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This is filed pursuant to Rule 497(c).
File Nos. 2-25364 and 811-01415.
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The Alliance
Stock Funds
The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Prospectus and Application
February 1, 1999
Domestic Stock Funds
o Alliance Premier Growth Fund
o Alliance Growth Fund
o Alliance Technology Fund
o Alliance Quasar Fund
o The Alliance Fund
Total Return Funds
o Alliance Growth & Income Fund
o Alliance Balanced Shares
o Alliance Utility Income Fund
o Alliance Real Estate Investment Fund
Global Stock Funds
o Alliance New Europe Fund
o Alliance Worldwide Privatization Fund
o Alliance International Premier Growth Fund
o Alliance Global Small Cap Fund
o Alliance Global Environment Fund
o Alliance International Fund
o Alliance Greater China '97 Fund
o Alliance All-Asia Investment Fund
o Alliance Global Environment Fund
Alliance Capital [LOGO(R)]
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2
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TABLE OF CONTENTS
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Page
RISK/RETURN SUMMARY ....................................................... 3
Domestic Stock Funds ...................................................... 4
Total Return Funds ........................................................ 9
Global Stock Funds ........................................................ 13
Summary of Principal Risks ................................................ 21
Principal Risks by Fund .................................... ....... 22
FEES AND EXPENSES OF THE FUNDS ............................................ 23
GLOSSARY .................................................................. 26
DESCRIPTION OF THE FUNDS .................................................. 27
Investment Objectives and Policies ........................................ 27
Description of Investment Practices ....................................... 39
Additional Risk Considerations ............................................ 46
MANAGEMENT OF THE FUNDS ................................................... 50
PURCHASE AND SALE OF SHARES ............................................... 53
How The Funds Value Their Shares .......................................... 53
How To Buy Shares ......................................................... 53
How to Exchange Shares .................................................... 53
How To Sell Shares ........................................................ 53
DIVIDENDS, DISTRIBUTIONS AND TAXES ........................................ 54
DISTRIBUTION ARRANGEMENTS ................................................. 55
GENERAL INFORMATION ....................................................... 56
FINANCIAL HIGHLIGHTS ...................................................... 57
APPENDIX A--ADDITIONAL INFORMATION ABOUT THE UNITED KINGDOM, JAPAN,
AND GREATER CHINA COUNTRIES ............................................... 67
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The Funds' investment adviser is Alliance Capital Management L.P., a global
investment manager providing diversified services to institutions and
individuals through a broad line of investments including more than 100 mutual
funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the Alliance Stock
Funds. You will find additional information about each Fund, including a
detailed description of the risks of an investment in each Fund, after this
Summary.
The Risk/Return Summary describes the Funds' objectives, principal investment
strategies, principal risks and fees. Each Fund's Summary page includes a short
discussion of some of the principal risks of investing in that Fund. A further
discussion of these and other risks is on page 21.
More detailed descriptions of the Funds, including the risks associated with
investing in the Funds, can be found further back in this Prospectus. Please be
sure to read this additional information BEFORE you invest. Each of the Funds
may at times use certain types of investment derivatives such as options,
futures, forwards and swaps. The use of these techniques involves
special risks that are discussed in this Prospectus.
The Risk/Return Summary includes a table for each Fund showing its average
annual returns and a bar chart showing its annual returns. The table and bar
chart provide an indication of the historical risk of an investment in each Fund
by showing:
o how the Fund's average annual returns for one, five, and 10 years
(or over the life of the Fund if the Fund is less than 10 years
old) compare to those of a broad based securities market index; and
o changes in the Fund's performance from year to year over 10 years
(or over the life of the Fund if the Fund is less than 10 years
old).
A Fund's past performance, of course, does not necessarily indicate how it will
perform in the future.
Other important things for you to note:
o You may lose money by investing in the Funds.
o An investment in the Funds is not a deposit in a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation
or any other government agency.
3
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DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range of
alternative approaches to investing primarily in U.S. equity markets.
ALLIANCE PREMIER GROWTH FUND
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OBJECTIVE:
The Fund's investment objective is long-term growth of capital by investing
predominantly in equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of U.S. companies. Unlike most
equity funds, the Fund focuses on a relatively small number of intensively
researched companies. Alliance selects the Fund's investments from a research
universe of more than 600 companies that have strong management, superior
industry positions, excellent balance sheets and superior earnings growth
prospects.
Normally, the Fund invests in about 40-50 companies, with the 25 most highly
regarded of these companies usually constituting approximately 70% of the
Fund's net assets. 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. Through this approach, Alliance seeks to gain
positive returns in good markets while providing some measure of protection in
poor markets. The Fund also may invest up to 20% of its net assets in
convertible securities.
Among the principal risks of investing in the Fund is market risk. Because the
Fund invests in a smaller number of securities than many other equity funds,
your investment has the risk that changes in the value of a single security may
have a more significant effect, either negative or positive, on the Fund's net
asset value.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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Since
1 Year 5 Years Inception*
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Class A 42.97% 26.65% 24.38%
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Class B 44.33% 26.95% 24.48%
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Class C 47.31% 26.97% 26.35%
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S&P 500 Index 28.60% 24.05% 21.60%**
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Since inception of Class C*** 22.41%
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 9/28/92 for Class A and Class B shares. 5/3/93 for Class
C shares.
** Index return from 9/30/92.
*** Index return from month-end of applicable class inception date.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
89 90 91 92 93 94 95 96 97 98
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n/a n/a n/a n/a 9.98 -5.80 46.87 24.14 32.67 49.31
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 31.05%, 4th quarter, 1998; and Worst Quarter was down
- -12.10%, 3rd quarter, 1998.
4
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Alliance Growth Fund
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OBJECTIVE:
The Fund's investment objective is long-term growth of capital. Current income
is incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests 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 over time. The Fund emphasizes investments in large- and
mid-cap companies. The Fund also may invest up to 25% of its total assets in
lower-rated fixed-income securities and convertible bonds and generally up to
15% of its total assets in foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile then investments in large-cap
companies. To the extent the Fund invests in lower-rated fixed-income
securities and convertible bonds, your investment may have interest rate or
credit risk. The Fund's investments in foreign securities have foreign risk
and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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10 Years
(or Since
1 Year 5 Years Inception)
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Class A 22.71% 19.72% 23.34%*
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Class B 23.23% 19.93% 20.91%
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Class C 26.25% 19.92% 20.22%*
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S&P 500 Index 28.60% 24.05% 19.19%**
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Since inception of Class A*** 21.37%
Since inception of Class C*** 22.74%
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The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 9/4/90 for Class A shares. 8/2/93 for Class C shares.
** Index return from 12/31/88.
*** Index returns from month-end of applicable class inception date.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class B shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
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27.94 -7.96 62.39 9.81 28.21 -1.84 28.65 22.32 26.22 27.23
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 29.47%, 1st quarter, 1991; and Worst Quarter was down
- -20.45%, 3rd quarter, 1990.
5
<PAGE>
Alliance Technology Fund
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OBJECTIVE:
The Fund's investment objective is growth of capital. Current income is
incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in securities of companies that use technology
extensively in the development of new or improved products or processes. Within
this framework, the Fund may invest in any company and industry and in any type
of security with potential for capital appreciation. It invests in well-known,
established companies or in new or unseasoned companies. The Fund also may
invest in debt securities and up to 10% of its total assets in foreign
securities.
Among the principal risks of investing in the Fund is market risk. In addition,
technology stocks, especially those of smaller, less-seasoned companies, tend
to be more volatile than the overall stock market. To the extent the Fund
invests in debt and foreign securities, your investment has credit risk,
currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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10 Years
(or Since
1 Year 5 Years Inception)
- --------------------------------------------------------------------------------
Class A 56.22% 29.58% 23.32%
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Class B 57.98% 29.81% 30.87%*
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Class C 60.94% 29.81% 30.87%*
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S&P 500 Index 28.60% 24.05% 19.19%**
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Since inception of Classes B and C*** 22.41%
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The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 5/3/93 for Class B shares and Class C shares.
** Index return from 12/31/88.
*** Index return from month-end of applicable class inception date.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
6.00 -3.08 54.24 15.50 21.63 28.51 45.80 19.41 4.54 63.14
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 39.86%, 4th quarter, 1998; and Worst Quarter was down
- -33.21%, 3rd quarter, 1990.
6
<PAGE>
Alliance Quasar Fund
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OBJECTIVE:
The Fund's investment objective is growth of capital by pursuing aggressive
investment policies. Current income is incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund generally invests in a widely diversified portfolio of equity
securities spread among many industries that offer the possibility of
above-average earnings growth. The Fund currently emphasizes investment in
small-cap companies. The Fund invests in well-known and established companies
and in new and unseasoned companies. The Fund can invest in the equity
securities of any company and industry and in any type of security with
potential for capital appreciation. 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 capabilities and practices. The Fund also may invest in
non-convertible bonds, preferred stocks, and foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in smaller companies tend to be more volatile than investments in large-cap or
mid-cap companies. To the extent the Fund invests in non-convertible bonds,
preferred stocks, and foreign stocks, your investment has interest rate risk,
credit risk, currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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10 Years
(or Since
1 Year 5 Years Inception)
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Class A -8.64% 14.23% 11.84%
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Class B -8.90% 14.35% 13.66%*
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Class C -6.19% 14.36% 15.96%*
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Russell 2000
Index -2.55% 11.87% 12.92%**
Since inception of Class B*** 17.50%
Since inception of Class C*** 12.88%
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The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charge and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 9/17/90 for Class B shares. 5/3/93 for Class C shares.
** Index return from 12/31/88.
*** Index returns from month-end of applicable class inception date.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
28.20 -23.44 34.27 2.81 16.16 -7.27 47.64 32.62 17.24 -4.56
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 23.10%, 1st quarter, 1991; and Worst Quarter was down
- -28.46%, 3rd quarter, 1998.
7
<PAGE>
The Alliance Fund
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OBJECTIVE:
The Fund's investment objective is long-term growth of capital and income
primarily through investments in common stocks.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund normally invests substantially all of its assets in high-quality common
stocks that Alliance expects to increase in value. The Fund may invest in a
broad range of companies, from large to small, but tends to emphasize attractive
opportunities in mid-cap companies. While the Fund's diversified and
high-quality investments cannot prevent fluctuations in market values, they tend
to limit investment risk and contribute to achieving the Fund's objective. The
Fund also may invest in convertible securities, U.S. Government securities, and
foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile than investments in large-cap
companies. To the extent the Fund invests in convertible securities and U.S.
Government securities, your investment may have interest rate or credit risk.
The Fund's investments in foreign securities have currency risk and foreign
risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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10 Years
(or Since
1 Year 5 Years Inception)
- --------------------------------------------------------------------------------
Class A -6.90% 14.39% 15.02%
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Class B -7.00% 14.43% 14.38%*
- --------------------------------------------------------------------------------
Class C -4.62% 14.35% 15.19%*
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S&P Midcap
400 Index 18.25% 18.67% 19.21%**
Since inception of Class B 18.24%
Since inception of Class C 18.26%
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The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 3/4/91 for Class B shares. 5/3/93 for Class C shares.
** Index return from 12/31/88.
*** Index returns from month-end of applicable class inception date.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
23.42 -4.36 33.91 14.70 14.26 -2.51 34.84 17.54 36.01 -2.72
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 23.72%, 4th quarter, 1998; and Worst Quarter was down
- -24.32%, 3rd quarter, 1998.
8
<PAGE>
TOTAL RETURN FUNDS
The Total Return Funds offer investors seeking both growth of capital and
current income a range of investment alternatives.
Alliance Growth & Income Fund
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OBJECTIVE:
The Fund's investment objective is appreciation through investments primarily in
dividend-paying common stocks of good quality, although the Fund also may invest
in fixed-income and convertible securities.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in dividend-paying common stocks of large,
well-established "blue-chip" companies. The Fund also may invest in fixed-income
and convertible securities and in securities of foreign issuers.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. The Fund's investments in foreign securities have
currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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10 Years
(or Since
1 Year 5 Years Inception)
- --------------------------------------------------------------------------------
Class A 16.14% 19.62% 16.03%
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Class B 16.24% 19.73% 15.76%*
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Class C 19.59% 19.79% 18.76%*
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S&P 500 Index 28.60% 24.05% 19.19%**
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Since inception of Class B*** 19.58%
Since inception of Class C*** 22.41%
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The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 2/8/91 for Class B shares. 5/3/93 for Class C shares.
** Index return from 12/31/88.
*** Index returns from month-end of applicable class inception date.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
25.56 -1.69 27.08 4.52 9.96 -4.20 37.86 24.13 28.86 21.23
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 23.25%, 4th quarter, 1998; and Worst Quarter was down
- -13.82%, 3rd quarter, 1998.
9
<PAGE>
Alliance Balanced Shares
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OBJECTIVE:
The Fund's investment objective is high return through a combination of current
income and capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in a diversified portfolio of equity and fixed-income
securities. The percentage of the Fund's assets invested in each type of
security will vary, but at least 25% of the Fund's total assets will be invested
in fixed-income senior securities. The Fund invests in common and preferred
stocks, U.S. Government and agency securities, bonds and senior debt securities.
The Fund's investments in each type of security depends on current economic
conditions and market outlooks. The Fund also may invest up to 15% of its total
assets in foreign equity and fixed-income securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk, allocation risk and credit risk. To the extent the Fund invests in
foreign securities, your investment has currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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10 Years
(or Since
1 Year 5 Years Inception)
- --------------------------------------------------------------------------------
Class A 10.84% 12.95% 11.25%
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Class B 10.78% 13.04% 11.87%*
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Class C 13.89% 13.08% 12.75%*
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S&P 500 Index 28.60% 24.05% 19.19%**
- --------------------------------------------------------------------------------
Since inception of Class B*** 19.58%
Since inception of Class C*** 22.41%
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The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 2/4/91 for Class B shares. 5/3/93 for Class C shares.
** Index return from 12/31/88.
*** Index returns from month-end of applicable class inception date.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
14.12 -2.20 20.47 6.81 9.93 -5.79 26.64 9.36 27.13 15.75
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 13.45%, 4th quarter, 1998; and Worst Quarter was down
- -8.21%, 3rd quarter, 1990.
10
<PAGE>
Alliance Utility Income Fund
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OBJECTIVE:
The Fund's investment objective is current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in income-producing equity securities. The Fund
invests in securities of utility companies in the electric, telecommunications,
gas, and water utility industries. The Fund may invest in both U.S. and foreign
utility companies, although the Fund will limit its investments in issuers in
any one foreign country to no more than 15% of its total assets. The Fund may
invest up to 35% of its net assets in lower-rated securities and up to 30% of
its net assets in convertible securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. Because the Fund invests a substantial portion of
its assets in companies in a specific industry, there is the risk that factors
affecting utility companies will have a significant effect of the value of the
Fund's investments. To the extent the Fund invests in lower-rated securities,
your investment is subject to more credit risk than a fund that invests in
higher-rated securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year 5 Years Inception*
- --------------------------------------------------------------------------------
Class A 19.09% 13.02% 13.44%
- --------------------------------------------------------------------------------
Class B 19.46% 13.23% 13.56%
- --------------------------------------------------------------------------------
Class C 22.42% 13.25% 13.65%
- --------------------------------------------------------------------------------
NYSE Utilities
Index 33.04% 14.17% 12.58%**
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 10/18/93 for Class A shares and Class B shares. 10/27/93
for Class C shares.
** Index return from 10/31/93.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
n/a n/a n/a n/a n/a -10.94 22.93 8.28 30.65 24.38
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 15.65%, 4th quarter, 1997; and Worst Quarter was down
- -7.50%, 1st quarter, 1994.
11
<PAGE>
Alliance Real Estate Investment Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is total return from long-term growth of capital
and income principally through investing in equity securities of companies that
are primarily engaged in or related to the real estate industry.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of real estate investment trusts
or "REITs" and other real estate industry companies. The Fund invests in real
estate companies that Alliance believes have strong property fundamentals and
management teams. The Fund seeks to invest in real estate companies whose
underlying portfolios are diversified geographically and by property type. The
Fund may invest up to 35% of its total assets in mortgage-backed securities,
which are securities that directly or indirectly represent participations in, or
are collateralized by and payable from, mortgage loans secured by real property.
Among the principal risks of investing in the Fund are market risk, interest
rate risk, and credit risk.
Because the Fund invests a substantial portion of its assets in the real estate
market, it has many of the same risks as direct ownership of real estate
including the risk that the value of real estate could decline due to a variety
of factors affecting the real estate market. In addition, REITs are dependent on
the capability of their managers, may have limited diversification, and could be
significantly affected by changes in tax laws. The Fund's investments in
mortgage-backed securities have prepayment risk, which is the risk that mortgage
loans will be prepaid when interest rates decline and the Fund will have to
reinvest in securities with lower interest rates. This risk causes
mortgage-backed securities to have significantly greater price and yield
volatility than traditional fixed-income securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
5 Years Inception*
- --------------------------------------------------------------------------------
Class A -23.59% 5.43%
- --------------------------------------------------------------------------------
Class B -23.85% 5.91%
- --------------------------------------------------------------------------------
Class C -21.52% 6.77%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 31.43%**
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 10/1/96 for Class A, Class B and Class C shares.
** Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a n/a n/a 22.98 -20.22
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 14.55%, 3rd quarter, 1997; and Worst Quarter was down
- -12.33%, 3rd quarter, 1998.
12
<PAGE>
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors seeking long-term capital appreciation a
range of alternative approaches to investing in foreign securities.
Alliance New Europe Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation through
investments primarily in the equity securities of companies based in Europe.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of European companies. The Fund
diversifies its investments among a number of European countries and normally
invests in companies based in at least three of these countries, although it may
invest 25% or more of its assets in issuers in a single country. The Fund may
invest up to 35% of its total assets in high-quality U.S. Dollar or foreign
currency denominated fixed-income securities issued or guaranteed by European
governmental entities, European or multinational companies, or supranational
organizations. At December 31, 1998, the Fund had approximately 26% of its
assets invested in securities of United Kingdom issuers.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, the Fund's investments in U.S.
Dollar or foreign currency denominated fixed-income securities have interest
rate and credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year 5 Years Inception*
- --------------------------------------------------------------------------------
Class A 19.67% 15.92% 11.28%
- --------------------------------------------------------------------------------
Class B 20.12% 16.10% 13.28%
- --------------------------------------------------------------------------------
Class C 23.10% 16.11% 17.74%
- --------------------------------------------------------------------------------
MSCI Europe
Index 28.91% 19.53% 15.40%**
- -------------------------------------------------------------------------------
Since inception of Class B*** 16.58%
Since inception of Class C*** 20.81%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 4/2/90 for Class A shares. 3/5/91 for Class B shares.
5/3/93 for Class C shares.
** Index return from 4/30/90.
*** Index returns from month-end of applicable class inception date.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
n/a n/a 3.30 -0.53 34.57 4.64 18.63 20.58 16.83 24.99
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 22.41%, 1st quarter, 1998; and Worst Quarter was down
- -19.73%, 3rd quarter, 1998.
13
<PAGE>
Alliance Worldwide Privatization Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of companies that are
undergoing, or have undergone, privatization. The Fund also invests in
securities of companies that will benefit from privatizations. The Fund takes
advantage of investment opportunities, historically inaccessible to U.S.
individual investors, that result from the privatization of state enterprises in
both established and developing economies. Because privatizations are integral
to a country's economic restructuring, securities sold in initial public
offerings often are attractively priced to secure the issuer's transition to
private sector ownership. In addition, these enterprises often dominate their
local markets and have the potential for significant managerial and operational
efficiency gains.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in four, and usually considerably more, countries. The
Fund may invest up to 30% of its total assets in any one of France, Germany,
Great Britain, Italy, and Japan and may invest all of its assets in a single
world region. The Fund also may invest up to 35% of its total assets in debt
securities and convertible debt securities of privatized companies.
