<PAGE>
As filed with the Securities and Exchange
Commission on April 23, 1996
File No. 2-25364
811-01415
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 64 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 27 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)
______ immediately upon filing pursuant to paragraph (b)
______ on (date) pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(1)
______ on (date) pursuant to paragraph (a)(1)
______ 75 days after filing pursuant to paragraph (a)(2)
<PAGE>
______ on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
______ this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
Registrant has registered an indefinite number of shares of
Capital Stock pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant filed a notice pursuant to such Rule for
its fiscal year ended July 31, 1995 on September 28, 1995.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectus
_____________ ______________________
(Caption)
PART A
Item 1. Cover Page........................ Cover Page
Item 2. Synopsis.......................... Expense Information
Item 3. Condensed Financial Information... Financial Highlights
Item 4. General Description of
Registrant...................... Description of the
Fund
Item 5. Management of the Fund............ Management of the
Fund; General
Information
Item 6. Capital Stock and Other
Securities...................... General Information;
Dividends,
Distributions and
Taxes
Item 7. Purchase of Securities
Being Offered................... Alternative Purchase
Arrangements;
Purchase of Shares;
General Information
Item 8. Redemption or Repurchase.......... Purchase of Shares
and Redemption and
Repurchase of
Shares
Item 9. Pending Legal Proceedings......... Not Applicable
Location in
Statement of
Additional
PART B Information
_______ ___________
(Caption)
Item 10. Cover Page........................ Cover Page
<PAGE>
Item 11. Table of Contents................. Cover Page
Item 12. General Information and History... Management of the
Fund; General
Information
Item 13. Investment Objectives and
Policies........................ Investment
Objective, Policies
and Restrictions
Item 14. Management of the Registrant...... Management of the
Fund
Item 15......Control Persons and Principal
Holders of Securities........... Management of the
Fund; General
Information
Item 16. Investment Advisory and
Other Services.................. Management of the
Fund
Item 17. Brokerage Allocation and
Other Practices................. Allocation of
Portfolio Brokerage
Item 18. Capital Stock and
Other Securities ............... General Information
Item 19. 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>
<PAGE>
THE ALLIANCE
- --------------------------------------------------------------------------------
STOCK FUNDS
- --------------------------------------------------------------------------------
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
Prospectus and Application
(Advisor Class)
June [ ], 1996
Domestic Stock Funds Global Stock Funds
- -The Alliance Fund -Alliance International Fund
- -Alliance Growth Fund -Alliance Worldwide Privatization Fund
- -Alliance Premier Growth Fund -Alliance New Europe Fund
- -Alliance Technology Fund -Alliance All-Asia Investment Fund
- -Alliance Quasar Fund -Alliance Global Small Cap Fund
Total Return Funds
-Alliance Strategic Balanced Fund
-Alliance Balanced Shares
-Alliance Income Builder Fund
-Alliance Utility Income Fund
-Alliance Growth and Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
The Funds at a Glance ................................................. 2
Expense Information ................................................... 4
Financial Highlights .................................................. 4
Glossary .............................................................. 6
Description of the Funds .............................................. 7
Investment Objectives and Policies ................................. 7
Additional Investment Practices .................................... 15
Certain Fundamental Investment Policies ............................ 22
Risk Considerations ................................................ 25
Purchase and Sale of Shares ........................................... 28
Management of the Funds ............................................... 30
Dividends, Distributions and Taxes .................................... 31
General Information ................................................... 32
</TABLE>
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Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return. The Domestic Stock Funds
invest mainly in the United States equity markets and the Global Stock Funds
diversify their investments among equity markets around the world, while the
Total Return Funds invest in both equity and fixed-income securities.
Each fund or portfolio (each a "Fund") is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A "Statement of Additional Information" for each Fund which provides
further information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, write Alliance Fund Services, Inc. at the indicated address or call
the "For Literature" telephone number shown above.
This Prospectus offers the Advisor Class shares of each Fund which may be
purchased at net asset value without any initial or contingent deferred sales
charges and without ongoing distribution expenses. Advisor Class shares are
offered solely to (i) investors participating in fee-based programs meeting
certain standards established by Alliance Fund Distributors, Inc., each Fund's
principal underwriters and (ii) participants in self-directed defined
contribution employee benefit plans (e.g., 401(k) plans) that meet certain
minimum standards. See "Purchase and Sale of Shares."
An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
Investors are advised to read this Prospectus carefully and to retain it for
future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Alliance(R)
Mutual funds without the Mystery.(SM)
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
<PAGE>
The Funds At A Glance
The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.
The Funds' Investment Adviser Is . . .
Alliance Capital Management L.P. ("Alliance"), a global investment manager
providing diversified services to institutions and individuals through a broad
line of investments including 107 mutual funds. Since 1971, Alliance has earned
a reputation as a leader in the investment world with over $156 billion in
assets under management as of March 1, 1996. Alliance provides investment
management services to 34 of the FORTUNE 100 companies.
Domestic Stock Funds
Alliance Fund
Seeks . . . Long-term growth of capital and income primarily through investment
in common stocks.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, have the potential to achieve capital appreciation.
Growth Fund
Seeks . . . Long-term growth of capital by investing primarily in common stocks
and other equity securities.
Invests Principally in . . . A diversified portfolio of equity securities of
companies with a favorable outlook for earnings and whose rate of growth is
expected to exceed that of the United States economy over time.
Premier Growth Fund
Seeks . . . Long-term growth of capital by investing in the equity securities of
a limited number of large, carefully selected, high-quality American companies
from a relatively small universe of intensively researched companies.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, are likely to achieve superior earnings growth.
Normally, approximately 40 companies will be represented in the Fund's
investment portfolio. The Fund's investments in 25 of these companies most
highly regarded at any point in time by Alliance will usually constitute
approximately 70% of the Fund's net assets.
Technology Fund
Seeks . . . Growth of capital through investment in companies expected to
benefit from advances in technology.
Invests Principally in . . . A diversified portfolio of securities of companies
which use technology extensively in the development of new or improved products
or processes.
Quasar Fund
Seeks . . . Growth of capital by pursuing aggressive investment policies.
Invests Principally in . . . A diversified portfolio of equity securities of any
company and industry and in any type of security which is believed to offer
possibilities for capital appreciation.
Global Stock Funds
International Fund
Seeks . . . A total return on its assets from long-term growth of capital and
from income.
Invests Principally in . . . A diversified portfolio of marketable securities of
established non-United States companies, companies participating in foreign
economies with prospects for growth, and foreign government securities.
Worldwide Privatization Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities
issued by enterprises that are undergoing, or have undergone, privatization. The
balance of the Fund's investment portfolio will include securities of companies
that are believed by Alliance to be beneficiaries of the privatization process.
New Europe Fund
Seeks . . . Long-term capital appreciation through investment primarily in the
equity securities of companies based in Europe.
Invests Principally in . . . A non-diversified portfolio of equity securities of
European companies.
All-Asia Investment Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities of
Asian/Pacific companies.
Global Small Cap Fund
Seeks . . . Long-term growth of capital.
Invests Principally in . . . A diversified global portfolio of the equity
securities of small capitalization companies.
2
<PAGE>
Total Return Funds
Strategic Balanced Fund
Seeks . . . A high long-term total return by investing in a combination of
equity and debt securities.
Invests Principally in . . . A diversified portfolio of dividend-paying common
stocks and fixed-income securities, and also in equity-type securities such as
warrants, preferred stocks and convertible debt instruments.
Balanced Shares
Seeks . . . A high return through a combination of current income and capital
appreciation.
Invests Principally in . . . A diversified portfolio of equity and fixed-income
securities such as common and preferred stocks, U.S. Government and agency
obligations, bonds and senior debt securities.
Income Builder Fund
Seeks . . . Both an attractive level of current income and long-term growth of
income and capital.
Invests Principally in . . . A non-diversified portfolio of fixed-income
securities and dividend-paying common stocks. Alliance currently expects to
continue to maintain approximately 60% of the Fund's net assets in fixed-income
securities and 40% in equity securities.
Utility Income Fund
Seeks . . . Current income and capital appreciation through investment in the
utilities industry.
Invests Principally in . . . A diversified portfolio of equity securities, such
as common stocks, securities convertible into common stocks and rights and
warrants to subscribe for purchase of common stocks, and in fixed-income
securities such as bonds and preferred stocks.
Growth and Income Fund
Seeks . . . Income and appreciation through investment in dividend-paying common
stocks of quality companies.
Invests Principally in . . . A diversified portfolio of dividend-paying common
stocks of good quality, and, under certain market conditions, other types of
securities, including bonds, convertible bonds and preferred stocks.
A Word About Risk . . .
The price of the shares of the Alliance Stock Funds will fluctuate as the daily
prices of the individual securities in which they invest fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost. With
respect to those Funds permitted to invest in foreign currency denominated
securities, these fluctuations may be magnified by changes in foreign exchange
rates. Investment in the Global Stock Funds involves risks not associated with
funds that invest primarily in securities of U.S. issuers. While the Funds
invest principally in common stocks and other equity securities, in order to
achieve their investment objectives the Funds may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
involve risks different from, and, in certain cases, greater than, the risks
presented by more traditional investments. These risks are fully discussed in
this Prospectus.
Getting Started . . .
Shares of the Funds are available through your financial representative. Each
Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares may be purchased at net asset
value without any initial or contingent deferred sales charges and are not
subject to ongoing distribution expenses. Advisor Class shares may be purchased
solely by investors (i) through accounts established under a fee-based program,
sponsored and maintained by a registered broker-dealer or other financial
intermediary and approved by Alliance Fund Distributors, Inc., each Fund's
principal underwriter, pursuant to which each investor pays an asset-based fee
at an annual rate of at least .50% of the assets in the investor's account, to
the broker-dealer or financial intermediary, or its affiliate or agent, for
investment advisory or administrative services, or (ii) through a self-directed
defined contribution employee benefit plan (e.g., a 401(k) plan) that has at
least 1,000 participants or $25 million in assets. Shares can be purchased for a
minimum initial investment of $250, and subsequent investments can be made for
as little as $50. Fee-based programs through which Advisor Class shares may be
purchased may impose different requirements with respect to minimal initial and
subsequent investment levels than described above. For detailed information
about purchasing and selling shares, see "Purchase and Sale of Shares." Be sure
to ask your financial representative about:
- --------------------------------------------------------------------------------
AUTOMATIC REINVESTMENT
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AUTOMATIC INVESTMENT PROGRAM
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RETIREMENT PLANS
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SHAREHOLDER COMMUNICATIONS
- --------------------------------------------------------------------------------
DIVIDEND DIRECTION PLANS
- --------------------------------------------------------------------------------
AUTO EXCHANGE
- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWALS
- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
- --------------------------------------------------------------------------------
24 HOUR INFORMATION
- --------------------------------------------------------------------------------
Alliance(R)
Mutual funds without the Mystery.(SM)
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
3
<PAGE>
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EXPENSE INFORMATION
- --------------------------------------------------------------------------------
Shareholder Transaction Expenses are one of several factors to consider when you
invest in a Fund. The following table summarizes your maximum transaction costs
from investing in the Advisor Class shares of each Fund and estimated annual
expenses for Advisor Class shares of each Fund. For each Fund, the "Examples" to
the right of the table below show the cumulative expenses attributable to a
hypothetical $1,000 investment in Advisor Class shares for the periods
specified.
<TABLE>
<CAPTION>
Advisor Class Shares
--------------------
<S> <C>
Maximum sales charge imposed on purchases .............. None
Sales charge imposed on dividend reinvestments ......... None
Deferred sales charge .................................. None
Exchange fee ........................................... None
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating Expenses Examples
- ---------------------------------------------------------- -------------------------------------------
<S> <C> <C> <C>
Alliance Fund Advisor Class Advisor Class
------------- -------------
Management fees .71% After 1 year $ 9
Other expenses (a) .18% After 3 years $ 28
----
Total fund
operating expenses .89%
====
Growth Fund Advisor Class Advisor Class
------------- -------------
Management fees .75% After 1 year $ 11
Other expenses (a) .30% After 3 years $ 33
----
Total fund
operating expenses 1.05%
====
Premier Growth Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 14
Other expenses (a) .38% After 3 years $ 44
----
Total fund
operating expenses 1.38%
====
Technology Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 15
Other expenses (a) .45% After 3 years $ 46
----
Total fund
operating expenses 1.45%
====
Quasar Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 16
Other expenses (a) .61% After 3 years $ 51
----
Total fund
operating expenses 1.61%
====
International Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 17
Other expenses (a) .68% After 3 years $ 53
----
Total fund
operating expenses 1.68%
====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page [ ] and the discussion following these
tables on page [ ].
4
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- ---------------------------------------------------------- -------------------------------------------
<S> <C> <C> <C>
Worldwide Privatization Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 20
Other expenses (a) .98% After 3 years $ 62
----
Total fund
operating expenses 1.98%
====
New Europe Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.07% After 1 year $ 17
Other expenses (a) .65% After 3 years $ 54
----
Total fund
operating expenses 1.72%
====
All-Asia Investment Fund Advisor Class Advisor Class
------------- -------------
Management fees (b) 0.00% After 1 year $ 41
Other expenses After 3 years $125
Administration fees 0.00%
Other operating expenses (a) 4.12%
----
Total other expenses 4.12%
----
Total fund
operating expenses 4.12%
====
Global Small Cap Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 23
Other expenses (a) 1.29% After 3 years $ 72
----
Total fund
operating expenses 2.29%
====
Strategic Balanced Fund Advisor Class Advisor Class
------------- -------------
Management fees (b) .45% After 1 year $ 11
Other expenses (a) .65% After 3 years $ 35
----
Total fund
operating expenses 1.10%
====
Balanced Shares Advisor Class Advisor Class
------------- -------------
Management fees .63% After 1 year $ 11
Other expenses (a) .48% After 3 years $ 35
----
Total fund
operating expenses 1.11%
====
Income Builder Fund Advisor Class Advisor Class
------------- -------------
Management fees .75% After 1 year $ 21
Other expenses (a) 1.33% After 3 years $ 65
----
Total fund
operating expenses 2.08%
====
Utility Income Fund Advisor Class Advisor Class
------------- -------------
Management fees .75% After 1 year $ 12
Other expenses (a) .45% After 3 years $ 38
----
Total fund
operating expenses 1.20%
====
Growth and Income Fund Advisor Class Advisor Class
------------- -------------
Management fees .53% After 1 year $ 9
Other expenses (a) .31% After 3 years $ 27
----
Total fund
operating expenses .84%
====
</TABLE>
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(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance, based on a fixed dollar amount
charged to the Fund for each shareholder's account.
(b) Net of voluntary fee waiver. In the absence of such waiver, management fees
would be 1.00% for All-Asia Investment Fund and .75% for Strategic
Balanced Fund.
5
<PAGE>
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Fund will bear directly or
indirectly. The examples do not reflect any charges or expenses imposed by your
financial representative or your employee benefit plan. "Other Expenses" are
based on estimated amounts for each Fund's current fiscal year. The management
fee rates of Growth Fund, Premier Growth Fund, Strategic Balanced Fund,
Technology Fund, International Fund, Worldwide Privatization Fund, New Europe
Fund, All-Asia Investment Fund, Income Builder Fund, Utility Income Fund and
Global Small Cap Fund are higher than those paid by most other investment
companies, but Alliance believes the fees are comparable to those paid by
investment companies of similar investment orientation. The examples set forth
above assume reinvestment of all dividends and distributions and utilize a 5%
annual rate of return as mandated by Commission regulations. The examples should
not be considered representative of future expenses; actual expenses may be
greater or less than those shown.
- --------------------------------------------------------------------------------
GLOSSARY
- --------------------------------------------------------------------------------
The following terms are frequently used in this Prospectus.
Equity securities are (i) common stocks, partnership interests, business trust
shares and other equity or ownership interests in business enterprises, and (ii)
securities convertible into, and rights and warrants to subscribe for the
purchase of, such stocks, shares and interests.
Debt securities are bonds, debentures, notes, bills, repurchase agreements,
loans, other direct debt instruments and other fixed, floating and variable rate
debt obligations, but do not include convertible securities.
Fixed-income securities are debt securities and dividend-paying preferred stocks
and include floating rate and variable rate instruments.
Convertible securities are fixed-income securities that are convertible into
common stock.
U.S. Government securities are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
Foreign government securities are securities issued or guaranteed, as to payment
of principal and interest, by governments, quasi-governmental entities,
governmental agencies or other governmental entities.
Asian company is an entity that (i) is organized under the laws of an Asian
country and conducts business in an Asian country, (ii) derives 50% or more of
its total revenues from business in Asian countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in an Asian
country.
Asian countries are Australia, the Democratic Socialist Republic of Sri Lanka,
Hong Kong, the Islamic Republic of Pakistan, Japan, the Kingdom of Thailand,
Malaysia, Negara Brunei Darussalam (Brunei), New Zealand, the People's Republic
of China, the People's Republic of Kampuchea (Cambodia), the Republic of China
(Taiwan), the Republic of India, the Republic of Indonesia, the Republic of
Korea (South Korea), the Republic of the Philippines, the Republic of Singapore,
the Socialist Republic of Vietnam and the Union of Myanmar.
Moody's is Moody's Investors Service, Inc.
S&P is Standard & Poor's Ratings Services.
Duff & Phelps is Duff & Phelps Credit Rating Co.
Fitch is Fitch Investors Service, Inc.
Investment grade securities are fixed-income securities rated Baa and above by
Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by
Alliance to be of equivalent quality.
Lower-rated securities are fixed-income securities rated Ba or below by Moody's
or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be
of equivalent quality, and are commonly referred to as "junk bonds."
Prime commercial paper is commercial paper rated Prime 1 by Moody's or A-1 or
higher by S&P or, if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.
Qualifying bank deposits are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than $1
billion and which are members of the Federal Deposit Insurance Corporation.
Rule 144A securities are securities that may be resold pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act").
Depositary receipts include American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and other types of depositary receipts.
Commission is the Securities and Exchange Commission.
1940 Act is the Investment Company Act of 1940, as amended.
Code is the Internal Revenue Code of 1986, as amended.
6
<PAGE>
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DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
Except as noted, (i) the Funds' investment objectives are "fundamental" and
cannot be changed without shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder vote.
No Fund will change a non-fundamental objective or policy without notifying its
shareholders. There is no guarantee that any Fund will achieve its investment
objective.
INVESTMENT OBJECTIVES AND POLICIES
Domestic Stock Funds
The Domestic Stock Funds have been designed to offer investors seeking capital
appreciation a range of alternative approaches to investing in the U.S. equity
markets.
The Alliance Fund
The Alliance Fund, Inc. ("Alliance Fund") is a diversified investment company
that seeks long-term growth of capital and income primarily through investment
in common stocks. The Fund normally invests substantially all of its assets in
common stocks that Alliance believes will appreciate in value, but it may invest
in other types of securities such as convertible securities, high grade
instruments, U.S. Government securities and high quality, short-term obligations
such as repurchase agreements, bankers' acceptances and domestic certificates of
deposit, and may invest without limit in foreign securities. While the
diversification and generally high quality of the Fund's investments cannot
prevent fluctuations in market values, they tend to limit investment risk and
contribute to achieving the Fund's objective. The Fund generally does not effect
portfolio transactions in order to realize short-term trading profits or
exercise control.
The Fund may also: (i) make secured loans of its portfolio securities equal in
value up to 25% of its total assets to brokers, dealers and financial
institutions; (ii) enter into repurchase agreements of up to one week in
duration with commercial banks, but only if those agreements together with any
restricted securities and any securities which do not have readily available
market quotations do not exceed 10% of its net assets; and (iii) write
exchange-traded covered call options with respect to up to 25% of its total
assets. For additional information on the use, risks and costs of these policies
and practices see "Additional Investment Practices."
Alliance Growth Fund
Alliance Growth Fund ("Growth Fund") is a diversified investment company that
seeks long-term growth of capital. Current income is only an incidental
consideration. The Fund seeks its objective by investing primarily in equity
securities of companies with favorable earnings outlooks and whose long-term
growth rates are expected to exceed that of the U.S. economy. The Fund's
investment objective is not fundamental.
The Fund may also invest up to 25% of its total assets in lower-rated
fixed-income and convertible securities. See "Risk ConsiderationsSecurities
Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund
generally will not invest in securities with ratings below Caa- by Moody's and
CCC- by S&P, Duff & Phelps or Fitch or in securities judged by Alliance to be of
comparable investment quality. However, from time to time, the Fund may invest
in securities rated in the lowest grades (i.e., C by Moody's or D or equivalent
by S&P, Duff & Phelps or Fitch), or securities Alliance judges to be of
comparable investment quality, if there are prospects for an upgrade or a
favorable conversion into equity securities. For the period ended December 31,
1995, the Fund did not invest in any lower-rated securities. If the credit
rating of a security held by the Fund falls below its rating at the time of
purchase (or Alliance determines that the quality of such security has so
deteriorated), the Fund may continue to hold the security if such investment is
considered appropriate under the circumstances.
The Fund may also: (i) invest in "zero-coupon" bonds and "payment-in-kind"
bonds; (ii) invest in foreign securities, although the Fund will not generally
invest more than 15% of its total assets in foreign securities; (iii) invest in
securities that are not publicly traded, including Rule 144A securities; (iv)
buy or sell foreign currencies, options on foreign currencies, foreign currency
futures contracts (and related options) and deal in forward foreign exchange
contracts; (v) lend portfolio securities amounting to not more than 25% of its
total assets; (vi) enter into repurchase agreements on up to 25% of its total
assets and purchase and sell securities on a forward commitment basis; (vii) buy
and sell stock index futures contracts and buy and sell options on those
contracts and on stock indices; (viii) purchase and sell futures contracts,
options thereon and options with respect to U.S. Treasury securities; (ix) write
covered call and put options on securities it owns or in which it may invest;
and (x) purchase and sell put and call options. For additional information on
the use, risks and costs of these policies and practices see "Additional
Investment Practices."
Alliance Premier Growth Fund
Alliance Premier Growth Fund, Inc. ("Premier Growth Fund") is a diversified
investment company that seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth. Normally, about 40 companies will be represented in the Fund's
portfolio, with the 25 most highly regarded of these companies usually
constituting approximately 70% of the Fund's net assets. The Fund is thus
atypical from most equity mutual funds in its focus on a relatively small number
of intensively researched companies and is designed for those seeking to
accumulate capital over time with less volatility than that associated with
investment in smaller companies.
As a matter of fundamental policy, the Fund normally invests at least 85% of its
total assets in the equity securities of U.S. companies. These are companies (i)
organized under U.S. law that have their principal office in the U.S., and (ii)
the equity securities of which are traded principally in the U.S.
Alliance's investment strategy for the Fund emphasizes stock selection and
investment in the securities of a limited number of issuers. Alliance relies
heavily upon the fundamental analysis and research of its large internal
research staff, which generally
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follows a primary research universe of more than 600 companies that have strong
management, superior industry positions, excellent balance sheets and superior
earnings growth prospects. An emphasis is placed on identifying companies whose
substantially above average prospective earnings growth is not fully reflected
in current market valuations.
In managing the Fund, Alliance seeks to utilize market volatility judiciously
(assuming no change in company fundamentals), striving to capitalize on
apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. The Fund
normally remains nearly fully invested and does not take significant cash
positions for market timing purposes. During market declines, while adding to
positions in favored stocks, the Fund becomes somewhat more aggressive,
gradually reducing the number of companies represented in its portfolio.
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Fund becomes somewhat more conservative, gradually increasing the
number of companies represented in its portfolio. Alliance thus seeks to gain
positive returns in good markets while providing some measure of protection in
poor markets.
Alliance expects the average market capitalization of companies represented in
the Fund's portfolio normally to be in the range, or in excess, of the average
market capitalization of companies comprising the "S&P 500" (the Standard &
Poor's 500 Composite Stock Price Index, a widely recognized unmanaged index of
market activity).
The Fund may also: (i) invest up to 20% of its net assets in convertible
securities of companies whose common stocks are eligible for purchase by it;
(ii) invest up to 5% of its net assets in rights or warrants; (iii) invest up to
15% of its total assets in securities of foreign issuers whose common stocks are
eligible for purchase by it; (iv) purchase and sell exchange-traded index
options and stock index futures contracts; and (v) write covered exchange-traded
call options on common stocks, unless as a result, the amount of its securities
subject to call options would exceed 15% of its total assets, and purchase and
sell exchange-traded call and put options on common stocks written by others,
but the total cost of all options held by the Fund (including exchange-traded
index options) may not exceed 10% of its total assets. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices." The Fund will not write put options.
Alliance Technology Fund
Alliance Technology Fund, Inc. ("Technology Fund") is a diversified investment
company that emphasizes growth of capital and invests for capital appreciation,
and only incidentally for current income. The Fund may seek income by writing
listed call options. The Fund invests primarily in securities of companies
expected to benefit from technological advances and improvements (i.e.,
companies that use technology extensively in the development of new or improved
products or processes). The Fund will normally have at least 80% of its assets
invested in the securities of these companies. The Fund normally will have
substantially all its assets invested in equity securities, but it also invests
in debt securities offering an opportunity for price appreciation. The Fund will
invest in listed and unlisted securities and U.S. and foreign securities, but it
will not purchase a foreign security if as a result 10% or more of the Fund's
total assets would be invested in foreign securities.
The Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known and
established companies and in new and unseasoned companies.
The Fund may also: (i) write and purchase exchange-listed call options and
purchase listed put options, including exchange-traded index put options; (ii)
invest up to 10% of its total assets in warrants; (iii) invest in restricted
securities and in other assets having no ready market if as a result no more
than 10% of the Fund's net assets are invested in such securities and assets;
(iv) lend portfolio securities equal in value to not more than 30% of the Fund's
total assets; and (v) invest up to 10% of its total assets in foreign
securities. For additional information on the use, risks and costs of the
policies and practices see "Additional Investment Practices."
Alliance Quasar Fund
Alliance Quasar Fund, Inc. ("Quasar Fund") is a diversified investment company
that seeks growth of capital by pursuing aggressive investment policies. It
invests for capital appreciation and only incidentally for current income. The
selection of securities based on the possibility of appreciation cannot prevent
loss in value. Moreover, because the Fund's investment policies are aggressive,
an investment in the Fund is risky and investors who want assured income or
preservation of capital should not invest in the Fund.
The Fund invests in any company and industry and in any type of security with
potential for capital appreciation. It invests in well-known and established
companies and in new and unseasoned companies. When selecting securities,
Alliance considers the economic and political outlook, the values of specific
securities relative to other investments, trends in the determinants of
corporate profits and management capability and practices.
The Fund invests principally in equity securities, but it also invests to a
limited degree in non-convertible bonds and preferred stocks. The Fund invests
in listed and unlisted U.S. and foreign securities. The Fund periodically
invests in special situations, which occur when the securities of a company are
expected to appreciate due to a development particularly or uniquely applicable
to that company and regardless of general business conditions or movements of
the market as a whole.
The Fund may also: (i) invest in restricted securities and in other assets
having no ready market, but not more than 10% of its total assets may be
invested in such securities or assets; (ii) make short sales of securities
"against the box," but not more than 15% of its net assets may be deposited on
short sales; and (iii) write call options and purchase and sell put and call
options written by others. For additional
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information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
Global Stock Funds
The Global Stock Funds have been designed to enable investors to participate in
the potential for long-term capital appreciation available from investment in
foreign securities.
Alliance International Fund
Alliance International Fund ("International Fund") is a diversified investment
company that seeks a total return on its assets from long-term growth of capital
and from income primarily through a broad portfolio of marketable securities of
established non-U.S. companies, companies participating in foreign economies
with prospects for growth, including U.S. companies having their principal
activities and interests outside the U.S. and foreign government securities.
Normally, more than 80% of the Fund's assets will be invested in such issuers.
The Fund expects to invest primarily in common stocks of established non-U.S.
companies that Alliance believes have potential for capital appreciation or
income or both, but the Fund is not required to invest exclusively in common
stocks or other equity securities, and it may invest in any other type of
investment grade security, including convertible securities, warrants, or
obligations of the U.S. or foreign governments and their political subdivisions.
The Fund intends to diversify its investments broadly among countries and
normally invests in at least three foreign countries, although it may invest a
substantial portion of its assets in one or more of such countries. At December
31, 1995, approximately 33% of the Fund's assets were invested in securities of
Japanese issuers. The Fund may invest in companies, wherever organized, that
Alliance judges have their principal activities and interests outside the U.S.
These companies may be located in developing countries, which involves exposure
to economic structures that are generally less diverse and mature, and to
political systems which can be expected to have less stability, than those of
developed countries. The Fund currently does not intend to invest more than 10%
of its total assets in companies in, or governments of, developing countries.
The Fund may also: (i) purchase or sell forward foreign currency exchange
contracts; (ii) write, sell and purchase U.S. or foreign exchange-listed put and
call options, including exchange-traded index options; (iii) enter into
financial futures contracts, including contracts for the purchase or sale for
future delivery of foreign currencies and stock index futures, and purchase and
write put and call options on futures contracts traded on U.S. or foreign
exchanges or over-the-counter; (iv) purchase and write put options on foreign
currencies traded on securities exchanges or boards of trade or
over-the-counter; (v) lend portfolio securities equal in value to not more than
30% of its total assets; and (vi) enter into repurchase agreements of up to
seven days' duration, provided that not more than 10% of the Fund's total assets
would be so invested. For additional information on the use, risks and costs of
these policies and practices see "Additional Investment Practices."
Alliance Worldwide Privatization Fund
Alliance Worldwide Privatization Fund, Inc. ("Worldwide Privatization Fund") is
a non-diversified investment company that seeks long-term capital appreciation.
As a fundamental policy, the Fund invests at least 65% of its total assets in
equity securities issued by enterprises that are undergoing, or have undergone,
privatization (as described below), although normally significantly more of its
assets will be invested in such securities. The balance of its investments will
include securities of companies believed by Alliance to be beneficiaries of
privatizations. The Fund is designed for investors desiring to take advantage of
investment opportunities, historically inaccessible to U.S. individual
investors, that are created by privatizations of state enterprises in both
established and developing economies, including those in Western Europe and
Scandinavia, Australia, New Zealand, Latin America, Asia and Eastern and Central
Europe and, to a lesser degree, Canada and the United States.
The Fund's investments in enterprises undergoing privatization may comprise
three distinct situations. First, the Fund may invest in the initial offering of
publicly traded equity securities (an "initial equity offering") of a
government- or state-owned or controlled company or enterprise (a "state
enterprise"). Secondly, the Fund may purchase securities of a current or former
state enterprise following its initial equity offering. Finally, the Fund may
make privately negotiated purchases of stock or other equity interests in a
state enterprise that has not yet conducted an initial equity offering. Alliance
believes that substantial potential for capital appreciation exists as
privatizing enterprises rationalize their management structures, operations and
business strategies in order to compete efficiently in a market economy, and the
Fund will thus emphasize investments in such enterprises.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in at least four, and usually considerably more,
countries. No more than 15% of the Fund's total assets, however, will be
invested in issuers in any one foreign country, except that the Fund may invest
up to 30% of its total assets in issuers in any one of France, Germany, Great
Britain, Italy and Japan. The Fund may invest all of its assets within a single
region of the world. To the extent that the Fund's assets are invested within
any one region, the Fund may be subject to any special risks that may be
associated with that region.
Privatization is a process through which the ownership and control of companies
or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all or
a portion of its interest in a state enterprise to some form of private
ownership. Governments and states with established economies, including France,
Great Britain, Germany and Italy,
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and those with developing economies, including Argentina, Mexico, Chile,
Indonesia, Malaysia, Poland and Hungary, are engaged in privatizations. Although
the Fund will invest in any country believed to present attractive investment
opportunities, currently approximately 70% of the Fund's total assets are
invested in countries with established economies.
A major premise of the Fund's approach is that the equity securities of
privatized companies offer opportunities for significant capital appreciation.
In particular, because privatizations are integral to a country's economic
restructuring, securities sold in initial equity offerings often are priced
attractively so as to secure the issuer's successful transition to private
sector ownership. Additionally, these enterprises often dominate their local
markets and typically have the potential for significant managerial and
operational efficiency gains.
Although the Fund anticipates that it will not concentrate its investments in
any industry, it is permitted to invest more than 25% of its total assets in
issuers whose primary business activity is that of national commercial banking.
