<PAGE>
As filed with the Securities and Exchange
Commission on June 1, 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 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 61 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 24 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)
<PAGE>
on (date) pursuant to paragraph (b)
days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph (a)(ii)
on (date) pursuant to paragraph (a)(ii) 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 period ended July 31, 1994 on September 26, 1994.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A ITEM NO. LOCATION IN PROSPECTUS (CAPTION)
_____________ ________________________________
PART A
Item l. 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 Securities General Information;
Dividends,
Distributions and
Taxes
Item 7. Purchase of Securities
Being Offered.................... Purchase and Sale of
Shares; General
Information
Item 8. Redemption or Repurchase.......... Purchase and Sale of
Shares
Item 9. Pending Legal Proceedings......... Not Applicable
LOCATION IN STATEMENT OF
PART B ADDITIONAL INFORMATION (CAPTION)
________________________________
Item l0. Cover Page........................ Cover Page
Item ll. Table of Contents................. Cover Page
Item l2. General Information and History... Management of the
Fund; General
Information
Item l3. Investment Objectives and Policies Investment
Objective, Policies
and Restrictions
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART B (continued) LOCATION IN STATEMENT OF
ADDITIONAL INFORMATION (CAPTION)
________________________________
Item l4. Management of the Registrant...... Management of the
Fund
Item l5. Control Persons and Principal
Holders of Securities.......... Management of the
Fund; General
Information
Item l6. Investment Advisory and
Other Services................. Management of the
Fund
Item l7. Brokerage Allocation and
Other Practices................ Allocation of
Portfolio Brokerage
Item l8. Capital Stock and
Other Securities............... General Information
Item l9. Purchase, Redemption and Pricing.. Purchase and
Redemption of
Shares; Net Asset
Value
Item 20. Tax Status........................ Investment
Objective, Policies
and Restrictions;
Dividends,
Distributions and
Taxes
Item 21. Underwriters...................... General Information
Item 22. Calculation of Performance Data... Not Applicable
Item 23. Financial Statements.............. Financial
Statements; Report
of Independent
Accountants
<PAGE>
Alliance Capital [Logo] The Alliance Stock Funds
_________________________________________________________________
June [ ], 1995
Supplement to Prospectus dated February 1, 1995
This supplement sets forth unaudited per share income and
capital change information for the periods indicated for Alliance
All-Asia Investment Fund, Inc. ("All-Asia Fund"), pursuant to the
requirements of the Securities and Exchange Commission applicable
to registered investment companies in their first year of
operations and for Alliance International Fund ("International
Fund"), Alliance Worldwide Privatization Fund, Inc. ("Worldwide
Privatization Fund"), Alliance New Europe Fund, Inc. ("New Europe
Fund"), Alliance Global Small Cap Fund, Inc. ("Global Small Cap
Fund"), Strategic Balanced Fund and Alliance Balanced Shares,
Inc. ("Balanced Shares") (collectively, the "Funds"). Unaudited
financial statements and related notes as of the same dates for
the respective Funds have also been added to the Statement of
Additional Information for each Fund.
The following information supplements the information under
the heading "Financial Information" on pages 7 through 15 of the
Prospectus.
<PAGE>
<TABLE>
<CAPTION>
Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ _____________ ___________ ____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>
International Fund
Class A
Six months
ended 12/31/94.... $18.38 $(.05) $(.26) $(.31) $0.00 $(1.62)
Class B
Six months
ended 12/31/94.... $17.90 $(.06)(b) $(.31) $(.37) $0.00 $(1.62)
Class C
Six months
ended 12/31/94.... $17.91 $(.03) $(.34) $(.37) $0.00 $(1.62)
Worldwide
Privatization Fund
Class A
Six months
ended 12/31/94.... $9.75 $(.01) $.24 $.23 $0.00 $0.00
Class B
Six months
ended 12/31/94.... $9.74 $(.03) $.23 $.20 $0.00 $0.00
New Europe Fund
Class A
Six months
ended 1/31/95..... $12.66 $(.07) $.23 $.16 $(.09) $0.00
Class B
Six months
ended 1/31/95..... $12.41 $(.11) $.22 $.11 $(.09) $0.00
Class C
Six months
ended 1/31/95..... $12.42 $(.12) $.23 $.11 $(.09) $0.00
All Asia Fund
Class A
11/28/94**
2
<PAGE>
- 4/30/95......... $10.00 $.11(c) $.13 $.24 $0.00 $0.00
Class B
11/18/94**
- 4/30/95......... $10.00 $.09(c) $.13 $.22 $0.00 $0.00
Class C
11/28/94**
- 4/30/95......... $10.00 $.08(c) $.16 $.24 $0.00 $0.00
</TABLE>
3
<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
_____________ _________ _____________ ____________ ____________ ___________ _____________
<C> <C> <C> <C> <C> <C> <C>
$(1.62) $16.45 (1.57)% $176,845 1.77%* (.46)%* 57%
$(1.62) $15.91 (1.94)% $49,532 2.56%* (1.32)%* 57%
$(1.62) $15.92 (1.94)% $29,173 2.56%* (1.29)%* 57%
$0.00 $9.98 2.36% $14,226 2.30%* (.04)%* 16%
$0.00 $9.94 2.05% $81,181 2.99%* (.75)%* 16%
$(.09) $12.73 1.29% $76,095 2.04%* (.89)%* 39%
$(.09) $12.43 .91% $29,978 2.74%* (1.59)%* 39%
$(.09) $12.44 .91% $8,863 2.73%* (1.59)%* 39%
$0.00 $10.24 2.40% $1,917 .19%*(d) 3.44%* 51%
4
<PAGE>
$0.00 $10.22 2.20% $3,019 .90%*(d) 2.73%* 51%
$0.00 $10.24 2.40% $185 .71%*(d) 2.87%* 51%
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ ____________ ____________ ____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>
Global Small
Cap Fund
Class A
Six months
ended 1/31/95..... $11.08 $(.04)(b) $(.23) $(.27) $(2.11) $0.00
Class B
Six months
ended 1/31/95..... $10.78 $(.02) $(.28) $(.30) $(2.11) $0.00
Class C
Six months
ended 1/31/95..... $10.79 $(.09) $(.22) $(.31) $(2.11) $0.00
Strategic
Balanced Fund
Class A
Six months
ended 1/31/95..... $16.26 $.18(c) $(.47) $(.29) $(.22) $(.04)
Class B
Six months
ended 1/31/95..... $14.10 $.11(c) $(.40) $(.29) $(.12) $(.04)
Class C
Six months
ended 1/31/95..... $14.11 $.10(c) $(.39) $(.29) $(.12) $(.04)
Balanced Shares
Class A
Six months
ended 1/31/95..... $13.38 $.23 $(.23) $0.00 $(.20) $(.02)
Class B
Six months
ended 1/31/95..... $13.23 $.16 $(.21) $(.05) $(.16) $(.02)
Class C
Six months
ended 1/31/95..... $13.24 $.16 $(.21) $(.05) $(.16) $(.02)
</TABLE>
6
<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
_____________ _________ _____________ ____________ ____________ ___________ _____________
<C> <C> <C> <C> <C> <C> <C>
$(2.11) $8.70 (2.26)% $53,830 2.52%* (1.24)%* 65%
$(2.11) $8.37 (2.61)% $4,574 3.24%* (2.00)%* 65%
$(2.11) $8.37 (2.73)% $1,131 3.21%* (1.96)%* 65%
$(.26) $15.71 (1.79)% $9,102 1.40%*(d) 2.14%* 34%
$(.16) $13.65 (2.07)% $39,008 2.10%*(d) 1.44%* 34%
$(.16) $13.66 (2.07)% $4,119 2.10%*(d) 1.45%* 34%
$(.22) $13.16 .09% $146,840 1.26%* 3.36%* 61%
$(.18) $13.00 (.32)% $13,350 2.04%* 2.58%* 61%
$(.18) $13.01 (.32)% $4,690 2.03%* 2.56%* 61%
___________________________________________
* Annualized
** Commencement of operations
7
<PAGE>
(a) Total investment return is calculated assuming an initial investment made at the net asset value at
the beginning of the period, reinvestment of all dividends and distributions at the net asset value
during the period, and a redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of total investment return.
Total investment returns calculated for periods of less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waived and expenses reimbursed by Alliance
(d) Net of expenses waived/reimbursed. If All-Asia Fund had borne all expenses, the expense ratios
would have been, with respect to Class A shares 11.71% (annualized), with respect to Class B shares
12.35% (annualized) and with respect to Class C shares 11.80% (annualized). If Strategic Balanced
Fund had borne all expenses, the expense ratios would have been, with respect to Class A shares
1.59% (annualized) and with respect to Class B and Class C shares 2.29% (annualized).
</TABLE>
Additionally, as of May 1, 1995, the portfolio manager of
Strategic Balanced Fund is Bruce W. Calvert. Mr. Calvert is a
Vice Chairman and the Chief Investment Officer of Alliance
Capital Management Corporation, the sole general partner of
Alliance Capital Management L.P., with which he has been
associated since prior to 1990.
8
00250157.AS7
<PAGE>
Prospectus for Alliance Global Small Cap Fund, Inc. -
Incorporated by reference to Alliance Global Small Cap Fund, Inc.
Prospectus in Post-Effective Amendment No. 59 of Registration
Statement on Form N-1A (File Nos. 2-25364 and 811-1415), filed
October 28, 1994.
00250157.AS7
<PAGE>
(Logo)(R)
ALLIANCE GLOBAL SMALL CAP FUND, INC.
_________________________________________________________________
P. O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature Toll Free (800) 227-4618
_________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1994 (amended June 1, 1995)
_________________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus for the Fund dated November 1, 1994. 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.................................... 1
Management of the Fund..................................... 15
Expenses of the Fund....................................... 22
Portfolio Transactions..................................... 25
Purchase of Shares......................................... 28
Redemption and Repurchase of Shares........................ 43
Shareholder Services....................................... 46
Net Asset Value............................................ 52
Dividends, Distributions and Taxes......................... 54
General Information........................................ 59
Report of Independent Auditors and
Financial Statements...................................... 63
<PAGE>
(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 will only
7
<PAGE>
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 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 account will equal the amount of the Fund's
8
<PAGE>
commitment with respect to such contracts. 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
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
9
<PAGE>
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
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
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<PAGE>
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 a option 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
11
<PAGE>
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 option.
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
(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
12
<PAGE>
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 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
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
13
<PAGE>
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.
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. 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
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<PAGE>
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;
(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.
15
<PAGE>
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
Alliance Capital Management L.P., (the "Adviser"), a Delaware
limited partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under a
management agreement (the "Management Agreement") as the Fund's
Adviser (see "Management of the Fund" in the Prospectus).
The Adviser is a leading international investment manager
supervising client accounts with assets as of December 31, 1994
of more than $121 billion (of which more than $36 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds and included, as of December 31,
1994, 29 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,450
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 51
registered investment companies comprising 103 separate
investment portfolios managed by the Adviser currently have more
than one million shareholders.
Alliance Capital Management Corporation (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 December 31,
1994, ACMC, Inc. and Equitable Capital Management Corporation,
each a wholly-owned direct or indirect subsidiary of Equitable,
owned in the aggregate approximately 59% of the issued and
outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser
("Units"). As of December 31, 1994, approximately 32% and 9% of
the Units were owned by the public and employees of the Adviser
16
<PAGE>
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
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.
_____________
* For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.
17
<PAGE>
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.
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 years ended
September 30, 1992 and 1993 and the fiscal period ended July 31,
1994, the Adviser received from the Fund advisory fees of
$761,286, $626,921 and $578,879, respectively.
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
18
<PAGE>
continuance of the Management Agreement until September 30, 1995
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 22, 1994.
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
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 Global Small Cap Fund,
Inc., Alliance Government Reserves, Alliance Growth and Income
Fund, Inc., Alliance Income Builder Fund, Inc., Alliance
International Fund, Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Mortgage Strategy Trust,
Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund II,
Alliance Municipal Trust, Alliance New Europe Fund, Inc.,
19
<PAGE>
Alliance North American Government Income Trust, Inc., Alliance
Premier Growth Fund, Inc., Alliance Quasar Fund, Inc., Alliance
Short-Term Multi-Market Trust, Inc., Alliance Technology Fund,
Inc., Alliance Utility Income Fund, Inc., Alliance Variable
Products Series Fund, Inc., Alliance World Income Trust, Inc.,
Alliance Worldwide Privatization Fund, Inc., The Alliance
Portfolios, Fiduciary Management Associates and The Hudson River
Trust, all registered open-end investment companies; and ACM
Government Income Fund, Inc., ACM Government Securities Fund,
Inc., ACM Government 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., The
Global Privatization Fund, Inc., The Austria Fund, Inc., The
Korean Investment Fund, Inc., The Southern Africa Fund and The
Spain Fund, Inc., all registered closed-end investment companies.
DIRECTORS AND OFFICERS
The Directors and principal officers of the Fund, their ages
and their primary occupations during the past five years are set
forth below. 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.
DIRECTORS
JOHN D. CARIFA*, [ ], Chairman of the 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, [ ], 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.
_____________
* An "interested person" of the Fund as defined in the
Investment Company Act of 1940.
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DAVID H. DIEVLER, [ ], was formerly a Senior Vice President
of ACMC with which he had been associated since prior to 1990.
He was formerly President of Eberstadt Fund Management, Inc.
JOHN H. DOBKIN, [ ], President of Historic Hudson Valley
(historic preservation) since 1990. From 1987 to 1992, he was a
Director of ACMC. His address is 105 West 55th Street, New York,
New York 10019.
WILLIAM H. FOULK, JR., [ ], has been a Senior Manager of
Barrett Associates, Inc., a registered investment adviser, since
prior to 1990. He was President of Competrol (BVI) Limited and
Cresent Diversified Limited (private investments) since prior to
1990.
DR. JAMES M. HESTER, [ ], is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide
Corporation. 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, [ ], has been a partner in the law firm
of Cahill Gordon & Reindel 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,
N.Y. 10005.
HENRY UGARTE, [ ], 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.
DAVID H. DIEVLER, see Biography above.
ALDEN M. STEWART, Senior Vice President - Investments, [ ],
has been an Executive Vice President of ACMC since July, 1993.
Prior thereto he was associated with Equitable Capital Management
Corporation ("ECMC").
ROBERT G. HEISTERBERG, Senior Vice President - Investments,
[ ], is a Senior Vice President of ACMC with which he has been
associated since prior to 1990.
PAUL H. JENKEL, Senior Vice President - Investments, [ ], is
a Senior Vice President of ACMC with which he has been associated
since prior to 1990.
