<PAGE>
As filed with the Securities and Exchange
Commission on October 31, 1995
File No. 2-25364
811-1415
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 63 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 26 X
___________________________
Alliance Global Small Cap Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
Alliance Capital Management L.P.
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:(800) 221-5672
____________________________
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York l0105
(Name and address of agent for service)
It is proposed that this filing will become effective
(check appropriate box)
x immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
<PAGE>
60 days after filing pursuant to paragraph (a) (1)
on (date) pursuant to paragraph (a) (1)
75 days after filing pursuant to paragraph (a) (2)
on (date) pursuant to paragraph (a) (2) of rule 485
If appropriate, check the following box:
this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
Registrant has registered an indefinite number of shares of
Capital Stock pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant filed a notice pursuant to such Rule for
its fiscal year ended July 31, 1995 on September 28, 1995.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectus (Caption)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Description of the
Fund
Item 5. Management of the Fund Management of the
Fund; General
Information
Item 6. Capital Stock and Other General Information;
Securities Dividends, Distribu-
tions and Taxes
Item 7. Purchase of Securities Alternative Purchase
Being Offered Arrangements; Purchase
of Shares; General
Information
Item 8. Redemption or Repurchase Purchase of Shares
Redemption and
Repurchase of
Shares
Item 9. Pending Legal Proceedings Not Applicable
Location in Statement of
PART B Additional Information (Caption)
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Management of the
Fund; General
Information
<PAGE>
Item 13. Investment Objectives and Investment
Policies Objective, Policies
and Restrictions
Item 14. Management of the Registrant Management of the
Fund
Item 15. Control Persons and Principal Management of the
Holders of Securities Fund; General
Information
Item 16. Investment Advisory and Management of the
Other Services Fund
Item 17. Brokerage Allocation and Allocation of
Other Practices Portfolio Brokerage
Item 18. Capital Stock and General Information
Other Securities
Item 19. Purchase, Redemption and Purchase and
Pricing Redemption of Shares;
Net Asset Value
Item 20. Tax Status Investment Objective,
Policies and Restric-
tions; Dividends,
Distributions and
Taxes
Item 21. Underwriters General Information
Item 22. Calculation of Performance Not Applicable
Data
Item 23. Financial Statements Financial Statements;
Report of Independent
Accountants
<PAGE>
<PAGE>
The Alliance
- --------------------------------------------------------------------------------
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
November 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.................................................................. 17
Description of the Funds.................................................. 18
Investment Objectives and Policies.................................... 18
Additional Investment Practices....................................... 27
Certain Fundamental Investment Policies............................... 34
Risk Considerations................................................... 36
Purchase and Sale of Shares............................................... 40
Management of the Funds................................................... 42
Dividends, Distributions and Taxes........................................ 45
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./SM/
(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 Adviser 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 105 mutual funds. Since 1971, Alliance has earned
a reputation as a leader in the investment world with over $135 billion in
assets under management as of June 30, 1995. Alliance provides investment
management services to 29 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
from a relatively small universe 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 Investment Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities of
Asian/Pacific 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
- --------------------------------------------------------------------------------
Alliance/(R)/
Mutual funds without the Mystery./SM/
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
3
<PAGE>
- --------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
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>
- --------------------------------------------------------------------------------
(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" -page 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" -page 40.
<TABLE>
<CAPTION>
Operating Expenses Examples
- ------------------------------------------------------------- ---------------------------------------------------------------
Alliance 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 .71% .71% .71% After 1 year $ 53 $ 59 $ 19 $ 19
12b-1 fees .19% 1.00% 1.00% After 3 years $ 74 $ 79 $ 59 $ 59
Other expenses (a) .15% .18% .16% After 5 years $ 98 $102 $102 $101
---- ---- ---- After 10 years $165 $199(b) $199(b) $220
Total fund
operating expenses 1.05% 1.89% 1.87%
==== ==== ====
<CAPTION>
Growth 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 .75% .75% .75% After 1 year $ 56 $ 61 $ 21 $ 21
12b-1 fees .30% 1.00% 1.00% After 3 years $ 83 $ 84 $ 64 $ 64
Other expenses (a) .30% .30% .30% After 5 years $113 $110 $110 $110
---- ---- ---- After 10 years $198 $220(b) $220(b) $239
Total fund
operating expenses 1.35% 2.05% 2.05%
==== ==== ====
<CAPTION>
Premier Growth 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 $ 60 $ 65 $ 25 $ 25
12b-1 fees .37% 1.00% 1.00% After 3 years $ 97 $ 97 $ 77 $ 77
Other expenses (a) .44% .46% .45% After 5 years $136 $131 $131 $131
---- ---- ---- After 10 years $246 $248(b) $243(b) $279
Total fund
operating expenses 1.81% 2.46% 2.45%
==== ==== ====
<CAPTION>
Counterpoint 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 .75% .75% .75% After 1 year $ 61 $ 68 $ 28 $ 27
12b-1 fees .30% 1.00% 1.00% After 3 years $101 $105 $ 85 $ 83
Other expenses (a) .89% .98% .91% After 5 years $143 $144 $144 $141
---- ---- ---- After 10 years $259 $287(b) $287(b) $299
Total fund
operating expenses 1.94% 2.73% 2.66%
==== ==== ====
</TABLE>
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Please refer to the footnotes on page 6.
4
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- --------------------------------------------------------------- ---------------------------------------------------------------
Technology Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 65 $ 25 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 93 $ 96 $ 76 $ 75
Other expenses (a) .36% .43% .41% After 5 years $129 $130 $130 $129
---- ---- ---- After 10 years $231 $258(b) $258(b) $275
Total fund
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> <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
---- ---- ---- After 10 years $232 $263(b) $263(b) $282
Total fund
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> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 66 $ 26 $ 26
12b-1 fees .18% 1.00% 1.00% After 3 years $ 95 $100 $ 80 $ 79
Other expenses (a) .55% .57% .54% After 5 years $132 $137 $137 $135
---- ---- ---- After 10 years $238 $270(b) $270(b) $288
Total fund
operating expenses 1.73% 2.57% 2.54%
==== ==== ====
<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> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 60 $ 65 $ 25 $ 25
12b-1 fees .30% 1.00% 1.00% After 3 years $ 96 $ 97 $ 77 $ 77
Other expenses (a) .48% .48% .48% After 5 years $135 $132 $132 $132
---- ---- ---- After 10 years $243 $264(b) $264(b) $282
Total fund
operating expenses 1.78% 2.48% 2.48%
==== ==== ====
<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> <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 $105 $107 $ 87 $ 86
Other expenses (a) .72% .72% .71% After 5 years $150 $147 $147 $147
---- ---- ---- After 10 years $274 $295(b) $295(b) $311
Total fund
operating expenses 2.09% 2.79% 2.78%
==== ==== ====
<CAPTION>
All-Asia Investment 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 After 1 year $ 35 $ 75 $ 35 $ 35
(after waiver) (c) 0.00% 0.00% 0.00% After 3 years $126 $127 $107 $107
12b-1 fees .30% 1.00% 1.00% After 5 years $184 $182 $182 $182
Other expenses After 10 years $342 $362(b) $362(b) $377
Administration fees
(after waiver) (f) 0.00% 0.00% 0.00%
Other operating expenses (a)
(after reimbursement) (d) 2.20% 1.50% 1.50%
---- ---- ----
Total other expenses 2.50% 2.50% 2.50%
---- ---- ----
Total fund
operating expenses (d) 2.80% 3.50% 3.50%
==== ==== ====
<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> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 67 $ 72 $ 32 $ 33
12b-1 fees .30% 1.00% 1.00% After 3 years $118 $119 $ 99 $100
Other expenses (a) 1.24% 1.20% 1.25% After 5 years $172 $167 $167 $170
---- ---- ---- After 10 years $318 $335(b) $335(b) $355
Total fund
operating expenses (g) 2.54% 3.20% 3.25%
==== ==== ====
<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> <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>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 6.
5
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- --------------------------------------------------------------- ---------------------------------------------------------------
Balanced Shares 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 .63% .63% .63% After 1 year $ 55 $ 61 $ 21 $ 21
12b-1 fees .24% 1.00% 1.00% After 3 years $ 83 $ 86 $ 66 $ 65
Other expenses (a) .45% .48% .46% After 5 years $112 $113 $113 $112
---- ---- ---- After 10 years $195 $224(b) $224(b) $242
Total fund
operating expenses 1.32% 2.11% 2.09%
==== ==== ====
<CAPTION>
Income Builder 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 .75% .75% .75% After 1 year $ 67 $ 71 $ 31 $ 27
12b-1 fees .30% 1.00% 1.00% After 3 years $118 $115 $ 95 $ 83
Other expenses (a) 1.47% 1.34% .92% After 5 years $171 $162 $162 $141
---- ---- ---- After 10 years $316 $327(b) $327(b) $300
Total fund
operating expenses 2.52% 3.09% 2.67%
==== ==== ====
<CAPTION>
Utility Income 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 .75% .75% .75% After 1 year $ 57 $ 62 $ 22 $ 22
12b-1 fees .30% 1.00% 1.00% After 3 years $ 88 $ 89 $ 69 $ 69
Other expenses (a) .45% .45% .45% After 5 years $121 $118 $118 $118
---- ---- ---- After 10 years $214 $236(b) $236(b) $253
Total fund
operating expenses (e) 1.50% 2.20% 2.20%
==== ==== ====
<CAPTION>
Growth and Income 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 .53% .53% .53% After 1 year $ 53 $ 59 $ 19 $ 19
12b-1 fees .20% 1.00% 1.00% After 3 years $ 74 $ 78 $ 58 $ 58
Other expenses (a) .30% .32% .31% After 5 years $ 97 $100 $100 $100
---- ---- ---- After 10 years $163 $195(b) $195(b) $216
Total fund
operating expenses 1.03% 1.85% 1.84%
==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
+ 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 and 1.00% for All-Asia Investment
Fund.
(d) Net of voluntary fee waiver and expense reimbursement. In the absence of
such waiver and reimbursement, other expenses for Strategic Balanced Fund
would have been .76%, .74% and .75%, respectively, for Class A, Class B and
Class C shares, and total fund operating expenses for Strategic Balanced
Fund would have been 1.81%, 2.49% and 2.50%, respectively, for Class A,
Class B and Class C shares. In the absence of such waiver and
reimbursements, other expenses for All-Asia Investment Fund would have been
7.81%, 7.83% and 7.83%, respectively for Class A, Class B and Class C
shares, and total fund operating expenses for All-Asia Investment Fund would
have been 9.26%, 9.98% and 9.98%, 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 13.72%, 14.42% and
14.42%, respectively, for Class A, Class B and Class C shares.
(f) Reflects the fees payable by All-Asia Investment Fund to Alliance pursuant
to an administration agreement net of voluntary fee waiver. In the absence
of such fee waiver, the administration fee would be .15%.
(g) Net of expense reimbursements. Absent of expense reimbursements, total fund
operating expenses for Global Small Cap Fund would be 2.61%, 3.27% and
3.31%, respectively, for Class A, Class B and Class C shares.
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 and Technology Fund reflects annualized expenses based on the
Fund's most recent fiscal periods. The information shown in the table for
Alliance Premier Growth Fund and All-Asia Investment Fund reflects estimated
annualized expenses for the Fund's current fiscal period. "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 Investment Fund and 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 Investment Fund, Income Builder
Fund, Utility Income Fund and Global Small Cap 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.
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 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>
All-Asia Investment Fund
Class A
11/28/94+ to 4/30/95+++... $ 10.00 $ .11 (c) $ .13 $ .24 $ 0.00 $ 0.00
Class B
11/28/94+ to 4/30/95+++... $ 10.00 $ .09 (c) $ .13 $ .22 $ 0.00 $ 0.00
Class C
11/28/94+ to 4/30/95+++... $ 10.00 $ .08 (c) $ .16 $ .24 $ 0.00 $ 0.00
Alliance Fund
Class A
12/1/94 to 5/31/95+++..... $ 6.63 $ .01 $ .81 $ .82 $ (.01) $ (1.00)
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)
Class B
12/1/94 to 5/31/95+++..... $ 6.50 $ .05 $ .72 $ .77 $ 0.00 $ (1.00)
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
12/1/94 to 5/31/95+++..... $ 6.50 $ (.10) $ .87 $ .77 $ 0.00 $ (1.00)
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
11/1/94 to 4/30/95+++..... $ 25.08 $ .08 $ .88 $ .96 $ (.11) $ (.41)
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
11/1/94 to 4/30/95+++..... $ 21.21 $ 0.00 $ .74 $ .74 $ (.01) $ (.41)
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
11/1/94 to 4/30/95+++..... $ 21.22 $ 0.00 $ .73 $ .73 $ (.01) $ (.41)
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
12/1/94 to 5/31/95+++..... $ 11.41 $ (.02) $ 2.15 $ 2.13 $ 0.00 $ (.67)
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
12/1/94 to 5/31/95+++..... $ 11.29 $ (.05) $ 2.13 $ 2.08 $ 0.00 $ (.67)
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
12/1/94 to 5/31/95+++..... $ 11.30 $ (.05) $ 2.13 $ 2.08 $ 0.00 $ (.67)
Year ended 11/30/94....... 11.72 (.09) (.33) (.42) 0.00
5/3/93++ to 11/30/93...... 10.48 (.05) 1.29 1.24 0.00 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
8
<PAGE>
<TABLE>
<CAPTION>
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
------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 0.00 $10.24 2.40% $ 1,917 .19%* 3.44%* 51%
$ 0.00 $10.22 2.20% $ 3,019 .90%* 2.73%* 51%
$ 0.00 $10.24 2.40% $ 185 .71%* 2.87%* 51%
$(1.01) $ 6.44 15.01% $ 812,401 1.07%* .44%* 41%
0.00 6.63 (3.21) 760,679 1.05* .21* 63
(.78) 6.85 14.26 831,814 1.01 .27 66
(.53) 6.68 14.70 794,733 .81 .79 58
(.70) 6.29 33.91 748,226 .83 1.03 74
(1.42) 5.22 (4.36) 620,374 .81 1.56 71
(.04) 6.87 23.42 837,429 .75 1.79 81
(.43) 5.60 17.10 760,619 .82 1.38 65
(2.07) 5.15 4.90 695,812 .76 1.03 100
(5.26) 6.87 12.60 652,009 .61 1.39 46
(.74) 11.15 31.52 710,851 .59 1.96 62
$(1.00) $ 6.27 14.36% $ 22,603 1.88%* (.32)%* 41%
0.00 6.50 (3.85) 18,138 1.89* (.60)* 63
(.76) 6.76 13.28 12,402 1.90 (.64) 66
(.49) 6.64 13.75 3,825 1.64 (.04) 58
(.67) 6.27 13.10 852 1.64* .10* 74
$(1.00) $ 6.27 14.36% $ 6,868 1.91%* (.38)%* 41%
0.00 6.50 (3.99) 6,230 1.87* (.59)* 63
(.76) 6.77 13.95 4,006 1.94* (.74)* 66
$ (.52) $25.52 4.04% $ 213,281 1.37%* .69%* 25%
0.00 25.08 4.98 167,800 1.35* .86* 24
(2.32) 23.89 15.66 102,406 1.40 (f) .32 87
(1.37) 22.67 18.89 13,889 1.40 (f) .20 124
(1.87) 20.31 23.61 8,228 1.40 (f) 1.44 137
(.06) 17.94 32.40 713 1.40*(f) 1.99* 130
$ (.42) $21.53 3.68% $1,051,753 2.07%* (.01)%* 25%
0.00 21.21 4.64 751,521 2.05* .16* 24
(2.32) 20.27 14.79 394,227 2.10 (f) (.36) 87
(1.65) 19.68 18.16 56,704 2.15 (f) (.53) 124
(2.56) 18.16 22.75 37,845 2.15 (f) .78 137
(.80) 16.88 24.72 22,710 2.10 (f) .56 130
(1.02) 14.38 8.81 15,800 2.00 (f) .07 165
(1.06) 14.13 20.31 7,672 2.00 (f) (.03) 139
0.00 12.76 27.60 1,938 2.00*(f) (.40)* 52
$ (.42) $21.53 3.63% $ 154,857 2.07%* (.01)%* 25%
0.00 21.22 4.64 114,455 2.05* .16* 24
(2.32) 20.28 5.27 64,030 2.10*(f) (.31)* 87
$ (.67) $12.87 19.94% $ 41,921 1.92%* (.36)%* 58%
0.00 11.41 (3.14) 35,146 1.96 (.67) 98
(.01) 11.78 9.26 40,415 2.18 (.61) 68
0.00 10.79 7.90 4,893 2.17*(f) .91*(f) 0
$ (.67) $12.70 19.70% $ 157,167 2.43%* (.88)%* 58%
0.00 11.29 (3.67) 139,988 2.47 (1.19) 98
0.00 11.72 8.64 151,600 2.70 (1.14) 68
0.00 10.79 7.90 19,941 2.68*(f) .35*(f) 0
$ (.67) $12.71 19.68% $ 8,638 2.42%* (.87)%* 58%
0.00 11.30 (3.58) 7,332 2.47 (1.16) 98
0.00 11.72 11.83 3,899 2.79* (1.35)* 68
</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>
Counterpoint Fund
Class A
10/1/94 to 3/31/95+++..... $17.14 $(.07) $ 1.31 $ 1.24 $0.00 $(2.62)
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
10/1/94 to 3/31/95+++..... $16.94 $(.07) $ 1.23 $ 1.16 $0.00 $(2.62)
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
10/1/94 to 3/31/95+++..... $16.95 $(.10) $ 1.26 $ 1.16 $0.00 $(2.62)
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
Technology Fund
Class A
12/1/94 to 5/31/95+++..... $31.98 $(.11) $ 7.94 $ 7.83 $0.00 $(3.17)
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
Class B
12/1/94 to 5/31/95+++..... $31.61 $(.14) $ 7.75 $ 7.61 $0.00 $(3.17)
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
12/1/94 to 5/31/95+++..... $31.61 $(.18) $ 7.79 $ 7.61 $0.00 $(3.17)
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
10/1/94 to 3/31/95+++..... $22.65 $(.13) $ .54 $ .41 $0.00 $(3.86)
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)
Class B
10/1/94 to 3/31/95+++..... $21.92 $(.19) $ .50 $ .31 $0.00 $(3.86)
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
10/1/94 to 3/31/95+++..... $21.92 $(.20) $ .53 $ .33 $0.00 $(3.86)
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
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
10
<PAGE>
<TABLE>
<CAPTION>
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
------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$(2.62) $15.76 9.07% $ 36,714 2.23%* (.84)%* 8%
(2.83) 17.14 (4.91) 42,712 1.94 (.43) 25
(1.15) 20.89 13.76 67,356 1.79 (.04) 48
(1.52) 19.45 10.76 70,876 1.62 .79 39
(1.19) 19.08 35.39 59,690 1.64 1.02 38
(1.28) 15.18 (17.91) 49,198 1.72 1.38 57
(.67) 19.86 38.25 60,478 1.69 1.28 37
(1.21) 15.02 (8.94) 44,789 1.76 1.93 33
(.67) 18.05 32.24 57,752 1.64 (f) 1.68 (f) 24
(.40) 14.26 34.00 36,713 1.55 (f) 2.88 (f) 17
0.00 10.98 9.80 22,365 1.50*(f) 3.20*(f) 6
$(2.62) $15.48 8.67% $ 1,303 3.03%* (1.57)%* 8%
(2.83) 16.94 (5.63) 527 2.73 (1.17) 25
0.00 20.82 12.48 120 3.35* (1.60)* 48
$(2.62) $15.49 8.66% $ 483 2.94%* (1.54)%* 8%
(2.83) 16.95 (5.62) 418 2.66 (1.11) 25
0.00 20.83 12.53 242 3.22* (1.34)* 48
$(3.17) $36.64 27.21% $255,131 1.59%* (.65)%* 23%
0.00 31.98 22.43 202,929 1.66* (1.22)* 55
(8.18) 26.12 21.63 173,732 1.73 (1.32) 64
(2.27) 28.20 15.50 173,566 1.61 (.90) 73
(3.61) 26.38 54.24 191,693 1.71 (.20) 134
(1.54) 19.44 (3.08) 131,843 1.77 (.18) 147
0.00 21.57 6.00 141,730 1.66 .02 139
0.00 20.35 0.64 169,856 1.42(f) (.16)(f) 139
(7.33) 20.22 19.16 167,608 1.31(f) (.56)(f) 248
(.01) 23.11 12.03 147,733 1.13(f) (.57)(f) 141
(.20) 20.64 26.24 147,114 1.14(f) .07 (f) 259
$(3.17) $36.05 26.80% $ 88,367 2.47%* (1.51)%* 23%
0.00 31.61 21.67 18,397 2.43* (1.95)* 55
(8.18) 25.98 24.49 1,645 2.57* (2.30)* 64
$(3.17) $36.05 26.80% $ 16,555 2.45%* (1.49)%* 23%
0.00 31.61 21.67 7,470 2.41* (1.94)* 55
(8.18) 25.98 24.49 1,096 2.52* (2.25)* 64
$(3.86) $19.20 3.89% $131,172 1.80%* (1.26)%* 80%
(.82) 22.65 (4.05) 155,470 1.67 (1.15) 110
(.88) 24.43 31.58 228,874 1.65 (1.00) 102
(.16) 19.34 (8.34) 252,140 1.62 (.89) 128
(.06) 21.27 36.28 333,806 1.64 (.22) 118
(2.02) 15.67 (30.81) 251,102 1.66 .16 90
(.18) 24.84 42.68 263,099 1.73 .10 90
(4.71) 17.60 (8.61) 90,713 1.28(f) (.40)(f) 58
(3.07) 24.47 29.61 134,676 1.18(f) (.56)(f) 76
(.99) 21.80 33.79 144,959 1.18 .02 84
(.33) 17.25 20.29 77,067 1.18 .22 77
$(3.86) $18.37 3.52% $ 12,876 2.63%* (2.08)%* 80%
(.82) 21.92 (4.92) 13,901 2.50 (1.98) 110
(.88) 23.88 30.53 16,779 2.46 (1.81) 102
(.16) 19.07 (9.05) 9,454 2.42 (1.67) 128
(.06) 21.14 35.54 7,346 2.41 (1.28) 118
0.00 15.66 (8.79) 71 2.09* (.26)* 90
$(3.86) $18.39 3.62% $ 1,032 2.59%* (2.06)%* 80%
(.82) 21.92 (4.92) 1,220 2.48 (1.96) 110
0.00 23.88 17.46 118 2.49* (1.90)* 102
</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>
International Fund
Class A
Year ended 6/30/95....... $18.38 $ .04 $ .01 $ .05 $0.00 $(1.62)
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)
Class B
Year ended 6/30/95....... $17.90 $(.01) $ (.08) $ (.09) $0.00 $(1.62)
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 6/30/95....... $17.91 $(.14) $ .05 $ (.09) $0.00 $(1.62)
Year ended 6/30/94....... 15.74 (.11) 2.84 2.73 0.00 (.56)
5/3/93++ to 6/30/93...... 15.93 0.00 (.19) (.19) 0.00 0.00
Worldwide Privatization Fund
Class A
Year ended 6/30/95....... $ 9.75 $ .06 $ .37 $ .43 $0.00 $ 0.00
6/2/94+ to 6/30/94....... 10.00 .01 (.26) (.25) 0.00 0.00
Class B
Year ended 6/30/95....... $ 9.74 $ .02 $ .34 $ .36 $0.00 $ 0.00
6/2/94+ to 6/30/94....... 10.00 .00 (.26) (.26) 0.00 0.00
Class C
2/8/95++ to 6/30/95...... $ 9.53 $ .05 $ .52 $ .57 $0.00 $ 0.00
New Europe Fund
Class A
Year ended 7/31/95....... $12.66 $ .04 $ 2.50 $ 2.54 $ (.09) $ 0.00
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
Year ended 7/31/95....... $12.41 $(.05) $ 2.44 $ 2.39 $ (.09) $ 0.00
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
Year ended 7/31/95....... $12.42 $(.07) $ 2.46 $ 2.39 $ (.09) $ 0.00
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
Year ended 7/31/95....... $11.08 $(.09) $ 1.50 $ 1.41 $0.00 $(2.11) (k)
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)
Class B
Year ended 7/31/95....... $10.78 $(.12) $ 1.40 $ 1.28 $0.00 $(2.11) (k)
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
Year ended 7/31/95....... $10.79 $(.17) $ 1.45 $ 1.28 $0.00 $(2.11) (k)
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
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
12
<PAGE>
<TABLE>
<CAPTION>
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
------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$(1.62) $16.81 .59% $165,584 1.73% .26% 119%
(.56) 18.38 18.68 201,916 1.90 (.50) 97
(.13) 16.01 7.86 161,048 1.88 (.14) 94
(.07) 14.98 7.52 179,807 1.82 .07 72
(.50) 14.00 (19.34) 214,442 1.73 .37 71
(2.15) 17.99 16.98 265,999 1.45 .33 37
(2.63) 17.24 27.65 166,003 1.41 .39 87
(6.56) 16.09 (4.20) 132,319 1.41 .84 55
(2.78) 23.70 23.05 194,716 1.30 .77 58
(.44) 22.02 90.87 139,326 1.29 .16 62
$(1.62) $16.19 (.22)% $ 48,998 2.57% (.62)% 119%
(.56) 17.90 17.65 29,943 2.78 (1.15) 97
(.09) 15.74 6.98 6,363 2.70 (.96) 94
(.03) 14.81 6.54 5,585 2.68 (.70) 72
(.50) 13.93 (6.97) 3,515 3.39* .84* 71
$(1.62) $16.20 (.22)% $ 19,395 2.54% (.88)% 119%
(.56) 17.91 17.72 13,503 2.78 (1.12) 97
0.00 15.74 (1.19) 229 2.57* .08* 94
$ 0.00 $10.18 4.41% $ 13,535 2.56% .66% 36%
0.00 9.75 (2.50) 4,990 2.75* 1.03* 0
$ 0.00 $10.10 3.70% $ 79,359 3.27% .01% 36%
0.00 9.74 (2.60) 22,859 3.45* .33* 0
$ 0.00 $10.10 5.98% $ 338 3.27%* 2.65%* 36%
$ (.09) $15.11 20.22% $ 86,112 2.09% .37% 74%
0.00 12.66 1.04 86,739 2.06* 1.85* 35
0.00 12.53 33.73 90,372 2.30 .17 94
(.15) 9.37 (2.82) 79,285 2.25 .47 125
(.02) 9.81 .74 108,510 2.24 .16 34
(.70) 9.76 (5.63) 188,016 1.52* 2.71* 48
$ (.09) $14.71 19.42% $ 34,527 2.79% (.33)% 74%
0.00 12.41 .73 31,404 2.76* 1.15* 35
0.00 12.32 32.76 20,729 3.02 (.52) 94
(.11) 9.28 (3.49) 1,732 3.00 (.50) 125
(.02) 9.74 .03 1,423 3.02* (.71)* 34
$ (.09) $14.72 19.40% $ 7,802 2.78% (.33)% 74%
0.00 12.42 .73 11,875 2.76* 1.15* 35
0.00 12.33 20.77 10,886 3.00* (.52)* 94
$(2.11) $10.38 16.62% $ 60,057 2.54%(f) (1.17)%(f) 128%
0.00 11.08 (1.42) 61,372 2.42* (1.26)* 78
(.43) 11.24 25.83 65,713 2.53 (1.13) 97
(.03) 9.33 (11.30) 58,491 2.34 (.85) 108
0.00 10.55 27.72 84,370 2.29 (.55) 104
(3.11) 8.26 (31.90) 68,316 1.73 (.46) 89
(.09) 15.54 37.34 113,583 1.56 (.17) 106
(1.78) 11.41 (8.11) 90,071 1.54 (f) (.50) (f) 74
(4.52) 15.07 34.11 113,305 1.41 (f) (.44) (f) 98
(1.26) 15.47 31.76 90,354 1.22 (f) .30 (f) 107
$(2.11) $ 9.95 15.77% $ 5,164 3.20%(f) (1.92)%(f) 128%
0.00 10.78 (2.00) 3,889 3.15* (1.93)* 78
(.43) 11.00 24.97 1,150 3.26 (1.85) 97
(.03) 9.20 (12.03) 819 3.11 (1.31) 108