Prior to so concentrating, however, the Fund's Directors must determine that its
ability to achieve its investment objective would be adversely affected if it
were not permitted to concentrate. The staff of the Commission is of the view
that registered investment companies may not, absent shareholder approval,
change between concentration and non-concentration in a single industry. The
Fund disagrees with the staff's position but has undertaken that it will not
concentrate in the securities of national commercial banks until, if ever, the
issue is resolved. If the Fund were to invest more than 25% of its total assets
in national commercial banks, the Fund's performance could be significantly
influenced by events or conditions affecting this industry, which is subject to,
among other things, increases in interest rates and deteriorations in general
economic conditions, and the Fund's investments may be subject to greater risk
and market fluctuation than if its portfolio represented a broader range of
investments.
The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities of issuers whose common stocks are eligible for
purchase by the Fund. The Fund may maintain not more than 5% of its net assets
in lower-rated securities. See "Risk Considerations Securities Ratings" and
"--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain
a non-convertible security that is downgraded below C or determined by Alliance
to have undergone similar credit quality deterioration following purchase.
The Fund may also: (i) invest up to 20% of its total assets in rights or
warrants; (ii) write covered put and call options and purchase put and call
options on securities of the types in which it is permitted to invest and on
exchange-traded index options; (iii) enter into contracts for the purchase or
sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including any index of U.S. Government
securities, foreign government securities, or common stock and may purchase and
write options on future contracts; (iv) purchase and write put and call options
on foreign currencies for hedging purposes; (v) purchase or sell forward
contracts; (vi) enter in forward commitments for the purchase or sale of
securities; (vii) enter into standby commitment agreements; (viii) enter into
currency swaps for hedging purposes; (ix) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (x) make short sales of
securities or maintain a short position; and (xi) make secured loans of its
portfolio securities not in excess of 30% of its total assets to entities with
which it can enter into repurchase agreements. For additional information on the
use, risks and costs of these policies and practices see "Additional Investment
Practices".
Alliance New Europe Fund
Alliance New Europe Fund, Inc. ("New Europe Fund") is a non-diversified
investment company that seeks long-term capital appreciation through investment
primarily in the equity securities of companies based in Europe. The Fund
intends to invest substantially all of its assets in the equity securities of
European companies and has a fundamental policy of normally investing at least
65% of its total assets in such securities. Up to 35% of its total assets may be
invested in high quality U.S. dollar or foreign currency denominated
fixed-income securities issued or guaranteed by European governmental entities,
or by European or multinational companies or supranational organizations.
Alliance believes that the quickening pace of economic integration and political
change in Europe creates the potential for many European companies to experience
rapid growth and that the emergence of new market economies in Europe and the
broadening and strengthening of other European economies may significantly
accelerate economic development. The Fund will invest in companies that Alliance
believes possess rapid growth potential. Thus, the Fund will emphasize
investments in smaller, emerging companies, but will also invest in larger,
established companies in such growing economic sectors as capital goods,
telecommunications, pollution control and consumer services.
The Fund will emphasize investment in companies believed to be the likely
beneficiaries of a program, originally known as the "1992 Program," to remove
substantially all barriers to the free movement of goods, persons, services and
capital within the European Community. Alliance believes that the beneficial
effects of this program upon economies, sectors and companies may be most
pronounced in the decade following 1992. The European Community is a Western
European economic cooperative organization consisting of Belgium, Denmark,
France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal,
Spain and the United Kingdom.
In recent years, economic ties between the former "east bloc" countries of
Eastern Europe and certain other European countries have been strengthened.
Alliance believes that as this strengthening continues, some Western European
financial institutions and other companies will have special opportunities to
facilitate East-West transactions. The Fund will seek investment opportunities
among such companies and, as
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such become available, within the former "east bloc," although the Fund will not
invest more than 20% of its total assets in issuers based therein, or more than
10% of its total assets in issuers based in any one such country.
The Fund diversifies its investments among a number of European countries and,
under normal circumstances, will invest in companies based in at least three
such countries. Subject to the foregoing and to the limitation on investment in
any one former "east bloc" country, the Fund may invest without limit in a
single European country. While the Fund does not intend to concentrate its
investments in a single country, at times 25% or more of its assets may be
invested in issuers located in a single country. During such times, the Fund
would be subject to a correspondingly greater risk of loss due to adverse
political or regulatory developments, or an economic downturn, within that
country. At December 31, 1995, approximately 27% of the Fund's assets were
invested in securities of issuers in the United Kingdom.
The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants and rights to purchase equity securities of European companies; (iii)
invest in depositary receipts or other securities convertible into securities of
companies based in European countries, debt securities of supranational entities
denominated in the currency of any European country, debt securities denominated
in European Currency Units of an issuer in a European country (including
supranational issuers) and "semi-governmental securities"; (iv) purchase and
sell forward contracts; (v) write, sell and purchase exchange-traded put and
call options, including exchange-traded index options; (vi) enter into financial
futures contracts, including contracts for the purchase or sale for future
delivery of foreign currencies and futures contracts based on stock indices, and
purchase and write options on futures contracts; (vii) purchase and write put
options on foreign currencies traded on securities exchanges or boards of trade
or over-the-counter; (viii) make secured loans of portfolio securities not in
excess of 30% of its total assets to brokers, dealers and financial
institutions; (ix) enter into forward commitments for the purchase or sale of
securities; and (x) enter into standby commitment agreements. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
Alliance All-Asia Investment Fund
Alliance All-Asia Investment Fund, Inc. ("All-Asia Investment Fund") is a
non-diversified investment company whose investment objective is to seek
long-term capital appreciation. In seeking to achieve its investment objective,
the Fund will invest at least 65% of its total assets in equity securities (for
the purposes of this investment policy, rights, warrants and options to purchase
common stocks are not deemed to be equity securities), preferred stocks and
equity-linked debt securities issued by Asian companies. The Fund may invest up
to 35% of its total assets in debt securities issued or guaranteed by Asian
companies or by Asian governments, their agencies or instrumentalities. The Fund
may also invest in securities issued by non-Asian issuers, provided that the
Fund will invest at least 80% of its total assets in securities issued by Asian
companies and the Asian debt securities referred to above. The Fund expects to
invest, from time to time, a significant portion, but less than 50%, of its
assets in equity securities of Japanese companies.
In the past decade, Asian countries generally have experienced a high level of
real economic growth due to political and economic changes, including foreign
investment and reduced government intervention in the economy. Alliance believes
that certain conditions exist in Asian countries which create the potential for
continued rapid economic growth. These conditions include favorable demographics
and competitive wage rates, increasing levels of foreign direct investment,
rising per capita incomes and consumer demand, a high savings rate and numerous
privatization programs. Asian countries are also becoming more industrialized
and are increasing their intra-Asian exports while reducing their dependence on
Western export demand. Alliance believes that these conditions are important to
the long-term economic growth of Asian countries.
As the economies of many Asian countries move through the "emerging market"
stage, thus increasing the supply of goods, services and capital available to
less developed Asian markets and helping to spur economic growth in those
markets, the potential is created for many Asian companies to experience rapid
growth. In addition, many Asian companies the securities of which are listed on
exchanges in more developed Asian countries will be participants in the rapid
economic growth of the lesser developed countries. These companies generally
offer the advantages of more experienced management and more developed market
regulation.
As their economies have grown, the securities markets in Asian countries have
also expanded. New exchanges have been created and the number of listed
companies, annual trading volume and overall market capitalization have
increased significantly. Additionally, new markets continue to open to foreign
investments. For example, South Korea and India have recently relaxed investment
restrictions and Vietnamese direct investments have recently become available to
U.S. investors. The Fund also offers investors the opportunity to access
relatively restricted markets. Alliance believes that investment opportunities
in Asian countries will continue to expand.
The Fund will invest in companies believed to possess rapid growth potential.
Thus, the Fund will invest in smaller, emerging companies, but will also invest
in larger, more established companies in such growing economic sectors as
capital goods, telecommunications and consumer services.
The Fund will invest in investment grade debt securities, except that the Fund
may maintain not more than 5% of its net assets in lower-rated securities and
lower-rated loans and other lower-rated direct debt instruments. See "Risk
Considerations--Securities Ratings", "--Investment in Lower-Rated Fixed-Income
Securities" and Appendix C in the Fund's Statement of
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Additional Information for a description of such ratings. The Fund will not
retain a security that is downgraded below C or determined by Alliance to have
undergone similar credit quality deterioration following purchase.
The Fund may also: (i) invest up to 25% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii)
invest in depositary receipts, instruments of supranational entities denominated
in the currency of any country, securities of multinational companies and
"semi-governmental securities;" (iv) invest up to 25% of its net assets in
equity-linked debt securities with the objective of realizing capital
appreciation; (v) invest up to 25% of its net assets in loans and other direct
debt instruments; (vi) write covered put and call options on securities of the
types in which it is permitted to invest and on exchange-traded index options;
(vii) enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, securities issued by
foreign government entities, or common stock and may purchase and write options
on future contracts; (viii) purchase and write put and call options on foreign
currencies for hedging purposes; (ix) purchase or sell forward contracts; (x)
enter into interest rate swaps and purchase or sell interest rate caps and
floors; (xi) enter into forward commitments for the purchase or sale of
securities; (xii) enter into standby commitment agreements; (xiii) enter into
currency swaps for hedging purposes; (xiv) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (xv) make short sales of
securities or maintain a short position, in each case only if "against the box;"
and (xvi) make secured loans of its portfolio securities not in excess of 30% of
its total assets to entities with which it can enter into repurchase agreements.
For additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices".
Alliance Global Small Cap Fund
Alliance Global Small Cap Fund, Inc. ("Global Small Cap Fund") is a diversified
investment company that seeks long-term growth of capital through investment in
a global portfolio of the equity securities of selected companies with
relatively small market capitalization. The Fund's portfolio emphasizes
companies with market capitalizations that would have placed them (when
purchased) in about the smallest 20% by market capitalization of actively traded
U.S. companies, or market capitalizations of up to about $1 billion. Because the
Fund applies the U.S. size standard on a global basis, its foreign investments
might rank above the lowest 20%, and, in fact, might in some countries rank
among the largest, by market capitalization in local markets. Normally, the Fund
invests at least 65% of its assets in equity securities of these smaller
capitalization issuers, and these issuers are located in at least three
countries, one of which may be the U.S. Up to 35% of the Fund's total assets may
be invested in securities of companies whose market capitalizations exceed the
Fund's size standard. The Fund's portfolio securities may be listed on a U.S.
or foreign exchange or traded over-the-counter.
Alliance believes that smaller capitalization issuers often have sales and
earnings growth rates exceeding those of larger companies, and that these growth
rates tend to cause more rapid share price appreciation. Investing in smaller
capitalization stocks, however, involves greater risk than is associated with
larger, more established companies. For example, smaller capitalization
companies often have limited product lines, markets, or financial resources.
They may be dependent for management on one or a few key persons, and can be
more susceptible to losses and risks of bankruptcy. Their securities may be
thinly traded (and therefore have to be sold at a discount from current market
prices or sold in small lots over an extended period of time), may be followed
by fewer investment research analysts and may be subject to wider price swings
and thus may create a greater chance of loss than when investing in securities
of larger capitalization companies. Transaction costs in small capitalization
stocks may be higher than in those of larger capitalization companies.
The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants to purchase equity securities; (iii) invest in depositary receipts or
other securities representing securities of companies based in countries other
than the U.S.; (iv) purchase or sell forward foreign currency contracts; (v)
write and purchase exchange-traded call options and purchase exchange-traded put
options, including put options on market indices; and (vi) make secured loans of
portfolio securities not in excess of 30% of its total assets to brokers,
dealers and financial institutions. For additional information on the use, risks
and costs of these policies and practices see "Additional Investment Practices."
Total Return Funds
The Total Return Funds have been designed to provide a range of investment
alternatives to investors seeking both growth of capital and current income.
Alliance Strategic Balanced Fund
Alliance Strategic Balanced Fund ("Strategic Balanced Fund") is a diversified
investment company that seeks a high long-term total return by investing in a
combination of equity and debt securities. The portion of the Fund's assets
invested in each type of security varies in accordance with economic conditions,
the general level of common stock prices, interest rates and other relevant
considerations, including the risks associated with each investment medium. The
Fund's investment objective is not fundamental.
The Fund's equity securities will generally consist of dividend-paying common
stocks and other equity securities of companies with favorable earnings outlooks
and long-term growth rates that Alliance expects will exceed that of the U.S.
economy. The Fund's debt securities may include U.S. Government securities and
securities issued by private
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corporations. The Fund may also invest in mortgage-backed securities, adjustable
rate securities, asset-backed securities and so-called "zero-coupon" bonds and
"payment-in-kind" bonds.
As a fundamental policy, the Fund will invest at least 25% of its total assets
in fixed-income securities, which for this purpose include debt securities,
preferred stocks and that portion of the value of convertible securities that is
attributable to the fixed-income characteristics of those securities.
The Fund's debt securities will generally be of investment grade. See "Risk
ConsiderationsSecurities Ratings" and "Investment in Lower-Rated Fixed-Income
Securities." In the event that the rating of any debt securities held by the
Fund falls below investment grade, the Fund will not be obligated to dispose of
such obligations and may continue to hold them if considered appropriate under
the circumstances.
The Fund may also: (i) invest in foreign securities, although the Fund will not
generally invest more than 15% of its total assets in foreign securities; (ii)
invest, without regard to this 15% limit, in Eurodollar CDs, which are
dollar-denominated certificates of deposit issued by foreign branches of U.S.
banks that are not insured by any agency or instrumentality of the U.S.
Government; (iii) write covered call and put options on securities it owns or in
which it may invest; (iv) buy and sell put and call options and buy and sell
combinations of put and call options on the same underlying securities; (v) lend
portfolio securities amounting to not more than 25% of its total assets; (vi)
enter into repurchase agreements on up to 25% of its total assets; (vii)
purchase and sell securities on a forward commitment basis; (viii) buy or sell
foreign currencies, options on foreign currencies, foreign currency futures
contracts (and related options) and deal in forward foreign exchange contracts;
(ix) buy and sell stock index futures contracts and buy and sell options on
those contracts and on stock indices; (x) purchase and sell futures contracts,
options thereon and options with respect to U.S. Treasury securities; and (xi)
invest in securities that are not publicly traded, including Rule 144A
securities. For additional information on the use, risks and costs of these
policies and practices see "Additional Investment Practices."
Alliance Balanced Shares
Alliance Balanced Shares, Inc. ("Balanced Shares") is a diversified investment
company that seeks a high return through a combination of current income and
capital appreciation. Although the Fund's investment objective is not
fundamental, the Fund is a "balanced fund" as a matter of fundamental policy.
The Fund will not purchase a security if as a result less than 25% of its total
assets will be in fixed-income senior securities (including short- and long-term
debt securities, preferred stocks, and convertible debt securities and
convertible preferred stocks to the extent that their values are attributable to
their fixed-income characteristics). Subject to these restrictions, the
percentage of the Fund's assets invested in each type of security will vary. The
Fund's assets are invested in U.S. Government securities, bonds, senior debt
securities and preferred and common stocks in such proportions and of such type
as are deemed best adapted to the current economic and market outlooks. The Fund
may invest up to 15% of the value of its total assets in foreign equity and
fixed-income securities eligible for purchase by the Fund under its investment
policies described above. See "Risk Considerations--Foreign Investment."
The Fund may also: (i) enter into contracts for the purchase or sale for future
delivery of foreign currencies; and (ii) purchase and write put and call options
on foreign currencies and enter into forward foreign currency exchange contracts
for hedging purposes. Subject to market conditions, the Fund may also seek to
realize income by writing covered call options listed on a domestic exchange.
For additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
Alliance Income Builder Fund
Alliance Income Builder Fund, Inc. ("Income Builder Fund") is a non-diversified
investment company that seeks an attractive level of current income and
long-term growth of income and capital by investing principally in fixed-income
securities and dividend-paying common stocks. Its investments in equity
securities emphasize common stocks of companies with a historical or projected
pattern of paying rising dividends. Normally, at least 65% of the Fund's total
assets are invested in income-producing securities. The Fund may vary the
percentage of assets invested in any one type of security based upon Alliance's
evaluation as to the appropriate portfolio structure for achieving the Fund's
investment objective, although Alliance currently maintains approximately 60% of
the Fund's net assets in fixed-income securities and 40% in equity securities.
The Fund may invest in fixed-income securities of domestic and foreign issuers,
including U.S. Government securities and repurchase agreements pertaining
thereto, corporate fixed-income securities of U.S. issuers, qualifying bank
deposits and prime commercial paper.
The Fund may maintain up to 35% of its net assets in lower-rated securities. See
"Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." The Fund will not retain a non-convertible security
that is downgraded below CCC or determined by Alliance to have undergone similar
credit quality deterioration following purchase.
Foreign securities in which the Fund invests may include fixed-income securities
of foreign corporate and governmental issuers, denominated in U.S. Dollars, and
equity securities of foreign corporate issuers, denominated in foreign
currencies or in U.S. Dollars. The Fund will not invest more than 10% of its net
assets in equity securities of foreign issuers nor more than 15% of its total
assets in issuers of any one foreign country. See "Risk Considerations --
Foreign Investment."
The Fund may also: (i) invest up to 5% of its net assets in rights or warrants;
(ii) invest in depositary receipts and U.S.
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Dollar denominated securities issued by supranational entities; (iii) write
covered put and call options and purchase put and call options on securities of
the types in which it is permitted to invest that are exchange-traded; (iv)
purchase and sell exchange-traded options on any securities index composed of
the types of securities in which it may invest; (v) enter into contracts for the
purchase or sale for future delivery of fixed-income securities or foreign
currencies, or contracts based on financial indices, including any index of U.S.
Government securities, foreign government securities, corporate fixed income
securities, or common stock, and purchase and write options on future contracts;
(vi) purchase and write put and call options on foreign currencies and enter
into forward contracts for hedging purposes; (vii) enter into interest rate
swaps and purchase or sell interest rate caps and floors; (viii) enter into
forward commitments for the purchase or sale of securities; (ix) enter into
standby commitment agreements; (x) enter into repurchase agreements pertaining
to U.S. Government securities with member banks of the Federal Reserve System or
primary dealers in such securities; (xi) make short sales of securities or
maintain a short position as described below under "Additional Investment
Policies and Practices -- Short Sales;" and (xii) make secured loans of its
portfolio securities not in excess of 20% of its total assets to brokers,
dealers and financial institutions. For additional information on the use, risks
and costs of these policies and practices see "Additional Investment Practices."
Alliance Utility Income Fund
Alliance Utility Income Fund, Inc. ("Utility Income Fund") is a diversified
investment company that seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. The Fund may invest in securities of both U.S. and foreign
issuers, although no more than 15% of the Fund's total assets will be invested
in issuers in any one foreign country. The utilities industry consists of
companies engaged in (i) the manufacture, production, generation, provision,
transmission, sale and distribution of gas and electric energy, and
communications equipment and services, including telephone, telegraph,
satellite, microwave and other companies providing communication facilities for
the public, or (ii) the provision of other utility or utility-related goods and
services, including, but not limited to, entities engaged in water provision,
cogeneration, waste disposal system provision, solid waste electric generation,
independent power producers and non-utility generators. The Fund is designed to
take advantage of the characteristics and historical performance of securities
of utility companies, many of which pay regular dividends and increase their
common stock dividends over time. As a fundamental policy, the Fund normally
invests at least 65% of its total assets in securities of companies in the
utilities industry. The Fund considers a company to be in the utilities industry
if, during the most recent twelve-month period, at least 50% of the company's
gross revenues, on a consolidated basis, were derived from its utilities
activities.
At least 65% of the Fund's total assets are invested in income-producing
securities, but there is otherwise no limit on the allocation of the Fund's
investments between equity securities and fixed-income securities. The Fund may
maintain up to 35% of its net assets in lower-rated securities. See "Risk
Considerations -- Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." The Fund will not retain a security that is downgraded
below B or determined by Alliance to have undergone similar credit quality
deterioration following purchase.
The United States utilities industry has experienced significant changes in
recent years. Electric utility companies in general have been favorably affected
by lower fuel costs, the full or near completion of major construction programs
and lower financing costs. In addition, many utility companies have generated
cash flows in excess of current operating expenses and construction
expenditures, permitting some degree of diversification into unregulated
businesses. Regulatory changes with respect to nuclear and conventionally fueled
generating facilities, however, could increase costs or impair the ability of
such electric utilities to operate such facilities, thus reducing their ability
to service dividend payments with respect to the securities they issue.
Furthermore, rates of return of utility companies generally are subject to
review and limitation by state public utilities commissions and tend to
fluctuate with marginal financing costs. Rate changes, however, ordinarily lag
behind the changes in financing costs, and thus can favorably or unfavorably
affect the earnings or dividend pay-outs on utilities stocks depending upon
whether such rates and costs are declining or rising.
Gas transmission companies, gas distribution companies and telecommunications
companies are also undergoing significant changes. Gas utilities have been
adversely affected by declines in the prices of alternative fuels, and have also
been affected by oversupply conditions and competition. Telephone utilities are
still experiencing the effects of the break-up of American Telephone & Telegraph
Company, including increased competition and rapidly developing technologies
with which traditional telephone companies now compete. Although there can be no
assurance that increased competition and other structural changes will not
adversely affect the profitability of such utilities, or that other negative
factors will not develop in the future, in Alliance's opinion, increased
competition and change may provide better positioned utility companies with
opportunities for enhanced profitability.
Utility companies historically have been subject to the risks of increases in
fuel and other operating costs, high interest costs, costs associated with
compliance with environmental and nuclear safety regulations, service
interruptions, economic slowdowns, surplus capacity, competition and regulatory
changes. There can also be no assurance that regulatory policies or accounting
standards changes will not negatively affect utility companies' earnings or
dividends. Utility companies are subject to regulation by various authorities
and may be affected by the imposition of special tariffs and
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changes in tax laws. To the extent that rates are established or reviewed by
governmental authorities, utility companies are subject to the risk that such
authorities will not authorize increased rates. Because of the Fund's policy of
concentrating its investments in utility companies, the Fund is more susceptible
than most other mutual funds to economic, political or regulatory occurrences
affecting the utilities industry.
Foreign utility companies, like those in the U.S., are generally subject to
regulation, although such regulations may or may not be comparable to domestic
regulations. Foreign utility companies in certain countries may be more heavily
regulated by their respective governments than utility companies located in the
U.S. and, as in the U.S., generally are required to seek government approval for
rate increases. In addition, because many foreign utility companies use fuels
that cause more pollution than those used in the U.S., such utilities may yet be
required to invest in pollution control equipment. Foreign utility regulatory
systems vary from country to country and may evolve in ways different from
regulation in the U.S. The percentage of the Fund's assets invested in issuers
of particular countries will vary. See "Risk Considerations -- Foreign
Investment."
The Fund may invest up to 35% of its total assets in equity and fixed-income
securities of domestic and foreign corporate and governmental issuers other than
utility companies, including U.S. Government securities and repurchase
agreements pertaining thereto, foreign government securities, corporate
fixed-income securities of domestic issuers, corporate fixed-income securities
of foreign issuers denominated in foreign currencies or in U.S. dollars (in each
case including fixed-income securities of an issuer in one country denominated
in the currency of another country), qualifying bank deposits and prime
commercial paper.
The Fund may also: (i) invest up to 30% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest
in depositary receipts, securities of supranational entities denominated in the
currency of any country, securities denominated in European Currency Units and
"semi-governmental securities;" (iv) write covered put and call options and
purchase put and call options on securities of the types in which it is
permitted to invest that are exchange-traded and over-the-counter; (v) purchase
and sell exchange-traded options on any securities index composed of the types
of securities in which it may invest; (vi) enter into contracts for the purchase
or sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including an index of U.S. Government
securities, foreign government securities, corporate fixed-income securities, or
common stock, and may purchase and write options on futures contracts; (vii)
purchase and write put and call options on foreign currencies traded on U.S. and
foreign exchanges or over-the-counter for hedging purposes; (viii) purchase or
sell forward contracts; (ix) enter into interest rate swaps and purchase or sell
interest rate caps and floors; (x) enter in forward commitments for the purchase
or sale of securities; (xi) enter into standby commitment agreements; (xii)
enter into repurchase agreements pertaining to U.S. Government securities with
member banks of the Federal Reserve System or primary dealers in such
securities; (xiii) make short sales of securities or maintain a short position
as described below under "Additional Investment Practices -- Short Sales;" and
(xiv) make secured loans of its portfolio securities not in excess of 20% of its
total assets to brokers, dealers and financial institutions. For additional
information on the use, risk and costs of these policies and practices, see
"Additional Investment Practices."
Alliance Growth and Income Fund
Alliance Growth and Income Fund, Inc. ("Growth and Income Fund") is a
diversified investment company that seeks appreciation through investments
primarily in dividend-paying common stocks of good quality, although it is
permitted to invest in fixed-income securities and convertible securities.
The Fund may also try to realize income by writing covered call options listed
on domestic securities exchanges. See "Additional Investment PracticesOptions."
The Fund also invests in foreign securities. Since the purchase of foreign
securities entails certain political and economic risks, the Fund has restricted
its investments in securities in this category to issues of high quality. See
"Risk Considerations -- Foreign Investment."
ADDITIONAL INVESTMENT PRACTICES
Some or all of the Funds may engage in the following investment practices to the
extent described above.
Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which provide a
stable stream of income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a convertible security
will normally vary with changes in the price of the underlying stock, although
the higher yield tends to make the convertible security less volatile than the
underlying common stock. As with debt securities, the market value of
convertible securities tends to decline as interest rates increase and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they enable investors to benefit from increases in the market price of
the underlying common stock. Convertible debt securities that are rated Baa or
lower by Moody's or BBB or lower by S&P, Duff & Phelps or Fitch and comparable
unrated securities as determined by Alliance may share some or all of the risks
of non-convertible debt securities with those ratings. For a description of
these risks, see "Risk Considerations -- Securities Ratings" and "--Investment
in Lower-Rated Fixed-Income Securities."
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Rights and Warrants. A Fund will invest in rights or warrants only if the
underlying equity securities themselves are deemed appropriate by Alliance for
inclusion in the Fund's portfolio. Rights and warrants entitle the holder to buy
equity securities at a specific price for a specific period of time. Rights are
similar to warrants except that they have a substantially shorter duration.
Rights and warrants may be considered more speculative than certain other types
of investments in that they do not entitle a holder to dividends or voting
rights with respect to the underlying securities nor do they represent any
rights in the assets of the issuing company. The value of a right or warrant
does not necessarily change with the value of the underlying security, although
the value of a right or warrant may decline because of a decrease in the value
of the underlying security, the passage of time or a change in perception as to
the potential of the underlying security, or any combination thereof. If the
market price of the underlying security is below the exercise price set forth in
the warrant on the expiration date, the warrant will expire worthless.
Moreover, a right or warrant ceases to have value if it is not exercised prior
to the expiration date.
Depositary Receipts and Securities of Supranational Entities. Depositary
receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In addition, the issuers
of the stock of unsponsored depositary receipts are not obligated to disclose
material information in the United States and, therefore, there may not be a
correlation between such information and the market value of the depositary
receipts. ADRs are depositary receipts typically issued by a U.S. bank or trust
company that evidence ownership of underlying securities issued by a foreign
corporation. GDRs and other types of depositary receipts are typically issued by
foreign banks or trust companies and evidence ownership of underlying securities
issued by either a foreign or a U.S. company. Generally, depositary receipts in
registered form are designed for use in the U.S. securities markets, and
depositary receipts in bearer form are designed for use in foreign securities
markets. The investments of Growth Fund, Strategic Balanced Fund and Income
Builder Fund in ADRs are deemed to be investments in securities issued by U.S.
issuers and those in GDRs and other types of depositary receipts are deemed to
be investments in the underlying securities. The investments of All-Asia
Investment Fund in depositary receipts are deemed to be investments in the
underlying securities.
A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include, among others, the World
Bank (International Bank for Reconstruction and Development) and the European
Investment Bank. A European Currency Unit is a basket of specified amounts of
the currencies of the member states of the European Economic Community.
"Semi-governmental securities" are securities issued by entities owned by either
a national, state or equivalent government or are obligations of one of such
government jurisdictions which are not backed by its full faith and credit and
general taxing powers.
Mortgage-Backed Securities. Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed securities are passed
through to the holders of the securities. As a result of the pass-through of
prepayments of principal on the underlying securities, mortgage-backed
securities are often subject to more rapid prepayment of principal than their
stated maturity would indicate. Prepayments occur when the mortgagor on a
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. Because the prepayment characteristics of the underlying
mortgages vary, it is impossible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates. Prepayments are
important because of their effect on the yield and price of the mortgage-backed
securities. During periods of declining interest rates, prepayments can be
expected to accelerate and a Fund investing in such securities would be required
to reinvest the proceeds at the lower interest rates then available. In
addition, prepayments of mortgages underlying securities purchased at a premium
could result in capital losses.
Adjustable Rate Securities. Adjustable rate securities have interest rates that
are reset at periodic intervals, usually by reference to some interest rate
index or market interest rate. Some adjustable rate securities are backed by
pools of mortgage loans. Although the rate-adjustment feature may reduce sharp
changes in the value of adjustable rate securities, these securities can change
in value based on changes in market interest rates or the issuer's
creditworthiness. Changes in the interest rate on adjustable rate securities may
lag behind changes in prevailing market interest rates. Also, some adjustable
rate securities (or the underlying mortgages) are subject to caps or floors that
limit the maximum change in interest rate.
Asset-Backed Securities. Asset-backed securities (unrelated to first mortgage
loans) represent fractional interests in pools of leases, retail installment
loans, revolving credit receivables and other payment obligations, both secured
and unsecured. These assets are generally held by a trust and payments of
principal and interest or interest only are passed through monthly or quarterly
to certificate holders and may be guaranteed up to certain amounts by letters of
credit issued by a financial institution affiliated or unaffiliated with the
trustee or originator of the trust.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the trust because
of unanticipated legal or administrative costs of enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors.
Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount
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in lieu of paying interest periodically. Payment-in-kind bonds allow the issuer
to make current interest payments on the bonds in additional bonds. Because
zero-coupon bonds and payment-in-kind bonds do not pay current interest in cash,
their value is generally subject to greater fluctuation in response to changes
in market interest rates than bonds that pay interest in cash currently. Both
zero-coupon and payment-in-kind bonds allow an issuer to avoid the need to
generate cash to meet current interest payments. Accordingly, such bonds may
involve greater credit risks than bonds paying interest currently. Even though
such bonds do not pay current interest in cash, a Fund is nonetheless required
to accrue interest income on such investments and to distribute such amounts at
least annually to shareholders. Thus, a Fund could be required at times to
liquidate other investments in order to satisfy its dividend requirements.
Equity-Linked Debt Securities. Equity-linked debt securities are securities with
respect to which the amount of interest and/or principal that the issuer thereof
is obligated to pay is linked to the performance of a specified index of equity
securities. Such amount may be significantly greater or less than payment
obligations in respect of other types of debt securities. Adverse changes in
equity securities indices and other adverse changes in the securities markets
may reduce payments made under, and/or the principal of, equity-linked debt
securities held by the Fund. Furthermore, as with any debt securities, the
values of equity-linked debt securities will generally vary inversely with
changes in interest rates. The Fund's ability to dispose of equity-linked debt
securities will depend on the availability of liquid markets for such
securities. Investment in equity-linked debt securities may be considered to be
speculative. As with other securities, the Fund could lose its entire investment
in equity-linked debt securities.
Loans and Other Direct Debt Instruments. Loans and other direct debt instruments
are interests in amounts owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending syndicates
(loans and loan participations), to suppliers of goods or services (trade claims
or other receivables), or to other creditors. Direct debt instruments involve
the risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to the Fund in the event of fraud or misrepresentation
than debt securities. In addition, loan participations involve a risk of
insolvency of the lending bank or other financial intermediary. Direct debt
instruments may also include standby financing commitments that obligate the
Fund to supply additional cash to the borrower on demand. Loans and other direct
debt instruments are generally illiquid and may be transferred only through
individually negotiated private transactions.