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RANDALL E. HAASE, Vice President, [ ], has been a Vice
President of ACMC since July, 1993. Prior thereto he was
associated with ECMC.
TIMOTHY D. RICE, Vice President, [ ], is a Vice President of
ACMC with which he has been associated since 1990.
RONALD L. SIMCOE, Vice President, [ ], has been a Vice
President of ACMC since July, 1993. Prior thereto he was
associated with ECMC.
DANIEL V. PANKER, Vice President, [ ], is a Senior Vice
President of ACMC with which he has been associated since prior
to 1990.
EDMUND P. BERGAN, JR., Secretary, [ ], is a Senior Vice
President and 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, [ ],
is a Senior Vice President of Alliance Fund Services, Inc.
("AFS"), with which he has been associated since prior to 1990.
PATRICK J. FARRELL, Controller, [ ], is a Vice President of
AFS, with which he has been associated since prior to 1990.
JOSEPH J. MANTINEO, Assistant Controller, [ ], has been a
Vice President of AFS with which he has been associated since
prior to 1990.
STEPHEN M. ATKINS, Assistant Controller, [ ], is a Manager
of International Mutual Fund Accounting of AFS since June, 1992.
He was formerly Supervisor in International Mutual Fund
Accounting since prior to 1990.
The Fund does not pay any fees to, or reimburse expenses of,
its Directors who are considered "interested persons" of the
Fund. The aggregate compensation paid by the Fund to each of the
Directors during its fiscal period ended July 31, 1994, the
aggregate compensation paid to each of the Directors during
calendar year 1994 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of funds in the
Alliance Fund Complex with respect to which each of the Directors
serves as a director or trustee, are set forth below. Neither
the Fund nor any other fund in the Alliance Fund Complex provides
compensation in the form of pension or retirement benefits to any
of its directors or trustees.
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<TABLE>
<CAPTION>
Total Total Number of Funds in
Compensation the Alliance Fund Complex,
Aggregate From the Alliance Including the Fund, as to
Name of Director Compensation Fund Complex, which the Director is
of the Fund from the Fund Including the Fund a Director or Trustee
________________ _____________ __________________ __________________________
<S> <C> <C> <C>
John D. Carifa $ 0 $ 0 42
Ruth Block $4,507 $157,000 31
David H. Dievler $ 0 $ 0 49
John H. Dobkin $2,391 $110,750 29
William H. Foulk, Jr. $4,194 $141,500 30
Dr. James M. Hester $4,507 $154,500 32
Clifford L. Michel $4,507 $120,500 31
Henry Ugarte $3,125 $ 13,000 4
Arthur J. Samberg $1,250 $ 2,000 4
</TABLE>
As of May [ ], 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").
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
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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 period ended July 31, 1994, with
respect to Class A shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $164,009 with respect to Class A shares which constituted
approximately .30%, of the average daily net assets attributable
to the Class A Shares during the period and the Adviser made
payments from its own resources, as described above, aggregating
$1,336. Of the $165,345 paid by the Fund and the Adviser under
the Plan with respect to Class A shares, $10,416 were spent on
advertising, $4,284 on printing and mailing of prospectuses for
persons other than current shareholders, $98,134 for compensation
to broker-dealers and other financial intermediaries (including
$41,192 to the Fund's Principal Underwriter), $4,856 for
compensation to sales personnel and $47,655 were spent on
printing of sales literature, travel, entertainment, due
diligence and other promotional expenses.
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During the Fund's fiscal period ended July 31, 1994, with
respect to Class B shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $23,686 which constituted approximately 1.00% of the average
daily net assets attributable to Class B Shares during the period
and the Adviser made payments from its own resources, as
described above, aggregating $170,156. Of the $193,842 paid by
the Fund and the Adviser under the Plan with respect to Class B
shares, $16,059 were spent on advertising, $14,174 on printing
and mailing of prospectuses for persons other than current
shareholders, $82,215 for compensation to broker-dealers and
other financial intermediaries (including $76,372 to the Fund's
Principal Underwriter), $3,204 for compensation to sales
personnel and $78,190 were spent on printing of sales literature,
travel, entertainment, due diligence and other promotional
expenses.
During the Fund's fiscal period ended July 31, 1994, with
respect to Class C shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $8,496 which constituted approximately 1.00%, annualized, of
the average daily net assets attributable to the Class C shares
during the period and the Adviser made payments from its own
resources, as described above, aggregating $133,876. Of the
$142,372 paid by the Fund and the Adviser under the Plan with
respect to Class C shares, $12,760 were spent on advertising,
$2,134 on printing and mailing of prospectuses for persons other
than current shareholders, $62,602 for compensation to broker-
dealers and other financial intermediaries (including $54,278 to
the Fund's Principal Underwriter) and $2,764 for
compensation to sales personnel and $62,112 were 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 plan or any
agreement related thereto. Most recently the continuance of the
Agreement was approved until September 30, 1995 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 22, 1994.
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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 period ended July 31, 1994, the Fund paid Alliance Fund
Services, Inc. $138,450 for transfer agency services.
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_________________________________________________________________
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
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<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 commission in accordance with
the provisions of Section 11(a) of the Securities Exchange Act of
1934, as amended. 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 in
an affiliate of the Adviser. With respect to orders placed with
Donaldson, Lufkin & Jenrette Securities Corporation for execution
on a national securities exchange, commissions received must
conform to Section 17(e)(2)(A) of the 1940 Act and Rule 17e-1
thereunder, which permit an affiliated person of a registered
investment company (such as the Fund), or any affiliated person
of such person, to receive a brokerage commission from such
registered investment company provided that such commission is
reasonable and fair compared to the commissions received by other
brokers in connection with comparable transactions involving
similar securities during a comparable period of time.
During the fiscal years ended September 30, 1992 and 1993 and
the fiscal period ended July 31, 1994, the Fund incurred
brokerage commissions amounting in the aggregate to $235,879,
$156,113 and $107,065 respectively. During the fiscal years
ended September 30, 1992 and 1993 and the fiscal period ended
July 31, 1994, brokerage commissions amounting in the aggregate
to $-0-, $1,010 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 $715, $1,681 and $-0-, respectively, were paid to brokers
utilizing the Pershing Division of DLJ. During the fiscal period
ended July 31, 1994, the brokerage commissions paid to DLJ
constituted 0% of the Fund's aggregate brokerage commissions and
the brokerage commissions paid to brokers utilizing the Pershing
Division of DLJ constituted 0% of the Fund's aggregate brokerage
commissions. During the fiscal period ended July 31, 1994, of
the Fund's aggregate dollar amount of brokerage transactions
involving the payment of commissions, 0% were effected through
DLJ and 2% were effected through brokers utilizing the Pershing
Division of DLJ. During the fiscal period ended July 31, 1994,
transactions in portfolio securities of the Fund aggregating
$435,708,619 with associated brokerage commissions of
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<PAGE>
approximately $311,484 were allocated to persons or firms
supplying research services to the Fund or the Adviser.
The annual portfolio turnover rate for the Fund for the
fiscal year ended September 30, 1993 and the fiscal period ended
July 31, 1994 were 97% and 78%, respectively.
_________________________________________________________________
PURCHASE OF SHARES
_________________________________________________________________
The following information supplements that set forth in the
Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How to Buy Shares."
GENERAL
Shares of the Fund 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.
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The public offering price of shares of the Fund is their net
asset value, plus, in the case of Class A shares, a sales charge
which will vary depending on the purchase alternative chosen by
the investor, as shown in the table below. 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 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
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close of regular trading on the Exchange on the next day it is
open for trading.
Following the initial purchase of Fund shares, a shareholder
may place orders to purchase additional shares by telephone if
the shareholder has completed the appropriate portion of the
Subscription Application or an "Autobuy" application obtained by
calling the "Literature" telephone number shown on the cover of
this Statement of Additional Information. Payment for shares
purchased by telephone can be made only by Electronic Funds
Transfer from a bank account maintained by the shareholder at a
bank that is a member of the National Automated Clearing House
Association ("NACHA"). If a shareholder's telephone purchase
request is received before 3:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day. Full and
fractional shares are credited to a subscriber's account in the
amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to the Fund, stock
certificates representing shares of the Fund are not issued
except upon written request to the Fund by the shareholder or his
or her authorized selected dealer or agent. This facilitates
later redemption and relieves the shareholder of the
responsibility for and inconvenience of lost or stolen
certificates. No certificates are issued for fractional shares,
although such shares remain in the shareholder's account on the
books of the Fund.
In addition to the discount or commission amount paid to
selected dealers or agents, the Principal Underwriter may from
time to time pay additional cash bonuses or other incentives to
selected dealers in connection with the sale of shares of the
Fund. On some occasions, such bonuses or incentives may be
conditioned upon the sale of a specified minimum dollar amount of
the shares of the Fund and/or other Alliance Mutual Funds, as
defined below, during a specific period of time. At the option
of the dealer such bonuses or other incentives may take the form
of payment for travel expenses, including lodging incurred in
connection with trips taken by persons associated with the dealer
and members of their families to places within or outside of the
United States.
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
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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 and Class B shares
bear the expense of the deferred sales charge, (ii) Class B
shares and Class C shares each bear the expense of a higher
distribution services fee 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. For this
reason, 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,
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
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period of time might consider purchasing Class A shares because
the accumulated continuing distribution charges on Class B shares
or Class C shares may exceed the initial sales charge on Class A
shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that,
because of such initial sales charges, not all their funds will
be invested initially.
Other investors might determine, however, that it would be
more advantageous to purchase Class B shares or Class C shares in
order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
in the case of Class B shares, being subject to a contingent
deferred sales charge for a four-year period. For example, based
on current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee, to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares. This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.
The Directors of the Fund have determined that currently no
conflict of interest exists between or among the Class A, Class B
and Class C shares. On an ongoing basis, the Directors of the
Fund, pursuant to their fiduciary duties under the 1940 Act and
state laws, will seek to ensure that no such conflict arises.
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.
33
<PAGE>
Initial Sales Charge
____________________
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
1,000,000 but
less than
3,000,000. . . 1.27 1.25 1.00
3,000,000 but
less than
5,000,000. . . 0.76 0.75 0.50
____________________
There is no sales charge on transactions of $5,000,000 or more.
With respect to purchases of $5,000,000 or more made through
selected 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.
Shares issued pursuant to the automatic reinvestment of
income dividends or capital gains distributions are not subject
to any sales charges. The Fund receives the entire net asset
value of its Class A shares sold to investors. The Principal
Underwriter's commission is the sales charge shown above less any
applicable discount or commission "reallowed" to selected dealers
and agents. The Principal Underwriter will reallow discounts to
selected dealers and agents in the amounts indicated in the table
above. In this regard, the Principal Underwriter may elect to
reallow the entire sales charge to selected dealers and agents
for all sales with respect to which orders are placed with the
34
<PAGE>
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 January 31, 1995.
Net Asset Value per Class A Share at $8.70
January 31, 1995
Per Share Sales Charge - 4.25%
of offering price (4.48% of
net asset value per share) .39
______
Class A Per Share Offering Price to
the Public $ 9.09
======
During the Fund's fiscal period ended July 31, 1994 and the
fiscal years ended September 30, 1993 and 1992, the aggregate
amount of underwriting commissions paid with respect to shares of
the Fund were $77,748, $403,693 and $77,192, respectively. Of
that amount, the Principal Underwriter, received $4,456, $5,614
and $7,754, 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 period ended July 31, 1994, the Principal Underwriter
received $9,729 in contingent deferred sales charges with respect
to Class B share redemptions.
Investors choosing the initial sales charge alternative may
under certain circumstances be entitled to pay reduced sales
charges. The circumstances under which such investors may pay
reduced sales charges 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
35
<PAGE>
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, policyholders 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
-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
36
<PAGE>
-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 Balanced Fund
-The Alliance Short-Term U.S. Government Fund
Prospectuses for the Alliance Mutual Funds may be obtained
without charge by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the front
cover of this Statement of Additional Information.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on
the previous day) of (a) all Class A, Class B and
Class C shares of the Fund held by the investor and
(b) all shares of any other Alliance Mutual Fund
held by the investor; and
(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder
eligible to combine his or her purchase with that
of the investor into a single "purchase" (see
above).
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the sales charge for the $100,000 purchase
would be at the 2.25% rate applicable to a single $300,000
purchase of shares of the Fund, rather than the 3.25% rate.
To qualify for the Combined Purchase Privilege or to obtain
the Cumulative Quantity Discount on a purchase through a selected
37
<PAGE>
dealer or agent, the investor or selected dealer or agent must
provide the Principal Underwriter with sufficient information to
verify that each purchase qualifies for the privilege or
discount.
STATEMENT OF INTENTION. Class A investors may also obtain
the reduced sales charges shown in the table above by means of a
written Statement of Intention, which expresses the investor's
intention to invest not less than $100,000 within a period of 13
months in Class A shares (or Class A, Class B and/or Class C
shares) of the Fund or any other Alliance Mutual Fund. Each
purchase of shares under a Statement of Intention will be made at
the public offering price or prices applicable at the time of
such purchase to a single transaction of the dollar amount
indicated in the Statement of Intention. At the investor's
option, a Statement of Intention may include purchases of shares
of the Fund or any other Alliance Mutual Fund made not more than
90 days prior to the date that the investor signs a Statement of
Intention; however, the 13-month period during which the
Statement of Intention is in effect will begin on the date of the
earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to
invest a total of $60,000 during the following 13 months in
shares of the Fund or any other Alliance Mutual Fund, to qualify
for the 3.25% sales charge on the total amount being invested
(the sales charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation upon
the investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount. Shares purchased with the first 5% of such amount will
be held in escrow (while remaining registered in the name of the
investor) to secure payment of the higher sales charge applicable
to the shares actually purchased if the full amount indicated is
not purchased, and such escrowed shares will be involuntarily
redeemed to pay the additional sales charge, if necessary.
Dividends on escrowed shares, whether paid in cash or reinvested
in additional Fund shares, are not subject to escrow. When the
full amount indicated has been purchased, the escrow will be
released. To the extent that an investor purchases more than the
dollar amount indicated on the Statement of Intention and
qualifies for a further reduced sales charge, the sales charge
will be adjusted for the entire amount purchased at the end of
the 13-month period. The difference in sales charge will be used
38
<PAGE>
to purchase additional shares of the Fund subject to the rate of
sales charge applicable to the actual amount of the aggregate
purchases.
Investors wishing to enter into a Statement of Intention in
conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.