Among the principal risks of investing in the Fund are market risk, foreign risk
and currency risk. Investments in companies that are undergoing or, have
undergone, privatization could have more risk because they have no operating
history as a private company. In addition, the Fund's investments in U.S. Dollar
or foreign currency denominated fixed-income securities have interest rate and
credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Class A 4.25% 9.61%
- --------------------------------------------------------------------------------
Class B 4.55% 9.88%
- --------------------------------------------------------------------------------
Class C 7.22% 13.11%
- --------------------------------------------------------------------------------
MSCI EAFE Index 20.33% 8.53%**
- -------------------------------------------------------------------------------
Since inception of Class C*** 11.52%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 6/2/94 for Class A shares and Class B shares. 2/8/95 for
Class C shares.
** Index return from 6/30/94.
*** Index return from month-end of applicable class inception date.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a 4.91 23.14 13.18 8.92
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 16.49%, 1st quarter, 1998; and Worst Quarter was down
- -17.44%, 3rd quarter, 1998.
14
<PAGE>
Alliance International Premier Growth Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term growth of capital by investing
predominantly in equity securities of a limited number of carefully selected
non-U.S. companies that are judged likely to achieve superior earnings growth.
Current income is incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of comparatively large,
high-quality, non-U.S. companies. The Fund invests in at least four, and usually
considerably more, countries. Normally, the Fund invests no more than 15% of its
total assets in issuers of any one foreign country, but may invest up to 25% of
its total assets in each of Canada, France, Germany, Italy, Japan, The
Netherlands, Switzerland and the United Kingdom. Unlike more typical
international equity funds, the Fund focuses on a relatively small number of
intensively researched companies. Alliance selects the Fund's investments from a
research universe of approximately 900 companies.
Normally, the Fund invests in about 60 companies, with the 30 most highly
regarded of these companies usually constituting approximately 70% of the Fund's
net assets. The Fund invests in companies with market values in the range of
the average weighted market capitalization of companies in the
EAFE index (currently approximately $35 billion). Alliance may take advantage
of market volatility to adjust the Fund's portfolio positions. To the extent
consistent with local market liquidity considerations, the Fund strives to
capitalize on apparently unwarranted price fluctuations, both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. The
Fund invests primarily in equity securities and also may invest in convertible
securities.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, since the Fund invests in a smaller
number of securities than many other international equity funds, changes in the
value of a single security may have a more significant effect, either negative
or positive, on the Fund's net asset value.
There is no bar chart or performance table for the Fund because it has not
completed a full calendar year of operations.
15
<PAGE>
Alliance Global Small Cap Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term growth of capital through
investment in a global portfolio of equity securities of selected companies with
relatively small market capitalizations.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of global companies, both
domestic and foreign, with relatively small market capitalizations. The Fund's
investments emphasize companies that are in the smallest 20% of the U.S. stock
market (or less than approximately $1.5 billion). Although these companies are
small by U.S. standards, they may be among the largest companies in their own
countries. The Fund may invest up to 35% of its total assets in securities of
companies whose market capitalizations exceed the Fund's size standard. The Fund
invests in at least three countries, including the U.S.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
10 Years
(or Since
1 Year 5 Years Inception)
- --------------------------------------------------------------------------------
Class A -0.85% 9.19% 7.59%
- --------------------------------------------------------------------------------
Class B -0.86% 9.37% 8.99%*
- --------------------------------------------------------------------------------
Class C 1.86% 9.37% 10.97%*
- --------------------------------------------------------------------------------
MSCI World
Index 24.80% 16.19% 11.21%**
- -------------------------------------------------------------------------------
Since inception of Class B*** 15.35%
Since inception of Class C*** 15.54%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charge and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 9/17/90 for Class B shares. 5/3/93 for Class C shares.
** Index return from 12/31/88.
*** Index returns from month-end of applicable class inception date.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
24.60 -24.89 25.29 -4.89 20.04 -4.55 27.18 19.37 8.08 3.56
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 18.10%, 1st quarter, 1991; and Worst Quarter was down
- -26.77%, 3rd quarter, 1990.
16
<PAGE>
Alliance International Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is total return from long-term growth of capital
and income primarily through investment in 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 in foreign
government securities.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity 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. The Fund diversifies its
investments broadly among countries and normally invests in companies in at
least three foreign countries, although it may invest a substantial portion of
its assets in companies in one or more foreign countries.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
10 Years
(or Since
1 Year 5 Years Inception)
- --------------------------------------------------------------------------------
Class A 5.00% 5.84% 5.81%
- --------------------------------------------------------------------------------
Class B 4.90% 5.91% 5.47%*
- --------------------------------------------------------------------------------
Class C 7.81% 5.88% 6.76%*
- -------------------------------------------------------------------------------
MSCI World
Index (minus
the U.S.) 19.11% 9.52% 5.93%**
- --------------------------------------------------------------------------------
Since inception of Class B*** 10.51%
Since inception of Class C*** 9.64%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 9/17/90 for Class B shares. 5/3/93 for Class C shares.
** Index return from 12/31/88.
*** Index returns from month-end of applicable class inception date.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
29.62 -20.95 7.72 -5.86 27.51 5.68 10.10 7.20 1.41 9.64
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 15.69%, 4th quarter, 1998; and Worst Quarter was down
- -22.29%, 3rd quarter, 1990.
17
<PAGE>
Alliance Greater China '97 Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation through
investment of at least 80% of its total assets in equity securities of Greater
China companies.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in equity securities of Greater China companies, which are
companies in China, Hong Kong, and Taiwan. Of these countries, the Fund expects
to invest a significant portion of its assets, which may be greater than 50%, in
Hong Kong companies and may invest all of its assets in Hong Kong companies or
companies of either of the other Greater China countries. The Fund also may
invest in convertible securities and equity-linked debt securities issued or
guaranteed by Greater China companies or Greater China Governments, their
agencies, or instrumentalities. As of December 31, 1998, the Fund had
approximately 75% of its assets invested in securities of Hong Kong companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in Greater China companies,
the Fund's returns will be significantly more volatile and differ substantially
from U.S. markets generally. Your investment also has the risk that market
changes or other events affecting the Greater China countries, including
political instability and unpredictable economic conditions, may have a more
significant effect on the Fund's net asset value. In addition, the Fund is
"non-diversified" meaning that it invests its assets in a smaller number of
companies than many other international funds. As a result, changes in the
value of a single security may have a more significant effect, either negative
or positive, on the Fund's net asset value. The Fund's investments in debt
securities have interest rate and credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Years Inception*
- --------------------------------------------------------------------------------
Class A -11.98% -29.28%
- --------------------------------------------------------------------------------
Class B -12.36% -29.07%
- --------------------------------------------------------------------------------
Class C -9.89% -27.52%
- --------------------------------------------------------------------------------
MSCI China Free Index -43.83% -54.48%**
- --------------------------------------------------------------------------------
MSCIHong Kong Index -2.92% -25.58%**
- --------------------------------------------------------------------------------
MSCITaiwan Index -20.64% -30.14%**
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charge and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 9/3/97 for Class A, Class B, and Class C shares.
** Index returns from 9/30/97.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a n/a n/a n/a -8.02
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 27.48%, 4th quarter, 1998; and Worst Quarter was down
- -26.95%, 2nd quarter, 1998.
18
<PAGE>
Alliance All-Asia Investment Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund primarily invests in securities of various types of companies based in
Asia. The Fund invests in equity securities, preferred stocks, and equity-
linked debt securities issued by Asian companies and may invest more than 50%
of its total assets in equity securities of Japanese issuers. The Fund also 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,
and may invest up to 25% of its net assets in convertible securities. At
December 31, 1998, the Fund had approximately 60% of its total assets invested
in securities of Japanese companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in Asian and Pacific region
countries and emerging markets, the Fund's returns will be significantly more
volatile and may differ substantially from the overall U.S. market generally.
Your investment has the risk that market changes or other factors affecting
Asian and Pacific region countries and other emerging markets, including
political instability and unpredictable economic conditions, may have a more
significant effect on the Fund's net asset value. To the extent that the Fund
invests a substantial amount of its assets in Japanese companies, your
investment has the risk that market changes or other events affecting that
country may have a more significant effect on the Fund's net asset value. In
addition, The Fund's investments in debt securities have interest rate and
credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Class A -16.07% -10.73%
- --------------------------------------------------------------------------------
Class B -16.63% -10.41%
- --------------------------------------------------------------------------------
Class C -13.74% -10.34%
- --------------------------------------------------------------------------------
MSCI All Country
Asia Pacific
Index 2.03% -8.48%**
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 11/28/94 for Class A, Class B, and Class C shares.
** Index return from 11/30/94.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a 10.21 4.58 -35.10 -12.34
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 13.67%, 4th quarter, 1998; and Worst Quarter was down
- -18.81%, 4th quarter, 1997.
19
<PAGE>
Alliance Global Environment Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation through
investment of substantially all of its assets in equity securities of companies
that are expected to benefit from advances or improvements in products,
processes or services intended to foster the protection of the environment.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in environmental companies, which are companies whose
principal business involves the sale of environmental protection systems or
services. The Fund also invests in companies whose principal business lies
outside the environmental sector but who anticipate environmental regulations or
consumer preferences through the development of new products or services that
would contribute to a cleaner and healthier environment. The Fund will invest
substantially all of its assets in these two types of companies. The Fund
invests in securities of companies in at least three, and normally considerably
more, countries. At December 31, 1998, the Fund had approximately 82% invested
in equity securities of U.S. companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in non-U.S. companies and in
specific types of companies that provide environmental services, the Fund's
returns will be more volatile and differ, sometimes substantially, from the
overall U.S. market generally. The Fund's investments also have the risk that
government regulations or other action could negatively affect the business of
environmental companies.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
5 Years
(or Since Since
1 Year Inception) Inception)
- --------------------------------------------------------------------------------
Class A -7.60% 11.03% 4.29%*
- --------------------------------------------------------------------------------
Class B -6.16% -7.39%* n/a
- --------------------------------------------------------------------------------
Class C -4.72% -4.28%* n/a
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 24.05% 18.61%**
- -------------------------------------------------------------------------------
Since inception of Class B*** 30.86%
Since inception of Class C*** 28.13%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table for the periods
ended December 31, 1998 reflect imposition of the maximum front-end or
contingent deferred sales charges, and conversion of Class B shares to Class A
shares after the applicable period.
* Inception Dates: 6/1/90 for Class A shares. 10/6/97 for Class B shares.
11/5/97 for Class C shares.
** Index return from 6/30/90.
*** Index returns from month-end of applicable class inception date.
BAR CHART
- --------------------------------------------------------------------------------
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart iun the printed material.]
89 90 91 92 93 94 95 96 97 98
-----------------------------------------------------------------------------
n/a n/a 5.99 -15.18 -0.44 -2.12 19.30 29.95 20.28 -3.49
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 13.50%, 2nd quarter, 1996; and Worst Quarter was down
- -19.87%, 3rd quarter, 1998.
20
<PAGE>
SUMMARY OF PRINCIPAL RISKS
The value of your investment in a Fund will change with changes in the values of
that Fund's investments. Many factors can affect those values. In this Summary,
we describe the principal risks that may affect a Fund's portfolio as a whole.
These risks and the Funds particularly subject to these risks appear in a chart
at the end of the section. All Funds could be subject to additional principal
risks because the types of investments made by each Fund can change over time.
This Prospectus has additional descriptions of the types of investments that
appear in bold type in the discussions under "Description of Investment
Practices" or "Additional Risk Considerations." These sections also include more
information about the Funds, their investments, and related risks.
MARKET RISK
This is the risk that the value of a Fund's investments will fluctuate as the
stock or bond markets fluctuate and that prices overall will decline over short
or longer-term periods. All of the Alliance Stock Funds are subject to market
risk.
SECTOR RISK
This is the risk of investments in a particular industry sector. Market or
economic factors affecting that industry sector could have a major effect on the
value of a Fund's investments. Funds particularly subject to this risk are
Alliance Technology Fund, Alliance Utility Income Fund, Alliance Real Estate
Investment Fund, Alliance Worldwide Privatization Fund and Alliance Global
Environment Fund. This risk may be greater for Alliance Technology Fund because
technology stocks, especially those of smaller, less-seasoned companies, tend to
be more volatile than the overall market.
CAPITALIZATION RISK
This is the risk of investments in small- to mid-capitalization companies.
Investments in mid-cap companies may be more volatile than investments in
large-cap companies. Alliance Growth Fund and The Alliance Fund are particularly
subject to this risk. Investments in small-cap companies tend to be more
volatile than investments in large-cap or mid-cap companies. A Fund's
investments in smaller capitalization stocks may have additional risks because
these companies often have limited product lines, markets or financial
resources. Alliance Quasar Fund and Alliance Global Small Cap Fund are
particularly subject to this risk.
INTEREST RATE RISK
This is the risk that changes in interest rates will affect the value of a
Fund's investments in income-producing, fixed-income (i.e., debt) securities.
Increases in interest rates may cause the value of a Fund's investments to
decline and this decrease in value may not be offset by the higher interest rate
income. Interest rate risk is particularly applicable to Funds that invest in
fixed-income securities and is greater for those Alliance Stock Funds that
invest a substantial portion of their assets in fixed-income securities, such as
Alliance Growth and Income Fund, Alliance Balanced Shares and Alliance Utility
Income Fund. Interest rate risk is greater for those Funds that invest in
lower-rated securities or comparable unrated securities ("junk bonds") such as
Alliance Utility Income Fund. Alliance Real Estate Investment Fund also has more
exposure to interest rate risk because it invests in real estate industry
companies and in mortgage-backed securities.
CREDIT RISK
This is the risk that the issuer of a security or the other party to an
over-the-counter transaction will be unable or unwilling to make timely payments
of interest or principal, or to otherwise honor its obligations. The degree of
risk for a particular security may be reflected in its credit rating. Credit
risk is applicable to Funds that invest in fixed-income securities and is
greater for those Alliance Stock Funds that invest a substantial portion of
their assets in lower-rated securities, such as Alliance Utility Income Fund.
FOREIGN RISK
This is the risk of investments in issuers located in foreign countries. All
Alliance Stock Funds with foreign securities are subject to this risk,
including, in particular, Alliance New Europe Fund, Alliance Worldwide
Privatization Fund, Alliance International Premier Growth Fund, Alliance Global
Small Cap Fund, Alliance International Fund, Alliance Greater China '97 Fund,
Alliance All-Asia Investment Fund and Alliance Global Environment Fund. Fund's
investing in foreign securities may experience more rapid and extreme changes in
value than Funds with investments solely in securities of U.S. companies. This
is because the securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small number of
industries. Additionally, foreign securities issuers are usually not subject to
the same degree of regulation as U.S. issuers. Reporting, accounting, and
auditing standards of foreign countries differ, in some cases significantly,
from U.S. standards. Also, nationalization, expropriation or confiscatory
taxation, currency blockage, or political changes or diplomatic developments
could adversely affect a Fund's investments in a foreign country. In the event
of nationalization, expropriation, or other confiscation, a Fund could lose its
entire investment. To the extent a Fund invests a substantial amount of its
assets in a particular country, your investment has the risk that market changes
or other events affecting that country, including political instability and
unpredictable economic conditions, may have a particularly significant effect on
the Fund's net asset value.
COUNTRY OR GEOGRAPHIC RISK
This is the risk of investments in issuers located in a particular country or
geographic region. Market changes or other factors affecting that country or
region, including political instability and unpredictable economic conditions,
may have a particularly significant effect on a Fund's net asset value. The
Funds particularly subject to this risk are Alliance New Europe Fund, Alliance
Worldwide Privatization Fund, Alliance International Fund, Alliance Greater
China '97 Fund and Alliance All Asia Investment Fund.
21
<PAGE>
CURRENCY RISK
This is the risk that fluctuations in the exchange rates between the U.S. Dollar
and foreign currencies may negatively affect the value of a Fund's investments.
Funds with foreign securities are subject to this risk, including, in
particular, Alliance New Europe
Fund, Alliance Worldwide Privatization Fund, Alliance International Premier
Growth Fund, Alliance Global Small Cap Fund, Alliance International Fund,
Alliance Greater China '97 Fund, Alliance All-Asia Investment Fund and Alliance
Global Environment Fund.
MANAGEMENT RISK
Each Alliance Stock Fund is subject to management risk because it is an actively
managed investment portfolio. Alliance will apply its investment techniques and
risk analyses in making investment decisions for the Funds, but there is no
guarantee that its decisions will produce the intended result.
FOCUSED PORTFOLIO RISK
Funds, such as Alliance Premier Growth Fund and Alliance International Premier
Growth Fund, that invest in a limited number of companies, may have more risk
because changes in the value of a single security may have a more significant
effect, either negative or positive, on the Fund's net asset value. Similarly,
Alliance Greater China '97 Fund may have more risk because it is
"non-diversified," meaning that it can invest more of its assets in a smaller
number of companies than many other international funds.
ALLOCATION RISK
Alliance Balanced Shares has the risk that the allocation of its investments
between equity and debt securities may have a more significant effect on the
Fund's net asset value when one of these asset classes is performing more poorly
than the other.
PRINCIPAL RISKS BY FUND
- --------------------------------------------------------------------------------
The following chart summarizes the principal risks of each Fund. Risks not
marked for a particular Fund may, however, still apply to some extent to that
Fund at various times.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Capital- Interest Country or Focused
Market Sector ization Rate Credit Foreign Geographic Currency Manage- Portfolio Allocation
Fund Risk Risk Risk Risk Risk Risk Risk Risk ment Risk Risk Risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Premier Growth Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth Fund o o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Technology Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Quasar Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
The Alliance Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth and
Income Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Balanced Shares o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Utility Income Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Real Estate
Investment Fund o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance New Europe Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Worldwide
Privatization Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance International
Premier Growth Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Global Small Cap
Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance International Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Greater China '97
Fund o o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance All-Asia Investment
Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Global Environment
Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUNDS
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25% None None
Maximum Deferred Sales Charge (Load) None 4.0% 1.0%
(as a percentage of original purchase price or during the 1st during the
redemption proceeds, whichever is lower) year, decreasing 1st year,
1.0% annually to 0% thereafter
0% after the
4th year*
Exchange Fee None None None
</TABLE>
* Class B Shares of every Fund automatically convert to Class A Shares after 8
years.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets) and
EXAMPLES
The Examples are to help you compare the cost of investing in the Funds with the
cost of investing in other funds. They assume that you invest $10,000 in each
Fund for the time periods indicated and then redeem all of your shares at the
end of those periods. They also assume that your investment has a 5% return
each year, that the Fund's operating expenses stay the same and that all
dividends and distributions are reinvested. Your actual costs may be higher or
lower.
<TABLE>
<CAPTION>
Operating Expenses Examples
- -------------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Premier
Growth Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 580 $ 631 $ 231 $ 331 $ 231
Rule 12b-1 fees .33% 1.00% 1.00% After 3 years $ 906 $ 912 $ 712 $ 712 $ 712
Other expenses .26% .28% .28% After 5 years $1,254 $1,220 $1,220 $1,220 $1,220
---- ---- ---- After 10 years $2,224 $2,442(b) $2,442(b) $2,615 $2,615
Total fund
operating expenses 1.59% 2.28% 2.28%
==== ==== ====
Alliance Growth Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .70% .70% .70% After 1 year $ 544 $ 597 $ 197 $ 296 $ 196
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $ 796 $ 804 $ 609 $ 606 $ 606
Other expenses .22% .24% .23% After 5 years $1,067 $1,047 $1,047 $1,042 $1,042
---- ---- ---- After 10 years $1,840 $2,078(b) $2,078(b) $2,254 $2,254
Total fund
operating expenses 1.22% 1.94% 1.93%
==== ==== ====
Alliance Technology Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.02% 1.02% 1.02% After 1 year $ 587 $ 642 $ 242 $ 343 $ 243
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $ 926 $ 945 $ 745 $ 748 $ 748
Other expenses .34% .37% .38% After 5 years $1,289 $1,275 $1,275 $1,280 $1,280
---- ---- ---- After 10 years $2,307 $2,545(b) $2,545(b) $2,736 $2,736
Total fund
operating expenses 1.66% 2.39% 2.40%
==== ==== ====
Alliance Quasar Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.04% 1.04% 1.04% After 1 year $ 582 $ 642 $ 242 $ 341 $ 241
Rule 12b-1 fees .26% 1.00% 1.00% After 3 years $ 911 $ 945 $ 745 $ 742 $ 742
Other expenses .31% .35% .34% After 5 years $1,264 $1,275 $1,275 $1,270 $1,270
---- ---- ---- After 10 years $2,255 $2,533(b) $2,5332(b) $2,716 $2,716
Total fund
operating expenses 1.61% 2.39% 2.38%
==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 25.