Purchasers of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If the Fund does not receive scheduled interest or principal payments
on such indebtedness, the Fund's share price and yield could be adversely
affected. Loans that are fully secured offer the Fund more protection than
unsecured loans in the event of non-payment of scheduled interest or principal.
However, there is no assurance that the liquidation of collateral from a secured
loan would satisfy the borrower's obligation, or that the collateral can be
liquidated. Indebtedness of borrowers whose creditworthiness is poor may involve
substantial risks, and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of Asian countries will also involve a risk that the governmental
entities responsible for the repayment of the debt may be unable, or unwilling,
to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to the Fund. For
example, if a loan is foreclosed, the Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary.
A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified on the loan agreement. Unless, under the terms of the loan or other
indebtedness, the Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of the Fund were determined to be
subject to the claims of the agent's general creditors, the Fund might incur
certain costs and delays in realizing payment on the loan or loan participation
and could suffer a loss of principal or interest.
Direct indebtedness purchased by the Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
the Fund to pay additional cash on demand. These commitments may have the effect
of requiring the Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid.
Illiquid Securities. Subject to any more restrictive applicable fundamental
investment policy, none of the Funds will maintain more than 15% of its net
assets in illiquid securities. Illiquid securities generally include (i) direct
placements or other securities that are subject to legal or contractual
restrictions on resale or for which there is no readily available market (e.g.,
when trading in the security is suspended or, in the case of unlisted
securities, when market makers do not exist or will not entertain bids or
offers), including many individually negotiated currency swaps and any assets
used to cover currency swaps and most privately negotiated investments in state
enterprises that have not yet conducted an initial equity offering, (ii)
over-the-counter options and assets used to cover over-the-counter options, and
(iii) repurchase agreements not terminable within seven days.
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Because of the absence of a trading market for illiquid securities, a Fund may
not be able to realize their full value upon sale. With respect to each Fund
that may invest in such securities, Alliance will monitor their illiquidity
under the supervision of the Directors of the Fund. To the extent permitted by
applicable law, Rule 144A securities will not be treated as "illiquid" for
purposes of the foregoing restriction so long as such securities meet liquidity
guidelines established by a Fund's Directors. Investment in non-publicly traded
securities by each of Growth Fund and Strategic Balanced Fund is restricted to
5% of its total assets (not including for these purposes Rule 144A securities,
to the extent permitted by applicable law) and is also subject to the 15%
restriction on investment in illiquid securities described above.
A Fund that invests in securities for which there is no ready market may
therefore not be able to readily sell such securities. To the extent that these
securities are foreign securities, there is no law in many of the countries in
which a Fund may invest similar to the Securities Act requiring an issuer to
register the sale of securities with a governmental agency or imposing legal
restrictions on resales of securities, either as to length of time the
securities may be held or manner of resale. However, there may be contractual
restrictions on resale of securities.
Options. An option gives the purchaser of the option, upon payment of a premium,
the right to deliver to (in the case of a put) or receive from (in the case of a
call) the writer a specified amount of a security on or before a fixed date at a
predetermined price. A call option written by a Fund is "covered" if the Fund
owns the underlying security, has an absolute and immediate right to acquire
that security upon conversion or exchange of another security it holds, or holds
a call option on the underlying security with an exercise price equal to or less
than that of the call option it has written. A put option written by a Fund is
covered if the Fund holds a put option on the underlying securities with an
exercise price equal to or greater than that of the put option it has written.
A call option is for cross-hedging purposes if a Fund does not own the
underlying security, and is designed to provide a hedge against a decline in
value in another security which the Fund owns or has the right to acquire.
Worldwide Privatization Fund, All-Asia Investment Fund, Income Builder Fund and
Utility Income Fund each may write call options for cross-hedging purposes. A
Fund would write a call option for cross-hedging purposes, instead of writing a
covered call option, when the premium to be received from the cross-hedge
transaction would exceed that which would be received from writing a covered
call option, while at the same time achieving the desired hedge.
In purchasing an option, a Fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in the
case of a call) or decreased (in the case of a put) by an amount in excess of
the premium paid; otherwise the Fund would experience a loss equal to the
premium paid for the option.
If an option written by a Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the underlying
security at the exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then be purchased or
sold by the Fund at a disadvantageous price. These risks could be reduced by
entering into a closing transaction (i.e., by disposing of the option prior to
its exercise). A Fund retains the premium received from writing a put or call
option whether or not the option is exercised. The writing of covered call
options could result in increases in a Fund's portfolio turnover rate,
especially during periods when market prices of the underlying securities
appreciate.
Technology Fund, Quasar Fund, International Fund, New Europe Fund and Global
Small Cap Fund will not write uncovered call options. Technology Fund and Global
Small Cap Fund will not write a call option if the premium to be received by the
Fund in doing so would not produce an annualized return of at least 15% of the
then current market value of the securities subject to the option (without
giving effect to commissions, stock transfer taxes and other expenses that are
deducted from premium receipts). Technology Fund, Quasar Fund and Global Small
Cap Fund will not write a call option if, as a result, the aggregate of the
Fund's portfolio securities subject to outstanding call options (valued at the
lower of the option price or market value of such securities) would exceed 15%
of the Fund's total assets or more than 10% of the Fund's assets would be
committed to call options that at the time of sale have a remaining term of more
than 100 days. The aggregate cost of all outstanding options purchased and held
by each of Premier Growth Fund, Technology Fund, Quasar Fund and Global Small
Cap Fund will at no time exceed 10% of the Fund's total assets. Neither
International Fund nor New Europe Fund will write uncovered put options.
A Fund that purchases or writes options on securities in privately negotiated
(i.e., over-the-counter) transactions will effect such transactions only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan institutions) deemed creditworthy by Alliance, and Alliance has
adopted procedures for monitoring the creditworthiness of such entities. Options
purchased or written by a Fund in negotiated transactions are illiquid and it
may not be possible for the Fund to effect a closing transaction at an
advantageous time. See "Illiquid Securities."
Options on Securities Indices. An option on a securities index is similar to an
option on a security except that, rather than the right to take or make delivery
of a security at a specified price, an option on a securities index gives the
holder the right to receive, upon exercise of the option, an amount of cash if
the closing level of the chosen index is greater than (in the case of a call) or
less than (in the case of a put) the exercise price of the option.
Futures Contracts and Options on Futures Contracts. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the contract
at a specified price
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on a specified date. A "purchase" of a futures contract means the incurring of
an obligation to acquire the securities, foreign currencies or other commodity
called for by the contract at a specified price on a specified date. The
purchaser of a futures contract on an index agrees to take or make delivery of
an amount of cash equal to the difference between a specified dollar multiple of
the value of the index on the expiration date of the contract ("current contract
value") and the price at which the contract was originally struck. No physical
delivery of the securities underlying the index is made.
Options on futures contracts written or purchased by a Fund will be traded on
U.S. or foreign exchanges or over-the-counter. These investment techniques will
be used only to hedge against anticipated future changes in market conditions
and interest or exchange rates which otherwise might either adversely affect the
value of the Fund's portfolio securities or adversely affect the prices of
securities which the Fund intends to purchase at a later date.
No Fund will enter into any futures contracts or options on futures contracts if
immediately thereafter the market values of the outstanding futures contracts of
the Fund and the currencies and futures contracts subject to outstanding options
written by the Fund would exceed 50% of its total assets and Income Builder Fund
will also not do so if immediately thereafter the aggregate of initial margin
deposits on all the outstanding futures contracts of the Fund and premiums paid
on outstanding options on futures contracts would exceed 5% of the market value
of the total assets of the Fund. Premier Growth Fund may not purchase or sell a
stock index future if immediately thereafter more than 30% of its total assets
would be hedged by stock index futures. In connection with the purchase of stock
index futures contracts, a Fund will deposit in a segregated account with its
custodian an amount of cash, U.S. Government securities or other liquid
high-quality debt securities equal to the market value of the futures contracts
less any amounts maintained in a margin account with the Fund's broker. Premier
Growth Fund may not purchase or sell a stock index future if, immediately
thereafter, the sum of the amount of margin deposits on the Fund's existing
futures positions would exceed 5% of the market value of the Fund's total
assets.
Options on Foreign Currencies. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and a Fund could be required to purchase
or sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event of
rate movements adverse to a Fund's position, it may forfeit the entire amount of
the premium plus related transaction costs. See the Statement of Additional
Information of each Fund that may invest in options on foreign currencies for
further discussion of the use, risks and costs of options on foreign currencies.
Forward Foreign Currency Exchange Contracts. A Fund purchases or sells forward
contracts to minimize the risk to it from adverse changes in the relationship
between the U.S. dollar and other currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date, and is individually negotiated and privately traded.
A Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security
("transaction hedge"). A Fund will not engage in transaction hedges with respect
to the currency of a particular country to an extent greater than the aggregate
amount of the Fund's transactions in that currency. When a Fund believes that a
foreign currency may suffer a substantial decline against the U.S. dollar, it
may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency, or when the Fund believes that
the U.S. dollar may suffer a substantial decline against a foreign currency, it
may enter into a forward purchase contract to buy that foreign currency for a
fixed dollar amount ("position hedge"). A Fund will not position hedge with
respect to the currency of a particular country to an extent greater than the
aggregate market value (at the time of making such sale) of the securities held
in its portfolio denominated or quoted in that particular foreign currency.
Instead of entering into a position hedge, a Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed U.S.
dollar amount where the Fund believes that the U.S. dollar value of the currency
to be sold pursuant to the forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which portfolio securities
of the Fund are denominated ("cross-hedge"). Unanticipated changes in currency
prices may result in poorer overall performance for the Fund than if it had not
entered into such forward contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. International Fund, New
Europe Fund and Global Small Cap Fund will not enter into a forward contract
with a term of more than one year or if, as a result, more than 50% of its total
assets would be committed to such contracts. The dealings of International Fund,
New Europe Fund and Global Small Cap Fund in forward contracts will be limited
to hedging involving either specific transactions or portfolio positions.
Growth Fund and Strategic Balanced Fund may also purchase and sell foreign
currency on a spot basis.
Forward Commitments. Forward commitments for the purchase or sale of securities
may include purchases on a "when-issued"
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basis or purchases or sales on a "delayed delivery" basis. In some cases, a
forward commitment may be conditioned upon the occurrence of a subsequent event,
such as approval and consummation of a merger, corporate reorganization or debt
restructuring (i.e., a "when, as and if issued" trade).
When forward commitment transactions are negotiated, the price is fixed at the
time the commitment is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within two months
after the transaction, but settlements beyond two months may be negotiated.
Securities purchased or sold under a forward commitment are subject to market
fluctuation, and no interest or dividends accrue to the purchaser prior to the
settlement date. At the time a Fund intends to enter into a forward commitment,
it records the transaction and thereafter reflects the value of the security
purchased or, if a sale, the proceeds to be received, in determining its net
asset value. Any unrealized appreciation or depreciation reflected in such
valuation of a "when, as and if issued" security would be canceled in the event
that the required conditions did not occur and the trade was canceled.
The use of forward commitments enables a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling prices.
In periods of falling interest rates and rising bond prices, a Fund might sell a
security in its portfolio and purchase the same or a similar security on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if Alliance were to forecast incorrectly
the direction of interest rate movements, a Fund might be required to complete
such when-issued or forward transactions at prices inferior to the then current
market values. When-issued securities and forward commitments may be sold prior
to the settlement date, but a Fund enters into when-issued and forward
commitments only with the intention of actually receiving securities or
delivering them, as the case may be. If a Fund chooses to dispose of the right
to acquire a when-issued security prior to its acquisition or dispose of its
right to deliver or receive against a forward commitment, it may incur a gain or
loss. Any significant commitment of Fund assets to the purchase of securities on
a "when, as and if issued" basis may increase the volatility of the Fund's net
asset value. No forward commitments will be made by New Europe Fund, All-Asia
Investment Fund, Worldwide Privatization Fund, Income Builder Fund or Utility
Income Fund if, as a result, the Fund's aggregate commitments under such
transactions would be more than 30% of the Fund's total assets. In the event the
other party to a forward commitment transaction were to default, a Fund might
lose the opportunity to invest money at favorable rates or to dispose of
securities at favorable prices.
Standby Commitment Agreements. Standby commitment agreements commit a Fund, for
a stated period of time, to purchase a stated amount of a security that may be
issued and sold to the Fund at the option of the issuer. The price and coupon of
the security are fixed at the time of the commitment. At the time of entering
into the agreement the Fund is paid a commitment fee, regardless of whether the
security ultimately is issued, typically equal to approximately 0.5% of the
aggregate purchase price of the security the Fund has committed to purchase. A
Fund will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price considered advantageous
to the Fund and unavailable on a firm commitment basis. No Fund, other than
Income Builder Fund, will enter into a standby commitment with a remaining term
in excess of 45 days. Investments in standby commitments will be limited so that
the aggregate purchase price of the securities subject to the commitments will
not exceed 25% with respect to New Europe Fund, 50% with respect to Worldwide
Privatization Fund and All-Asia Investment Fund, and 20% with respect to Utility
Income Fund, of the Fund's assets taken at the time of making the commitment.
There is no guarantee that the securities subject to a standby commitment will
be issued and the value of the security, if issued, on the delivery date may be
more or less than its purchase price. Since the issuance of the security
underlying the commitment is at the option of the issuer, a Fund will bear the
risk of capital loss in the event the value of the security declines and may not
benefit from an appreciation in the value of the security during the commitment
period if the issuer decides not to issue and sell the security to the Fund.
Currency Swaps. Currency swaps involve the individually negotiated exchange by a
Fund with another party of a series of payments in specified currencies. A
currency swap may involve the delivery at the end of the exchange period of a
substantial amount of one designated currency in exchange for the other
designated currency. Therefore the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The net amount of the excess, if any, of a
Fund's obligations over its entitlements with respect to each currency swap will
be accrued on a daily basis. A Fund will not enter into any currency swap unless
the credit quality of the unsecured senior debt or the claims-paying ability of
the other party thereto is rated in the highest rating category of at least one
nationally recognized rating organization at the time of entering into the
transaction. If there is a default by the other party to such a transaction,
such Fund will have contractual remedies pursuant to the agreements related to
the transactions.
Interest Rate Transactions. Each Fund that may enter into interest rate
transactions expects to do so primarily to preserve a return or spread on a
particular investment or portion of its portfolio or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Funds do not intend to use these transactions in a speculative manner.
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Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments). Interest rate swaps are entered on a net
basis (i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments). With
respect to All-Asia Investment Fund and Utility Income Fund, the exchange
commitments can involve payments in the same currency or in different
currencies. The purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount from the party
selling such interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on an agreed principal amount
from the party selling the interest rate floor.
A Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or liabilities. The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each interest rate swap, cap
and floor is accrued daily. A Fund will not enter into an interest rate swap,
cap or floor transaction unless the unsecured senior debt or the claims-paying
ability of the other party thereto is then rated in the highest rating category
of at least one nationally recognized rating organization. Alliance will monitor
the creditworthiness of counterparties on an ongoing basis. The swap market has
grown substantially in recent years, with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps and floors are more recent innovations for which standardized documentation
has not yet been developed and, accordingly, they are less liquid than swaps.
The use of interest rate transactions is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance incorrectly forecasted
market values, interest rates and other applicable factors, the investment
performance of a Fund would be adversely affected by the use of these investment
techniques. Moreover, even if Alliance is correct in its forecasts, there is a
risk that the transaction position may correlate imperfectly with the price of
the asset or liability being hedged. There is no limit on the amount of interest
rate transactions that may be entered into by a Fund that is permitted to enter
into such transactions. These transactions do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to interest rate transactions is limited to the net amount of
interest payments that a Fund is contractually obligated to make. If the other
party to an interest rate transaction defaults, a Fund's risk of loss consists
of the net amount of interest payments that the Fund contractually is entitled
to receive.
Repurchase Agreements. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an agreed-upon
future date, normally a day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon interest rate for the period
the buyer's money is invested in the security. Such agreements permit a Fund to
keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. If a vendor defaults on its
repurchase obligation, a Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
a vendor goes bankrupt, a Fund might be delayed in, or prevented from, selling
the collateral for its benefit. Alliance monitors the creditworthiness of the
vendors with which the Fund enters into repurchase agreements. There is no
percentage restriction on a Fund's ability to enter into repurchase agreements,
other than as indicated under "Investment Objectives and Policies."
Short Sales. A short sale is effected by selling a security that a Fund does not
own, or if the Fund does own such security, it is not to be delivered upon
consummation of the sale. A short sale is "against the box" to the extent that a
Fund contemporaneously owns or has the right to obtain securities identical to
those sold short without payment. Worldwide Privatization Fund, All-Asia
Investment Fund, Income Builder Fund and Utility Income Fund each may make short
sales of securities or maintain short positions only for the purpose of
deferring realization of gain or loss for U.S. federal income tax purposes,
provided that at all times when a short position is open the Fund owns an equal
amount of securities of the same issue as, and equal in amount to, the
securities sold short. In addition, each of those Funds may not make a short
sale if as a result more than 10% of the Fund's net assets would be held as
collateral for short sales, except that All-Asia Investment Fund may not make a
short sale if as a result more than 25% of the Fund's net assets would be held
as collateral for short sales. If the price of the security sold short increases
between the time of the short sale and the time a Fund replaces the borrowed
security, the Fund will incur a loss; conversely, if the price declines, the
Fund will realize a capital gain. See "Certain Fundamental Investment Policies."
Certain special federal income tax considerations may apply to short sales
entered into by a Fund. See "Dividends, Distributions and Taxes" in the relevant
Fund's Statement of Additional Information.
Loans of Portfolio Securities. The risks in lending portfolio securities, as
with other extensions of credit, consist of possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund any income earned thereon
and the Fund may invest any cash collateral in portfolio securities, thereby
earning additional income, or receive an agreed upon amount of income from a
borrower who has delivered equivalent collateral. Each Fund will have the right
to regain record ownership of loaned
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securities or equivalent securities in order to exercise ownership rights such
as voting rights, subscription rights and rights to dividends, interest or
distributions. A Fund may pay reasonable finders', administrative and custodial
fees in connection with a loan. A Fund will not lend its portfolio securities to
any officer, director, employee or affiliate of the Fund or Alliance.
General. The successful use of the foregoing investment practices draws upon
Alliance's special skills and experience with respect to such instruments and
usually depends on Alliance's ability to forecast price movements, interest
rates or currency exchange rate movements correctly. Should interest rates,
prices or exchange rates move unexpectedly, a Fund may not achieve the
anticipated benefits of the transactions or may realize losses and thus be in a
worse position than if such strategies had not been used. Unlike many
exchange-traded futures contracts and options on futures contracts, there are no
daily price fluctuation limits with respect to certain options and forward
contracts, and adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation between movements in
the prices of futures contracts, options and forward contracts and movements in
the prices of the securities and currencies hedged or used for cover will not be
perfect and could produce unanticipated losses.
A Fund's ability to dispose of its position in futures contracts, options and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types of
securities and currencies are relatively new and still developing, and there is
no public market for forward contracts. It is impossible to predict the amount
of trading interest that may exist in various types of futures contracts,
options and forward contracts. If a secondary market does not exist with respect
to an option purchased or written by a Fund, it might not be possible to effect
a closing transaction in the option (i.e., dispose of the option) with the
result that (i) an option purchased by the Fund would have to be exercised in
order for the Fund to realize any profit and (ii) the Fund may not be able to
sell currencies or portfolio securities covering an option written by the Fund
until the option expires or it delivers the underlying security, futures
contract or currency upon exercise. Therefore, no assurance can be given that
the Funds will be able to utilize these instruments effectively for the purposes
set forth above. Furthermore, a Fund's ability to engage in options and futures
transactions may be limited by tax considerations. See "Dividends, Distributions
and Taxes" in the Statement of Additional Information of each Fund that invests
in options and futures.
Future Developments. A Fund may, following written notice to its shareholders,
take advantage of other investment practices that are not currently contemplated
for use by the Fund or are not available but may yet be developed, to the extent
such investment practices are consistent with the Fund's investment objective
and legally permissible for the Fund. Such investment practices, if they arise,
may involve risks that exceed those involved in the activities described above.
Defensive Position. For temporary defensive purposes, each Fund may invest in
certain types of short-term, liquid, high grade or high quality (depending on
the Fund) debt securities. These securities may include U.S. Government
securities, qualifying bank deposits, money market instruments, prime commercial
paper and other types of short-term debt securities including notes and bonds.
For Funds that may invest in foreign countries, such securities may also include
short-term, foreign-currency denominated securities of the type mentioned above
issued by foreign governmental entities, companies and supranational
organizations. For a complete description of the types of securities each Fund
may invest in while in a temporary defensive position, please see such Fund's
Statement of Additional Information.
Portfolio Turnover. Alliance anticipates that the annual turnover rate will not
exceed 100% for Alliance Fund, Worldwide Privatization Fund and All-Asia
Investment Fund; 150% for Premier Growth Fund, International Fund, New Europe
Fund, Global Small Cap Fund, Income Builder Fund and Growth and Income Fund; and
200% for Growth Fund, Technology Fund, Strategic Balanced Fund, Balanced Shares
and Utility Income Fund. A 100%, 150% and 200% annual turnover rate would occur,
for example, when all of the securities in a Fund's portfolio are replaced once,
one and one-half times and twice, respectively, in a period of one year. These
portfolio turnover rates are greater than those of most other investment
companies, including those which emphasize capital appreciation as a basic
policy. A high rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, which must be borne by the Fund
and its shareholders. High portfolio turnover also may result in the realization
of substantial net short-term capital gains. See "Dividends, Distributions and
Taxes" in each Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement of
Additional Information.
Alliance Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S. Government); (ii) acquire more
than 10% of the voting or other securities of any one issuer; or (iii) buy
securities of any company that (including its predecessors) has not been in
business at least three continuous years. Pursuant to investment policies which
are not fundamental, the Fund does not invest (i) in puts or calls (except as
discussed above); (ii) in straddles, spreads, or any combination thereof; (iii)
in oil, gas or other mineral exploration or development programs; or
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(iv) more than 5% of its gross assets in securities the disposition of which
would be subject to restrictions under the federal securities laws.
Growth Fund and Strategic Balanced Fund each may not: (i) invest more than 5% of
its total assets in the securities of any one issuer (other than U.S. Government
securities and repurchase agreements relating thereto), although up to 25% of
each Fund's total assets may be invested without regard to this restriction; or
(ii) invest 25% or more of its total assets in the securities of any one
industry.
Premier Growth Fund may not: (i) purchase more than 10% of the outstanding
voting securities of any one issuer; (ii) invest 25% or more of the value of its
total assets in the same industry; (iii) borrow money or issue senior securities
except for temporary or emergency purposes in an amount not exceeding 5% of the
value of its total assets at the time the borrowing is made; (iv) pledge,
mortgage, hypothecate or otherwise encumber any of its assets except in
connection with the writing of call options and except to secure permitted
borrowings; or (v) invest in the securities of any issuer that has a record of
less than three years of continuous operation (including the operation of any
predecessor) if as a result more than 10% of the value of the total assets of
the Fund would be invested in the securities of such issuer or issuers.
Technology Fund may not: (i) with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items, (b) U.S. Government
securities, or (c) securities of any one issuer (other than the U.S. Government
and its agencies or instrumentalities) not greater in value than 5% of the
Fund's total assets, and not more than 10% of the outstanding voting securities
of such issuer; (ii) purchase the securities of any one issuer, other than the
U.S. Government and its agencies or instrumentalities, if as a result (a) the
value of the holdings of the Fund in the securities of such issuer exceeds 25%
of its total assets, or (b) the Fund owns more than 25% of the outstanding
securities of any one class of securities of such issuer; (iii) concentrate its
investments in any one industry, but the Fund has reserved the right to invest
up to 25% of its total assets in a particular industry; and (iv) invest in the
securities of any issuer which has a record of less than three years of
continuous operation (including the operation of any predecessor) if such
purchase would cause 10% or more of its total assets to be invested in the
securities of such issuers.
Quasar Fund may not: (i) purchase the securities of any one issuer, other than
the U.S. Government or any of its agencies or instrumentalities, if as a result
more than 5% of its total assets would be invested in such issuer or the Fund
would own more than 10% of the outstanding voting securities of such issuer,
except that up to 25% of its total assets may be invested without regard to
these 5% and 10% limitations; (ii) invest more than 25% of its total assets in
any particular industry; (iii) borrow money except for temporary or emergency
purposes in an amount not exceeding 5% of its total assets at the time the
borrowing is made; or (iv) invest more than 10% of its assets in restricted
securities.
International Fund may not: (i) invest more than 5% of the value of its total
assets in securities of a single issuer (including repurchase agreements with
any one entity), except U.S. Government securities or foreign government
securities; provided, however, that the Fund may not, with respect to 75% of its
total assets, invest more than 5% of its total assets in securities of any one
foreign government issuer; (ii) own more than 10% of the outstanding securities
of any class of any issuer (for this purpose, all preferred stocks of an issuer
shall be deemed a single class, and all indebtedness of an issuer shall be
deemed a single class), except U.S. Government securities; (iii) invest more
than 25% of the value of its total assets in securities of issuers having their
principal business activities in the same industry; provided, that this
limitation does not apply to U.S. Government securities or foreign government
securities; (iv) invest more than 5% of the value of its total assets in the
securities of any issuer that has a record of less than three years of
continuous operation (including the operation of any predecessor or
unconditional guarantor), except U.S. Government securities or foreign
government securities; (v) invest more than 5% of the value of its total assets
in securities with legal or contractual restrictions on resale, other than
repurchase agreements, or more than 10% of the value of its total assets in
securities that are not readily marketable (including restricted securities and
repurchase agreements not terminable within seven business days); and (vi)
borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then only from banks in amounts not exceeding 5% of its total
assets.
Worldwide Privatization Fund may not: (i) invest 25% or more of its total assets
in securities of issuers conducting their principal business activities in the
same industry, except that this restriction does not apply to (a) U.S.
Government securities, or (b) the purchase of securities of issuers whose
primary business activity is in the national commercial banking industry, so
long as the Fund's Directors determine, on the basis of factors such as
liquidity, availability of investments and anticipated returns, that the Fund's
ability to achieve its investment objective would be adversely affected if the
Fund were not permitted to invest more than 25% of its total assets in those
securities, and so long as the Fund notifies its shareholders of any decision by
the Directors to permit or cease to permit the Fund to invest more than 25% of
its total assets in those securities, such notice to include a discussion of any
increased investment risks to which the Fund may be subjected as a result of the
Directors' determination; (ii) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests that might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; outstanding
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borrowings in excess of 5% of the value of the Fund's total assets will be
repaid before any investments are made; or (iii) pledge, hypothecate, mortgage
or otherwise encumber its assets, except to secure permitted borrowings. The
exception contained in clause (i)(b) above is subject to the operating policy
regarding concentration described in this Prospectus.
New Europe Fund may not: (i) purchase more than 10% of the outstanding voting
securities of any one issuer; (ii) invest more than 15% of its total assets in
the securities of any one issuer or 25% or more of its total assets in the same
industry, provided, however, that the foregoing restriction shall not be deemed
to prohibit the Fund from purchasing the securities of any issuer pursuant to
the exercise of rights distributed to the Fund by the issuer, except that no
such purchase may be made if as a result the Fund will fail to meet the
diversification requirements of the Code and any such acquisition in excess of
the foregoing 15% or 25% limits will be sold by the Fund as soon as reasonably
practicable (this restriction does not apply to U.S. Government securities, but
will apply to foreign government securities unless the Commission permits their
exclusion); (iii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the Fund's total assets will be repaid
before any subsequent investments are made; or (iv) purchase a security (unless
the security is acquired pursuant to a plan of reorganization or an offer of
exchange) if, as a result, the Fund would own any securities of an open-end
investment company or more than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the value of the Fund's total
assets would be invested in securities of any closed-end investment company, or
more than 10% of such value in closed-end investment companies in general.
All-Asia Investment Fund may not: (i) invest 25% or more of its total assets in
securities of issuers conducting their principal business activities in the same
industry; (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the value of the Fund's total assets
will be repaid before any investments are made; or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings.
Global Small Cap Fund may not: (i) purchase the securities of any one issuer,
other than the U.S. Government or any of its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its total assets
would be invested in such issuer or the Fund would own more than 10% of the
outstanding voting securities of such issuer, except that up to 25% of the
Fund's total assets may be invested without regard to these 5% and 10%
limitations; (ii) invest 25% or more of its total assets in the same industry;
this restriction does not apply to U.S. Government securities, but will apply to
foreign government securities unless the Commission permits their exclusion;
(iii) borrow money except from banks for emergency or temporary purposes in an
amount not exceeding 5% of the total assets of the Fund; or (iv) make short
sales of securities or maintain a short position, unless at all times when a
short position is open it owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in amount to, the
securities sold short and unless not more than 5% of the Fund's net assets is
held as collateral for such sales at any one time.
Balanced Shares may not: (i) invest more than 5% of its total assets in the
securities of any one issuer, except U.S. Government securities; or (ii) own
more than 10% of the outstanding voting securities of any one issuer.
Income Builder Fund may not: (i) invest 25% or more of its total assets in
securities of companies engaged principally in any one industry, except that
this restriction does not apply to U.S. Government securities; (ii) borrow money
except from banks for temporary or emergency purposes, including the meeting of
redemption requests that might require the untimely disposition of securities;
borrowing in the aggregate may not exceed 15%, and borrowing for purposes other
than meeting redemptions may not exceed 5%, of the Fund's total assets
(including the amount borrowed) less liabilities (not including the amount
borrowed) at the time borrowing is made; securities will not be purchased while
borrowings in excess of 5% of the Fund's total assets are outstanding; or (iii)
pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings.
Utility Income Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer except the U.S. Government, although with respect
to 25% of its total assets it may invest in any number of issuers; (ii) invest
25% or more of its total assets in the securities of issuers conducting their
principal business activities in any one industry, other than the utilities
industry, except that this restriction does not apply to U.S. Government
securities; (iii) purchase more than 10% of any class of the voting securities
of any one issuer; (iv) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests that might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; outstanding borrowings in excess of 5% of the Fund's total assets will be
repaid before any subsequent
24
<PAGE>
investments are made; or (v) purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an offer of
exchange), the Fund would own any securities of an open-end investment company
or more than 3% of the total outstanding voting stock of any closed-end
investment company or more than 5% of the value of the Fund's net assets would
be invested in securities of any one or more closed-end investment companies.
Growth and Income Fund may not (i) invest more than 5% of its net assets in the
security of any one issuer, except U.S. Government obligations or (ii) own more
than 10% of the outstanding voting securities of any issuer.
RISK CONSIDERATIONS
Investment in certain of the Funds involves the special risk considerations
described below. These risks may be heightened when investing in emerging
markets.
Investment in Privatized Enterprises by Worldwide Privatization Fund. In certain
jurisdictions, the ability of foreign entities, such as the Fund, to participate
in privatizations may be limited by local law, or the price or terms on which
the Fund may be able to participate may be less advantageous than for local
investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.
Furthermore, in the case of certain of the enterprises in which the Fund may
invest, large blocks of the stock of those enterprises may be held by a small
group of stockholders, even after the initial equity offerings by those
enterprises. The sale of some portion or all of those blocks could have an
adverse effect on the price of the stock of any such enterprise.
Most state enterprises or former state enterprises go through an internal
reorganization of management prior to conducting an initial equity offering in
an attempt to better enable these enterprises to compete in the private sector.
However, certain reorganizations could result in a management team that does not
function as well as the enterprise's prior management and may have a negative
effect on such enterprise. After making an initial equity offering, enterprises
that may have enjoyed preferential treatment from the respective state or
government that owned or controlled them may no longer receive such preferential
treatment and may become subject to market competition from which they were
previously protected. Some of these enterprises may not be able to effectively
operate in a competitive market and may suffer losses or experience bankruptcy
due to such competition. In addition, the privatization of an enterprise by its
government may occur over a number of years, with the government continuing to
hold a controlling position in the enterprise even after the initial equity
offering for the enterprise.