CERTAIN RETIREMENT PLANS. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of sales charges set forth in this Statement
of Additional Information, to an investment 13 times larger than
such initial purchase. The sales charge applicable to each
succeeding monthly purchase will be that normally applicable,
under such schedule, to an investment equal to the sum of (i) the
total purchase previously made during the 13-month period, and
(ii) the current month's purchase multiplied by the number of
months (including the current month) remaining in the 13-month
period. Sales charges previously paid during such period will
not be retroactively adjusted on the basis of later purchases.
REINSTATEMENT PRIVILEGE. A Class A shareholder who has
caused any or all of his or her shares of the Fund to be redeemed
or repurchased may reinvest all or any portion of the redemption
or repurchase proceeds in Class A shares of the Fund at net asset
value without any sales charge, provided that such reinvestment
is made within 30 calendar days after the redemption or
repurchase date. Shares are sold to a reinvesting shareholder at
the net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except
that no loss will be recognized to the extent that the proceeds
are reinvested in shares of the Fund. The reinstatement
privilege may be used by the shareholder only once, irrespective
of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in the Fund to his or her individual retirement account
or other qualified retirement plan account. Investors may
exercise the reinstatement privilege by written request sent to
39
<PAGE>
the Fund at the address shown on the cover of this Statement of
Additional Information.
SALES AT NET ASSET VALUE. The Fund may sell its Class A
shares at net asset value, i.e., without any sales charge, 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; officers, directors and present or retired full-time
employees of ACMC, the Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; officers, directors and
present and full-time employees of selected dealers or agents; or
the spouse, sibling, direct ancestor or direct descendant
(collectively "relatives") of any such person; or any trust,
individual retirement account or retirement plan account for the
benefit of any such person or relative; or the estate of any such
person or relative, if such shares are purchased for investment
purposes (such shares may not be resold except to the Fund);
(iii) certain employee benefit plans for employees of the
Adviser, the Principal Underwriter, Alliance Fund Services, Inc.
and their affiliates; (iv) persons who were shareholders of the
Fund before the commencement of sales of shares of the Fund
subject to a sales charge; and (v) persons participating in a
fee-based program, sponsored and maintained by a registered
broker-dealer and approved by the Principal Underwriter, pursuant
to which such persons pay an asset-based fee to such broker-
dealer, or its affiliate or agent, for service in the nature of
investment advisory or administrative services. These provisions
are intended to provide additional job-related incentives to
persons who serve the Fund or work for companies associated with
the Fund and selected dealers and agents of the Fund. Since
these persons are in a position to have a basic understanding of
the nature of an investment company as well as a general
familiarity with the Fund, sales to these persons, as compared to
sales in the normal channels of distribution, require
substantially less sales effort. Similarly, these provisions
extend the privilege of purchasing shares at net asset value to
certain classes of institutional investors who, because of their
investment sophistication, can be expected to require
significantly less than normal sales effort on the part of the
Fund and 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
40
<PAGE>
charge so that the Fund will receive the full amount of the
investor's purchase payment.
Proceeds from the contingent deferred sales charge are paid
to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class 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.
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
41
<PAGE>
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.
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 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 contingent deferred sales charge is waived on redemptions
of shares (i) following the death or disability, as defined in
the Internal Revenue Code of 1986, as amended (the "Code"), of a
shareholder, (ii) to the extent that the redemption represents a
minimum required distribution from an individual retirement
account or other retirement plan to a shareholder who has
attained the age of 70- 1/2 or (iii) that had been purchased by
present or former Directors of the Fund, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative, or by the estate of any such person or relative.
CONVERSION FEATURE. At the end of the period ending eight
years after the end of the calendar month in which the
shareholder's purchase order was accepted, Class B shares will
automatically convert to Class A shares and will no longer be
subject to a higher distribution services fee. Such conversion
will be on the basis of the relative net asset values of the two
classes, without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to reduce the
distribution services fee paid by holders of Class B shares that
42
<PAGE>
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.
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.
43
<PAGE>
_________________________________________________________________
REDEMPTION AND REPURCHASE OF SHARES
_________________________________________________________________
The following information supplements that set forth in the
Fund's Prospectus under the heading "Purchase and Sale of Shares-
- -How to Sell Shares."
REDEMPTION
Subject only to the limitations described below, the Fund's
Articles of Incorporation require that the Fund redeem the shares
tendered to it, as described below, at a redemption price equal
to their net asset value as next computed following the receipt
of shares tendered for redemption in proper form. Except for any
contingent deferred sales charge which may be applicable to Class
B shares, there is no redemption charge. Payment of the
redemption price will be made within seven days after the Fund's
receipt of such tender for redemption.
The right of redemption may not be suspended or the date of
payment upon redemption postponed for more than seven days after
shares are tendered for redemption, except for any period during
which the New York Stock Exchange (the "Exchange") is closed
(other than customary weekend and holiday closings) or during
which the Securities and Exchange Commission determines that
trading thereon is restricted, or for any period during which an
emergency (as determined by the Securities and Exchange
Commission) exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or as a
result of which it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or for such
other periods as the Securities and Exchange Commission may by
order permit for the protection of security holders of the Fund.
Payment of the redemption price may be made either in cash or
in portfolio securities (selected at the discretion of the
Directors of the Fund and taken at their value used in
determining the redemption price), or partly in cash and partly
in portfolio securities. However, payments will be made wholly in
cash unless the Directors believe that economic conditions exist
which would make such a practice detrimental to the best
interests of the Fund. The Fund has filed a formal election with
the Securities and Exchange Commission pursuant to which the Fund
will only effect a redemption in portfolio securities where the
particular shareholder of record is redeeming more than $250,000
or 1% of the Fund's total net assets, whichever is less, during
any 90-day period. In the opinion of the Fund's management,
however, the amount of a redemption request would have to be
significantly greater than $250,000 or 1% of total net assets
44
<PAGE>
before a redemption wholly or partly in portfolio securities
would be made. If payment for shares redeemed is made wholly or
partly in portfolio securities, brokerage costs may be incurred
by the investor in converting the securities to cash.
The value of a shareholder's shares on redemption or
repurchase may be more or less than the cost of such shares to
the shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class B shares will reflect
the deduction of the contingent deferred sales charge, if any.
Payment (either in cash or in portfolio securities) received by a
shareholder upon redemption or repurchase of his 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 $25,000. Proceeds of such redemptions are
remitted by check to the shareholder's address of record.
Telephone redemption by check is not available with respect to
shares (i) for which certificates have been issued, (ii) held in
nominee or "street name" accounts, (iii) purchased within 15
calendar days prior to the redemption request, (iv) held by a
shareholder who has changed his or her address of record within
the preceding 30 calendar days or (v) held in any retirement plan
45
<PAGE>
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.
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
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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 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.
_________________________________________________________________
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.
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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 the Alliance Mutual Funds without
the payment of any sales or service charges. Prospectuses for
each Alliance Mutual Fund may be obtained by contacting Alliance
Fund Services, Inc. at the address shown on the cover of this
Statement of Additional Information or by telephone at (800) 227-
4618 or, in Illinois, (800) 227-4170.
Class B shareholders of the Fund can exchange their Class B
shares ("original Class B shares") for Class B shares of any
other Alliance Mutual Fund that offers Class B shares ("new Class
B shares") without the payment of any contingent deferred sales
or service charges. For purposes of computing both the time
remaining before the new Class B shares convert to Class A shares
of that fund and the contingent deferred sales charge payable
upon disposition of the new Class B shares, the period of time
for which the original Class B shares have been held is added to
the period of time for which the new Class B shares have been
held, and the original fund's contingent deferred sales charge
schedule is applied.
Class C shareholders of the Fund can exchange their Class C
shares for Class C shares of the other Alliance Mutual Funds.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
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Prospectus for the Alliance 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 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 Fund whose shares have been tendered for exchange is
reasonably assured that the check has cleared, normally up to 15
calendar days following the purchase date. Exchanges of shares
of Alliance Mutual Funds will generally result in the realization
of a capital gain or loss for Federal income tax purposes.
Each Fund shareholder, and the shareholder's selected dealer
or agent, are authorized to make telephone requests for exchanges
unless Alliance Fund Services, Inc., receives written instruction
to the contrary from the shareholder, or the shareholder declines
the privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.
Eligible shareholders desiring to make an exchange should
telephone Alliance Fund Services, Inc. with their account number
and other details of the exchange, at (800) 221-5672 between 9:00
a.m. and 4:00 p.m., New York time, on a Fund business day as
defined above. Telephone requests for exchange received before
4:00 p.m. New York time on a Fund business day will be processed
as of the close of business on that day. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto Exchange"
whereby a specified dollar amount's worth of his or her Fund
shares (minimum $25) is automatically exchanged for shares of
another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto. Auto Exchange is not currently
available between Alliance Cash Management Funds and Alliance
Mutual Funds.
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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.
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
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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 shortly before the end of
the calendar year in which the $5 million level is attained. The
Fund waives any contingent deferred sales charge applicable to
redemptions of Class B shares by qualified plans investing
through the Alliance Premier Retirement Program.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP"). Sole proprietors,
partnerships and corporations may sponsor a SEP under which they
make annual tax-deductible contributions to an IRA established by
each eligible employee within prescribed limits based on employee
compensation.
403(b)(7) RETIREMENT PLAN. Certain tax-exempt organizations
and public educational institutions may sponsor 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
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any sales or service charges, in shares of the same class of such
other Alliance Mutual Fund(s). Further information can be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the cover
of this Statement of Additional Information. Investors wishing
to establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.
SYSTEMATIC WITHDRAWAL PLAN
Any shareholder who owns or purchases shares of the Fund
having a current net asset value of at least $4,000 (for
quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.
Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions. Shares acquired with
reinvested dividends and distributions will be liquidated first
to provide such withdrawal payments and thereafter other shares
will be liquidated to the extent necessary, and depending upon
the amount withdrawn, the investor's principal may be depleted.
A systematic withdrawal plan may be terminated at any time by the
shareholder or the Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to the Fund's involuntary redemption provisions. See
"Redemption and Repurchase of Shares -- General." Purchases of
additional shares concurrently with withdrawals are undesirable
because of sales charges when purchases are made. While an
occasional lump-sum investment may be made by a shareholder of
Class A shares who is maintaining a systematic withdrawal plan,
such investment should normally be an amount equivalent to three
times the annual withdrawal or $5,000, whichever is less.
For Class A shareholders, Class B shareholders that purchased
their Class B shares under a retirement plan and Class C
shareholders, payments under a systematic withdrawal plan may be
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made by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "Literature" telephone number shown on the cover of this
Statement of Additional Information.
STATEMENTS AND REPORTS
Each shareholder of the Fund receives semi-annual and annual
reports which include a portfolio of investments, financial
statements and, in the case of the annual report, the report of
the Fund's independent auditors, Ernst & Young LLP, as well as a
confirmation of each purchase and redemption. By contacting his
or her broker or Alliance Fund Services, Inc., a shareholder can
arrange for copies of his or her account statements to be sent to
another person.
_________________________________________________________________
NET ASSET VALUE
_________________________________________________________________
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
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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
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
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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
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.
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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
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
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<PAGE>
non-taxable return of capital to shareholders, rather than as an
ordinary dividend, reducing each shareholder's basis in his Fund
shares. To the extent that such distributions exceed such
shareholder's basis, each distribution will be treated as a gain
from the sale of shares.
OPTIONS, FUTURES AND FORWARD CONTRACTS. Certain listed
options, regulated futures contracts, and forward foreign
currency contracts are considered "section 1256 contracts" for
federal income tax purposes. Section 1256 contracts held by the
Fund at the end of each taxable year will be "marked to market"
and treated for federal income tax purposes as though sold for
fair market value on the last business day of such taxable year.
Gain or loss realized by the Fund on section 1256 contracts other
than forward foreign currency contracts will be considered 60%
long-term and 40% short-term capital gain or loss. Gain or loss
realized by the Fund on forward foreign currency contracts will
be treated as section 988 gain or loss and will therefore be
characterized as ordinary income or loss and will increase or
decrease the amount of the Fund's net investment income available
to be distributed to shareholders as ordinary income, as
described above. The Fund can elect to exempt its section 1256
contracts which are part of a "mixed straddle" (as described
below) from the application of section 1256.
The Treasury Department has the authority to issue
regulations that would permit or require the Fund either to
integrate a foreign currency hedging transaction with the
investment that is hedged and treat the two as a single
transaction, or otherwise to treat the hedging transaction in a
manner that is consistent with the hedged investment. The
regulations issued under this authority generally should not
apply to the type of hedging transactions in which the Fund
intends to engage.
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-
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counter or on certain foreign exchanges will be treated as
section 988 gain or loss and will therefore be characterized as
ordinary income or loss and will increase or decrease the amount
of the Fund's net investment income available to be distributed
to shareholders as ordinary income, as described above. The
amount of such gain or loss shall be determined by subtracting
the amount paid, if any, for or with respect to the option
(including any amount paid by the Fund upon termination of an
option written by the Fund) from the amount received, if any, for
or with respect to the option (including any amount received by
the Fund upon termination of an option held by the Fund). In
general, if the Fund exercises such an option on a foreign
currency, or such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option. The foregoing rules will also
apply to other put and call options which have as their
underlying property foreign currency and which are traded over-
the-counter or on certain foreign exchanges to the extent gain or
loss with respect to such options is attributable to fluctuations
in foreign currency exchange rates.
TAX STRADDLES. Any option, futures contract, 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.
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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.
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
59
<PAGE>
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
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
60
<PAGE>
portfolio differently, such as approval of the Advisory Agreement
and changes in investment policy, shares of each portfolio would
vote as a separate series.
Procedures for calling a shareholders' meeting for the
removal of Directors of the Fund, similar to those set forth in
Section 16(c) of the 1940 Act will be available to shareholders
of the Fund. The rights of the holders of shares of a series may
not be modified except by the vote of a majority of the
outstanding shares of such series.
An order has been received from the Securities and Exchange
Commission permitting the issuance and sale of 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 May [ ], 1995 there were [ ] shares of common
stock of the Fund outstanding, including [ ] Class A
shares, [ ] Class B shares and [ ] Class C
shares. Set forth below is certain information as to all persons
who owned of record or beneficially 5% or more of any class of
the Fund's outstanding shares at May [ ], 1995.
No. of % of % of % of
Name and Address Shares Class A Class B Class C
________________ ______ _______ _______ _______
Merrill Lynch
Mutual Fund Operations 90,890 22.1%
4800 Deer Lake Dr. East
Jacksonville, FL 32246
Merrill Lynch 57,510 44.2%
Mutual Fund Operations
4800 Deer Lake Dr. East
Jacksonville, FL 32246
Katty Industries Inc. 6,811 5.2%
401-K Plan
Kenneth Hutson TTEE
P.O. Box 14290
Odessa, TX 79768-4290
61
<PAGE>
COUNSEL
Legal matters in connection with the issuance of the shares
of Common Stock offered hereby are passed upon by Messrs. Seward
& Kissel, One Battery Park Plaza, New York, New York l0004.