0.00 10.49 27.00 121 2.98 (1.39) 104
0.00 8.26 (9.43) 183 2.61* (1.30)* 89
$(2.11) $ 9.96 15.75% $ 1,407 3.25%(f) (2.10)%(f) 128%
0.00 10.79 (1.91) 1,330 3.13* (1.92)* 78
0.00 11.00 11.56 261 3.75* (2.51)* 97
</TABLE>
- --------------------------------------------------------------------------------
13
<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>
Strategic Balanced Fund (i)
Class A
Year ended 7/31/95........ $16.26 $ .34 (c) $ 1.64 $ 1.98 $ (.22) $ (.04)
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
Year ended 7/31/95........ $14.10 $ .22 (c) $ 1.40 $ 1.62 $ (.12) $ (.04)
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
Year ended 7/31/95........ $14.11 $ .16 (c) $ 1.46 $ 1.62 $ (.12) $ (.04)
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
Year ended 7/31/95........ $13.38 $ .46 $ 1.62 $ 2.08 $ (.36) $ (.02)
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)
Class B
Year ended 7/31/95........ $13.23 $ .30 $ 1.65 $ 1.95 $ (.28) $ (.02)
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
Year ended 7/31/95........ $13.24 $ .30 $ 1.65 $ 1.95 $ (.28) $ (.02)
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
Income Builder Fund (h)
Class A
11/1/94 to 4/30/95+++..... $ 9.69 $ .28 $ .04 $ .32 $ (.25) $ 0.00
3/25/94++ to 10/31/94..... 10.00 .96 (1.02) (.06) (.05)(g) (.20)
Class B
11/1/94 to 4/30/95+++..... $ 9.68 $ .24 $ .06 $ .30 $ (.22) $ 0.00
3/25/94++ to 10/31/94..... 10.00 .88 (.98) (.10) (.06)(g) (.16)
Class C
11/1/94 to 4/30/95+++..... $ 9.66 $ .25 $ .04 $ .29 $ (.22) $ 0.00
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
12/1/94 to 5/31/95+++..... $ 8.97 $ .20 (c) $ .67 $ .87 $ (.23) $ 0.00
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
12/1/94 to 5/31/95+++..... $ 8.96 $ .15 (c) $ .69 $ .84 $ (.20) $ 0.00
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
12/1/94 to 5/31/95+++..... $ 8.97 $ .13 (c) $ .71 $ .84 $ (.20) $ 0.00
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
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
14
<PAGE>
<TABLE>
<CAPTION>
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
------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ (.26) $17.98 12.40% $ 10,952 1.40% (f) 2.07% 172%
0.00 16.26 (1.22) 9,640 1.40* (f) 1.63* 21
(1.41) 16.46 5.06 9,822 1.40 (f) 1.67 139
(1.07) 16.97 5.85 8,637 1.40 (f) 2.29 98
(.49) 17.06 20.96 6,843 1.40 (f) 1.92 103
(.03) 14.48 16.00 443 1.40* (f) 3.54* 137
$ (.16) $15.56 11.63% $ 37,301 2.10% (f) 1.38% 172%
0.00 14.10 (1.40) 43,578 2.10* (f) .92* 21
(1.31) 14.30 4.29 43,616 2.10 (f) .93 139
(1.35) 14.92 4.96 36,155 2.15 (f) 1.55 98
(1.37) 15.51 20.14 31,842 2.15 (f) 1.34 103
(.47) 13.96 16.73 22,552 2.10 (f) 3.23 137
(.67) 12.40 8.85 19,523 2.00 (f) 3.85 120
(1.07) 11.97 14.66 5,128 2.00 (f) 4.31 103
(.06) 11.45 15.10 2,344 2.00* (f) 2.44* 72
$ (.16) $15.57 11.62% $ 4,113 2.10% (f) 1.38% 172%
0.00 14.11 (1.40) 4,317 2.10* (f) .93* 21
(1.31) 14.31 .45 4,289 2.10* (f) .69* 139
$ (.38) $15.08 15.99% $122,033 1.32% 3.12% 179%
(.57) 13.38 (3.21) 157,637 1.27* 2.50* 116
(.43) 14.40 12.52 172,484 1.35 2.50 188
(.45) 13.20 8.14 143,883 1.40 3.26 204
(.40) 12.64 25.52 154,230 1.44 3.75 70
(2.03) 10.41 (13.12) 140,913 1.36 4.01 169
(1.00) 14.13 22.27 159,290 1.42 3.29 132
(3.19) 12.53 (1.10) 111,515 1.42 3.74 190
(.60) 16.33 15.80 129,786 1.17 4.14 136
(1.18) 14.64 35.01 78,900 .99 4.78 26
$ (.30) $14.88 15.07% $ 15,080 2.11% 2.30% 179%
(.51) 13.23 (3.80) 14,347 2.05* 1.73* 116
(.37) 14.27 11.65 12,789 2.13 1.72 188
(.39) 13.13 7.32 6,499 2.16 2.46 204
(.28) 12.61 8.96 1,830 2.13* 3.19* 70
$ (.30) $14.89 15.06% $ 5,108 2.09% 2.32% 179%
(.51) 13.24 (3.80) 6,254 2.03* 1.81* 116
(.17) 14.28 6.01 1,487 2.29* 1.47* 188
$ (.25) $ 9.76 3.48% $ 1,237 2.25%* 6.00%* 105%
(.25) 9.69 (.54) 600 2.52* 6.11* 126
$ (.22) $ 9.76 3.21% $ 2,876 2.93%* 5.30%* 105%
(.22) 9.68 (.99) 1,998 3.09* 5.07* 126
$ (.22) $ 9.73 3.11% $ 52,193 2.89%* 5.28%* 105%
(.46) 9.66 (3.44) 64,027 2.67 3.82 126
(.36) 10.47 10.65 106,034 2.32 6.85 101
(.47) 9.80 2.70 152,617 2.33 5.47 108
(.01) 10.00 .11 41,813 0.00* (f) .94* 0
$ (.23) $ 9.61 9.71% $ 2,510 1.50%*(f) 3.42*% 63%
(.48) 8.97 (4.86) 1,068 1.50 (f) 4.13 30
0.00 9.92 (.80) 229 1.50* (f) 2.35* 11
$ (.20) $ 9.60 9.31% $ 5,580 2.20%*(f) 2.74*% 63%
(.41) 8.96 (5.59) 2,353 2.20 (f) 3.53 30
0.00 9.91 (.90) 244 2.20* (f) 2.84* 11
$ (.20) $ 9.61 9.41 % $ 3,504 2.20%*(f) 2.83*% 63%
(.41) 8.97 (5.58) 2,651 2.20 (f) 3.60 30
0.00 9.92 (.80) 18 2.20* (f) 3.08* 11
</TABLE>
- --------------------------------------------------------------------------------
15
<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>
Growth and Income Fund
Class A
11/1/94 to 4/30/95+++.... $ 2.35 $ .02 $ .13 $ .15 $ (.03) $ (.12)
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)
Class B
11/1/94 to 4/30/95+++.... $ 2.34 $ .01 $ .13 $ .14 $ (.02) $ (.12)
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
11/1/94 to 4/30/95+++.... $ 2.34 $ .01 $ .13 $ .14 $ (.02) $ (.12)
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.
+++ Unaudited.
* Annualized.
** Reflects a change in 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 fee waiver and/or 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% (annualized) and
3.78% (annualized) for Class A and Class B shares, respectively; and net
investment income ratios would have been (.25)% (annualized) and (.75)%
(annualized) 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% (annualized), 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% (annualized) for 1985, 2.83% for 1986 and 1.51%
for 1987. If Technology Fund had borne all expenses, the expense ratios
would have been 1.43%, 1.40%, 1.59% and 1.73% for the periods ended in 1985,
1986, 1987, and 1988, respectively; and the investment income ratios would
have been (.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 1.33% for
1986, 1.61% for 1987 and 1.86% for 1988; and 2.61%, 3.27%, and 3.31% for
Class A, Class B and Class C shares, respectively, for the fiscal year ended
July 31, 1995 and the investment income ratios would have been .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, 1.70% for the fiscal year ended April 30, 1994, 1.94% (annualized) for
the fiscal period ended July 31, 1994, and 1.81% for fiscal year ended July
31, 1995; 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, 2.42% for the fiscal year ended April 30, 1994, 2.64% (annualized) for
the fiscal period ended July 31, 1994 and 2.49% for fiscal year ended July
31, 1995; and with respect to Class C shares, 2.07% (annualized) for the
fiscal period ended April 30, 1994, 2.64% (annualized) for the fiscal period
ended July 31, 1994 and 2.50% for the fiscal year ended July 31, 1995. 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% (annualized), 133.62% (annualized)
and 148.03% (annualized) for Class A, Class B and Class C shares,
respectively, for the fiscal period ended November 30, 1993, 13.72%, 14.42%
and 14.42% for Class A, Class B and Class C shares, respectively, for 1994,
and 6.70% (annualized), 7.41% (annualized), and 7.40% (annualized) for Class
A, Class B, and Class C shares respectively for the fiscal period ended
May 31, 1995.
(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.
(k) "Distributions from Net Realized Gains" includes a return of capital. Global
Small Cap Fund had a return of capital with respect to Class A shares, for
the year ended July 31, 1995, of $(.12); with respect to Class B shares,
$(.12); and with respect to Class C shares, $(.12).
16
<PAGE>
<TABLE>
<CAPTION>
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
------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ (.15) $ 2.35 5.70 % $410,917 2.00%* 1.07%* 92%
(.24) 2.35 (.67) 414,386 1.03 2.36 68
(.22) 2.61 14.98 459,372 1.07 2.38 91
(.21) 2.48 7.23 417,018 1.09 2.63 104
(.39) 2.52 31.03 409,597 1.14 2.74 84
(.53) 2.28 (8.55) 314,670 1.09 3.40 76
(.56) 3.02 21.59 377,168 1.08 3.49 79
(.86) 3.05 16.45 350,510 1.09 3.09 66
(.12) 3.48 2.04 348,375 .86 2.77 60
(.53) 3.52 34.92 347,679 .81 3.31 11
(.48) 3.01 19.53 275,681 .95 3.78 15
$ (.14) $ 2.34 6.25 % $108,846 1.17%* 1.88%* 92%
(.22) 2.34 (1.50) 102,546 1.85 1.56 68
(.20) 2.60 14.22 76,633 1.90 1.58 91
(.20) 2.47 6.22 29,656 1.90 1.69 104
(.04) 2.52 6.83 10,221 1.99* 1.67* 84
$ (.14) $ 2.34 6.25 % $ 23,863 1.16%* 1.87%* 92%
(.22) 2.34 (1.50) 19,395 1.84 1.61 68
(.02) 2.60 7.85 7,774 1.96* 1.45* 91
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
- --------------------------------------------------------------------------------
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 Ratings Services.
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.
17
<PAGE>
- --------------------------------------------------------------------------------
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 period ended
September 29, 1995, 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
18
<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.
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 80% of its assets invested in the securities of these
19
<PAGE>
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, 1995, approximately 36% 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,
20
<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
21
<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, 1995, approximately 30% 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
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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", "--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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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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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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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
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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 Investment 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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Mortgage-Backed Securities. Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed securities are passed
through to the holders of the securities. As a result of the pass-through of
prepayments of principal on the underlying securities, mortgage-backed
securities are often subject to more rapid prepayment of principal than their
stated maturity would indicate. Prepayments occur when the mortgagor on a
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. Because the prepayment characteristics of the underlying
mortgages vary, it is impossible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates. Prepayments are
important because of their effect on the yield and price of the mortgage-backed
securities. During periods of declining interest rates, prepayments can be
expected to accelerate and a Fund investing in such securities would be required
to reinvest the proceeds at the lower interest rates then available. In
addition, prepayments of mortgages underlying securities purchased at a premium
could result in capital losses.
Adjustable Rate Securities. Adjustable rate securities have interest rates
that are reset at periodic intervals, usually by reference to some interest
rate index or market interest rate. Some adjustable rate securities are
backed by pools of mortgage loans. Although the rate-adjustment feature may
reduce sharp changes in the value of adjustable rate securities, these
securities can change in value based on changes in market interest rates or
the issuer's creditworthiness. Changes in the interest rate on adjustable
rate securities may lag behind changes in prevailing market interest rates.
Also, some adjustable rate securities (or the underlying mortgages) are
subject to caps or floors that limit the maximum change in interest rate.
Asset-Backed Securities. Asset-backed securities (unrelated to first mortgage
loans) represent fractional interests in pools of leases, retail installment
loans, revolving credit receivables and other payment obligations, both
secured and unsecured. These assets are generally held by a trust and
payments of principal and interest or interest only are passed through
monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which
may reduce the overall return to certificate holders. Certificate holders may
also experience delays in payment on the certificates if the full amounts due
on underlying sales contracts or receivables are not realized by the trust
because of unanticipated legal or administrative costs of enforcing the
contracts or because of depreciation or damage to the collateral (usually
automobiles) securing certain contracts, or other factors.
Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both
zero-coupon and payment-in-kind bonds allow an issuer to avoid the need to
generate cash to meet current interest payments. Accordingly, such bonds may
involve greater credit risks than bonds paying interest currently. Even
though such bonds do not pay current interest in cash, a Fund is nonetheless
required to accrue interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, a Fund could be required at
times to liquidate other investments in order to satisfy its dividend
requirements.
Equity-Linked Debt Securities. Equity-linked debt securities are securities with
respect to which the amount of interest and/or principal that the issuer thereof
is obligated to pay is linked to the performance of a specified index of equity
securities. Such amount may be significantly greater or less than payment
obligations in respect of other types of debt securities. Adverse changes in
equity securities indices and other adverse changes in the securities markets
may reduce payments made under, and/or the principal of, equity-linked debt
securities held by the Fund. Furthermore, as with any debt securities, the
values of equity-linked debt securities will generally vary inversely with
changes in interest rates. The Fund's ability to dispose of equity-linked debt
securities will depend on the availability of liquid markets for such
securities. Investment in equity-linked debt securities may be considered to be
speculative. As with other securities, the Fund could lose its entire investment
in equity-linked debt securities.
Loans and Other Direct Debt Instruments. Loans and other direct debt
instruments are interests in amounts owned by a corporate, governmental or
other borrower to another party. They may represent amounts owed to lenders
or lending syndicates (loans and loan participations), to suppliers of goods
or services (trade claims or other receivables), or to other creditors.
Direct debt instruments involve the risk of loss in case of default or
insolvency of the borrower and may offer less legal protection to the Fund in
the event of fraud or misrepresentation than debt securities. In addition,
loan participations involve a risk of insolvency of the lending bank or other
financial intermediary. Direct debt instruments may also include standby
financing commitments that obligate the Fund to supply additional cash to the
borrower on demand. Loans and other direct debt instruments are generally
illiquid and may be transferred only through individually negotiated private
transactions.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If the Fund does not receive scheduled interest or
principal payments on such indebtedness, the Fund's share price and yield
could
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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 be repaid.
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 Investment 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 purchasing an 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
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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 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
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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"). 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 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 Investment 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. 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.
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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 Investment Fund, and 20% with respect to Utility Income Fund, of its
assets taken at the time of making 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. 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 Investment 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 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. 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.
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
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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. 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 Investment 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
Investment 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
or equivalent securities in order to exercise ownership rights such as voting
rights, subscription rights and rights to dividends, interest or
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
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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. Portfolio turnover rates are set forth under "Financial
Highlights." These portfolio turnover rates are greater than those 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 each 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 each Fund's total assets may be invested without regard to this
restriction; or (ii) invest 25% or more of its total assets in the securities
of any one industry.
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
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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 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.
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All-Asia Investment 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 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
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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 Investment 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 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 in vestments. 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
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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
1990 through 1994, the pound sterling declined at an average annual rate of
approximately 3.6% 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 3593.0 on October 18, 1995, up 17% from the end of
1994.
The public sector borrowing requirement ("PSBR"), a mandated measure of the
amount required to balance the budget, is running in excess of the November
1994 budget estimate, as a result of decreased revenue growth and increased
government spending. The PSBR estimate for the 1996-97 fiscal year has also
been raised, but is still expected to be under the European Union limit.
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. Mr. Major's position has been
strengthened by his reelection as leader of the Conservative Party and is
expected to retain that position until the next general election. 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 Investment 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 but has recently
fallen from its post-World War II high against the U.S. dollar.
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 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. In June of 1995 the two countries agreed in principal to
increase Japanese imports of American automobiles and automotive parts.
Nevertheless it is expected that the continuing friction between the U.S. and
Japan with respect to trade issues will 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 Investment 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.
38
<PAGE>
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 Investment 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 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
39
<PAGE>
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 Investment 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 Investment 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,
Inc. ("AFD"), each Fund's principal underwriter. The minimum initial investment
in each Fund is $250. The minimum for subsequent investments in each Fund is
$50. Investments of $25 or more are allowed under the automatic investment
program of each Fund. Share certificates are issued only upon request. See the
Subscription Application and Statement of Additional Information for more
information.
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.
40
<PAGE>
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, to meet the
requirements of certain qualified retirement plans or pursuant to a systematic
withdrawal plan. 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 incentives 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 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, Inc. ("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,
41
<PAGE>
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. Eastern 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 an amount not exceeding $50,000. 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.
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.
42
<PAGE>
<TABLE>
<CAPTION>
Principal occupation
during the past
Fund Employee; year; title five years
- --------------------------------------------------------------------------------
<S> <C> <C>
The 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 David P. Handke, Jr. since Associated with
inception--Vice President of ACMC Alliance
Jon H. Outcalt since inception-- Associated with
Senior 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
Senior 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
Senior Vice President of ACMC Alliance since July
1993; prior
thereto,
associated with
Equitable Capital
Timothy Rice since 1993-- Associated with
Vice President of ACMC Alliance
International Fund A. Rama Krishna since 1993-- Associated with
Senior Vice President of ACMC Alliance since
and director of Asian Equity 1993, prior
research thereto,
Chief Investment
Strategist and
Director--Equity
Research for CS
First Boston
Worldwide Mark H. Breedon since inception--- Associated with
Privatization Senior Vice President of ACMC Alliance
and 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
and director of European equity
research
Principal occupation
during the past
Fund Employee; year; title five years
- --------------------------------------------------------------------------------
<S> <C> <C>
All-Asia Investment A. Rama Krishna-- (see above)
Fund Since 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)
Timothy Rice since 1993-- (see above)
(see above)
Strategic Balanced Bruce W. Calvert since 1990-- Associated with
Fund Vice Chairman and the Chief Alliance
Investment Officer of ACMC
Balanced Shares Bruce W. Calvert since 1990-- Associated with
(see above) Alliance
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.
Thomas M. Perkins since 1991-- Associated with
Senior Vice President of ACMC Alliance
Utility Income Fund Alan Levi since 1994-- Associated with
Senior Vice President and Alliance
Director of Research of ACMC
Gregory Allison since 1995-- Associated with
Portfolio Manager of Utility Alliance since
Income Fund 1994; prior
thereto associated
with
Gabelli & Co.
Growth & Income Paul Rissman since 1994-- 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.
Alliance is a leading international investment manager supervising client
accounts with assets as of September 30, 1995 totaling more than $140 billion
(of which approximately $44 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 51 registered investment companies managed by Alliance
comprising 105 separate investment portfolios currently have over two million
shareholders. As of September 30, 1995, Alliance was retained as an investment
manager for 29 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
43
<PAGE>
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 INVESTMENT FUND
Alliance has been retained by All-Asia Investment 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 Investment
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, 1995, OAM had approximately $1.5 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, 1995 of approximately $6.6 billion.