Currency Considerations. Substantially all of the assets of International Fund,
New Europe Fund, All-Asia Investment Fund, Global Small Cap Fund and Worldwide
Privatization Fund will be invested in securities denominated in foreign
currencies, and a corresponding portion of these Funds' revenues will be
received in such currencies. Therefore, the dollar equivalent of their net
assets, distributions and income will be adversely affected by reductions in the
value of certain foreign currencies relative to the U.S. dollar. If the value of
the foreign currencies in which a Fund receives its income falls relative to the
U.S. dollar between receipt of the income and the making of Fund distributions,
the Fund may be required to liquidate securities in order to make distributions
if it has insufficient cash in U.S. dollars to meet distribution requirements
that the Fund must satisfy to qualify as a regulated investment company for
federal income tax purposes. Similarly, if an exchange rate declines between the
time a Fund incurs expenses in U.S. dollars and the time cash expenses are paid,
the amount of the currency required to be converted into U.S. dollars in order
to pay expenses in U.S. dollars could be greater than the equivalent amount of
such expenses in the currency at the time they were incurred. In light of these
risks, a Fund may engage in certain currency hedging transactions, which
themselves involve certain special risks. See "Additional Investment Practices"
above.
Foreign Investment. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, a Fund whose investment portfolio includes such
securities may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in equity securities of United States
companies. These markets may be subject to greater influence by adverse events
generally affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States. Securities settlements
may in some instances be subject to delays and related administrative
uncertainties. These problems are particularly severe in India, where settlement
is through physical delivery, and, where, currently, a severe shortage of vault
capacity exists among custodial banks, although efforts are being undertaken to
alleviate the shortage. Certain foreign countries require governmental approval
prior to investments by foreign persons or limit investment by foreign persons
to only a specified percentage of an issuer's outstanding securities or a
specific class of securities which may have less advantageous terms (including
price) than securities of the company available for purchase by nationals. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the costs and expenses of a Fund. In addition, the
repatriation of investment income, capital or the proceeds of sales of
securities from certain of the countries is controlled under regulations,
including in some cases the need for certain advance government notification or
authority, and if a deterioration occurs in a country's balance of payments, the
country could impose temporary restrictions on foreign capital remittances.
A Fund could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as
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<PAGE>
well as by the application to it of other restrictions on investment. Investing
in local markets may require a Fund to adopt special procedures, which may
involve additional costs to a Fund. The liquidity of a Fund's investments in any
country in which any of these factors exists could be affected and Alliance will
monitor the effect of any such factor or factors on a Fund's investments.
Furthermore, transaction costs including brokerage commissions for transactions
both on and off the securities exchanges in many foreign countries are generally
higher than in the U.S.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements and timely disclosure of information. The reporting, accounting and
auditing standards of foreign countries may differ, in some cases significantly,
from U.S. standards in important respects and less information may be available
to investors in foreign securities than to investors in U.S. securities.
Substantially less information is publicly available about certain non-U.S.
issuers than is available about U.S. issuers.
The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability or diplomatic
developments could affect adversely the economy of a foreign country or the
Fund's investments in such country. In the event of expropriation,
nationalization or other confiscation, a Fund could lose its entire investment
in the country involved. In addition, laws in foreign countries governing
business organizations, bankruptcy and insolvency may provide less protection to
security holders such as the Fund than that provided by U.S. laws.
Investment in United Kingdom Issuers by New Europe Fund. Investment in
securities of United Kingdom issuers involves certain considerations not present
with investment in securities of U.S. issuers. As with any investment not
denominated in the U.S. dollar, the U.S. dollar value of the Fund's investment
denominated in the British pound sterling will fluctuate with pound
sterling--dollar exchange rate movements. Since 1972, when the pound sterling
was allowed to float against other currencies, it has generally depreciated
against most major currencies, including the U.S. dollar. From 1990 through
1994, the pound sterling declined at an average annual rate of approximately
3.6% against the U.S. dollar. Between September and December 1992, after the
United Kingdom's exit from the Exchange Rate Mechanism of the European Monetary
System, the value of the pound sterling fell by almost 20% against the U.S.
dollar. The pound sterling continued to fall in early 1993, but recovered due to
interest rate cuts throughout Europe and an upturn in the economy of the United
Kingdom.
The United Kingdom's largest stock exchange is the International Stock Exchange
of the United Kingdom and the Republic of Ireland (The London Stock Exchange),
which is the third largest exchange in the world. As measured by the FT-SE 100
index, the performance of the 100 largest companies in the United Kingdom
reached a record high of 3593.0 on October 18, 1995, up 17% from the end of
1994.
The public sector borrowing requirement ("PSBR"), a mandated measure of the
amount required to balance the budget, is running in excess of the November 1994
budget estimate, as a result of decreased revenue growth and increased
government spending. The PSBR estimate for the 1996-97 fiscal year has also been
raised, but is still expected to be under the European Union limit.
Since 1979, the Conservative Party has controlled Parliament. However, in recent
years, this dominance has been called into question. In 1990, due to an internal
challenge for leadership the Conservative Party chose John Major to replace
Margaret Thatcher as Prime Minister. Mr. Major's position has been strengthened
by his reelection as leader of the Conservative Party and is expected to retain
that position until the next general election. Unless the Conservative Party
calls for an earlier election, the next general election will take place in
April 1997. For further information regarding the United Kingdom, see the Fund's
Statement of Additional Information.
Investment in Japanese Issuers by All-Asia Investment Fund and International
Fund. Investment in securities of Japanese issuers involves certain
considerations not present with investment in securities of U.S. issuers. As
with any investment not denominated in the U.S. dollar, the U.S. dollar value of
each Fund's investments denominated in the Japanese yen will fluctuate with
yen-dollar exchange rate movements. The Japanese yen has generally been
appreciating against the U.S. dollar for the past decade but has recently fallen
from its post-World War II high against the U.S. dollar.
Japan's largest stock exchange is the Tokyo Stock Exchange, the First Section of
which is reserved for larger, established companies. As measured by the TOPIX, a
capitalization-weighted composite index of all common stocks listed in the First
Section, the performance of the First Section reached a peak in 1989.
Thereafter, the TOPIX declined approximately 46% through the beginning of 1993.
In 1993, the TOPIX increased by approximately 9% from the end of 1992, and by
the end of 1994 increased by approximately 8% from the end of 1993. As of
October 27, 1995, the TOPIX had declined by approximately 11% from the end of
1994. Certain valuation measures, such as price-to-book value and price-to-cash
flow ratios, indicate that the Japanese stock market is near its lowest level in
the last twenty years relative to other world markets. The price/earnings ratios
of First Section companies, however, are on average high in comparison with
other major stock markets.
In recent years, Japan has consistently recorded large current account trade
surpluses with the U.S. that have caused difficulties in the relations between
the two countries. On October 1, 1994, the U.S. and Japan reached an agreement
that may lead to more open Japanese markets with respect to trade in certain
goods and services. In June 1995, the two countries agreed in principle to
increase Japanese imports of American automobiles and automotive parts.
Nevertheless it is expected that the continuing friction between the U.S. and
Japan with
26
<PAGE>
respect to trade issues will continue for the foreseeable future.
Each Fund's investments in Japanese issuers also will be subject to uncertainty
resulting from the instability of recent Japanese ruling coalitions. From 1955
to 1993, Japan's government was controlled by a single political party. In
August 1993, following a split in that party, a coalition government was formed.
That coalition government collapsed in April 1994, and was replaced by a
minority coalition that, in turn, collapsed in June 1994. The stability of the
current ruling coalition, the third since 1993, and the first in 47 years led by
a socialist, is not assured. For further information regarding Japan, see each
Fund's Statement of Additional Information.
Investment in Smaller, Emerging Companies. The Funds may invest in smaller,
emerging companies. Global Small Cap Fund and New Europe Fund will emphasize
investment in, and All-Asia Investment Fund may emphasize investment in,
smaller, emerging companies. Investment in such companies involves greater risks
than is customarily associated with securities of more established companies.
The securities of smaller companies may have relatively limited marketability
and may be subject to more abrupt or erratic market movements than securities of
larger companies or broad market indices.
U.S. and Foreign Taxes. Foreign taxes paid by a Fund may be creditable or
deductible by U.S. shareholders for U.S. income tax purposes. No assurance can
be given that applicable tax laws and interpretations will not change in the
future. Moreover, non-U.S. investors may not be able to credit or deduct such
foreign taxes. Investors should review carefully the information discussed under
the heading "Dividends, Distributions and Taxes" and should discuss with their
tax advisers the specific tax consequences of investing in a Fund.
Fixed-Income Securities. The value of each Fund's shares will fluctuate with the
value of its investments. The value of each Fund's investments in fixed-income
securities will change as the general level of interest rates fluctuates. During
periods of falling interest rates, the values of fixed-income securities
generally rise.
Conversely, during periods of rising interest rates, the values of fixed-income
securities generally decline.
Under normal market conditions, the average dollar-weighted maturity of a Fund's
portfolio of debt or other fixed-income securities is expected to vary between
five and 30 years in the case of All-Asia Investment Fund, between eight and 15
years in the case of Income Builder Fund, between five and 25 years in the case
of Utility Income Fund and between one year or less and 30 years in the case of
all other Funds that invest in such securities.
Securities Ratings. The ratings of securities by S&P, Moody's, Duff & Phelps and
Fitch are a generally accepted barometer of credit risk. They are, however,
subject to certain limitations from an investor's standpoint. The rating of an
issuer is heavily weighted by past developments and does not necessarily reflect
probable future conditions. There is frequently a lag between the time a rating
is assigned and the time it is updated. In addition, there may be varying
degrees of difference in credit risk of securities within each rating category.
Securities rated Aaa by Moody's and AAA by S&P, Duff & Phelps and Fitch are
considered to be of the highest quality; capacity to pay interest and repay
principal is extremely strong. Securities rated Aa by Moody's and AA by S&P,
Duff & Phelps and Fitch are considered to be high quality; capacity to repay
principal is considered very strong, although elements may exist that make risks
appear somewhat larger than exist with securities rated Aaa or AAA. Securities
rated A are considered by Moody's to possess adequate factors giving security to
principal and interest. S&P, Duff & Phelps and Fitch consider such securities to
have a strong capacity to pay interest and repay principal. Such securities are
more susceptible to adverse changes in economic conditions and circumstances
than higher-rated securities.
Securities rated Baa by Moody's and BBB by S&P, Duff & Phelps and Fitch are
considered to have an adequate capacity to pay interest and repay principal.
Such securities are considered to have speculative characteristics and share
some of the same characteristics as lower-rated securities. Sustained periods of
deteriorating economic conditions or of rising interest rates are more likely to
lead to a weakening in the issuer's capacity to pay interest and repay principal
than in the case of higher-rated securities. Securities rated Ba by Moody's and
BB by S&P, Duff & Phelps and Fitch are considered to have speculative
characteristics with respect to capacity to pay interest and repay principal
over time; their future cannot be considered as well-assured. Securities rated B
by Moody's, S&P, Duff & Phelps and Fitch are considered to have highly
speculative characteristics with respect to capacity to pay interest and repay
principal. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Securities rated Caa by Moody's and CCC by S&P, Duff & Phelps and Fitch are of
poor standing and there is a present danger with respect to payment of principal
or interest. Securities rated Ca by Moody's and CC by S&P and Fitch are
minimally protected, and default in payment of principal or interest is
probable. Securities rated C by Moody's, S&P and Fitch are in imminent default
in payment of principal or interest and have extremely poor prospects of ever
attaining any real investment standing. Securities rated D by S&P and Fitch are
in default. The issuer of securities rated DD by Duff & Phelps is under an order
of liquidation.
Investment in Lower-Rated Fixed-Income Securities. Lower-rated securities, i.e.,
those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps or
Fitch, are subject to greater risk of loss of principal and interest than
higher-rated securities. They are also generally considered to be subject to
greater market risk than higher-rated securities, and the capacity of issuers of
lower-rated securities to pay interest and repay principal is more likely to
weaken than is that of issuers of higher-rated securities in times of
deteriorating economic conditions or rising interest rates. In addition,
lower-rated securities may be more susceptible to real or perceived adverse
economic conditions than investment grade securities, although the market values
of securities rated below investment grade and comparable unrated securities
tend to react less to fluctuations in interest rate levels than do those of
higher-rated securities.
27
<PAGE>
The market for lower-rated securities may be thinner and less active than that
for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, a Fund may experience difficulty
in valuing such securities and, in turn, the Fund's assets. In addition, adverse
publicity and investor perceptions about lower-rated securities, whether or not
factual, may tend to impair their market value and liquidity.
Alliance will try to reduce the risk inherent in investment in lower-rated
securities through credit analysis, diversification and attention to current
developments and trends in interest rates and economic and political conditions.
However, there can be no assurance that losses will not occur. Since the risk of
default is higher for lower-rated securities, Alliance's research and credit
analysis are a correspondingly more important aspect of its program for managing
a Fund's securities than would be the case if a Fund did not invest in
lower-rated securities.
In seeking to achieve a Fund's investment objective, there will be times, such
as during periods of rising interest rates, when depreciation and realization of
capital losses on securities in a Fund's portfolio will be unavoidable.
Moreover, medium- and lower-rated securities and non-rated securities of
comparable quality may be subject to wider fluctuations in yield and market
values than higher-rated securities under certain market conditions. Such
fluctuations after a security is acquired do not affect the cash income received
from that security but are reflected in the net asset value of a Fund. See the
Statement of Additional Information for each Fund that invests in lower-rated
securities for a description of the bond ratings of Moody's, S&P, Duff & Phelps
and Fitch.
Certain lower-rated securities in which Growth Fund, Income Builder Fund and
Utility Income Fund may invest may contain call or buy-back features that permit
the issuers thereof to call or repurchase such securities. Such securities may
present risks based on prepayment expectations. If an issuer exercises such a
provision, a Fund may have to replace the called security with a lower yielding
security, resulting in a decreased rate of return to the Fund.
Non-Diversified Status. Each of Worldwide Privatization Fund, New Europe Fund,
All-Asia Investment Fund and Income Builder Fund is a "non-diversified"
investment company, which means the Fund is not limited in the proportion of its
assets that may be invested in the securities of a single issuer. However, each
Fund intends to conduct its operations so as to qualify to be taxed as a
"regulated investment company" for purposes of the Code, which will relieve the
Fund of any liability for federal income tax to the extent its earnings are
distributed to shareholders. See "Dividends, Distributions and Taxes" in each
Fund's Statement of Additional Information. To so qualify, among other
requirements, the Fund will limit its investments so that, at the close of each
quarter of the taxable year, (i) not more than 25% of the Fund's total assets
will be invested in the securities of a single issuer, and (ii) with respect to
50% of its total assets, not more than 5% of its total assets will be invested
in the securities of a single issuer and the Fund will not own more than 10% of
the outstanding voting securities of a single issuer. A Fund's investments in
U.S. Government securities are not subject to these limitations. Because
Worldwide Privatization Fund, New Europe Fund, All-Asia Investment Fund and
Income Builder Fund is each a non-diversified investment company, it may invest
in a smaller number of individual issuers than a diversified investment company,
and an investment in such Fund may, under certain circumstances, present greater
risk to an investor than an investment in a diversified investment company.
Foreign government securities are not treated like U.S. Government securities
for purposes of the diversification tests described in the preceding paragraph,
but instead are subject to these tests in the same manner as the securities of
non-governmental issuers.
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PURCHASE AND SALE
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OF SHARES
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HOW TO BUY SHARES
Each Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares of each Fund may be purchased
through your financial representative at net asset value without any initial or
contingent deferred sales charges and are not subject to ongoing distribution
expenses. Advisor Class shares may be purchased solely by investors (i) through
accounts established under a fee-based program, sponsored and maintained by a
registered broker-dealer or other financial intermediary and approved by
Alliance Fund Distributors, Inc. ("AFD"), each Fund's principal underwriter,
pursuant to which each investor pays an asset-based fee at an annual rate of at
least .50% of the assets in the investor's account to the broker-dealer or
financial intermediary, or its affiliate or agent, for investment advisory or
administrative services, or (ii) through a self-directed defined contribution
employee benefit plan (e.g., a 401(k) plan) that has at least 1,000 participants
or $25 million in assets. The minimum initial investment in each Fund is $250.
The minimum for subsequent investments in each Fund is $50. Investments of $25
or more are allowed under the automatic investment program of each Fund and
under a 403(b)(7) retirement plan. Share certificates are issued only upon
request. See the Subscription Application and Statement of Additional
Information for more information.
The Funds may refuse any order to purchase Advisor Class shares. In this regard,
the Funds reserve the right to restrict purchases of Advisor Class shares
(including exchanges) when there appears to be evidence of a pattern of frequent
purchases and sales made in response to short-term fluctuations in share price.
How the Funds Value Their Shares
The net asset value of Advisor Class shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to the Advisor Class by the
outstanding shares of the Advisor Class. Shares are valued each day the New York
Stock Exchange (the "Exchange") is open as of the close of regular trading
(currently 4:00 p.m. Eastern time). The securities in a Fund are valued at their
current market value determined on the basis of market quotations or, if such
quotations are not readily available, such other methods as the Fund's Directors
believe would accurately reflect fair market value.
HOW TO SELL SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any day the
Exchange is open, either directly or through your financial representative. The
price you will receive is the net asset value next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by
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<PAGE>
check or electronic funds transfer, a Fund will not send proceeds until it is
reasonably satisfied that the check or electronic funds transfer has been
collected (which may take up to 15 days). If you are in doubt about what
documents are required by your fee-based program or employee benefit plan, you
should contact your financial representative.
Selling Shares Through Your Financial Representative
Your financial representative must receive your request before 4:00 p.m. Eastern
time, and your financial representative must transmit your request to the Fund
by 5:00 p.m. Eastern time, for you to receive that day's net asset value. Your
financial representative is responsible for furnishing all necessary
documentation to a Fund and may charge you for this service.
Selling Shares Directly To A Fund
Send a signed letter of instruction or stock power form to Alliance Fund
Services, Inc. ("AFS") along with certificates, if any, that represent the
shares you want to sell. For your protection, signatures must be guaranteed by a
bank, a member firm of a national stock exchange or other eligible guarantor
institution. Stock power forms are available from your financial representative,
AFS, and many commercial banks. Additional documentation is required for the
sale of shares by corporations, intermediaries, fiduciaries and surviving joint
owners. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
1-800-221-5672
Alternatively, a request for redemption of shares for which no stock
certificates have been issued can also be made by telephone to 800-221-5672.
Telephone redemption requests must be made by 4 p.m. Eastern time on a Fund
business day in order to receive that day's net asset value, and, except for
certain omnibus accounts, may be made only once in any 30-day period. A
shareholder who has completed the Telephone Transactions section of the
Subscription Application, or the Shareholder Options form obtained from AFS, can
elect to have the proceeds of their redemption sent to their bank via an
electronic funds transfer. Proceeds of telephone redemptions also may be sent by
check to a shareholder's address of record. Except for certain omnibus accounts,
redemption requests by electronic funds transfer may not exceed $100,000 and
redemption requests by check may not exceed $50,000. Telephone redemption is not
available for shares held in nominee or "street name" accounts or retirement
plan accounts or shares held by a shareholder who has changed his or her address
of record within the previous 30 calendar days.
General
The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, a Fund may suspend redemptions or postpone payment for up
to seven days or longer, as permitted by federal securities law. The Funds
reserve the right to close an account that through redemption has remained below
$200 for 90 days. Shareholders will receive 60 days' written notice to increase
the account value before the account is closed.
During drastic economic or market developments, you might have difficulty
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephonic requests to
purchase, sell or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it failed to do so. Dealers and
agents may charge a commission for handling telephonic requests. The telephone
service may be suspended or terminated at any time without notice.
SHAREHOLDER SERVICES
AFS offers a variety of shareholder services. For more information about these
services or your account, call AFS's toll-free number, 800-221-5672.
HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares of any Fund for Advisor Class shares
of other Alliance Mutual Funds (which include AFD Exchange Reserves, a money
market fund managed by Alliance). Exchanges of shares are made at the net asset
values next determined, without sales or service charges. Exchanges may be made
by telephone or written request. Telephone exchange requests must be received by
AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that
day's net asset value.
Please read carefully the Prospectus of the mutual fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to exchange
uncertificated shares. An exchange is a taxable capital transaction for federal
tax purposes. The exchange service may be changed, suspended, or terminated on
60 days' written notice.
GENERAL
If you are a Fund shareholder through an account established under a fee-based
program, your fee-based program may impose requirements with respect to the
purchase, sale or exchange of Advisor Class shares of a Fund that are different
from those described in this Prospectus. A transaction fee may be charged by
your financial representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
Each Fund offers three classes of shares other than the Advisor Class, which are
Class A, Class B and Class C. All classes of shares of a Fund have a common
investment objective and investment portfolio. Class A shares are offered with
an initial sales charge and pay a distribution services fee. Class B shares have
a contingent deferred sales charge (a "CDSC") and also pay a distribution
services fee. Class C shares have no initial sales charge or CDSC but pay a
distribution services fee. Because Advisor Class shares have no initial sales
charge or CDSC and pay no distribution services fee, Advisor Class shares are
expected to have different performance from Class A, Class B or Class C shares.
You may obtain more information about Class A, Class B and Class C shares, which
are not offered by this Prospectus, by contacting AFS by telephone at
1-800-221-5672 or by contacting your financial representative.
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MANAGEMENT OF THE FUNDS
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ADVISER
Alliance, which is a Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been retained under an
advisory agreement (the "Advisory Agreement") to provide investment advice and,
in general, to conduct the management and investment program of each Fund,
subject to the general supervision and control of the Directors of the Fund.
The following table lists the person or persons who are primarily responsible
for the day-to-day management of each Fund's portfolio, the length of time that
each person has been primarily responsible, and each person's principal
occupation during the past five years.
<TABLE>
<CAPTION>
Principal occupation
during the past
Fund Employee; year; title five years
- --------------------------------------------------------------------------------
<S> <C> <C>
The Alliance Fund Alfred Harrison since 1989-- Associated with
Vice Chairman of Alliance Capital Alliance
Management Corporation
("ACMC")*
Paul H. Jenkel since 1985-- Associated with
Senior Vice President of ACMC Alliance
Growth Fund Tyler Smith since inception-- Associated with
Senior Vice President of ACMC Alliance since
July 1993; prior
thereto,
associated with
Equitable Capital
Management
Corporation
("Equitable
Capital")**
Premier Growth Fund Alfred Harrison since inception-- (see above)
(see above)
Technology Fund Peter Anastos since 1992-- Associated with
Senior Vice President of ACMC Alliance
Gerald T. Malone since 1992-- Associated with
Senior Vice President of ACMC Alliance since
1992; prior
thereto
associated with
College
Retirement
Equities Fund
Quasar Fund Alden M. Stewart since 1994-- Associated with
Executive Vice President of ACMC Alliance since
1993; prior
thereto,
associated with
Equitable Capital
Randall E. Haase since 1994-- Associated with
Senior Vice President of ACMC Alliance since July
1993; prior
thereto,
associated with
Equitable Capital
Timothy Rice since 1993-- Associated with
Vice President of ACMC Alliance
International Fund A. Rama Krishna since 1993-- Associated with
Senior Vice President of ACMC Alliance since
and director of Asian Equity 1993, prior
research thereto,
Chief Investment
Strategist and
Director--Equity
Research for CS
First Boston
Worldwide Mark H. Breedon since inception-- Associated with
Privatization Senior Vice President of ACMC Alliance
and Director and Vice President
of Alliance Capital Limited ***
New Europe Fund Eric N. Perkins since 1992-- Associated with
Senior Vice President of ACMC Alliance
and director of European equity
research
All-Asia Investment A. Rama Krishna since inception-- (see above)
Fund (see above)
Global Small Cap Alden M. Stewart since 1994-- (see above)
Fund (see above)
Randall E. Haase since 1994-- (see above)
(see above)
Timothy Rice since 1993-- (see above)
(see above)
Ronald L. Simcoe since 1993-- Associated with
Vice President of ACMC Alliance since
1993; prior
thereto,
associated with
Equitable Capital
Strategic Balanced Robert G. Heisterberg since 1996-- Associated with
Fund Senior Vice President of ACMC Alliance
and Global Economic Policy Analyst
Balanced Shares Kevin J. O'Brien since 1996-- Associated with
Senior Vice President of ACMC Alliance
Income Builder Fund Andrew M. Aran since 1994-- Associated with
Senior Vice President of ACMC Alliance since
March 1991; prior
thereto, a Vice
President of
PaineWebber, Inc.
Thomas M. Perkins since 1991-- Associated with
Senior Vice President of ACMC Alliance
Utility Income Fund Gregory Allison since 1995-- Associated with
Portfolio Manager of Utility Alliance since
Income Fund 1994; prior
thereto
associated with
Gabelli & Co.
Growth & Income Paul Rissman since 1994-- Associated with
Fund Vice President of ACMC Alliance
</TABLE>
- --------------------------------------------------------------------------------
* The sole general partner of Alliance.
** Equitable Capital was, prior to Alliance's acquisition of it, a management
firm under common control with Alliance.
*** An indirect wholly-owned subsidiary of Alliance.
Alliance is a leading international investment manager supervising client
accounts with assets as of March 1, 1996 totaling more than $156 billion (of
which approximately $48 billion represented the assets of investment companies).
Alliance's clients are primarily major corporate employee benefit funds, public
employee retirement systems, investment companies, foundations and endowment
funds. The 50 registered investment companies managed by Alliance comprising 107
separate investment portfolios currently have
30
<PAGE>
over two million shareholders. As of March 1, 1996, Alliance was retained as
an investment manager for 34 of the Fortune 100 companies.
ACMC, the sole general partner of, and the owner of a 1% general partnership
interest in, Alliance, is an indirect wholly-owned subsidiary of The Equitable
Life Assurance Society of the United States ("Equitable"), one of the largest
life insurance companies in the United States, which is a wholly-owned
subsidiary of The Equitable Companies Incorporated, a holding company controlled
by AXA, a French insurance holding company. Certain information concerning the
ownership and control of Equitable by AXA is set forth in each Fund's Statement
of Additional Information under "Management of the Fund."
ADMINISTRATOR AND CONSULTANT TO ALL-ASIA INVESTMENT FUND
Alliance has been retained by All-Asia Investment Fund under an administration
agreement (the "Administration Agreement") to perform administrative services
necessary for the operation of the Fund. For a description of such services, see
the Statement of Additional Information of the Fund.
In connection with its provision of advisory services to All-Asia Investment
Fund, Alliance has retained at its expense OCBC Asset Management Limited ("OAM")
as a consultant to provide to Alliance such statistical and other factual
information, research and assistance with respect to economic, financial,
political, technological and social conditions and trends in Asian countries,
including information on markets and industries, as Alliance shall from time to
time request. OAM will not furnish investment advice or make recommendations
regarding the purchase or sale of securities by the Fund nor will it be
responsible for making investment decisions involving Fund assets.
OAM is one of the largest Singapore-based investment management companies
specializing in investment in Asia- Pacific markets. OAM provides consulting and
advisory services to institutions and individuals, including mutual funds. As of
September 30, 1995, OAM had approximately $1.5 billion in assets under
management.
OAM is a wholly-owned subsidiary of Oversea-Chinese Banking Corporation Limited
("OCBC Bank"), which is based in Singapore. The OCBC Bank Group has an extensive
network of banking offices in the Asian Pacific region. The OCBC Bank Group
engages in a wide variety of activities including commercial banking, investment
banking, and property and hotel investment and management. OCBC Bank is the
third largest company listed on the Stock Exchange of Singapore with a market
capitalization as of September 30, 1995 of approximately $11.4 billion.
DISTRIBUTION SERVICES AGREEMENTS
Each Fund has entered into a Distribution Services Agreement with AFD with
respect to Advisor Class shares. The Glass-Steagall Act and other applicable
laws may limit the ability of a bank or other depository institution to become
an underwriter or distributor of securities. However, in the opinion of the
Funds' management, based on the advice of counsel, these laws do not prohibit
such depository institutions from providing services for investment companies
such as the administrative, accounting and other services referred to in the
Agreements. In the event that a change in these laws prevented a bank from
providing such services, it is expected that other services arrangements would
be made and that shareholders would not be adversely affected. The State of
Texas requires that shares of a Fund may be sold in that state only by dealers
or other financial institutions that are registered there as broker-dealers.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS
- --------------------------------------------------------------------------------
AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
If you receive an income dividend or capital gains distribution in cash you may,
within 120 days following the date of its payment, reinvest the dividend or
distribution in additional shares of that Fund without charge by returning to
Alliance, with appropriate instructions, the check representing such dividend or
distribution. Thereafter, unless you otherwise specify, you will be deemed to
have elected to reinvest all subsequent dividends and distributions in shares of
that Fund.
Each income dividend and capital gains distribution, if any, declared by a Fund
on its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of the same class of shares of that Fund having an
aggregate net asset value as of the close of business on the day following the
declaration date of such dividend or distribution equal to the cash amount of
such income dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are initially
purchased and may be changed at any time prior to the record date for a
particular dividend or distribution. Cash dividends can be paid by check or, if
the shareholder so elects, electronically via the ACH network. There is no sales
or other charge in connection with the reinvestment of dividends and capital
gains distributions.
While it is the intention of each Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by such Fund of income and capital gains
from investments. There is no fixed dividend rate, and there can be no assurance
that a Fund will pay any dividends or realize any capital gains.
If you buy shares just before a Fund deducts a distribution from its net asset
value, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.
FOREIGN INCOME TAXES
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for
31
<PAGE>
foreign income taxes withheld at the source, each Fund intends, if possible, to
operate so as to meet the requirements of the Code to "pass through" to the
Fund's shareholders credits for foreign income taxes paid, but there can be no
assurance that any Fund will be able to do so.
U.S. FEDERAL INCOME TAXES
Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Code. To the extent that a Fund distributes its taxable income and net
capital gain to its shareholders, qualification as a regulated investment
company relieves that Fund of federal income and excise taxes on that part of
its taxable income including net capital gains which it pays out to its
shareholders. Dividends out of net ordinary income and distributions of net
short-term capital gains are taxable to the recipient shareholders as ordinary
income. In the case of corporate shareholders, such dividends may be eligible
for the dividends-received deduction, except that the amount eligible for the
deduction is limited to the amount of qualifying dividends received by the Fund.
A corporation's dividends-received deduction will be disallowed unless the
corporation holds shares in the Fund at least 46 days. Furthermore, the
dividends-received deduction will be disallowed to the extent a corporation's
investment in shares of a Fund is financed with indebtedness.
The excess of net long-term capital gains over the net short-term capital losses
realized and distributed by each Fund to its shareholders as capital gains
distributions is taxable to the shareholders as long-term capital gains,
irrespective of the length of time a shareholder may have held his or her stock.
Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.
Under the current federal tax law the amount of an income dividend or capital
gains distribution declared by a Fund during October, November or December of a
year to shareholders of record as of a specified date in such a month that is
paid during January of the following year is includable in the prior year's
taxable income of shareholders that are calendar year taxpayers.
Any dividend or distribution received by a shareholder on shares of a Fund will
have the effect of reducing the net asset value of such shares by the amount of
such dividend or distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder, although in effect a
return of capital to that particular shareholder, would be taxable to him or her
as described above. If a shareholder held shares six months or less and during
that period received a distribution taxable to such shareholder as long-term
capital gain, any loss realized on the sale of such shares during such six-month
period would be a long-term capital loss to the extent of such distribution.
A dividend or capital gains distribution with respect to shares of a Fund held
by a tax-deferred or qualified plan, such as an individual retirement account,
403(b)(7) retirement plan or corporate pension or profit-sharing plan, will not
be taxable to the plan. Distributions from such plans will be taxable to
individual participants under applicable tax rules without regard to the
character of the income earned by the qualified plan.
Distributions by a Fund may be subject to state and local taxes. Alliance Fund,
Premier Growth Fund, Technology Fund, Income Builder Fund, Quasar Fund, New
Europe Fund, Balanced Shares and Growth and Income Fund are qualified to do
business in the Commonwealth of Pennsylvania and, therefore, are subject to the
Pennsylvania foreign franchise and corporate net income tax in respect of their
business activities in Pennsylvania. Accordingly, shares of such Funds are
exempt from Pennsylvania personal property taxes. These Funds anticipate
continuing such business activities but reserve the right to suspend them at any
time, resulting in the termination of the exemptions.