Seward & Kissel has relied upon the opinion of Venable, Baetjer
and Howard, 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.
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
62
<PAGE>
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 year ended
January 31, 1995 was (14.72%), for the five years ended January
31, 1995 was 1.29% and for the ten years ended January 31, 1995
was 6.71%. The Fund's average annual compounded total return for
Class B shares for the one year ended January 31, 1995 was
(14.38%) and since commencement of the offering of Class B shares
(September 17, 1990) was 4.40%. The Fund's average annual
compounded total return for Class C shares for year ended January
31, 1995 was (11.58%) and for the period from May 3, 1993
(commencement of distribution) through January 31, 1995 was
3.63%.
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
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 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
63
<PAGE>
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
00250157.AS7
<PAGE>
PORTFOLIO OF INVESTMENTS
January 31, 1995 (unaudited) Alliance Global Small Cap Fund
Company Shares U.S. $ Value
COMMON STOCKS & OTHER
INVESTMENTS--92.4%
UNITED STATES INVESTMENTS--46.6%
CONSUMER PRODUCTS & SERVICES--23.1%
APPAREL--0.9%
Donnkenny, Inc.* 4,800 $ 77,700
Nautica Enterprise, Inc.* 8,800 249,700
Phillips Van Heusen Corp. 11,900 187,425
514,825
AUTO & RELATED--0.5%
Superior Industries International,
Inc. 13,200 321,750
BROADCASTING & CABLE--2.8%
ADVO, Inc. 34,200 602,775
Cablevision Systems Corp.
Cl.A* 4,800 248,400
Central European Media
Enterprises, Ltd.* 10,700 113,688
Viacom, Inc. Cl. B*
warrants, expiring 6/06/97 63,500 313,531
warrants, expiring 6/06/99 57,600 410,400
1,688,794
COSMETICS & HOUSEHOLD PRODUCTS--0.4%
Jean Philippe Fragrances, Inc.* 31,600 242,925
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES--9.2%
Centocor, Inc.*. 23,900 418,250
Community Health
Systems, Inc.* 28,100 783,288
Coram Healthcare Corp.* 29,400 628,425
Health Management* 26,900 516,144
Healthwise America, Inc.* 9,300 327,825
Medcath, Inc.* 30,700 418,288
National Health
Laboratories Hldgs. 73,900 988,413
North American
Biologicals, Inc.* 2,400 15,600
Physician Reliance Network* 21,700 434,000
Sun Healthcare Group, Inc.* 20,600 548,475
Surgical Care Affiliates, Inc. 17,800 369,350
5,448,058
ENTERTAINMENT & LEISURE TIME--2.8%
BJ Services Co. 27,300 467,513
Bally Gaming International,
Inc.* 27,400 208,925
Heritage Media Corp. Cl.A* 28,200 726,150
Playboy Enterprises,
Inc. Cl. B*. 26,100 244,688
1,647,276
PRINTING & PUBLISHING--0.8%
American Publishing Co. Cl.A* 11,000 130,625
IVI Publishing, Inc.*. 31,100 330,438
461,063
RESTAURANTS & LODGING--1.3%
Hospitality Franchise Systems 22,300 624,400
Host Marriott Corp. 16,000 152,000
International Pizza Corp. Ord.* 16,400 16,400
warrants, expiring 9/22/98* 16,400 3,331
796,131
RETAILING--3.1%
Bombay Co., Inc.* 35,600 315,950
Catalina Marketing Corp.* 7,400 370,925
Ethan Allen Interiors, Inc.* 5,200 115,700
Nine West Group, Inc.* 36,500 1,053,938
1,856,513
TEXTILE PRODUCTS--1.3%
Cygne Designs, Inc.* 36,800 437,000
Tommy Hilfiger Corp.* 16,600 338,225
775,225
13,752,560
TECHNOLOGY--12.1%
COMMUNICATION & EQUIPMENT--3.2%
Bay Networks, Inc.* 7,692 225,953
MFS Communications Co., Inc.* 4,100 156,825
<PAGE>
Company Shares U.S. $ Value
Millicom International
Cellular S.A.* 18,500 $ 482,156
Paging Network, Inc.* 9,100 307,125
Scientific-Atlanta, Inc. 33,600 676,200
1,848,259
COMPUTER HARDWARE--0.4%
Read-Rite Corp.* 13,900 208,500
COMPUTER PERIPHERALS--1.8%
Exabyte Corp.* 14,900 257,025
Hutchinson Technology, Inc.* 15,600 390,000
Komag, Inc.* 18,700 439,450
1,086,475
COMPUTER SOFTWARE & SERVICES--4.0%
Cadence Design Systems, Inc. 10,600 231,875
Informix Corp.* 25,900 832,038
Lotus Developement Corp.* 11,900 531,038
Soft Key International, Inc.* 14,100 339,281
Symantec Corp.* 21,500 421,938
2,356,170
SEMI-CONDUCTORS & RELATED--1.4%
Applied Materials, Inc.* 4,600 176,525
Cypress Semiconductor Corp. 21,600 507,600
LSI Logic Corp.* 4,900 208,250
892,375
OTHER--1.3%
Dionex Corp.* 11,800 467,575
QUALCOMM, Inc.* 12,100 317,625
785,200
7,176,979
ENERGY--5.5%
DOMESTIC PRODUCERS--1.5%
Diamond Shamrock, Inc 26,200 612,425
Snyder Oil Corp 18,800 258,500
870,925
INTERNATIONAL PRODUCERS--0.1%
XCL, Ltd.* 110,000 68,750
OIL & GAS SERVICES--3.1%
Arethusa, Ltd.* 35,050 427,172
Global Marine, Inc.* 224,600 842,250
Rowan Cos., Inc.* 90,600 520,950
Tosco Corp. 1,800 51,525
Tuboscope Vetco
International Corp.* 6,100 46,131
1,888,028
OTHER--0.8%
Reading & Bates Corp.* 77,200 472,850
3,300,553
FINANCIAL SERVICES--3.2%
INSURANCE--3.2%
National Re Corp. 12,600 348,075
PXRE Corp. 27,200 676,600
20th Century Industries, Inc. 70,800 902,700
1,927,375
BASIC INDUSTRIES--2.7%
MACHINERY--0.7%
JLG Industries, Inc. 11,000 408,375
MINING & METALS--0.7%
AK Steel Holding Corp.* 5,100 128,775
Noble Drilling Corp.* 53,500 270,844
399,619
TRANSPORTATION & SHIPPING--1.3%
Airbourne Freight Corp. 10,400 228,800
Alaska Air Group, Inc.* 11,400 169,575
TNT Freightways Corp 15,250 404,125
802,500
1,610,494
Total United States Investments
(cost $25,783,063) 27,767,961
<PAGE>
Company Shares U.S. $ Value
FOREIGN INVESTMENTS--45.8%
ARGENTINA--0.1%
Telecom Argentina
Stet-France*(ADR)(a) 1,000 $ 48,250
Telephone utility
YPF S.A. (ADR) Cl. D. 1,000 20,625
Energy-international producers
68,875
AUSTRALIA--1.0%
AAPC, Ltd. 385,000 198,228
Restaurants & lodging
Diamond Ventures, Ltd.* 170,000 25,744
Mining & metals
Fai Life, Ltd. 619,954 389,613
Insurance
613,585
AUSTRIA--1.2%
Austria Mikro Systeme
International AG 4,000 313,445
Semi-conductors & related
Benckiser-Wasser-Technik AG 1,500 230,280
Pollution control
Mayr-Melnhof Karton AG*(a) 3,300 183,066
Paper & Forest 726,791
BELGIUM--0.4%
Tessenderlo Chemie, S.A. 700 227,269
Chemicals
BRAZIL--0.1%
Companhia Siderurgica de
Tubarao (ADR)(a) 3,000 79,719
Mining & metals
CANADA--1.4%
Bell Cable Media Plc.* 5,000 95,625
Broadcasting & cable
CHC Helicopter Corp. Cl.A 20,000 70,957
Airlines
MacMillan Bloedel, Ltd. 5,000 58,096
Paper & Forest
Miramar Mining Corp.* 23,000 91,801
Mining & metals
Nelvana, Ltd.*(a) 15,000 142,358
Entertainment & Leisure Time
Orbit Oil & Gas, Ltd.* 10,000 7,309
Oil & gas exploration
Quebecor Printing, Inc. 14,250 154,199
Printing & publishing
Renaissance Energy, Ltd.* 4,000 70,957
Energy-domestic producers
Royal Plastics Group, Ltd.* 20,300 154,846
Building & related
846,148
CHILE--0.8%
Banco Osorno Y La
Un (ADR) 11,000 127,875
Banking-Regional
Distribuidora Chilectra Metropolitan
S.A., Sponsored (ADR) 4,000 191,803
Electric & gas utility
Empresas Telex Chile, S.A. 8,000 81,000
Communication equipment
Enersis, S.A. Sponsored (ADR) 3,000 72,000
Electric utility
472,678
FINLAND--0.9%
Nokia Corp. pfd.-free(a) 3,000 436,114
Communication equipment
Tamro AB 20,000 96,495
Medical services
532,609
FRANCE--1.7%
Alcatel Cable 2,000 157,729
Communication equipment
Coflexip Sponsored (ADR) 20,000 490,000
Oil & gas services
Lafarge Coppee 2,000 138,694
Building & related
Synthelabo 5,000 213,623
Drugs, hospital supplies & medical
services 1,000,046
<PAGE>
Company Shares U.S. $ Value
GERMANY--2.9%
Bayer AG(b) 1,000 $ 230,870
Chemicals
Duerr Beteiliqunqs AG(b) 700 247,356
Machinery
Fielmann AG pfd.(b) 9,000 305,025
Retail
G.E.A. AG(b) 120 35,862
Engineering & construction
Hach AG(b) 300 125,123
Retail
Mannesmann AG(b) 1,000 268,177
Machinery
Marschollek Lautenschalaeger(b) 700 382,069
Insurance
Plettac AG 50 25,813
Multi-Industry
Rheinhold & Mahla AG 400 81,445
Multi-Industry
1,701,740
HONG KONG--0.8%
Concordia Paper Holdings
Ltd.*(ADR) 18,800 213,850
Multi-Industry
Fu Hui Jewelry Co., Ltd.* 400,000 23,788
Jewelry & watches
Paul Y.-ITC Construction Holdings,
Inc.* 800,000 138,591
Engineering & construction
Sing Tao 180,000 111,118
Printing & publishing
487,347
INDIA--0.6%
Gujarat Normal Fertilizer (GDR) 4,000 43,826
Chemicals
Shirarim Industrial Enterprises,
Ltd(c)* 15,000 315,000
warrants, expiring 4/28/96* 5,000 -0-
Multi-Industry
358,826
IRELAND--1.0%
Crean (James) Plc. 25,000 100,822
Multi-Industry
Irish Continental Group 21,500 140,874
Transportation-shipping
Ryan Hotels Plc. 450,000 210,608
Restaurants & lodging
Unidare, Ltd. 35,000 136,505
Multi-Industry
588,809
ITALY--3.1%
CIGA Hotels* 150,000 81,509
Restaurants & lodging
Editoriale La Republica S.p.A.* 20,000 30,678
Printing & publishing
Fila Holding Sponsored (ADR) 10,000 190,000
Apparel
Industrie Natuzzi S.p.A.*(ADR) 39,200 1,264,200
Furniture products
Luxottica Group (ADR) 7,000 240,625
Consumer products & services
Marzotto & Figli-D'ris 7,000 46,732
Textile products
1,853,744
JAPAN--10.2%
Bunkyodo Co., Ltd.* 2,000 80,463
Retail
Canon, Inc.(b) 17,000 251,345
Computer peripherals
Casio Computer Co., Ltd.(b) 11,000 119,487
Electronic equipment
Charle Co., Ltd. 4,000 73,221
Textiles
Chubu Sekiwa Real Estate, Ltd. 1,000 12,673
Real estate
Disco Corp. 3,000 86,296
Semi-conducts & related
Eidensha Co., Ltd. 6,000 81,468
Retail
<PAGE>
Company Shares U.S. $ Value
Fanuc, Ltd.(b) 3,500 $144,330
Electronic equipment
Fuji Electronics Co.*(b) 7,000 172,492
Semi-conductors & related
Fukuda Corp. 7,000 83,078
Miscellaneous technologies
Futuba Corp. 2,000 92,532
Multi-Industry
Hachijuni Bank 7,000 84,486
Banking-Regional
Honda Motor Co. 5,000 77,948
Auto & related
Innotech Corp. 2,200 78,552
Semi-conductors & related
Ishiguro Homa Co. 3,000 64,571
Retail
Kanamoto Co., Ltd.* 3,900 75,705
Engineering & construction
Kaneshita Construction 2,000 31,380
Engineering & construction
Kawasaki Steel Corp.(b) 40,000 154,891
Mining & metals
Kawasaki Kisen Kaisha, Ltd.* 11,000 37,948
Transportation-shipping
Keyence Corp.(b) 2,600 240,583
Machinery
Kyocera Corp.(b) 3,000 193,412
Semi-conductors & related
Lasertec Corp. 2,000 88,308
Electronics
Mabuchi Motor Co. 3,000 192,809
Transportation-shipping
Marutomi Group 400 3,822
Apparel
Matsuyadenki Co., Ltd.* 5,000 53,307
Retail
Minebea Co. 13,000 88,911
Machinery
Mitsubishi Motors Corp.(b) 17,000 153,030
Auto & related
Morishita Co., Ltd. 5,000 60,347
Consumer manufacturing
Murata Manufacturing Co., Ltd. 2,000 63,767
Communication equipment
NEC Corp. 10,000 93,538
Computer hardware
Nomura Ship Building 14,000 106,170
Engineering & construction
Nichiei Co., Ltd. 2,000 101,182
Financial services
Nihon Dempa Kogyo 6,000 156,902
Communication equipment
Nippon Steel Corp. 30,000 111,340
Mining & metals
Nippon Electric Glass Co., Ltd. 6,000 109,832
Consumer products & services
Nissen Corp., Ltd.* 6,960 189,007
Retail
Ohmori Co., Ltd. 1,000 18,909
Engineering & construction
Omron Corp. 8,000 136,787
Machinery
PS Corp. 7,000 158,411
Engineering & construction
Promise Co., Ltd. 3,000 121,599
Financial services
Ricoh Elemex Co., Ltd 5,000 62,861
Computer peripherals
Rohm Co., Ltd. 7,000 253,457
Machinery
SMC Corp. 4,500 229,017
Machinery
Santen Pharmaceutical Co. 6,000 162,333
Healthcare
Sanyo Shinpan Finance Co., Ltd. 900 63,817
Financial services
Sato Corp. 7,000 159,819
Consumer services
Sharp Corp. 8,000 117,475
Consumer manufacturing
Shimamura Co., Ltd. 2,000 92,532
Retail
<PAGE>
Company Shares U.S. $ Value
Showa Denko K.K.* 5,000 $ 16,243
Chemical
TDK Corp. 10,000 406,336
Consumer products & services
Techno Ryowa, Ltd. 1,000 19,613
Semi-conductors & related
Wesco, Inc. 3,000 119,487
Engineering & construction
Xebio Co. 1,000 33,493
Retail
Yamanashi Chuo Bank 4,000 41,438
Banking
Yamato Setsubi Construction 9,000 71,511
Engineering & construction
6,094,271
MALAYSIA--0.1%
C.I. Holdings Berhad 16,000 55,658
Building & related
MEXICO--0.4%
Buffete Industrial, S.A.