23
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- -------------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Alliance Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .67% .67% .67% After 1 year $ 526 $ 587 $ 187 $ 287 $ 187
Rule 12b-1 fees .20% 1.00% 1.00% After 3 years $ 739 $ 779 $ 579 $ 579 $ 579
Other expenses .16% .17% .17% After 5 years $ 969 $ 995 $ 995 $ 995 $ 995
----- ----- ----- After 10 years $1,631 $1,946(b) $1,946(b) $2,159 $2,159
Total fund
operating expenses 1.03% 1.84% 1.84%
===== ===== =====
Alliance Growth and
Income Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .48% .48% .48% After 1 year $ 516 $ 575 $ 175 $ 275 $ 175
Rule 12b-1 fees .23% 1.00% 1.00% After 3 years $ 709 $ 742 $ 542 $ 542 $ 542
Other expenses .22% .24% .24% After 5 years $ 918 $ 933 $ 933 $ 933 $ 933
----- ----- ----- After 10 years $1,519 $1,821(b) $1,821(b) $2,030 $2,030
Total fund
operating expenses .93% 1.72% 1.72%
===== ===== =====
Alliance Balanced Shares Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .63% .63% .63% After 1 year $ 553 $ 609 $ 209 $ 308 $ 208
Rule 12b-1 fees .24% 1.00% 1.00% After 3 years $ 820 $ 846 $ 646 $ 643 $ 643
Other expenses .43% .43% .42% After 5 years $1,108 $1,108 $1,108 $1,103 $1,103
----- ----- ----- After 10 years $1,926 $2,195(b) $2,195(b) $2,379 $2,379
Total fund
operating expenses 1.30% 2.06% 2.05%
===== ===== =====
Alliance Utility Income Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .75% .75% .75% After 1 year $ 571 $ 623 $ 223 $ 323 $ 223
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $ 879 $ 888 $ 688 $ 688 $ 688
Other expenses 1.43% 1.46% 1.47% After 5 years $1,209 $1,180 $1,180 $1,180 $1,180
----- ----- ----- After 10 years $2,139 $2,357(b) $2,357(b) $2,534 $2,534
Total fund
operating expenses 2.48% 3.21% 3.22%
===== ===== =====
Waiver and/or expense
reimbursement (a) (.98)% (1.01)% (1.02)%
===== ===== =====
Net expenses 1.50% 2.20% 2.20%
===== ===== =====
Alliance Real Estate
Investment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .90% .90% .90% After 1 year $ 576 $ 629 $ 229 $ 329 $ 229
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $ 894 $ 906 $ 706 $ 706 $ 706
Other expenses .35% .36% .36% After 5 years $1,234 $1,210 $1,210 $1,210 $1,210
----- ----- ----- After 10 years $2,192 $2,417(b) $2,417(b) $2,595 $2,595
Total fund
operating expenses 1.55% 2.26% 2.26%
===== ===== =====
Alliance New Europe Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.02% 1.02% 1.02% After 1 year $ 605 $ 659 $ 259 $ 359 $ 259
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $ 982 $ 996 $ 796 $ 796 $ 796
Other expenses .53% .53% .54% After 5 years $1,383 $1,360 $1,360 $1,360 $1,360
----- ----- ----- After 10 years $2,502 $2,722(b) $2,722(b) $2,895 $2,895
Total fund
operating expenses 1.85% 2.56% 2.56%
===== ===== =====
Alliance Worldwide
Privatization Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 593 $ 648 $ 248 $ 347 $ 247
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $ 947 $ 964 $ 764 $ 761 $ 761
Other expenses .43% .45% .44% After 5 years $1,324 $1,306 $1,306 $1,301 $1,301
----- ----- ----- After 10 years $2,379 $2,609(b) $2,609(b) $2,776 $2,776
Total fund
operating expenses 1.73% 2.45% 2.44%
===== ===== =====
Alliance International
Premier Growth Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 667 $ 723 $ 323 $ 423 $ 323
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $1,170 $1,186 $ 986 $ 986 $ 986
Other expenses 3.89% 4.14% 4.00% After 5 years $1,699 $1,674 $1,674 $1,674 $1,674
----- ----- ----- After 10 years $3,140 $3,343(b) $3,343(b) $3,503 $3,503
Total fund
operating expenses 5.19% 6.14% 6.00%
===== ===== =====
Waiver and/or expense
reimbursement (a) (2.69)% (2.94)% (2.80)%
===== ===== =====
Net expenses 2.50% 3.20% 3.20%
===== ===== =====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 25.
24
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- -------------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Global
Small Cap Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 635 $ 691 $ 291 $ 391 $ 291
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $1,072 $1,092 $ 892 $ 892 $ 892
Other expenses .86% .88% .88% After 5 years $1,535 $1,518 $1,518 $1,518 $1,518
------ ------ ------ After 10 years $2,812 $3,034(b) $3,034(b) $3,204 $3,204
Total fund
operating expenses 2.16% 2.88% 2.88%
====== ====== ======
Alliance International Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
Fund ------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 586 $ 652 $ 252 $ 351 $ 251
Rule 12b-1 fees .21% 1.00% 1.00% After 3 years $ 923 $ 976 $ 776 $ 773 $ 773
Other expenses .59% .64% .63% After 5 years $1,284 $1,326 $1,326 $1,321 $1,321
------ ------ ------ After 10 years $2,296 $2,619(b) $2,619(b) $2,816 $2,816
Total fund
operating expenses 1.80% 2.64% 2.63%
====== ====== ======
Waiver and/or expense
reimbursement (a) (.15)% (.15)% (.15)%
====== ====== ======
Net expenses 1.65% 2.49% 2.48%
====== ====== ======
Alliance Greater
China '97 Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 669 $ 725 $ 325 $ 425 $ 325
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $1,176 $1,192 $ 992 $ 992 $ 992
Other expenses 16.97% 17.18% 17.37% After 5 years $1,709 $1,683 $1,683 $1,683 $1,683
------ ------ ------ After 10 years $3,157 $3,362(b) $3,362(b) $3,522 $3,522
Total fund
operating expenses 18.27% 19.18% 19.37%
====== ====== ======
Waiver and/or expense
reimbursement (a) (15.75)% (15.96)% (16.15)%
====== ====== ======
Net expenses 2.52% 3.22% 3.22%
====== ====== ======
Alliance All-Asia
Investment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 715 $ 772 $ 372 $ 472 $ 372
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $1,313 $1,332 $1,132 $1,132 $1,332
Other expenses After 5 years $1,935 $1,911 $1,911 $1,911 $1,911
Administration fees .15% .15% .15% After 10 years $3,602 $3,797(b) $3,797(b) $3,950 $3,950
Other operating
expenses 3.18% 3.24% 3.27%
------ ------ ------
Total other expenses 3.33% 3.39% 3.42%
------ ------ ------
Total fund operating
expenses 4.63% 5.39% 5.42%
====== ====== ======
Waiver and/or expense
reimbursement (a) (1.63)% (1.69)% (1.72)%
====== ====== ======
Net expenses 3.00% 3.70% 3.70%
====== ====== ======
Alliance Global
Environment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees (c) 1.10% 1.10% 1.10% After 1 year $ 899 $ 974 $ 574 $ 661 $ 561
Rule 12b-1 fees .30% 1.00% 1.00% After 3 years $1,848 $1,908 $1,708 $1,673 $1,673
Other expenses (c) 3.55% 3.66% 3.53% After 5 years $2,798 $2,826 $2,826 $2,771 $2,771
------ ------ ------ After 10 years $5,176 $5,402(b) $5,402(b) $5,456 $5,456
Total fund
operating expenses 4.95% 5.76% 5.63%
====== ====== ======
</TABLE>
- --------------------------------------------------------------------------------
+ Assumes redemption at end of period.
++ Assumes no redemption at end of period.
(a) Reflects Alliance's contractual waiver of a portion of its advisory fee
and/or reimbursement of a portion of the Fund's operating expenses.
(b) Assumes Class B shares convert to Class A shares after eight years.
(c) Management fees and other expenses for Alliance Global Environment Fund
are based on estimated amounts for its current fiscal year.
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
GLOSSARY
- --------------------------------------------------------------------------------
This Prospectus uses the following terms.
TYPES OF SECURITIES
Convertible securities are fixed-income securities that are convertible into
common stock.
Debt securities are bonds, debentures, notes, bills, loans, other direct debt
instruments, and other fixed, floating and variable rate debt obligations, but
do not include convertible securities.
Depositary receipts include American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and other types of depositary receipts.
Equity securities include (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.
Fixed-income securities are debt securities and dividend-paying preferred
stocks, including floating rate and variable rate instruments.
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.
Qualifying bank deposits are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks that have total assets of more than
$1 billion and are members of the Federal Deposit Insurance Corporation.
Rule 144A securities are securities that may be resold under Rule 144A of the
Securities Act.
U.S. Government securities are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
TYPES OF COMPANIES
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,
the Hong Kong Special Administrative Region of the People's Republic of China
(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.
Beneficiary Companies are Eligible Companies whose principal businesses lie
outside the environmental sector but nevertheless anticipate environmental
regulations or consumer preferences through the development of new products,
processes or services that are intended to contribute to a cleaner and healthier
environment, such as companies that anticipate the demand for plastic
substitutes, aerosol substitutes, alternative fuels and processes that generate
less hazardous waste.
Eligible Companies are companies expected to benefit from advances or
improvements in products, processes or services intended to foster the
protection of the environment.
Environmental companies are Eligible Companies that have a principal business
involving the sale of systems or services intended to foster environmental
protection, such as waste treatment and disposal, remediation, air pollution
control and recycling.
Greater China company is an entity that (i) is organized under the laws of a
Greater China country and conducts business in a Greater China country, (ii)
derives 50% or more of its total revenues from businesses in Greater China
countries, or (iii) issues equity or debt securities that are traded principally
on a stock exchange in a Greater China country. A company of a particular
Greater China country is a company that meets any of these criteria with respect
to that country.
Greater China countries are the People's Republic of China ("China"), the Hong
Kong Special Administrative Region of the People's Republic of China ("Hong
Kong") and the Republic of China ("Taiwan").
Non-U.S. Company is an entity that (i) is organized under the laws of a foreign
country and conducts business in a foreign country, (ii) derives 50% or more of
its total revenues from business in foreign countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in a foreign
country.
RATING AGENCIES, RATED SECURITIES and INDEXES
Duff & Phelps is Duff & Phelps Credit Rating Co.
EAFE Index is Morgan Stanley Capital International Europe, Australasia and Far
East ("EAFE") Index.
Fitch is Fitch IBCA, Inc.
Investment grade securities are fixed-income securities rated Baa and above by
Moody's or B 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."
Moody's is Moody's Investors Service, Inc.
26
<PAGE>
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.
S&P is Standard & Poor's Ratings Services.
S&P 500 Index is S&P's 500 Composite Stock Price Index, a widely recognized
unmanaged index of market activity.
OTHER
1940 Act is the Investment Company Act of 1940, as amended.
Code is the Internal Revenue Code of 1986, as amended.
Commission is the Securities and Exchange Commission.
Exchange is the New York Stock Exchange.
Securities Act is the Securities Act of 1933, as amended.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
This section of the Prospectus provides a more complete description of each
Fund's investment objectives, principal strategies and risks. Of course, there
can be no assurance that any Fund will achieve its investment objective.
Please note that:
o Additional discussion of the Funds' investments, including the risks of
the investments, can be found in the discussion under Description of
Investment Practices following this section.
o The description of the principal risks for a Fund may include risks
described in the Summary of Principal Risks above. Additional information
about the risks of investing in a Fund can be found in the discussion
under Additional Risk Considerations.
o Additional descriptions of each Fund's strategies, investments and risks
can be found in the Fund's Statement of Additional Information or SAI.
o Except as noted, (i) the Funds' investment objectives are "fundamental"
and cannot be changed without a shareholder vote, and (ii) the Funds'
investment policies are not fundamental and thus can be changed without a
shareholder vote.
INVESTMENT OBJECTIVES AND POLICIES
DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range of
alternative approaches to investing in the U.S. equity markets.
Alliance Premier Growth Fund
Alliance Premier Growth Fund 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. 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. A U.S.
company is a company that is organized under United States law, has its
principal office in the United States and issues equity securities that are
traded principally in the United States. Normally, about 40-50 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. The Fund is designed for those
seeking to accumulate capital over time with less volatility than that
associated with investment in smaller companies.
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 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 included in the S&P 500 Index.
The Fund also may:
o invest up to 20% of its net assets in convertible securities;
o invest up to 5% of its net assets in rights or warrants;
o invest up to 15% of its total assets in foreign securities;
o purchase and sell exchange-traded index options and stock index futures
contracts; and
27
<PAGE>
o write covered exchange-traded call options on its securities of up to 15%
of its total assets, and purchase and sell exchange-traded call and put
options on common stocks written by others of up to, for all options, 10%
of its total assets.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment has the risk that changes in the value of a single
security may have a more significant effect, either negative or positive, on the
Fund's net asset value.
Alliance Growth Fund
Alliance Growth Fund seeks long-term growth of capital. Current income is only
an incidental consideration. The Fund seeks to achieve its objective by
investing primarily in equity securities of companies with favorable
earnings outlooks and long-term growth rates that are expected to exceed that of
the U.S. economy over time. The Fund's investment objective is not fundamental.
The Fund also may invest up to 25% of its total assets in lower-rated
fixed-income securities and convertible bonds. The Fund generally will not
invest in securities rated at the time of purchase 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. From time to time, however, 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 of comparable investment quality
if there are prospects for an upgrade or a favorable conversion into equity
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 credit quality
of the security has deteriorated), the Fund may continue to hold the security if
such investment is considered appropriate under the circumstances.
The Fund also may:
o invest in zero-coupon and payment-in-kind bonds;
o invest in foreign securities although not generally in excess of 15% of
its total assets;
o buy or sell foreign currencies, options on foreign currencies, and foreign
currency futures contracts (and related options) and deal in forward
foreign currency exchange contracts;
o enter into forward commitments;
o buy and sell stock index futures contracts and options on futures
contracts and on stock indices;
o purchase and sell futures contracts and options on futures contracts and
U.S. Treasury securities;
o write covered call and put options;
o purchase and sell put and call options;
o make loans of portfolio securities of up to 25% of its total assets; and
o enter into repurchase agreements of up to 25% of its total assets.
Alliance Technology Fund
Alliance Technology Fund emphasizes growth of capital and invests for capital
appreciation. Current income is only an incidental consideration. 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, in U.S.
securities and up to 10% of its total assets 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 also may:
o write covered call options on its securities of up to 15% of its total
assets and purchase exchange-listed call and put options, including
exchange-traded index put options of up to, for all options, 10% of its
total assets;
o invest up to 10% of its total assets in warrants; and
o make loans of portfolio securities of up to 30% of its total assets.
Because the Fund invests primarily in technology companies, factors affecting
those types of companies could have a significant effect on the Fund's net asset
value. In addition, the Fund's investments in technology stocks, especially
those of smaller, less seasoned companies, tend to be more volatile than the
overall market. The Fund's investments in debt and foreign securities have
credit risk and foreign risk.
Alliance Quasar Fund
Alliance Quasar Fund seeks growth of capital by pursuing aggressive investment
policies. The Fund invests for capital appreciation and only incidentally for
current income. The Fund's practice of selecting securities based on the
possibility of appreciation cannot,of course, ensure against a 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 for the
Fund, 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
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preferred stocks. The Fund invests in listed and unlisted U.S. and foreign
securities. The Fund can periodically invest in the securities of companies that
are expected to appreciate due to a development particularly or uniquely
applicable to that company regardless of general business conditions or
movements of the market as a whole.
The Fund also may:
o make short sales of securities against the box but not more than 15% of
its net assets may be deposited on short sales; and
o write covered call options of up to 15% of its total assets and purchase
and sell put and call options written by others of up to, for all options,
10% of its total assets.
Investments in smaller companies may have more risk because they tend to be more
volatile than the overall stock market. The Fund's investments in
non-convertible bonds, preferred stocks and foreign stocks may have credit risk
and foreign risk.
The Alliance Fund
The Alliance Fund 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. The
Fund also may invest in other types of securities such as convertible
securities, investment grade instruments, U.S. Government securities and high
quality, short-term obligations such as repurchase agreements, bankers'
acceptances and domestic certificates of deposit. The Fund may invest without
limit in foreign securities. The Fund generally does not effect portfolio
transactions in order to realize short-term trading profits or exercise
control.
The Fund also may:
o write exchange-traded covered call options on up to 25% of its total
assets;
o make secured loans of portfolio securities of up to 25% of its total
assets;
o enter into repurchase agreements of up to seven days' 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;
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.
TOTAL RETURN FUNDS
The Total Return Funds provide a range of investment alternatives to investors
seeking both growth of capital and current income.
Alliance Growth and Income Fund
Alliance Growth and Income Fund seeks appreciation through investments primarily
in dividend-paying common stocks of good quality. The Fund also may invest in
fixed-income securities and convertible securities.
The Fund also may try to realize income by writing covered call options listed
on domestic securities exchanges. The Fund also invests in foreign securities.
Since the purchase of foreign securities entails certain political and economic
risks, the Fund restricts its investments in these securities to issues of high
quality. The Fund also may purchase and sell financial forward and futures
contracts and options on these securities for hedging purposes.
Alliance Balanced Shares
Alliance Balanced Shares 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 invests in equity securities of high-quality, financially strong,
dividend-paying companies. Normally, the Fund's investments will consist of
about 60% in stocks, but stocks may make up to 75% of its investments. The Fund
will invest at least 25% of its total assets in investment grade debt
securities. These investments may include short- and long-term debt securities,
preferred stocks, convertible debt securities and convertible preferred stocks
to the extent that their values are attributable to their fixed-income
characteristics. Other than this restriction, the percentage of the Fund's
assets invested in each type of security will vary.
The Fund invests in U.S. Government securities, bonds, senior debt securities,
and preferred and common stocks in such proportions and of such type as Alliance
deems 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.
The Fund also may:
o enter into contracts for the purchase or sale for future delivery of
foreign currencies;
o purchase and write put and call options on foreign currencies and enter
into forward foreign currency exchange contracts for hedging purposes; and
o subject to market conditions, write covered call options listed on a
domestic exchange to realize income.
As a balanced fund, the Fund has the risk that the allocation of its investments
between equity and debt securities may have a more significant effect on the
Fund's net asset value when one of these asset classes is performing more poorly
than the other.
Alliance Utility Income Fund
Alliance Utility Income Fund seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. As a fundamental policy, the Fund normally invests at least
65% of its total assets in securities of companies in the utilities industry.
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The Fund seeks 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. 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.