A Fund will be required to withhold 31% of any payments made to a shareholder if
the shareholder has not provided a certified taxpayer identification number to
the Fund, or the Secretary of the Treasury notifies a Fund that a shareholder
has not reported all interest and dividend income required to be shown on the
shareholder's Federal income tax return.
Shareholders will be advised annually as to the federal tax status of dividends
and capital gains distributions made by a Fund for the preceding year.
Shareholders are urged to consult their tax advisers regarding their own tax
situation.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, a
Fund may consider sales of its shares as a factor in the selection of dealers to
enter into portfolio transactions with the Fund.
ORGANIZATION
Each of the following Funds is a Maryland corporation organized in the year
indicated: The Alliance Fund, Inc. (1938), Alliance Balanced Shares, Inc.
(1932), Alliance Premier Growth Fund, Inc. (1992), Alliance Technology Fund,
Inc. (1980), Alliance Quasar Fund, Inc. (1968), Alliance Worldwide Privatization
Fund, Inc. (1994), Alliance New Europe Fund, Inc. (1990), Alliance All-Asia
Investment Fund, Inc. (1994), Alliance Global Small Cap Fund, Inc. (1966),
Alliance Income Builder Fund, Inc. (1991), Alliance Utility Income Fund, Inc.
(1993), and Alliance Growth and Income Fund, Inc. (1932). Each of the following
Funds is either a Massachusetts business trust or a series of a Massachusetts
business trust organized in the year indicated: Alliance Growth Fund and
Alliance Strategic Balanced Fund (each a series of The Alliance Portfolios)
(1987), and Alliance International Fund (1980). Prior to August 2, 1993, The
Alliance Portfolios was known as The Equitable Funds, Growth Fund was known
32
<PAGE>
as The Equitable Growth Fund and Strategic Balanced Fund was known as The
Equitable Balanced Fund. Prior to March 22, 1994, Income Builder Fund was known
as Alliance Multi-Market Income and Growth Trust, Inc.
It is anticipated that annual shareholder meetings will not be held; shareholder
meetings will be held only when required by federal, or in the case of the Funds
organized as Maryland corporations, state law. Shareholders have available
certain procedures for the removal of Directors.
A shareholder in a Fund will be entitled to his or her pro rata share of all
dividends and distributions arising from the Fund's assets and, upon redeeming
shares, will receive the then current net asset value of the Fund represented by
the redeemed shares. The Funds are empowered to establish, without shareholder
approval, additional portfolios, which may have different investment objectives,
and additional classes of shares. If an additional portfolio or class were
established in a Fund, each share of the portfolio or class would normally be
entitled to one vote for all purposes. Generally, shares of each portfolio and
class would vote together as a single class on matters, such as the election of
Directors, that affect each portfolio and class in substantially the same
manner. Advisor Class, Class A, Class B and Class C shares have identical
voting, dividend, liquidation and other rights, except that each class bears its
own transfer agency expenses and each of Class A, Class B and Class C shares
bears its own distribution expenses. Each class of shares votes separately with
respect to matters for which separate class voting is appropriate under
applicable law. Shares are freely transferable, are entitled to dividends as
determined by the Directors and, in liquidation of a Fund, are entitled to
receive the net assets of the Fund. Since this Prospectus sets forth information
about all the Funds, it is theoretically possible that a Fund might be liable
for any materially inaccurate or incomplete disclosure in this Prospectus
concerning another Fund. Based on the advice of counsel, however, the Funds
believe that the potential liability of each Fund with respect to the disclosure
in this Prospectus extends only to the disclosure relating to that Fund. Certain
additional matters relating to a Fund's organization are discussed in its
Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer agent
and dividend-disbursing agent for a fee based upon the number of shareholder
accounts maintained for the Funds.
PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the principal underwriter of shares
of the Funds.
PERFORMANCE INFORMATION
From time to time, the Funds advertise their "total return," which is computed
separately for each class of shares, including Advisor Class shares. Such
advertisements disclose a Fund's average annual compounded total return for the
periods prescribed by the Commission. A Fund's total return for each such period
is computed by finding, through the use of a formula prescribed by the
Commission, the average annual compounded rate of return over the period that
would equate an assumed initial amount invested to the value of the investment
at the end of the period. For purposes of computing total return, income
dividends and capital gains distributions paid on shares of a Fund are assumed
to have been reinvested when paid and the maximum sales charges applicable to
purchases and redemptions of a Fund's shares are assumed to have been paid.
Balanced Shares, Growth and Income Fund, Income Builder Fund, Strategic Balanced
Fund and Utility Income Fund may also advertise their "yield," which is also
computed separately for each class of shares, including Advisor Class shares. A
Fund's yield for any 30-day (or one-month) period is computed by dividing the
net investment income per share earned during such period by the maximum public
offering price per share on the last day of the period, and then annualizing
such 30-day (or one-month) yield in accordance with a formula prescribed by the
Commission which provides for compounding on a semi-annual basis.
Strategic Balanced Fund, Balanced Shares, Income Builder Fund, Utility Income
Fund and Growth and Income Fund may also state in sales literature an "actual
distribution rate" for each class which is computed in the same manner as yield
except that actual income dividends declared per share during the period in
question are substituted for net investment income per share. The actual
distribution rate is computed separately for each class of shares, including
Advisor Class shares.
Advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
ADDITIONAL INFORMATION
This Prospectus and the Statements of Additional Information, which have been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statements filed by the Funds with the Commission under the
Securities Act. Copies of the Registration Statements may be obtained at a
reasonable charge from the Commission or may be examined, without charge, at the
offices of the Commission in Washington, D.C.
33
<PAGE>
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
This prospectus is intended to constitute an offer by each Fund only of the
securities of which it is the issuer and is not intended to constitute an offer
by any Fund of the securities of any other Fund whose securities are also
offered by this prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this prospectus relating to any
other Fund. See "General Information--Organization."
34
<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
(Advisor Class)
June [ ], 1996
_________________________________________________________________
This Statement of Additional Information relating to Advisor
Class shares of the Fund is not a prospectus but supplements and
should be read in conjunction with the current Prospectus for the
Fund relating to Advisor Class shares. A copy of the Prospectus
relating to Advisor Class shares may be obtained by contacting
Alliance Fund Services, Inc. at the address or the "Literature"
telephone number shown above.
TABLE OF CONTENTS
Page
Description of the Fund...............................
Management of the Fund................................
Expenses of the Fund..................................
Portfolio Transactions................................
Purchase of Shares....................................
Redemption and Repurchase of Shares...................
Shareholder Services..................................
Net Asset Value.......................................
Dividends, Distributions and Taxes....................
General Information...................................
Report of Independent Auditors and
Financial Statements................................
<PAGE>
___________________________
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
________________________________________________________________
DESCRIPTION OF THE FUND
_________________________________________________________________
Incorporated by reference from the section "Description
of the Fund" contained in the Statement of Additional Information
of Alliance Global Small Cap Fund, Inc. (the "Fund") dated
November 1, 1995 relating to Class A, Class B and Class C shares
of the Fund as filed with the Securities and Exchange Commission
pursuant to Rule 497(c) on November 9, 1995 (file nos. 2-25364
and 811-01415) (the "Rule 497 SAI").
Capitalized terms used herein that are not otherwise
defined herein are used as defined in the Rule 497 SAI.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
Incorporated by reference from the section "Management
of the Fund" contained in the Rule 497 SAI, except that the
second, third, fourth and fourteenth paragraphs of the
sub-section "Adviser" and the sub-section "Directors and
Officers" are restated as set forth below:
The Adviser is a leading international investment
manager supervising client accounts with assets as of March 1,
1996 of more than $156 billion (of which more than $48 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 March 1,
1996, 34 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,350
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 50
registered investment companies comprising 107 separate
investment portfolios managed by the Adviser currently have more
than two million shareholders.
Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of March 1, 1996,
2
<PAGE>
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 57.6% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of March 1, 1996, approximately 32.4% and
10.0% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including employees
of the Adviser who serve as Directors of the Fund.
AXA and its subsidiaries own approximately 63.9% of the
issued and outstanding shares of capital stock of ECI. AXA is
the holding company for an international group of insurance and
related financial services companies. AXA's insurance operations
include activities in life insurance, property and casualty
insurance and reinsurance. The insurance operations are diverse
geographically, with activities in France, the United States,
Australia, the United Kingdom, Canada and other countries,
principally in Europe and the Asia Pacific area. AXA is also
engaged in asset management, investment banking, securities
trading, brokerage, real estate and other financial services
activities in the United States, Europe and the Asia Pacific
area. Based on information provided by AXA, as of March 1, 1996,
42.1% of the issued ordinary shares (representing 53.4% of the
voting power) of AXA were owned by Midi Participations, a French
holding company ("Midi"). The shares of Midi were, in turn,
owned 61.4% (representing 62.5% of the voting power) by Finaxa, a
French holding company, and 38.6% (representing 37.5% of the
voting power) by subsidiaries of Assicurazioni Generali S.p.A.,
an Italian corporation (one of which, Belgica Insurance Holding
S.A., a Belgian corporation, owned 30.8%, representing 33.1% of
the voting power). As of March 1, 1996, 61.1% of the voting
shares (representing 73.4% 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
34.7% of the voting shares representing 40.4% of the voting
power), and 25.5% of the voting shares (representing 16% of the
voting power) of Finaxa were owned by Banque Paribas, a French
bank. Including the ordinary shares owned by Midi, as of
March 1, 1996, the Mutuelles AXA directly or indirectly owned 51%
of the issued ordinary shares (representing 64.7% of the voting
power) of AXA. Acting as a group, the Mutuelles AXA control AXA,
Midi and Finaxa.
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 Developing
Markets Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
3
<PAGE>
Alliance Global Strategic Income Trust, Inc., Alliance Government
Reserves, Alliance Growth and Income Fund, Inc., Alliance Income
Builder Fund, Inc., Alliance International Fund, Alliance Limited
Maturity Government Fund, Inc., Alliance Money Market Fund,
Alliance Mortgage Securities Income Fund, Inc., Alliance Multi-
Market Strategy Trust, Inc., Alliance Municipal Income Fund,
Inc., Alliance Municipal Income Fund II, Alliance Municipal
Trust, Alliance New Europe Fund, Inc., Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Short-Term Multi-
Market Trust, Inc., Alliance Technology Fund, Inc., Alliance
Utility Income Fund, Inc., Alliance Variable Products Series
Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., The Alliance Portfolios, Fiduciary
Management Associates and The Hudson River Trust, all registered
open-end investment companies; and to ACM Government Income Fund,
Inc., ACM Government Securities Fund, Inc., ACM Government
Spectrum Fund, Inc., ACM Government Opportunity Fund, Inc., ACM
Managed Income Fund, Inc., ACM Managed Dollar Income Fund, Inc.,
ACM Municipal Securities Income Fund, Inc., Alliance All-Market
Advantage Fund, Inc., Alliance Global Environment Fund, Inc.,
Alliance World Dollar Government Fund, Inc., Alliance World
Dollar Government Fund II, Inc., Alliance Global Privatization
Fund, Inc., The Austria Fund, Inc., The Korean Investment Fund,
Inc., The Southern African Fund and The Spain Fund, Inc., all
registered closed-end investment companies.
Directors and Officers
The Directors and principal officers of the Fund and
their primary occupations during the past five years are set
forth below. Unless otherwise specified the address of each of
the following persons is at 1345 Avenue of the Americas, New
York, New York 10105. Each such Director and officer is also a
trustee, director or officer of other registered investment
companies sponsored by the Adviser.
Directors
JOHN D. CARIFA, 51, - Chairman of the Board of
Directors, is the President and Chief Operating Officer and a
Director of ACMC, with which he has been associated since prior
to 1991.
RUTH BLOCK, 64, - was formerly Executive Vice President
and Chief Insurance Officer of The Equitable Life Assurance
Society of the United States ("Equitable"). She is a Director of
Ecolab Incorporated (specialty chemicals) and Amoco Corporation
(oil and gas). Her address is Box 4653, Stamford, Connecticut,
06903.
4
<PAGE>
DAVID H. DIEVLER, 65, was formerly a Senior Vice
President of ACMC, with which he was associated since prior to
1991 through 1994. He is currently an independent consultant.
His address is P.O. Box 167, Spring Lake, New Jersey, 07762.
JOHN H. DOBKIN, 53, has been the President of Historic
Hudson Valley (historic preservation) since 1991 Previously, he
was Director of the National Academy of Design. From 1987 to
1992, he was a Director of ACMC. His address is 105 West 55th
Street, New York, New York, 10019.
WILLIAM H. FOULK, JR., 63, is an investment Advisor and
Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, since
1986. His address is 2 Hekma Road, Greenwich, Connecticut,
06831.
DR. JAMES M. HESTER, 72, - is President of the Harry
Frank Guggenheim Foundation and a Director of Union Carbide
Corporation, with which he has been associated since prior to
1991. He was formerly President of New York University, the New
York Botanical Garden and Rector of the United Nations
University. His address is 45 East 89th Street, New York, New
York, 10128.
CLIFFORD L. MICHEL, 56, - is a partner in the law firm
of Cahill Gordon & Reindel, with which he has been associated
since prior to 1991. He is Chief Executive Officer of Wenonah
Development Company (investments) and Director of Placer Dome,
Inc., and Faber-Castell Corporation (writing products). His
address is 80 Pine Street, New York, New York, 10005.
DONALD J. ROBINSON, 61, was formerly a partner at
Orrick, Herrington & Sutcliffe since prior to 1991 and is
currently counsel to that firm. His address is 599 Lexington
Avenue, 26th Floor, New York, New York 10022.
Officers
JOHN D. CARIFA, Chairman and President, see Biography
above.
ALDEN M. STEWART, Senior Vice President, 49, has been an
Executive Vice President of ACMC since July, 1993. Prior thereto
he was associated with ECMC.
RANDALL E. HAASE, Vice President, 32, has been a Vice
President of ACMC since July, 1993. Prior thereto he was
associated with ECMC.
5
<PAGE>
TIMOTHY D. RICE, Vice President, 28, is a Vice President
of ACMC with which he has been associated since prior to 1991.
RONALD L. SIMCOE, Vice President, 50, has been a Vice
President of ACMC since July, 1993. Prior thereto he was
associated with ECMC.
THOMAS BARDONG, Vice President, 50, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1991.
DANIEL PANKER, Vice President, 57, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1991.
EDMUND P. BERGAN, JR., Secretary, 45, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") with which he has been associated since prior to
1991.
MARK D. GERSTEN, Treasurer and Chief Financial Officer,
44, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS"), with which he has been associated since prior to 1991.
DOMENICK PUGLIESE, Assistant Secretary, 34, is a Vice
President and Associate General Counsel of AFD with which he has
been associated since May 1995. Previously, he was Vice
President and Counsel of Concord Holding Corporation since 1994,
Vice President and Associate General Counsel of Prudential
Securities since 1991 and an associate with Battle Fowler since
prior to 1991.
VINCENT SOTO, Controller, 31, is an Assistant Vice
President of Alliance Fund Services, Inc., with which he has been
associated since prior to 1991.
JUAN J. RODRIGUEZ, Assistant Controller, 38, is an
Assistant Vice President of Alliance Fund Services, Inc., with
which he has been associated since prior to 1991.
JOSEPH J. MANTINEO, Assistant Controller, 36, is an
Assistant Vice President of Alliance Fund Services, Inc., with
which he has been associated since prior to 1991.
PHYLLIS CLARK, Assistant Controller, 34, is a Manager of
Alliance Fund Services, Inc., since 1994. Previously, she was a
Supervisor for Fixed Income Mutual Fund Accounting for Alliance
Fund Services, Inc.
The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended July 31, 1995, the
6
<PAGE>
aggregate compensation paid to each of the Directors during
calendar year 1995 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies in the Alliance Fund Complex with respect to
which each of the Directors serves as a director or trustee, are
set forth below. Neither the Fund nor any other fund in the
Alliance Fund Complex provides compensation in the form of
pension or retirement benefits to any of its directors or
trustees. Each of the Directors is a director or trustee of one
or more other registered investment companies in the Alliance
Fund Complex.
Total Compensa- Total Number of
tion From the Fund in the
the Alliance Alliance Fund
Aggregate Fund Complex, Complex, Including
Name of Director Compensation Including the Director is a
of the Fund from the Fund the Fund Director or Trustee
________________ _____________ _______________ ___________________
John D. Carifa $-0- $-0- 49
Ruth Block $5,000 $157,000 36
David H. Dievler $3,750 $-0- 42
John H. Dobkin $5,000 $110,750 29
William H. Foulk, Jr. $5,000 $141,500 30
Dr. James M. Hester $5,000 $154,500 37
Clifford L. Michel $5,000 $120,500 36
Donald J. Robinson $ -0- $24,000 9
As of April 5, 1996, 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 Principal Underwriter to distribute
the Fund's Advisor Class shares.
The Agreement became effective on July 22, 1992, and was
amended as of [ ], 1996 to permit the distribution of the
7
<PAGE>
Advisor Class shares. The amendment to the Agreement was
approved by a vote of the Directors on [ ], 1996.
The Agreement will continue in effect for successive
twelve-month periods with respect to Advisor Class shares
(computed from each October 1) provided, however, that such
continuance is specifically approved at least annually by the
Directors of the Fund or by vote of the holders of a majority of
the outstanding voting securities (as defined in the 1940 Act) of
that class, and in either case, by a majority of the Directors of
the Fund who are not parties to the Agreement or interested
persons, as defined in the 1940 Act, of any such party (other
than as directors of the Fund). All amendments to the Agreement
must be approved by a vote of the Directors of the Fund.
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 Class A, Class B, Class C and Advisor
Class share of the Fund plus reimbursement for out-of-pocket
expenses. During the fiscal year ended July 31, 1995, the Fund
paid Alliance Fund Services, Inc. $159,995 for transfer agency
services.
________________________________________________________________
PORTFOLIO TRANSACTIONS
________________________________________________________________
Incorporated by reference from the section "Portfolio
Transactions" contained in the Rule 497 SAI.
________________________________________________________________
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; -- How To Sell Shares; -- and
Shareholder Services."
General
If you are a Fund shareholder through an account
established under a fee-based program, your fee-based program may
impose requirements with respect to the purchase, sale or
exchange of Advisor Class shares of the Fund that are different
from those described in the Prospectus and this Statement of
Additional Information. A transaction fee may be charged by your
8
<PAGE>
financial representative with respect to the purchase, sale or
exchange of Advisor Class shares made through such financial
representative.
Advisor Class shares of the Fund are offered on a
continuous basis at a price equal to their net asset value. 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.
Investors may purchase Advisor Class shares of the Fund
solely through (i) accounts established under a fee-based
program, sponsored and maintained by registered broker-dealers or
other financial intermediaries and approved by the Principal
Underwriter, pursuant to which each investor pays an asset-based
fee at an annual rate of at least .50% of the assets in the
investor's account, to the broker-dealer or financial
intermediary, or its affiliate or agent, for investment advisory
or administrative services, or (ii) a self-directed defined
contribution employee benefit plan (e.g., a 401(k) plan) that has
at least 1,000 participants or $25 million in assets. The Fund
may refuse any order for the purchase of Advisor Class shares.
The Fund reserves the right to suspend the sale of its Advisor
Class shares to the public in response to conditions in the
securities markets or for other reasons.
The public offering price of Advisor Class shares of the
Fund is their net asset value. 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 Advisor Class 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. Eastern time) by dividing the value of the
Fund's total assets, less its liabilities, by the total number of
its shares then outstanding. A Fund business day is any weekday,
exclusive of days on which the Exchange is closed (most national
holidays and Good Friday). For purposes of this computation,
Exchange-listed securities and over-the-counter securities
admitted to trading on the NASDAQ National List are valued at the
last quoted sale or, if there is no such sale, at the mean of
closing bid and asked prices and portfolio bonds are presently
valued by a recognized pricing service. If accurate quotations
are not available, securities will be valued at fair value
determined in good faith by the Board of Directors.
The Fund will accept unconditional orders for its
Advisor Class shares to be executed at the public offering price
9
<PAGE>
equal to their net asset value next determined, 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. In
the case of orders for purchase of Advisor Class shares placed
through a shareholder's financial representative, the applicable
public offering price will be the net asset value as so
determined, but only if the financial representative receives the
order prior to the close of regular trading on the Exchange and
transmits it to the Principal Underwriter prior to 5:00 p.m.
Eastern time. The financial representative is responsible for
transmitting such orders by 5:00 p.m. If the financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
financial representative. If the financial representative
receives the order after the close of regular trading on the
Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on
the next day it is open for trading.
Following the initial purchase of Advisor Class shares,
a shareholder may place orders to purchase additional Advisor
Class shares by telephone if the shareholder has completed the
appropriate portion of the Subscription Application. Except with
respect to certain omnibus accounts, a telephone purchase order
may not exceed $500,000. Payment for Advisor Class shares
purchased by telephone can be made only by Electronic Funds
Transfer from a bank account maintained by the shareholder at a
bank that is a member of the National Automated Clearing House
Association ("NACHA"). If a shareholder's telephone purchase
request is received before 3:00 p.m. Eastern time on a Fund
business day, the order to purchase Advisor Class 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 Advisor Class 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 Advisor
Class shares of the Fund are not issued except upon written
request to the Fund by the shareholder or his or her authorized
financial representative. 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 Advisor Class shares, although such
Advisor Class shares remain in the shareholder's account on the
books of the Fund.
10
<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
Advisor Class shares tendered to it, as described below, at a
redemption price equal to their net asset value as next computed
following the receipt of Advisor Class shares tendered for
redemption in proper form. Payment of the redemption price will
be made within seven days after the Fund's receipt of such tender
for redemption. If a shareholder is in doubt about what
documents are required by his or her fee-based program or
employee benefit plan, the shareholder should contact his or her
financial representative.
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after Advisor Class shares are tendered for redemption, except
for any period during which the New York Stock Exchange (the
"Exchange") is closed (other than customary weekend and holiday
closings) or during which the Securities and Exchange Commission
determines that trading thereon is restricted, or for any period
during which an emergency (as determined by the Securities and
Exchange Commission) exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or
as a result of which it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or for such
other periods as the Securities and Exchange Commission may by
order permit for the protection of security holders of the Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's Advisor Class shares on redemption
or repurchase may be more or less than the cost of such Advisor
Class shares to the shareholder, depending upon the market value
of the Fund's portfolio securities at the time of such redemption
or repurchase. Payment received by a shareholder upon redemption
or repurchase of his or her Advisor Class shares, assuming the
Advisor Class shares constitute capital assets in his or her
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 Advisor Class shares redeemed.
11
<PAGE>
To redeem Advisor Class shares of the Fund for which no
stock certificates have been issued, the registered owner or
owners should forward a letter to the Fund containing a request
for redemption. The signature or signatures on the letter must
be guaranteed by an "eligible guarantor institution" as defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
To redeem Advisor Class shares of the Fund represented
by stock certificates, the investor should forward the
appropriate stock certificate or certificates, endorsed in blank
or with blank stock powers attached, to the Fund with the request
that the Advisor Class 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.
Telephone Redemption By Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption by electronic
funds transfer, once in any 30-day period (except for certain
omnibus accounts), of Advisor Class shares for which no stock
certificates have been issued can also be made by telephone at
(800) 221-5672 by a shareholder who has completed the appropriate
portion of the Subscription Application. A telephone redemption
request may not exceed $100,000 (except for certain omnibus
accounts), and must be made by 4:00 p.m. Eastern time on a Fund
business day as defined above. Proceeds of telephone redemptions
will be sent by Electronic Funds Transfer to a shareholder's
designated bank account at a bank selected by the shareholder
that is a member of the NACHA.
Telephone Redemption By Check. Except for certain
omnibus accounts or as otherwise noted below, each Fund
shareholder is eligible to request redemption, by check once in
any 30-day period, of Advisor Class shares for which no stock
certificates have been issued by telephone at (800) 221-5672
before 4:00 p.m. Eastern time on a Fund business day in an amount
not exceeding $50,000. Proceeds of such redemptions are remitted
by check to the shareholder's address of record. Telephone
redemption by check is not available with respect to Advisor
Class shares (i) for which certificates have been issued, (ii)
held in nominee or "street name" accounts, (iii) held by a
shareholder who has changed his or her address of record within
the preceding 30 calendar days or (iv) held in any retirement
plan account. A shareholder otherwise eligible for telephone
12
<PAGE>
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.
Telephone Redemption--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.
A shareholder's financial representative may charge a fee for
handling telephone requests for redemptions.
Repurchase
The Fund may repurchase Advisor Class shares through the
Principal Underwriter or selected financial intermediaries. The
repurchase price will be the net asset value next determined
after the Principal Underwriter receives the request, except that
requests placed through selected financial intermediaries 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.
Eastern time). The financial intermediary is responsible for
transmitting the request to the Principal Underwriter by 5:00
p.m. If the financial intermediary fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the financial intermediary.
A shareholder may offer Advisor Class shares of the Fund to the
Principal Underwriter either directly or through a financial
intermediary. Neither the Fund nor the Principal Underwriter
charges a fee or commission in connection with the repurchase of
Advisor Class shares. Normally, if Advisor Class shares of the
Fund are offered through a financial intermediary, the repurchase
is settled by the shareholder as an ordinary transaction with or
13
<PAGE>
through the financial intermediary, who may charge the
shareholder for this service. The repurchase of Advisor Class
shares of the Fund as described above is a voluntary service of
the Fund and the Fund may suspend or terminate this practice at
any time.
General
The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. In the case of a
redemption or repurchase of Advisor Class 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."
Automatic Investment Program
Investors may purchase Advisor Class 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 Advisor Class shares through
the financial intermediary 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. 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.
14
<PAGE>
Exchange Privilege
Advisor Class shareholders of the Fund can exchange
their Advisor Class shares for Advisor Class shares any other
Alliance Mutual Fund that offers Advisor Class shares.
Exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose Advisor Class
shares are being acquired. An exchange is effected through the
redemption of the Advisor Class shares tendered for exchange and
the purchase of Advisor Class shares being acquired at their
respective net asset values as next determined following receipt
by the Alliance Mutual Fund whose Advisor Class 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 Advisor Class shares recently
purchased by check will be permitted only after the Alliance
Mutual Fund whose Advisor Class 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 Advisor Class 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 financial
representative, 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. Such telephone requests
cannot be accepted with respect to Advisor Class shares then
represented by stock certificates. Advisor Class shares acquired
pursuant to a telephone request for exchange will be held under
the same account registration as the Advisor Class 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., Eastern time, on a Fund business
day as defined above. Telephone requests for exchange received
before 4:00 p.m. Eastern time on a Fund business day will be
processed as of the close of business on that day. During
periods of drastic economic or market developments, such as the
market break of October 1987, it is possible that shareholders
would have difficulty in reaching Alliance Fund Services, Inc. by
telephone (although no such difficulty was apparent at any time
in connection with the 1987 market break). If a shareholder were
15
<PAGE>
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
Advisor Class Fund shares (minimum $25) is automatically
exchanged for Advisor Class shares of another Alliance Mutual
Fund. Auto Exchange transactions normally occur on the 12th day
of each month, or the following Fund business day.
Neither the Alliance Mutual 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. A shareholder's financial
representative may charge a fee for handling telephone requests
for exchanges.
The exchange privilege is available only in states where
Advisor Class shares of the Alliance Mutual Fund being acquired
may be legally sold. Each Alliance Mutual Fund reserves the
right, at any time on 60 days' notice to its shareholders, to
reject any order to acquire its Advisor Class 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
16
<PAGE>
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans, under which annual tax-deductible
contributions are made within prescribed limits based on
compensation paid to participating individuals.
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 Advisor Class Fund account, an Advisor Class account with
one or more other Alliance Mutual Funds may direct that income
dividends and/or capital gains paid on his or her Advisor Class
Fund shares be automatically reinvested, in any amount, without
the payment of any service charges, in Advisor Class shares 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. Current shareholders should contact
Alliance Fund Services, Inc. to establish a dividend direction
plan.
17
<PAGE>
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases Advisor
Class 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 Advisor Class shares of the Fund.
Advisor Class 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.
Advisor Class shares acquired with reinvested dividends and
distributions will be liquidated first to provide such withdrawal
payments and thereafter other Advisor Class 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 Advisor Class 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."
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
network. Investors wishing to establish a systematic withdrawal
plan in conjunction with their initial investment in Advisor
Class shares of the Fund should complete the appropriate portion
of the Subscription Application, 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
18
<PAGE>
shareholder can arrange for copies of his or her account
statements to be sent to another person.
_________________________________________________________________
NET ASSET VALUE
_________________________________________________________________
Incorporated by reference from the section "Net Asset
Value" contained in the Rule 497 SAI, except that the fifth
paragraph is restated as set forth below.
The assets belonging to the Class A, Class B, Class C
and Advisor Class shares will be invested together in a single
portfolio. The net asset value of each class will be determined
separately by subtracting the accrued expenses and liabilities
allocated to that class from the assets belonging to that class.
_________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_________________________________________________________________
Incorporated by reference from the section "Dividends,
Distributions and Taxes" contained in the Rule 497 SAI.
_________________________________________________________________
GENERAL INFORMATION
_________________________________________________________________
Incorporated by reference from the section "General
Information" contained in the Rule 497 SAI, except that the
sub-sections entitled "Capitalization" and sub-section "Total
Return Quotations" are restated as set forth below:
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, 25,000,000 of Class C Common
Stock and [ ] shares of Class Y Common Stock designated as
Advisor Class 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
19
<PAGE>
would be governed by the 1940 Act and the law of the State of
Maryland. If shares of another series were issued in connection
with the creation of a second portfolio, each share of either
portfolio would normally be entitled to one vote for all
purposes. Generally, shares of both portfolios would vote as a
single series on matters, such as the election of Directors, that
affected both portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of
the Advisory Agreement and changes in investment policy, shares
of each portfolio would vote as a separate series.
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.
To the knowledge of the Fund, the following persons
owned of record, and no person owned beneficially, 5% or more of
the outstanding shares of the Fund as of April 5, 1996:
No. of % of % of
Name and Address Shares Class B Class C
Merrill Lynch 221,701 25.56
Mutual Fund Operations
4800 Deer Lake Dr. East
Jacksonville FL 32246
Merrill Lynch 106,439 46.26
Mutual Fund Operations
4800 Deer Lake Dr. East
Jacksonville FL 32246
Total Return Quotations
From time to time the Fund advertises its "total
return." Computed separately for each class, the Fund's "total
return" is its average annual compounded total return for recent
one, five, and ten-year periods. The Fund's total return for
each such period is computed by finding, through the use of a
formula prescribed by the Securities and Exchange Commission, the
average annual compounded rate of return over the period that
would equate an assumed initial amount invested to the value of
such investment at the end of the period. For purposes of
computing total return, income dividends and capital gains
distributions paid on shares of the Fund are assumed to have been
reinvested when paid and the maximum sales charge applicable to
purchases of Fund shares is assumed to have been paid. The Fund
will include performance data for Class A, Class B, Class C and
20
<PAGE>
Advisor Class 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 period
ended January 31, 1996 was 27.32%, for the five years ended
January 31, 1996 was 10.24% and for the ten years ended
January 31, 1996 was 8.22%. The Fund's average annual compounded
total return for Class B shares for the period ended January 31,
1996 was 28.05% and for the period September 17, 1990
(commencement of distribution) through January 31, 1996 was
9.06%. The Fund's average annual compounded total return for
Class C shares for the year ended January 31, 1996 was 32.29% and
for the period May 3, 1993 (commencement of distribution) through
January 31, 1996 was 13.20%.
The Fund's total return is not fixed and will fluctuate
in response to prevailing market conditions or as a function of
the type and quality of the securities in the Fund's portfolio
and the Fund's expenses. Total return information is useful in
reviewing the Fund's performance but such information may not
provide a basis for comparison with bank deposits or other
investments which pay a fixed return for a stated period of time.
An investor's principal invested in the Fund is not fixed and
will fluctuate in response to prevailing market conditions.
Advertisements quoting performance ratings of the Fund
as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc. and advertisements presenting the historical
record of payments of income dividends by the Fund may also from
time to time be sent to investors or placed in newspapers and
magazines such as THE NEW YORK TIMES, THE WALL STREET JOURNAL,
BARRONS, INVESTOR'S DAILY, MONEY MAGAZINE, CHANGING TIMES,
BUSINESS WEEK AND FORBES or other media on behalf of the Fund.