Sponsored (ADR) 700 9,625
Engineering & construction
Grupo Fernandex Editores, S.A. 15,000 10,769
Printing & publishing
Grupo Industrial Durango, S.A.* 15,000 129,375
Paper & forest products
International de Ceramica* 34,915 78,783
Ceramic tiles
228,552
NETHERLANDS--1.5%
Akzo Nobel N.V.(b) 2,000 226,269
Chemicals
Atag Holding N.V.(b) 1,000 69,099
Multi-Industry
BAM Groep N.V.(b) 2,154 131,180
Engineering & construction
Boskalis Westminster cum. pfd.(b) 263 4,913
Engineering & construction
Content Beheer N.V.(b) 10,000 192,657
Temporary help
KLM Royal Dutch Airlines(b) 10,000 267,611
Consumer services-airlines
891,729
NORWAY--1.6%
Dyno Industrier AS 9,000 253,312
Chemicals
Helikopter Service AS* 15,000 143,723
Energy-oil
Sensonor AS* 25,000 174,040
Miscellaneous technology
Tomra Systems AS 82,500 207,501
Pollution control
Western Bulk Shipping AS(a) 31,500 167,415
Shipping
945,991
PANAMA--0.3%
Banco Latinoamericano
de Exportaciones,
S.A. (ADR) 6,600 205,425
Finance
PORTUGAL--0.6%
Sumolis Comp Inc. 29,876 284,199
Food, beverages & tobacco
TVI Televisas Independente* 12,000 75,822
Broadcasting & cable
360,021
SINGAPORE--0.4%
GP Batteries International 10,000 26,500
Consumer products & services
Lim Kah Ngam, Ltd. 30,000 36,933
Multi-Industry
Singapore Press Holdings, Ltd. 10,000 171,252
Printing & publishing
234,685
SOUTH KOREA--0.6%
Samsung Electronics Co., Ltd.
(GDS)*(a)(ADR) 7,000 255,500
baby shrs(a) 290 15,370
Semi-conductors & related
Yukong, Ltd. (ADR) 5,280 56,760
Energy international producers
327,630
<PAGE>
Company Shares U.S. $ Value
SPAIN--0.5%
Acerinox, S.A. 1,500 $ 155,081
Mining & metals
Construcciones Y Aux de Ferr* 3,000 136,163
Railroad transportation
291,244
SWEDEN--2.4%
Autoliv AB*(ADR) 3,900 141,656
Auto & related
Hoganas AB Cl. B*(a) 15,000 241,045
Mining & metals
Kalmar Industries AB(a) 16,000 202,705
Machinery
Rottneros Bruks AB* 75,000 116,022
Paper & forest products
SKF AB* 25,000 438,415
Machinery
SSAB (Svenskt Stal Aktiebolag)
Series B 4,500 208,239
Mining & metals
Seco Tools AB 4,000 77,348
Machinery
1,425,430
SWITZERLAND--1.0%
Keramik Laufen Holding
AG-ptg. certs. 300 187,150
Household products
Lindtt & Spruengli AG Ord. 20 288,162
warrants, expiring 2/28/95* 200 3,193
Consumer products & services
SBSI Holdings S.A.-PC 500 105,140
Brokerage & money
management
583,645
TAIWAN--0.4%
The Taiwan Fund 9,200 212,750
Mutual Fund
TURKEY--0.1%
Netas Telekomunik Ord. Cl.B*(a) 215,600 53,103
Communication equipment
UNITED KINGDOM--9.7%
ACT Group Plc. 100,000 116,242
Computer software & services
Anglo United Plc. Ord.* 650,000 15,420
Miscellaneous basic industries
Aran Energy 350,000 240,788
Oil service
Asda Group Plc. 80,000 85,086
Retailing
Automated Security Holdings Plc* 180,008 196,434
Consumer products & services
Berkeley Group Plc. Ord.(b) 125,000 671,161
Building & related
Blenheim Group 10,000 30,365
Advertising
Bryant Group(b) 150,000 276,372
Building & related
Caird Group Plc.* 900,000 78,286
Pollution control
Cray Electronics Holdings Plc. 30,000 71,169
Communication equipment
Filtronic Comtec Plc.*(b) 180,000 543,729
Communication equipment
Kwik-Fit Holdings Plc. 250,000 604,934
Auto & related
M.S. International Plc. 800,000 278,349
Machinery
Mid-States Plc.* 740,000 749,012
Auto & related
Morrison (William)
Supermarkets Plc 40,000 91,729
Retailing
Mowlem (John) & Co. Plc.* 580,000 871,422
Engineering & construction
Northern Ireland
Electricity Plc.(b) 30,000 166,535
Electric & gas utility
<PAGE>
Company Shares U.S. $ Value
Powerscreen International Plc. 39,000 $ 151,113
Recycling equipment
Queens Moat Houses Plc.*(c) 600,000 9,489
Restaurants & lodging
Resort Hotels Plc. (c)* 1,000,000 -0-
Restaurants & lodging
RTZ Corp. 15,000 184,446
Mining & metals
Sears Plc. 70,000 109,046
Retailing
Siebe Plc. 30,000 236,517
Machinery
5,777,644
Total Foreign Investments
(cost $29,385,990) 27,245,964
Total Common Stock &
Other Investments
(cost $55,169,053) 55,013,925
CORPORATE BOND--0.4%
COMMUNICATION & EQUIPMENT--0.4%
Intelcom Group, Inc.(a)(c)
8.00%, 9/17/98
(cost $257,489) US$ 257 $ 216,173
COMMERCIAL PAPER--4.9%
Merrill Lynch & Co.
5.85%, 2/01/95
(amortized cost $2,926,000) US$2,926 2,926,000
TOTAL INVESTMENTS--97.7%
(cost $58,352,542) 58,156,098
Other assets less
liabilities--2.3% 1,379,427
NET ASSETS--100% $59,535,525
* Non-income producing.
(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 January 31,
1995 these securities amounted to $2,040,818 or 3.4% of net assets.
(b) Securities (with an aggregate market value of $5,573,578), segregated to
collateralize a forward exchange currency contract.
(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.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1995 (unaudited) Alliance Global Small Cap Fund
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $58,352,542) $58,156,098
Cash, at value (cost $1,724,787) 1,740,893
Receivable for investment securities sold 2,002,313
Dividends and interest receivable 172,089
Foreign taxes receivable 36,400
Receivable for capital stock sold 36,059
Total assets 62,143,852
LIABILITIES
Payable for investment securities purchased 1,539,670
Unclaimed dividends 634,284
Unrealized depreciation of forward exchange currency contracts 106,183
Payable for capital stock repurchased 86,457
Management fee payable 51,360
Distribution fee payable 18,910
Accrued expenses 171,463
Total liabilities 2,608,327
NET ASSETS $59,535,525
COMPOSITION OF NET ASSETS
Capital stock, at par $ 68,705
Additional paid-in capital 68,423,526
Accumulated net investment loss (4,312,347)
Accumulated net realized loss on investments and foreign currency transactions (4,359,887)
Net unrealized depreciation of investments and foreign currency denominated assets and liabilities (284,472)
$59,535,525
</TABLE>
<TABLE>
<CAPTION>
CALCULATION OF MAXIMUM OFFERING PRICE
<S> <C>
Class A Shares
Net asset value and redemption price per share
($53,830,187/6,188,801 shares of capital stock issued and outstanding) $8.70
Sales charge--4.25% of public offering price .39
Maximum offering price $9.09
Class B Shares
Net asset value and offering price per share
($4,574,236/546,555 shares of capital stock issued and outstanding) $8.37
Class C Shares
Net asset value, redemption and offering price per share
($1,131,102/135,112 shares of capital stock issued and outstanding) $8.37
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended January 31, 1995 (unaudited) Alliance Global Small Cap Fund
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
Dividends (net of foreign taxes withheld of $20,942) $251,939
Interest 175,764 $ 427,703
EXPENSES
Management fee 335,341
Distribution fee--Class A 91,778
Distribution fee--Class B 22,881
Distribution fee--Class C 6,931
Transfer agency 120,148
Administrative 91,511
Custodian 48,742
Registration 43,623
Audit and legal 40,701
Printing 20,784
Directors' fees 16,598
Miscellaneous 26,817
Total expenses 865,855
Net investment loss (438,152)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments 3,826,986
Net realized loss on foreign currency transactions (381,010)
Net change in unrealized appreciation of investments (3,037,613)
Net change in unrealized depreciation of foreign currency denominated
assets and liabilities (1,513,924)
Net loss on investments and foreign currency transactions (1,105,561)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(1,543,713)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended October 1, 1993
January 31, 1995 to
(unaudited) July 31, 1994*
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment loss $ (438,152) $ (751,009)
Net realized gain on investments and foreign currency transactions 3,445,976 5,770,260
Net change in unrealized appreciation (depreciation) of investments
and foreign currency denominated assets and liabilities (4,551,537) (6,096,357)
Net decrease in net assets from operations. (1,543,713) (1,077,106)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (11,284,722) -0-
Class B (274,470) -0-
Class C (942,024) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 6,988,930 545,313
Total decrease (7,055,999) (531,793)
NET ASSETS
Beginning of year 66,591,524 67,123,317
End of period $ 59,535,525 $66,591,524
</TABLE>
*The fund changed its fiscal year end from September 30 to July 31.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
January 31, 1995 (unaudited) 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 deter- mined 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 January 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 $381,010 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
unrealized depreciation of investments and 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. Change of Year End
The Fund changed its fiscal year end from September 30 to July 31.
Accordingly, the statements of changes in net assets and per share data and
ratios reflect the period from October 1, 1993 to July 31, 1994.
7. Change in Accounting for Distributions to Shareholders
Effective November 1, 1993, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As
a result, the Funds changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations.
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
<PAGE>
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. No
reimbursement was required for the six months ended January 31, 1995.
Pursuant to the management agreement, the Fund paid $91,511 to the Manager
representing the cost of certain legal and accounting services provided to
the Fund by the Manager for the six months ended January 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 $81,178 for the six months ended January 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 $1,092 from the sale of Class A shares and $7,516
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the six months ended January 31, 1995.
Brokerage commissions paid on securities transactions for the six months
ended January 31, 1995 amounted to $123,844, 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 $794,327, and
$272,796 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.
NOTE D: Investment Transactions
Purchases and sales of investment securities (excluding short- term
investments) aggregated $40,381,171 and $45,948,427, respectively, for the
six months ended January 31, 1995. There were no purchases or sales of U.S.
Government and government agency obligations for the six months ended January
31, 1995.
1. 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 from
foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for
investment or U.S. Government securities in a separate account of the Fund's
commitments under forward exchange currency contracts entered into with
respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
At January 31, 1995, the Fund had outstanding forward exchange currency
contracts, both to purchase and sell foreign currencies against the U.S.
dollar as follows:
<PAGE>
<TABLE>
<CAPTION>
Contract Cost on Unrealized
Amount Origination U.S. $ Appreciation/
Foreign Currency Buy Contracts (000) Date Current Value (Depreciation)
<S> <C> <C> <C> <C>
British Pounds, expiring 4/03/95 1,425 $2,227,803 $2,249,325 $ 21,522
Foreign Currency Sale Contracts
British Pounds, expiring 4/03/95 2,375 3,715,617 3,748,875 (33,258)
Japanese Yen, expiring 4/21/95 130,000 1,303,258 1,319,003 (15,745)
Deutsche Mark, expiring 4/03/95 2,413 1,537,368 1,587,972 (50,604)
Netherland Guilder, expiring 4/03/95 1,589 904,353 932,451 (28,098)
$(106,183)
</TABLE>
At January 31, 1995, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $6,396,878 and gross unrealized
depreciation of investments was $6,593,322, resulting in net unrealized
depreciation of $196,444.
NOTE E: Illiquid Securities
Date Acquired Cost Value
Intelcom Group, Inc. 8.00%, 9/17/98 9/16/93 $ 249,707 $216,173
Queens Moat Houses Plc. 8/20/92 373,681 9,489
Resort Hotels Plc. 5/01/92 719,086 -0-
$1,342,474 $225,662
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 January 31, 1995 represents 0.4% 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:
<TABLE>
<CAPTION>
Shares Amount
Six Months Ended October 1, 1993 Six Months Ended October 1, 1993
January 31, 1995 to January 31, 1995 to
Class A (unaudited) July 31, 1994* (unaudited) July 31, 1994*
<S> <C> <C> <C> <C>
Shares sold 205,492 325,941 $ 2,261,525 $ 3,837,992
Shares issued in reinvestment
of distributions 952,163 -0- 8,217,164 -0-
Shares redeemed (507,936) (632,975) (5,409,099) (7,361,992)
Net increase (decrease) 649,719 (307,034) $ 5,069,590 $(3,524,000)
Class B
Shares sold 208,647 333,615 $ 2,171,283 $ 3,794,604
Shares issued in reinvestment
of distributions 75,995 -0- 631,516 -0-
Shares redeemed (98,837) (77,401) (1,006,574) (875,725)
Net increase 185,805 256,214 $ 1,796,225 $ 2,918,879
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Amount
Six Months Ended October 1, 1993 Six Months Ended October 1, 1993
January 31, 1995 to January 31, 1995 to
Class C (unaudited) July 31, 1994* (unaudited) July 31, 1994*
<S> <C> <C> <C> <C>
Shares sold 95,971 165,941 $ 923,946 $1,883,546
Shares issued in reinvestment
of distribution 15,861 -0- 131,935 -0-
Shares redeemed (99,994) (66,414) (932,766) (733,112)
Net increase 11,838 99,527 $ 123,115 $1,150,434
</TABLE>
* The Fund changed its fiscal year end from September 30 to July 31.