EXPENSES OF ALL-ASIA INVESTMENT FUND
In addition to the payments to Alliance under the Advisory Agreement and
Administration Agreement with All-Asia Investment Fund, all as described above,
the Fund pays certain other costs, including (i) custody, transfer and dividend
disbursing expenses, (ii) fees of the Directors who are not affiliated with
Alliance, (iii) legal and auditing expenses (iv) clerical, accounting and other
office costs, (v) costs of printing 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
Directors of Premier Growth Fund currently limit payments under the Plan with
respect to sales of Class A shares made after November 1993 to, .30% of the
Fund's aggregate average daily net assets. 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 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
44
<PAGE>
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............. $ 1,672,131 (3.41%) $ 455,492 (2.35%)
Worldwide Privatization Fund... $ 138,862 (.17%) $ 569 (.17%)
New Europe Fund................ $ 1,630,288 (4.72%) $ 298,375 (3.82%)
All-Asia Fund.................. $ 349,468 (11.58%) $ 3,881 (2.09%)
Global Small Cap Fund.......... $ 922,746 (17.87%) $ 327,084 (23.25%)
Income Builder Fund............ $ 224,734 (11.25%) $1,507,457 (2.35%)
Strategic Balanced Fund........ $ 759,314 (2.04%) $ 219,442 (5.34%)
Balanced Shares................ $ 965,505 (6.40%) $ 262,338 (5.14%)
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>
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 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.
45
<PAGE>
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.
- --------------------------------------------------------------------------------
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
46
<PAGE>
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 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.
47
<PAGE>
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."
48
<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>
- --------------------------------------------------------------------------------
Subscription Application
- --------------------------------------------------------------------------------
Alliance Stock Funds
(see instructions at the front of the application)
- --------------------------------------------------------------------------------
1. Your Account Registration (Please Print)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
[_] 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
</TABLE>
- --------------------------------------------------------------------------------
2. Address
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
---------------------------------------------------------------------------------------------------
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
</TABLE>
+++ +++
+ +
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 Sales Dollar (Contingent Deferred Dollar (Asset-based Dollar
Charge) Amount Sales Charge) Amount Sales 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)
------------------------------------------------------
DEALER USE ONLY
to be purchased with the enclosed check or draft for $ __________ Wire Confirm No.:
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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 $50,000 per check. 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 next 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
- ---------------------------------------- -------------- ----------------------
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 GLOBAL SMALL CAP FUND, INC.
(LOGO)(R)
________________________________________________________________
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
November 1, 1995
_________________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus for the Fund dated November 1, 1995. 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...............................
Management of the Fund................................
Expenses of the Fund..................................
Portfolio Transactions................................
Purchase of Shares....................................
Redemption and Repurchase of Shares...................
Shareholder Services..................................
Net Asset Value.......................................
Dividends, Distributions and Taxes....................
General Information...................................
Report of Independent Auditors and
Financial Statements................................
___________________________
(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 Global Small Cap Fund, Inc. (the "Fund") are not
"fundamental policies" and, therefore, may be changed by the
Board of Directors without a shareholder vote. However, the Fund
will not change its investment policies without contemporaneous
written notice to its shareholders. The Fund's investment
objective may not be changed without shareholder approval. There
can be, of course, no assurance that the Fund will achieve its
investment objective.
Investment Objective
The investment objective of the Fund is to seek long-
term growth of capital through investment in a global portfolio
of the equity securities (i.e., common stocks, rights or warrants
to purchase common stocks and securities convertible into common
stocks) of selected companies with relatively small market
capitalization. Current income is not a consideration. In the
opinion of Alliance Capital Management L.P., the Fund's Adviser
(the "Adviser"), global investing offers opportunities for
superior investment returns, and many smaller companies have the
potential for unusually rapid growth. Investing in smaller
companies and companies in various countries involves both
opportunities and risks that are different from those associated
with investing solely in larger United States companies.
How The Fund Pursues Its Objective
The Fund will select its portfolio investments primarily
from among companies whose individual market capitalizations
would place them (at the time of purchase) in the same size range
as companies in approximately the lowest 20% by market
capitalization of companies that have equity securities listed on
a U.S. national securities exchange or traded in the NASDAQ
system. Based on recent U.S. share prices, the Fund's portfolio
companies typically will have individual market capitalizations
of between approximately $50 million and $1 billion (although the
Fund will be free to invest in smaller capitalization companies
that satisfy the Fund's size standard). Because the Fund applies
the U.S. size standard on a global basis, its investment outside
the U.S. might rank above the lowest 20% by market capitalization
in local markets and, in fact, might in some countries rank among
the largest companies in terms of capitalization.
Under normal market conditions, the Fund will invest at
least 65% of its assets in equity securities of such smaller
2
<PAGE>
capitalization issuers, and such issuers will be 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
companies whose market capitalizations exceed the Fund's size
standard. Equity securities in which the Fund invests may be
listed on a U.S. or foreign exchange or traded over the counter.
Special Investment Considerations. The Adviser believes
that the issuers of smaller capitalization stocks often have
sales and earnings growth rates which exceed those of larger
companies, and that such growth rates may in turn be reflected in
more rapid share price appreciation. However, investing in
smaller capitalization stocks can involve greater risk than is
customarily 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. Also, 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 investing in
securities of larger capitalization companies. Transaction costs
in smaller capitalization stocks may be higher than those of
larger capitalization companies.
The Adviser believes that global investing offers
opportunities for superior investment returns. In recent years,
many economies in Western Europe and elsewhere have grown at a
faster rate than the U.S. economy. A portfolio containing the
securities of companies located in a number of countries may
offer the opportunity for greater capital appreciation than
investment in a portfolio composed only of the securities of U.S.
companies. The Adviser will adjust the Fund's exposure to
particular national economies based on its perception of the most
favorable markets and issuers. The Fund intends to spread
investment risk among the capital markets of a number of
countries and will invest in equity securities of companies based
in at least three, and normally considerably more such countries,
one of which may be the U.S. The percentage of the Fund's assets
invested in securities of companies in a particular country or
denominated in a particular currency will vary in accordance with
the Adviser's assessment of the appreciation potential of such
securities and the strength of that currency. Investing in
securities issued by foreign corporations involves considerations
and possible risks not typically associated with investing in
obligations issued by U.S. corporations. The values of foreign
investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including
withholding taxes, changes in governmental administration or
3
<PAGE>
economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Costs are
incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions are
generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less
subject to governmental supervision than in the United States.
Investments in foreign countries could be affected by other
factors not present in the United States, including
expropriation, confiscatory taxation, lack of uniform accounting
and auditing standards and potential difficulties in enforcing
contractual obligations and could be subject to extended
settlement periods.
The Fund may invest up to 10% of its total assets in
securities for which there is no ready market. The Fund may
therefore not be able to readily sell such securities. While
there may not be securities sales registration requirements
comparable to those under U.S. laws or laws imposing legal
restrictions on resales of securities in many of the countries in
which the Fund may invest, there may be contractual restrictions
on resale of securities.
The Fund has the ability to invest up to 20% of its
total assets in warrants to purchase equity securities issued by
European companies to the extent consistent with the Fund's
investment objective; however, the Fund does not presently intend
to invest more than 10% of its total assets in such warrants.
The warrants in which the Fund may invest are a type of security,
usually issued together with another security of an issuer, that
entitles the holder to buy a fixed amount of common or preferred
stock of such issuer at a specified price for a fixed period of
time (which may be in perpetuity). Generally, warrants are
commonly issued attached to other securities of the issuer as a
method of making such securities more attractive and are usually
detachable and, thus, may be bought or sold separately from the
issued security. Warrants can be a speculative investment and
may be considered more speculative than certain other types of
investments in that they neither entitle a holder to dividends or
voting rights with respect to the securities which may be
purchased nor represent any rights in the assets of the issuing
company. Also, the value of a warrant does not necessarily
change with the value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to the
expiration date. The value of a warrant may decline because of a
decrease in the value of the underlying stock, the passage of
time or a change in perception as to the potential of the
underlying stock, or any combination thereof. If the market
price of the underlying stock is below the exercise price set
forth in the warrant on the expiration date, the warrant will
expire worthless. Warrants are freely transferable and are
4
<PAGE>
generally traded on one or more stock exchanges. The Fund
anticipates that the warrants in which it will invest will have
exercise periods of approximately two to ten years. In addition
to purchasing corporate securities of non-U.S. issuers in
overseas markets, the Fund may invest in American Depository
Receipts, European Depository Receipts or other securities
representing securities of companies based in countries other
than the United States.
For temporary defensive purposes, the Fund may vary from
its investment policy during periods in which conditions in
securities markets or other economic or political conditions
warrant. In such circumstances, the Fund will be able to invest
without limit in large capitalization companies or reduce its
position in equity securities and increase its position in debt
securities, which may include short-term U.S. Government
securities and U.S. dollar - or foreign currency-denominated
short-term indebtedness (including commercial paper), cash
equivalents and fixed income securities issued or guaranteed by
governmental entities, or by companies or supranational
organizations (e.g., International Bank for Reconstruction and
Development and the European Community) rated AA or better by
Standard & Poor's Corporation or Aa or better by Moody's
Investors Service, Inc. or if not so rated, of equivalent
investment quality as determined by the Adviser. Apart from
periods of defensive investment, the Fund may also at any time
temporarily invest funds awaiting reinvestment or held as
reserves for dividends and other distributions to shareholders in
U.S. dollar-denominated money market instruments.
Additional Investment Practices And Policies
The following additional investment policies supplement
those set forth above.
Options. In seeking to attain capital growth, the Fund
may supplement customary investment practices by writing and
purchasing call options listed on one or more U.S. or foreign
securities exchanges and purchasing listed put options, including
put options on market indexes. A put option gives the buyer of
such option, upon payment of a premium, the right to deliver a
specified number of shares of a stock 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
number of shares of a specified stock on or before a fixed date,
at a predetermined price, usually the market price at the time
the contract is negotiated. Prior to the expiration of the
option, the seller (the "writer") of the option has an obligation
to sell the underlying security to the holder of the option at
the exercise price regardless of the market price of the security
5
<PAGE>
at the time the option is exercised. The premium received by the
Fund is recorded as a liability and is subsequently adjusted to
the current market value of the option written. Premiums
received from writing options which expire unexercised are
treated by the Fund on the expiration date as realized capital
gains. The difference between the premium and the amount paid
upon executing a closing purchase transaction, including
brokerage commissions, is also treated as a gain, or if the
premium is less than the amount paid for the closing purchase
transaction, as a loss. If a call option is exercised, the
premium is added to the proceeds from the sale in determining
whether the Fund has realized a gain or loss.
Writing and purchasing options are highly specialized
activities and entail greater than ordinary investment risks.
The Fund will not write a call option unless the Fund at all
times during the option period owns either (a) the optioned
securities, or securities convertible into or carrying rights to
acquire the optioned securities, or (b) an offsetting call option
on the same securities.
It is the Fund's policy not to write a call option if
the premium to be received by the Fund in connection with such
option would not produce an annualized return of at least 15% of
the then current market value of the securities subject to option
(without giving effect to commissions, stock transfer taxes and
other expenses of the Fund which are deducted from premium
receipts). The Fund will also 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. The Fund will not sell any call option if
such sale would result in more than 10% of the Fund's assets
being committed to call options written by the Fund which, at the
time of sale by the Fund, have a remaining term of more than 100
days. The aggregate cost of all outstanding options purchased
and held by the Fund will at no time exceed 10% of the Fund's
total assets.
In the event the option is exercised, the Fund will be
obligated to sell stocks below the current market price. The
Fund's potential for gain is limited to the difference between
the exercise price plus the premium less the cost of the
security. Alternatively, the option's position could be closed
out by purchasing a like option. It is possible, although
considered unlikely, that the Fund might be unable to execute
such a closing purchase transaction. If the price of a security
declines below the amount to be received from the exercise price
less the amount of the call premium received and if the option
could not be closed, the Fund would hold a security which might
otherwise have been sold to protect against depreciation. In
6
<PAGE>
addition, the Fund's portfolio turnover may increase to the
extent that the market price of the underlying securities covered
by call options written by the Fund increases and the Fund has
not entered into a closing purchase transaction.
If an option purchased by the Fund expires without being
exercised, its premium would be lost by the Fund.
Options on Market Indexes. Options on securities
indexes are similar to options 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.
Through the purchase of listed index options, the Fund
could achieve many of the same objectives as through the use of
options on individual securities. Price movements in the Fund's
portfolio securities probably will not correlate perfectly with
movements in the level of the index and, therefore, the Fund
would bear a risk of loss on index options purchased by it if
favorable price movements of the hedged portfolio securities do
not equal or exceed losses on the options or if adverse price
movements of the hedged portfolio securities are greater than
gains realized from the options.
Restricted Securities. Where registration is required,
the Fund may be obligated to pay all or part of the registration
expense, and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to
sell a security under an effective registration statement. If,
during such a period adverse market conditions were to develop,
the Fund might obtain a less favorable price than prevailed when
it decided to sell. Restricted securities will be valued in such
manner as the Board of Directors of the Fund, in good faith,
deems appropriate to reflect their fair market value.
Currency Hedging Techniques. The Fund may engage in
various portfolio strategies to hedge its portfolio against
currency risks. These strategies include the use of forward
foreign currency transactions, currency options and futures and
options on such futures. The Fund may enter into such
transactions only in connection with hedging strategies. While
the Fund's use of hedging strategies is intended to reduce the
risk of declines in the net asset value of Fund shares, there can
be no assurance that the Fund's hedging transactions will be
effective. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not
entered into such hedging transactions. Furthermore, the Fund
7
<PAGE>
will only engage in hedging activities from time to time and may
not necessarily be engaging in hedging activities when movements
in the currency exchange rates occur.
Although certain risks are involved in forward, futures
and options transactions, the Adviser believes that, because the
Fund will only engage in these transactions for hedging purposes,
the forward, futures and options portfolio strategies of the Fund
will not subject the Fund to the risks frequently associated with
the speculative use of futures transactions.
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 other currencies. Generally, the foreign exchange
transactions of the Fund will be conducted on a spot, i.e., cash,
basis at the spot rate for purchasing or selling currency
prevailing in the foreign exchange market. Under normal market
conditions, this rate differs from the prevailing exchange rate
in an amount generally less than one-tenth of one percent due to
the costs of converting from one currency to another. However,
the Fund has authority to deal in forward foreign exchange
between currencies of the different countries in whose securities
it will invest as a hedge against possible variations in the
foreign exchange rates between these currencies. A forward
contract is an obligation to purchase or sell a specific currency
for an agreed price at a future date (up to one year) which is
individually negotiated and privately traded by currency traders
and their customers. The Fund's dealings in forward contracts
will be limited to hedging involving either specific transactions
or portfolio positions. Transaction hedging is the purchase or
sale of forward contracts with respect to specific receivables or
payables of the Fund accruing in connection with the purchase and
sale of its portfolio securities or the payment of dividends and
distributions by the Fund. Position hedging is the sale of
forward contracts with respect to portfolio security positions
denominated or quoted in such foreign currency.
The Fund may 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. If the Fund enters into a position
hedging transaction, its custodian bank will place, to the extent
required by applicable law, cash or other liquid assets in a
segregated account of the Fund in an amount equal to the value of
the Fund's total assets committed to the consummation of such
forward contract. If the value of the securities placed in the
segregated account declines, additional cash or other liquid
assets will be placed in the account so that the value of the
8
<PAGE>
account will equal the amount of the Fund's commitment with
respect to such contracts. In addition, the Fund may use such
other methods of "cover" as are permitted by applicable law. The
Fund will not commit more than 15% of the value of its assets to
position hedging contracts.
Forward contracts reduce the potential gain from a
positive change in the relationship between U.S. dollar and other
currencies. The Fund will not enter into a forward contract with
a term of more than one year or if, as a result thereof, more
than 50% of the Fund's total assets would be committed to such
contracts.
Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities denominated in such currency or prevent losses if the
prices of such securities decline. Such transactions also
preclude the opportunity for gain if the value of the hedge
currency should rise. Moreover, it may not be possible for the
Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the
currency at a price above the devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency transactions
varies with such factors as the currency involved, the length of
the contract period and the market conditions then prevailing.
Since transactions in foreign currency exchange are usually
conducted on a principal basis, no fees or commissions are
involved.
Foreign Currency Options, Foreign Currency Futures and
Options on Foreign Currency Futures. The Fund is also authorized
to purchase or sell listed or unlisted foreign currency options,
foreign currency futures and related options on foreign currency
futures as a short or long hedge against possible variations in
foreign exchange rates. Such transactions may be effected with
respect to hedges on non-U.S. dollar denominated securities owned
by the Fund, sold by the Fund but not yet delivered, or committed
or anticipated to be purchased by the Fund. As an illustration,
the Fund may use such techniques to hedge the stated value in
U.S. dollars of an investment in a pound sterling denominated
security. In such circumstances, for example, the Fund may
purchase a foreign currency put option enabling it to sell a
specified amount of pounds for dollars at a specified price by a
future date. To the extent the hedge is successful, a loss in
the value of the pound relative to the dollar will tend to be
offset by an increase in the value of the put option. To offset,
in whole or in part, the cost of acquiring such a put option, the
Fund may also sell a call option which, if exercised, requires it
to sell a specified amount of pounds for dollars at a specified
price by a future date (a technique called a "straddle"). By
selling such call option in this illustration, the Fund gives up
9
<PAGE>
the unlimited opportunity to profit from increases in the
relative value of the pound to the dollar. All options written
by the Fund must be "covered," and must remain "covered" as long
as the Fund is obligated as a writer. For example, where the
Fund sells a call option on a futures or forward contract, it may
cover either by entering into a long position in the same
contract at a price no higher than the strike price of the call
option or by owning the instruments or currency underlying the
futures or forward contracts. The Fund could also cover this
position by holding a separate call option permitting it to
purchase the same futures or forward contract at a price no
higher than the strike price of the call option sold by the Fund.
A put option written by the Fund may be "covered" if the Fund
maintains cash or other liquid assets with a value equal to the
exercise price in a segregated account with its custodian, or
else owns a put on the same contract as the put written where the
exercise price of the put held is equal or greater than the
exercise price of the put written.
Certain differences exist between these foreign currency
hedging instruments. Foreign currency options provide the holder
thereof the right to buy or sell a currency at a fixed price on a
future date. Listed options are third-party contracts (i.e.,
performance of the parties' obligations is guaranteed by an
exchange or clearing corporation) which are issued by a clearing
corporation, traded on an exchange and have standardized strike
prices and expiration dates. Unlisted options are two-party
contracts and have negotiated strike prices and expiration dates.
The Fund will engage in unlisted transactions involving options
only with member banks of the Federal Reserve System and primary
dealers in United States Government securities or with affiliates
of such banks or dealers which have capital of at least $50
million or whose obligations are guaranteed by an entity having
capital of at least $50 million. The Fund will acquire only
those unlisted options for which management believes the Fund can
receive on each business day at least two independent bids or
offers (one of which will be from an entity other than a party to
the option). A futures contract on a foreign currency is an
agreement between two parties to buy or sell a specified amount
of a currency for a set price on a future date. Certain futures
contracts and options on futures contracts are traded on boards
of trade or futures exchanges. The Fund may enter into such
transactions only in connection with hedging strategies against
variations on exchange rates.
The Fund will not speculate in foreign currency options,
futures or related options. Accordingly, the Fund will not hedge
a currency substantially in excess of (i) the market value of the
securities denominated in such currency which it owns; (ii) the
expected acquisition price of securities which it has committed
or anticipates to purchase which are denominated in such
10
<PAGE>
currency; and (iii) in the case of securities which have been
sold by the Fund but not yet delivered, the proceeds thereof in
its denominated currency. Further, the Fund will segregate in a
segregated account with its custodian bank cash or other liquid
assets having a market value substantially representing any
subsequent decrease in the market value of such hedged security,
less any initial or variation margin held in the account of its
broker. The Fund may not incur potential net liabilities of more
than 33 1/3% of its total assets from foreign currency options,
futures or related options.
Risk Factors in Options, Futures and Currency
Transactions. Utilization of futures transactions involves the
risk of imperfect correlation in movements in the price of
futures contracts and movements in the price of the currencies
which are the subject of the hedge. If the price of the futures
contract moves more or less than the price of the currency, the
Fund will experience a gain or loss which will not be completely
offset by movements in the price of the currencies which are the
subject of the hedge. Unanticipated changes in currency prices
may result in poorer overall performance for the Fund than if it
had not entered into such contract. Transactions in options and
options on futures contracts involve similar risks. The
successful use of such instruments draws upon the Adviser's
special skills with respect to such instruments and usually
depends on the Adviser's ability to forecast currency exchange
rate movements correctly.
Other risks inherent in the use of these forward,
futures and options on futures strategies include: imperfect
correlation between movements in the prices of futures contracts
or options thereon and movements in the exchange rates of the
currencies hedged, the fact that skills and techniques needed to
trade futures contracts and options thereon are different from
those needed to select equity securities, no assurance that a
liquid secondary market will exist for any particular futures
contract or option thereon at any particular time, the fact that
some futures markets have daily price movements limits, and the
possible need to defer closing out of certain futures contracts
and options thereon in order to continue to qualify for
beneficial tax treatment under the Code (which requires the Fund
to limit its gains from the disposition of securities and certain
other investments held for less than three months to no more than
30% of the Fund's annual gross income). There are similar risks
inherent in the use of options on foreign currencies.
Prior to exercise or expiration, an exchange-traded
option position written by the Fund can only be terminated by
entering into a closing purchase or sale transaction. This
requires a secondary market on an exchange for call or put
options of the same series. The Fund will enter into an option
11
<PAGE>
or futures transaction on an exchange only if there appears to be
a liquid secondary market for such options or futures. However,
there can be no assurance that a liquid secondary market will
exist for any particular call or put option or futures contract
at any specific time. Thus, it may not be possible for the Fund
to close a particular option or futures position. The Fund will
acquire only unlisted options for which management believes the
Fund can receive on each business day at least two independent
bids or offers (one of which will be from an entity other than a
party to the option). In the case of a futures position, in the
event of adverse price movements, the Fund would continue to be
required to make daily cash payments of variation margin. In
such situations, if the Fund has insufficient cash, it may have
to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so.
In addition, the Fund may be required to take or make delivery of
the currency underlying the currency futures contracts it holds.
The inability to close options and futures positions also could
have an adverse impact on the Fund's ability to effectively hedge
its portfolio. There is also the risk of loss by the Fund of
margin deposits in the event of the bankruptcy of a broker with
whom the Fund has an open position in the futures contract or
related option.
The exchanges on which the Fund intends to conduct
options transactions have generally established "position limits"
which are limitations governing the maximum number of call or put
options on the same underlying currency (whether or not covered)
which may be written by a single investor, whether acting alone
or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written
on one or more accounts or through one or more brokers).
"Trading limits" are imposed on the maximum number of contracts
which any person may trade on a particular trading day. An
exchange may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or
restrictions. The Adviser does not believe that these position
and trading limits will have any adverse impact on the portfolio
strategies for hedging the Fund's portfolio. On the other hand,
the protections afforded to exchange participants by position and
trading limits are not available with respect to transactions in
unlisted options.
Lending of Portfolio Securities. In order to increase
income, the Fund may from time to time lend portfolio securities
to brokers, dealers and financial institutions and receive
collateral in the form of cash, U.S. Government securities or
bank letters of credit. Under the Fund's procedures, collateral
for such loans must be maintained at all times in an amount equal
to at least 100% of the market value of the loaned securities
(including interest accrued on the loaned securities) adjusted
12
<PAGE>
(marking-to-market) with the borrower each day the securities are
on loan to provide for price fluctuations. The interest accruing
on the loaned securities will be paid to the Fund and the Fund
will have the right, on demand, to call back the loaned
securities. The Fund may pay fees to arrange the loans. The Fund
will neither lend portfolio securities in excess of 30% of the
value of its total assets nor lend its portfolio securities to
any officer, director, employee or affiliate of the Fund or the
Adviser.