The Fund may invest in securities of both U.S. and foreign issuers, although the
Fund will invest no more than 15% of its total assets in issuers in any one
foreign country. The Fund invests at least 65% of its total assets 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 invest up to 35% of its net assets in lower-rated 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 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. These securities include U.S. Government securities and
repurchase agreements for those securities, 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 also may:
o invest up to 30% of its net assets in convertible securities;
o invest up to 5% of its net assets in rights or warrants;
o 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";
o write covered call and put options, purchase call and put options on
securities of the types in which it is permitted to invest that are
exchange-traded and over-the-counter, and write uncovered call options for
cross-hedging purposes;
o purchase and sell exchange-traded options on any securities index composed
of the types of securities in which it may invest;
o 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;
o purchase and write call and put options on foreign currencies traded on
U.S. and foreign exchanges or over-the-counter for hedging purposes;
o purchase or sell forward contracts;
o enter into interest rate swaps and purchase or sell interest rate caps and
floors;
o enter into forward commitments;
o enter into standby commitment agreements;
o make short sales of securities or maintain a short position;
o make secured loans of portfolio securities of up to 20% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
The Fund's principal risks include those that arise from its investing primarily
in electric utility companies. Factors affecting that industry sector can have a
significant effect on the Fund's net asset value. The U.S. 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, however, could
increase costs or impair the ability of nuclear and conventionally fueled
generating facilities to operate their facilities and reduce their ability to
make dividend payments on their securities. 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
ordinarily lag behind changes in financing costs and can favorably or
unfavorably affect the earnings or dividend pay-outs of utilities stocks
depending upon whether the rates and costs are declining or rising.
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 also can be no assurance that regulatory policies or accounting
standards changes will not negatively affect utility companies' earnings or
dividends. Utility companies are subject to regulation by various authorities
and may be affected by the imposition of special tariffs and changes in tax
laws. To the extent that rates are established or reviewed by governmental
authorities, utility companies are subject to the risk that such authorities
will not authorize increased rates. Because of the Fund's policy of
concentrating its investments in utility companies, the Fund is more susceptible
than most other mutual funds to economic, political or regulatory occurrences
affecting the utilities industry.
Foreign utility companies, like those in the U.S., are generally subject to
regulation, although the regulation may or may not be comparable to domestic
regulations. Foreign utility companies in certain countries may be more heavily
regulated by their
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respective governments than utility companies located in the U.S. As in the
U.S., utility companies generally are required to seek government approval for
rate increases. In addition, many foreign utility companies use fuels that cause
more pollution than those used in the U.S. and 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.
Increases in interest rates may cause the value of the Fund's investments to
decline and the decrease in value may not be offset by higher interest rate
income. The Fund's investments in lower-rated securities may be subject to more
credit risk than a fund that invests in higher-rated securities.
Alliance Real Estate Investment Fund
Alliance Real Estate Investment Fund seeks a total return from long-term growth
of capital and from income principally through investing in a portfolio of
equity securities of issuers that are primarily engaged in or related to the
real estate industry.
The Fund normally invests at least 65% of its total assets in equity securities
of real estate investment trusts, or REITs, and other real estate industry
companies. A "real estate industry company" is a company that derives at least
50% of its gross revenues or net profits from the ownership, development,
construction, financing, management, or sale of commercial, industrial, or
residential real estate or interests in these properties. The Fund invests in
equity securities that include common stock, shares of beneficial interest of
REITs, and securities with common stock characteristics, such as preferred stock
or convertible securities ("Real Estate Equity Securities").
The Fund may invest up to 35% of its total assets in (a) securities that
directly or indirectly represent participations in, or are collateralized by and
payable from, mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real estate mortgage
investment conduit certificates ("REMICs") and collateralized mortgage
obligations ("CMOs") and (b) short-term investments. These securities are
described below.
In selecting Real Estate Equity Securities, Alliance's analysis will focus on
determining the degree to which the company involved can achieve sustainable
growth in cash flow and dividend paying capability. Alliance believes that the
primary determinant of this capability is the economic viability of property
markets in which the company operates and that the secondary determinant of this
capability is the ability of management to add value through strategic focus and
operating expertise. The Fund will purchase Real Estate Equity Securities when,
in the judgment of Alliance, their market price does not adequately reflect this
potential. In making this determination, Alliance will take into account
fundamental trends in underlying property markets as determined by proprietary
models, site visits conducted by individuals knowledgeable in local real estate
markets, price-earnings ratios (as defined for real estate companies), cash flow
growth and stability, the relationship between asset value and market price of
the securities, dividend payment history, and such other factors that Alliance
may determine from time to time to be relevant. Alliance will attempt to
purchase for the Fund Real Estate Equity Securities of companies whose
underlying portfolios are diversified geographically and by property type.
The Fund may invest without limitation in shares of REITs. REITs are pooled
investment vehicles that invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs, or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Similar to investment companies
such as the Fund, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Code. The Fund will
indirectly bear its proportionate share of expenses incurred by REITs in which
the Fund invests in addition to the expenses incurred directly by the Fund.
The Fund's investment strategy with respect to Real Estate Equity Securities is
based on the premise that property market fundamentals are the primary
determinant of growth underlying the performance of Real Estate Equity
Securities. Value and management further distinguishes the most attractive Real
Estate Equity Securities. The Fund's research and investment process is designed
to identify those companies with strong property fundamentals and strong
management teams. This process is comprised of real estate market research,
specific property inspection, and securities analysis. Alliance believes that
this process will result in a portfolio that will consist of Real Estate Equity
Securities of companies that own assets in the most desirable markets across the
country, diversified geographically and by property type.
To implement the Fund's research and investment process, Alliance has retained
the consulting services of CB Richard Ellis, Inc. ("CBRE"), a publicly held
company and the largest real estate services company in the United States.
CBRE's business includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory activities. The
universe of property-owning real estate industry firms consists of approximately
142 companies of sufficient size and quality to merit consideration for
investment by the Fund. As consultant to Alliance, CBRE provides access to its
proprietary model, REIT-Score, which analyzes the approximately 18,000
properties owned by these 142 companies. Using proprietary databases and
algorithms, CBRE analyzes local market rent, expenses, occupancy trends, market
specific transaction pricing, demographic and economic trends, and leading
indicators of real estate supply such as building permits. Over 1,000 asset-type
specific geographic markets are analyzed and ranked on a relative scale by CBRE
in compiling its REIT-Score database. The relative attractiveness of these real
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estate industry companies is similarly ranked based on the composite rankings of
the properties they own.
Once the universe of real estate industry companies has been distilled through
the market research process, CBRE's local market presence provides the
capability to perform site specific inspections of key properties. This analysis
examines specific location, condition, and sub-market trends. CBRE's use of
locally based real estate professionals provides Alliance with a window on the
operations of the portfolio companies as information can immediately be put in
the context of local market events. Only those companies whose specific property
portfolios reflect the promise of their general markets will be considered for
investment by the Fund.
Alliance further screens the universe of real estate industry companies by using
rigorous financial models and by engaging in regular contact with management of
targeted companies. Each management's strategic plan and ability to execute the
plan are determined and analyzed. Alliance makes extensive use of CBRE's network
of industry analysts in order to assess trends in tenant industries. This
information is then used to further evaluate management's strategic plans.
Financial ratio analysis is used to isolate those companies with the ability to
make value-added acquisitions. This information is combined with property market
trends and used to project future earnings potential.
The Fund may invest in short-term investments including: corporate commercial
paper and other short-term commercial obligations, in each case rated or issued
by companies with similar securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; obligations (including
certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks with securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities with
remaining maturities not exceeding 18 months.
The Fund may invest in debt securities rated BBB or higher by S&P or Baa or
higher by Moody's or, if not rated, of equivalent credit quality as determined
by Alliance. The Fund expects that it will not retain a debt security that is
downgraded below BBB or Baa or, if unrated, determined by Alliance to have
undergone similar credit quality deterioration, subsequent to purchase by the
Fund.
The Fund also may:
o invest up to 15% of its net assets in convertible securities;
o enter into forward commitments;
o enter into standby commitment agreements; and
o make short sales of securities or maintain a short position but only if at
all times when a short position is open not more than 25% of the Fund's
net assets is held as collateral for such sales.
o invest up to 10% of its net assets in rights or warrants;
o make loans of portfolio securities of up to 25% of its total assets; and
o enter into repurchase agreements of up to seven days' duration.
Because the Fund invests a substantial portion of its assets in the real estate
market, it is subject to many of the same risks involved in direct ownership of
real estate. For example, the value of real estate could decline due to a
variety of factors affecting the real estate market generally, such as
overbuilding, increases in interest rates, or declines in rental rates. In
addition, REITs are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by changes in tax
laws.
The Fund's investments in mortgage-backed securities have prepayment risk, which
is the risk that mortgage loans will be prepaid when interest rates decline and
the Fund will have to reinvest in securities with lower interest rates. This
risk causes mortgage-backed securities to have significantly greater price and
yield volatility than traditional fixed-income securities. The Fund's
investments in REMICs, CMOs and other types of mortgage-backed securities may be
subject to special risks that are described under "Description of Investment
Practices."
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors the opportunity to participate in the
potential for long-term capital appreciation available from investment in
foreign securities.
Alliance New Europe Fund
Alliance New Europe Fund 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 these securities. The Fund may invest up to 35% of
its total assets 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. In addition, the emergence of new market economies in Europe and
the broadening and strengthening of other European economies may significantly
accelerate economic development. The Fund invests in companies that Alliance
believes possess rapid growth potential. The Fund emphasizes investments in
larger, established companies, but also invests in smaller, emerging companies.
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
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investment opportunities among these companies and, as opportunities
become available, within the former "east bloc."The Fund will not invest more
than 20% of its total assets in these companies, or more than 10% of its total
assets in issuers based in any one country.
The Fund diversifies its investments among a number of European countries and
normally invests in companies based in at least three of these countries. The
Fund, however, 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 companies 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.
The Fund also may:
o invest up to 20% of its total assets in rights or warrants;
o invest in depositary receipts or other securities convertible into
securities of companies based in European countries, debt securities of
supranational entities denominated in the Euro or the currency of any
European country, debt securities denominated in the Euro of an
issuer in a European country (including supranational issuers), and
"semi-governmental securities";
o purchase and sell forward contracts;
o write covered call or put options and sell and purchase exchange-traded
put and call options, including exchange-traded index options;
o 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;
o purchase and write put options on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
o enter into forward commitments;
o enter into standby commitment agreements; and
o make secured loans of portfolio securities of up to 30% of its total
assets.
The Fund's investments in non-U.S. countries and smaller countries may have more
risk because they tend to be more volatile than the overall stock market. To the
extent the Fund invests a substantial amount of its assets in a particular
European country, your investment is subject to the risk that market changes or
other events affecting that country may have a more significant effect on the
Fund's net asset value. The Fund's investments in U.S. Dollar- or foreign
currency-denominated fixed-income securities have interest rate and credit risk.
Alliance Worldwide Privatization Fund
Alliance Worldwide Privatization Fund 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. These companies include those in Western
Europe and Scandinavia, Australia, New Zealand, Latin America, Asia, 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.
Privatization is a process through which the ownership and control of companies
or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all or
a portion of its interest in a state enterprise to some form of private
ownership. Governments and states with established economies, including France,
Great Britain, Germany, and Italy, and those with developing economies,
including Argentina, Mexico, Chile, Indonesia, Malaysia, Poland, and Hungary,
are engaged in privatizations. The Fund will invest in any country believed to
present attractive investment opportunities.
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 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.
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. The Fund may invest up to 15% of its total assets in issuers in any
one foreign
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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.
The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities. The Fund may invest up to 5% of its net assets in
lower-rated 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 also may:
o invest up to 20% of its total assets in rights or warrants;
o write covered call and put options, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for
cross-hedging purposes;
o 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;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into forward commitments;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain a short position;
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
Investments in non-U.S. companies and smaller companies may have more risk
because they tend to be more volatile than the overall stock market. The Fund's
investments in debt securities and convertible securities have interest risk and
credit risk.
Alliance International Premier Growth Fund
Alliance International Premier Growth Fund seeks long term capital appreciation
by investing predominately in the equity securities of a limited number of
carefully selected non-U.S. companies that are judged likely to achieve superior
earnings growth. As a matter of fundamental policy, the Fund will invest under
normal circumstances at least 85% of its total assets in equity securities. The
Fund makes investments based upon their potential for capital appreciation.
Current income is incidental to that objective.
In the main, the Fund's investments will be in comparatively large, high-quality
companies. Normally, about 60 companies will be represented in the Fund's
portfolio, and the 30 most highly regarded of these companies usually will
constitute approximately 70% of the Fund's net assets. The Fund thus differs
from more typical international equity mutual funds by focusing on a relatively
small number of intensively researched companies. The Fund is designed for
investors seeking to accumulate capital over time. Because of market risks
inherent in any investment, the selection of securities on the basis of their
appreciation possibilities cannot ensure against possible loss in value. There
is, of course, no assurance that the Fund's investment objective will be met.
Alliance expects the market capitalization of the companies represented in the
Fund's portfolio normally will be in the range of the average weighted market
capitalization of the companies comprising the EAFE Index. As of December 31,
1998, the average weighted market capitalization of companies in the EAFE Index
was approximately $35 billion.
Within the investment framework of the Fund, Alliance's Large Cap Growth Group,
headed by Alfred Harrison, Alliance's Vice Chairman, has responsibility for
managing the Fund's portfolio. As discussed below, in selecting the Fund's
portfolio investments Alliance's Large Cap Growth Group will follow a
structured, disciplined research and investment process that is essentially
similar to that which it employs in managing Premier Growth Fund.
In managing the Fund's assets, Alliance's investment strategy will emphasize
stock selection and investment in the securities of a limited number of issuers.
Alliance depends heavily upon the fundamental analysis and research of its large
global equity research team situated in numerous locations around the world. Its
global equity analysts follow a research universe of approximately 900
companies. As one of the largest multinational investment management firms,
Alliance has access to considerable information concerning the companies in its
research universe, an in-depth understanding of the products, services, markets,
and competition of these companies, and a good knowledge of their management.
Research emphasis is placed on the identification of companies whose superior
prospective earnings growth is not fully reflected in current market valuations.
Alliance constantly adds to and deletes from this universe as fundamentals and
valuations change. Alliance's global equity analysts rate companies in three
categories. The performance of each analyst's ratings is an important
determinant of his or her incentive compensation. The equity securities of
"one-rated" companies are expected to significantly outperform the local market
in local currency terms. All equity securities purchased for the Fund's
portfolio will be selected from the universe of approximately 100 "one-rated"
companies. As noted above, the Fund usually invests approximately 70% of its
net assets in the approximately 30 most highly regarded of these companies.
The Fund's portfolio emphasis upon particular industries or sectors will be a
by-product of the stock selection process rather than the result of assigned
targets or ranges.
The Fund's diversifies its investments among at least four, and usually
considerably more, countries. No more than 15% of the Fund's total assets will
be invested in issuers in any one foreign country, except that the Fund may
invest up to 25% of its total assets in issuers in each of Canada, France,
Germany, Italy, Japan, The Netherlands, Switzerland, and the United Kingdom.
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Within these limits, geographic distribution of the Fund's investments among
countries or regions also will be a product of the stock selection process
rather than a predetermined allocation. To the extent that the Fund
concnetrates its assets within one region, the Fund may be subject to any
special risks that may be associated with that region. While the Fund may
engage in currency hedging programs in periods in which Alliance perceives
extreme exchange rate risk, the Fund normally will not make significant use of
currency hedging strategies.
In the management of the Fund's investment portfolio, Alliance will seek to
utilize market volatility judiciously (assuming no change in company
fundamentals) to adjust the Fund's portfolio positions. To the extent consistent
with local market liquidity considerations, the Fund will strive to capitalize
on apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. Under normal
circumstances, the Fund will remain substantially fully invested in equity
securities and will not take significant cash positions for market timing
purposes. Rather, through "buying into declines" and "selling into strength,"
Alliance seeks superior relative returns over time.
The Fund also may:
o invest up to 20% of its total assets in convertible securities;
o invest up to 20% of its total assets in rights or warrants;
o write covered call and put options, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for cross
hedging purposes;
o 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 such future contracts;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into standby commitment agreements;
o enter into forward commitments;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain short positions of no more than
5% of its net assets as collateral for short sales; and
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment also has the risk that changes in the value of a
single security may have a more significant effect, either negative or positive,
on the Fund's net asset value.
Alliance Global Small Cap Fund
Alliance Global Small Cap Fund 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 $1.5 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 companies. These companies are located in at least
three countries, one of which may be the U.S. The Fund may invest up to 35% of
its total assets 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.
The Fund also may:
o invest up to 20% of its total assets in warrants to purchase equity
securities;
o invest in depositary receipts or other securities representing securities
of companies based in countries other than the U.S.;
o purchase or sell forward foreign currency contracts;
o write covered call options on its securities of up to 15% of its total
assets, and purchase exchange-traded call and put options, including put
options on market indices of up to, for all options, 10% of its total
assets; and
o make secured loans of portfolio securities of up to 30% of its total
assets.
One of the Fund's principal risks is its investments in smaller capitalization
companies. Alliance believes that smaller capitalization companies 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. For these reasons, the Fund's investments may have a greater
chance of loss than investments in securities of larger
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capitalization companies. In addition, transaction costs in small capitalization
stocks may be higher than in those of larger capitalization companies.
The Fund's investments in non-U.S. companies and in smaller companies will be
more volatile and may differ substantially from the overall U.S. market.
Alliance International Fund
Alliance International Fund 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, the Fund will invest more than 80% of its assets in these
types of companies.
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. The Fund may invest in any other type of
investment grade security, including convertible securities, as well as in
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 these countries. 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 that 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 also may:
o purchase or sell forward foreign currency exchange contracts;
o write covered call or put options, sell and purchase U.S. or foreign
exchange-listed put and call options, including exchange-traded index
options;
o 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;
o purchase and write put options on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
o make loans of portfolio securities of up to 30% of its total assets; and
o enter into repurchase agreements of up to seven days' duration for up to
10% of the Fund's total assets.
Investments in non-U.S. countries may have more risk because they tend to be
more volatile than the U.S. stock market. To the extent that the Fund invests a
substantial amount of its assets in a particular foreign country, an investment
in the Fund has the risk that market changes or other events affecting that
country may have a more significant effect, either negative or positive, on the
Fund's net asset value.
Alliance Greater China '97 Fund
Alliance Greater China '97 Fund is a non-diversified investment company that
seeks long-term capital appreciation through investment of at least 80% of its
total assets in equity securities issued by Greater China companies. The Fund
expects to invest a significant portion, which may be greater than 50%, of its
assets in equity securities of Hong Kong companies and may invest, from time to
time, all of its assets in Hong Kong companies or companies of either of the
other Greater China countries.
In recent years, China, Hong Kong and Taiwan have each experienced a high level
of real economic growth, although growth is expected to slow in 1999. This
growth has resulted from advantageous economic conditions, including favorable
demographics, competitive wage rates, and rising per capita income and consumer
demand. Significantly, the growth has also been fueled by an easing by both
China and Taiwan of government restrictions and an increased receptivity to
foreign investment. This expanded, if not yet complete, openness to foreign
investment extends as well to the securities markets of both countries. Hong
Kong's free-market economy has historically included securities markets
completely open to foreign investments. All three countries have regulated stock
exchanges upon which shares of an increasing number of Greater China companies
are traded.
With its population estimated at more than 1.2 billion as a driving force, and
notwithstanding its continuing political rigidity, China's economic growth has
been coupled with significantly reduced government economic intervention and
basic economic structural change. Recent years have seen large increases in
industrial production with a significant decline in the state sector share of
industrial output, and increased involvement of local governmental units and the
private sector in establishing new business enterprises.
With China's growth has come an increasing direct and indirect economic
involvement of all three Greater China countries. For some time, Hong Kong, a
world financial and trade center in its own right, with a large stock exchange
and offices of many of the world's multinational companies, has been the gateway
to trade with and foreign investment in China. With the transfer
on July 1, 1997 of the sovereignty of Hong Kong from Great Britain to China,
not only the political but the economic ties between China and Hong Kong are
expected to continue to intensify, with the continuation of Hong Kong's
economic system as provided for in the law governing its sovereignty.