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Global Small Cap Fund
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Class A
Six Months Ended October 1, 1993
January 31, 1995 to Year Ended September 30,
(unaudited) 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 (.04)(a) (.15) (.15) (.16) (.06) (.05)(a)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions (.23) (.01) 2.49 (1.03) 2.35 (4.12)
Net increase (decrease) in net asset value
from operations (.27) (.16) 2.34 (1.19) 2.29 (4.17)
Less: Distributions
Distributions from net realized gains (2.11) -0- (.43) (.03) -0- (3.11)
Net asset value, end of period $ 8.70 $ 11.08 $ 11.24 $ 9.33 $ 10.55 $ 8.26
Total Return
Total investment return based on net asset
value (b) (2.26)% (1.42)% 25.83% (11.30)% 27.72% (31.90)%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $53,830 $61,372 $65,713 $58,491 $84,370 $68,316
Ratio of expenses to average net assets 2.52%(c) 2.42%(c) 2.53% 2.34% 2.29% 1.73%
Ratio of net investment loss to average net
assets (1.24)%(c) (1.26)%(c) (1.13)% (.85)% (.55)% (.46)%
Portfolio turnover rate 65% 78% 97% 108% 104% 89%
</TABLE>
See footnote summary on page 22.
<PAGE>
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Class B
Six Months Ended October 1, 1993
January 31, 1995 to Year Ended September 30,
(unaudited) July 31, 1994* 1993 1992 1991 1990 (d)
<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 (.02) (.17)(a) (.15) (.20) (.07) (.01)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.28) (.05) 2.38 (1.06) 2.30 (.85)
Net increase (decrease) in net asset
value from operations (.30) (.22) 2.23 (1.26) 2.23 (.86)
Less: Distributions
Distributions from net realized gains (2.11) -0- (.43) (.03) -0- -0-
Net asset value, end of period $ 8.37 $10.78 $11.00 $ 9.20 $10.49 $ 8.26
Total Return
Total investment return based on net
asset value (b) (2.61)% (2.00)% 24.97% (12.03)% 27.00% (9.43)%
Ratios/Supplemental Data
Net assets, end of period (000's
omitted) $4,574 $3,889 $1,150 $ 819 $ 121 $ 183
Ratio of expenses to average net assets 3.24%(c) 3.15%(c) 3.26% 3.11% 2.98% 2.61%(c)
Ratio of net investment loss to average
net assets (2.00)%(c) (1.93)%(c) (1.85)% (1.31)% (1.39)% (1.30)%(c)
Portfolio turnover rate 65% 78% 97% 108% 104% 89%
</TABLE>
See footnote summary on page 22.
<PAGE>
<TABLE>
<CAPTION>
Class C
Six Months Ended October 1, 1993 May 3, 1993(e)
January 31, 1995 to to
(unaudited) July 31, 1994* September 30, 1993
<S> <C> <C> <C>
Net asset value, beginning of period $10.79 $11.00 $ 9.86
Income From Investment Operations
Net investment loss (.09) (.17)(a) (.05)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions (.22) (.04) 1.19
Net increase (decrease) in net asset value
from operations (.31) (.21) 1.14
Less: Distributions
Distributions from net realized gains (2.11) -0- -0-
Net asset value, end of period $ 8.37 $10.79 $11.00
Total Return
Total investment return based on net asset
value (b) (2.73)% (1.91)% 11.56%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $1,131 $1,330 $ 261
Ratio of expenses to average net assets 3.21%(c) 3.13%(c) 3.75%(c)
Ratio of net investment income (loss) to
average net assets (1.96)%(c) (1.92)%(c) (2.51)%(c)
Portfolio turnover rate 65% 78% 97%
</TABLE>
* 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) Annualized.
(d) For the period September 17, 1990 (commencement of distribution) to
September 30, 1990.
(e) Commencement of distribution.
<PAGE>
July 31, 1994 Alliance Global Small Cap Fund
<TABLE>
<CAPTION>
Company Shares U.S. $ Value
<S> <C> <C>
COMMON STOCKS & OTHER INVESTMENTS--92.1%
UNITED STATES INVESTMENTS--48.8%
CONSUMER PRODUCTS & SERVICES--20.7%
APPAREL--3.1%
Authentic Fitness Corp.* 20,300 $ 271,513
Donnkenny, Inc.* 21,400 521,625
Nautica Enterprise, Inc.* 32,200 780,850
Quicksilver, Inc.* 47,700 500,850
2,074,838
AUTO & RELATED--1.3%
Automotive Industries Holdings, Inc.
Cl.A* 30,400 843,600
BROADCASTING & CABLE--2.4%
ADVO, Inc. 39,700 664,975
Associated Communications Corp.
Cl.B* 22,800 592,800
Cablevision Systems Corp. Cl.A* 5,500 313,500
1,571,275
BUILDING & RELATED--0.7%
Lennar Corp. 23,750 477,969
COSMETICS & HOUSEHOLD PRODUCTS--0.8%
Jean Philippe Fragrances, Inc.* 49,300 517,650
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES--4.1%
Coastal Healthcare Group, Inc.* 2,000 69,000
Community Health Systems, Inc.* 33,300 715,950
Future Healthcare, Inc.* 25,600 313,600
Homecare Management, Inc.* 30,900 428,738
National Health Laboratories Hldgs. 25,400 288,925
Noven Pharmaceuticals, Inc.* 15,400 177,100
Perceptive Biosystems, Inc.* 21,500 268,750
Protein Design Labs, Inc.* 20,200 382,538
SciMed Life Systems, Inc.* 3,200 97,200
2,741,801
ENTERTAINMENT & LEISURE TIME--1.4%
Bally Gaming International, Inc.* 42,700 501,725
Discovery Zone, Inc.* 4,400 81,950
Heritage Media Corp. Cl.A* 19,000 380,000
963,675
PRINTING & PUBLISHING--0.5%
American Publishing Co. Cl.A* 23,000 327,750
RESTAURANTS & LODGING--0.1%
International Pizza Corp. Ord.* 16,400 41,000
warrants, expiring 9/22/98* 16,400 4,613
45,613
RETAILING--4.5%
Bombay Co., Inc.* 38,300 406,938
Catalina Marketing Corp.* 8,000 370,000
Designs, Inc.* 35,100 342,225
General Nutrition Cos., Inc.* 12,800 249,600
Nature's Bounty, Inc.* 47,900 347,275
Nine West Group, Inc.* 18,800 528,750
Sun Television & Appliances, Inc. 37,800 368,550
Whole Foods Market, Inc.* 21,700 401,450
3,014,788
TEXTILE PRODUCTS--1.6%
Cygne Designs, Inc.* 21,200 477,000
Tommy Hilfiger Corp.* 14,400 583,200
1,060,200
OTHER--0.2%
Envoy Corp.* 6,300 111,825
13,750,984
<PAGE>
TECHNOLOGY--8.9%
COMMUNICATION & EQUIPMENT--2.5%
Intelcom Group, Inc.* 10,200 $ 144,075
MFS Communications Co., Inc.* 9,100 268,450
Millicom International Cellular,
S.A.* 1,000 23,875
Paging Network, Inc.* 12,600 335,475
Scientific-Atlanta, Inc. 25,850 898,288
1,670,163
COMPUTER HARDWARE--0.4%
AST Research, Inc.* 19,600 291,550
COMPUTER PERIPHERALS--1.3%
Exabyte Corp.* 35,900 560,938
Hutchinson Technology, Inc.* 13,200 349,800
910,738
COMPUTER SOFTWARE & SERVICES--1.4%
Sybase, Inc.* 20,400 803,250
Walker Interactive Systems, Inc.* 15,700 109,900
913,150
SEMI-CONDUCTORS & RELATED--2.2%
Advanced Micro Devices, Inc.* 8,800 237,600
Applied Materials, Inc.* 9,600 429,600
Lam Research Corp.* 7,300 206,225
LSI Logic Corp.* 21,300 577,763
1,451,188
TELEPHONE UTILITY--0.1%
Atlantic Tele-Network, Inc. 5,000 50,625
OTHER--1.0%
Dionex Corp.* 13,700 457,238
QUALCOMM, Inc.* 12,100 217,800
675,038
5,962,452
ENERGY--7.9%
DOMESTIC PRODUCERS--2.3%
Cabot Oil & Gas Corp. Cl.A 37,300 722,688
Diamond Shamrock, Inc. 14,700 396,900
Snyder Oil Corp. 23,100 410,025
1,529,613
INTERNATIONAL PRODUCERS--0.2%
XCL, Ltd.* 110,000 130,625
OIL & GAS SERVICES--5.1%
Arethusa, Ltd.* 45,400 550,475
Global Marine, Inc.* 213,800 988,825
Oceaneering International, Inc.* 36,100 509,913
Rowan Cos., Inc.* 92,600 763,950
Tuboscope Vetco International Corp.* 81,100 577,838
3,391,001
OTHER--0.3%
Seitel, Inc.* 6,500 208,000
5,259,239
BASIC INDUSTRIES--6.5%
CHEMICALS--0.1%
OM Group, Inc. 3,500 69,125
ENGINEERING & CONSTRUCTION--0.4%
USG Corp.* 13,300 279,300
MACHINERY--2.5%
Cummins Engine Co., Inc. 5,500 220,688
JLG Industries, Inc. 24,800 880,400
Pentair, Inc. 15,000 564,375
1,665,463
MINING & METALS--1.0%
AK Steel Holding Corp.* 7,500 210,000
American Resource Corp.* 8,000 44,000
Harsco Corp. 10,900 433,275
687,275
<PAGE>
PAPER & FOREST PRODUCTS--0.8%
Rayonier, Inc. 17,100 $ 527,963
SURFACE TRANSPORTATION & SHIPPING--0.8%
TNT Freightways Corp. 22,650 560,588
OTHER--0.9%
National Gypsum Co.* 16,000 564,000
4,353,714
FINANCIAL SERVICES--4.8%
INSURANCE--2.5%
Harleysville Group, Inc. 6,000 124,500
NAC Re Corp. 12,350 345,800
National Re Corp. 13,800 363,975
PXRE Corp. 31,100 816,375
1,650,650
SAVINGS & LOAN--2.3%
Charter One Financial, Inc. 16,600 352,750
Collective Bancorp, Inc. 21,075 424,134
Commercial Federal Corp.* 20,900 522,500
Metropolitan Bancorp* 20,100 246,225
1,545,609
3,196,259
Total United States Investments
(cost $29,678,965) 32,522,648
FOREIGN INVESTMENTS--43.3%
ARGENTINA--0.4%
Baesa (ADR) 4,300 147,275
Food & beverages
Telecom Argentina
Stet-France (ADR)*(a) 2,000 126,000
Telephone utility
273,275
AUSTRALIA--1.4%
AAPC, Ltd. 385,000 279,032
Restaurants & lodging
Diamond Ventures, Ltd.* 170,000 36,459
Mining & metals
Fai Life, Ltd. 619,954 504,335
Insurance
Parbury, Ltd.* 302,757 134,343
Retail hardware
954,169
AUSTRIA--1.1%
Austria Mikro Systeme International
AG 4,000 242,953
Semi-conductors & related
Benckiser-Wasser-Technik AG 1,650 229,113
Pollution control
Mayr-Melnhof Karton AG*(a) 4,300 232,670
Paper & forest products
704,736
BELGIUM--0.3%
Tessenderlo Chemie, S.A. 500 162,308
Chemicals
BRAZIL--0.2%
Companhia Siderurgica de Tubarao(a) 5,300 132,500
Mining & metals
CANADA--1.9%
Call-Net Enterprises, Inc.*(a) 12,500 93,762
Telephone utility
Canadian Fracmaster, Ltd.*(a) 12,500 99,410
Oil & gas services
CHC Helicopter Corp. Cl.A 20,000 126,522
Airlines
Cott Corp. 20,800 249,600
Multi-Industry
Eicon Technology Corp.*(a) 9,500 74,693
Computer software & services
Maax, Inc.* 3,000 23,859
Building & related
Miramar Mining Corp.* 23,000 95,616
Mining & metals
Nelvana, Ltd.*(a) 14,000 142,970
Broadcasting & cable
<PAGE>
Orbit Oil & Gas, Ltd. 10,000 $ 12,002
Oil & gas exploration
Quebecor Printing, Inc. 14,250 171,281
Printing & publishing
Renaissance Energy, Ltd.* 4,000 85,313
Energy-domestic producers
Sidus Systems, Inc.*(a) 9,700 64,870
Computer software & services
1,239,898
CHILE--0.9%
Distribuidora Chilectra Metropolitan
S.A., Sponsored (ADR) 8,000 344,000
Electric & gas utility
Enersis, S.A. Sponsored (ADR) 7,000 161,875
Electric utility
Maderas y Sinteticos Sociedad
Anonima Masisa 5,000 116,250
Paper & forest products
622,125
FINLAND--1.7%
Nokia AB Corp. pfd.-free(a) 12,000 1,152,889
Communication equipment
FRANCE--0.3%
Coflexip Sponsored (ADR) 1,700 39,101
Oil & gas services
Synthelabo 5,000 181,752
Drugs, hospital supplies & medical
services
220,853
GERMANY--2.0%
Barmag AG 100 24,582
Machinery
Computer 2000 AG 700 280,176
Computer software & services
Duerr Beteiliqunqs AG 700 313,268
Machinery
Hach AG 300 131,988
Retail
Marschollek Lautenschlaeger 760 457,005
Insurance
Rheinhold & Mahla AG 500 120,393
Building & related
1,327,412
HONG KONG--0.7%
Fu Hui Jewelry Co., Ltd. 500,000 44,011
Jewelry & watches
Giordano Holdings, Ltd. 300,000 166,985
Retail apparel
Maanshan Iron & Steel Co.*(a) 158,000 56,244
Mining & metals
Paul Y.-ITC Construction Holdings,
Inc.* 900,000 202,715
Engineering & construction
Swank International Manufacturing Co. 20,000 4,401
Consumer products & services
474,356
INDIA--0.7%
Dcw, Ltd.*(a) 17,000 242,250
Chemicals
India Growth Fund, Inc. 50,000 132,911
Mutual funds
Indo Gulf Fertilizer, Ltd.(a) 20,000 78,000
Chemicals
453,161
IRELAND--0.8%
Grafton Group Plc. 40,000 212,780
Building & related
Ryan Hotels Plc. 450,000 188,082
Restaurants & lodging
Unidare, Ltd. 35,000 140,966
Multi-Industry
541,828
ITALY--3.1%
Burgo (Cartiere) Ord.* 5,000 28,648
rights, expiring 12/31/95* 5,000 242
Paper & forest products
CIGA Hotels* 250,000 173,812
Restaurants & lodging
<PAGE>
Editoriale La Republica S.p.A. 20,000 $ 40,782
Printing & publishing
Fila Holding Sponsored (ADR) 10,000 157,500
Apparel
Industrie Natuzzi S.p.A. (ADR)* 56,600 1,613,100
Furniture products
Marzotto (GAE) & Figli-D'ris 10,000 65,049
Textile products
2,079,133
JAPAN--6.0%
Bridgestone Metalpha Corp.* 4,000 65,550
Auto & related
Bunkyodo Co., Ltd.* 3,000 107,919
Retail
Canon Aptex, Inc.* 2,000 73,744
Computer peripherals
C-Cube Corp. 3,000 44,666
Engineering & construction
Cesar Co. 3,000 40,169
Real estate
Charle Co., Ltd. 9,000 233,824
Textiles
Chubu Sekiwa Real Estate, Ltd. 9,000 140,294
Real estate
Disco Corp.* 3,000 86,934
Semi-conductors & related
Eidensha Co., Ltd. 8,000 135,098
Retail
Fuji Electronics Co.* 10,000 314,763
Semi-conductors & related
Fuji PS Corp. 7,000 171,371
Building & related
Fukuda Corp. 7,000 97,227
Engineering & construction
Ishiguro Homa Co. 3,000 88,433
Retail
Kanamoto Co., Ltd.* 4,000 125,905
Engineering & construction
Kaneshita Construction 2,000 35,173
Engineering & construction
Lasertec Corp. 4,000 179,865
Electronics
Maezawa Kyuso Industries Co. 2,000 60,554