While such 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 not lend its portfolio securities if such loans are not
permitted by the laws or regulations of any state within which
its shares are qualified for sale. Loans will be subject to
termination by the Fund in the normal settlement time, currently
five business days after notice, or by the borrower on one day's
notice. Although voting rights may pass with the loaned
securities, if a material event affecting the investment is to be
voted on,the loan must be terminated and the securities voted by
the Fund. Borrowed or equivalent securities must be returned
when the loan is terminated. Any gain or loss in the market
price of the borrowed securities that occurs during the term of
the loan inures to the Fund and its shareholders. The Fund may
pay reasonable finders', borrowers', administrative, and
custodial fees in connection with a loan. The Board of
Directors will monitor the Fund's lending of portfolio
securities.
ADRs and EDRs. In addition to purchasing corporate
securities of non-U.S. issuers in overseas securities markets,
the Fund may invest in American Depository Receipts (ADRs),
European Depository Receipts (EDRs) or other securities
representing securities of companies based in countries other
than the United States. Transactions in these securities may not
necessarily be settled in the same currency as transactions in
the securities into which they represent. Generally, ADRs, in
registered form, are designed for use in the U.S. securities
markets and EDRs, in bearer form, are designed for use in
European securities markets.
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
long-term capital gains treatment upon their sale and not for
trading purposes. However, it is also the Fund's policy to sell
any security whenever, in the judgment of the Fund's Adviser, its
appreciation possibilities have been substantially realized or
13
<PAGE>
the business or market prospects for such security have
deteriorated, irrespective of the length of time that such
security has been held. This policy may result in the Fund
realizing short-term capital gains or losses on the sale of
certain securities. See "Dividends, Distributions and Taxes." It
is anticipated that the Fund's rate of portfolio turnover will
approximate 100% in future years. A 100% annual turnover rate
would occur, for example, if all the stocks in the Fund's
portfolio were replaced within a period of one year. A portfolio
turnover rate approximating 100% involves correspondingly greater
brokerage commission expenses than would a lower rate, which
expenses must be borne by the Fund and its shareholders.
The annual portfolio turnover rate for the Fund for the
fiscal year ended September 30, 1993, fiscal period ended July
31, 1994 and the fiscal year ended July 31, 1995 were 97%, 78%
and 128%, respectively.
Certain Fundamental Investment Policies. The following
restrictions may not be changed without shareholder approval,
which means the affirmative vote of the holders of(a) 67% or more
of the shares represented at a meeting at which more than 50% of
the outstanding shares are represented or (b) more than 50% of
the outstanding shares, whichever is less. Whenever any
investment restriction states a maximum percentage of the Fund's
assets which may be invested in any security or other asset, it
is intended that such maximum percentage limitation be determined
immediately after and as a result of the Fund's acquisition of
such securities or other assets. Accordingly, any later increase
or decrease in percentage beyond the specified limitation
resulting from a change in values or net assets will not be
considered a violation.
The 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 value of the Fund's total
assets may be invested without regard to such 5% and 10%
limitations;
(ii) invest 25% or more of the value of its total
assets in the same industry; this restriction does not
apply to securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, but will
apply to foreign government obligations unless the U.S.
14
<PAGE>
Securities and Exchange Commission permits their
exclusion;
(iii) borrow money except from banks for emergency
or temporary purposes in an amount not exceeding 5% of
the value of the total assets of the Fund;
(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 ("short
sales against the box") and unless not more than 5% of
the Fund's net assets (taken at market value) is held as
collateral for such sales at any one time;
(v) purchase a security (unless the security is
acquired pursuant to a plan of reorganization or an
offer of exchange) if, as a result, the Fund would own
any securities of an open-end investment company or more
than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the
value of the Fund's total assets would be invested in
securities of any closed-end investment company or more
than 10% of such value in closed-end investment
companies in the aggregate;
(vi) invest in companies for the purpose of
exercising control;
(vii) purchase or sell real estate, except that it
may purchase and sell securities of companies which deal
in real estate or interests therein;
(viii) purchase or sell commodities or commodity
contracts (except foreign currencies, foreign currency
options and futures and forward contracts or contracts
for the future acquisition or delivery of foreign
currencies and related options on futures contracts and
other similar contracts);
(ix) invest in interests in oil, gas, or other
mineral exploration or development programs, except that
it may purchase and sell securities of companies that
deal in oil, gas or other mineral exploration or
development programs;
15
<PAGE>
(x) purchase securities on margin, except for
such short-term credits as may be necessary for the
clearance of transactions; or
(xi) act as an underwriter of securities, except
that the Fund may acquire securities in private
placements under circumstances in which, if such
securities were sold, the Fund might be deemed to be an
underwriter within the meaning of the Securities Act of
1933, as amended.
In addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in
certain states, the Fund may not invest in mineral leases nor may
the Fund invest in real estate limited partnerships.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
Adviser
The Adviser, a New York Stock Exchange listed company
with principal offices at 1345 Avenue of the Americas, New York,
New York 10105, has been retained under a management agreement
(the "Management Agreement") to provide investment advice and, in
general, to conduct the management and investment program of the
Fund under the supervision and control of the Fund's Board of
Directors.
The Adviser is a leading international investment
manager supervising client accounts with assets as of September
30, 1995 of more than $140 billion (of which approximately $44
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 September 30,
1995, 29 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,350
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 105 separate
investment portfolios managed by the Adviser currently have more
than two million shareholders.
16
<PAGE>
Alliance Capital Management Corporation ("ACMC")*, the
sole general partner of, and the owner of a 1% general
partnership interest in the Adviser, is an indirect wholly- owned
subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of The
Equitable Companies Incorporated ("ECI"), a holding company
controlled by AXA, a French insurance holding company. As of
June 30, 1995, ACMC and Equitable Capital Management Corporation
("ECMC"), 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 June 30, 1995, approximately 33% and 8% of the
Units were owned by the public and employees of the Adviser and
its subsidiaries, respectively, including employees of the
Adviser who serve as Directors of the Fund.
AXA owns approximately 60% of the outstanding voting
shares of common stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations are comprised of
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities in France, the United States, the United Kingdom,
Canada and other countries, principally in Europe. AXA is also
engaged in asset management, investment banking and brokerage,
real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, as of
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
____________________
* For purposes of this Statement of Additional Information, ACMC
refers to Alliance Capital Management Corporation, the sole
general partner of the Investment Adviser, and to the predecessor
general partner of the Investment Adviser of the same name.
17
<PAGE>
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.
Under the Management Agreement, the Adviser furnishes
advice and recommendations with respect to the Fund's portfolio
of securities and investments and provides persons satisfactory
to the Board of Directors to act as officers and employees of the
Fund. Such officers and employees, as well as certain Directors
of the Fund may be employees of the Adviser or its affiliates.
The Adviser is, under the Management Agreement,
responsible for certain expenses incurred by the Fund, including,
for example, the costs of clerical and accounting assistance to
the Directors and expenses of office rental. The Fund has, under
the Management Agreement, assumed the obligation for payment of
all of its other expenses.
For the services rendered by the Adviser under the
Management Agreement, the Fund pays a monthly fee to the Adviser
at the annual rate of 1.00% of the average daily net assets of
the Fund during the month. The Fund may utilize personnel
employed by the Adviser or by affiliates of the Adviser.
The Management Agreement provides that the Adviser will
reimburse the Fund for its total expenses (exclusive of interest,
taxes, brokerage commissions and extraordinary expenses), to the
extent total expenses exceed the most restrictive annual expense
limitation prescribed by any state in which the Fund's shares are
registered for sale. The Fund believes that presently the most
restrictive expense ratio limitation imposed by any state is 2.5%
of the first $30 million of its 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. As of July 31,
1995, such reimbursement amounted to $46,816.
At their Regular Meeting held on July 22, 1994, the
Board of Directors, including a majority of the Directors who are
not "interested persons" as defined in the 1940 Act, voted
unanimously to a change in the fiscal year end from September 30
to July 31. In this regard, for the fiscal year ended
September 30, 1993, the fiscal period ended July 31, 1994 and
fiscal year ended July 31, 1995, the Adviser received from the
Fund advisory fees of $626,921, $578,879 and $640,582
respectively.
18
<PAGE>
The Management Agreement became effective on July 22,
1992. The Management Agreement was approved by the unanimous
vote, cast in person, of the Fund's Directors (including the
Directors who are not parties to the Management Agreement or
interested persons, as defined in the 1940 Act, of any such
party) at a meeting called for the purpose and held on
October 17, 1991. At a meeting held on June 11, 1992, a majority
of the outstanding voting securities of the Fund approved the
Management Agreement.
The Management Agreement must be approved each year
either by (a) a majority vote of the Board of Directors of the
Fund or (b) a majority vote of the outstanding voting securities
of the Fund, and, in either case, by majority vote of the
Directors who are neither parties to the Management Agreement nor
"interested persons" of any such party (as defined by the 1940
Act), cast in person at a meeting called for the purpose of
voting on such approval. Any changes in the terms of the
Management Agreement must be approved by the shareholders. Most
recently, the continuance of the Management Agreement until
September 30, 1996 was approved by a vote, cast in person, of the
Directors, including a majority of the Directors who were not
parties to the Management Agreement or "interested persons" of
any such party, at a meeting called for that purpose on July 21,
1995.
The Management Agreement automatically terminates upon
its assignment. In addition, the Management Agreement is
terminable at any time without penalty by the Board of Directors
of the Fund or by vote of a majority of the Fund's outstanding
voting securities on 60 days written notice to the Adviser or by
the Adviser on any January 1 on 60 days written notice to the
Fund. The term "majority of the Fund's outstanding voting
securities" as used above means (i) 67% or more of the
outstanding shares present at a meeting, if the holders of more
than 50% of the outstanding shares of the Fund are represented at
the meeting or (ii) more than 50% of the outstanding shares of
the Fund, whichever is less.
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
19
<PAGE>
Adviser (including the Fund) are purchasing or selling the same
security on a given day from the same broker-dealer, such
transactions may be averaged as to price.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to ACM Institutional Reserves, Inc.,
AFD Exchange Reserves, Alliance All-Asia Investment Fund, Inc.,
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 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 to ACM Government Income Fund, Inc., ACM
Government Securities Fund, Inc., ACM Government Spectrum Fund,
Inc., ACM Government Opportunity Fund, Inc., ACM Managed Income
Fund, Inc., ACM Managed Dollar Income Fund, Inc., ACM Municipal
Securities Income Fund, Inc., Alliance All-Market Advantage Fund,
Inc., Alliance Global Environment Fund, Inc., Alliance World
Dollar Government Fund, Inc., Alliance World Dollar Government
Fund II, Inc., Alliance Global Privatization Fund, Inc., The
Austria Fund, Inc., The Korean Investment Fund, Inc., The
Southern African Fund and The Spain Fund, Inc., all registered
closed-end investment companies.
Directors and Officers
The Directors and principal officers of the Fund and
their primary occupations during the past five years are set
forth below. Unless otherwise specified the address of each of
the following persons is at 1345 Avenue of the Americas, New
York, New York 10105. Each such Director and officer is also a
trustee, director or officer of other registered investment
companies sponsored by the Adviser.
20
<PAGE>
Directors
JOHN D. CARIFA,* 50, - Chairman of the Board of
Directors, is the President and Chief Operating Officer and a
Director of ACMC, with which he has been associated since prior
to 1990.
RUTH BLOCK, 64, - was formerly Executive Vice President
and Chief Insurance Officer of The Equitable Life Assurance
Society of the United States ("Equitable"). She is a Director of
Ecolab Incorporated (specialty chemicals) and Amoco Corporation
(oil and gas). Her address is Box 4653, Stamford, Connecticut,
06903.
DAVID H. DIEVLER, 65, was formerly a Senior Vice
President of ACMC, with which he was associated since prior to
1990 through 1994. He is currently an independent consultant.
His address is P.O. Box 167, Spring Lake, New Jersey, 07762.
JOHN H. DOBKIN, 53, has been the President of Historic
Hudson Valley (historic preservation) since 1990. Previously, he
was Director of the National Academy of Design. From 1987 to
1992, he was a Director of ACMC. His address is 105 West 55th
Street, New York, New York, 10019.
WILLIAM H. FOULK, JR., 63, is an investment Advisor and
Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, since
1986. His address is 2 Hekma Road, Greenwich, Connecticut,
06831.
DR. JAMES M. HESTER, 71, - is President of the Harry
Frank Guggenheim Foundation and a Director of Union Carbide
Corporation, with which he has been associated since prior to
1990. He was formerly President of New York University, the New
York Botanical Garden and Rector of the United Nations
University. His address is 45 East 89th Street, New York, New
York, 10128.
CLIFFORD L. MICHEL, 56, - is a partner in the law firm
of Cahill Gordon & Reindel, with which he has been associated
since prior to 1990. He is Chief Executive Officer of Wenonah
Development Company (investments) and Director of Placer Dome,
Inc., and Faber-Castell Corporation (writing products). His
address is 80 Pine Street, New York, New York, 10005.
_______________
* An "interested person" of the Fund as defined in the investment
Company Act of 1940.
21
<PAGE>
HENRY UGARTE - 76, has been a private investor and a
management consultant since prior to 1990. His address is 33735
Madera de Playa, Temecula, California, 92390.
Officers
JOHN D. CARIFA, Chairman and President, see Biography
above.
ALDEN M. STEWART, Senior Vice President - Investments,
49, has been an Executive Vice President of ACMC since July,
1993. Prior thereto he was associated with ECMC.
RANDALL E. HAASE, Vice President, 32, has been a Vice
President of ACMC since July, 1993. Prior thereto he was
associated with ECMC.
TIMOTHY D. RICE, Vice President, 28, is a Vice President
of ACMC with which he has been associated since prior to 1990.
RONALD L. SIMCOE, Vice President, 50, has been a Vice
President of ACMC since July, 1993. Prior thereto he was
associated with ECMC.
THOMAS BARDONG, Vice President, 50, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1990.
EDMUND P. BERGAN, JR., Secretary, 45, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") with which he has been associated 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.
DOMENICK PUGLIESE, Assistant Secretary, 34, is a Vice
President and Associate General Counsel of AFD with which he has
been associated since May 1995. Previously, he was Vice
President and Counsel of Concord Holding Corporation since 1994,
Vice President and Associate General Counsel of Prudential
Securities since 1991 and an associate with Battle Fowler since
prior to 1990.
PATRICK J. FARRELL, Controller, 35, is a Vice President
of AFS, with which he has been associated since prior to 1990.
The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended July 31, 1995, the
aggregate compensation paid to each of the Directors during
22
<PAGE>
calendar year 1994 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies in the Alliance Fund Complex with respect to
which each of the Directors serves as a director or trustee, are
set forth below. Neither the Fund nor any other fund in the
Alliance Fund Complex provides compensation in the form of
pension or retirement benefits to any of its directors or
trustees. Each of the Directors is a director or trustee of one
or more other registered investment companies in the Alliance
Fund Complex.
Total Compensa- Total Number of
tion From the Fund in the
the Alliance Alliance Fund
Aggregate Fund Complex, Complex, Including
Name of Director Compensation Including the Director is a
of the Fund from the Fund the Fund Director or Trustee
________________ _____________ _______________ ___________________
John D. Carifa $-0- $-0- 49
Ruth Block $5,000 $157,000 36
David H. Dievler $3,750 $-0- 42
John H. Dobkin $5,000 $110,750 29
William H. Foulk, Jr. $5,000 $141,500 30
Dr. James M. Hester $5,000 $154,500 37
Clifford L. Michel $5,000 $120,500 36
Henry Ugarte $3,000 $13,000 4
As of October 13, 1995, the Directors and officers of
the Fund as a group owned less than 1% of the shares of the Fund.
________________________________________________________________
EXPENSES OF THE FUND
________________________________________________________________
Distribution Services Agreement
The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Fund directly or indirectly to pay
expenses associated with the distribution of its shares in
accordance with a plan of distribution which is included in the
Agreement and has been duly adopted and approved in accordance
with Rule 12b-1 adopted by the Securities and Exchange Commission
under the 1940 Act (the "Rule 12b-1 Plan").
23
<PAGE>
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 and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and/or distribution services
fee provide for the financing of the distribution of the Fund's
shares.
Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the purposes
for which such expenditures were made to the Directors of the
Fund for their review on a quarterly basis. Also, the Agreement
provides that the selection and nomination of Directors who are
not interested persons of the Fund (as defined in the 1940 Act)
are committed to the discretion of such disinterested Directors
then in office.
The Agreement became effective on July 22, 1992 and was
amended as of April 30, 1993 to permit the distribution of an
additional class of shares, Class C shares. The amendment to the
Agreement was approved by the unanimous vote, cast in person, of
the disinterested Directors at a meeting called for that purpose
and held on February 23, 1993, and by the initial holder of
Class C shares of the Fund on April 30, 1993.
The Adviser may, from time to time and from its own
funds or such other resources as may be permitted by rules of the
Securities and Exchange Commission, make payments for
distribution services to the Principal Underwriter; the latter
may in turn pay part or all of such compensation to brokers or
other persons for their distribution assistance.
During the Fund's fiscal year ended July 31, 1995, with
respect to Class A shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $174,375, which constituted approximately .30%, of the average
daily net assets attributable to the Class A Shares during the
year and the Adviser made payments from its own resources, as
described above, aggregating $5,486. Of the $179,860 paid by the
Fund and the Adviser under the Plan with respect to Class A
shares, $16,315 was spent on advertising, $4,923 on printing and
24
<PAGE>
mailing of prospectuses for persons other than current
shareholders, $97,065 for compensation to broker-dealers and
other financial intermediaries (including $34,990 to the Fund's
Principal Underwriter), $639 for compensation to sales personnel
and $60,918 was spent on printing of sales literature, travel,
entertainment, due diligence and other promotional expenses.
During the Fund's fiscal year ended July 31, 1995, with
respect to Class B shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $47,620, which constituted approximately 1.00% of the average
daily net assets attributable to Class B Shares during the year
and the Adviser made payments from its own resources, as
described above, aggregating $296,133. Of the $343,753 paid by
the Fund and the Adviser under the Plan with respect to Class B
shares, $34,485 was spent on advertising, $21,666 on printing and
mailing of prospectuses for persons other than current
shareholders, $147,558 for compensation to broker-dealers and
other financial intermediaries (including $76,254 to the Fund's
Principal Underwriter), $1,395 for compensation to sales
personnel and $123,321 was spent on printing of sales literature,
travel, entertainment, due diligence and other promotional
expenses.
During the Fund's fiscal year ended July 31, 1995, with
respect to Class C shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $12,795 which constituted approximately 1.00%, annualized, of
the average daily net assets attributable to the Class C shares
during the year and the Adviser made payments from its own
resources, as described above, aggregating $125,833. Of the
$138,628 paid by the Fund and the Adviser under the Plan with
respect to Class C shares, $18,001 was spent on advertising,
$6,648 on printing and mailing of prospectuses for persons other
than current shareholders, $56,414 for compensation to broker-
dealers and other financial intermediaries (including $43,680 to
the Fund's Principal Underwriter) and $879 for compensation to
sales personnel and $56,686 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.
The Agreement will continue in effect for successive
twelve-month periods (computed from each October 1) provided,
however, that such continuance is specifically approved at least
annually by the Directors, or by vote of the holders of a
majority of the Fund's outstanding voting securities (as defined
in the 1940 Act), of that class, and in either case, by a
majority of the Directors 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
25
<PAGE>
plan or any agreement related thereto. Most recently the
continuance of the Agreement was approved until September 30,
1996 by a vote, cast in person, of the Board of Directors,
including a majority of the Directors who are not "interested
persons", as defined in the 1940 Act, at their Regular Meeting
held on July 21, 1995.
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 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.
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, Class B 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
or the Class C shares reflecting the additional costs associated
with the Class B contingent deferred sales charge. During the
fiscal year ended July 31, 1995, the Fund paid Alliance Fund
Services, Inc. $159,995 for transfer agency services.
26
<PAGE>
________________________________________________________________
PORTFOLIO TRANSACTIONS
________________________________________________________________
Subject to the general supervision and control of the
Directors of the Fund, the Adviser makes the Fund's portfolio
decisions and determines the broker to be used in each specific
transaction with the objective of negotiating best price and
execution. When consistent with the objective of obtaining best
execution, brokerage may be directed to persons or firms
supplying investment information to the Adviser. There may be
occasions where the transaction cost charged by a broker may be
greater than that which another broker may charge if the Fund
determines in good faith that the amount of such transaction cost
is reasonable in relation to the value of the brokerage, research
and statistical services provided by the executing broker.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking
best execution, the Fund may consider sales of shares of the Fund
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
Neither the Fund nor the Adviser has entered into
agreements or understandings with any brokers regarding the
placement of securities transactions because of research or
statistical services they provide. To the extent that such
persons or firms supply investment information to the Adviser for
use in rendering investment advice to the Fund, such information
may be supplied at no cost to the Adviser. While it is
impossible to place an actual dollar value on such investment
information, its receipt by the Adviser probably does not reduce
the overall expenses of the Adviser to any material extent.
The investment information provided to the Adviser is of
the type described in Section 28(e)(3) of the Securities Exchange
Act of 1934 and is designed to augment the Adviser's own internal
research and investment strategy capabilities. Research and
statistical services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its client accounts but not all such services may
be used by the Adviser in connection with the Fund.
The Fund may deal in some instances in securities which
are not listed on a national stock exchange but are traded in the
over-the-counter market. The Fund may also purchase listed
securities through the third market, i.e., from a dealer which is
not a member of the exchange on which a security is listed.
Where transactions are executed in the over-the-counter market or
third market, the Fund will seek to deal with the primary market
27
<PAGE>
makers; but when necessary in order to obtain the best price and
execution, it will utilize the services of others. In all cases,
the Fund will attempt to negotiate best execution.
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.
During the fiscal year ended September 30, 1993, the
fiscal period ended July 31, 1994 and the fiscal year ended
July 31, 1995, the Fund incurred brokerage commissions amounting
in the aggregate to $156,113, $107,065 and $259,471 respectively.
During the fiscal year ended September 30, 1993, the fiscal
period ended July 31, 1994 and the fiscal year ended July 31,
1995, brokerage commissions amounting in the aggregate to $1,010,
$-0- and $-0- respectively, were paid to Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") (an affiliate of the
Adviser) and brokerage commissions amounting in the aggregate to
$1,681, $-0- and $-0-, respectively, were paid to brokers
utilizing the Pershing Division of DLJ. During the fiscal year
ended July 31, 1995, the brokerage commissions paid to DLJ
constituted -0-% of the Fund's aggregate brokerage commissions
and the brokerage commissions paid to brokers utilizing the
Pershing Division of DLJ constituted -0-% of the Fund's aggregate
brokerage commissions. During the fiscal year ended July 31,
1995, of the Fund's aggregate dollar amount of brokerage
transactions involving the payment of commissions, -0-% were
effected through DLJ and -0-% were effected through brokers
utilizing the Pershing Division of DLJ. During the fiscal year
ended July 31, 1995, transactions in portfolio securities of the
Fund aggregating $164,237,381 with associated brokerage
commissions of approximately $246,497 were allocated to persons
or firms supplying research services to the Fund or the Adviser.
________________________________________________________________
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."
28
<PAGE>
General
Shares of the Fund will be offered on a continuous basis
at a price equal to their net asset value plus an initial sales
charge at the time of purchase (the "initial sales charge
alternative"), with a contingent deferred sales charge (the
"deferred sales charge alternative"), or without any initial or
contingent deferred sales charge (the "asset-based sales charge
alternative"), as described below. Shares of the Fund are
offered on a continuous basis through (i) investment dealers that
are members of the National Association of Securities Dealers,
Inc. and have entered into selected dealer agreements with the
Principal Underwriter ("selected dealers"), (ii) depository
institutions and other financial intermediaries or their
affiliates, that have entered into selected agent agreements with
the Principal Underwriter ("selected agents"), or (iii) the
Principal Underwriter. The minimum for initial investments is
$250; subsequent investments (other than reinvestments of
dividends and capital gains distributions in shares) must be in
the minimum amount of $50. As described under "Shareholder
Services," the Fund offers an automatic investment program and a
403(b)(7) retirement plan which permit investments of $25 or
more. The subscriber may use the Subscription Application found
in the Prospectus for his or her initial investment. Sales
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B or Class C shares.