21
00250176.AG3
<PAGE>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS AND OTHER INVESTMENTS-91.7%
UNITED STATES INVESTMENTS-39.0%
CONSUMER PRODUCTS, SERVICES & STAPLES-14.4%
APPAREL-1.0%
Gucci Group N.V.* 8,900 $ 361,562
Nautica Enterprises, Inc.* 10,400 405,600
-----------
767,162
AUTO & RELATED-0.0%
Ek Chor China Motorcycle Co. 2,000 28,250
BROADCASTING & CABLE-1.1%
Cablevision Systems Corp. Cl.A* 3,900 219,375
Data Broadcasting* 5,607 65,181
Infinity Broadcasting Corp.* 13,000 516,750
-----------
801,306
DRUGS, HOSPITAL SUPPLIES, MEDICAL
SERVICES & PRODUCTS-8.0%
Apria Healthcare Group, Inc. 15,500 406,875
Centocor, Inc.* 10,800 369,900
Geltex Pharmaceuticals, Inc.* 20,300 380,625
Healthsouth Corp.* 47,068 1,517,943
Healthwise America, Inc.* 31,500 1,181,250
Laboratory Corp. of America Holdings
warrants, expiring 4/28/00* 1 1
Medimmune, Inc.* 10,000 182,500
National Surgery Centers, Inc.* 11,000 308,000
Neurex Corp.* 9,400 132,775
Pet Practice, Inc.* 29,500 272,875
Physio Control International Corp.* 37,800 774,900
Summit Technology, Inc.* 5,750 $195,500
Veterinary Centers America, Inc.* 22,900 352,087
-----------
6,075,231
ENTERTAINMENT & LEISURE TIME-0.3%
Heritage Media Corp.* 7,700 231,963
REAL ESTATE-0.2%
Summit Properties, Inc. 9,300 182,513
RESTAURANTS & LODGING-1.8%
Extended Stay America, Inc.* 5,600 173,600
HFS, Inc.* 8,400 697,200
Host Marriott Corp.* 30,800 354,200
Host Marriott Services Corp.* 3,840 24,480
International Pizza Corp.* 16,400 32,800
warrants, expiring 9/22/98* 16,400 8,712
Manhattan Bagel, Inc.* 2,200 34,650
-----------
1,325,642
RETAILING-2.0%
Bed Bath & Beyond, Inc.* 12,400 492,125
Jones Apparel Group, Inc.* 4,800 180,600
Nine West Group, Inc.* 25,200 872,550
-----------
1,545,275
-----------
10,957,342
TECHNOLOGY-8.9%
COMMUNICATION & EQUIPMENT-1.9%
Andrew Corp.* 6,800 299,200
Ascend Communications, Inc.* 4,400 171,050
CD Radio, Inc.* 11,200 40,600
Millicom International Cellular, S.A.* 23,900 932,100
-----------
1,442,950
6
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
COMMUNICATION SERVICES-0.4%
Vanguard Cellular Systems, Inc.* 13,700 $ 287,700
COMPUTER EQUIPMENT-0.6%
Western Digital Corp.* 13,500 249,750
Zebra Technologies Corp.* 8,100 251,100
-----------
500,850
COMPUTER PERIPHERALS-0.3%
Storage Technology Corp.* 7,500 198,750
COMPUTER SOFTWARE & SERVICES-2.8%
Cadence Design Systems, Inc.* 9,100 356,038
DST Systems, Inc.* 9,400 285,525
Exabyte Corp.* 22,700 306,450
Informix Corp.* 20,500 684,187
Intersolv, Inc.* 15,000 155,625
Sierra On-Line, Inc.* 12,600 313,425
-----------
2,101,250
ELECTRONICS-0.7%
BMC Industries, Inc. 12,200 260,775
Tellabs, Inc.* 6,300 277,200
-----------
537,975
TELEPHONE UTILITY-2.2%
Telephone and Data Systems, Inc. 26,700 1,084,687
United States Cellular Corp.* 16,800 569,100
-----------
1,653,787
-----------
6,723,262
BASIC INDUSTRIES-8.8%
BUSINESS SERVICES-0.9%
Oxford Resources Corp.* 18,600 462,675
Phymatrix Corp.* 8,000 172,000
-----------
634,675
CHEMICALS-0.3%
Cytec Industries, Inc.* 3,000 228,750
MACHINERY-0.4%
JLG Industries, Inc. 11,000 292,875
MINING & METALS-0.9%
Kaiser Aluminum Corp.* 11,700 162,338
Noble Drilling Corp.* 44,600 437,637
Pittston Co.* 5,450 108,319
-----------
708,294
OFFICE EQUIPMENT-1.0%
Office Max, Inc.* 33,700 775,100
POLLUTION CONTROL-1.4%
United Waste Systems, Inc.* 9,400 405,375
USA Waste Services, Inc.* 32,800 680,600
-----------
1,085,975
TRANSPORTATION & SHIPPING-3.9%
Alaska Air Group, Inc.* 27,800 549,050
America West Airlines, Inc.* 31,400 537,725
Pittston Services Group 10,900 272,500
USAIR Group, Inc.* 35,700 535,500
Wisconsin Central Transport Corp.* 5,400 405,000
Xtra Corp. 14,600 622,325
-----------
2,922,100
-----------
6,647,769
ENERGY-5.2%
DOMESTIC PRODUCERS-0.3%
Diamond Shamrock, Inc. 7,000 199,500
INTERNATIONAL PRODUCERS-0.0%
XCL, Ltd.* 110,000 34,375
OIL & GAS SERVICES-3.5%
Arethusa, Ltd. 19,600 646,800
Diamond Offshore Drilling, Inc.* 22,200 846,375
Global Marine, Inc.* 68,400 589,950
Rowan Cos., Inc.* 52,900 575,288
-----------
2,658,413
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
OTHER-1.4%
Reading & Bates Corp.* 61,900 $ 1,052,300
-----------
3,944,588
FINANCIAL SERVICES-1.7%
BANKS-0.3%
Roosevelt Financial Group, Inc. 11,000 191,125
INSURANCE-1.4%
20th Century Industries, Inc.* 32,000 584,000
Allmerica Financial Corp. 6,500 173,063
National Re Corp. 9,200 332,350
-----------
1,089,413
-----------
1,280,538
Total United States Investments
(cost $23,008,345) 29,553,499
FOREIGN INVESTMENTS-52.7%
AUSTRALIA-2.0%
AAPC, Ltd. 300,000 172,041
Hotels
Advance Bank Australia 30,000 261,414
Banking
Cochlear, Ltd.* 180,100 382,278
Medical Devices
Diamond Ventures, Ltd. 120,000 21,449
Mining & Metals
Fai Life, Ltd. 395,000 220,637
Insurance
Oil Search, Ltd. 200,000 193,640
Oil
Plutonic Resources 20,000 111,715
Metals & Mining
WMC, Ltd. 25,000 153,795
Metals & Mining
-----------
1,516,969
AUSTRIA-0.8%
Austria Mikro Systeme
International AG(a) 1,060 171,156
Semi-Conductors & Related
Benckiser-Wasser-Technik AG 1,500 169,111
Pollution Control
OMV AG 3,000 283,762
Oil - International
-----------
624,029
CANADA-1.4%
Accugraph Corp.* 17,000 39,584
Computer Software
Alumax, Inc.* 2,000 63,000
Metals & Mining
Cinar Films, Inc.* 11,000 156,750
Entertainment & Leisure
Istar Internet, Inc.*(a) 26,000 212,836
Computer Software & Services
Loewen Group, Inc. 9,500 267,187
Business Services
Nelvana, Ltd.*(a) 12,000 156,079
Entertainment & Leisure
Renaissance Energy, Ltd.* 4,000 99,687
Oil & Gas Exploration
Royal Plastics Group, Ltd.*(a) 5,000 77,767
Building & Related
-----------
1,072,890
CHILE-0.4%
Banco Osornoy La Un (ADR) 11,000 154,000
Banking - Regional
Empresas Telex Chile S.A. (ADR) 4,000 44,000
Communication Equipment
Enersis S.A. Sponsored (ADR) 3,000 82,500
Electric Utility
-----------
280,500
DENMARK-1.4%
Novo Nordisk AS 2,450 328,084
Drugs
8
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
Scandinavian Mobility Intl.(a) 18,400 $ 459,601
Medical Products
Tele Danmark AS 5,000 275,802
Telephone Utility
-----------
1,063,487
FINLAND-0.7%
Nokia AB OY Corp. pfd.(a) 12,000 467,197
Communication Equipment
OYTamro AB 15,000 70,080
Medical Services
-----------
537,277
FRANCE-1.7%
Business Objects S.A. (ADR) 8,100 372,600
Computer Software & Services
Casino Guichard Perrachon 7,000 225,771
Retail
Coflexip S.A. (ADR) 7,700 141,488
Oil & Gas Services
Credit Local de France 2,500 210,133
Banking
Ecco Travail Temporary 800 59,580
Temporary Help
Lafarge Coppee 2,200 148,321
Building Materials
Michelin 2,000 84,835
Tire & Rubber
Synthelabo 1,000 68,025
Drugs
-----------
1,310,753
GERMANY-3.7%
Adidas AG*(a)(b) 7,400 422,573
Apparel
Apcoa Parking AG(a) 2,000 155,862
Business Services
Bayer AG 500 149,479
Chemicals
Duerr Beteiliqunqs AG 600 203,158
Machinery
Fag Kugelfischer 300 43,735
Industrial Machinery
Fielmann AG pfd.(b) 9,000 498,824
Retail
Hach AG 50 19,046
Retail
Mannesmann AG 700 242,896
Machinery
Merck KG*(a) 2,500 101,444
Drugs
Rheinhold & Mahla AG 300 45,549
Building & Related
SGL Carbon AG(a)(b) 9,000 836,211
Specialty Chemical
Veba AG 2,000 88,989
Electric Utility
-----------
2,807,766
HONG KONG-1.0%
Amoy Properties 100,000 121,569
Real Estate
Fu Hui Jewelry Co., Ltd. 200,000 6,466
Jewelry & Watches
Hong Kong Land Holdings, Ltd. 70,000 158,900
Real Estate
Hong Kong Telecomm 20,000 38,023
Telephone Utility
HSBC Holdings Plc. 15,000 248,312
Banking
Paul Y.-ITC Construction Holdings, Inc.* 600,000 138,124
warrants, expiring 3/31/97* 60,000 1,847
warrants, expiring 3/31/98* 60,000 1,979
Engineering & Construction
-----------
715,220
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
INDIA-0.1%
Gujarat Narmada Valley Fertilizers Co.,
Ltd. (GDR)(a) 4,000 $ 21,956
Chemicals
Shriram Industrial Enterprises, Ltd. (GDR)(a) 15,000 52,500
warrants, expiring 4/28/96*(a) 5,000 25
Consumer Appliances
-----------
74,481
INDONESIA-0.2%
Indonesian Satellite Corp. (ADR) 4,000 162,000
Telecommunications
IRELAND-0.6%
Crean (James) Plc. 55,000 193,492
Multi-Industry
Fyffes 50,000 87,574
Food
Irish Continental Group 21,500 168,179
Transportation - Shipping
-----------
449,245
ITALY-1.6%
Fila Holding Sponsored (ADR) 5,000 242,500
Apparel
Industrie Natuzzi S.p.A. (ADR) 17,500 853,125
Furniture Products
Societa Italiana Per L'Eserreizio
Delle Telecommunicazioni, P.A. 40,000 67,959
Utility - Telephone
Telecom Italia Mob* 40,000 71,987
Telephone Utility
-----------
1,235,571
JAPAN-17.2%
Ado Electronic Industries 6,000 153,270
Retail - Electronics
Advan Co. 1,000 30,411
Building & Related
Alpine Electronics 10,000 165,622
Electronics
Asahi Bank 4,000 47,909
Banking - Regional
Asahi Diamond Industrial 12,000 166,183
Machinery
Asatsu, Inc. 4,000 160,943
Professional Services
Aval Data Corp. 5,000 86,554
Semi-Conductors & Related
Canon, Inc.(b) 18,000 340,226
Computer Peripherals
Chiyoda Co. 6,000 138,112
Retail - General
Credit Saison Co.(b) 9,000 211,378
Financial Services
Daibiru Corp. 1,000 11,977
Real Estate
Doshisha Co., Ltd.* 1,000 35,557
Retail
Eiden Sakakiya Co. 6,000 71,302
Retail
Fujitsu Electronics 2,000 21,521
Electronics
Hachijuni Bank 5,000 54,272
Banking - Regional
Hirose Electric Co. 2,500 136,849
Electronics
Hitachi Metals, Ltd. 12,000 141,480
Steel
Honda Motor Co.(b) 18,000 394,124
Automobiles
Hoya Corp. 6,000 196,500
Electronics
Isetan Co. 6,000 79,162
Retail
10
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
Ishihara Sangyo(b) 45,000 $ 153,691
Chemicals
Japan Industrial Land Development 3,000 120,427
Engineering & Construction
Kanamoto Co., Ltd. 2,000 24,516
Engineering & Construction
Kaneshita Construction 9,000 115,374
Engineering & Construction
Kawasaki Kisen(b) 55,000 192,991
Transportation
Keyence Corp.(b) 3,600 387,387
Machinery
Koa Fire & Marine 21,000 125,367
Insurance
Kurita Water Industries 1,000 25,919
Chemicals - Specialty
Kyoritsu Maintenance 1,000 27,978
Janitorial Services
Mabuchi Motor Co.(b) 5,000 311,594
Technology - Computer Peripherals
Matsushita Electrical Industrial Co., Ltd. 7,000 116,590
Consumer Appliances
Matsuyadenki Co., Ltd. 3,000 33,967
Retail - General
Minebea Co. 18,000 156,470
Machinery
Ministop Co. 2,000 54,646
Retail - Food
Mitsubishi Bank 6,000 130,252
Banking
Mitsubishi Estate 16,000 194,629
Real Estate
Mitsubishi Heavy Industries(b) 90,000 714,981
Industrial Machinery
Mitsubishi Trust and Bank 8,000 124,263
Banks
Mitsui Home Co. 3,000 46,879
Homebuilders
Namura Shipbuildng 12,000 69,056
Machinery
Nanno Construction 12,000 154,955
Building & Construction
NEC Corp.(b) 26,000 316,272
Electronics
New Oji Paper Co., Ltd. 15,000 137,129
Paper & Forest Products
Ngk Spark Plug Co. 10,000 117,900
Semi-Conductors & Related
Nichiei Co.(b) 4,000 280,715
Financial Services
Nichiha Corp. 4,000 86,086
Miscellaneous
Nikon Corp. 10,000 120,707
Semi-Conductors & Related
Nippon Electric Glass Co., Ltd. 10,000 183,400
Consumer Appliances
Nippon Kanzai Co. 1,000 32,563
Business Services
Nippon Paper Industries Co. 10,000 71,114
Paper
Nippon TV Network(b) 1,200 345,841
Broadcasting
Nissen Corp., Ltd. 3,300 71,021
Retail
NSK, Ltd. 7,000 51,090
Machinery
NTT Data Communications Systems 8 239,543
Computer Software & Services
Omron Corp. 9,000 198,746
Machinery
Oriental Construction 4,000 80,472
Building & Construction
Paris Miki, Inc.(b) 7,000 243,006
Retail - General
Penta Ocean Construction 18,000 131,038
Building & Construction
Promise Co., Ltd. 3,500 158,183
Financial Services
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
PS Corp. 7,000 $ 121,175
Building & Construction
Rohm Co., Ltd. 5,000 276,972
Semi-Conductors
Sankyo Co. 12,000 284,083
Drugs
Santen Pharmaceutical Co. 11,000 237,766
Drugs
Sanyo Shinpan Finance Co., Ltd. 2,500 188,781
Financial Services
Sato Corp. 4,000 96,940
Technology - Electronics
Sekisui Chemical Co. 14,000 188,640
Chemicals
Seven Eleven Japan 2,000 138,299
Retail - Food
Shimamura Co., Ltd. 1,800 67,035
Retail - General
Sho Bond Corp. 5,500 175,494
Building & Construction
Shohkoh Fund & Co. 1,000 180,593
Financial Services
SMC Corp.(b) 4,500 317,489
Industrial Machinery
Sumitomo Metal Industries 90,000 293,909
Steel
Taisho Pharmaceutical Co. 9,000 176,008
Drugs
TDK Corp. 3,000 149,621
Consumer Products & Services
Toda Corp. 10,000 91,232
Chemicals - Specialty
Toho Bank 5,000 37,429
Banking - Regional
Tokyo Broadcasting 12,000 197,623
Broadcasting
Tokyo Electron, Ltd. 6,000 222,326
Semi-Conductors & Related
Wesco, Inc.* 4,600 117,077
Engineering & Construction
Xebio Co. 2,000 68,307
Retail
Yamaichi Securities Co.(b) 35,000 270,188
Financial Services
Yamanashi Chuo Bank 5,000 46,786
Banking - Regional
Yamanouchi Pharmaceutical 7,000 153,270
Drugs
Yaskawa Electric Corp. 34,000 167,025
Machinery
-----------
13,054,178
MALAYSIA-0.7%
Austral Enterprise 9,333 17,349
Multi-Industry
C.I. Holdings Berhad 15,000 52,720
Building & Related
Highlands & Lowlands 10,000 14,996
Real Estate
Malaysian Assurance 13,500 69,063
Insurance
Metacorp Berhad 25,000 72,246
Engineering & Construction
Pacific & Orient 50,000 159,136
Insurance
Road Builder (M) Holdings BHD 30,000 111,298
Building & Construction
-----------
496,808
MEXICO-0.2%
Bufete Industrial S.A. (ADR)* 700 13,650
Engineering & Construction
Grupo Industrial Durango, S.A. (ADR)* 15,000 105,000
Paper & Forest Products
International de Ceramica* 34,915 49,375
Ceramic Tiles
-----------
168,025
NETHERLANDS-3.7%
Aegon N.V.(b) 18,000 737,908
Insurance
12
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
Amev N.V.(b) 4,000 $ 257,237
Insurance
BAM Groep N.V.(b) 1,800 103,027
Engineering & Construction
Content Beheer N.V.(b) 10,000 263,111
Temporary Help
Elsevier N.V.(b) 25,000 347,618
Printing & Publishing
IHC Caland N.V.(b) 8,000 284,327
Machinery
KLM Royal Dutch Airlines(b)9,000 276,176
Consumer Services - Airlines
Kon Ptt Nederland(b) 5,000 191,789
Telephone Utility
Nutricia Verenidge Bedrijuen(a)(b) 1,300 116,014
Food
Philips Electronic(b) 5,500 219,209
Appliances
Randstad Holdings N.V. 800 36,680
Temporary Help
-----------
2,833,096
NEW ZEALAND-0.8%
Air New Zealand 40,000 126,531
Airlines
Fisher & Paykel Industries 20,000 61,516
Consumer Appliances
Helicopter Line 50,000 99,273
Entertainment & Leisure
Lion Nathan, Ltd. 55,000 129,190
Food & Beverages
Warehouse Group 62,500 166,577
Retail
-----------
583,087
NORWAY-1.3%
Fokus Bank 6,000 34,322
Banks
Merkantildata 18,000 149,066
Computer Software
Tomra Systems AS 75,000 690,121
Pollution Control
Western Bulk Shipping AS(a) 26,000 123,608
Shipping
-----------
997,117
PANAMA-1.1%
Banco Latinoamericano de Exportaciones,
S.A. (ADR) 18,200 839,475
Finance
PERU-0.1%
Banco Wiese Sponsored (ADR) 15,000 105,000
Banking - Regional
PORTUGAL-0.1%
TVI Televisao Independente*(c) 7,800 31,290
Broadcasting & Cable
SINGAPORE-0.1%
Lim Kah Ngam, Ltd. 30,000 33,815
Multi - Industry
SOUTH KOREA-0.8%
Samsung Electronics Co., Ltd. (ADR)(GDS)*(a) 8,637 490,124
(GDR) bonus shares*(a)(c) 596 58,830
Electronics
Yukong, Ltd. (ADR)*(a) 5,912 53,208
Energy International Produce
-----------
602,162
SPAIN-1.4%
Banco Popular Esp 1,200 214,679
Banking
Centros Commerciales Continente, S.A.* 8,000 149,813
Retail
Construcciones Y Aux de Ferr2,000 68,213
Railroad Transportation
Corporacion Mapfre* 4,000 221,850
Insurance rights, expiring 2/22/96 4,000 2,040
Insurance
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
Fomento de Construcciones Y Contratas, S.A. 1,000 $ 82,875
Building & Construction
Hidroel Cantabrico 2,000 66,220
Utility - Electric
Repsol S.A. 5,000 173,719
Energy
Viscofan Envolturas Celulosi6,000 64,547
Food
-----------
1,043,956
SWEDEN-1.6%
Autoliv AB 2,500 120,898
Auto & Related
Autoliv AB Sponsored (ADR)(a) 3,900 188,614
Auto & Related
Hoganas AB Cl.B(a) 2,000 50,662
Mining & Metals
Kalmar Industries AB(a) 16,000 257,916
Machinery
Nordbanken AB*(a) 6,000 101,900
Banks
SKF AB 25,000 465,961
Machinery
SSAB (Svenskt Stal Aktiebolag) Series B 5,000 52,173
Mining & Metals
-----------
1,238,124
SWITZERLAND-1.0%
BBC Brown Boveri AG 300 345,212
Miscellaneous
Roche Holdings AG, Ltd. 60 438,505
Drugs
-----------
783,717
TAIWAN-0.2%
The Taiwan Fund, Inc. 7,300 146,000
Mutual Fund
THAILAND-1.4%
CMIC Finance & Security Public Co. 159,200 621,973
Financial Services
Nawarat Pattanakar* 20,000 $83,662
Engineering & Construction
Total Access Communication*40,000 312,000
Communication Services
-----------
1,017,635
TURKEY-0.1%
Netas Telekomunik Ord. Cl.B*(a) 215,600 78,861
Communication Equipment
UNITED KINGDOM-5.3%
Asda Group Plc. 40,000 63,868
Retailing
Automated Security Holdings Plc. 120,008 47,112
Consumer Products & Services
Barclays Plc. 14,000 167,628
Banks
British Airways Plc. 20,000 160,048
Airlines
Caird Group Plc. 900,000 20,383
Pollution Control
Carlton Communications Plc. 8,000 125,140
Broadcasting
Filtronic Comtec Plc. 100,000 623,584
Communication Equipment
Grand Metropolitan Plc. 10,000 67,190
Restaurants & Lodging
M.S. International Plc. 500,000 211,385
Machinery
McBride*(a) 30,000 66,133
Household Products
Mid-States Plc. 300,000 203,835
Auto & Related
Mirror Group Plc 25,000 70,776
Newspapers
Misys Plc. 10,000 86,970
Computer Software & Services
14
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
Morrison (William) Supermarkets Plc. 90,000 $ 210,630
Retail - Food
Mowlem (John) & Co. Plc. 580,000 542,956
Engineering & Construction
Powerscreen International Plc. 44,000 253,118
Recycling Equipment
Rank Organisation 10,000 69,379
Entertainment & Leisure
Resort Hotels Plc.*(c) 1,000,000 -0-
Restaurants & Lodging
Siebe Plc. 15,000 179,488
Machinery
Tate & Lyle Plc. 20,000 142,534
Food & Beverages
Tomkins 35,000 145,591
Household Products
WPP Group 70,000 182,848
Advertising
Zeneca Group Plc. 20,000 388,948
Drugs
-----------
4,029,544
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ------------------------------------------------------------------------
Total Foreign Investments
(cost $37,392,022) $39,932,078
Total Common Stocks and Other Investments
(cost $60,400,367) 69,485,577
CORPORATE BONDS-0.3%
COMMUNICATION & EQUIPMENT-0.3%
Intelcom Group, Inc.
8.00%, 9/17/98 (a)(c)
(cost $274,579) $ 278 238,589
COMMERCIAL PAPER-5.7%
Merrill Lynch & Co., Inc.
5.45%, 2/12/96
(amortized cost $4,292,839) 4,300 4,292,839
TOTAL INVESTMENTS-97.7%
(cost $64,967,785) 74,017,005
Other assets less liabilities-2.3% 1,747,454
NET ASSETS-100% $75,764,459
* Non-income producing security.
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At January 31, 1996, these
securities amounted to $4,959,666 representing 6.5% of net assets.
(b) Securities with an aggregate market value of $9,033,907, segregated to
collateralized forward exchange currently contracts.
(c) Illiquid security, valued at fair market value (see Notes A and E).
Glossary of Terms.
ADR - American Depository Receipt
GDR - Global Depository Receipt
GDS - Global Depository Security
See notes to financial statements.
15
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996 (UNAUDITED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $64,967,785) $74,017,005
Cash, at value (cost $1,771,288) 1,766,027
Receivable for investment securities sold 1,481,527
Unrealized appreciation of forward exchange currency contracts 173,252
Receivable for capital stock sold 71,515
Dividends and interest receivable 32,000
Foreign taxes receivable 9,927
Total assets 77,551,253
LIABILITIES
Payable for investment securities purchased 869,748
Unclaimed dividends 634,139
Advisory fee payable 61,598
Payable for capital stock repurchased 33,678
Distribution fee payable 24,244
Accrued expenses 163,387
Total liabilities 1,786,794
NET ASSETS $75,764,459
COMPOSITION OF NET ASSETS
Capital stock, at par $ 69,220
Additional paid-in capital 65,587,215
Accumulated net investment loss (577,657)
Accumulated net realized gain on investments and foreign
currency transactions 1,469,540
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 9,216,141
$75,764,459
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($65,266,864/
5,922,690 shares of capital stock issued and outstanding) $11.02
Sales charge-4.25% of public offering price .49
Maximum offering price $11.51
CLASS B SHARES
Net asset value and offering price per share($7,820,902/
744,790 shares of capital stock issued and outstanding) $10.50
CLASS C SHARES
Net asset value, redemption and offering price per share($2,676,693
/254,536 shares of capital stock issued and outstanding) $10.52
See notes to financial statements.
16
STATEMENT OF OPERATIONS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends(net of foreign taxes withheld of $20,406) $193,301
Interest 159,585 $ 352,886
EXPENSES
Management fee 347,954
Distribution fee - Class A 92,635
Distribution fee - Class B 31,351
Distribution fee - Class C 7,820
Custodian 115,378
Transfer agency 102,225
Administrative 75,713
Audit and legal 52,293
Registration 46,183
Printing 32,039
Directors' fees 17,210
Miscellaneous 9,742
Total expenses 930,543
Net investment loss (577,657)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investments 5,101,196
Net realized gain on foreign currency transactions 616,193
Net change in unrealized appreciation of investments 2,196,015
Net change in unrealized depreciation of foreign
currency denominated assets and liabilities 316,658
Net gain on investments and foreign currency 8,230,062
NET INCREASE IN NET ASSETS FROM OPERATIONS $7,652,405
See notes to financial statements.
17
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JANUARY 31,1996 JULY 31,
(UNAUDITED) 1995
--------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $(577,657) $ (794,248)
Net realized gain on investments and foreign
currency transactions 5,717,389 7,789,167
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities 2,512,673 2,436,403
Net increase in net assets from operations 7,652,405 9,431,322
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (2,964,670) (10,605,411)
Class B (331,138) (885,298)
Class C (74,101) (257,942)
Tax return of capital
Class A -0- (679,545)
Class B -0- (56,726)
Class C -0- (16,528)
CAPITAL STOCK TRANSACTIONS
Net increase 4,854,044 3,106,523
Total increase 9,136,540 36,395
NET ASSETS
Beginning of period 66,627,919 66,591,524
End of period $75,764,459 $66,627,919
See notes to financial statements.
18
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996 (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
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 January 31, 1996.
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 gain on foreign currency transactions of $616,193 represents net
foreign exchange gains from holding of foreign currencies, currency gains or
losses realized between the trade and settlement dates on foreign security
transactions, and the difference between the amounts of dividends, interest and
foreign taxes recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid.
Net currency gains or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of
net change in unrealized depreciation of foreign currency denominated assets
and liabilities.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date the securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are 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.
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
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 six months ended January 31, 1996. Pursuant to the management
agreement, the Fund paid $75,713 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, 1996.
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 $75,873 for the six months ended January 31, 1996.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Manager)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $2,338 from the sale of Class A shares and $9,851 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the six months ended January 31, 1996.
Brokerage commissions paid on securities transactions for the six months ended
January 31, 1996 amounted to $208,668, 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 $1,070,742, and $369,793 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 $45,804,587 and $44,362,231, respectively, for the six months ended
January 31, 1996. There were no purchases or sales of U.S. Government and
government agency obligations for the six months ended January 31, 1996.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gain or
loss on foreign currency transactions.
20
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
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. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At January 31, 1996, the Fund had outstanding forward exchange currency
contracts, both to purchase and sell foreign currencies against the U.S.
dollar, as follows:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
------- ---------- ---------- -------------
FOREIGN CURRENCY BUY CONTRACTS
Japanese Yen,
expiring 3/13/96 150,670 $1,498,012 $1,418,025 $(79,987)
FOREIGN CURRENCY SALE CONTRACTS
Deutsche Mark,
expiring 5/20/96 2,500 1,725,328 1,689,411 35,917
Japanese Yen,
expiring 3/13/96-5/8/96 301,000 2,994,392 2,838,689 155,703
Netherland Guilder,
expiring 5/20/96 4,400 2,716,552 2,654,933 61,619
---------
$173,252
At January 31, 1996, the cost of investments for federal income tax purposes
was $65,214,580. Accordingly, gross unrealized appreciation of investments was
$13,274,295 and gross unrealized depreciation of investments was $4,471,870,
resulting in net unrealized appreciation of $8,802,425.
NOTE E: ILLIQUID SECURITIES
DATE ACQUIRED COST
------------- ----------
Intelcom Group, Inc. 8.00%, 9/17/98 9/16/93 $ 274,579
Resort Hotels Plc. 5/01/92 719,086
TVI Televisao Independente 10/24/94 56,543
----------
$1,050,208
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, 1996 was $269,879, representing 0.4% of net
assets.
21
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE F: CAPITAL STOCK
There are 62,500,000 shares of $.01 par value capital stock authorized, divided
into three classes, designated Class A, Class B and Class C shares. Class A and
Class C each consist of 25,000,000 authorized shares and Class B consists of
12,500,000 authorized shares. Transactions in capital stock were as follows:
SHARES AMOUNT
----------------------------- ------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JAN. 31,1996 YEAR ENDED JAN. 31,1996 YEAR ENDED
(UNAUDITED) JULY 31,1995 (UNAUDITED) JULY 31,1995
----------- ------------ ------------- -------------
CLASS A
Shares sold 285,371 391,760 $3,073,750 $ 3,971,546
Shares issued in
reinvestment of
distributions 214,025 952,163 2,238,697 8,217,164
Shares redeemed (364,056) (1,095,655) (3,904,907) (10,827,369)
Net increase 135,340 248,268 $1,407,540 $ 1,361,341
CLASS B
Shares sold 329,180 287,247 $3,347,100 $ 2,886,684
Shares issued in
reinvestment of
distributions 21,595 75,995 215,523 631,516
Shares redeemed (125,185) (204,792) (1,271,857) (1,961,914)
Net increase 225,590 158,450 $2,290,766 $ 1,556,286
CLASS C
Shares sold 175,426 136,839 $1,789,497 $ 1,295,724
Shares issued in
reinvestment of
distributions 4,299 15,861 42,946 131,935
Shares redeemed (66,466) (134,697) (676,705) (1,238,763)
Net increase 113,259 18,003 $1,155,738 $ 188,896
22
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 OCTOBER 1,
ENDED 1993
JANUARY 31, YEAR ENDED TO YEAR ENDED SEPTEMBER 30,
1996 JULY 31, JULY 31, --------------------------------
(UNAUDITED) 1995 1994* 1993 1992 1991
------------ ----------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.38 $11.08 $11.24 $9.33 $10.55 $8.26
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.09)(f) (.09) (.15) (.15) (.16) (.06)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.26 1.50 (.01) 2.49 (1.03) 2.35
Net increase (decrease) in net asset
value from operations 1.17 1.41 (.16) 2.34 (1.19) 2.29
LESS: DISTRIBUTIONS
Distributions from net realized gains (.53) (1.99) -0- (.43) (.03) -0-
Tax return of capital -0- (.12) -0- -0- -0- -0-
Net asset value, end of period $11.02 $10.38 $11.08 $11.24 $9.33 $10.55
TOTAL RETURN
Total investment return based on net
asset value (b) 11.50% 16.62% (1.42)% 25.83% (11.30)% 27.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $65,267 $60,057 $61,372 $65,713 $58,491 $84,370
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.59%(d) 2.54%(c) 2.42%(d) 2.53% 2.34% 2.29%
Net investment loss (1.60)%(d) (1.17)% (1.26)%(d) (1.13)% (.85)% (.55)%
Portfolio turnover rate 68% 128% 78% 97% 108% 104%
</TABLE>
See footnote summary on page 25.