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Notwithstanding the, at times considerable, political tension between the two
countries, it is generally recognized that substantially increased trade and
investment with China has been generated from Taiwan, in many cases through Hong
Kong. Along with this increased interaction with China, Taiwan is becoming a
regional technological and telecommunication center, while continuing the
process of opening its economy up to foreign investment. Although geographically
limited, Taiwan boasts an economy among the world's 20 largest and its foreign
exchange reserves are third largest in the world measured in U.S. dollars. As
China's economy continues to expand, it is expected that Taiwan's economic
interaction with China will likewise increase.
Alliance believes that over the long-term conditions are favorable for
continuing and expanding economic growth in all three Greater China countries.
It is this potential which the Fund hopes to take advantage of by investing both
in established and new and emerging companies. Appendix A has additional
Information about the Greater China countries.
In addition to investing in equity securities of Greater China companies, the
Fund may invest up to 20% of its total assets in (i) debt securities issued or
guaranteed by Greater China companies or by Greater China governments, their
agencies or instrumentalities and (ii) equity or debt securities issued by
issuers other than Greater China companies. The Fund will invest only in
investment grade securities. The Fund will normally sell a security that is
downgraded below investment grade or is determined by Alliance to have
undergone a similar credit quality deterioration.
The Fund also may:
o invest up to 25% of its net assets in the convertible securities;
o invest up to 20% of its net assets in rights or warrants;
o invest in depositary receipts, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
o invest up to 25% of its net assets in equity-linked debt securities with
the objective of realizing capital appreciation;
o invest up to 20% of its net assets in loans and other direct debt
securities;
o write covered call and put options, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
o 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;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into interest rate swaps and purchase or sell interest rate caps and
floors;
o enter into forward commitments;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain a short position, in each case
only if against the box;
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
All or some of the policies and practices listed above may not be available to
the Fund in the Greater China countries and the Fund will utilize these policies
only to the extent permissible.
The Fund's investments in Greater China companies will be significantly more
volatile and differ from the overall U.S. market. Your investment also has
the risk that market changes or other events affecting the Greater China
countries may have a more significant effect on the Fund's net asset value.
In addition the Fund is "non-diversified" meaning that it invests its assets
in a smaller number of companies than many other international funds. As a
result, changes in the value of a single security may have a more significant
effect, either negative or positive, on the Fund's net asset value.
Alliance All-Asia Investment Fund
Alliance All-Asia Investment Fund's investment objective is long-term capital
appreciation. The Fund invests 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 will invest at least 80% of its total assets in
Asian companies and Asian debt securities but also may invest in securities
issued by non-Asian issuers. The Fund expects to invest, from time to time, a
significant portion, which may be in excess of 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 that 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 also are becoming more
industrialized and are increasing their intra-
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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 that have securities listed
on exchanges in more developed Asian countries will be participants in the rapid
economic growth of the less-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. 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 primarily in investment grade debt securities but may
invest up to 5% of its net assets in lower-rated securities, lower-rated
loans, and other lower-rated direct debt instruments. 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 also may:
o invest up to 25% of its net assets in the convertible securities;
o invest up to 20% of its net assets in rights or warrants;
o invest in depositary receipts, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
o invest up to 25% of its net assets in equity-linked debt securities with
the objective of realizing capital appreciation;
o invest up to 25% of its net assets in loans and other direct debt
instruments;
o write covered call and put options, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
o 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;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into interest rate swaps and purchase or sell interest rate caps and
floors;
o enter into forward commitments;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain a short position, in each case
only if against the box;
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
The Fund's investments in Asian and Pacific region countries will be
significantly more volatile and may differ significantly from the overall U.S.
market. To the extent the Fund invests a substantial amount of its assets in
Japanese companies, your investment has the risk that market changes or other
events affecting that country may have a more significant effect on the Fund's
net assets value. The Fund's investments in debt securities have interest rate
and credit risk.
Alliance Global Environment Fund
Alliance Global Environment Fund is a non-diversified investment company that
seeks long-term capital appreciation through investment in equity securities of
Eligible Companies. For purposes of the Fund's investment objective and
investment policies, "equity securities" are common stocks (but not preferred
stocks), rights or warrants to subscribe for or purchase common stocks, and
preferred stocks or debt securities that are convertible into common stocks
without the payment of any further consideration.
The Fund invests in two categories of Eligible Companies--Environmental
Companies and Beneficiary Companies. The Fund may invest in a company with a
broadly diversified business only a part of which provides such products,
processes, or services, when Alliance believes that these products, processes or
services will yield a competitive advantage that significantly enhances the
issuer's growth prospects. As a matter of fundamental policy, the Fund will,
under normal circumstances, invest substantially all of its total assets in
equity securities of Eligible Companies.
A major premise of the Fund's investment approach is that environmental
concerns will be a significant source of future growth opportunities, and that
Environmental Companies will see an increased demand for their systems and
services. Environmental Companies operate in the areas of pollution control,
clean energy, solid waste management, hazardous
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waste treatment and disposal, pulp and paper recycling, waste-to-energy
alternatives, biodegradable cartons, packages, plastics and other products,
remedial projects and emergency cleanup efforts, manufacture of environmental
supplies and equipment, the achievement of purer air, groundwater, and foods,
and the detection, evaluation and treatment of both existing and potential
environmental problems including, among others, air pollution and acid rain.
The environmental services industry generally is positively affected by
increasing governmental action intended to foster environmental protection. As
environmental regulations are developed and enforced, Environmental Companies
providing the means of compliance with such regulations are afforded substantial
opportunities for growth. Beneficiary Companies may also derive an advantage to
the extent that they have anticipated environmental regulation and are therefore
at a competitive advantage.
In the view of Alliance, increasing public and political awareness of
environmental concerns and resultant environmental regulations are long-term
phenomena that are driven by an emerging global consensus that environmental
protection is a vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other economically
developed countries will have increasing opportunities for earnings growth
resulting not only from an increased demand for their existing products or
services but also from innovative responses to changing regulations and
priorities and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also within many
economically developing countries, such as those of Eastern Europe and the
Pacific Rim. These countries lag well behind developed countries in the
conservation and efficient use of natural resources and in their implementation
of policies that protect the environment.
Alliance believes that global investing offers opportunities for superior
investment returns. The Fund spreads investment risk among the capital markets
of a number of countries and invests in equity securities of companies based in
at least three, and normally considerably more, such countries. The percentage
of the Fund's assets invested in securities of companies in a particular country
or denominated in a particular currency will vary in accordance with Alliance's
assessment of the appreciation potential of such securities and the strength of
that currency.
The Fund also may:
o invest up to 20% of its total assets in warrants to purchase equity
securities;
o invest in depositary receipts;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o enter into forward foreign currency transactions for hedging purposes;
o invest in currency futures and options on such futures for hedging
purposes; and
o make secured loans of portfolio securities of up to 30% of its total
assets.
The Fund's investments in non-U.S. companies and in specific types of companies
that provide environmental services will be more volatile and may differ
substantially from the overall U.S. market. The Fund's investments also have the
risk that government regulations or other action could negatively affect the
business of environmental companies.
DESCRIPTION OF INVESTMENT PRACTICES
This section describes the Funds' investment practices and associated risks.
Unless otherwise noted, a Fund's use of any of these practices was specified in
the previous section.
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.
Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which generally
provide a stable stream of income with yields that are generally higher 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 equity security, although the higher yield tends to make the
convertible security less volatile than the underlying equity security. As with
debt securities, the market value of convertible securities tends to decrease as
interest rates rise 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 offer investors the
potential 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.
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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. 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 counterparty 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 counterparty to the transaction, the
Fund will have contractual remedies under the transaction agreements.
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 an 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 an 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. For purposes of determining the country of issuance, investments in
depositary receipts of either type are deemed to be investments in the
underlying securities, except with respect to Alliance Growth Fund, where
investments 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.
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 that are not backed by its full faith and credit and
general taxing powers.
Equity-Linked Debt Securities. Equity-linked debt securities are securities on
which the issuer is obligated to pay interest and/or principal that is linked to
the to the performance of a specified index of equity securities. The interest
or principal payments may be significantly greater or less than payment
obligations for 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 a Fund. As with any debt securities, the values of
equity-linked debt securities will generally vary inversely with changes in
interest rates. A 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.
Forward Commitments. Forward commitments for the purchase or sale of securities
may include purchases on a "when-issued" basis or purchases or sales on a
"delayed delivery" basis. In some cases, a forward commitment may be conditioned
upon the occurrence of a subsequent event, such as approval and consummation of
a merger, corporate reorganization or debt restructuring (i.e., a "when, as and
if issued" trade).
When forward commitment transactions are negotiated, the price is fixed at the
time the commitment is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within two months
after the transaction, but a Fund may negotiate settlements beyond two months.
Securities purchased or sold under a forward commitment are subject to market
fluctuations and no interest or dividends accrue to the purchaser prior to the
settlement date.
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 to obtain the benefit of currently
higher cash yields. If, however, 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 Alliance Utility Income
Fund, Alliance Real Estate Investment Fund, Alliance New Europe Fund, Alliance
Worldwide Privatization Fund, Alliance International Premier Growth Fund,
Alliance Greater China '97 Fund or Alliance All-Asia Investment Fund if, as a
result, the Fund's aggregate commitments under the transactions would be more
than 30% of its total assets. In the event the other party to a forward
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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.
Forward Foreign Currency Exchange Contracts. A Fund may purchase or sell forward
foreign currency exchange contracts to minimize the risk of 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 a particular currency 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 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. Alliance New Europe Fund,
Alliance Global Small Cap Fund and Alliance International 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. Alliance
New Europe Fund's, Alliance Global Small Cap Fund's and Alliance International
Fund's investments in forward contracts will be limited to hedging involving
either specific transactions or portfolio positions. Alliance Growth Fund also
may purchase and sell foreign currency on a spot basis.
Illiquid Securities. The Funds will limit their investments in illiquid
securities to no more than 15% of their net assets, except that the limit is 10%
for Alliance Technology Fund, Alliance Quasar Fund, Alliance New Europe Fund,
and Alliance Global Small Cap Fund and 5% for The Alliance Fund and Alliance
Growth Fund. Illiquid securities generally include (i) direct placements or
other securities that are subject to legal or contractual restrictions on
resale or for which there is no readily available market (e.g., when trading in
the security is suspended or, in the case of unlisted securities, when market
makers do not exist or will not entertain bids or offers), including many
individually negotiated currency swaps and any assets used to cover currency
swaps and most privately negotiated investments in state enterprises that have
not yet conducted an initial equity offering, (ii) over-the-counter options and
assets used to cover over-the-counter options, and (iii) repurchase agreements
not terminable within seven days.
Because of the absence of a trading market for illiquid securities, a Fund may
not be able to realize their full value upon sale. Alliance will monitor the
liquidity of a Fund's investments in illiquid securities. Rule 144A securities
will not be treated as "illiquid" for purposes of this limit on investments.
A Fund that invests in securities for which there is no ready market may not be
able to readily sell such securities. Such securities are unlike securities that
are traded in the open market and can be expected to be sold immediately if the
market is adequate. The sale price of illiquid securities may be lower or higher
than Alliance's most recent estimate of their fair value. Generally, less public
information is available about the issuers of such securities than about
companies whose securities are traded on an exchange. 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 resales of non-publicly traded foreign securities.
Interest Rate Transactions (Swaps, Caps, and Floors). Each Fund that may enter
into interest rate transactions expects to do so primarily to preserve a return
or spread on a particular investment or portion of its portfolio or to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. The Funds do not intend to use these transactions in a
speculative manner.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments). Interest rate swaps are entered on a net
basis (i.e., the two payment streams are netted out, with the Fund receiving
or paying, as the case may be, only the net amount of the two payments). With
respect to Alliance Utility Income Fund, Alliance Greater China '97 Fund and
Alliance All-Asia Investment 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
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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. 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 is 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 that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance were to incorrectly
forecast 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
counterparty 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.
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 a 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 a 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. Failure to receive scheduled interest or principal payments on these
types of investments could adversely affect a Fund's net asset value and yield.
Loans that are fully secured offer a 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.
Making loans to 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 government issuers 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 a Fund. For
example, if a loan is foreclosed, a 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, a 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 a 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 a Fund may include letters of credit, revolving
credit facilities, or other standby financing commitments obligating a Fund to
pay additional cash on demand. These commitments may have the effect of
requiring a 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.
Loans of Portfolio Securities. The risk in lending portfolio securities, as with
other extensions of credit, consists of the 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
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income from the securities. The Fund may invest any cash collateral in
portfolio securities and earn additional income or receive an agreed-upon
amount of income from a borrower who has delivered equivalent collateral.
Each Fund will have the right to regain record ownership of loaned securities
or equivalent securities in order to exercise ownership rights such as voting
rights, subscription rights and rights to dividends, interest, or
distributions. A Fund may pay reasonable finders', administrative, and
custodial fees in connection with a loan.
Mortgage-Backed Securities and Associated Risks. 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 that invests in these
securities would be required to reinvest the proceeds at the lower interest
rates then available. Conversely, during periods of rising interest rates, a
reduction in prepayments may increase the effective maturity of the securities,
subjecting them to a greater risk of decline in market value in response to
rising interest rates. In addition, prepayments of mortgages underlying
securities purchased at a premium could result in capital losses.
Mortgage-Backed Securities include mortgage pass-through certificates and
multiple-class pass-through securities, such as REMIC pass-through certificates,
CMOs and stripped mortgage-backed securities ("SMBS"), and other types of
Mortgage-Backed Securities that may be available in the future.
Guaranteed Mortgage Pass-Through Securities. Alliance Real Estate Investment
Fund may invest in guaranteed mortgage pass-through securities which represent
participation interests in pools of residential mortgage loans and are issued by
U.S. governmental or private lenders and guaranteed by the U.S. Government or
one of its agencies or instrumentalities, including but not limited to the
Government National Mortgage Association ("Ginnie Mae"), the Federal National
Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full
faith and credit of the United States Government for timely payment of principal
and interest on the certificates. Fannie Mae certificates are guaranteed by
Fannie Mae, a federally chartered and privately-owned corporation, for full and
timely payment of principal and interest on the certificates. Freddie Mac
certificates are guaranteed by Freddie Mac, a corporate instrumentality of the
United States Government, for timely payment of interest and the ultimate
collection of all principal of the related mortgage loans.
Multiple-Class Pass-Through Securities and Collateralized Mortgage Obligations.
Mortgage-Backed Securities also include CMOs and REMIC pass-through or
participation certificates that may be issued by, among others, U.S. Government
agencies and instrumentalities as well as private lenders. CMOs and REMIC
certificates are issued in multiple classes and the principal of and interest on
the mortgage assets may be allocated among the several classes of CMOs or REMIC
certificates in various ways. Each class of CMOs or REMIC certificates, often
referred to as a "tranche," is issued at a specific adjustable or fixed interest
rate and must be fully retired no later than its final distribution date.
Generally, interest is paid or accrues on all classes of CMOs or REMIC
certificates on a monthly basis. Alliance Real Estate Investment Fund will not
invest in the lowest tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or Freddie Mac certificates but
also may be collateralized by other mortgage assets such as whole loans or
private mortgage pass-through securities. Debt service on CMOs is provided from
payments of principal and interest on collateral of mortgaged assets and any
reinvestment income.
A REMIC is a CMO that qualifies for special tax treatment under the Code and
invests in certain mortgages primarily secured by interests in real property and
other permitted investments. Investors may purchase "regular" and "residual"
interest shares of beneficial interest in REMIC trusts, although Alliance Real
Estate Investment Fund does not intend to invest in residual interests.
Options on Securities. 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. 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
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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. Entering into a closing transaction
(i.e., by disposing of the option prior to its exercise) could reduce these
risks. 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.
Alliance Technology Fund and Alliance Global Small Cap Fund will not write a
call option if the premium to be received by the Fund 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.
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.
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.
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 and incur 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. For Fund's that may invest in options on
foreign currencies, see the Fund's SAI for further discussion of the use, risks,
and costs of options on foreign currencies.
Futures Contracts and Options on Futures Contracts. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the contract
at a specified price on a specified date. A "purchase" of a futures contract
means the incurring of an obligation to acquire the securities, foreign
currencies or other commodity called for by the contract at a specified price on
a specified date. The purchaser of a futures contract on an index agrees to take
or make delivery of an amount of cash equal to the difference between a
specified dollar multiple of the value of the index on the expiration date of
the contract ("current contract value") and the price at which the contract was
originally struck. No physical delivery of the securities underlying the index
is made.
A Fund may purchase options on futures contracts written or purchased by a Fund
that are 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, or in the case of
Alliance International Premier Growth Fund 100% of its total assets. Alliance
Premier Growth Fund and Alliance Growth and Income 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. Alliance Premier Growth Fund and
Alliance Growth and Income 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.
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.
Rights and Warrants. A Fund will invest in rights or warrants only if Alliance
deems the underlying equity securities themselves appropriate 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,
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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
of these factors. If the market price of the underlying security is below the
exercise price of 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.
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. Alliance Utility Income Fund, Alliance
Worldwide Privatization Fund, Alliance Greater China '97 Fund and Alliance
All-Asia Investment 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 Alliance
Real Estate Investment Fund, Alliance Greater China '97 Fund and Alliance
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.
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. 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
Alliance Real Estate Investment Fund and Alliance New Europe Fund 50% with
respect to Alliance Worldwide Privatization Fund, Alliance International Premier
Growth Fund, Alliance Greater China '97 Fund and Alliance All-Asia Investment
Fund and 20% with respect to Alliance Utility Income Fund, of the Fund's assets
at the time of making the commitment.
There is no guarantee that a security 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.
Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both zero-coupon
and payment-in-kind bonds allow an issuer to avoid the need to generate cash to
meet current interest payments. These bonds may involve greater credit risks
than bonds paying interest currently. Although these 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.
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.
General. The successful use of the investment practices described above draws
upon Alliance's special skills and experience 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 for
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
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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 for 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. In addition, a Fund's ability to engage in options and futures
transactions may be limited by tax considerations and the use of certain
hedging techniques may adversely impact the characterization of income to a
Fund for U.S. federal income tax purposes.
Portfolio Turnover. The portfolio turnover rate for each Fund is included in the
Financial Highlights section. The Funds are actively managed and, in some cases
in response to market conditions, a Fund's portfolio turnover may exceed 100%. A
higher rate of portfolio turnover increases brokerage and other expenses, 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, which,
when distributed, are taxable to shareholders.
Temporary Defensive Position. For temporary defensive purposes, each Fund may
reduce its position in equity securities and invest in, without limit, 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 also may include
short-term, foreign-currency denominated securities of the type mentioned above
issued by foreign governmental entities, companies, and supranational
organizations. While the Funds are investing for temporary defensive purposes,
they may not meet their investment objectives.
ADDITIONAL RISK CONSIDERATIONS
Investment in certain of the Funds involves the special risk considerations
described below. Certain of these risks may be heightened when investing in
emerging markets.
Currency Considerations. Substantially all of the assets of Alliance New Europe
Fund, Alliance Worldwide Privatization Fund, Alliance International Premier
Growth Fund, Alliance International Fund, Alliance Greater China '97 Fund and
Alliance All-Asia Investment Fund, and a substantial portion of the assets of
Alliance Global Small Cap Fund and Alliance Global Environment Fund are invested
in securities denominated in foreign currencies. The Funds receive a
corresponding portion of their revenues in foreign 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 currency hedging transactions, as described above, which involve
certain special risks.
Foreign Securities. 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 foreign
securities may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in equity securities of U.S.
companies. These markets may be subject to greater influence by adverse events
generally affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States. Securities settlements
may in some instances be subject to delays and related administrative
uncertainties.
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 that 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 countries is controlled under regulations, including in
some cases the need for certain advance government notification or authority. If
a deterioration occurs in a country's balance of payments, the country could
impose temporary restrictions on foreign capital remittances.
A Fund also could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
of other restrictions on
investment. Investing in local markets may require a Fund to adopt special
procedures that may involve additional costs to a Fund. These factors may affect
the liquidity of a Fund's investments in any country 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 United States.