Investors may purchase shares of the Fund in the United
States either through selected dealers or agents or directly
through the Principal Underwriter. Shares may also be sold in
foreign countries where permissible. The Fund may refuse any
order for the purchase of shares. The Fund reserves the right to
suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.
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, as shown in the table below
under "Initial Sales Charge Alternative - Class A Shares." On
each Fund business day on which a purchase or redemption order is
received by the Fund and trading in the types of securities in
which the Fund invests might materially affect the value of Fund
shares, the per share net asset value is computed 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
29
<PAGE>
circumstances, however, the per share net asset values of the
Class B and Class C shares may be lower than the per share net
asset value of the Class A shares as a result of the daily
expense accruals of the distribution and transfer agency fees
applicable with respect to the Class B and Class C shares. Even
under those circumstances, the per share net asset values of the
three classes eventually will tend to converge immediately after
the payment of dividends, which will differ by approximately the
amount of the expense accrual differential among the classes. A
Fund business day is any weekday, exclusive of national holidays
on which the Exchange is closed and Good Friday. For purposes of
this computation, the securities in the Fund's portfolio are
valued at their current market value determined on the basis of
market quotations or, if such quotations are not readily
available, such other methods as the Directors believe would
accurately reflect fair market value.
The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers or agents, the applicable public offering price
will be the net asset value as so determined, but only if the
selected dealer or agent receives the order prior to the close of
regular trading on the Exchange and transmits it to the Principal
Underwriter prior to its close of business that same day
(normally 5:00 p.m. New York time). The selected dealer or agent
is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to
that day's closing price must be settled between the investor and
the selected 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
30
<PAGE>
telephone purchase request is received before 3:00 p.m. New York
time on a Fund business day, the order to purchase shares is
automatically placed the following Fund business day, and the
applicable public offering price will be the public offering
price determined as of the close of business on such following
business day.
Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.
In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash bonuses or other incentives to dealers or
agents, including Equico Securities, Inc., an affiliate of the
Principal Underwriter, in connection with the sale of shares of
the Portfolio. Such additional amounts may be utilized, in whole
or in part, to provide additional compensation to registered
representatives who sell shares of the Portfolio. On some
occasions, such cash or other incentives will be conditioned upon
the sale of a specified minimum dollar amount of the shares of
the Portfolio 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 Purchase Arrangements
The Fund issues three classes of shares: Class A shares
are sold to investors choosing the initial sales charge
alternative, Class B shares are sold to investors choosing the
deferred sales charge alternative, and Class C shares are sold to
investors choosing the asset-based sales charge alternative. The
three classes of shares each represent an interest in the same
portfolio of investments of the Fund, have the same rights and
are identical in all respects, except that (i) Class A shares
bear the expense of the initial sales charge (or contingent
31
<PAGE>
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.
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. In addition, the Principal Underwriter will reject any
order for more than $5,000,000 for Class C shares.
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, most investors purchasing Class A shares would not
have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
32
<PAGE>
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.
Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
in the case of Class B shares, being subject to a contingent
deferred sales charge for a four-year period. For example, based
on current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee, to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares. This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.
The Directors of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B and Class C shares. On an ongoing basis, the Directors
of the Fund, pursuant to their fiduciary duties under the 1940
Act and state laws, will seek to ensure that no such conflict
arises.
During the Fund's fiscal year ended July 31, 1995,
fiscal period ended July 31, 1994 and fiscal year ended
September 30, 1993, the aggregate amount of underwriting
commissions paid with respect to shares of the Fund were $31,844,
$77,748 and $403,693, respectively. Of that amount, the
Principal Underwriter, received $2,309, $4,456 and $5,614,
respectively, representing that portion of the sales charges paid
on shares of the Fund sold during the year which was not
reallowed to selected dealers or agents. During the Fund's
fiscal year ended July 31, 1995, the Principal Underwriter
received $15,749 in contingent deferred sales charges with
respect to Class B share redemptions.
33
<PAGE>
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for
purchasers choosing the initial sales charge alternative is the
net asset value plus a sales charge, as set forth below.
Sales Discount or
Sales Charge Commission
Charge As % of to Dealers
As % of the or Agents
Net Public As % of
Amount of Amount Offering Offering
Purchase Invested Price Price
_________ ________ _________ ____________
Less than
$100,000. . . 4.44% 4.25% 4.00%
$100,000 but
less than
250,000. . . 3.36 3.25 3.00
250,000 but
less than
500,000. . . 2.30 2.25 2.00
500,000 but
less than
1,000,000* . 1.78 1.75 1.50
____________________
* There is no 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, and such charge will be applied to
redemptions of shares by shareholders who hold both Class A and
Class B shares, as described below under "Deferred Sales Charge
Alternative--Class B Shares." Proceeds from the contingent
deferred sales charge on Class A shares are paid to the Principal
Underwriter and are used by the Principal Underwriter to defray
the expenses of the Principal Underwriter related to providing
distribution-related services to the Fund in connection with the
sales of Class A shares, such as the payment of compensation to
selected dealers and agents for selling Class A shares. With
respect to purchases of $1,000,000 or more made through selected
34
<PAGE>
dealers or agents, the Adviser may, pursuant to the Agreement
described above, pay such dealers or agents from its own
resources a fee of up to .25 of 1% of the amount invested to
compensate such dealers or agents for their distribution
assistance in connection with such purchases.
No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, or (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" (as that term is
defined under "Combined Purchase Privilege" below), except that
an initial sales charge will be imposed on Class A shares issued
in exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge. The Fund receives the entire net asset value of
its Class A shares sold to investors. The Principal
Underwriter's commission is the sales charge shown above less any
applicable discount or commission "reallowed" to selected dealers
and agents. The Principal Underwriter will reallow discounts to
selected dealers and agents in the amounts indicated in the table
above. The Principal Underwriter may, however, elect to reallow
the entire sales charge to selected dealers and agents for all
sales with respect to which orders are placed with the Principal
Underwriter. A selected dealer who receives reallowance in
excess of 90% of such a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933, as amended.
Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund on July 31, 1995.
Net Asset Value per Class A Share at $10.38
July 31, 1995
Per Share Sales Charge - 4.25%
of offering price (4.43% of
net asset value per share) .46
_______
Class A Per Share Offering Price to
the Public $10.84
=======
An investor choosing the initial sales charge
alternative may under certain circumstances be entitled to pay
(i) no initial sales charge (but subject in most cases to a
contingent deferred sales charge) or (ii) a reduced initial sales
35
<PAGE>
charge. The circumstances under which an investor may pay
reduced 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 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
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
36
<PAGE>
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance 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
37
<PAGE>
of the investor into a single "purchase" (see
above).
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the sales charge for the $100,000 initial
purchase would be at the 2.25% rate applicable to a single
$300,000 purchase of shares of the Fund, rather than the 3.25%
rate.
To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.
Statement of Intention. Class A investors may also
obtain the reduced initial sales charges shown in the table above
by means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B and/or
Class C shares) of the Fund or any other Alliance Mutual Fund.
Each purchase of shares under a Statement of Intention will be
made at the public offering price or prices applicable at the
time of such purchase to a single transaction of the dollar
amount indicated in the Statement of Intention. At the
investor's option, a Statement of Intention may include purchases
of shares of the Fund or any other Alliance Mutual Fund made not
more than 90 days prior to the date that the investor signs the
Statement of Intention; however, the 13-month period during which
the Statement of Intention is in effect will begin on the date of
the earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will be necessary to invest
only a total of $60,000 during the following 13 months in shares
of the Fund or any other Alliance Mutual Fund, to qualify for the
3.25% initial sales charge on the total amount being invested
(the initial sales charge applicable to an investment of
$100,000).
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%
38
<PAGE>
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher initial
sales charge applicable to the shares actually purchased if the
full amount indicated is not purchased, and such escrowed shares
will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed shares, whether paid
in cash or reinvested in additional Fund shares, are not subject
to escrow. When the full amount indicated has been purchased,
the escrow will be released. To the extent that an investor
purchases more than the dollar amount indicated on the Statement
of Intention and qualifies for a further reduced sales charge,
the initial sales charge will be adjusted for the entire amount
purchased at the end of the 13- month period. The difference in
the initial sales charge will be used to purchase additional
shares of the Fund subject to the rate of 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 initial sales charge applicable to such
initial purchase of shares of the Fund will be that normally
applicable, under the schedule of the initial sales charges set
forth in this Statement of Additional Information, to an
investment 13 times larger than such initial purchase. The sales
charge applicable to each succeeding monthly purchase will be
that normally applicable, under such schedule, to an investment
equal to the sum of (i) the total purchase previously made during
the 13-month period, and (ii) the current month's purchase
multiplied by the number of months (including the current month)
remaining in the 13-month period. Sales charges previously paid
during such period will not be retroactively adjusted on the
basis of later purchases.
Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A 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
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<PAGE>
or repurchase date. Shares are sold to a reinvesting shareholder
at the net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except
that no loss will be recognized to the extent that the proceeds
are reinvested in shares of the Fund. The reinstatement
privilege may be used by the shareholder only once, irrespective
of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in the Fund to his or her individual retirement account
or other qualified retirement plan account. Investors may
exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of
Additional Information.
Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without any initial sales
charge) and without any contingent deferred sales charge to
certain categories of investors, including: (i) investment
advisory clients of the Adviser or its affiliates; (ii) officers
and present or former Directors of the Fund; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser, the Principal Underwriter, Alliance Fund Services, Inc.
and their affiliates; officers and directors of ACMC, the
Principal Underwriter, Alliance Fund Services, Inc. and their
affiliates; officers, directors and present and full-time
employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively "relatives")
of any such person; or any trust, individual retirement account
or retirement plan account for the benefit of any such person or
relative; or the estate of any such person or relative, if such
shares are purchased for investment purposes (such shares may not
be resold except to the Fund); (iii) certain employee benefit
plans for employees of the Adviser, the Principal Underwriter,
Alliance Fund Services, Inc. and their affiliates; (iv) persons
participating in a fee-based program, sponsored and maintained by
a registered broker-dealer and approved by the Principal
Underwriter, pursuant to which such persons pay an asset- based
fee to such broker-dealer, or its affiliate or agent, for
services in the nature of investment advisory or administrative
services; (v) persons who establish to the Principal
Underwriter's satisfaction that they are investing within such
time period as may be designated by the Principal Underwriter,
proceeds of redemption of shares of such other registered
investment companies as may be designated from time to time by
the Principal Underwriter; and (vi) employer-sponsored qualified
pensions or profit-sharing plans (including Section 401(k)
plans), custodial account maintained pursuant to Section
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403(b)(7) retirement plans and individual retirement accounts
(including individual retirement accounts to which simplified
employee pension (SEP) contributions are made), if such plans or
accounts are established or administered under programs sponsored
by administrators or other persons that have been approved by the
Principal Underwriter.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative
purchase Class B shares at the public offering price equal to the
net asset value per share of the Class B shares on the date of
purchase without the imposition of a sales charge at the time of
purchase. The Class B shares are sold without an initial sales
charge so that the Fund will receive the full amount of the
investor's purchase payment.
Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares which
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions.
To illustrate, assume that on or after November 19, 1993
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
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<PAGE>
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 %
Of Dollar Amount Subject To Charge
________________________________________
Shares purchased Shares purchased
before on or after
Year Since Purchase November 19, 1993 November 19, 1993
___________________ __________________ _________________
First 5.50% 4.00%
Second 4.50% 3.00%
Third 3.50% 2.00%
Fourth 2.50% 1.00%
Fifth 1.50% None
Sixth 0.50% None
In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed, in the case of
Class B shares purchased on or after November 19, 1993, that the
redemption is first of any Class A shares or Class C shares in
the shareholder's Fund account, second of Class B shares held for
over four years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B
shares held longest during the four-year period. 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 charge will not be applied to dollar
amounts representing an increase in the net asset value since the
time of 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-
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1/2, (iii) that had been purchased by present or former Directors
of the Fund, by the relative of any such person, by any trust,
individual retirement account or retirement plan account for the
benefit of any such person or relative, or by the estate of any
such person or relative, or (iv) pursuant to a systematic
withdrawal plan (see "Shareholder Services - Systematic
Withdrawal Plan" below).
Conversion Feature. 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) 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.
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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.
_________________________________________________________________
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 or Class B shares, there is no redemption charge.
Payment of the redemption price will be made within seven days
after the Fund's receipt of such tender for redemption.
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the New York Stock Exchange (the "Exchange") is
closed (other than customary weekend and holiday closings) or
during which the Securities and Exchange Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Securities and Exchange
Commission) exists as a result of which disposal by the Fund of
44
<PAGE>
securities owned by it is not reasonably practicable or as a
result of which it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or for such
other periods as the Securities and Exchange Commission may by
order permit for the protection of security holders of the Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A and Class B shares
will reflect the deduction of the contingent deferred sales
charge, if any. Payment (either in cash or in portfolio
securities) received by a shareholder upon redemption or
repurchase of his shares, assuming the shares constitute capital
assets in his hands, will result in long-term or short-term
capital gains (or loss) depending upon the shareholder's holding
period and basis in respect of the shares redeemed.
To redeem shares of the Fund for which no share
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an institution that is an "eligible guarantor" as
defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended.
Telephone Redemption By Electronic Funds Transfer.
Requests for redemption of shares for which no share certificates
have been issued can also be made by telephone at (800) 221-5672
by a shareholder who has completed the appropriate portion of the
Subscription Application or, in the case of an existing
shareholder, an "Autosell" application obtained from Alliance
Fund Services, Inc. A telephone redemption request must be for
at least $500 and may not exceed $100,000, and must be made
between 9:00 a.m. and 4:00 p.m. New York time on a Fund business
day as defined above. Proceeds of telephone redemptions will be
sent by Electronic Funds Transfer to a shareholder's designated
bank account at a bank selected by the shareholder that is a
member of the NACHA.
Telephone Redemption By Check. Except as noted below,
each Fund shareholder is eligible to request redemption, once in
any 30-day period, of Fund shares by telephone at (800) 221-5672
before 4:00 p.m. New York time on a Fund business day in an
amount not exceeding $50,000. Proceeds of such redemptions are
remitted by check to the shareholder's address of record.
Telephone redemption by check is not available with respect to
shares (i) for which certificates have been issued, (ii) held in
nominee or "street name" accounts, (iii) purchased within 15
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<PAGE>
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 share
certificates, the investor should forward the appropriate share
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.
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<PAGE>
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 B shares), except
that requests placed through selected dealers or agents before
the close of 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 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.
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.
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<PAGE>
_________________________________________________________________
SHAREHOLDER SERVICES
_________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares-- Shareholder Services." The shareholder services set
forth below are applicable to all three classes of shares of the
Fund.
Automatic Investment Program
Investors may purchase shares of the Fund through an
automatic investment program utilizing "pre-authorized check"
drafts drawn on the investor's own bank account. Under such a
program, pre-authorized monthly drafts for a fixed amount (at
least $25) are used to purchase shares through the selected
dealer or selected agent designated by the investor at the public
offering price next determined after the Principal Underwriter
receives the proceeds from the investor's bank. Drafts may be
made in paper form or, if the investor's bank is a member of the
NACHA, in electronic form. If made in paper form, the draft is
normally made on the 20th day of each month, or the next business
day thereafter. If made in electronic form, drafts can be made
on or about a date each month selected by the shareholder.
Investors wishing to establish an automatic investment program in
connection with their initial investment should complete the
appropriate portion of the Subscription Application found in the
Prospectus. Current shareholders should contact Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.
Exchange Privilege
Class A shareholders of the Fund can exchange their
Class A shares for Class A shares of any other Alliance Mutual
Fund that offers Class A shares and for shares of Alliance World
Income Trust, Inc. without the payment of any sales or service
charges. For purposes of applying 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.
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<PAGE>
Class B shareholders of the Fund can exchange their
Class B shares ("original Class B shares") for Class B shares of
any other Alliance Mutual Fund that offers Class B shares ("new
Class B shares") without the payment of any contingent deferred
sales or service charges. For purposes of computing both the
time remaining before the new Class B shares convert to Class A
shares of that fund and the contingent deferred sales charge
payable upon disposition of the new Class B shares, the period of
time for which the original Class B shares have been held is
added to the period of time for which the new Class B shares have
been held. After an exchange, new Class B shares will
automatically convert into Class A shares in accordance with the
conversion schedule applicable to the Alliance Mutual Fund Class
B shares originally purchased for cash, and when redemption
occurs, the contingent deferred sales charge schedule applicable
to the Class B shares originally purchased for cash is applied.
Class C shareholders of the Fund can exchange their
Class C shares for Class C shares any other Alliance Mutual Fund
that offers Class C shares.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date. Exchanges of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for Federal income tax purposes.
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
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<PAGE>
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 following
Fund business day.
Neither the Alliance Funds nor the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
exchanges that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that
telephone requests for exchanges are genuine, including, among
others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to
shareholders. If the Fund did not employ such procedures, it
could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Selected dealers or agents
may charge a commission for handling telephone requests for
exchanges.
The exchange privilege is available only in states where
shares of the Alliance Mutual Funds being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.
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Retirement Plans
The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact Alliance Fund Services,
Inc. at the "Literature" telephone number on the cover of this
Statement of Additional Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals.
If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan investing through
the Alliance Premier Retirement Program reaches $5 million on or
before December 15 in any year, all Class B or C shares of the
Fund held by such plan can be exchanged, 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
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<PAGE>
retirements plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, which serves as custodian or trustee under the retirement
plan prototype forms available from the Fund, charges certain
nominal fees for establishing an account and for annual
maintenance. A portion of these fees is remitted to Alliance
Fund Services, Inc. as compensation for its services to the
retirement plan accounts maintained with the Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact Alliance
Fund Services, Inc.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B or Class C Fund account, a Class A, Class
B or Class C account(s) with one or more other Alliance Mutual
Funds may direct that income dividends and/or capital gains paid
on his or her Class A, Class B or Class C Fund shares be
automatically reinvested, in any amount, without the payment of
any sales or service charges, in shares of the same class of such
other Alliance Mutual Fund(s). Further information can be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the cover
of this Statement of Additional Information. Investors wishing
to establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases shares
of the Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.
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<PAGE>
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 and, except as discussed
below, any applicable contingent deferred sales charge. Shares
acquired with reinvested dividends and distributions will be
liquidated first to provide such withdrawal payments and
thereafter other shares will be liquidated to the extent
necessary, and depending upon the amount withdrawn, the
investor's principal may be depleted. A systematic withdrawal
plan may be terminated at any time by the shareholder or the
Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to the Fund's involuntary redemption provisions. See
"Redemption and Repurchase of Shares -- General." Purchases of
additional shares concurrently with withdrawals are undesirable
because of sales charges when purchases are made. While an
occasional lump-sum investment may be made by a shareholder of
Class A shares who is maintaining a systematic withdrawal plan,
such investment should normally be an amount equivalent to three
times the annual withdrawal or $5,000, whichever is less.
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of 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.
Class B CDSC Waiver for Shares Acquired After July 1,
1995. Under a systematic withdrawal plan, up to 1% monthly, 2%
bi-monthly or 3% quarterly of the value at the time of redemption
of the Class B shares in a shareholder's account acquired after
July 1, 1995 may be redeemed free of any contingent deferred
sales charge (such as shares acquired with reinvested dividends
or distributions) will be redeemed first and will count toward
these limitations. Remaining Class B shares acquired after July
1, 1995 that are held the longest will be redeemed next.
Redemptions of Class B shares acquired after July 1, 1995 in
excess of the foregoing limitations and redemptions of Class B
shares acquired before July 1, 1995 will be subject to any
otherwise applicable contingent deferred sales charge.
53
<PAGE>
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
_________________________________________________________________
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 (currently 4:00
p.m.) following receipt of a purchase or redemption order (and on
such other days as the Directors of the Fund deem necessary in
order to comply with Rule 22c-1 under the 1940 Act), by dividing
the value of the Fund's total assets less its liabilities, by the
total number of the Fund's shares then outstanding. For this
purpose, a Fund's business day is any weekday exclusive of
national holidays on which the Exchange is closed and Good
Friday.
Securities listed or traded on the Exchange or other
United States or foreign securities exchanges are valued at the
last quoted sales prices on such exchanges prior to the time when
assets are valued. Securities listed or traded on certain
foreign exchanges whose operations are similar to the United
States over-the-counter market are valued at the price within the
limits of the latest available current bid and asked prices
deemed best to reflect a fair value. A security which is listed
or traded on more than one exchange is valued at the quotations
on the exchange determined to be the primary market for such
security by the Directors or their delegates. Listed securities
that are not traded on a particular day, and securities regularly
traded in the over-the-counter market, are valued at the price
within the limits of the latest available current bid and asked
prices deemed best to reflect a fair value. In instances where
the price of a security determined above is deemed not to be
representative, the security is valued in such a manner as
prescribed by the Directors to reflect its fair value. All other
assets and securities are valued in a manner determined in good
faith by the Directors to reflect their fair value. For purposes
of determining the Fund's net asset value per share, all assets
and liabilities initially expressed in foreign currencies will be
54
<PAGE>
converted into United States dollars at the mean of the bid and
asked prices of such currencies against the United States dollar
last quoted by any major bank. If such quotations are not
available as of the close of the Exchange, the rate of exchange
will be determined in accordance with policies established in
good faith by the Directors. On an ongoing basis, the Directors
monitor the Fund's method of valuation.
Trading in securities on European and Far Eastern
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each business day
in New York (i.e., a day on which the Exchange is open). In
addition, European or Far Eastern securities trading generally or
in a particular country or countries may not take place on all
business days in New York. Furthermore, trading takes place in
Japanese markets on certain Saturdays and in various foreign
markets on days which are not business days in New York and on
which the Fund's net asset value is not calculated. The Fund
calculates net asset value per share, and therefore effects
purchases and redemptions of its shares, as of the next close of
trading on the Exchange following receipt of a purchase or
redemption order (and on such other days as the Directors of the
Fund deem necessary in order to comply with Rule 22c-1 under the
1940 Act). Such calculation does not take place
contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation.
Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of the
Exchange will not be reflected in the Fund's calculation of net
asset value unless the Fund's Directors deem that the particular
event would materially affect net asset value, in which case an
adjustment will be made.
The Directors may suspend the determination of the
Fund's net asset value (and the offering and sales of shares),
subject to the rules of the Securities and Exchange Commission
and other governmental rules and regulations, at such time when:
(1) the New York Stock Exchange is closed, other than customary
weekend and holiday closing, (2) an emergency exists as a result
of which it is not reasonably practical for the Fund to dispose
of securities owned by it or to determine fairly the value of its
net assets, or (3) for the protection of shareholders, the
Securities and Exchange Commission by
order permits a suspension of the right of redemption or a
postponement of the date of payment on redemption.
The assets belonging to the Class A shares, the Class B
shares and the Class C shares will be invested together in a
single portfolio. The net asset value of each class will be
determined separately by subtracting the accrued expenses and
55
<PAGE>
liabilities allocated to that class from the assets belonging to
that class pursuant to an order issued by the Commission.
_________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_________________________________________________________________
The Fund intends to qualify and elect to be treated as a
"regulated investment company" under Sections 851-855 of the
Internal Revenue Code of 1986, as amended (the "Code"). To so
qualify, the Fund must, among other things, (i) derive at least
90% of its gross income in each taxable year from dividends,
interest, payments with respect to securities loans, gains from
the sale or other disposition of stock or securities or foreign
currency, or certain other income (including but not limited to
gains from options, futures and forward contracts) derived with
respect to its business of investing in stock, securities or
currency; (ii) derive less than 30% of its gross income in each
taxable year from the sale or other disposition of stock,
securities or certain other investments held less than three
months; 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 total value of the Fund's
assets is represented by cash, U.S. Government securities,
securities of other regulated investment companies and other
securities (for this purpose, such other securities will qualify
only if the Fund's investment is limited, in respect of any one
issuer, to an amount not greater than 5% of the Fund's total
assets and 10% of the outstanding voting securities of such
issuer) and (b) not more than 25% of the total 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).