Engineering & construction
Matsuyadenki Co., Ltd.* 10,000 122,907
Retail
Marutomi Group 400 6,834
Apparel
Morishita Co., Ltd. 6,000 112,115
Consumer manufacturing
Nichiei Co., Ltd. 2,000 169,872
Financial services
Nihon Dempa Kogyo* 2,000 65,151
Communication equipment
Nissen Corp., Ltd.* 5,000 213,839
Retail
Ohmori Co., Ltd. 5,500 125,306
Engineering & construction
Osaka Organic Chemical Industries 8,000 107,919
Chemicals
Promise Co., Ltd.* 2,000 127,904
Financial services
Ricoh Elemex Co., Ltd.* 5,000 77,941
Computer peripherals
Sanyo Chemical Industries 2,000 22,583
Chemicals
Sanyo Shinpan Finance Co., Ltd. 1,500 157,381
Financial services
Sho-Bond Construction Co., Ltd. 3,300 98,925
Engineering & construction
Suido Kiko 5,000 75,443
Pollution control
<PAGE>
Techno Ryowa, Ltd. 3,000 $ 89,337
Semi-conductors & related
Wesco, Inc.* 3,000 132,805
Engineering & construction
Yamanashi Chuo Bank 8,000 91,935
Banking
Yamato Setsubi Construction 18,000 175,552
Engineering & construction
3,975,238
KOREA--0.7%
Samsung Electronics-GDS*(a) 7,000 433,125
Semi-conductors & related
MALAYSIA--0.4%
C.I. Holdings Berhad 20,000 77,115
Building & related
Renong Berhad 150,000 205,900
Multi-Industry
283,015
MEXICO--0.8%
Buffete Industrial, S.A. Sponsored
(ADR)* 7,500 287,813
Engineering & construction
Grupo Industrial Maseca, S.A.(a) 3,000 71,625
Food processing
International de Ceramica* 34,915 179,656
Ceramic tiles
539,094
NETHERLANDS--1.0%
BAM Groep N.V. 2,154 128,256
Engineering & construction
Boskalis Westminster cum. pfd. 10,000 221,883
Engineering & construction
Content Beheer N.V. 17,500 278,198
Consumer products & services
628,337
NORWAY--0.9%
Norske Skogindustrier AS 2,000 51,448
Paper & forest products
Sensonor AS* 41,830 223,673
Miscellaneous technology
Tomra Systems AS 82,500 175,265
Pollution control
Western Bulk Shipping AS(a) 31,500 177,541
Shipping
627,927
PORTUGAL--0.5%
Sumolis Comp Inc. 29,876 323,548
Food, beverages & tobacco
SINGAPORE--0.3%
Resources Development Corp., Ltd. 50,000 193,663
Building materials
SPAIN--0.6%
Centros Commerciales Continente, S.A.* 7,500 157,475
Retail
Construcciones Y Aux de Ferr 4,000 256,864
Railroad transportation
414,339
SWEDEN--2.0%
Autoliv AB (ADS)*(a) 3,900 101,322
Auto & related
Arjo AB*(a) 2,400 38,432
Medical supplies
Celsius Industries
Corp. AB Cl.B 10,000 236,666
Aerospace
Hoganas AB Cl. B*(a) 17,500 231,843
Mining & metals
Kalmar Industries AB*(a) 16,000 164,637
Machinery
Rottneros Bruks AB* 75,000 75,244
Paper & forest products
Seco Tools AB 2,000 34,985
Machinery
SKF AB* 25,000 472,694
Machinery
1,355,823
<PAGE>
SWITZERLAND--1.0%
Danzas Basel AG-PC 100 $ 25,669
Transportation & shipping
Keramik Laufen Holding AG-ptg. certs. 300 165,178
Household products
Lindtt & Spruengli AG Ord. 20 308,035
warrants, expiring 2/28/95* 200 4,279
Consumer staples
SBSI Holding, S.A.-PC 500 152,530
Brokerage & money management
655,691
TAIWAN--0.4%
Taiwan Fund, Inc. 9,200 297,850
Mutual funds
TURKEY--0.7%
Medya Holding AS Cl. C Ord.* 2,356,480 329,907
Consumer services
Netas Telekomunik Ord. Cl. B*(a) 215,600 103,488
Communication equipment
433,395
UNITED KINGDOM--12.5%
ACT Group Plc. 100,000 184,920
Computer software & services
Allied Radio Loan Stock Ord. 2,177,540 201,335
Broadcasting
Anglo United Plc. Ord.* 1,650,000 54,031
Miscellaneous basic industries
Asda Group Plc. 200,000 177,215
Retailing
Automated Security Holdings Plc. 255,208 381,477
Consumer products & services
Bell Cablemedia Plc. (ADR)* 14,700 251,738
Broadcasting & cable
Berkeley Group Plc. Ord. 125,000 818,656
Building & related
Blenheim Group 20,000 71,194
Advertising
Bryant Group 250,000 593,285
Building & related
Caird Group Plc.* 1,000,000 119,427
Pollution control
Cray Electronics Holdings Plc. 50,000 139,460
Communication equipment
Kwik-Fit Holdings Plc. 300,000 739,680
Auto & related
M.S. International Plc. 800,000 628,728
Machinery
Mid-States Plc. 750,000 982,387
Auto & related
Morrison (William) Supermarkets Plc. 110,000 236,466
Retailing
Mowlem (John) & Co. Plc. 600,000 915,354
Engineering & construction
News International Plc. 40,000 147,319
Publishing & advertising
Northern Ireland Electricity Plc. 60,500 332,833
Electric & gas utility
PizzaExpress Plc. 105,000 197,402
Consumer products & services
Plantsbrook Group Plc. 370,000 535,964
Consumer products & services
Powerscreen International Plc. 30,000 137,303
Recycling equipment
Queens Moat Houses Plc.*(b) 600,000 9,246
Restaurants & lodging
Resort Hotels Plc. (b) 1,000,000 -0-
Restaurants & lodging
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Shares or
Principal
Amount
Company (000) U.S. $ Value
Sears Plc. 70,000 $ 124,050
Retailing
Security Services Plc. 30,000 319,453
Telephone utility
8,298,923
Total Foreign Investments
(cost $27,272,491) 28,798,611
Total Common Stocks &
Other Investments
(cost $56,951,456) 61,321,259
CORPORATE BOND--0.3%
COMMUNICATION & EQUIPMENT
Intelcom Group, Inc.(a)(b)
8.00%, 9/17/98
(cost $249,707) US $ 250 198,182
COMMERCIAL PAPER--8.6%
Merrill Lynch & Co.
4.20%, 8/01/94
(amortized cost $5,711,000) $ 5,711 $ 5,711,000
TOTAL INVESTMENTS--101.0%
(cost $62,912,163) 67,230,441
Other assets less liabilities--(1.0)% (638,917)
NET ASSETS--100% $66,591,524
</TABLE>
* Non-income producing.
(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,
1994 these securities amounted to $4,016,453 or 6.0% of net assets.
(b) Illiquid security, valued at fair market value (see Notes A and E).
Glossary:
ADR--American Depository Receipt
See notes to financial statements.
<PAGE>
Statement Of Assets And Liabilities
July 31, 1994 Alliance Global Small Cap Fund
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $62,912,163) $67,230,441
Cash, at value (cost $17,053) 14,718
Receivable for investment securities sold 1,730,883
Dividends and interest receivable 126,357
Receivable for capital stock sold 46,462
Foreign taxes receivable 20,108
Other assets 7,827
Total assets 69,176,796
LIABILITIES
Payable for investment securities purchased 1,510,422
Unclaimed dividends 655,961
Payable for capital stock redeemed 95,645
Management fee payable 56,617
Payable for forward exchange currency contracts 49,258
Distribution fee payable 20,048
Accrued expenses 197,321
Total liabilities 2,585,272
NET ASSETS $66,591,524
COMPOSITION OF NET ASSETS
Capital stock, at par $ 60,231
Additional paid-in capital 61,443,070
Distributions in excess of net investment income (3,874,195)
Accumulated net realized gain on investments and foreign
currency transactions 4,695,353
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 4,267,065
$66,591,524
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($61,372,237/5,539,082 shares of capital stock issued
and outstanding) $11.08
Sales charge-4.25% of public offering price .49
Maximum offering price $11.57
Class B Shares
Net asset value and offering price per share
($3,889,219/360,750 shares of capital stock issued and
outstanding) $10.78
Class C Shares
Net asset value, redemption and offering price per share
($1,330,068/123,274 shares of capital stock issued and $10.79
outstanding)
</TABLE>
See notes to financial statements.
<PAGE>
Statement Of Operations
October 1, 1993 to July 31, 1994* Alliance Global Small Cap Fund
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of
$82,769) $451,863
Interest 220,406 $ 672,269
EXPENSES
Management fee 578,879
Distribution fee--Class A 164,009
Distribution fee--Class B 23,686
Distribution fee--Class C 8,496
Transfer agency 196,304
Administrative 129,841
Custodian 78,323
Audit and legal 64,383
Registration 54,176
Printing 47,676
Directors' fees 21,543
Miscellaneous 55,962
Total expenses 1,423,278
Net investment loss (751,009)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS & FOREIGN CURRENCY
Net realized gain on investments 5,833,070
Net realized loss on foreign currency
transactions (62,810)
Net change in unrealized appreciation of
investments (6,046,903)
Net change in unrealized depreciation of
foreign currency denominated assets and
liabilities (49,454)
Net loss on investments (326,097)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(1,077,106)
</TABLE>
Statement Of Changes In Net Assets
<TABLE>
<CAPTION>
October 1,
1993 Year Ended
to July 31, September 30,
1994* 1993
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment loss $ (751,009) $ (712,983)
Net realized gain (loss) on investments and
foreign currency transactions 5,770,260 (948,019)
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities (6,096,357) 16,159,128
Net increase (decrease) in net assets from
operations (1,077,106) 14,498,126
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A -0- (2,651,627)
Class B -0- (38,084)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 545,313 (3,994,652)
Total increase (decrease) (531,793) 7,813,763
NET ASSETS
Beginning of period 67,123,317 59,309,554
End of period $66,591,524 $67,123,317
</TABLE>
* The Fund changed its fiscal year end from September 30 to July 31.
See notes to financial statements.
<PAGE>
Notes to Financial Statements
July 31, 1994 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, 1994.
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 $62,810 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
unrealized appreciation of investments and 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. Change of Year End
The Fund changed its fiscal year end from September 30 to July 31.
Accordingly, the statements of operations, changes in net assets and
financial highlights reflect the period from October 1, 1993 to July 31,
1994.
7. Change in Accounting for Distributions to Shareholders
Effective November 1, 1993, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As
a result, the Funds changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations. Net investment income, net realized gains and net assets were
not affected by this change. No adjustment resulted from the adoption of this
Statement of Position.
<PAGE>
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. No
reimbursement was required for the period ended July 31, 1994. Pursuant to
the management agreement, the Fund paid $129,841 to the Manager representing
the cost of certain legal and accounting services provided to the Fund by the
Manager for the period ended July 31, 1994.
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 $138,565 for the period ended July 31, 1994.
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 $4,456 from the sale of Class A shares and $9,729
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the period ended July 31, 1994.
Brokerage commissions paid on securities transactions for the period ended
July 31, 1994 amounted to $107,065, 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 $642,361, and
$201,251 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.
NOTE D: Investment Transactions
Purchases and sales of investment securities (excluding short-term
investments) aggregated $50,990,851 and $55,188,712, respectively, for the
period ended July 31, 1994. There were no purchases or sales of U.S.
Government and government agency obligations for the period ended July 31,
1994.
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. 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 from foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the 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, 1994, the Fund had
outstanding forward exchange currency contracts, both to buy and sell foreign
currencies against the U.S. dollar as follows:
<PAGE>
<TABLE>
<CAPTION>
Contract Cost on U.S. $
Amount Origination Current Unrealized
Foreign Currency Buy Contracts (000) Date Value Depreciation
<S> <C> <C> <C> <C>
Japanese Yen, expiring 8/02/94 10,879,725 $ 108,983 $ 108,716 $ (267)
Foreign Currency Sale Contracts
British Pounds, expiring 8/05/94 86,423 131,622 133,178 (1,556)
Japanese Yen, expiring 11/25/94 205,600,000 2,007,067 2,054,459 (47,392)
Spanish Peseta, expiring 8/01/94 7,199,456 55,126 55,169 (43)
$(49,258)
</TABLE>
At July 31, 1994, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $10,060,621 and gross unrealized
depreciation of investments was $5,739,796, resulting in net unrealized
appreciation of $4,320,825.