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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 and the
Fund's investments. 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.
Alliance International Fund, Alliance Greater China '97 Fund and Alliance
All-Asia Investment Fund may invest substantial amounts of their assets in
United Kingdom issuers, Japanese issuers, and/or Greater China issuers.
Please refer to Appendix A for a discussion of risks associated
with investments in these countries.
Investment in Privatized Enterprises by Alliance 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.
Investment in Smaller, Emerging Companies. The Funds may invest in smaller,
emerging companies. Alliance New Europe Fund and Alliance Global Small Cap Fund
will emphasize investment in, and Alliance All-Asia Investment Fund, Alliance
Greater China '97 Fund and Alliance Global Environment 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. Companies in the earlier stages of their development
often have products and management personnel which have not been thoroughly
tested by time or the marketplace; their financial resources may not be as
substantial as those 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. The revenue flow of such companies may be erratic and their
results of operations may fluctuate widely and may also contribute to stock
price volatility.
Extreme Governmental Action; Less Protective Laws. In contrast to investing in
the U.S., foreign investment may involve in certain situations greater risk of
nationalization, expropriation, confiscatory taxation, currency blockage or
other extreme governmental action which could adversely impact a Fund's
investments. In the event of certain such actions, a Fund could lose its entire
investment in the country involved. In addition, laws in various foreign
countries, including in certain respects each of the Greater China countries,
governing, among other subjects, business organization and practices, securities
and securities trading, bankruptcy and insolvency may provide less protection to
investors such as the Fund than provided under United States laws.
Investments in Environmental Companies by Alliance Global Environment Fund.
Governmental regulations or other action can inhibit an Environmental Company's
performance, and it
may take years to translate environmental legislation into sales and profits.
Environmental Companies generally face competition in fields often characterized
by relatively short product cycles and competitive pricing policies. Losses may
result from large product development or expansion costs, unprotected marketing
or distribution systems, erratic revenue flows and low profit margins.
Additional risks that Environmental Companies may face include difficulty in
financing the high cost of technological development, uncertainties due to
changing
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governmental regulation or rapid technological advances, potential
liabilities associated with hazardous components and operations, and difficulty
in finding experienced employees.
The Real Estate Industry. Although Alliance Real Estate Investment Fund does not
invest directly in real estate, it invests primarily in Real Estate Equity
Securities and has a policy of concentration of its investments in the real
estate industry. Therefore, an investment in the Fund is subject to certain
risks associated with the direct ownership of real estate and with the real
estate industry in general. These risks include, among others: possible declines
in the value of real estate; risks related to general and local economic
conditions; possible lack of availability of mortgage funds; overbuilding;
extended vacancies of properties; increases in competition, property taxes and
operating expenses; changes in zoning laws; costs resulting from the clean-up
of, and liability to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from floods,
earthquakes or other natural disasters; limitations on and variations in rents;
and changes in interest rates. To the extent that assets underlying the Fund's
investments are concentrated geographically, by property type or in certain
other respects, the Fund may be subject to certain of the foregoing risks to a
greater extent.
In addition, if Alliance Real Estate Investment Fund receives rental income or
income from the disposition of real property acquired as a result of a default
on securities the Fund owns, the receipt of such income may adversely affect the
Fund's ability to retain its tax status as a regulated investment company.
Investments by the Fund in securities of companies providing mortgage servicing
will be subject to the risks associated with refinancings and their impact on
servicing rights.
REITs. Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax-free pass-through of income under the Code and failing to
maintain their exemptions from registration under the 1940 Act.
REITs (especially mortgage REITs) also are subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities. Historically, small
capitalization stocks, such as REITs, have been more volatile in price than the
larger capitalization stocks included in the S&P 500 Index.
Mortgage-Backed Securities. Investing in Mortgage-Backed Securities involves
certain unique risks in addition to those risks associated with investment in
the real estate industry in general. These risks include the failure of a
counterparty to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. When interest rates decline, the
value of an investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of an investment in fixed rate
obligations can be expected to decline. In contrast, as interest rates on
adjustable rate mortgage loans are reset periodically, yields on investments in
such loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
Further, the yield characteristics of Mortgage-Backed Securities, such as those
in which Alliance Real Estate Investment Fund may invest, differ from those of
traditional fixed-income securities. The major differences typically include
more frequent interest and principal payments (usually monthly), the
adjustability of interest rates, and the possibility that prepayments of
principal may be made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social, and other factors, and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Early payment associated
with Mortgage-Backed Securities causes these securities to experience
significantly greater price and yield volatility than that experienced by
traditional fixed-income securities. Under certain interest rate and prepayment
rate scenarios, the Fund may fail to recoup fully its investment in
Mortgage-Backed Securities notwithstanding any direct or indirect governmental
or agency guarantee. When the Fund reinvests amounts representing payments and
unscheduled prepayments of principal, it may receive a rate of interest that is
lower than the rate on existing adjustable rate mortgage pass-through
securities. Thus, Mortgage-Backed Securities, and adjustable rate mortgage
pass-through securities in particular, may be less effective than other types of
U.S. Government securities as a means of "locking in" interest rates.
U.S. and Foreign Taxes. A Fund's investment in foreign securities may be subject
to taxes withheld at the source on dividend or interest payments. Foreign taxes
paid by a Fund may
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<PAGE>
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.
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 Alliance All-Asia Investment Fund, between five
and 25 years in the case of Alliance Utility Income Fund, and between one year
or less and 30 years in the case of all other Funds that invest in such
securities. In periods of increasing interest rates, each of the Funds may, to
the extent it holds mortgage-backed securities, be subject to the risk that the
average dollar-weighted maturity of the Fund's portfolio of debt or other
fixed-income securities may be extended as a result of lower than anticipated
prepayment rates.
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 credit risk or loss of principal and interest than
higher-rated securities. They also are generally considered to be subject to
greater market risk than higher-rated securities. 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.
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 the securities for the purpose of computing a Fund's net asset value. 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.
Certain lower-rated securities 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.
Year 2000. Many computer systems and applications in use today process
transactions using two-digit date fields for the year of the transaction, rather
than the full four digits. If these systems are not modified or replaced,
transactions occurring after 1999 could be processed as year "1900," which could
result in processing inaccuracies and computer system failures. This is commonly
known as the Year 2000 problem. Should any of the computer systems employed by
the Funds' major service providers fail to process Year 2000 related information
properly, that could have a significant negative impact on the Funds' operations
and the services that are provided to the Funds' shareholders. In addition, to
the extent that the operations of issuers of securities held by the Funds are
impaired by the Year 2000 problem, or prices of securities held by the Funds
decline as a result of real or perceived problems relating to the Year 2000, the
value of the Funds' shares may be materially affected.
With respect to the Year 2000, the Funds have been advised that Alliance, each
Fund's investment adviser, Alliance Fund Distributors, Inc, ("AFD"), each Fund's
principal underwriter, and Alliance Fund Services, Inc. ("AFS"), each Fund's
registrar, transfer agent and dividend disbursing agent (collectively,
"Alliance") began to address the Year 2000 issue several years ago in connection
with the replacement or upgrading of certain computer systems and applications.
During 1997, Alliance began a formal Year 2000 initiative, which established a
structured and coordinated process to deal with the Year 2000 issue. Alliance
reports that it has completed its assessment of the Year 2000 issues on its
domestic and international computer systems and applications. Currently,
management of Alliance expects that the required modifications for the majority
of its significant systems and applications that will be in use on
January 1, 2000, will be completed and tested in early 1999. Full integration
testing of these systems and testing of interfaces with third-party suppliers
will continue through 1999. At this time, management of Alliance believes that
the costs associated with resolving this issue will not have a material adverse
effect on its operations or on its ability to provide the level of services it
currently provides to the Funds.
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The Funds and Alliance have been advised by the Funds' Custodians that they are
also in the process of reviewing their systems with the same goals. As of the
date of this prospectus, the Funds and Alliance have no reason to believe that
the Custodians will be unable to achieve these goals.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Each Fund's Adviser is Alliance Capital Management, L.P., 1345 Avenue of the
Americas, New York, NY 10105. Alliance is a leading international investment
adviser supervising client accounts with assets as of December 31, 1998 totaling
more than $ 286 billion (of which approximately $118 billion represented assets
of investment companies). Alliance's clients are primarily major corporate
employee benefit plans, public employee retirement systems, investment
companies, foundations, and endowment funds. The 54 registered investment
companies, with more than 118 separate portfolios, managed by Alliance currently
have over 3.5 million shareholder accounts. As of December 31, 1998, Alliance
was retained as investment manager for over 35 of the FORTUNE 100 Companies.
Alliance provides investment advisory services and order placement facilities
for the Funds. For these advisory services, the Funds paid Alliance as a
percentage of average daily net assets:
Fee as a percentage of Fiscal
Fund average daily net assets* Year Ending
- ---- ------------------------- -----------
Alliance Premier Growth
Fund 1.00% 11/30/98
Alliance Growth Fund .70 10/31/98
Alliance Technology Fund 1.02 11/30/98
Alliance Quasar Fund 1.04 9/30/98
The Alliance Fund .67 11/30/98
Alliance Growth and Income
Fund .48 10/31/98
Alliance Balanced Shares
Fund .625 7/31/98
Alliance Utility Income
Fund -0- 11/30/98
Alliance Real Estate
Investment Fund .90 8/31/98
Alliance New Europe
Fund 1.02 7/31/98
Alliance Worldwide
Privatization Fund 1.00% 6/30/98
Alliance International
Premier Growth Fund -0- 11/30/98
Alliance Global Small
Cap Fund 1.00 7/31/98
Alliance International
Fund .85 6/30/98
Alliance Greater China
'97 Fund -0- 7/31/98
Alliance All-Asia Investment
Fund .24 10/31/98
Alliance Global Environment
Fund 1.10 10/31/98
- --------------------------------------------------------------------------------
* Fees are stated net of any waivers and/or reimbursements. See the "Fee
Table" at the beginning of the Prospectus for more information about fee
waivers.
In connection with providing advisory services to Alliance Greater China '97
Fund, Alliance has, at its expense, retained as a consultant New Alliance, a
joint venture company headquartered in Hong Kong, which was formed in 1997 by
Alliance and Sun Hung Kai Properties Limited. New Alliance provides Alliance
with ongoing, current, and comprehensive information and analysis of conditions
and developments in Greater China countries.
In connection with investments in real estate securities, Alliance has, at its
expense, retained as a consultant CB Richard Ellis, Inc. ("CBRE"). CBRE is a
publicly held company and the largest real estate services company in the United
States, comprised of real estate brokerage, property and facilities management,
real estate finance, and investment advisory services.
Portfolio Manager
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 for the Fund, and each person's
principal occupation during the past five years.
Principal Occupation
During the Past
Fund Employee; Year; Title Five (5) Years*
- --------------------------------------------------------------------------------
Alliance Premier Alfred Harrison; since Associated with
Growth Fund inception--Vice Chairman Alliance
of Alliance Capital
Management Corporation
(ACMC)**
Alliance Growth Tyler Smith; since inception Associated with
Fund --Senior Vice President Alliance
of ACMC
Alliance Technology Peter Anastos; since 1992 Associated with
Fund --Senior Vice President Alliance
of ACMC
Gerald T. Malone; since 1992 Associated with
--Senior Vice President Alliance
of ACMC
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During the Past
Fund Employee; Year; Title Five (5) Years*
- --------------------------------------------------------------------------------
Alliance Quasar Alden M. Stewart; since 1994 Associated with
Fund --Executive Vice President Alliance
of ACMC
Randall E. Haase; since 1994 Associated with
--Senior Vice President Alliance
of ACMC
Principal Occupation
The Alliance Fund Alden M. Stewart; since 1997 (see above)
--(see above)
Randall E. Haase; since 1997 (see above)
--(see above)
Alliance Growth and Paul Rissman; since 1994 Associated with
Income Fund --Senior Vice President Alliance
of ACMC
Alliance Balanced Paul Rissman; since 1997 (see above)
Shares --(see above)
Alliance Utility Paul Rissman; since 1996 (see above)
Income Fund --(see above)
Alliance Real Estate Daniel G. Pine; since 1996 Associated with
Investment Fund --Senior Vice President Alliance since 1996;
of ACMC prior thereto; Senior
Vice President of Desai
Capital Management
David Kruth; since 1997 Associated with
--Vice President of ACMC Alliance since 1997;
prior thereto; Senior
Vice President of
Yarmouth Group
Alliance New Steven Beinhacker; since 1997 Associated with
Europe Fund --Vice President of ACMC Alliance
Alliance Worldwide Mark H. Breedon; since Associated with
Privatization Fund inception Senior Vice Alliance
President of ACMC and
Director and Vice President
of Alliance Capital Limited***
Alliance International Alfred Harrison; since 1998 (see above)
Premier Growth --(see above)
Fund
Thomas Kamp; since 1998 Associated with
--Senior Vice President Alliance
of ACMC
Alliance Global Alden M. Stewart; since 1994 (see above)
Small Cap Fund --(see above)
Randall E. Haase; since 1994 (see above)
--(see above)
Mark H. Breedon; since 1998 (see above)
--(see above)
Alliance Nicholas D.P. Carn; Associated with
International Fund since 1998 Alliance since 1995;
--Senior Vice President prior thereto; Chief
of ACMC. Investment Officer of
Dracott Partners, Inc.
Alliance Greater Matthew W.S. Lee; since 1997 Associated with
China '97 Fund --Vice President of ACMC Alliance since 1997;
prior thereto;
associated with National
Mutual Funds Management
(Asia) and James Capel
and Co. since prior to
1994
Alliance All-Asia Hiroshi Motoki; since 1998 Associated with
Investment Fund --Senior Vice President Alliance since 1994;
of ACMC and director of prior thereto;
Japanese/Asian Equity associated with
research Ford Motor Company
Alliance Global Linda Bolton Weiser; Associated with
Environment Fund since 1998--Vice President Alliance
of ACMC
- --------------------------------------------------------------------------------
* Unless indicated otherwise, persons associated with Alliance have been
employed in a portfolio management, research or investment capacity.
** The sole general partner of Alliance.
*** An indirect wholly-owned subsidiary of Alliance.
Performance of Similarly Managed Portfolios. In addition to managing the assets
of Alliance Premier Growth Fund, Mr. Harrison has ultimate responsibility for
the management of discretionary tax-exempt accounts of institutional clients
managed as described below without significant client-imposed restrictions
("Historical Portfolios"). These accounts have substantially the same investment
objectives and policies and are managed in accordance with essentially the same
investment strategies and techniques as those for Alliance Premier Growth Fund,
except for the ability of Alliance Premier Growth Fund to use futures and
options as hedging tools and to invest in warrants. The Historical Portfolios
also are not subject to certain limitations, diversification requirements and
other restrictions imposed under the 1940 Act and the Code to which Alliance
Premier Growth Fund, as a registered investment company, is subject and which,
if applicable to the Historical Portfolios, may have adversely affected the
performance results of the Historical Portfolios. See "Investment Objectives
and Policies."
Set forth below is performance data provided by Alliance relating to the
Historical Portfolios for each of the nineteen full calendar years during which
Mr. Harrison has managed the Historical Portfolios as an employee of Alliance
and cumulatively through December 31, 1998. As of December 31, 1998, the assets
in the Historical Portfolios totaled approximately $15.9 billion and the average
size of an institutional account in the Historical Portfolio was $529 million.
Each Historical Portfolio has a nearly identical composition of investment
holdings and related percentage weightings.
The performance data is net of all fees (including brokerage commissions)
charged to those accounts. The performance data is computed in accordance with
standards formulated by the Association of Investment Management and Research
and has not been adjusted to reflect any fees that will be payable by Alliance
Premier Growth Fund, which are higher than the fees imposed on the Historical
Portfolio and will result in a higher expense ratio and lower returns for
Alliance Premier Growth Fund. Expenses associated with the distribution of Class
A, Class B, and Class C shares of Alliance Premier Growth Fund in accordance
with the plan adopted by Alliance Premier Growth Fund's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act ("distribution fees") are also
excluded. The performance data has also not been adjusted for corporate or
individual taxes, if any, payable by the account owners.
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<PAGE>
Alliance has calculated the investment performance of the Historical Portfolios
on a trade-date basis. Dividends have been accrued at the end of the month and
cash flows weighted daily. Composite investment performance for all portfolios
has been determined on an asset weighted basis. New accounts are included in the
composite investment performance computations at the beginning of the quarter
following the initial contribution. The total returns set forth below are
calculated using a method that links the monthly return amounts for the
disclosed periods, resulting in a time-weighted rate of return.
As reflected below, the Historical Portfolios have over time performed favorably
when compared with the performance of recognized performance indices. The S&P
500 Index is a widely recognized, unmanaged index of market activity based upon
the aggregate performance of a selected portfolio of publicly traded common
stocks, including monthly adjustments to reflect the reinvestment of dividends
and other distributions. The S&P 500 Index reflects the total return of
securities comprising the Index, including changes in market prices as well as
accrued investment income, which is presumed to be reinvested. The Russell 1000
universe of securities is compiled by Frank Russell Company and is segmented
into two style indices, based on the capitalization-weighted median
book-to-price ratio of each of the securities. At each reconstitution, the
Russell 1000 constituents are ranked by their book-to-price ratio. Once so
ranked, the breakpoint for the two styles is determined by the median market
capitalization of the Russell 1000. Thus, those securities falling within the
top fifty percent of the cumulative market capitalization (as ranked by
descending book-to-price) become members of the Russell Price-Driven Indices.
The Russell 1000 Growth Index is, accordingly, designed to include those Russell
1000 securities with a greater-than-average growth orientation. In contrast with
the securities in the Russell Price-Driven Indices, companies in the Growth
Index tend to exhibit higher price-to-book and price-earnings ratios, lower
dividend yield and higher forecasted growth values.
To the extent Alliance Premier Growth Fund does not invest in U.S. common stocks
or utilizes investment techniques such as futures or options, the S&P 500 Index
and Russell 1000 Growth Index may not be substantially comparable to Alliance
Premier Growth Fund. The S&P 500 Index and Russell 1000 Growth Index are
included to illustrate material economic and market factors that existed during
the time period shown. The S&P 500 Index and Russell 1000 Growth Index do not
reflect the deduction of any fees. If Alliance Premier Growth Fund were to
purchase a portfolio of securities substantially identical to the securities
comprising the S&P 500 Index or the Russell 1000 Growth Index, Alliance Premier
Growth Fund's performance relative to the index would be reduced by Alliance
Premier Growth Fund's expenses, including brokerage commissions, advisory fees,
distribution fees, custodial fees, transfer agency costs and other
administrative expenses, as well as by the impact on Alliance Premier Growth
Fund's shareholders of sales charges and income taxes.
The Lipper Growth Fund Index is prepared by Lipper Analytical Services, Inc. and
represents a composite index of the investment performance for the 30 largest
growth mutual funds. The composite investment performance of the Lipper Growth
Fund Index reflects investment management and administrative fees and other
operating expenses paid by these mutual funds and reinvested income dividends
and capital gain distributions, but excludes the impact of any income taxes and
sales charges.
The following performance data is provided solely to illustrate Mr. Harrison's
performance in managing the Historical Portfolios and the Alliance Premier
Growth Fund as measured against certain broad based market indices and against
the composite performance of other open-end growth mutual funds. Investors
should not rely on the following performance data of the Historical Portfolios
as an indication of future performance of Alliance Premier Growth Fund. The
composite investment performance for the periods presented may not be indicative
of future rates of return. Other methods of computing investment performance may
produce different results, and the results for different periods may vary.