The Treasury Department is authorized to issue
regulations to provide that foreign currency gains that are "not
directly related" to the Fund's principal business of investing
in stock or securities may be excluded from the income that
qualifies for purposes of the 90% gross income requirement
described above with respect to the Fund's qualification as a
"regulated investment company." No such regulations have yet
been issued.
If the Fund qualifies as a regulated investment company
and makes a timely distribution of 90% or more of its taxable 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
56
<PAGE>
income (including any net capital gain) that it distributes to
its shareholders.
The Fund will also avoid the nondeductible 4% federal
excise tax that would otherwise apply to certain undistributed
income for a given calendar year if it meets certain minimum
distribution requirements by the end of each calendar 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 purposes of the 4%
excise tax and federal income tax, dividends declared and payable
as of a date in October, November or December will be treated as
if they were paid on December 31 of that year if the dividends
are actually paid during the following January.
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.
Currency Fluctuations - "Section 988" Gains or Losses.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, or from the disposition of a forward contract
denominated in a foreign currency which are attributable to
fluctuations in the value of the foreign currency between the
date of acquisition of the asset and the date of disposition also
are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its shareholders as
ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain. Because section 988 losses
reduce the amount of ordinary dividends the Fund will be allowed
to distribute for a taxable year, such section 988 losses may
result in all or a portion of prior dividend distributions for
such year being recharacterized as a non-taxable return of
capital to shareholders, rather than as an ordinary dividend,
reducing each shareholder's basis in his Fund shares. To the
extent that such distributions exceed such shareholder's basis,
each distribution will be treated as a gain from the sale of
shares.
57
<PAGE>
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.
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
58
<PAGE>
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, currency
swap, forward foreign currency contract, or other position
entered into or held by the Fund in conjunction with any other
position held by the Fund may constitute a "straddle" for federal
income tax purposes. A straddle of which at least one, but not
all, the positions are section 1256 contracts may constitute a
"mixed straddle". In general, straddles are subject to certain
rules that may affect the character and timing of the Fund's
gains and losses with respect to straddle positions by requiring,
among other things, that (i) loss realized on disposition of one
position of a straddle not be recognized to the extent that the
Fund has unrealized gains with respect to the other position in
such straddle; (ii) the Fund's holding period in straddle
positions be suspended while the straddle exists (possibly
resulting in gain being treated as short-term capital gain rather
than long-term capital gain); (iii) losses recognized with
respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as
60% long-term and 40% short-term capital loss; (iv) losses
recognized with respect to certain straddle positions which would
otherwise constitute short-term capital losses be treated as
long-term capital losses; and (v) the deduction of interest and
carrying charges attributable to certain straddle positions may
be deferred. The Treasury Department is authorized to issue
regulations providing for the proper treatment of a mixed
straddle where at least one position is ordinary and at least one
position is capital. No such regulations have yet been issued.
Various elections are available to the Fund which may mitigate
the effects of the straddle rules, particularly with respect to
mixed straddles. In general, the straddle rules described above
do not apply to any straddles held by the Fund all of the
offsetting positions of which consist of section 1256 contracts.
59
<PAGE>
United States Shareholders - Foreign Tax Credits.
Income received by the Fund may also be subject to foreign income
taxes, including withholding taxes. It is impossible to
determine the effective rate of foreign tax in advance since the
amount of the Fund's assets to be invested within various
countries is not known. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of
stocks or securities of foreign corporations, the Fund will be
eligible and intends to file an election with the Internal
Revenue Service to pass through to its shareholders the amount of
foreign taxes paid by the Fund. However, there can be no
assurance that the Fund will be able to do so. Pursuant to this
election a United States Shareholder will be required to (i)
include in gross income (in addition to taxable dividends
actually received) his pro rata share of foreign taxes paid by
the Fund, (ii) treat his pro rata share of such foreign taxes as
having been paid by him, and (iii) either deduct such pro rata
share of foreign taxes in computing his taxable income or treat
such foreign taxes as a credit against United States federal
income taxes. Shareholders who are not liable for federal income
taxes, such as retirement plans qualified under section 401 of
the Code, will not be affected by any such pass-through of taxes
by the Fund. No deduction for foreign taxes may be claimed by an
individual United States Shareholder who does not itemize
deductions. In addition, certain individual United States
Shareholders may be subject to rules which limit or reduce their
ability 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.
Generally, a credit for foreign taxes may not exceed the
United States Shareholder's United States tax attributable to the
shareholder's total foreign source taxable income. Generally,
the source of the Fund's income flows through to its
shareholders. The overall limitation on a foreign tax credit is
also applied separately to specific categories of foreign source
income, including foreign source "passive income," including
dividends, interest and capital gains. Further, the foreign tax
credit is allowed to offset only 90% of any alternative minimum
tax to which a United States Shareholder may be subject. As a
result of these rules, certain United States Shareholders may be
unable to claim a credit for the full amount of their
proportionate share of the foreign taxes paid by the Fund. If a
United States Shareholder could not credit his full share of the
foreign tax paid, double taxation of such income could be
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<PAGE>
mitigated only by deducting the foreign tax paid, which may be
subject to limitation as described above.
The federal income tax status of each year's
distributions by the Fund will be reported to shareholders and to
the Internal Revenue Service. The foregoing is only a general
description of the treatment of foreign taxes under the United
States federal income tax laws. Because the availability of a
foreign tax credit or deduction will depend on the particular
circumstances of each shareholder, potential investors are
advised to consult their own tax advisers.
The foregoing discussion relates only to U.S. Federal
income tax law as it affects shareholders who are U.S. residents
or U.S. corporations. The effects of Federal income tax law on
shareholders who are non-resident aliens or foreign corporations
may be substantially different. Foreign investors should consult
their counsel for further information as to the U.S. tax
consequences of receipt of income from the Fund.
_________________________________________________________________
GENERAL INFORMATION
_________________________________________________________________
Capitalization
The authorized capital stock of the Fund currently
consists of 25,000,000 shares of Class A Common Stock, 12,500,000
shares of Class B Common Stock and 25,000,000 of Class C Common
Stock, each having a par value of $.01 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 Advisory Agreement
and changes in investment policy, shares of each portfolio would
vote as a separate series.
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<PAGE>
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 three
classes of shares representing interests in the Fund. The
issuance and sale of any additional classes will require an
additional order from the Securities and Exchange Commission.
There is no assurance that such exemptive relief would be
granted.
At October 13, 1995 there were 6,402,051 shares of
common stock of the Fund outstanding, including 5,692,089 Class A
shares, Class B shares and 130,861 Class C shares. To the
knowledge of the Fund, the following persons owned of record, and
no person owned beneficially, 5% or more of the outstanding
shares of the Fund as of October 13, 1995:
No. of % of % of % of
Name and Address Shares Class A Class B Class C
Merrill Lynch
Mutual Fund Operations 145,254 25.20%
4800 Deer Lake Dr. East
Jacksonville FL 32246
Merrill Lynch 50,838 38.85%
Mutual Fund Operations
4800 Deer Lake Dr. East
Jacksonville FL 32246
Counsel
Legal matters in connection with the issuance of the
shares of Common Stock offered hereby are passed upon by Seward &
Kissel, One Battery Park Plaza, New York, New York l0004.
Seward & Kissel has relied upon the opinion of Venable, Baetjer
and Howard, LLP, 1800 Mercantile Bank & Trust Building, 2 Hopkins
Plaza, Baltimore, Maryland 21201, for matters relating to
Maryland law.
Independent Auditors
Ernst & Young LLP, 787 Seventh Avenue, New York, NY
10019, has been appointed as the independent auditors for the
Fund.
62
<PAGE>
Custodian
State Street Bank and Trust Company, 225 Franklin, St.,
Boston, Massachusetts 02110, acts as custodian for the securities
and cash of the Fund but plays no part in deciding the purchase
or sale of portfolio securities.
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.
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. The Fund's total return for
each such 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, Class B and Class C
shares in any advertisement or information including performance
data of the Fund.
On September 17, 1990, all outstanding shares of the
Fund were reclassified as Class A shares. The Fund's average
annual compounded total return for Class A shares for the fiscal
year ended July 31, 1995 was 16.62 %, for the five years ended
July 31, 1995 was 4.88% and for the ten years ended July 31, 1995
was 8.84%. The Fund's average annual compounded total return for
Class B shares for the fiscal year ended July 31, 1995 was 15.77%
and for the period September 17, 1990 (commencement of
distribution) through July 31, 1995 was 7.69%. The Fund's
63
<PAGE>
average annual compounded total return for Class C shares for the
one year ended July 31, 1995 was 15.75% and for the period May 3,
1993 (commencement of distribution) through July 31, 1995 was
11.08%.
The Fund's total return is not fixed and will fluctuate
in response to prevailing market conditions or as a function of
the type and quality of the securities in the Fund's portfolio
and the Fund's expenses. Total return information is useful in
reviewing the Fund's performance but such information may not
provide a basis for comparison with bank deposits or other
investments which pay a fixed return for a stated period of time.
An investor's principal invested in the Fund is not fixed and
will fluctuate in response to prevailing market conditions.
Advertisements quoting performance ratings of the Fund
as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc. and advertisements presenting the historical
record of payments of income dividends by the Fund may also from
time to time be sent to investors or placed in newspapers and
magazines such as The New York Times, The Wall Street Journal,
Barrons, Investor's Daily, Money Magazine, Changing Times,
Business Week and Forbes or other media on behalf of the Fund.
Additional Information
Any shareholder inquiries may be directed to the
shareholder's broker or other financial adviser 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 l933. Copies of the Registration Statement may
be obtained at a reasonable charge from the Commission or may be
examined, without charge, at the offices of the Commission in
Washington, D.C.
64
00250176.AE9
<PAGE>
PORTFOLIO OF INVESTMENTS
JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- ------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-91.2%
UNITED STATES INVESTMENTS-40.6%
CONSUMER PRODUCTS & SERVICES-14.5%
APPAREL-0.6%
Nautica Enterprises, Inc.* 14,100 $ 382,463
AUTO & RELATED-0.1%
Ek Chor China Motorcycle Co. 3,000 52,500
BROADCASTING & CABLE-1.8%
Advo, Inc. 17,100 314,212
Cablevision Systems Corp. Cl.A* 4,300 295,088
Data Broadcasting 5,607 44,856
Infinity Broadcasting Corp. 13,800 510,600
Valuevision International, Inc. 10,000 58,125
1,222,881
COSMETICS-0.6%
Jean Phillippe Fragrances, Inc.* 32,600 362,675
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES-5.5%
Apria Healthcare Group, Inc. 11,200 364,000
Centocor, Inc.* 10,300 131,325
Cephalon, Inc. 8,300 194,012
Community Health Systems, Inc.* 16,800 659,400
Healthwise America, Inc.* 24,100 710,950
Laboratory Corp. Of America Holdings
warrant, expiring 4/28/05* 1 2
Manor Care, Inc. 2,000 64,750
Medcath, Inc.* 19,600 269,500
Medimmune, Inc.* 10,000 90,000
Physician Reliance Network* 16,600 390,100
Sun Healthcare Group, Inc.* 43,400 640,150
Surgical Care Affiliates, Inc. 8,400 159,600
3,673,789
ENTERTAINMENT & LEISURE TIME-0.6%
Cinergi Pictures Entertainment, Inc. 26,000 113,750
Discovery Zone, Inc.* 500 3,563
Heritage Media Corp. Cl.A* 10,000 287,500
404,813
PRINTING & PUBLISHING-0.3%
IVI Publishing, Inc.* 27,400 219,200
RESTAURANTS & LODGING-2.5%
Hospitality Franchise Systems 17,100 752,400
Host Marriott Corp. 37,000 411,625
International Pizza Corp.* 16,400 13,325
warrants, expiring 9/22/98* 16,400 2,306
La Quinta Inns, Inc. 10,100 283,727
Redeemable Lion Hotels, Inc. 7,500 159,375
1,622,758
RETAILING-2.5%
Ann Taylor Stores Corp. 1,000 19,695
Bed Bath & Beyond, Inc. 7,500 232,500
Circle K Corp.* 6,100 118,187
Corporate Express, Inc. 7,050 178,894
Musicland Stores, Inc. 14,200 138,450
Nine West Group, Inc.* 24,700 1,000,350
1,688,076
9,629,155
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------------
TECHNOLOGY-13.0%
COMMUNICATION & EQUIPMENT-2.4%
ADC Telecommunications, Inc.* 5,000 $ 193,750
Adtran, Inc. 4,100 150,675
Ascend Communications, Inc. 3,600 261,000
Cascade Communications Corp.* 1,400 71,050
CD Radio, Inc. 20,700 56,925
Millicom International Cellular, S.A.* 21,400 631,300
Scientific-Atlanta, Inc. 11,900 255,850
1,620,550
COMMUNICATION SERVICES-0.6%
Vanguard Cellular Systems, Inc. 14,300 378,950
COMPUTER EQUIPMENT-0.4%
General Datacomm Industries, Inc. 2,000 27,000
Quantum Corp. 10,000 257,500
284,500
COMPUTER HARDWARE-0.6%
Read-Rite Corp.* 9,200 379,500
COMPUTER PERIPHERALS-0.6%
Komag, Inc.* 5,800 398,025
COMPUTER SOFTWARE & SERVICES-2.1%
Cadence Design Systems, Inc. 6,200 234,050
Informix Corp.* 30,900 915,412
Symantec Corp.* 9,200 250,700
1,400,162
ELECTRICAL EQUIPMENT-0.5%
Kemet Corp. 4,600 $297,850
Smartflex Systems, Inc. 1,500 18,000
315,850
ELECTRONICS-1.7%
Boston Technology, Inc.* 16,900 329,550
Glenayre Technologies, Inc.* 4,000 250,000
Integrated Device Technology, Inc.* 5,400 338,175
Tellabs, Inc.* 4,500 200,250
1,117,975
SEMI-CONDUCTORS & RELATED-0.8%
Cypress Semiconductor Corp.* 5,200 274,300
Lam Research Corp.* 4,200 286,650
560,950
SOFTWARE-0.4%
Intersolv, Inc.* 11,800 293,525
TELEPHONE - UTILITY-2.9%
Dionex Corp.* 10,400 500,500
Telephone & Data Systems, Inc. 19,500 755,625
United States Cellular Corp.* 20,100 678,375
1,934,500
8,684,487
BASIC INDUSTRIES-5.2%
BUSINESS SERVICES-0.5%
Gymboree Corp.* 7,000 216,125
Stratacom, Inc.* 2,400 130,200
346,325
CHEMICALS-0.2%
Wang Labs, Inc. New* 8,300 155,625
MACHINERY-0.3%
JLG Industries, Inc. 5,800 210,250
8
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- ------------------------------------------------------------------------
MINING & METALS-0.5%
Noble Drilling Corp.* 50,900 $ 330,850
OFFICE EQUIPMENT-0.3%
Staples, Inc.* 8,700 195,750
PAPER & FOREST PRODUCTS-0.0%
Asia Pacific Resources International Holding,
Ltd.* 3,000 28,125
POLLUTION CONTROL-0.1%
USA Waste Services, Inc.* 2,100 39,900
TRANSPORTATION & SHIPPING-3.3%
Alaska Air Group, Inc.* 30,000 577,500
America West Airlines, Inc. 9,400 131,600
Mesa Airlines, Inc. 27,000 293,625
Pittston Services Group 10,800 270,000
Southwest Airlines Co. 5,600 161,000
USAIR Group, Inc. 15,600 148,200
Xtra Corp. 12,700 582,612
2,164,537
3,471,362
ENERGY-5.0%
DOMESTIC PRODUCERS-0.8%
Diamond Shamrock, Inc. 19,900 517,400
INTERNATIONAL PRODUCERS-0.1%
XCL, Ltd.* 110,000 75,625
OIL & GAS SERVICES-2.8%
Arethusa, Ltd. 22,600 401,150
BJ Services Co.* 10,500 261,188
Global Marine, Inc.* 129,700 745,775
Rowan Cos., Inc.* 67,000 485,750
1,893,863
OTHER-1.3%
Reading & Bates Corp.* 85,900 859,000
3,345,888
FINANCIAL SERVICES-2.9%
BANKS-0.4%
First USA, Inc. 5,500 250,938
INVESTMENT COMPANIES-0.1%
T. Rowe Price & Associates Inc. 400 16,200
United Asset Management Corp. 500 20,035
36,235
INSURANCE-2.4%
20th Century Industries, Inc. 61,900 735,062
National Re Corp. 11,100 377,400
PXRE Corp. 19,400 501,975
1,614,437
1,901,610
Total United States Investments
(cost $22,368,851) 27,032,502
FOREIGN INVESTMENTS-50.6%
ARGENTINA-0.1%
Telecom Argentina Stet-France (ADR)*(a) 1,000 49,625
Telephone - Utility
AUSTRALIA-1.1%
AAPC, Ltd. 385,000 181,979
Restaurants & Lodging
Advance Bank Australia 30,000 16,396
Banking
Ampolex, Ltd. 40,000 90,399
Oil & Gas Exploration
Diamond Ventures, Ltd.* 154,000 22,747
Mining & Metals
Fai Life, Ltd. 500,000 232,644
Insurance
Oil Search, Ltd. 200,000 165,436
Oil
709,601
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- ------------------------------------------------------------------------
AUSTRIA-0.8%
Austria Mikro Systeme International AG(a) 1,100 $211,844
Semi-Conductors & Related
Benckiser-Wasser-Technik AG 1,500 207,003
Pollution Control
Mayr-Melnhof Karton AG*(a) 2,000 131,205
Packaging
550,052
CANADA-0.8%
Accugraph Corp. 17,000 59,592
Miscellaneous
Cinar Films, Inc. 12,000 112,500
Entertainment & Leisure
MacMillan Bloedel, Ltd. 3,000 42,449
Paper & Forest Products
Nelvana, Ltd.*(a) 13,000 182,757
Entertainment & Leisure
Orbit Oil & Gas, Ltd. 10,000 7,011
Oil & Gas Exploration
Renaissance Energy, Ltd.* 4,000 82,159
Oil & Gas Exploration
Royal Plastics Group, Ltd.*(a) 5,000 63,445
Building & Related
549,913
CHILE-0.4%
Banco Osorno Y La Un (ADR) 11,000 163,625
Banking - Regional
Empresas Telex Chile S.A. 5,000 59,375
Communication Equipment
Enersis, S.A. Sponsored (ADR) 3,000 76,875
Electric Utility
299,875
DENMARK-0.8%
Novo Nordisk AS 2,450 $283,715
Drugs
Tele Danmark AS 4,000 223,439
Telephone - Utility
507,154
FINLAND-1.3%
Nokia AB Corp. pfd.-free(a) 12,000 799,524
Communication Equipment
Tamro AB 15,000 65,675
Medical Services
865,199
FRANCE-1.7%
Coflexip Sponsored (ADR) 13,500 334,125
Oil & Gas Services
Credit Local De France 2,500 231,921
Banking
Ecco Travail Temporary 1,800 123,782
Temporary Help
Lafarge Coppee 2,200 168,966
Building & Related
Synthelabo 5,000 290,514
Drugs, Hospital Supplies &
Medical Services
1,149,308
GERMANY-3.7%
Apcoa Parking AG(b) 2,000 105,316
Business Services
Bayer AG(b) 500 134,170
Chemicals
Duerr Beteiliqunqs AG(b) 700 253,481
Machinery
Fag Kugelfischer(b) 300 45,445
Industrial Machinery
Fielmann AG pfd.(b) 9,000 470,677
Retail
Hach AG(b) 50 24,742
Retail
10
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Mannesmann AG(b) 900 $ 299,805
Machinery
Marschollek Lautenschlaeger 550 374,125
Insurance
Rheinhold & Mahla AG(b) 400 85,119
Building & Related
Sgl Carbon(a)(b) 11,000 641,131
Specialty Chemical
Veba A.G.(b) 1,500 62,238
Electric Utility
2,496,249
HONG KONG-1.2%
Fu Hui Jewelry Co., Ltd.* 300,000 16,477
Jewelry & Watches
Hong Kong Land Holdings, Ltd. 70,000 135,800
Real Estate
Hong Kong Telecomm 80,000 146,808
Telephone - Utility
HSBC Holdings Plc. 15,000 203,541
Banking
Paul Y.-ITC Construction Holdings, Inc.* 800,000 199,535
Engineering & Construction
Sing Tao 180,000 109,330
Printing & Publishing
811,491
INDIA-0.3%
Gujarat Normal Fertilizer (GDR) 4,000 40,426
Chemicals
Shriram Industrial Enterprises, Ltd.* 15,000 131,250
warrants, expiring 4/28/96* 5,000 1,000
Multi-Industry
172,676
INDONESIA-0.2%
Indonesian Satellite Corp. (ADR) 4,000 150,000
Telecommunications
IRELAND-0.4%
Crean (James) Plc. 25,000 97,922
Multi-Industry
Irish Continental Group 21,500 174,897
Transportation - Shipping
272,819
ITALY-1.6%
Fila Holding Sponsored (ADR) 10,000 292,500
Apparel
Industrie Natuzzi S.p.A. (ADR)* 19,200 696,000
Furniture Products
Marzotto (GAE) & Figli-D'ris 7,000 42,279
Textile Products
Telecom Italia Mob 40,000 50,154
Telephone - Utility
1,080,933
JAPAN-14.6%
Akita Bank(b) 5,000 41,185
Banking - Regional
Asahi Bank(b) 16,000 186,721
Banking - Regional
Aval Data Corp.(b) 9,000 183,549
Semi-Conductors & Related
Canon, Inc.*(b) 18,000 326,309
Computer Peripherals
Chubu Sekiwa Real Estate, Ltd.(b) 1,000 10,798
Real Estate
Daibiru Corp.(b) 9,000 101,971
Real Estate
Denki Kagaku Kogyo(b) 10,000 33,991
Chemicals
Eiden Sakakiya Co. 6,000 89,055
Retail
Familymart Co.(b) 2,000 99,026
Retail - Food
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Fuji Electronics Co.(b) 5,000 $ 138,228
Semi-Conductors & Related
Fukuda Corp.(b) 7,000 77,487
Engineering & Construction
Futaba Corp.(b) 3,000 148,199
Technology - Electronics
Hachijuni Bank(b) 6,000 72,740
Banking - Regional
Hitachi Metals, Ltd.(b) 3,000 35,010
Steel
Ishiguro Homa Co. 3,000 53,025
Retail
Ishihara Sangyo(b) 23,000 75,572
Chemicals
Kanamoto Co., Ltd.*(b) 2,000 29,912
Engineering & Construction
Kaneshita Construction(b) 9,000 114,208
Engineering & Construction
Keyence Corp.(b) 2,600 321,097
Machinery
Kinden Corp.(b) 6,000 106,730
Electrical Equipment
Koa Fire & Marine 16,000 98,980
Insurance
Kurita Water Industries(b) 8,000 221,165
Chemicals - Specialty
Kyocera Corp.(b) 4,000 345,343
Semi-Conductors & Related
Kyoritsu Maintenance(b) 2,000 82,257
Janitorial Services
Mabuchi Motor Co.(b) 5,000 358,033
Technology - Computer Peripherals
Matsushita Electrical Industrial Co., Ltd.(b) 20,000 333,107
Consumer Appliances
Matsuyadenki Co., Ltd.(b) 3,000 29,810
Retail
Mimasu Semiconductor(b) 1,000 26,059
Semi-Conductors
Minebea Co.(b) 25,000 190,913
Machinery
Ministop Co.(b) 1,000 21,641
Retail - Food
Mitsubishi Bank(b) 10,000 236,800
Banking
Mitsubishi Motors Corp.(b) 15,000 126,445
Auto & Related
Murata Manufacturing Co., Ltd.(b) 3,000 131,203
Communication Equipment
Namura Shipbuildng(b) 12,000 47,995
Machinery
National House Industrial Co.(b) 5,000 96,306
Building & Construction
New Oji Paper Co., Ltd.(b) 30,000 298,436
Paper & Forest Products
Ngk Spark Plug Co.(b) 3,000 37,729
Semi-Conductors & Related
Nichiei Co., Ltd.(b) 3,000 190,347
Financial Services
Nichiha Corp.(b) 4,000 77,498
Miscellaneous
Nihon Dempa Kogyo(b) 8,000 231,135
Communication Equipment
Nikon Corp.(b) 11,000 123,635
Semi-Conductors & Related
Nippon Electric Glass Co., Ltd.(b) 9,000 163,154
Consumer Appliances
Nippon Sanso Corp. 20,000 98,799
Mining & Metals
Nippon Steel Corp. 10,000 33,877
Mining & Metals
Nippon Telegraph & Telephone Corp.(b) 10 85,203
Telephone Utilities
Nippon TV Network(b) 1,000 231,135
Broadcasting
Nissen Corp., Ltd.(b) 1,000 32,064
Retail
Omron Corp.(b) 6,000 136,642
Machinery
12
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Oriental Construction(b) 4,000 $ 88,375
Building & Construction
P S Corp.(b) 8,700 166,587
Construction
Promise Co., Ltd.(b) 3,600 161,523
Financial Services
Ricoh Elemex Co., Ltd.(b) 2,000 24,926
Computer Peripherals
Rohm Co., Ltd.(b) 4,000 227,056
Semi-Conductors
Sankyo Co.(b) 12,000 282,801
Drugs
Santen Pharmaceutical Co.(b) 7,000 188,761
Drugs
Sanyo Shinpan Finance Co., Ltd.(b) 2,000 163,154
Financial Services
Sato Corp.(b) 7,000 134,036
Technology - Electronics
Secom Co.(b) 1,000 61,636
Business Services
Sekichu Co.(b) 1,000 13,596
Retail
Sekisui Chemical Co.(b) 15,000 180,150
Chemicals
Sharp Corp.(b) 6,000 87,695
Consumer Manufacturing
Shimamura Co., Ltd.(b) 3,000 104,691
Retail
Showa Shell Sekiyu(b) 4,750 45,961
Oil
SMC Corp.(b) 4,000 242,919
Machinery
Takeda Chemical Industries(b) 8,000 107,863
Drugs
TDK Corp.(b) 3,000 152,617
Consumer Products & Services
Toda Corp.(b) 10,000 92,114
Chemicals - Specialty
Toho Bank(b) 8,000 60,005
Banking - Regional
Tokyo Broadcasting(b) 5,000 73,646
Broadcasting
Tokyo Electron, Ltd.(b) 8,000 300,023
Semi-Conductors & Related
Wesco, Inc.*(b) 4,600 112,055
Engineering & Construction
Xebio Co.(b) 300 10,163
Retail
Yamaichi Secs Co.(b) 10,000 62,429
Financial Services
Yamanashi Chuo Bank(b) 7,000 79,311
Banking - Regional
Yamanouchi Pharmaceutical(b) 8,000 177,657
Drugs
9,732,274
MALAYSIA-0.4%
Arab Malaysian Finance 1,000 4,680
Financial Services
Austral Enterprise 9,333 20,132
rights, expiring 8/24/95 4,666 -0-
Multi-Industry
C.I. Holdings Berhad 16,000 64,466
Building & Related
Highlands & Lowlands 10,000 18,884
Real Estate
Malaysian Assuranc 12,000 46,396
Insurance
Metacorp Berhad 33,000 120,203
Engineering & Construction
274,761
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
MEXICO-0.3%
Bufete Industrial SA 700 $ 11,900
Engineering & Construction
Grupo Industrial Durango, S.A.* 15,000 136,875
Paper & Forest Products
International de Ceramica* 34,915 54,287
Ceramic Tiles
203,062
NETHERLANDS-4.3%
Akzo Nobel N.V.(b) 1,000 131,316
Chemicals
Amev N.V(b). 4,000 229,160
Insurance
ASM Lithography Holding N.V.(b) 3,000 174,767
Semi-Conductors
Atag Holding N.V.(b) 500 35,082
Multi-Industry
BAM Groep N.V.(b) 1,800 127,686
Engineering & Construction
Boskalis Westminister cum. pfd.(b) 820,000 510,422
Engineering & Construction
Content Beheer N.V.(b) 10,000 256,839
Temporary Help
Elsevier N.V.(b) 22,000 280,399
Printing & Publishing
KLM Royal Dutch Airlines(b) 9,000 338,333
Consumer Services - Airlines
NBM Amstelland Nv 10,000 137,753
Building & Construction
Philips Electronic(b) 5,500 270,132
Appliances
Polygram N.V.(b) 3,000 190,409
Leisure Related
Randstad Holdings N.V.(b) 2,500 177,020
Temporary Help
2,859,318
NEW ZEALAND-0.6%
Air New Zealand 40,000 134,753
Airlines
Helicopter Line 50,000 149,912
Entertainment & Leisure
Lion Nathan, Ltd. 55,000 106,354
Food & Beverages
391,019
NORWAY-0.8%
Tomra Systems AS 82,500 376,467
Pollution Control
Western Bulk Shipping AS(a) 31,500 148,875
Shipping
525,342
PANAMA-1.1%
Banco Latinoamericano de Exportaciones,
S.A. (ADR) 18,200 730,275
Finance
PERU-0.2%
Banco Wiese Sponsored (ADR) 15,000 127,500
Banking - Regional
PORTUGAL-0.1%
TVI Televisao Independente* 7,800 35,859
Broadcasting & Cable
SINGAPORE-0.1%
Lim Kah Ngam, Ltd. 30,000 35,082
Multi-Industry
SOUTH KOREA-1.0%
Samsung Electronics Co., Ltd.