23
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------
SIX MONTHS OCTOBER 1,
ENDED 1993
JANUARY 31, YEAR ENDED TO YEAR ENDED SEPTEMBER 30,
1996 JULY 31, JULY 31, --------------------------------
(UNAUDITED) 1995 1994* 1993 1992 1991
------------ ----------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.95 $10.78 $11.00 $9.20 $10.49 $8.26
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.12)(f) (.12) (.17)(a) (.15) (.20) (.07)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.20 1.40 (.05) 2.38 (1.06) 2.30
Net increase (decrease) in net asset
value from operations 1.08 1.28 (.22) 2.23 (1.26) 2.23
LESS: DISTRIBUTIONS
Distributions from net realized gains (.53) (1.99) -0- (.43) (.03) -0-
Tax return of capital -0- (.12) -0- -0- -0- -0-
Net asset value, end of period $10.50 $9.95 $10.78 $11.00 $9.20 $10.49
TOTAL RETURN
Total investment return based on net
asset value (b) 11.08% 15.77% (2.00)% 24.97% (12.03)% 27.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,821 $5,164 $3,889 $1,150 $819 $121
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.31%(d) 3.20%(c) 3.15%(d) 3.26% 3.11% 2.98%
Net investment loss (2.36)%(d) (1.92)% (1.93)%(d) (1.85)% (1.31)% (1.39)%
Portfolio turnover rate 68% 128% 78% 97% 108% 104%
</TABLE>
See footnote summary on page 25.
24
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------
SIX MONTHS OCTOBER 1, MAY 3,
ENDED 1993 1993(E)
JANUARY 31, YEAR ENDED TO TO
1996 JULY 31, JULY 31, SEPTEMBER 30,
(UNAUDITED) 1995 1994* 1993
------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.96 $10.79 $11.00 $ 9.86
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.11)(f) (.17) (.17)(a) (.05)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.20 1.45 (.04) 1.19
Net increase (decrease) in net asset
value from operations 1.09 1.28 (.21) 1.14
LESS: DISTRIBUTIONS
Distributions from net realized gains (.53) (1.99) -0- -0-
Tax return of capital -0- (.12) -0- -0-
Net asset value, end of period $10.52 $ 9.96 $10.79 $11.00
TOTAL RETURN
Total investment return based on net
asset value (b) 11.17% 15.75% (1.91)% 11.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,677 $1,407 $1,330 $261
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.30%(d) 3.25%(c) 3.13%(d) 3.75%(d)
Net investment loss (2.37)%(d) (2.10)% (1.92)%(d) (2.51)%(d)
Portfolio turnover rate 68% 128% 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) If the Fund had borne all expenses, the expense ratios would have been
2.61%, 3.27%, and 3.31% for Class A, Class B and Class C shares, respectively.
(d) Annualized.
(e) Commencement of distribution.
(f) Based on average shares outstanding.
25
<PAGE>
PORTFOLIO OF INVESTMENTS
JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- ------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-91.2%
UNITED STATES INVESTMENTS-40.6%
CONSUMER PRODUCTS & SERVICES-14.5%
APPAREL-0.6%
Nautica Enterprises, Inc.* 14,100 $ 382,463
AUTO & RELATED-0.1%
Ek Chor China Motorcycle Co. 3,000 52,500
BROADCASTING & CABLE-1.8%
Advo, Inc. 17,100 314,212
Cablevision Systems Corp. Cl.A* 4,300 295,088
Data Broadcasting 5,607 44,856
Infinity Broadcasting Corp. 13,800 510,600
Valuevision International, Inc. 10,000 58,125
1,222,881
COSMETICS-0.6%
Jean Phillippe Fragrances, Inc.* 32,600 362,675
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES-5.5%
Apria Healthcare Group, Inc. 11,200 364,000
Centocor, Inc.* 10,300 131,325
Cephalon, Inc. 8,300 194,012
Community Health Systems, Inc.* 16,800 659,400
Healthwise America, Inc.* 24,100 710,950
Laboratory Corp. Of America Holdings
warrant, expiring 4/28/05* 1 2
Manor Care, Inc. 2,000 64,750
Medcath, Inc.* 19,600 269,500
Medimmune, Inc.* 10,000 90,000
Physician Reliance Network* 16,600 390,100
Sun Healthcare Group, Inc.* 43,400 640,150
Surgical Care Affiliates, Inc. 8,400 159,600
3,673,789
ENTERTAINMENT & LEISURE TIME-0.6%
Cinergi Pictures Entertainment, Inc. 26,000 113,750
Discovery Zone, Inc.* 500 3,563
Heritage Media Corp. Cl.A* 10,000 287,500
404,813
PRINTING & PUBLISHING-0.3%
IVI Publishing, Inc.* 27,400 219,200
RESTAURANTS & LODGING-2.5%
Hospitality Franchise Systems 17,100 752,400
Host Marriott Corp. 37,000 411,625
International Pizza Corp.* 16,400 13,325
warrants, expiring 9/22/98* 16,400 2,306
La Quinta Inns, Inc. 10,100 283,727
Redeemable Lion Hotels, Inc. 7,500 159,375
1,622,758
RETAILING-2.5%
Ann Taylor Stores Corp. 1,000 19,695
Bed Bath & Beyond, Inc. 7,500 232,500
Circle K Corp.* 6,100 118,187
Corporate Express, Inc. 7,050 178,894
Musicland Stores, Inc. 14,200 138,450
Nine West Group, Inc.* 24,700 1,000,350
1,688,076
9,629,155
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------------
TECHNOLOGY-13.0%
COMMUNICATION & EQUIPMENT-2.4%
ADC Telecommunications, Inc.* 5,000 $ 193,750
Adtran, Inc. 4,100 150,675
Ascend Communications, Inc. 3,600 261,000
Cascade Communications Corp.* 1,400 71,050
CD Radio, Inc. 20,700 56,925
Millicom International Cellular, S.A.* 21,400 631,300
Scientific-Atlanta, Inc. 11,900 255,850
1,620,550
COMMUNICATION SERVICES-0.6%
Vanguard Cellular Systems, Inc. 14,300 378,950
COMPUTER EQUIPMENT-0.4%
General Datacomm Industries, Inc. 2,000 27,000
Quantum Corp. 10,000 257,500
284,500
COMPUTER HARDWARE-0.6%
Read-Rite Corp.* 9,200 379,500
COMPUTER PERIPHERALS-0.6%
Komag, Inc.* 5,800 398,025
COMPUTER SOFTWARE & SERVICES-2.1%
Cadence Design Systems, Inc. 6,200 234,050
Informix Corp.* 30,900 915,412
Symantec Corp.* 9,200 250,700
1,400,162
ELECTRICAL EQUIPMENT-0.5%
Kemet Corp. 4,600 $297,850
Smartflex Systems, Inc. 1,500 18,000
315,850
ELECTRONICS-1.7%
Boston Technology, Inc.* 16,900 329,550
Glenayre Technologies, Inc.* 4,000 250,000
Integrated Device Technology, Inc.* 5,400 338,175
Tellabs, Inc.* 4,500 200,250
1,117,975
SEMI-CONDUCTORS & RELATED-0.8%
Cypress Semiconductor Corp.* 5,200 274,300
Lam Research Corp.* 4,200 286,650
560,950
SOFTWARE-0.4%
Intersolv, Inc.* 11,800 293,525
TELEPHONE - UTILITY-2.9%
Dionex Corp.* 10,400 500,500
Telephone & Data Systems, Inc. 19,500 755,625
United States Cellular Corp.* 20,100 678,375
1,934,500
8,684,487
BASIC INDUSTRIES-5.2%
BUSINESS SERVICES-0.5%
Gymboree Corp.* 7,000 216,125
Stratacom, Inc.* 2,400 130,200
346,325
CHEMICALS-0.2%
Wang Labs, Inc. New* 8,300 155,625
MACHINERY-0.3%
JLG Industries, Inc. 5,800 210,250
8
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- ------------------------------------------------------------------------
MINING & METALS-0.5%
Noble Drilling Corp.* 50,900 $ 330,850
OFFICE EQUIPMENT-0.3%
Staples, Inc.* 8,700 195,750
PAPER & FOREST PRODUCTS-0.0%
Asia Pacific Resources International Holding,
Ltd.* 3,000 28,125
POLLUTION CONTROL-0.1%
USA Waste Services, Inc.* 2,100 39,900
TRANSPORTATION & SHIPPING-3.3%
Alaska Air Group, Inc.* 30,000 577,500
America West Airlines, Inc. 9,400 131,600
Mesa Airlines, Inc. 27,000 293,625
Pittston Services Group 10,800 270,000
Southwest Airlines Co. 5,600 161,000
USAIR Group, Inc. 15,600 148,200
Xtra Corp. 12,700 582,612
2,164,537
3,471,362
ENERGY-5.0%
DOMESTIC PRODUCERS-0.8%
Diamond Shamrock, Inc. 19,900 517,400
INTERNATIONAL PRODUCERS-0.1%
XCL, Ltd.* 110,000 75,625
OIL & GAS SERVICES-2.8%
Arethusa, Ltd. 22,600 401,150
BJ Services Co.* 10,500 261,188
Global Marine, Inc.* 129,700 745,775
Rowan Cos., Inc.* 67,000 485,750
1,893,863
OTHER-1.3%
Reading & Bates Corp.* 85,900 859,000
3,345,888
FINANCIAL SERVICES-2.9%
BANKS-0.4%
First USA, Inc. 5,500 250,938
INVESTMENT COMPANIES-0.1%
T. Rowe Price & Associates Inc. 400 16,200
United Asset Management Corp. 500 20,035
36,235
INSURANCE-2.4%
20th Century Industries, Inc. 61,900 735,062
National Re Corp. 11,100 377,400
PXRE Corp. 19,400 501,975
1,614,437
1,901,610
Total United States Investments
(cost $22,368,851) 27,032,502
FOREIGN INVESTMENTS-50.6%
ARGENTINA-0.1%
Telecom Argentina Stet-France (ADR)*(a) 1,000 49,625
Telephone - Utility
AUSTRALIA-1.1%
AAPC, Ltd. 385,000 181,979
Restaurants & Lodging
Advance Bank Australia 30,000 16,396
Banking
Ampolex, Ltd. 40,000 90,399
Oil & Gas Exploration
Diamond Ventures, Ltd.* 154,000 22,747
Mining & Metals
Fai Life, Ltd. 500,000 232,644
Insurance
Oil Search, Ltd. 200,000 165,436
Oil
709,601
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- ------------------------------------------------------------------------
AUSTRIA-0.8%
Austria Mikro Systeme International AG(a) 1,100 $211,844
Semi-Conductors & Related
Benckiser-Wasser-Technik AG 1,500 207,003
Pollution Control
Mayr-Melnhof Karton AG*(a) 2,000 131,205
Packaging
550,052
CANADA-0.8%
Accugraph Corp. 17,000 59,592
Miscellaneous
Cinar Films, Inc. 12,000 112,500
Entertainment & Leisure
MacMillan Bloedel, Ltd. 3,000 42,449
Paper & Forest Products
Nelvana, Ltd.*(a) 13,000 182,757
Entertainment & Leisure
Orbit Oil & Gas, Ltd. 10,000 7,011
Oil & Gas Exploration
Renaissance Energy, Ltd.* 4,000 82,159
Oil & Gas Exploration
Royal Plastics Group, Ltd.*(a) 5,000 63,445
Building & Related
549,913
CHILE-0.4%
Banco Osorno Y La Un (ADR) 11,000 163,625
Banking - Regional
Empresas Telex Chile S.A. 5,000 59,375
Communication Equipment
Enersis, S.A. Sponsored (ADR) 3,000 76,875
Electric Utility
299,875
DENMARK-0.8%
Novo Nordisk AS 2,450 $283,715
Drugs
Tele Danmark AS 4,000 223,439
Telephone - Utility
507,154
FINLAND-1.3%
Nokia AB Corp. pfd.-free(a) 12,000 799,524
Communication Equipment
Tamro AB 15,000 65,675
Medical Services
865,199
FRANCE-1.7%
Coflexip Sponsored (ADR) 13,500 334,125
Oil & Gas Services
Credit Local De France 2,500 231,921
Banking
Ecco Travail Temporary 1,800 123,782
Temporary Help
Lafarge Coppee 2,200 168,966
Building & Related
Synthelabo 5,000 290,514
Drugs, Hospital Supplies &
Medical Services
1,149,308
GERMANY-3.7%
Apcoa Parking AG(b) 2,000 105,316
Business Services
Bayer AG(b) 500 134,170
Chemicals
Duerr Beteiliqunqs AG(b) 700 253,481
Machinery
Fag Kugelfischer(b) 300 45,445
Industrial Machinery
Fielmann AG pfd.(b) 9,000 470,677
Retail
Hach AG(b) 50 24,742
Retail
10
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Mannesmann AG(b) 900 $ 299,805
Machinery
Marschollek Lautenschlaeger 550 374,125
Insurance
Rheinhold & Mahla AG(b) 400 85,119
Building & Related
Sgl Carbon(a)(b) 11,000 641,131
Specialty Chemical
Veba A.G.(b) 1,500 62,238
Electric Utility
2,496,249
HONG KONG-1.2%
Fu Hui Jewelry Co., Ltd.* 300,000 16,477
Jewelry & Watches
Hong Kong Land Holdings, Ltd. 70,000 135,800
Real Estate
Hong Kong Telecomm 80,000 146,808
Telephone - Utility
HSBC Holdings Plc. 15,000 203,541
Banking
Paul Y.-ITC Construction Holdings, Inc.* 800,000 199,535
Engineering & Construction
Sing Tao 180,000 109,330
Printing & Publishing
811,491
INDIA-0.3%
Gujarat Normal Fertilizer (GDR) 4,000 40,426
Chemicals
Shriram Industrial Enterprises, Ltd.* 15,000 131,250
warrants, expiring 4/28/96* 5,000 1,000
Multi-Industry
172,676
INDONESIA-0.2%
Indonesian Satellite Corp. (ADR) 4,000 150,000
Telecommunications
IRELAND-0.4%
Crean (James) Plc. 25,000 97,922
Multi-Industry
Irish Continental Group 21,500 174,897
Transportation - Shipping
272,819
ITALY-1.6%
Fila Holding Sponsored (ADR) 10,000 292,500
Apparel
Industrie Natuzzi S.p.A. (ADR)* 19,200 696,000
Furniture Products
Marzotto (GAE) & Figli-D'ris 7,000 42,279
Textile Products
Telecom Italia Mob 40,000 50,154
Telephone - Utility
1,080,933
JAPAN-14.6%
Akita Bank(b) 5,000 41,185
Banking - Regional
Asahi Bank(b) 16,000 186,721
Banking - Regional
Aval Data Corp.(b) 9,000 183,549
Semi-Conductors & Related
Canon, Inc.*(b) 18,000 326,309
Computer Peripherals
Chubu Sekiwa Real Estate, Ltd.(b) 1,000 10,798
Real Estate
Daibiru Corp.(b) 9,000 101,971
Real Estate
Denki Kagaku Kogyo(b) 10,000 33,991
Chemicals
Eiden Sakakiya Co. 6,000 89,055
Retail
Familymart Co.(b) 2,000 99,026
Retail - Food
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Fuji Electronics Co.(b) 5,000 $ 138,228
Semi-Conductors & Related
Fukuda Corp.(b) 7,000 77,487
Engineering & Construction
Futaba Corp.(b) 3,000 148,199
Technology - Electronics
Hachijuni Bank(b) 6,000 72,740
Banking - Regional
Hitachi Metals, Ltd.(b) 3,000 35,010
Steel
Ishiguro Homa Co. 3,000 53,025
Retail
Ishihara Sangyo(b) 23,000 75,572
Chemicals
Kanamoto Co., Ltd.*(b) 2,000 29,912
Engineering & Construction
Kaneshita Construction(b) 9,000 114,208
Engineering & Construction
Keyence Corp.(b) 2,600 321,097
Machinery
Kinden Corp.(b) 6,000 106,730
Electrical Equipment
Koa Fire & Marine 16,000 98,980
Insurance
Kurita Water Industries(b) 8,000 221,165
Chemicals - Specialty
Kyocera Corp.(b) 4,000 345,343
Semi-Conductors & Related
Kyoritsu Maintenance(b) 2,000 82,257
Janitorial Services
Mabuchi Motor Co.(b) 5,000 358,033
Technology - Computer Peripherals
Matsushita Electrical Industrial Co., Ltd.(b) 20,000 333,107
Consumer Appliances
Matsuyadenki Co., Ltd.(b) 3,000 29,810
Retail
Mimasu Semiconductor(b) 1,000 26,059
Semi-Conductors
Minebea Co.(b) 25,000 190,913
Machinery
Ministop Co.(b) 1,000 21,641
Retail - Food
Mitsubishi Bank(b) 10,000 236,800
Banking
Mitsubishi Motors Corp.(b) 15,000 126,445
Auto & Related
Murata Manufacturing Co., Ltd.(b) 3,000 131,203
Communication Equipment
Namura Shipbuildng(b) 12,000 47,995
Machinery
National House Industrial Co.(b) 5,000 96,306
Building & Construction
New Oji Paper Co., Ltd.(b) 30,000 298,436
Paper & Forest Products
Ngk Spark Plug Co.(b) 3,000 37,729
Semi-Conductors & Related
Nichiei Co., Ltd.(b) 3,000 190,347
Financial Services
Nichiha Corp.(b) 4,000 77,498
Miscellaneous
Nihon Dempa Kogyo(b) 8,000 231,135
Communication Equipment
Nikon Corp.(b) 11,000 123,635
Semi-Conductors & Related
Nippon Electric Glass Co., Ltd.(b) 9,000 163,154
Consumer Appliances
Nippon Sanso Corp. 20,000 98,799
Mining & Metals
Nippon Steel Corp. 10,000 33,877
Mining & Metals
Nippon Telegraph & Telephone Corp.(b) 10 85,203
Telephone Utilities
Nippon TV Network(b) 1,000 231,135
Broadcasting
Nissen Corp., Ltd.(b) 1,000 32,064
Retail
Omron Corp.(b) 6,000 136,642
Machinery
12
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Oriental Construction(b) 4,000 $ 88,375
Building & Construction
P S Corp.(b) 8,700 166,587
Construction
Promise Co., Ltd.(b) 3,600 161,523
Financial Services
Ricoh Elemex Co., Ltd.(b) 2,000 24,926
Computer Peripherals
Rohm Co., Ltd.(b) 4,000 227,056
Semi-Conductors
Sankyo Co.(b) 12,000 282,801
Drugs
Santen Pharmaceutical Co.(b) 7,000 188,761
Drugs
Sanyo Shinpan Finance Co., Ltd.(b) 2,000 163,154
Financial Services
Sato Corp.(b) 7,000 134,036
Technology - Electronics
Secom Co.(b) 1,000 61,636
Business Services
Sekichu Co.(b) 1,000 13,596
Retail
Sekisui Chemical Co.(b) 15,000 180,150
Chemicals
Sharp Corp.(b) 6,000 87,695
Consumer Manufacturing
Shimamura Co., Ltd.(b) 3,000 104,691
Retail
Showa Shell Sekiyu(b) 4,750 45,961
Oil
SMC Corp.(b) 4,000 242,919
Machinery
Takeda Chemical Industries(b) 8,000 107,863
Drugs
TDK Corp.(b) 3,000 152,617
Consumer Products & Services
Toda Corp.(b) 10,000 92,114
Chemicals - Specialty
Toho Bank(b) 8,000 60,005
Banking - Regional
Tokyo Broadcasting(b) 5,000 73,646
Broadcasting
Tokyo Electron, Ltd.(b) 8,000 300,023
Semi-Conductors & Related
Wesco, Inc.*(b) 4,600 112,055
Engineering & Construction
Xebio Co.(b) 300 10,163
Retail
Yamaichi Secs Co.(b) 10,000 62,429
Financial Services
Yamanashi Chuo Bank(b) 7,000 79,311
Banking - Regional
Yamanouchi Pharmaceutical(b) 8,000 177,657
Drugs
9,732,274
MALAYSIA-0.4%
Arab Malaysian Finance 1,000 4,680
Financial Services
Austral Enterprise 9,333 20,132
rights, expiring 8/24/95 4,666 -0-
Multi-Industry
C.I. Holdings Berhad 16,000 64,466
Building & Related
Highlands & Lowlands 10,000 18,884
Real Estate
Malaysian Assuranc 12,000 46,396
Insurance
Metacorp Berhad 33,000 120,203
Engineering & Construction
274,761
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
MEXICO-0.3%
Bufete Industrial SA 700 $ 11,900
Engineering & Construction
Grupo Industrial Durango, S.A.* 15,000 136,875
Paper & Forest Products
International de Ceramica* 34,915 54,287
Ceramic Tiles
203,062
NETHERLANDS-4.3%
Akzo Nobel N.V.(b) 1,000 131,316
Chemicals
Amev N.V(b). 4,000 229,160
Insurance
ASM Lithography Holding N.V.(b) 3,000 174,767
Semi-Conductors
Atag Holding N.V.(b) 500 35,082
Multi-Industry
BAM Groep N.V.(b) 1,800 127,686
Engineering & Construction
Boskalis Westminister cum. pfd.(b) 820,000 510,422
Engineering & Construction
Content Beheer N.V.(b) 10,000 256,839
Temporary Help
Elsevier N.V.(b) 22,000 280,399
Printing & Publishing
KLM Royal Dutch Airlines(b) 9,000 338,333
Consumer Services - Airlines
NBM Amstelland Nv 10,000 137,753
Building & Construction
Philips Electronic(b) 5,500 270,132
Appliances
Polygram N.V.(b) 3,000 190,409
Leisure Related
Randstad Holdings N.V.(b) 2,500 177,020
Temporary Help
2,859,318
NEW ZEALAND-0.6%
Air New Zealand 40,000 134,753
Airlines
Helicopter Line 50,000 149,912
Entertainment & Leisure
Lion Nathan, Ltd. 55,000 106,354
Food & Beverages
391,019
NORWAY-0.8%
Tomra Systems AS 82,500 376,467
Pollution Control
Western Bulk Shipping AS(a) 31,500 148,875
Shipping
525,342
PANAMA-1.1%
Banco Latinoamericano de Exportaciones,
S.A. (ADR) 18,200 730,275
Finance
PERU-0.2%
Banco Wiese Sponsored (ADR) 15,000 127,500
Banking - Regional
PORTUGAL-0.1%
TVI Televisao Independente* 7,800 35,859
Broadcasting & Cable
SINGAPORE-0.1%
Lim Kah Ngam, Ltd. 30,000 35,082
Multi-Industry
SOUTH KOREA-1.0%
Samsung Electronics Co., Ltd.
(ADR)(GDS)*(a) 7,000 460,250
bonus shrs*(a)(c) 1,385 89,790
baby shrs(a) 395 52,535
bonus shrs(a)(c) 78 10,302
14
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
rights, expiring
12/31/95*(a) 108 $ -0-
Semi-Conductors & Related
Yukong, Ltd. (ADR) 5,912 71,712
Energy International Producers
684,589
SPAIN-1.3%
Bco Popular Esp 1,200 194,284
Banking
Centros Commerciales Continente, S.A.* 9,000 178,648
Retail
Construcciones Y Aux de Ferr 2,000 80,574
Railroad Transportation
Corporacion Mapfre 3,000 168,702
Insurance
Repsol S.A. 5,000 168,702
Energy
Viscofan Envolturas Celulosi 6,000 80,826
Food
871,736
SWEDEN-2.7%
Autoliv AB (ADS)(a) 3,900 242,124
Auto & Related
Electrolux AB 1,000 52,649
Household Products
Hoganas AB Cl.B(a) 6,000 121,007
Mining & Metals
Kalmar Industries AB(a) 16,000 244,562
Machinery
Rottneros Bruks AB 75,000 124,191
Paper & Forest Products
SKF AB 25,000 548,424
Machinery
Sparbanken Sverige 25,000 221,139
Banking - Regional
SSAB (Svenskt Stal Aktiebolag) Series B 18,000 219,086
Mining & Metals
1,773,182
SWITZERLAND-1.1%
Lindtt & Spruengli AG Ord. 20 316,384
Consumer Staples
Roche Holdings AG, Ltd. 60 408,605
Drugs
724,989
TAIWAN-0.3%
The Taiwan Fund, Inc. 11,500 232,875
Mutual Fund
TURKEY-0.1%
Netas Telekomunik Ord. Cl.B*(a) 215,600 89,535
Communication Equipment
UNITED KINGDOM-7.2%
Aran Energy(b) 350,000 240,607
Oil - International
Asda Group Plc.(b) 40,000 60,432
Retailing
Automated Security Holdings Plc.*(b) 130,008 76,903
Consumer Products & Services
Bell Cablemedia Plc. (ADR)* 5,000 87,500
Broadcasting & Cable
British Airways Plc.(b) 30,000 220,144
Airlines
Bryant Group(b) 100,000 213,429
Building & Related
Caird Group Plc.*(b) 900,000 57,554
Pollution Control
Filtronic Comtec Plc.*(b) 140,000 716,227
Communication Equipment
M.S. International Plc.(b) 650,000 342,926
Machinery
Mcbride(b) 24,000 80,000
Household Products
Mid-States Plc.*(b) 740,000 532,374
Auto & Related
Morrison (William) Supermarkets Plc.(b) 40,000 100,080
Retailing - Food
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- -----------------------------------------------------------------------
Mowlem (John) & Co. Plc.(b) 580,000 $ 686,171
Engineering & Construction
Northern Ireland Electricity Plc.(b) 20,000 122,142
Electric Utility
Powerscreen International Plc.(b) 39,000 215,108
Recycling Equipment
Resort Hotels Plc.*(c) 1,000,000 -0-
Restaurants & Lodging
Sears Plc.(b) 40,000 66,827
Retailing
Siebe Plc.(b) 15,000 163,669
Machinery
Tate & Lyle(b) 12,000 84,604
Food & Beverages
Tomkins(b) 30,000 123,022
Household Products
Williams Holdings(b) 20,000 104,396
Building & Construction
WPP Group(b) 70,000 150,520
Advertising
Zeneca Group Plc.(b) 20,000 356,355
Drugs
4,800,990
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -----------------------------------------------------------------------
Total Foreign Investments
(cost $31,531,740) $33,757,283
Total Common Stocks & Other Investments
(cost $53,900,591) 60,789,785
CORPORATE BONDS-0.4%
COMMUNICATION & EQUIPMENT-0.4%
Intelcom Group, Inc.
8.00%, 9/17/98 *(a)(c)
(cost $265,813) $ 269 229,824
COMMERCIAL PAPER-8.5%
Merrill Lynch & Co., Inc.
5.85%, 8/01/95
(amortized cost $5,683,000) 5,683 5,683,000
TOTALINVESTMENTS-100.1%
(cost $59,849,404) 66,702,609
Other assets less liabilities-(0.1%) (74,690)
NET ASSETS-100% $66,627,919
* Non-income producing security.
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At July 31, 1995
these securities amounted to $3,768,335 representing 5.66% of net assets.
(b) Securities with an aggregate market value of $18,915,717, segregated to
collateralize forward exchange currency contracts.
(c) Illiquid security, valued at fair market value (see Notes A and E).
Glossary of Terms:
ADR - American Depository Receipt
GDR - Global Depository Receipt
GDS - Global Depository Security
See notes to financial statements.
16
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $59,849,404) $66,702,609
Receivable for investment securities sold 2,323,300
Dividends and interest receivable 39,962
Receivable for capital stock sold 29,020
Foreign taxes receivable 15,580
Total assets 69,110,471
LIABILITIES
Due to custodian 178,618
Payable for investment securities purchased 1,305,359
Unclaimed dividends 634,284
Unrealized depreciation of forward exchange currency contracts 151,877
Management fee payable 42,043
Distribution fee payable 20,175
Payable for capital stock repurchased 8,763
Accrued expenses 141,433
Total liabilities 2,482,552
NET ASSETS $66,627,919
COMPOSITION OF NET ASSETS
Capital stock, at par $64,478
Additional paid-in capital 60,737,913
Accumulated net realized loss on investments and
foreign currency transactions (877,940)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 6,703,468
$66,627,919
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($60,056,776/5,787,350
shares of capital stock issued and outstanding) $10.38
Sales charge-4.25% of public offering price .46
Maximum offering price $10.84
CLASS B SHARES
Net asset value and offering price per share ($5,164,440/519,200
shares of capital stock issued and outstanding) $ 9.95
CLASS C SHARES
Net asset value, redemption and offering price per share($1,406,703/
141,277 shares of capital stock issued and outstanding) $ 9.96
See notes to financial statements.
17
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $69,032) $ 566,752
Interest 304,953
$ 871,705
EXPENSES
Management fee 640,582
Distribution fee - Class A 174,375
Distribution fee - Class B 47,620
Distribution fee - Class C 12,795
Transfer agency 244,934
Administrative 161,181
Custodian 138,414
Audit and legal 99,154
Registration 70,777
Printing 59,692
Directors' fees 25,987
Miscellaneous 37,258
Total expenses 1,712,769
Less: expenses waived and assumed by manager
(See Note B) (46,816)
Net expenses 1,665,953
Net investment loss (794,248)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investments 8,002,975
Net realized loss on foreign currency transactions (213,808)
Net change in unrealized appreciation of investments 2,534,927
Net change in unrealized depreciation of foreign currency
denominated assets and liabilities (98,524)
Net gain on investments and foreign currency 10,225,570
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,431,322
See notes to financial statements.
18
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
YEAR ENDED OCT. 1,1993
JULY 31, TO
1995 JULY 31,1994*
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (794,248) $ (751,009)
Net realized gain on investments and
foreign currency transactions 7,789,167 5,770,260
Net change in unrealized appreciation (depreciation)
of investments and foreign currency denominated
assets and liabilities 2,436,403 (6,096,357)
Net increase(decrease) in net assets from operations 9,431,322 (1,077,106)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Tax return of capital
Class A (679,545) -0-
Class B (56,726) -0-
Class C (16,528) -0-
Net realized gain on investments
Class A (10,605,411) -0-
Class B (885,298) -0-
Class C (257,942) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 3,106,523 545,313
Total increase (decrease) 36,395 (531,793)
NET ASSETS
Beginning of period 66,591,524 67,123,317
End of period $66,627,919 $66,591,524
* The Fund changed its fiscal year end from September 30 to July 31.
See notes to financial statements.
19
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995 ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Small Cap Fund, Inc. (the "Fund"), formerly Surveyor Fund,
Inc., is registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge of up to
4.25%. Class B shares are sold with a contingent deferred sales charge which
declines from 4.00% to zero depending on the period of time the shares are
held. Class B shares will automatically convert to Class A shares eight years
after the end of the calendar month of purchase. Class C shares are sold
without an initial or contingent deferred sales charge. All three classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Securities traded on United States or foreign securities exchanges are valued
at the last reported sales price, or, if no sale occurred, at the mean of the
bid and asked price. Securities listed or traded on certain foreign exchanges
whose operations are similar to the U.S. over-the-counter market are valued at
the closing bid price. Debt securities are valued at the mean of the bid and
asked price except that debt securities maturing within 60 days are valued at
amortized cost, which approximates market value. Securities for which current
market quotations are not readily available (including investments which are
subject to limitations as to their sale) are valued at their fair value as
determined in good faith by the Board of Directors. The values of foreign
securities quoted in foreign currencies are translated into U.S. dollars at the
current rate of exchange at July 31, 1995.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward currency exchange contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
Net realized loss on foreign currency transactions of $213,808 represents net
foreign exchange losses from holding of foreign currencies, currency gains or
losses realized between the trade and settlement dates on foreign security
transactions, and the difference between the amounts of dividends, interest and
foreign taxes recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid.