Schedule of Composite Investment Performance--Historical Portfolios*
<TABLE>
<CAPTION>
Russell Lipper
Premier Historical S&P 500 1000 Growth
Growth Portfolios Index Growth Index Fund Index
Fund Total Return** Total Return Total Return Total Return
<S> <C> <C> <C> <C> <C>
Year ended December:
1998*** ......... 42.97% 52.16% 28.60% 38.71% 25.69%
1997*** ......... 27.05 34.64 33.36 30.49 25.30
1996*** ......... 18.84 22.06 22.96 23.12 17.48
1995*** ......... 40.66 39.83 37.58 37.19 32.65
1994 ............ (9.78) (4.82) (1.32) 2.66 (1.57)
1993 ............ 5.35 10.54 10.08 2.90 11.98
1992 ............ -- 12.18 7.62 5.00 7.63
1991 ............ -- 38.91 30.47 41.16 35.20
1990 ............ -- (1.57) (3.10) (0.26) (5.00)
1989 ............ -- 38.80 31.69 35.92 28.60
1988 ............ -- 10.88 16.61 11.27 15.80
1987 ............ -- 8.49 5.25 5.31 1.00
1986 ............ -- 27.40 18.67 15.36 15.90
1985 ............ -- 37.41 31.73 32.85 30.30
1984 ............ -- (3.31) 6.27 (.95) (2.80)
1983 ............ -- 20.80 22.56 15.98 22.30
1982 ............ -- 28.02 21.55 20.46 20.20
1981 ............ -- (1.09) (4.92) (11.31) (8.40)
1980 ............ -- 50.73 32.50 39.57 37.30
1979 ............ -- 30.76 18.61 23.91 27.40
Cumulative total
return for
the period
January 1, 1979 to
December 31, 1998 -- 4708% 2525% 2373% 2003%
</TABLE>
- --------------------------------------------------------------------------------
* Total return is a measure of investment performance that is based upon the
change in value of an investment from the beginning to the end of a
specified period and assumes reinvestment of all dividends and other
distributions. The basis of preparation of this data is described in the
preceding discussion. Total returns for Alliance Premier Growth Fund are
for Class A shares, with imposition of the maximum 4.25% sales charge.
** Assumes imposition of the maximum advisory fee charged by Alliance for any
Historical Portfolio for the period involved.
*** During this period, the Historical Portfolios differed from Alliance
Premier Growth Fund in that Alliance Premier Growth Fund invested a
portion of its net assets in warrants on equity securities in which the
Historical Portfolios were unable, by their investment restrictions, to
purchase. In lieu of warrants, the Historical Portfolios acquired the
common stock upon which the warrants were based.
52
<PAGE>
The average annual total returns presented below are based upon the cumulative
total return as of December 31, 1998 and, for more than one year, assume a
steady compounded rate of return and are not year-by-year results, which
fluctuated over the periods as shown.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Russell Lipper
Premier Historical S&P 500 1000 Growth
Growth Portfolios Index Growth Index Fund Index
<S> <C> <C> <C> <C> <C>
One year ........ 42.97% 52.16% 28.60% 38.71% 25.69%
Three years ..... 33.03 35.74 28.23 30.62 23.67
Five years ...... 26.65 27.19 24.05 25.70 19.82
Ten years ....... 24.38+ 22.86 19.19 20.57 17.21
Since January 1,
1979 ............ -- 21.37 17.75 17.40 16.45
</TABLE>
- --------------------------------------------------------------------------------
+ Since inception on 9/28/92
The Funds' SAIs have more detailed information about Alliance and other Fund
service providers.
- --------------------------------------------------------------------------------
PURCHASE AND SALE OF SHARES
- --------------------------------------------------------------------------------
HOW THE FUNDS VALUE THEIR SHARES
The Funds' net asset value or NAV is calculated at 4 p.m. Eastern time each day
the Exchange is open for business. To calculate NAV, a Fund's assets are valued
and totaled, liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. The Funds' value their securities
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 Funds'
directors believe accurately reflect fair market value.
Your order for purchase, sale, or exchange of shares is priced at the next NAV
calculated after your order is accepted by the Fund. Your purchase of Fund
shares may be subject to an initial sales charge. Sales of Fund shares may be
subject to a contingent deferred sales charge or CDSC. See the next section of
this Prospectus, Distribution Arrangements, for details.
HOW TO BUY SHARES
You may purchase a Funds' shares through broker-dealers, banks, or other
financial intermediaries. You also may purchase shares directly from the Funds'
principal underwriter, Alliance Fund Distributors, Inc., or AFD.
Minimum investment amounts are:
--Initial: $250
--Subsequent: $ 50
--Automatic Investment Program: $ 25
If you are an existing Fund shareholder, you may purchase shares by electronic
funds transfer in amounts not exceeding $500,000 if you have completed the
appropriate section of the Shareholder Application. Call 800-221-5672 to arrange
a transfer from your bank account.
A Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not provided the
Fund with their certified taxpayer identification number. To avoid this, you
must provide your correct Tax Identification Number (Social Security Number for
most investors) on your account application.
A Fund may refuse any order to purchase shares. In particular, the Funds reserve
the right to restrict purchases of shares (including through exchanges) when
they appear to evidence a pattern of frequent purchases and sales made in
response to short-term considerations.
HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of the same class of other Alliance
Mutual Funds (including AFD Exchange Reserves, a money market fund managed by
Alliance). Exchanges of shares are made at the next determined NAV, without
sales or service charges. You may request an exchange by mail or telephone. You
must call by 4:00 p.m. Eastern time to receive that day's NAV. The Funds may
change, suspend, or terminate the exchange service on 60 days' written notice.
HOW TO SELL SHARES
You may "redeem" your shares (i.e., sell your shares to a Fund) on any day the
Exchange is open, either directly or through your financial intermediary. Your
sales price will be the next-determined NAV, less any applicable CDSC, after the
Fund receives your sales request in proper form. Normally, proceeds will be sent
to you within 7 days. If you recently purchased your shares by check or
electronic funds transfer, your redemption payment may be delayed until the Fund
is reasonably satisfied that the check or electronic funds transfer has been
collected (which may take up to 15 days).
o Selling Shares Through Your Broker
Your broker must receive your sales request by 4:00 p.m., Eastern time, and
submit it to the Fund by 5:00 p.m., Eastern time, for you to receive that day's
NAV, less any applicable CDSC. Your broker is responsible for submitting all
necessary documentation to the Fund and may charge you for this service.
o Selling Shares Directly to the Fund
By Mail:
-- Send a signed letter of instruction or stock power, along with
certificates, to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07906-1520
800-221-5672
-- For your protection, a bank, a member firm of a national stock
exchange, or other eligible guarantor institution, must guarantee
signatures. Stock power forms are available from your financial
intermediary, AFS, and many commercial banks. Additional
documentation is required for the sale of shares by corporations,
intermediaries,
53
<PAGE>
fiduciaries, and surviving joint owners. If you have any questions
about these procedures, contact AFS.
By Telephone:
-- You may redeem your shares for which no stock certificates have been
issued by telephone request. Call AFS at 800-221-5672 with
instructions on how you wish to receive your sale proceeds.
-- A telephone redemption request must be received by 4:00 p.m. Eastern
time for you to receive that day's NAV, less any applicable CDSC.
-- If you have selected electronic funds transfer in your Shareholder
Application, the redemption proceeds will be sent directly to your
bank. Otherwise, the proceeds will be mailed to you.
-- Redemption requests by electronic funds transfer may not exceed
$100,000 per day and redemption requests by check cannot exceed
$50,000 per day.
-- Telephone redemption is not available for shares held in nominee or
"street name" accounts, retirement plan accounts, or shares held by
a shareholder who has changed his or her address of record within
the previous 30 calendar days.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS
- --------------------------------------------------------------------------------
AND TAXES
- --------------------------------------------------------------------------------
Each Fund's income dividends and capital gains distributions, 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. If paid in additional shares, the shares will have an aggregate net asset
value as of the close of business on the day following the declaration date of
the dividend or distribution equal to the cash amount of the dividend or
distribution. You may make an election to receive dividends and distributions in
cash or in shares at the time you purchase shares. Your election can be changed
at any time prior to a record date for a dividend. There is no sales or other
charge in connection with the reinvestment of dividends or capital gains
distributions. Cash dividends may be paid in check, or at your election,
electronically via the ACH network. There is no sales or other charge on the
reinvestment of Fund 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 the 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.
The Funds expect that their distributions will consist either of net income or
long-term capital gains. For federal income tax purposes, the Fund's dividend
distributions of net income (or short-term taxable gains) will be taxable to you
as ordinary income. Any long-term capital gains distributions may be taxable to
you as long-term capital gains. A Fund's distributions also may be subject to
certain state and local taxes.
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 dividend or distribution will depend
on the realization by the 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. Since REITs pay distributions
based on cash flow, without regard to depreciation and amortization, it is
likely that a portion of the distributions paid to Alliance Real Estate
Investment Fund and subsequently distributed to shareholders may be a nontaxable
return of capital. The final determination of the amount of a Fund's return of
capital distributions for the period will be made after the end of each calendar
year.
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid
(or to permit shareholders to claim a deduction for such foreign taxes), but
there can be no assurance that any Fund will be able to do so. Furthermore, a
shareholder's ability to claim a foreign tax credit or deduction for foreign
taxes paid by a Fund may be subject to certain limitations imposed by the Code,
as a result of which a shareholder may not be permitted to claim a full credit
or deduction for the amount of such taxes.
Under certain circumstances, if a Fund realizes losses (e.g., from fluctuations
in currency exchange rates) after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. Returns of
capital are generally nontaxable, but will reduce a shareholder's basis in
shares of a Fund. If that basis is reduced to zero (which could happen if the
shareholder does not reinvest distributions and returns of capital are
significant), any further returns of capital will be taxable as capital gain.
See the Fund's SAI for a further explanation of these tax issues.
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.
The sale or exchange of Fund shares is a taxable transaction for Federal income
tax purposes.
54
<PAGE>
Each year shortly after December 31, the Funds will send you tax information
stating the amount and type of all its distributions for the year. Consult your
tax adviser about the federal, state, and local tax consequences in your
particular circumstances.
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Share Classes. The Funds offer three classes of shares.
CLASS A SHARES--INITIAL SALES CHARGE ALTERNATIVE
You can purchase Class A shares at NAV with an initial sales charge as follows:
Initial Sales Charge
As % of As % of Commission
Net Amount Offering to Dealer/
Invested Price Agent as
% of
Offering
Amount Purchased Price
- --------------------------------------------------------------------------------
Up to $100,000 4.44% 4.25% 4.00%
$100,000 up to $250,000 3.36 3.25 3.00
$250,000 up to $500,000 2.30 2.25 2.00
$500,000 up to $1,000,000 1.78 1.75 1.50
You pay no initial sales charge on purchases of Class A Shares in the amount of
$1,000,000 or more, but may pay a 1% CDSC if you redeem your shares within 1
year. Alliance may pay the dealer or agent a fee of up to 1% of the dollar
amount purchased. Certain purchases of Class A shares may qualify for reduced or
eliminated sales charges under a Fund's Combined Purchase Privilege, Cumulative
Quantity Discount, Statement of Intention, Privilege for Certain Retirement
Plans, Reinstatement Privilege and Sales at Net Asset Value Programs. Consult
the Subscription Application and a Fund's SAI for additional information about
these options.
CLASS B SHARES--DEFERRED SALES CHARGE ALTERNATIVE
You can purchase Class B Shares at NAV without an initial sales charge. A Fund
will thus receive the full amount of your purchase. Your investment, however,
will be subject to a CDSC if you redeem shares within 4 years of purchase. The
CDSC varies depending of the number of years you hold the shares. The CDSC
amounts are:
Years Since Purchase CDSC
First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth None
If you exchange your shares for the Class B shares of another Alliance Mutual
Fund, the CDSC also will apply to those Class B shares. The CDSC period begins
with the date of your original purchase, not the date of exchange for the other
Class B shares.
The Fund's Class B shares purchased for cash automatically convert to Class A
shares eight years after the end of the month of your purchase. If you purchase
shares by exchange for the Class B shares of another Alliance Mutual Fund, the
conversion period runs from the date of your original purchase.
CLASS C SHARES--ASSET-BASED SALES CHARGE ALTERNATIVE
You can purchase shares at NAV without an initial sales charge. A Fund will thus
receive the full amount of your purchase. Your investment, however, will be
subject to a 1% CDSC if you redeem your shares within 1 year. If you exchange
your shares for the Class C shares of another Alliance Mutual Fund, the 1% CDSC
also will apply to those Class C shares. The 1-year period for the CDSC begins
with the date of your original purchase, not the date of the exchange for the
other Class C shares.
Class C shares do not convert to any other class of shares of the Fund.
Asset-based Sales Charge or Rule 12b-1 Fees. Each Fund has adopted a plan under
Commission Rule 12b-1 that allows the Fund to pay asset-based sales charges or
distribution and service fees for the distribution and sale of its shares. The
amount of these fees for each class of the Fund's shares is:
Rule 12b-1 Fee (As a Percentage of
Aggregate Average Daily Net Assets)
Class A .30%*
Class B 1.00%
Class C 1.00%
- --------------------------------------------------------------------------------
The fee under the Rule 12b-1 Plan for the Class A shares of Alliance
Growth Fund and Alliance Premier Growth Fund is .50% of the aggregate
average daily net assets. The Directors of Alliance Growth Fund
currently limit the payments to .30%. The Directors of Alliance Premier
Growth Fund limit payments for Class A shares purchased after November
1993 to .30% of aggregate average daily net assets.
Because these fees are paid out of the Fund's assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales fees. Class B and Class C shares are subject to
higher distribution fees than Class A shares (Class B shares are subject to
these higher fees for a period of eight years, after which they convert to Class
A shares). The higher fees mean a higher expense ratio, so Class B and Class C
shares pay correspondingly lower dividends and may have a lower net asset value
than Class A shares.
Choosing a Class of Shares. The decision as to which class of shares is more
beneficial to you depends on the amount and intended length of your investment.
If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider purchasing Class A shares. If you are making a
smaller investment, you might consider purchasing Class B shares because 100% of
your purchase is invested immediately. If you are unsure of the length of your
investment, you might consider Class C shares because there is no initial sales
charge and no CDSC as long as the shares are held for one year or more. Dealers
and agents may receive differing compensation for selling Class A, Class B, or
Class C shares. There is no size limit on purchases of Class A shares. The
maximum purchase of Class B shares is $250,000. The maximum purchase of Class C
shares is $1,000,000.
55
<PAGE>
You should consult your financial agent to assist in choosing a class of Fund
shares.
Application of the CDSC. The CDSC is applied to the lesser of the original cost
of shares being redeemed or NAV at the time of redemption (or, as to Fund shares
acquired through an exchange, the cost of the Alliance Mutual Fund shares
originally purchased for cash). Shares obtained from dividend or distribution
reinvestment are not subject to the CDSC. The Fund may waive the CDSC on
redemptions of shares following the death or disability of a shareholder, to
meet the requirements of certain qualified retirement plans, or under a monthly,
bimonthly, or quarterly systematic withdrawal plan. See the Fund's SAI for
further information about CDSC waivers.
Other. A transaction, service, administrative or other similar fee may be
charged by your broker-dealer, agent, financial intermediary, or other financial
representative with respect to the purchase, sale, or exchange of Class A, Class
B, or Class C shares made through your financial representative. The financial
intermediaries also may impose requirements on the purchase, sale, or exchange
of shares that are different from, or in addition to, those imposed by a Fund,
including requirements as to the minimum initial and subsequent investment
amounts.
In addition to the discount or commission paid to dealers or agents, AFD from
time to time pays additional cash or other incentives to dealers or agents for
the sale of shares of the Funds. These additional amounts may be utilized, in
whole or in part, in some cases together with other revenues of such dealers or
agents, to provide additional compensation to registered representatives who
sell shares of the Funds. On some occasions, the cash or other incentives will
be conditioned upon the sale of a specified minimum dollar amount of the shares
of a Fund and/or other Alliance Mutual Funds during a specific period of time.
The incentives may take the form of payment for attendance at seminars, meals,
sporting events or theater performances, or payment for travel, lodging and
entertainment incurred in connection with travel by persons associated with a
dealer or agent to urban or resort locations within or outside the U.S. The
dealer or agent may elect to receive cash incentives of equivalent amount in
lieu of such payments.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
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 in
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephone 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 telephone requests. The telephone
service may be suspended or terminated at any time without notice.
Shareholder Services. AFS offers a variety of shareholder services. For more
information about these services or your account, call AFS's toll-free number,
800-221-5672. Some services are described in the attached Subscription
Application. You also may request a shareholder's manual explaining all
available services by calling 800-227-4618.
Employee Benefit Plans. Certain employee benefit plans, including
employer-sponsored tax-qualified 401(k) plans and other defined contribution
retirement plans ("Employee Benefit Plans"), may establish requirements as to
the purchase, sale or exchange of shares, including maximum and minimum initial
investment requirements, that are different from those described in this
Prospectus. Employee Benefit Plans also may not offer all classes of shares of
the Funds. In order to enable participants investing through Employee Benefit
Plans to purchase shares of the Funds, the maximum and minimum investment
amounts may be different for shares purchased through Employee Benefit Plans
from those described in this Prospectus. In addition, the Class A, Class B, and
Class C CDSC may be waived for investments made through Employee Benefit Plans.
56
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the past 5 years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
share of each Fund. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, the independent accountants for The
Alliance Fund, Alliance Growth Fund, Alliance Premier Growth Fund, Alliance
International Premier Growth Fund, Alliance Balanced Shares, Alliance Utility
Income Fund, Alliance Worldwide Privatization Fund, and Alliance Growth and
Income Fund, and by Ernst & Young LLP, the independent accountants for Alliance
All-Asia Investment Fund, Alliance Technology Fund, Alliance Quasar Fund,
Alliance International Fund, Alliance New Europe Fund, Alliance Global Small Cap
Fund, Alliance Global Environment Fund, Alliance Greater China '97 Fund and
Alliance Real Estate Investment Fund, whose reports along with each Fund's
financial statements, are included in the SAI, which is available upon request.