(ADR)(GDS)*(a) 7,000 460,250
bonus shrs*(a)(c) 1,385 89,790
baby shrs(a) 395 52,535
bonus shrs(a)(c) 78 10,302
14
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
rights, expiring
12/31/95*(a) 108 $ -0-
Semi-Conductors & Related
Yukong, Ltd. (ADR) 5,912 71,712
Energy International Producers
684,589
SPAIN-1.3%
Bco Popular Esp 1,200 194,284
Banking
Centros Commerciales Continente, S.A.* 9,000 178,648
Retail
Construcciones Y Aux de Ferr 2,000 80,574
Railroad Transportation
Corporacion Mapfre 3,000 168,702
Insurance
Repsol S.A. 5,000 168,702
Energy
Viscofan Envolturas Celulosi 6,000 80,826
Food
871,736
SWEDEN-2.7%
Autoliv AB (ADS)(a) 3,900 242,124
Auto & Related
Electrolux AB 1,000 52,649
Household Products
Hoganas AB Cl.B(a) 6,000 121,007
Mining & Metals
Kalmar Industries AB(a) 16,000 244,562
Machinery
Rottneros Bruks AB 75,000 124,191
Paper & Forest Products
SKF AB 25,000 548,424
Machinery
Sparbanken Sverige 25,000 221,139
Banking - Regional
SSAB (Svenskt Stal Aktiebolag) Series B 18,000 219,086
Mining & Metals
1,773,182
SWITZERLAND-1.1%
Lindtt & Spruengli AG Ord. 20 316,384
Consumer Staples
Roche Holdings AG, Ltd. 60 408,605
Drugs
724,989
TAIWAN-0.3%
The Taiwan Fund, Inc. 11,500 232,875
Mutual Fund
TURKEY-0.1%
Netas Telekomunik Ord. Cl.B*(a) 215,600 89,535
Communication Equipment
UNITED KINGDOM-7.2%
Aran Energy(b) 350,000 240,607
Oil - International
Asda Group Plc.(b) 40,000 60,432
Retailing
Automated Security Holdings Plc.*(b) 130,008 76,903
Consumer Products & Services
Bell Cablemedia Plc. (ADR)* 5,000 87,500
Broadcasting & Cable
British Airways Plc.(b) 30,000 220,144
Airlines
Bryant Group(b) 100,000 213,429
Building & Related
Caird Group Plc.*(b) 900,000 57,554
Pollution Control
Filtronic Comtec Plc.*(b) 140,000 716,227
Communication Equipment
M.S. International Plc.(b) 650,000 342,926
Machinery
Mcbride(b) 24,000 80,000
Household Products
Mid-States Plc.*(b) 740,000 532,374
Auto & Related
Morrison (William) Supermarkets Plc.(b) 40,000 100,080
Retailing - Food
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Mowlem (John) & Co. Plc.(b) 580,000 $ 686,171
Engineering & Construction
Northern Ireland Electricity Plc.(b) 20,000 122,142
Electric Utility
Powerscreen International Plc.(b) 39,000 215,108
Recycling Equipment
Resort Hotels Plc.*(c) 1,000,000 -0-
Restaurants & Lodging
Sears Plc.(b) 40,000 66,827
Retailing
Siebe Plc.(b) 15,000 163,669
Machinery
Tate & Lyle(b) 12,000 84,604
Food & Beverages
Tomkins(b) 30,000 123,022
Household Products
Williams Holdings(b) 20,000 104,396
Building & Construction
WPP Group(b) 70,000 150,520
Advertising
Zeneca Group Plc.(b) 20,000 356,355
Drugs
4,800,990
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -----------------------------------------------------------------------
Total Foreign Investments
(cost $31,531,740) $33,757,283
Total Common Stocks & Other Investments
(cost $53,900,591) 60,789,785
CORPORATE BONDS-0.4%
COMMUNICATION & EQUIPMENT-0.4%
Intelcom Group, Inc.
8.00%, 9/17/98 *(a)(c)
(cost $265,813) $ 269 229,824
COMMERCIAL PAPER-8.5%
Merrill Lynch & Co., Inc.
5.85%, 8/01/95
(amortized cost $5,683,000) 5,683 5,683,000
TOTALINVESTMENTS-100.1%
(cost $59,849,404) 66,702,609
Other assets less liabilities-(0.1%) (74,690)
NET ASSETS-100% $66,627,919
* Non-income producing security.
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At July 31, 1995
these securities amounted to $3,768,335 representing 5.66% of net assets.
(b) Securities with an aggregate market value of $18,915,717, segregated to
collateralize forward exchange currency contracts.
(c) Illiquid security, valued at fair market value (see Notes A and E).
Glossary of Terms:
ADR - American Depository Receipt
GDR - Global Depository Receipt
GDS - Global Depository Security
See notes to financial statements.
16
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $59,849,404) $66,702,609
Receivable for investment securities sold 2,323,300
Dividends and interest receivable 39,962
Receivable for capital stock sold 29,020
Foreign taxes receivable 15,580
Total assets 69,110,471
LIABILITIES
Due to custodian 178,618
Payable for investment securities purchased 1,305,359
Unclaimed dividends 634,284
Unrealized depreciation of forward exchange currency contracts 151,877
Management fee payable 42,043
Distribution fee payable 20,175
Payable for capital stock repurchased 8,763
Accrued expenses 141,433
Total liabilities 2,482,552
NET ASSETS $66,627,919
COMPOSITION OF NET ASSETS
Capital stock, at par $64,478
Additional paid-in capital 60,737,913
Accumulated net realized loss on investments and
foreign currency transactions (877,940)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 6,703,468
$66,627,919
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($60,056,776/5,787,350
shares of capital stock issued and outstanding) $10.38
Sales charge-4.25% of public offering price .46
Maximum offering price $10.84
CLASS B SHARES
Net asset value and offering price per share ($5,164,440/519,200
shares of capital stock issued and outstanding) $ 9.95
CLASS C SHARES
Net asset value, redemption and offering price per share($1,406,703/
141,277 shares of capital stock issued and outstanding) $ 9.96
See notes to financial statements.
17
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $69,032) $ 566,752
Interest 304,953
$ 871,705
EXPENSES
Management fee 640,582
Distribution fee - Class A 174,375
Distribution fee - Class B 47,620
Distribution fee - Class C 12,795
Transfer agency 244,934
Administrative 161,181
Custodian 138,414
Audit and legal 99,154
Registration 70,777
Printing 59,692
Directors' fees 25,987
Miscellaneous 37,258
Total expenses 1,712,769
Less: expenses waived and assumed by manager
(See Note B) (46,816)
Net expenses 1,665,953
Net investment loss (794,248)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investments 8,002,975
Net realized loss on foreign currency transactions (213,808)
Net change in unrealized appreciation of investments 2,534,927
Net change in unrealized depreciation of foreign currency
denominated assets and liabilities (98,524)
Net gain on investments and foreign currency 10,225,570
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,431,322
See notes to financial statements.
18
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
YEAR ENDED OCT. 1,1993
JULY 31, TO
1995 JULY 31,1994*
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (794,248) $ (751,009)
Net realized gain on investments and
foreign currency transactions 7,789,167 5,770,260
Net change in unrealized appreciation (depreciation)
of investments and foreign currency denominated
assets and liabilities 2,436,403 (6,096,357)
Net increase(decrease) in net assets from operations 9,431,322 (1,077,106)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Tax return of capital
Class A (679,545) -0-
Class B (56,726) -0-
Class C (16,528) -0-
Net realized gain on investments
Class A (10,605,411) -0-
Class B (885,298) -0-
Class C (257,942) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 3,106,523 545,313
Total increase (decrease) 36,395 (531,793)
NET ASSETS
Beginning of period 66,591,524 67,123,317
End of period $66,627,919 $66,591,524
* The Fund changed its fiscal year end from September 30 to July 31.
See notes to financial statements.
19
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Small Cap Fund, Inc. (the "Fund"), formerly Surveyor Fund,
Inc., is registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge of up to
4.25%. Class B shares are sold with a contingent deferred sales charge which
declines from 4.00% 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
Securities traded on United States or foreign securities exchanges are valued
at the last reported sales price, or, if no sale occurred, at the mean of the
bid and asked price. Securities listed or traded on certain foreign exchanges
whose operations are similar to the U.S. over-the-counter market are valued at
the closing bid price. Debt securities are valued at the mean of the bid and
asked price except that debt securities maturing within 60 days are valued at
amortized cost, which approximates market value. Securities for which current
market quotations are not readily available (including investments which are
subject to limitations as to their sale) are valued at their fair value as
determined in good faith by the Board of Directors. The values of foreign
securities quoted in foreign currencies are translated into U.S. dollars at the
current rate of exchange at July 31, 1995.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward currency exchange 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 $213,808 represents net
foreign exchange losses from holding of foreign currencies, currency gains or
losses realized between the trade and settlement dates on foreign security
transactions, and the difference between the amounts of dividends, interest and
foreign taxes recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid.
Net currency gains or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of
net change in unrealized depreciation of foreign currency denominated assets
and liabilities.
3. 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 the securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis.
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. 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 income tax regulations, which may differ from generally
accepted accounting principles.
6. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
During the year, the Fund reclassified certain components of net assets. The
reclassifications were the result of permanent book to tax differences in the
classification of foreign currency transactions as well as the reclassification
of a tax return of capital. The reclassifications resulted in a net decrease to
accumulated net realized loss of $3,807,433 and a corresponding decrease to
additional paid-in capital of $3,807,433. Net assets were not affected by the
change.
20
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
NOTE B: MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the management agreement, the Fund pays its Manager,
Alliance Capital Management L.P., a management fee at an annual rate of 1% of
the average daily net assets of the Fund. The fee is accrued daily and paid
monthly.
The Manager has agreed to reimburse the Fund to the extent that its aggregate
annual expenses (exclusive of interest, taxes, brokerage, distribution fee and
extraordinary expenses) exceed the limits prescribed by any state in which the
Fund's shares are qualified for sale.
The Manager believes that the most restrictive expense ratio limitation 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. For the year ended July 31,
1995, such reimbursement amounted to $46,816. Pursuant to the management
agreement, the Fund paid $161,181 to the Manager representing the cost of
certain legal and accounting services provided to the Fund by the Manager for
the year ended July 31, 1995.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Manager) in accordance with a Services Agreement for providing personnel
and facilities to perform transfer agency services for the Fund. Such
compensation amounted to $159,995 for the year ended July 31, 1995.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Manager)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $2,309 from the sale of Class A shares and $15,749
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended July 31, 1995.
Brokerage commissions paid on securities transactions for the year ended July
31, 1995 amounted to $259,471, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Manager, nor to DLJ directly.
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 the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to both Class B
and Class C shares. 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 $922,746, and $327,084 for Class
B and 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 Manager may use its own resources
to finance the distribution of the Fund's shares.
21
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $76,675,599 and $87,533,882, respectively, for the year ended July
31, 1995. There were no purchases or sales of U.S. Government and government
agency obligations for the year ended July 31, 1995.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies.
A forward exchange currency contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated forward rate. The gain or
loss arising from the difference between the original contracts and the closing
of such contracts is included in net realized gain or loss on foreign currency
transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At July 31, 1995, the Fund had outstanding forward exchange currency contracts,
both to purchase and sell foreign currencies against the U.S. dollar as follows:
CONTRACT COST ON UNREALIZED
AMOUNT ORIGINATION U.S. $ APPRECIATION
(000) DATE CURRENT VALUE (DEPRECIATION)
------- ---------- ------------- --------------
FOREIGN CURRENCY BUY CONTRACTS
Japanese Yen,
expiring 9/18/95 65,000 $767,233 $741,638 $(25,595)
FOREIGN CURRENCY SALE CONTRACTS
British Pounds,
expiring 9/18/95 1,986 3,103,721 3,171,009 (67,288)
Deutsche Mark,
expiring 9/18/95 1,598 1,112,426 1,154,791 (42,365)
Japanese Yen, expiring
9/18/95-11/15/95 475,954 5,509,027 5,462,939 46,088
Netherland Guilder,
expiring 9/18/95 2,725 1,695,495 1,758,212 (62,717)
----------
$(151,877)
At July 31, 1995, the cost of investments for federal income tax purposes was
$59,926,275. Accordingly, gross unrealized appreciation of investments was
$11,400,151 and gross unrealized depreciation of investments was $4,623,817,
resulting in net unrealized appreciation of $6,776,334.
NOTE E: ILLIQUID SECURITIES
DATE ACQUIRED COST VALUE
------------- -------- ---------
Intelcom Group, Inc. 8.00%, 9/17/98 9/16/93 $265,813 $229,824
Resort Hotels Plc. 5/01/92 719,086 -0-
Samsung Electronics Co., Ltd. Bonus shares 7/10/95 -0- 100,092
--------- ---------
$984,899 $329,916
22
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with the procedures described in Note A. The value of
these securities at July 31, 1995 represents 0.5% of net assets.
NOTE F: CAPITAL STOCK
There are 62,500,000 shares of $.01 par value capital stock authorized, divided
into three classes, designated Class A, Class B and Class C shares. Class A and
Class C each consist of 25,000,000 authorized shares and Class B consists of
12,500,000 authorized shares. Transactions in capital stock were as follows:
SHARES AMOUNT
------------------------- ---------------------------
OCT. 1,1993 OCT. 1,1993
YEAR ENDED TO JULY 31, YEAR ENDED TO JULY 31,
JUY 31,1995 1994* JULY 31,1995 1994*
----------- ------------ ------------- ------------
CLASS A
Shares sold 391,760 325,941 $ 3,971,546 $ 3,837,992
Shares issued in
reinvestment
of distributions 952,163 -0- 8,217,164 -0-
Shares redeemed (1,095,655) (632,975) (10,827,369) (7,361,992)
Net increase (decrease) 248,268 (307,034) $ 1,361,341 $(3,524,000)
CLASS B
Shares sold 287,247 333,615 $ 2,886,684 $ 3,794,604
Shares issued in
reinvestment
of distributions 75,995 -0- 631,516 -0-
Shares redeemed (204,792) (77,401) (1,961,914) (875,725)
Net increase 158,450 256,214 $ 1,556,286 $2,918,879
CLASS C
Shares sold 136,839 165,941 $ 1,295,724 $1,883,546
Shares issued in
reinvestment
of distributions 15,861 -0- 131,935 -0-
Shares redeemed (134,697) (66,414) (1,238,763) (733,112)
Net increase 18,003 99,527 $ 188,896 $1,150,434
* The Fund changed its fiscal year end from September 30 to July 31.
23
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------
OCT. 1,1993 YEAR ENDED SEPTEMBER 30,
YEAR ENDED TO ----------------------------------------------
JULY 31,1995 JULY 31,1994* 1993 1992 1991 1990
------------- ------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.08 $11.24 $9.33 $10.55 $8.26 $15.54
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.09) (.15) (.15) (.16) (.06) (.05)(a)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.50 (.01) 2.49 (1.03) 2.35 (4.12)
Net increase (decrease) in net asset
value from operations 1.41 (.16) 2.34 (1.19) 2.29 (4.17)
LESS: DISTRIBUTIONS
Tax return of capital (.12) -0- -0- -0- -0- -0-
Distributions from net realized gains (1.99) -0- (.43) (.03) -0- (3.11)
Net asset value, end of period $10.38 $11.08 $11.24 $9.33 $10.55 $8.26
TOTAL RETURN
Total investment return based on
net asset value (b) 16.62% (1.42)% 25.83% (11.30)% 27.72% (31.90)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $60,057 $61,372 $65,713 $58,491 $84,370 $68,316
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 2.54%(c) 2.42%(d) 2.53% 2.34% 2.29% 1.73%
Net investment loss (1.17)% (1.26)%(d) (1.13)% (.85)% (.55)% (.46)%
Portfolio turnover rate 128% 78% 97% 108% 104% 89%
</TABLE>
See footnote summary on page 26.
24
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------------
OCT. 1,1993 YEAR ENDED SEPTEMBER 30,
YEAR ENDED TO --------------------------------------------
JULY 31, 1995 JULY 31, 1994* 1993 1992 1991 1990(E)
------------- -------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.78 $11.00 $9.20 $10.49 $ 8.26 $ 9.12
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.12) (.17)(a) (.15) (.20) (.07) (.01)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.40 (.05) 2.38 (1.06) 2.30 (.85)
Net increase (decrease) in net asset
value from operations 1.28 (.22) 2.23 (1.26) 2.23 (.86)
LESS: DISTRIBUTIONS
Tax return of capital (.12) -0- -0- -0- -0- -0-
Distributions from net realized gains (1.99) -0- (.43) (.03) -0- -0-
Net asset value, end of period $9.95 $10.78 $11.00 $9.20 $10.49 $8.26
TOTAL RETURN
Total investment return based on
net asset value (b) 15.77% (2.00)% 24.97% (12.03)% 27.00% (9.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,164 $3,889 $1,150 $ 819 $ 121 $ 183
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 3.20%(c) 3.15%(d) 3.26% 3.11% 2.98% 2.61%(d)
Net investment loss (1.92)% (1.93)%(d) (1.85)% (1.31)% (1.39)% (1.30)%(d)
Portfolio turnover rate 128% 78% 97% 108% 104% 89%
</TABLE>
See footnote summary on page 26.
25
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
--------------------------------------
OCTOBER 1, MAY 3,
1993 1993(F)
YEAR ENDED TO TO
JULY 31, JULY 31, SEPTEMBER 30,
1995 1994* 1993
-------------- ----------- -----------
Net asset value, beginning of period $10.79 $11.00 $ 9.86
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.17) (.17)(a) (.05)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.45 (.04) 1.19
Net increase (decrease) in net asset
value from operations 1.28 (.21) 1.14
LESS: DISTRIBUTIONS
Tax return of capital (.12) -0- -0-
Distributions from net realized gains (1.99) -0- -0-
Net asset value, end of period $ 9.96 $10.79 $11.00
TOTAL RETURN
Total investment return based on
net asset value (b) 15.75% (1.91)% 11.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,407 $1,330 $ 261
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 3.25%(c) 3.13%(d) 3.75%(d)
Net investment loss (2.10)% (1.92)%(d) (2.51)%(d)
Portfolio turnover rate 128% 78% 97%
* The Fund changed its fiscal year end from September 30 to July 31.
(a) Based on average shares outstanding.