NOTE E: Illiquid Securities
<TABLE>
<CAPTION>
Date
Acquired Cost Value
<S> <C> <C> <C>
Intelcom Group, Inc. 8.00%, 9/17/98 9/16/93 $ 249,707 $198,182
Queens Moat Houses Plc. 8/20/92 373,681 9,246
Resort Hotels Plc. 5/01/92 719,086 -0-
$1,342,474 $207,428
</TABLE>
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, 1994 represents 0.3% 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:
<TABLE>
<CAPTION>
Shares Amount
October 1, October 1,
1993 Year Ended 1993
to September to Year Ended
July 31, 30, July 31, September 30,
Class A 1994** 1993 1994** 1993
<S> <C> <C> <C> <C>
Shares sold 325,941 194,911 $ 3,837,992 $ 1,957,527
Shares issued in reinvestment
of distributions -0- 202,739 -0- 1,960,483
Shares redeemed (632,975) (823,897) (7,361,992) (8,312,312)
Net decrease (307,034) (426,247) $(3,524,000) $(4,394,302)
Class B
Shares sold 333,615 34,098 $ 3,794,604 $ 342,911
Shares issued in reinvestment
of distributions -0- 3,385 -0- 32,187
Shares redeemed (77,401) (22,017) (875,725) (220,759)
Net increase 256,214 15,466 $ 2,918,879 $ 154,339
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Amount
October 1, October 1,
1993 May 31, 1993* 1993
to to to May 31, 1993* to
July 31, September 30, July 31, September 30,
Class C 1994** 1993 1994** 1993
<S> <C> <C> <C> <C>
Shares sold 165,941 26,411 $1,883,546 $272,825
Shares redeemed (66,414) (2,664) (733,112) (27,514)
Net increase 99,527 23,747 $1,150,434 $245,311
</TABLE>
NOTE G: 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 period ended July 31, 1994, this
benefit amounted to $82,769. 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 tax-payers on
their federal income tax return will be mailed to shareholders in January
1995.
* Commencement of distribution.
** The Fund changed its fiscal year end from September 30 to July 31.
<PAGE>
Financial Highlights Alliance Global Small Cap Fund
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Class A
Year Ended September 30,
October 1,
1993
to July 31,
1994* 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $11.24 $ 9.33 $ 10.55 $ 8.26 $ 15.54
Income From Investment Operations
Net investment loss (.15) (.15) (.16) (.06) (.05)(a)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (.01) 2.49 (1.03) 2.35 (4.12)
Net increase (decrease) in net
asset value from operations (.16) 2.34 (1.19) 2.29 (4.17)
Less: Distributions
Distributions from net realized
gains -0- (.43) (.03) -0- (3.11)
Net asset value, end of period $11.08 $11.24 $ 9.33 $10.55 $ 8.26
Total Return
Total investment return based on
net asset value (b) (1.42)% 25.83% (11.30)% 27.72% (31.90)%
Ratios/Supplemental Data
Net assets, end of period (000's
omitted) $61,372 $65,713 $58,491 $84,370 $68,316
Ratio of expenses to average net
assets 2.42%(c) 2.53% 2.34% 2.29% 1.73%
Ratio of net investment loss to
average net assets (1.26)%(c) (1.13)% (.85)% (.55)% (.46)%
Portfolio turnover rate 78% 97% 108% 104% 89%
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
Year Ended September 30,
October 1, October 1, May 3, 1993
1993 1993 (d) to
to July 31, to July 31, September 30,
1994* 1993 1992 1991 1990(e) 1994* 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $11.00 $ 9.20 $ 10.49 $ 8.26 $ 9.12 $11.00 $ 9.86
Income From Investment
Operations
Net investment loss (.17)(a) (.15) (.20) (.07) (.01) (.17)(a) (.05)
Net realized and unrealized
gain (loss) on
investments and foreign
currency transactions (.05) 2.38 (1.06) 2.30 (.85) (.04) 1.19
Net increase (decrease) in
net asset value from
operations (.22) 2.23 (1.26) 2.23 (.86) (.21) 1.14
Less: Distributions
Distributions from net
realized gains -0- (.43) (.03) -0- -0- -0- -0-
Net asset value, end of
period $10.78 $11.00 $ 9.20 $10.49 $ 8.26 $10.79 $11.00
Total Return
Total investment return
based on net asset value
(b) (2.00)% 24.97% (12.03)% 27.00% (9.43)% (1.91)% 11.56%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $3,889 $1,150 $ 819 $ 121 $ 183 $1,330 $ 261
Ratio of expenses to
average net assets 3.15%(c) 3.26% 3.11% 2.98% 2.61%(c) 3.13%(c) 3.75%(c)
Ratio of net investment
loss to average net
assets (1.93)%(c) (1.85)% (1.31)% (1.39)% (1.30)%(c) (1.92)%(c) (2.51)%(c)
Portfolio turnover rate 78% 97% 108% 104% 89% 78% 97%
</TABLE>
* 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) Annualized.
(d) Commencement of distribution.
(e) For the period September 17, 1990 (commencement of distribution) to
September 30, 1990.
<PAGE>
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, 1994, and the related statement of operations for the ten
months then ended, the statement of changes in net assets 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, 1994, 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, 1994, the results of its
operations for the ten months then ended, the changes in its net assets and
the financial highlights for each of the indicated periods, in conformity
with generally accepted accounting principles.
[SIGNATURE OF ERNST & YOUNG]
New York, New York
September 9, 1994
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional
Information:
Portfolio of Investments, July 31, 1994
Statement of Assets and Liabilities, July 31,
1994
Statement of Operations, period ended July 31,
1994
Statement of Changes in Net Assets, year ended
September 30, 1993 and period ended July 31,
1994
Notes to Financial Statements, July 31, 1994
Financial Highlights - for the years ended
September 30, 1990 through September 30, 1993
and period September 30, 1993 through July 31,
1994
Report of Independent Auditors - September 9,
1994
Portfolio of Investments, January 31, 1995
(unaudited)
Statement of Assets and Liabilities,
January 31, 1995 (unaudited)
Statement of Operations, period ended January
31, 1995 (unaudited)
Statement of Changes in Net Assets period
ended July 31, 1994 and six months ended
January 31, 1995 (unaudited)
Notes to Financial Statements, January 31,
1995 (unaudited)
Financial Highlights - for the years ended
September 30, 1990 through September 30,
1993,
Period September 30, 1993 through July 31,
1994 and six months ended January 31,
1995(unaudited)
C-1
<PAGE>
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).
(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-2
<PAGE>
(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.
(15) Rule 12b-1 Plan - Incorporated by reference to
Exhibit 15 to Post-Effective Amendment No. 59 to
Registrant's Registration Statement on Form N-1A,
filed October 28, 1994.
(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
C-3
<PAGE>
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 MAY 24, 1995)
______________ ____________________
Shares of Common Stock Class A - 13,324
par value $.01 Class B - 640
Class C - 153
______
Total 14,117
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:
"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,
C-4
<PAGE>
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 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.
C-5
<PAGE>
(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.
(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
C-6
<PAGE>
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:
(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.
C-7
<PAGE>
(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
(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:
C-8
<PAGE>
(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 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."
C-10
<PAGE>
ARTICLE X of the Registrant's By-Laws reads as
follows:
"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
C-11
<PAGE>
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2, 1980),
the Registrant will indemnify its directors 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 committed in their
capacities as trustee or director. A pro rata share of the
premium for this coverage is charged to each investment company
and to the Adviser.
C-12
<PAGE>
ITEM 28. Business and Other Connections of Investment
Adviser.
The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Fund" in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively, of
this Registration Statement are incorporated by
reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference.
ITEM 29. Principal Underwriters.
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale of
shares of the Registrant, also acts as Principal
Underwriter for the following investment companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Fund
Alliance Government Reserves
Alliance Global Dollar Government 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 Income 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.
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
The Hudson River Trust
(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 OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
____ ________________ _____________
Michael J. Laughlin Chairman
Robert L. Errico President
Kimberly A.
Baumgardner Senior Vice President
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumsiek Senior Vice President
William F. O'Grady Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G.
Poleonadkis Senior Vice President
Richard K. Saccullo Senior Vice President
Gregory K.
Shannahan Senior Vice President
Peter J. Szabo Senior Vice President
C-14
<PAGE>
Richard A. Winge Senior Vice President
Jim A. Yockey Senior Vice President
Edmund P.
Bergan, Jr. Senior Vice President, Secretary
Secretary and General
Counsel
Robert H. Joseph Vice President &
Controller
Stacia D. Petrou Vice President &
Treasurer
Michael T. Anderson Vice President
Kenneth F. Barkoff Vice President
Kevin T. Cannon Vice President
Mark J. Dunbar Vice President
Deirdre E. Duffy Vice President
Linda A. Finnerty Vice President
Sheila M. Flynn Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President
Mark D. Gersten Vice President Treasurer and
Chief Financial
Officer
Troy L. Glawe Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
Steven P. Hecht Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Mark H. Huston Vice President
Marek E. Lakotko Vice President
C-15
<PAGE>
Sheila F. Lamb Vice President
Stephen R. Laut Vice President
Thomas Leavitt, III Vice President
Christopher J.
MacDonald Vice President
John A. McClain Vice President
Gregory T. McCombs Vice President
Daniel D. McGinley Vice President
Matthew P. Mintzer Vice President
Nicole M. Nolan Vice President
Robert T. Pigozzi Vice President
Bruce W. Reitz Vice President
Joseph F. Sumanski Vice President
Nicholas K. Willett Vice President
Domenick Pugliese Vice President
Andrew L. Gangolf Vice President
Richard D. Allen Assistant Vice
President
Warren W.
Babcock III Assistant Vice
President
Benji A. Baer Assistant Vice
President
Casimir F.
Bolanowski Assistant Vice
President
Maria L. Carreras Assistant Vice
President
C-16
<PAGE>
Leo H. Cook Assistant Vice
President
John W. Cronin Assistant Vice
President
Richard W. Dabney Assistant Vice
President
Gerard P. DiSalvo Assistant Vice
President
Sohaila S. Farsheed Assistant Vice
President
Leon M. Fern Assistant Vice
President
William C. Fisher Assistant Vice
President
Joseph W. Gibson Assistant Vice
President
James E. Gunter Assistant Vice
President
William B. Hanigan Assistant Vice
President
Alan C. Hanson Assistant Vice
President
Vicky M. Hayes Assistant Vice
President
Daniel M. Hazard Assistant Vice
President
John C. Hershock Assistant Vice
President
Kenneth R. Hill Assistant Vice
President
William C. Howard Assistant Vice
President
C-17
<PAGE>
Thomas K. Intoccia Assistant Vice
President
Edward W. Kelly Assistant Vice
President
Donna M. Lamback Assistant Vice
President
David P. Lambert Assistant Vice
President
Nicholas J. Lapi Assistant Vice
President
Michael F. Mahoney Assistant Vice
President
Renate S. Mars Assistant Vice
President
Daniel G. McCabe Assistant Vice
President
Shawn P. McClain Assistant Vice
President
Maura A. McGrath Assistant Vice
President
Paul J. McIntyre Assistant Vice
President
Kevin M. McLoughlin Assistant Vice
President
Charles R. Mechler Assistant Vice
President
Thomas F. Monnerat Assistant Vice
President
Mark A. Moore Assistant Vice
President
Joanna D. Murray Assistant Vice
President
Jeanette M.
C-18
<PAGE>
Nardella Assistant Vice
President
William E. Noe Assistant Vice
President
Marilyn I. Noonan Assistant Vice
President
Robert E. Powers Assistant Vice
President
Patrick J. Pung Assistant Vice
President
Carol H. Rappa Assistant Vice
President
Karen C. Satterberg Assistant Vice
President
Raymond S. Scalfani Assistant Vice
President
Rodney J. Schull Assistant Vice
President
Robert M. Smith Assistant Vice
President
William J. Strott Assistant Vice
President
Joseph T. Tocyloski Assistant Vice
President
Neil B. Wood Assistant Vice
President
Mark R. Manley Assistant Secretary
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 (i) State Street Bank and
C-19
<PAGE>
Trust Company, the Registrant's Custodian with respect to the
Growth Portfolio and the South Africa-Free International
Portfolio, 225 Franklin Street, Boston, Massachusetts 02110 and
(ii) Brown Brothers Harriman & Co., the Registrant's Custodian
with respect to the Short-Term Global Income Portfolio, 40 Water
Street, Boston, Massachusetts 02109. All other records so
required to be maintained are maintained at the offices of
Alliance Capital Management L.P., 1345 Avenue of the Americas,
New York, New York, 10105.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
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-20
<PAGE>
SIGNATURE
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 1st day of June, 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 Chairman June 1, 1995
/s/ John D. Carifa
_______________________
John D. Carifa
(2) Principal Financial and
Accounting Officer Treasurer and June 1, 1995
/s/ Mark D. Gersten Chief Financial
_______________________ Officer
Mark D. Gersten
Treasurer
(3) All of the Directors
_______________________
Ruth Block
John D. Carifa
David H. Dievler
John H. Dobkin
William H. Foulk, Jr.
C-21
<PAGE>
Dr. James M. Hester
Clifford L. Michel
Henry Ugarte
By /s/ Edmund P. Bergan, Jr. June 1, 1995
_________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-22
<PAGE>
Index to Exhibits
_________________
Page
____
(11) Consent of Independent Auditors.
(27) Financial Data Schedule.
C-23
00250157.AS7
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
ALLIANCE GLOBAL SMALL CAP
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 58352542
<INVESTMENTS-AT-VALUE> 58156098
<RECEIVABLES> 11839939
<ASSETS-OTHER> 1740893
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71736930
<PAYABLE-FOR-SECURITIES> 1539670
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10661735
<TOTAL-LIABILITIES> 12201405
<SENIOR-EQUITY> 70682
<PAID-IN-CAPITAL-COMMON> 68421549
<SHARES-COMMON-STOCK> 7068224
<SHARES-COMMON-PRIOR> 6023106
<ACCUMULATED-NII-CURRENT> (4312347)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4359887)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (284472)
<NET-ASSETS> 59535525
<DIVIDEND-INCOME> 251939
<INTEREST-INCOME> 175764
<OTHER-INCOME> 0
<EXPENSES-NET> 865855
<NET-INVESTMENT-INCOME> (438152)
<REALIZED-GAINS-CURRENT> 3445976
<APPREC-INCREASE-CURRENT> (4551537)
<NET-CHANGE-FROM-OPS> (1543713)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (12501216)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5356754
<NUMBER-OF-SHARES-REDEEMED> (7348439)
<SHARES-REINVESTED> 8980615
<NET-CHANGE-IN-ASSETS> 6988930
<ACCUMULATED-NII-PRIOR> (3874195)
<ACCUMULATED-GAINS-PRIOR> 4695353
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 335341
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 865855
<AVERAGE-NET-ASSETS> 66546236
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> O
2
00250157.AY1
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Highlights" and "General Information - Independent
Auditors" and to the use of our report dated September 9, 1994,
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
May 31, 1995
00250157.AZ0