Net currency gains or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of
net change in unrealized depreciation of foreign currency denominated assets
and liabilities.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date the securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
6. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
During the year, the Fund reclassified certain components of net assets. The
reclassifications were the result of permanent book to tax differences in the
classification of foreign currency transactions as well as the reclassification
of a tax return of capital. The reclassifications resulted in a net decrease to
accumulated net realized loss of $3,807,433 and a corresponding decrease to
additional paid-in capital of $3,807,433. Net assets were not affected by the
change.
20
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
NOTE B: MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the management agreement, the Fund pays its Manager,
Alliance Capital Management L.P., a management fee at an annual rate of 1% of
the average daily net assets of the Fund. The fee is accrued daily and paid
monthly.
The Manager has agreed to reimburse the Fund to the extent that its aggregate
annual expenses (exclusive of interest, taxes, brokerage, distribution fee and
extraordinary expenses) exceed the limits prescribed by any state in which the
Fund's shares are qualified for sale.
The Manager believes that the most restrictive expense ratio limitation imposed
by any state is 2.5% of the first $30 million of its average daily net assets,
2% of the next $70 million of its average daily net assets and 1.5% of its
average daily net assets in excess of $100 million. For the year ended July 31,
1995, such reimbursement amounted to $46,816. Pursuant to the management
agreement, the Fund paid $161,181 to the Manager representing the cost of
certain legal and accounting services provided to the Fund by the Manager for
the year ended July 31, 1995.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Manager) in accordance with a Services Agreement for providing personnel
and facilities to perform transfer agency services for the Fund. Such
compensation amounted to $159,995 for the year ended July 31, 1995.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Manager)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $2,309 from the sale of Class A shares and $15,749
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended July 31, 1995.
Brokerage commissions paid on securities transactions for the year ended July
31, 1995 amounted to $259,471, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Manager, nor to DLJ directly.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to both Class B
and Class C shares. The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and promotional
activities. The Distributor has incurred expenses in excess of the distribution
costs reimbursed by the Fund in the amount of $922,746, and $327,084 for Class
B and C shares, respectively; such costs may be recovered from the Fund in
future periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Manager may use its own resources
to finance the distribution of the Fund's shares.
21
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $76,675,599 and $87,533,882, respectively, for the year ended July
31, 1995. There were no purchases or sales of U.S. Government and government
agency obligations for the year ended July 31, 1995.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies.
A forward exchange currency contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated forward rate. The gain or
loss arising from the difference between the original contracts and the closing
of such contracts is included in net realized gain or loss on foreign currency
transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At July 31, 1995, the Fund had outstanding forward exchange currency contracts,
both to purchase and sell foreign currencies against the U.S. dollar as follows:
CONTRACT COST ON UNREALIZED
AMOUNT ORIGINATION U.S. $ APPRECIATION
(000) DATE CURRENT VALUE (DEPRECIATION)
------- ---------- ------------- --------------
FOREIGN CURRENCY BUY CONTRACTS
Japanese Yen,
expiring 9/18/95 65,000 $767,233 $741,638 $(25,595)
FOREIGN CURRENCY SALE CONTRACTS
British Pounds,
expiring 9/18/95 1,986 3,103,721 3,171,009 (67,288)
Deutsche Mark,
expiring 9/18/95 1,598 1,112,426 1,154,791 (42,365)
Japanese Yen, expiring
9/18/95-11/15/95 475,954 5,509,027 5,462,939 46,088
Netherland Guilder,
expiring 9/18/95 2,725 1,695,495 1,758,212 (62,717)
----------
$(151,877)
At July 31, 1995, the cost of investments for federal income tax purposes was
$59,926,275. Accordingly, gross unrealized appreciation of investments was
$11,400,151 and gross unrealized depreciation of investments was $4,623,817,
resulting in net unrealized appreciation of $6,776,334.
NOTE E: ILLIQUID SECURITIES
DATE ACQUIRED COST VALUE
------------- -------- ---------
Intelcom Group, Inc. 8.00%, 9/17/98 9/16/93 $265,813 $229,824
Resort Hotels Plc. 5/01/92 719,086 -0-
Samsung Electronics Co., Ltd. Bonus shares 7/10/95 -0- 100,092
--------- ---------
$984,899 $329,916
22
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with the procedures described in Note A. The value of
these securities at July 31, 1995 represents 0.5% of net assets.
NOTE F: CAPITAL STOCK
There are 62,500,000 shares of $.01 par value capital stock authorized, divided
into three classes, designated Class A, Class B and Class C shares. Class A and
Class C each consist of 25,000,000 authorized shares and Class B consists of
12,500,000 authorized shares. Transactions in capital stock were as follows:
SHARES AMOUNT
------------------------- ---------------------------
OCT. 1,1993 OCT. 1,1993
YEAR ENDED TO JULY 31, YEAR ENDED TO JULY 31,
JUY 31,1995 1994* JULY 31,1995 1994*
----------- ------------ ------------- ------------
CLASS A
Shares sold 391,760 325,941 $ 3,971,546 $ 3,837,992
Shares issued in
reinvestment
of distributions 952,163 -0- 8,217,164 -0-
Shares redeemed (1,095,655) (632,975) (10,827,369) (7,361,992)
Net increase (decrease) 248,268 (307,034) $ 1,361,341 $(3,524,000)
CLASS B
Shares sold 287,247 333,615 $ 2,886,684 $ 3,794,604
Shares issued in
reinvestment
of distributions 75,995 -0- 631,516 -0-
Shares redeemed (204,792) (77,401) (1,961,914) (875,725)
Net increase 158,450 256,214 $ 1,556,286 $2,918,879
CLASS C
Shares sold 136,839 165,941 $ 1,295,724 $1,883,546
Shares issued in
reinvestment
of distributions 15,861 -0- 131,935 -0-
Shares redeemed (134,697) (66,414) (1,238,763) (733,112)
Net increase 18,003 99,527 $ 188,896 $1,150,434
* The Fund changed its fiscal year end from September 30 to July 31.
23
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------
OCT. 1,1993 YEAR ENDED SEPTEMBER 30,
YEAR ENDED TO ----------------------------------------------
JULY 31,1995 JULY 31,1994* 1993 1992 1991 1990
------------- ------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.08 $11.24 $9.33 $10.55 $8.26 $15.54
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.09) (.15) (.15) (.16) (.06) (.05)(a)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.50 (.01) 2.49 (1.03) 2.35 (4.12)
Net increase (decrease) in net asset
value from operations 1.41 (.16) 2.34 (1.19) 2.29 (4.17)
LESS: DISTRIBUTIONS
Tax return of capital (.12) -0- -0- -0- -0- -0-
Distributions from net realized gains (1.99) -0- (.43) (.03) -0- (3.11)
Net asset value, end of period $10.38 $11.08 $11.24 $9.33 $10.55 $8.26
TOTAL RETURN
Total investment return based on
net asset value (b) 16.62% (1.42)% 25.83% (11.30)% 27.72% (31.90)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $60,057 $61,372 $65,713 $58,491 $84,370 $68,316
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 2.54%(c) 2.42%(d) 2.53% 2.34% 2.29% 1.73%
Net investment loss (1.17)% (1.26)%(d) (1.13)% (.85)% (.55)% (.46)%
Portfolio turnover rate 128% 78% 97% 108% 104% 89%
</TABLE>
See footnote summary on page 26.
24
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------------
OCT. 1,1993 YEAR ENDED SEPTEMBER 30,
YEAR ENDED TO --------------------------------------------
JULY 31, 1995 JULY 31, 1994* 1993 1992 1991 1990(E)
------------- -------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.78 $11.00 $9.20 $10.49 $ 8.26 $ 9.12
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.12) (.17)(a) (.15) (.20) (.07) (.01)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.40 (.05) 2.38 (1.06) 2.30 (.85)
Net increase (decrease) in net asset
value from operations 1.28 (.22) 2.23 (1.26) 2.23 (.86)
LESS: DISTRIBUTIONS
Tax return of capital (.12) -0- -0- -0- -0- -0-
Distributions from net realized gains (1.99) -0- (.43) (.03) -0- -0-
Net asset value, end of period $9.95 $10.78 $11.00 $9.20 $10.49 $8.26
TOTAL RETURN
Total investment return based on
net asset value (b) 15.77% (2.00)% 24.97% (12.03)% 27.00% (9.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,164 $3,889 $1,150 $ 819 $ 121 $ 183
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 3.20%(c) 3.15%(d) 3.26% 3.11% 2.98% 2.61%(d)
Net investment loss (1.92)% (1.93)%(d) (1.85)% (1.31)% (1.39)% (1.30)%(d)
Portfolio turnover rate 128% 78% 97% 108% 104% 89%
</TABLE>
See footnote summary on page 26.
25
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
--------------------------------------
OCTOBER 1, MAY 3,
1993 1993(F)
YEAR ENDED TO TO
JULY 31, JULY 31, SEPTEMBER 30,
1995 1994* 1993
-------------- ----------- -----------
Net asset value, beginning of period $10.79 $11.00 $ 9.86
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.17) (.17)(a) (.05)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.45 (.04) 1.19
Net increase (decrease) in net asset
value from operations 1.28 (.21) 1.14
LESS: DISTRIBUTIONS
Tax return of capital (.12) -0- -0-
Distributions from net realized gains (1.99) -0- -0-
Net asset value, end of period $ 9.96 $10.79 $11.00
TOTAL RETURN
Total investment return based on
net asset value (b) 15.75% (1.91)% 11.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,407 $1,330 $ 261
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 3.25%(c) 3.13%(d) 3.75%(d)
Net investment loss (2.10)% (1.92)%(d) (2.51)%(d)
Portfolio turnover rate 128% 78% 97%
* The Fund changed its fiscal year end from September 30 to July 31.
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) If the Fund had borne all expenses, the expense ratios would have been
2.61%, 3.27%, and 3.31% for Class A, Class B and Class C shares, respectively.
(d) Annualized.
(e) For the period September 17, 1990 (commencement of distribution) to
September 30, 1990.
(f) Commencement of distribution.
26
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS ALLIANCE GLOBAL SMALL CAP FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Global Small Cap Fund, Inc. including the portfolio of investments, as
of July 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Global Small Cap Fund, Inc. at July 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
New York, New York
September 9, 1995
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
During the fiscal year ended July 31, 1995, the Fund paid on Class A, Class B
and Class C shares long-term capital gains of $0.10.
FOREIGN TAX CREDIT (UNAUDITED)
The Fund has elected to give the benefit to its shareholders of foreign taxes
that have been paid and/or withheld. For the year ended July 31, 1995, this
benefit amounted to $69,032. Although the Fund has made the election required
to make this credit available, the amount of allowable tax credit is subject to
limitations under the Internal Revenue Code.
A notification reflecting the per share amount to be used by taxpayers on their
federal income tax return will be mailed to shareholders in January 1996.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements
Included in the Prospectus:
Included in the Statement of Additional
Information:
Portfolio of Investments, July 31, 1995
Statement of Assets and Liabilities, July 31, 1995
Statement of Operations, period ended July 31,
1995
Statement of Changes in Net Assets, period ended
July 31, 1994 and year ended July 31, 1995
Notes to Financial Statements, July 31, 1995
Report of Independent Auditors - September 9, 1995
Portfolio of Investments, January 31, 1996
(unaudited)
Statement of Assets and Liabilities, January 31,
1996 (unaudited)
Statement of Operations, January 31, 1996
(unaudited)
Statement of Changes in Net Assets, year ended
July 31, 1995 and the six months ended January 31,
1996 (unaudited)
Notes to Financial Statements, January 31, 1996
(unaudited)
Financial Highlights, years ended September 30,
1991 through September 30, 1993, period ended
October 1, 1993 through July 31, 1994, year ended
July 31, 1995 and the six months ended January 31,
1996 (unaudited)
Report of Independent Auditors - January 31, 1996
(unaudited)
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.
C-1
<PAGE>
(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).
(4) (a) Specimen of Share Certificate for
Advisor Class shares - Filed herewith.
(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 - See Exhibit 6(a) hereto.
(16) (a) Schedule for computation of total return
performance of Class A - Incorporated by
reference to Exhibit 16(a) to Post-Effective
Amendment No. 49 of Registrant's Registration
Statement on Form N-1A, filed January 31,
1991 (File No. 2-25364).
(b) Schedule for computation of total return
performance of Class B - Incorporated by
reference to Exhibit 16(b) to Post-Effective
Amendment No. 49 of Registrant's Registration
C-3
<PAGE>
Statement on Form N-1A, filed January 31,
1991 (File No. 2-25364).
(18) Rule 18f-3 Plan - Filed herewith.
(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 April 5, 1996)
______________ ________________________
Shares of Common Stock Class A - 12,655
par value $.01 Class B - 1,156
Class C - 311
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, or agent of another foreign
C-4
<PAGE>
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
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(ii) The director actually received an
improper personal benefit in money, property, or
services; or
(iii) In the case of any criminal
proceeding, the director had reasonable cause to believe
that the act or omission was unlawful.
(2) (i) Indemnification may be against
judgments, penalties, fines, settlements, and reasonable
expenses actually incurred by the director in connection
with the proceeding.
(ii) However, if the proceeding was
one by or in the right of the corporation,
indemnification may not be made in respect of any
proceeding in which the director shall have been
adjudged to be liable to the corporation.
(3) (i) The termination of any
proceeding by judgment, order or settlement does not
create a presumption that the director did not meet the
requisite standard of conduct set forth in this
subsection.
(ii) The termination of any
proceeding by conviction, or a plea of nolo contendere
or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that
the director did not meet that standard of conduct.
(c) A director may not be indemnified
under subsection (b) of this section in respect of any
proceeding charging improper personal benefit to the
director, whether or not involving action in the
director's official capacity, in which the director was
adjudged to be liable on the basis that personal benefit
was improperly received.
(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
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court shall require, may order indemnification in the
following circumstances:
(i) If it determines a director is
entitled to reimbursement under paragraph (1) of this
subsection, the court shall order indemnification, in
which case the director shall be entitled to recover the
expenses of securing such reimbursement; or
(ii) If it determines that the director
is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not
the director has met the standards of conduct set forth
in subsection (b) of this section or has been adjudged
liable under the circumstances described in subsection
(c) of this section, the court may order such
indemnification as the court shall deem proper. However,
indemnification with respect to any proceeding by or in
the right of the corporation or in which liability shall
have been adjudged in the circumstances described in
subsection (c) shall be limited to expenses.
(3) A court of appropriate jurisdiction
may be the same court in which the proceeding involving
the director's liability took place.
(e)(1) Indemnification under subsection
(b) of this section may not be made by the corporation
unless authorized for a specific proceeding after a
determination has been made that indemnification of the
director is permissible in the circumstances because the
director has met the standard of conduct set forth in
subsection (b) of this section.
(2) Such determination shall be made:
(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
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established, by a majority vote of the full board in
which director who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of
indemnification and determination as to reasonableness
of expenses shall be made in the same manner as the
determination that indemnification is permissible.
However, if the determination that indemnification is
permissible is made by special legal counsel,
authorization of indemnification and determination as to
reasonableness of expenses shall be made in the manner
specified in subparagraph (ii) of paragraph (2) of this
subsection for selection of such counsel.
(4) Shares held by directors who
are parties to the proceeding may not be voted on the
subject matter under this subsection.
(f)(1) Reasonable expenses incurred by a
director who is a party to a proceeding may be paid or
reimbursed by the corporation in advance of the final
disposition of the proceeding, upon receipt by the
corporation of:
(i) A written affirmation by the
director of the director's good faith belief that the
standard of conduct necessary for indemnification by the
corporation as authorized in this section has been met;
and
(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
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indemnification or otherwise, to which a director may be
entitled under the charter, the bylaws, a resolution of
stockholders or directors, an agreement or otherwise,
both as to action in an official capacity and as to
action in another capacity while holding such office.
(h) This section does not limit the
corporation's power to pay or reimburse expenses
incurred by a director in connection with an appearance
as a witness in a proceeding at a time when the director
has not been made a named defendant or respondent in the
proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to
have requested a director to serve an employee benefit
plan where the performance of the director's duties to
the corporation also imposes duties on, or otherwise
involves services by, the director to the plan or
participants or beneficiaries of the plan:
(2) Excise taxes assessed on a director
with respect to an employee benefit plan pursuant to
applicable law shall be deemed fines; and
(3) Action taken or omitted by the
director with respect to an employee benefit plan in the
performance of the director's duties for a purpose
reasonably believed by the director to be in the
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,
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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.
(1) 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
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directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify and
advance expenses to its officers to the same extent as
its directors and to such further extent as is
consistent with the law. The Board of Directors may by
Bylaw, resolution or agreement make further provisions
for indemnification of directors, officers, employees
and agents to the fullest extent permitted by the
Maryland General Corporation Law.
(c) No provision of this Article shall be effective to
protect or purport to protect any director or officer of
the Corporation against any liability to the Corporation
or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(d) References to the Maryland General Corporation Law
in this Article are to that law as from time to time
amended. No amendment to the charter of the Corporation
shall effect any right of any person under this Article
based on any event, omission or proceeding prior to such
amendment."
ARTICLE X of the Registrant's By-Laws reads as follows:
"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
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Article X shall impair the rights of any person arising
at any time with respect to events occurring prior to
such amendment. For purposes of this Article X the term
"Corporation" shall include any predecessor of the
Corporation and any constituent corporation (including
any constituent of a constituent) absorbed by the
Corporation in a consolidation or merger; the term
"other enterprise" shall include any corporation,
partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall
include service as a director or officer of the
Corporation which imposes duties on, or involves
services by, such director or officer with respect to an
employee benefit plan, its participants or
beneficiaries; any excise taxes assessed on a person
with respect to an employee benefit plan shall be deemed
to be indemnifiable expenses; and action by a person
with respect to any employee benefit plan which such
person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be
deemed to be action not opposed to the best interests of
the Corporation."
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that, in
the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such 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
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(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.
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.
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<PAGE>
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference.
Item 29. Principal Underwriters
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale
of shares of the Registrant, also acts as Principal
Underwriter or Distributor for the following
investment companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Income Fund, Inc.
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust,
Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
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<PAGE>
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES
NAME UNDERWRITER WITH REGISTRANT
Michael J. Laughlin Chairman
Robert L. Errico President
Kimberly A. Gardner Senior Vice President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
and Secretary
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumsiek Senior Vice President
Stephen R. Laut Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleondakis Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Richard A. Winge Senior Vice President
Benji A. Baer Vice President
Warren W. Babcock III Vice President
Kenneth F. Barkoff Vice President
William P. Beanblossom Vice President
Jack C. Bixler Vice President
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<PAGE>
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Mark J. Dunbar Vice President
Sohaila S. Farsheed Vice President
Linda A. Finnerty Vice President
William C. Fisher Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President &
Controller
Andrew L. Gangolf Vice President Assistant
Secretary
Mark D. Gersten Vice President Treasurer
and Chief
Financial
Officer
Joseph W. Gibson Vice President
Herbert H. Goldman Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Robert H. Joseph, Jr. Vice President
and Treasurer
Richard D. Keppler Vice President
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Sheila F. Lamb Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Daniel D. McGinley Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Nicole Nolan-Koester Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President and Assistant
Associate General Secretary
Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Raymond S. Sclafani Vice President
J. William Strott, Jr. Vice President
Richard E. Tambourine Vice President
Joseph T. Tocyloski Vice President
Neil S. Wood Vice President
Emilie D. Wrapp Vice President and Assistant
Special Counsel Secretary
Maria L. Carreras Assistant Vice President
Sarah A. Chodera Assistant Vice President
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<PAGE>
John W. Cronin Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
Vicky M. Hayes Assistant Vice President
Daniel M. Hazard Assistant Vice President
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Thomas K. Intoccia Assistant Vice President
Edward W. Kelly Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Shawn P. McClain Assistant Vice President
Thomas F. Monnerat Assistant Vice President
Joanna D. Murray Assistant Vice President
Jeanette M. Nardella Assistant Vice President
Camilo R. Pedraza Assistant Vice President
Carol H. Rappa Assistant Vice President
Karen C. Satterberg Assistant Vice President
Robert M. Smith Assistant Vice President
Wesley S. Williams 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 State Street Bank and Trust
Company, the Registrant's Custodian, 225 Franklin Street, Boston,
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Massachusetts 02110. All other records so required to be
maintained are maintained at the offices of Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, New York,
10105.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
The Registrant undertakes to furnish each person to whom
the prospectus is delivered with a copy of the Registrant's
latest report to Shareholders, upon request and without charge.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant 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 8th day of
April, 1996.
ALLIANCE GLOBAL SMALL CAP FUND, INC.
By /s/ John D. Carifa
John D. Carifa
Chairman
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
Signature Title Date
_________ _____ ____
(1) Principal Executive
Officer
/s/ John D. Carifa Chairman April 8, 1996
John D. Carifa
(2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and April 8, 1996
Mark D. Gersten Chief Financial
Officer
(3) All of the Directors
____________________
Ruth Block
John D. Carifa
David H. Dievler
John H. Dobkin
William H. Foulk, Jr.
Dr. James M. Hester
Clifford L. Michel
Donald J. Robinson
By/s/ Edmund P. Bergan, Jr. April 8, 1996
(Attorney-in-fact)
Edmund P. Bergan, Jr.
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Index to Exhibits
Page
(11) Consent of Independent Auditors.
(18) Rule 18f-3 Plan
(27) Financial Data Schedule.
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00250176.AG3
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption
"Shareholder Services - Statements and Reports" and to the use of
our report dated September 9, 1995 included in this Amendment to
the Registration Statement (Form N-1A No. 2-25364) of Alliance
Global Small Cap Fund, Inc.
We also hereby consent to the reference to our firm under the
caption "General Information - Independent Auditors" included in
the Statement of Additional Information of Alliance Global Small
Cap Fund, Inc. filed pursuant to Rule 497(c) on November 9, 1995
which is incorporated by reference in this Registration
Statement.
ERNST & YOUNG LLP
New York, New York
April 19, 1996
00250176.AG5
<PAGE>
ALLIANCE GLOBAL SMALL CAP FUND, INC.
Plan pursuant to Rule 18f-3 under the
Investment Company Act of 1940
Effective November 28, 1995
This Plan (the "Plan") is adopted by the Alliance Global
Small Cap Fund, Inc. (the "Fund") pursuant to Rule 18f-3 under
the Investment Company Act of 1940 (the "Act") and sets forth the
general characteristics of, and the general conditions under
which the Fund may offer, multiple classes of shares of its now
existing and hereafter created portfolios.1 This Plan may be
revised or amended from time to time as provided below.
Class Designations
The Fund2 may from time to time issue one or more of the
following classes of shares: Class A shares, Class B shares,
Class C shares and Class Y shares. Each of the four classes of
shares will represent interests in the same portfolio of
investments of the Fund and, except as described herein, shall
have the same rights and obligations as each other class. Each
class shall be subject to such investment minimums and other
conditions of eligibility as are set forth in the Fund's
prospectus or statement of additional information as from time to
time in effect (the "Prospectus").
Class Characteristics
Class A shares are offered at a public offering price
that is equal to their net asset value ("NAV") plus an initial
sales charge, as set forth in the Prospectus. Class A shares may
also be subject to a Rule 12b-1 fee, which may include a service
fee and, under certain circumstances, a contingent deferred sales
charge ("CDSC"), as described in the Prospectus.
_________________________
1. Prior to the effectiveness of this Plan, the Fund has been
offering multiple classes of shares pursuant to an exemptive
order of the Securities and Exchange Commission. This Plan
is intended to allow the Fund to offer multiple classes of
shares to the full extent and in the manner permitted by Rule
18f-3 under the Act (the "Rule"), subject to the requirements
and conditions imposed by the Rule.
2. For purposes of this Plan, if the Fund has existing more than
one portfolio pursuant to which multiple classes of shares
are issued, then references in this Plan to the "Fund" shall
be deemed to refer instead to each portfolio.
<PAGE>
Class B shares are offered at their NAV, without an
initial sales charge, but may be subject to a CDSC and a Rule
12b-1 fee, which may include a service fee, as described in the
Prospectus.
Class C shares are offered at their NAV, without an
initial sales charge, and may be subject to a Rule 12b-1 fee,
which may include a service fee, and a CDSC, as described in the
Prospectus.
Class Y Shares are offered at their NAV, without any
initial sales charge, CDSC or Rule 12b-1 fee.
The initial sales charge on Class A shares and CDSC on
Class A, B and C shares are each subject to reduction or waiver
as permitted by the Act, and as described in the Prospectus.
Allocations to Each Class
Expense Allocations
The following expenses shall be allocated, to the extent
practicable, on a class-by-class basis: (i) Rule 12b-1 fees
payable by the Fund to the distributor or principal underwriter
of the Fund's shares (the "Distributor"), and (ii) transfer
agency costs attributable to each class. Subject to the approval
of the Fund's Board of Directors, including a majority of the
independent Directors, the following "Class Expenses" may be
allocated on a class-by-class basis: (a) printing and postage
expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxy statements to current
shareholders of a specific class,3 (b) SEC registration fees
incurred with respect to a specific class, (c) blue sky and
foreign registration fees and expenses incurred with respect to a
specific class, (d) the expenses of administrative personnel and
services required to support shareholders of a specific class
(including, but not limited to, maintaining telephone lines and
personnel to answer shareholder inquiries about their accounts or
about the Fund), (e) litigation and other legal expenses relating
to a specific class of shares, (f) Directors' fees or expenses
incurred as a result of issues relating to a specific class of
shares, (g) accounting and consulting expenses relating to a
specific class of shares, (h) any fees imposed pursuant to a non-
Rule 12b-1 shareholder services plan that relate to a specific
_________________________
3. For Class Y shares, the expenses of preparation, printing and
distribution of prospectuses and shareholder reports, as well
as other distribution-related expenses, will be borne by the
investment adviser of the Fund (the "Adviser") or the
Distributor from their own resources.
2
<PAGE>
class of shares, and (i) any additional expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount with respect to a class, or if
services are provided with respect to a class that are of a
different kind or to a different degree than with respect to one
or more other classes.
All expenses not now or hereafter designated as Class
Expenses ("Fund Expenses") will be allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund.
Waivers and Reimbursements
The Adviser or Distributor may choose to waive or
reimburse Rule 12b-1 fees, transfer agency fees or any Class
Expenses on a voluntary, temporary basis. Such waiver or
reimbursement may be applicable to some or all of the classes and
may be in different amounts for one or more classes.
Income, Gains and Losses
Income, and realized and unrealized capital gains and
losses shall be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value of
the Fund.
Conversion and Exchange Features
Conversion Features
Class B shares of the Fund automatically convert to
Class A shares of the Fund after a certain number of months or
years after the end of the calendar month in which the
shareholder's purchase order was accepted as described in the
Prospectus. Class B shares purchased through reinvestment of
dividends and distributions will be treated as Class B shares for
all purposes except that such Class B shares will be considered
held in a separate sub-account. Each time any Class B shares in
the shareholder's account convert to Class A shares, an equal
pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares. The conversion of Class B shares
to Class A shares may be suspended if the opinion of counsel
obtained by the Fund that the conversion does not constitute a
taxable event under current federal income tax law is no longer
available. Class B shares will convert into Class A shares on
the basis of the relative net asset value of the two classes,
without the imposition of any sales load, fee or other charge.
3
<PAGE>
In the event of any material increase in payments
authorized under the Rule 12b-1 Plan (or, if presented to
shareholders, any material increase in payments authorized by a
non-Rule 12b-1 shareholder services plan) applicable to Class A
shares, existing Class B shares will stop converting into Class A
shares unless the Class B shareholders, voting separately as a
class, approve the increase in such payments. Pending approval
of such increase, or if such increase is not approved, the
Directors shall take such action as is necessary to ensure that
existing Class B shares are exchanged or converted into a new
class of shares ("New Class A") identical in all material
respects to Class A shares as existed prior to the implementation
of the increase in payments, no later than such shares were
previously scheduled to convert to Class A shares. If deemed
advisable by the Directors to implement the foregoing, such
action may include the exchange of all existing Class B shares
for a new class of shares ("New Class B"), identical to existing
Class B shares, except that New Class B shares shall convert to
New Class A shares. Exchanges or conversions described in this
paragraph shall be effected in a manner that the Directors
reasonably believe will not be subject to federal taxation. Any
additional cost associated with the creation, exchange or
conversion of New Class A or New Class B shares shall be borne by
the Adviser and the Distributor. Class B shares sold after the
implementation of the fee increase may convert into Class A
shares subject to the higher maximum payment, provided that the
material features of the Class A plan and the relationship of
such plan to the Class B shares are disclosed in an effective
registration statement.
Exchange Features
Shares of each class generally will be permitted to be
exchanged only for shares of a class with similar characteristics
in another Alliance Mutual Fund and shares of certain Alliance
money market funds. Class Y shares may be exchanged for Class Y
shares of another Alliance Mutual Fund and shares of certain
Alliance money market funds. If the aggregate net asset value of
shares of all Alliance Mutual Funds held by an investor in the
Fund reaches the minimum amount at which an investor may purchase
Class A shares at net asset value without a front-end sales load
on or before December 15 in any year, then all Class B and
Class C shares of the Fund held by that investor may thereafter
be exchanged, at the investor's request, at net asset value and
without any front-end sales load or CDSC for Class A shares of
the Fund. All exchange features applicable to each class will be
described in the Prospectus.
4
<PAGE>
Dividends
Dividends paid by the Fund with respect to its Class A,
Class B, Class C and Class Y shares, to the extent any dividends
are paid, will be calculated in the same manner, at the same time
and will be in the same amount, except that any Rule 12b-1 fee
payments relating to a class of shares will be borne exclusively
by that class and any incremental transfer agency costs or, if
applicable, Class Expenses relating to a class shall be borne
exclusively by that class.
Voting Rights
Each share of a Fund entitles the shareholder of record
to one vote. Each class of shares of the Fund will vote
separately as a class with respect to the Rule 12b-1 plan
applicable to that class and on other matters for which class
voting is required under applicable law. Both Class A and
Class B shareholders will vote separately as a class to approve
any material increase in payments authorized under the Rule 12b-1
plan applicable to Class A shares.
Responsibilities of the Directors
On an ongoing basis, the Directors will monitor the Fund
for the existence of any material conflicts among the interests
of the four classes of shares. The Directors shall further
monitor on an ongoing basis the use of waivers or reimbursement
by the Adviser and the Distributor of expenses to guard against
cross-subsidization between classes. The Directors, including a
majority of the independent Directors, shall take such action as
is reasonably necessary to eliminate any such conflict that may
develop. If a conflict arises, the Adviser and Distributor, at
their own cost, will remedy such conflict up to and including
establishing one or more new registered management investment
companies.
Reports to the Directors
The Adviser and Distributor will be responsible for
reporting any potential or existing conflicts among the four
classes of shares to the Directors. In addition, the Directors
will receive quarterly and annual statements concerning
distributions and shareholder servicing expenditures complying
with paragraph (b)(3)(ii) of Rule 12b-1. In the statements, only
expenditures properly attributable to the sale or servicing of a
particular class of shares shall be used to justify any
distribution or service fee charged to that class. The
statements, including the allocations upon which they are based,
will be subject to the review of the independent Directors in the
exercise of their fiduciary duties. At least annually, the
5
<PAGE>
Directors shall receive a report from an expert, acceptable to
the Directors, (the "Expert") with respect to the methodology and
procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The report of the Expert
shall also address whether the Fund has adequate facilities in
place to ensure the implementation of the methodology and
procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The Fund and the Adviser
will take immediate corrective measures in the event of any
irregularities reported by the Expert.
Amendments
The Plan may be amended from time to time in accordance
with the provisions and requirements of Rule 18f-3 under the Act.
Adopted this 28th day of November, 1995
By:
Edmund P. Bergan, Jr.
Secretary
6
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