(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 charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) If the Fund had borne all expenses, the expense ratios would have been
2.61%, 3.27%, and 3.31% for Class A, Class B and Class C shares, respectively.
(d) Annualized.
(e) For the period September 17, 1990 (commencement of distribution) to
September 30, 1990.
(f) Commencement of distribution.
26
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS ALLIANCE GLOBAL SMALL CAP FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Global Small Cap Fund, Inc. including the portfolio of investments, as
of July 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Global Small Cap Fund, Inc. at July 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
New York, New York
September 9, 1995
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
During the fiscal year ended July 31, 1995, the Fund paid on Class A, Class B
and Class C shares long-term capital gains of $0.10.
FOREIGN TAX CREDIT (UNAUDITED)
The Fund has elected to give the benefit to its shareholders of foreign taxes
that have been paid and/or withheld. For the year ended July 31, 1995, this
benefit amounted to $69,032. Although the Fund has made the election required
to make this credit available, the amount of allowable tax credit is subject to
limitations under the Internal Revenue Code.
A notification reflecting the per share amount to be used by taxpayers on their
federal income tax return will be mailed to shareholders in January 1996.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements
Included in the Prospectus:
Condensed Financial Highlights
Included in the Statement of Additional Information:
Portfolio of Investments, July 31, 1995
Statement of Assets and Liabilities, July 31, 1995
Statement of Operations, period ended July 31, 1995
Statement of Changes in Net Assets, period ended
July 31, 1994 and year ended July 31, 1995
Notes to Financial Statements, July 31, 1995
Report of Independent Auditors - September 9, 1995
All other schedules are either omitted because they are
not required under the related instructions, they are
inapplicable, or the required information is presented
in the financial statements or notes which are included
in the Statement of Additional Information of the
Registration Statement.
(b) Exhibits
(1) Articles of Restatement of Articles of Incorporation
as now in effect - Incorporated by reference to Exhibit
1 to Post-Effective Amendment No. 49 of Registrant's
Registration Statement on Form N-1A, filed January 31,
1991 (File No. 2-25364).
(2) Amended By-Laws - Incorporated by reference to
Exhibit 2 to Post-Effective Amendment No. 43 of
Registrant's Registration Statement on Form N-1A, filed
January 30, 1989 (File No. 2-25364).
(3) Not applicable.
(4) Specimen of Share Certificate - Incorporated by
reference to Exhibit 4 to Post-Effective Amendment No.
37 of Registrant's Registration Statement on Form N-1A,
filed February 2, 1986 (File No. 2-25364).
C-1
<PAGE>
(5) Form of Management Agreement between the Registrant
and Alliance Capital Management L.P. - Incorporated by
reference to Exhibit 6 to Post-Effective Amendment No.
54 of Registrant's Registration Statement on Form N-1A,
filed March 2, 1993 (File No. 2-25364).
(6) (a) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc.
-Incorporated by reference to Exhibit 6 (a) to
Post-Effective Amendment No. 56 of Registrant's
Registration Statement on Form N-1A, filed January 30,
1994 (File No. 2-25364).
(b) Form of Selected Dealer Agreement between
Alliance Fund Distributors, Inc. and selected dealers
offering shares of Registrant - Incorporated by
reference to Exhibit 6 to Post-Effective Amendment No.
54 of Registrant's Registration Statement on Form N-1A,
filed March 2, 1993 (File No. 2-25364).
(c) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and selected agents
making available shares of Registrant - Incorporated by
reference to Exhibit 6 to Post-Effective Amendment No.
54 of Registrant's Registration Statement on Form N-1A,
filed March 2, 1993 (File No. 2-25364).
(7) Not applicable.
(8) Custodian Contract between the Registrant and State
Street Bank and Trust Company - Incorporated by
reference to Exhibit 8 to Post-Effective Amendment No.
45 of Registrant's Registration Statement on Form N-1A,
filed January 31, 1990 (File No. 2-25364).
(9) Transfer Agency Agreement between the Registrant and
Alliance Fund Services, Inc. - Incorporated by reference
to Exhibit 9 to Post-Effective Amendment No. 43 of
Registrant's Registration Statement on Form N-1A, filed
January 30, 1989 (File No. 2-25364).
(10) Not applicable.
(11) Consent of Independent Auditors - filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
C-2
<PAGE>
(15) Rule 12b-1 Plan - See Exhibit 6(a) hereto.
(16) (a) Schedule for computation of total return
performance of Class A - Incorporated by reference to
Exhibit 16(a) to Post-Effective Amendment No. 49 of
Registrant's Registration Statement on Form N-1A, filed
January 31, 1991 (File No. 2-25364).
(b) Schedule for computation of total return
performance of Class B - Incorporated by reference to
Exhibit 16(b) to Post-Effective Amendment No. 49 of
Registrant's Registration Statement on Form N-1A, filed
January 31, 1991 (File No. 2-25364).
(27) Financial Data Schedule - filed herewith.
ITEM 25. Persons Controlled by or under Common Control with
Registrant.
None.
ITEM 26. Number of Holders of Securities.
Number of Record Holders
Title of Class (as of October 13, 1995)
Shares of Common Stock Class A - 13,114
par value $.01 Class B - 759
Class C - 183
Total 14,056
ITEM 27. Indemnification
It is the Registrant's policy to indemnify its
directors, officers and employees to the maximum extent
permitted by Section 2-418 of the General Corporation
Law of the State of Maryland and as set forth in Article
NINTH of Registrant's Articles of Restatement of
Articles of Incorporation, filed as Exhibit 1 in
response to Item 24 and Article X of the Registrant's
By-Laws filed as Exhibit 2 in response to Item 24 all as
set forth below. The liability of the Registrant's
directors and officers is dealt with in Article NINTH of
Registrant's Articles of Restatement of Articles of
Incorporation and Article X of the Registrant's By-Laws,
as set forth below.
Section 2-418 of the Maryland General Corporation Law
reads as follows:
C-3
<PAGE>
"2-418 INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS.--(a) In this
section the following words have the meaning
indicated.
(1) "Director" means any person who is or was
a director of a corporation and any person who,
while a director of a corporation, is or was
serving at the request of the corporation as a
director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation,
partnership, joint venture, trust, other
enterprise, or employee benefit plan.
(2) "Corporation" includes any domestic or
foreign predecessor entity of a corporation in a
merger, consolidation, or other transaction in
which the predecessor's existence ceased upon
consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a
director, the office of director in the
corporation; and
(ii) When used with respect to a person
other than a director as contemplated in subsection
(j), the elective or appointive office in the
corporation held by the officer, or the employment
or agency relationship undertaken by the employee
or agent in behalf of the corporation.
(iii) "Official capacity" does not
include service for any other foreign or domestic
corporation or any partnership, joint venture,
trust, other enterprise, or employee benefit plan.
(5) "Party" includes a person who was, is, or
is threatened to be made a named defendant or
respondent in a proceeding.
(6) "Proceeding" means any threatened,
pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or
investigative.
(b)(1) A corporation may indemnify any
director made a party to any proceeding by reason
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<PAGE>
of service in that capacity unless it is
established that:
(i) The act or omission of the director was
material to the matter giving rise to the
proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and
deliberate dishonesty; or
(ii) The director actually received an
improper personal benefit in money, property, or
services; or
(iii) In the case of any criminal proceeding,
the director had reasonable cause to believe that
the act or omission was unlawful.
(2)(i) Indemnification may be against
judgments, penalties, fines, settlements, and
reasonable expenses actually incurred by the
director in connection with the proceeding.
(ii) However, if the proceeding was one
by or in the right of the corporation,
indemnification may not be made in respect of any
proceeding in which the director shall have been
adjudged to be liable to the corporation.
(3) (i) The termination of any proceeding by
judgment, order or settlement does not create a
presumption that the director did not meet the
requisite standard of conduct set forth in this
subsection.
(ii) The termination of any proceeding by
conviction, or a plea of nolo contendere or its
equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption
that the director did not meet that standard of
conduct.
(c) A director may not be indemnified under
subsection (b) of this section in respect of any
proceeding charging improper personal benefit to
the director, whether or not involving action in
the director's official capacity, in which the
director was adjudged to be liable on the basis
that personal benefit was improperly received.
C-5
<PAGE>
(d) Unless limited by the charter:
(1) A director who has been successful, on
the merits or otherwise, in the defense of any
proceeding referred to in subsection (b) of this
section shall be indemnified against reasonable
expenses incurred by the director in connection
with the proceeding.
(2) A court of appropriate jurisdiction upon
application of a director and such notice as the
court shall require, may order indemnification in
the following circumstances:
(i) If it determines a director is entitled
to reimbursement under paragraph (1) of this
subsection, the court shall order indemnification,
in which case the director shall be entitled to
recover the expenses of securing such
reimbursement; or
(ii) If it determines that the director is
fairly and reasonably entitled to indemnification
in view of all the relevant circumstances, whether
or not the director has met the standards of
conduct set forth in subsection (b) of this section
or has been adjudged liable under the circumstances
described in subsection (c) of this section, the
court may order such indemnification as the court
shall deem proper. However, indemnification with
respect to any proceeding by or in the right of the
corporation or in which liability shall have been
adjudged in the circumstances described in
subsection (c) shall be limited to expenses.
(3) A court of appropriate jurisdiction may
be the same court in which the proceeding involving
the director's liability took place.
(e)(1) Indemnification under subsection (b)
of this section may not be made by the corporation
unless authorized for a specific proceeding after a
determination has been made that indemnification of
the director is permissible in the circumstances
because the director has met the standard of
conduct set forth in subsection (b) of this
section.
(2) Such determination shall be made:
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(i) By the board of directors by a majority
vote of a quorum consisting of directors not, at
the time, parties to the proceeding, or, if such a
quorum cannot be obtained, then by a majority vote
of a committee of the board consisting solely of
two or more directors not, at the time, parties to
such proceeding and who were duly designated to act
in the matter by a majority vote of the full board
in which the designated directors who are parties
may participate;
(ii) By special legal counsel selected by the
board or a committee of the board by vote as set
forth in subparagraph (I) of this paragraph, or, if
the requisite quorum of the full board cannot be
obtained therefor and the committee cannot be
established, by a majority vote of the full board
in which director who are parties may participate;
or
(iii) By the stockholders.
(3) Authorization of indemnification and
determination as to reasonableness of expenses
shall be made in the same manner as the
determination that indemnification is permissible.
However, if the determination that indemnification
is permissible is made by special legal counsel,
authorization of indemnification and determination
as to reasonableness of expenses shall be made in
the manner specified in subparagraph (ii) of
paragraph (2) of this subsection for selection of
such counsel.
(4) Shares held by directors who are parties
to the proceeding may not be voted on the subject
matter under this subsection.
(f)(1) Reasonable expenses incurred by a
director who is a party to a proceeding may be paid
or reimbursed by the corporation in advance of the
final disposition of the proceeding, upon receipt
by the corporation of:
(i) A written affirmation by the director of
the director's good faith belief that the standard
of conduct necessary for indemnification by the
corporation as authorized in this section has been
met; and
C-7
<PAGE>
(ii) A written undertaking by or on behalf of
the director to repay the amount if it shall
ultimately be determined that the standard of
conduct has not been met.
(2) The undertaking required by subparagraph
(ii) of paragraph (1) of this subsection shall be
an unlimited general obligation of the director but
need not be secured and may be accepted without
reference to financial ability to make the
repayment.
(3) Payments under this subsection shall be
made as provided by the charter, bylaws, or
contract or as specified in subsection (e) of this
section.
(g) The indemnification and advancement of
expenses provided or authorized by this section may
not be deemed exclusive of any other rights, by
indemnification or otherwise, to which a director
may be entitled under the charter, the bylaws, a
resolution of stockholders or directors, an
agreement or otherwise, both as to action in an
official capacity and as to action in another
capacity while holding such office.
(h) This section does not limit the
corporation's power to pay or reimburse expenses
incurred by a director in connection with an
appearance as a witness in a proceeding at a time
when the director has not been made a named
defendant or respondent in the proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to have
requested a director to serve an employee benefit
plan where the performance of the director's duties
to the corporation also imposes duties on, or
otherwise involves services by, the director to the
plan or participants or beneficiaries of the plan:
(2) Excise taxes assessed on a director with
respect to an employee benefit plan pursuant to
applicable law shall be deemed fines; and
(3) Action taken or omitted by the director
with respect to an employee benefit plan in the
performance of the director's duties for a purpose
reasonably believed by the director to be in the
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<PAGE>
interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which
is not opposed to the best interests of the
corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation shall be
indemnified as and to the extent provided in
subsection (d) of this section for a director and
shall be entitled, to the same extent as a
director, to seek indemnification pursuant to the
provisions of subsection (d);
(2) A corporation may indemnify and advance
expenses to an officer, employee, or agent of the
corporation to the same extent that it may
indemnify directors under this section; and
(3) A corporation, in addition, may indemnify
and advance expenses to an officer, employee, or
agent who is not a director to such further extent,
consistent with law, as may be provided by its
charter, bylaws, general or specific action of its
board of directors or contract.
(k)(1) A corporation may purchase and
maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of
the corporation, or who, while a director, officer,
employee, or agent of the corporation, is or was
serving at the request, of the corporation as a
director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation,
partnership, joint venture, trust, other
enterprise, or employee benefit plan against any
liability asserted against and incurred by such
person in any such capacity or arising out of such
person's position, whether or not the corporation
would have the power to indemnify against liability
under the provisions of this section.
(2) A corporation may provide similar
protection, including a trust fund, letter of
credit, or surety bond, not inconsistent with this
section.
(3) The insurance or similar protection may
be provided by a subsidiary or an affiliate of the
corporation.
C-9
<PAGE>
(l) Any indemnification of, or advance of
expenses to, a director in accordance with this
section, if arising out of a proceeding by or in
the right of the corporation, shall be reported in
writing to the stockholders with the notice of the
next stockholders' meeting or prior to the
meeting."
Article NINTH of the Registrant's Articles of
Incorporation reads as follows:
"(a) To the full extent that limitations on the
liability of directors and officers are permitted by the
Maryland General Corporation Law, no director or officer
of the Corporation shall have any liability to the
Corporation or its stockholders for damages. This
limitation on liability applies to events occurring at
the time a person serves as a director or officer of the
Corporation whether or not such person is a director or
officer at the time of any proceeding in which liability
is asserted.
(b) The Corporation shall indemnify and advance
expenses to its currently acting and its former
directors to the fullest extent that indemnification of
directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify and
advance expenses to its officers to the same extent as
its directors and to such further extent as is
consistent with the law. The Board of Directors may by
Bylaw, resolution or agreement make further provisions
for indemnification of directors, officers, employees
and agents to the fullest extent permitted by the
Maryland General Corporation Law.
(c) No provision of this Article shall be effective to
protect or purport to protect any director or officer of
the Corporation against any liability to the Corporation
or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(d) References to the Maryland General Corporation Law
in this Article are to that law as from time to time
amended. No amendment to the charter of the Corporation
shall effect any right of any person under this Article
based on any event, omission or proceeding prior to such
amendment."
ARTICLE X of the Registrant's By-Laws reads as follows:
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<PAGE>
"The Corporation shall indemnify to the fullest extent
permitted by law (including the Investment Company Act of
1940) as currently in effect or as the same may hereafter be
amended, any person made or threatened to be made a party to
any action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that
such person or such person's testator or intestate is or was
a director or officer of the Corporation or serves or served
at the request of the Corporation any other enterprise as a
director or officer. To the fullest extent permitted by law
(including the Investment Company Act of 1940) as currently
in effect or as the same may hereafter be amended, expenses
incurred by any such person in defending any such action,
suit or proceeding shall be paid or reimbursed by the
Corporation promptly upon receipt by it of an undertaking of
such person to repay such expenses if it shall ultimately be
determined that such person is not entitled to be indemnified
by the Corporation. The rights provided to any person by
this Article X shall be enforceable against the Corporation
by such person who shall be presumed to have relied upon it
in serving or continuing to serve as a director or officer as
provided above. No amendment of this Article X shall impair
the rights of any person arising at any time with respect to
events occurring prior to such amendment. For purposes of
this Article X the term "Corporation" shall include any
predecessor of the Corporation and any constituent
corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation or merger; the
term "other enterprise" shall include any corporation,
partnership, joint venture, trust or employee benefit plan;
service "at the request of the Corporation" shall include
service as a director or officer of the Corporation which
imposes duties on, or involves services by, such director or
officer with respect to an employee benefit plan, its
participants or beneficiaries; any excise taxes assessed on a
person with respect to an employee benefit plan shall be
deemed to be indemnifiable expenses; and action by a person
with respect to any employee benefit plan which such person
reasonably believes to be in the interest of the participants
and beneficiaries of such plan shall be deemed to be action
not opposed to the best interests of the Corporation."
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
C-11
<PAGE>
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection
with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
In accordance with Release No. IC-11330 (September 2, 1980),
the Registrant will indemnify its directors and officers only
if (1) a final decision on the merits was issued by the court
or other body before whom the proceeding was brought that the
person to be indemnified (the "indemnitee") was not liable by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
his office ("disabling conduct") or (2) a reasonable
determination is made, based upon a review of the facts, that
the indemnitee was not liable by reason of disabling conduct,
by (a) the vote of a majority of a quorum of the directors
who are neither "interested persons" of the Registrant as
defined in section 2(a)(19) of the Investment Company Act of
1940 nor parties to the proceeding ("disinterested, non-party
directors"), or (b) an independent legal counsel in a written
opinion. The Registrant will advance attorneys fees or other
expenses incurred by its directors and officers, in defending
a proceeding, upon the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately
determined that he is entitled to indemnification and, as a
condition to the advance, (1) the indemnitee shall provide a
security for his undertaking, (2) the Registrant shall be
insured against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of disinterested,
non-party directors of the Registrant, or an independent
legal counsel in a written opinion, shall determine, based on
a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
indemnitee ultimately will be found entitled to
indemnification.
The Registrant participates in a joint directors and officers
liability insurance policy issued by the ICI Mutual Insurance
Company. Coverage under this policy has been extended to
directors, trustees and officers of the investment companies
managed by Alliance Capital Management L.P. Under this
policy, outside trustees and directors are covered up to the
limits specified for any claim against them for acts
C-12
<PAGE>
committed in their capacities as trustee or director. A pro
rata share of the premium for this coverage is charged to
each investment company and to the Adviser.
Item 28. Business and Other Connections of Investment Adviser.
The descriptions of Alliance Capital Management L.P. under
the captions "Management of the Fund" in the Prospectus and
in the Statement of Additional Information constituting Parts
A and B, respectively, of this Registration Statement are
incorporated by reference herein.
The information as to the directors and executive officers of
Alliance Capital Management Corporation, the general partner
of Alliance Capital Management L.P., set forth in Alliance
Capital Management L.P.'s Form ADV filed with the Securities
and Exchange Commission on April 21, 1988 (File No. 801-
32361) and amended through the date hereof, is incorporated
by reference.
Item 29. Principal Underwriters
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale of
shares of the Registrant, also acts as Principal
Underwriter or Distributor for the following investment
companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Income Fund, Inc.
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust,
Inc.
C-13
<PAGE>
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of Alliance
Fund Distributors, Inc., the principal place of business
of which is 1345 Avenue of the Americas, New York, New
York, 10105.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES
NAME UNDERWRITER WITH REGISTRANT
Michael J. Laughlin Chairman
Robert L. Errico President
Kimberly A. Baumgardner Senior Vice President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
and Secretary
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumsiek Senior Vice President
Stephen R. Laut Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleondakis Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
James P. Syrett Senior Vice President
C-14
<PAGE>
Peter J. Szabo Senior Vice President
Richard A. Winge Senior Vice President
Benji A. Baer Vice President
Warren W. Babcock III Vice President
Kenneth F. Barkoff Vice President
William P. Beanblossom Vice President
Jack C. Bixler Vice President
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
Mark J. Dunbar Vice President
Linda A. Finnerty Vice President
William C. Fisher Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President &
Controller
Andrew L. Gangolf Vice President Assistant Secretary
Mark D. Gersten Vice President Treasurer and Chief
Financial Officer
Joseph W. Gibson Vice President
Troy L. Glawe Vice President
Herbert H. Goldman Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
C-15
<PAGE>
Robert H. Joseph, Jr. Vice President
and Treasurer
Richard D. Keppler Vice President
Sheila F. Lamb Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
Christopher J. MacDonald Vice President
Mark R. Manley Vice President, Counsel
and Assistant Secretary
Daniel D. McGinley Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Nicole Nolan-Koester Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President Assistant Secretary
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Raymond S. Sclafani Vice President
J. William Strott, Jr. Vice President
Richard E. Tambourine Vice President
Nicholas K. Willett Vice President
Neil S. Wood Vice President
Emilie D. Wrapp Vice President Assistant Secretary
Maria L. Carreras Assistant Vice President
C-16
<PAGE>
Sarah A. Chodera Assistant Vice President
John W. Cronin Assistant Vice President
Sohaila S. Farsheed Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
Vicky M. Hayes Assistant Vice President
Daniel M. Hazard Assistant Vice President
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Kalen H. Holliday Assistant Vice President
Thomas K. Intoccia Assistant Vice President
Edward W. Kelly Assistant Vice President
Patrick Look Assistant Vice President &
Assistant Treasurer
Michael F. Mahoney Assistant Vice President
Shawn P. McClain Assistant Vice President
Thomas F. Monnerat Assistant Vice President
Joanna D. Murray Assistant Vice President
Jeanette M. Nardella Assistant Vice President
Camilo R. Pedraza Assistant Vice President
Carol H. Rappa Assistant Vice President
Karen C. Satterberg Assistant Vice President
Robert M. Smith Assistant Vice President
Joseph T. Tocyloski Assistant Vice President
C-17
<PAGE>
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other documents required
to be maintained by Section 31(a) of the Investment Company Act
of 1940 and the Rules thereunder are maintained as follows:
journals, ledgers, securities records and other original records
are maintained principally at the offices of Alliance Fund
Services, Inc., 500 Plaza Drive, Secaucus, New Jersey 07094 and
at the offices of State Street Bank and Trust Company, the
Registrant's Custodian, 225 Franklin Street, Boston,
Massachusetts 02110. All other records so required to be
maintained are maintained at the offices of Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, New York,
10105.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
The Registrant undertakes to furnish each person to whom the
prospectus is delivered with a copy of the Registrant's latest
report to Shareholders, upon request and without charge.
C-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
and State of New York, on the 30th day of October, 1995.
ALLIANCE GLOBAL SMALL CAP FUND, INC.
by/s/ John D. Carifa
____________________________
John D. Carifa
Chairman
Pursuant to the requirements of the Securities Act of l933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
Signature Title Date
(1) Principal Executive
Officer
/s/ John D. Carifa Chairman October 30, 1995
___________________
John D. Carifa
(2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and October 30, 1995
___________________ Chief Financial
Mark D. Gersten Officer
(3) All of the Directors
Ruth Block
John D. Carifa
David H. Dievler
John H. Dobkin
William H. Foulk, Jr.
Dr. James M. Hester
Clifford L. Michel
Henry Ugarte
C-19
<PAGE>
By /s/ Edmund P. Bergan, Jr. October 30, 1995
____________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-20
<PAGE>
Index to Exhibits
Page
(11) Consent of Independent Auditors.
(27) Financial Data Schedule.
C-21
00250176.AE9
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Highlights", "Shareholder Services - Statements and
Reports" and "General Information - Independent Auditors" and to
the use of our report dated September 9, 1995, in this
Registration Statement (Form N-1A 2-25364) of Alliance Global
Small Cap Fund, Inc.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
October 25, 1995
00250176.AE7
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME>ALLIANCE GLOBAL SMALL CAP FUND, INC.
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
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<NET-INVESTMENT-INCOME> 7789167
<REALIZED-GAINS-CURRENT> 2436403
<APPREC-INCREASE-CURRENT> 9431322
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<DISTRIBUTIONS-OF-INCOME> 12501450
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<NUMBER-OF-SHARES-SOLD> 14028046
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<GROSS-EXPENSE> 64058140
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00250176.AE4
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