57
<PAGE>
<TABLE>
<CAPTION>
Income from Investment Operations Less Dividends and Distributions
-------------------------------------------- -----------------------------------------
Net Gains
Net Asset or Losses on Dividends Distributions
Value, Securities Total from from Net in Excess of Distributions
Beginning Net Investment (both realized Investment Investment Net Investment from
Fiscal Year or Period of Period Income (Loss) and unrealized) Operations Income Income Capital Gains
--------------------- --------- -------------- -------------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Premier
Growth Fund
Class A
Year ended 11/30/98 ..... $ 22.00 $ (.15)(b) $ 7.11 $ 6.96 $ 0.00 $ 0.00 $ (1.46)
Year ended 11/30/97 ..... 17.98 (.10)(b) 5.20 5.10 0.00 0.00 (1.08)
Year ended 11/30/96 ..... 16.09 (.04)(b) 3.20 3.16 0.00 0.00 (1.27)
Year ended 11/30/95 ..... 11.41 (.03) 5.38 5.35 0.00 0.00 (.67)
Year ended 11/30/94 ..... 11.78 (.09) (.28) (.37) 0.00 0.00 0.00
Class B
Year ended 11/30/98 ..... $ 21.26 $ (.30)(b) $ 6.83 $ 6.53 $ 0.00 $ 0.00 $ (1.46)
Year ended 11/30/97 ..... 17.52 (.23)(b) 5.05 4.82 0.00 0.00 (1.08)
Year ended 11/30/96 ..... 15.81 (.14)(b) 3.12 2.98 0.00 0.00 (1.27)
Year ended 11/30/95 ..... 11.29 (.11) 5.30 5.19 0.00 0.00 (.67)
Year ended 11/30/94 ..... 11.72 (.15) (.28) (.43) 0.00 0.00 0.00
Class C
Year ended 11/30/98 ..... $ 21.29 $ (.31)(b) $ 6.84 $ 6.53 $ 0.00 $ 0.00 $ (1.46)
Year ended 11/30/97 ..... 17.54 (.24)(b) 5.07 4.83 0.00 0.00 (1.08)
Year ended 11/30/96 ..... 15.82 (.14)(b) 3.13 2.99 0.00 0.00 (1.27)
Year ended 11/30/95 ..... 11.30 (.08) 5.27 5.19 0.00 0.00 (.67)
Year ended 11/30/94 ..... 11.72 (.09) (.33) (.42) 0.00 0.00 0.00
Alliance Growth Fund
Class A
Year ended 10/31/98 ..... $ 43.95 $ (.05)(b) $ 6.18 $ 6.13 $ 0.00 $ 0.00 $ (2.91)
Year ended 10/31/97 ..... 34.91 (.10)(b) 10.17 10.07 0.00 0.00 (1.03)
Year ended 10/31/96 ..... 29.48 .05 6.20 6.25 (.19) 0.00 (.63)
Year ended 10/31/95 ..... 25.08 .12 4.80 4.92 (.11) 0.00 (.41)
5/1/94 to 10/31/94** .... 23.89 .09 1.10 1.19 0.00 0.00 0.00
Year ended 4/30/94 ...... 22.67 (.01)(c) 3.55 3.54 0.00 0.00 (2.32)
Class B
Year ended 10/31/98 ..... $ 36.31 $ (.31)(b) $ 5.06 $ 4.75 $ 0.00 $ 0.00 $ (2.91)
Year ended 10/31/97 ..... 29.21 (.31)(b) 8.44 8.13 0.00 0.00 (1.03)
Year ended 10/31/96 ..... 24.78 (.12) 5.18 5.06 0.00 0.00 (.63)
Year ended 10/31/95 ..... 21.21 (.02) 4.01 3.99 (.01) 0.00 (.41)
5/1/94 to 10/31/94** .... 20.27 .01 .93 .94 0.00 0.00 0.00
Year ended 4/30/94 ...... 19.68 (.07)(c) 2.98 2.91 0.00 0.00 (2.32)
Class C
Year ended 10/31/98 ..... $ 36.33 $ (.31)(b) $ 5.06 $ 4.75 $ 0.00 $ 0.00 $ (2.91)
Year ended 10/31/97 ..... 29.22 (.31)(b) 8.45 8.14 0.00 0.00 (1.03)
Year ended 10/31/96 ..... 24.79 (.12) 5.18 5.06 0.00 0.00 (.63)
Year ended 10/31/95 ..... 21.22 (.03) 4.02 3.99 (.01) 0.00 (.41)
5/1/94 to 10/31/94** .... 20.28 .01 .93 .94 0.00 0.00 0.00
8/2/93++ to 4/30/94 ..... 21.47 (.02)(c) 1.15 1.13 0.00 0.00 (2.32)
Alliance Technology Fund
Class A
Year ended 11/30/98 ..... $ 54.44 $ (.68)(b) $ 15.42 $ 14.74 $ 0.00 $ 0.00 $ (.58)
Year ended 11/30/97 ..... 51.15 (.51)(b) 4.22 3.71 0.00 0.00 (.42)
Year ended 11/30/96 ..... 46.64 (.39)(b) 7.28 6.89 0.00 0.00 (2.38)
Year ended 11/30/95 ..... 31.98 (.30)(b) 18.13 17.83 0.00 0.00 (3.17)
1/1/94 to 11/30/94** .... 26.12 (.32) 6.18 5.86 0.00 0.00 0.00
Class B
Year ended 11/30/98 ..... $ 52.58 $ (1.08)(b) $ 14.83 $ 13.75 $ 0.00 $ 0.00 $ (.58)
Year ended 11/30/97 ..... 49.76 (.88)(b) 4.12 3.24 0.00 0.00 (.42)
Year ended 11/30/96 ..... 45.76 (.70)(b) 7.08 6.38 0.00 0.00 (2.38)
Year ended 11/30/95 ..... 31.61 (.60)(b) 17.92 17.32 0.00 0.00 (3.17)
1/1/94 to 11/30/94** .... 25.98 (.23) 5.86 5.63 0.00 0.00 0.00
Class C
Year ended 11/30/98 ..... $ 52.57 $ (1.08)(b) $ 14.83 $ 13.75 $ 0.00 $ 0.00 $ (.58)
Year ended 11/30/97 ..... 49.76 (.88)(b) 4.11 3.23 0.00 0.00 (.42)
Year ended 11/30/96 ..... 45.77 (.70)(b) 7.07 6.37 0.00 0.00 (2.38)
Year ended 11/30/95 ..... 31.61 (.58)(b) 17.91 17.33 0.00 0.00 (3.17)
1/1/94 to 11/30/94** .... 25.98 (.24) 5.87 5.63 0.00 0.00 0.00
Alliance Quasar Fund
Class A
Year ended 9/30/98 ...... $ 30.37 $ (.17)(b) $ (6.70) $ (6.87) $ 0.00 $ 0.00 $ (1.23)
Year ended 9/30/97 ...... 27.92 (.24)(b) 6.80 6.56 0.00 0.00 (4.11)
Year ended 9/30/96 ...... 24.16 (.25) 8.82 8.57 0.00 0.00 (4.81)
Year ended 9/30/95 ...... 22.65 (.22)(b) 5.59 5.37 0.00 0.00 (3.86)
Year ended 9/30/94 ...... 24.43 (.60) (.36) (.96) 0.00 0.00 (.82)
Class B
Year ended 9/30/98 ...... $ 27.83 $ (.36)(b) $ (6.07) $ (6.43) $ 0.00 $ 0.00 $ (1.23)
Year ended 9/30/97 ...... 26.13 (.42)(b) (6.23) 5.81 0.00 0.00 (4.11)
Year ended 9/30/96 ...... 23.03 (.20) 8.11 7.91 0.00 0.00 (4.81)
Year ended 9/30/95 ...... 21.92 (.37)(b) 5.34 4.97 0.00 0.00 (3.86)
Year ended 9/30/94 ...... 23.88 (.53) (.61) (1.14) 0.00 0.00 (.82)
- ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the footnotes on page 66.
<CAPTION>
Less Distributions Ratios/Supplemental Data
------------------ --------------------------------------------------------------
Total Net Asset Ratio of Ratio of Net
Dividends Value, Net Assets, Expenses Income/Loss
and End of Total End of Period to Average to Average Portfolio
Fiscal Year or Period Distributions Period Return (a) (000's omitted) Net Assets Net Assets Turnover Rate
--------------------- ------------- --------- ---------- --------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Premier
Growth Fund
Class A
Year ended 11/30/98 .... $ (1.46) $ 27.50 33.94% $1,418,262 1.59%(f) (.59)% 82%
Year ended 11/30/97 .... (1.08) 22.00 30.46 373,099 1.57 (.52) 76
Year ended 11/30/96 .... (1.27) 17.98 21.52 172,870 1.65 (.27) 95
Year ended 11/30/95 .... (.67) 16.09 49.95 72,366 1.75 (.28) 114
Year ended 11/30/94 .... 0.00 11.41 (3.14) 35,146 1.96 (.67) 98
Class B
Year ended 11/30/98 .... $ (1.46) $ 26.33 33.04% $2,799,288 2.28%(f) (1.27)% 82%
Year ended 11/30/97 .... (1.08) 21.26 29.62 858,449 2.25 (1.20) 76
Year ended 11/30/96 .... (1.27) 17.52 20.70 404,137 2.32 (.94) 95
Year ended 11/30/95 .... (.67) 15.81 49.01 238,088 2.43 (.95) 114
Year ended 11/30/94 .... 0.00 11.29 (3.67) 139,988 2.47 (1.19) 98
Class C
Year ended 11/30/98 .... $ (1.46) $ 26.36 32.99% $ 862,193 2.28%(f) (1.30)% 82%
Year ended 11/30/97 .... (1.08) 21.29 29.64 177,923 2.24 (1.22) 76
Year ended 11/30/96 .... (1.27) 17.54 20.76 60,194 2.32 (.94) 95
Year ended 11/30/95 .... (.67) 15.82 48.96 20,679 2.42 (.97) 114
Year ended 11/30/94 .... 0.00 11.30 (3.58) 7,332 2.47 (1.16) 98
Alliance Growth Fund
Class A
Year ended 10/31/98 .... $ (2.91) $ 47.17 14.56% $1,008,093 1.22%(f) (.11)% 61%
Year ended 10/31/97 .... (1.03) 43.95 29.54 783,110 1.26(f) (.25) 48
Year ended 10/31/96 .... (.82) 34.91 21.65 499,459 1.30 .15 46
Year ended 10/31/95 .... (.52) 29.48 20.18 285,161 1.35 .56 61
5/1/94 to 10/31/94** ... 0.00 25.08 4.98 167,800 1.35* .86* 24
Year ended 4/30/94 ..... (2.32) 23.89 15.66 102,406 1.40(d) .32 87
Class B
Year ended 10/31/98 .... $ (2.91) $ 38.15 13.78% $4,230,756 1.94%(f) (.83)% 61%
Year ended 10/31/97 .... (1.03) 36.31 28.64 3,578,806 1.96(f) (.94) 48
Year ended 10/31/96 .... (.63) 29.21 20.82 2,498,097 1.99 (.54) 46
Year ended 10/31/95 .... (.42) 24.78 19.33 1,052,020 2.05 (.15) 61
5/1/94 to 10/31/94** ... 0.00 21.21 4.64 751,521 2.05* .16* 24
Year ended 4/30/94 ..... (2.32) 20.27 14.79 394,227 2.10(d) (.36) 87
Class C
Year ended 10/31/98 .... $ (2.91) $ 38.17 13.76% $ 718,688 1.93%(f) (.83)% 61%
Year ended 10/31/97 .... (1.03) 36.33 28.66 599,449 1.97(f) (.95) 48
Year ended 10/31/96 .... (.63) 29.22 20.81 403,478 2.00 (.55) 46
Year ended 10/31/95 .... (.42) 24.79 19.32 226,662 2.05 (.15) 61
5/1/94 to 10/31/94** ... 0.00 21.22 4.64 114,455 2.05* .16* 24
8/2/93++ to 4/30/94 .... (2.32) 20.28 5.27 64,030 2.10*(d) (.31)* 87
Alliance Technology Fund
Class A
Year ended 11/30/98 .... $ (.58) $ 68.60 27.36% $ 824,636 1.66%(f) (1.13)% 67%
Year ended 11/30/97 .... (.42) 54.44 7.32 624,716 1.67(f) (.97) 51
Year ended 11/30/96 .... (2.38) 51.15 16.05 594,861 1.74 (.87) 30
Year ended 11/30/95 .... (3.17) 46.64 61.93 398,262 1.75 (.77) 55
1/1/94 to 11/30/94** ... 0.00 31.98 22.43 202,929 1.66* (1.22)* 55
Class B
Year ended 11/30/98 .... $ (.58) $ 65.75 26.44% $1,490,578 2.39%(f) (1.86)% 67%
Year ended 11/30/97 .... (.42) 52.58 6.57 1,053,436 2.38(f) (1.70) 51
Year ended 11/30/96 .... (2.38) 49.76 15.20 660,921 2.44 (1.61) 30
Year ended 11/30/95 .... (3.17) 45.76 60.95 277,111 2.48 (1.47) 55
1/1/94 to 11/30/94** ... 0.00 31.61 21.67 18,397 2.43* (1.95)* 55
Class C
Year ended 11/30/98 .... $ (.58) $ 65.74 26.44% $ 271,320 2.40%(f) (1.87)% 67%
Year ended 11/30/97 .... (.42) 52.57 6.55 184,194 2.38(f) (1.70) 51
Year ended 11/30/96 .... (2.38) 49.76 15.17 108,488 2.44 (1.60) 30
Year ended 11/30/95 .... (3.17) 45.77 60.98 43,161 2.48 (1.47) 55
1/1/94 to 11/30/94** ... 0.00 31.61 21.67 7,470 2.41* (1.94)* 55
Alliance Quasar Fund
Class A
Year ended 9/30/98 ..... $ (1.23) $ 22.27 (23.45)% $ 495,070 1.61%(f) (.59)% 109%
Year ended 9/30/97 ..... (4.11) 30.37 27.81 402,081 1.67 (.91) 135
Year ended 9/30/96 ..... (4.81) 27.92 42.42 229,798 1.79 (1.11) 168
Year ended 9/30/95 ..... (3.86) 24.16 30.73 146,663 1.83 (1.06) 160
Year ended 9/30/94 ..... (.82) 22.65 (4.05) 155,470 1.67 (1.15) 110
Class B
Year ended 9/30/98 ..... $ (1.23) $ 20.17 (24.03)% $ 625,147 2.39%(f) (1.36)% 109%
Year ended 9/30/97 ..... (4.11) 27.83 26.70 503,037 2.51 (1.73) 135
Year ended 9/30/96 ..... (4.81) 26.13 41.48 112,490 2.62 (1.96) 168
Year ended 9/30/95 ..... (3.86) 23.03 29.78 16,604 2.65 (1.88) 160
Year ended 9/30/94 ..... (.82) 21.92 (4.92) 13,901 2.50 (1.98) 110
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58 & 59
<PAGE>
<TABLE>
<CAPTION>
Income from Investment Operations Less Dividends and Distributions
-------------------------------------------- -----------------------------------------
Net Gains
Net Asset or Losses on Dividends Distributions
Value, Securities Total from from Net in Excess of Distributions
Beginning Net Investment (both realized Investment Investment Net Investment from
Fiscal Year or Period of Period Income (Loss) and unrealized) Operations Income Income Capital Gains
--------------------- --------- -------------- -------------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Quasar
Fund (continued)
Class C
Year ended 9/30/98 ...... $ 27.85 $ (.35)(b) $ (6.09) $ (6.44) $ 0.00 $ 0.00 $ (1.23)
Year ended 9/30/97 ...... 26.14 (.42)(b) 6.24 5.82 0.00 0.00 (4.11)
Year ended 9/30/96 ...... 23.05 (.20) 8.10 7.90 0.00 0.00 (4.81)
Year ended 9/30/95 ...... 21.92 (.37)(b) 5.36 4.99 0.00 0.00 (3.86)
Year ended 9/30/94 ...... 23.88 (.36) (.78) (1.14) 0.00 0.00 (.82)
The Alliance Fund
Class A
Year ended 11/30/98 ..... $ 8.70 $ (.02)(b) $ (.54) $ (.56) $ 0.00 $ 0.00 $ (2.17)
Year ended 11/30/97 ..... 7.71 (.02)(b) 2.09 2.07 (.02) 0.00 (1.06)
Year ended 11/30/96 ..... 7.72 .02(b) 1.06 1.08 (.02) 0.00 (1.07)
Year ended 11/30/95 ..... 6.63 .02 2.08 2.10 (.01) 0.00 (1.00)
1/1/94 to 11/30/94** .... 6.85 .01 (.23) (.22) 0.00 0.00 0.00
Class B
Year ended 11/30/98 ..... $ 8.25 $ (.07)(b) $ (.50) $ (.57) $ 0.00 $ 0.00 $ (2.17)
Year ended 11/30/97 ..... 7.40 (.08)(b) 1.99 1.91 0.00 0.00 (1.06)
Year ended 11/30/96 ..... 7.49 (.01) .99 .98 0.00 0.00 (1.07)
Year ended 11/30/95 ..... 6.50 (.03)(b) 2.02 1.99 0.00 0.00 (1.00)
1/1/94 to 11/30/94** .... 6.76 (.03) (.23) (.26) 0.00 0.00 0.00
Class C
Year ended 11/30/98 ..... $ 8.26 $ (.07)(b) $ (.52) $ (.59) $ 0.00 $ 0.00 $ (2.17)
Year ended 11/30/97 ..... 7.41 (.08)(b) 1.99 1.91 0.00 0.00 (1.06)
Year ended 11/30/96 ..... 7.50 (.02) 1.00 .98 0.00 0.00 (1.07)
Year ended 11/30/95 ..... 6.50 (.03)(b) 2.03 2.00 0.00 0.00 (1.00)
1/1/94 to 11/30/94** .... 6.77 (.03) (.24) (.27) 0.00 0.00 0.00
5/3/93++ to 12/31/93 .... 6.67 (.02) .88 .86 0.00 0.00 (.76)
Alliance Growth and
Income Fund
Class A
Year ended 10/31/98 ..... $ 3.48 $ .03(b) $ .43 $ .46 $ (.04) $ 0.00 $ (.46)
Year ended 10/31/97 ..... 3.00 .04(b) .87 .91 (.05) 0.00 (.38)
Year ended 10/31/96 ..... 2.71 .05 .50 .55 (.05) 0.00 (.21)
Year ended 10/31/95 ..... 2.35 .02 .52 .54 (.06) 0.00 (.12)
Year ended 10/31/94 ..... 2.61 .06 (.08) (.02) (.06) 0.00 (.18)
Class B
Year ended 10/31/98 ..... $ 3.45 $ .01(b) $ .43 $ .44 $ (.02) $ 0.00 $ (.46)
Year ended 10/31/97 ..... 2.99 .02(b) .85 .87 (.03) 0.00 (.38)
Year ended 10/31/96 ..... 2.69 .03 .51 .54 (.03) 0.00 (.21)
Year ended 10/31/95 ..... 2.34 .01 .49 .50 (.03) 0.00 (.12)
Year ended 10/31/94 ..... 2.60 .04 (.08) (.04) (.04) 0.00 (.18)
Class C
Year ended 10/31/98 ..... $ 3.45 $ .01(b) $ .43 $ .44 $ (.02) $ 0.00 $ (.46)
Year ended 10/31/97 ..... 2.99 .02(b) .85 .87 (.03) 0.00 (.38)
Year ended 10/31/96 ..... 2.70 .03 .50 .53 (.03) 0.00 (.21)
Year ended 10/31/95 ..... 2.34 .01 .50 .51 (.03) 0.00 (.12)
Year ended 10/31/94 ..... 2.60 .04 (.08) (.04) (.04) 0.00 (.18)
Alliance Balanced Shares
Class A
Year ended 7/31/98 ...... $ 16.17 $ .33(b) $ 1.86 $ 2.19 $ (.32) $ 0.00 $ (2.07)
Year ended 7/31/97 ...... 14.01 .31(b) 3.97 4.28 (.32) 0.00 (1.80)
Year ended 7/31/96 ...... 15.08 .37 .45 .82 (.41) 0.00 (1.48)
Year ended 7/31/95 ...... 13.38 .46 1.62 2.08 (.36) 0.00 (.02)
Period ended 7/31/94** .. 14.40 .29 (.74) (.45) (.28) 0.00 (.29)
Class B
Year ended 7/31/98 ...... $ 15.83 $ .21(b) $ 1.81 $ 2.02 $ (.24) $ 0.00 $ (2.07)
Year ended 7/31/97 ...... 13.79 .19(b) 3.89 4.08 (.24) 0.00 (1.80)
Year ended 7/31/96 ...... 14.88 .28 .42 .70 (.31) 0.00 (1.48)
Year ended 7/31/95 ...... 13.23 .30 1.65 1.95 (.28) 0.00 (.02)
Period ended 7/31/94** .. 14.27 .22 (.75) (.53) (.22) 0.00 (.29)
Class C
Year ended 7/31/98 ...... $ 15.86 $ .21(b) $ 1.81 $ 2.02 $ (.24) $ 0.00 $ (2.07)
Year ended 7/31/97 ...... 13.81 .20(b) 3.89 4.09 (.24) 0.00 (1.80)
Year ended 7/31/96 ...... 14.89 .26 .45 .71 (.31) 0.00 (1.48)
Year ended 7/31/95 ...... 13.24 .30 1.65 1.95 (.28) 0.00 (.02)
Period ended 7/31/94** .. 14.28 .24 (.77) (.53) (.22) 0.00 (.29)
Alliance Utility Income Fund
Class A
Year ended 11/30/98 ..... $ 12.48 $ .30(b)(c) $ 2.69 $ 2.99 $ (.32) $ 0.00 $ (.47)
Year ended 11/30/97 ..... 10.59 .32(b)(c) 2.04 2.36 (.34) 0.00 (.13)
Year ended 11/30/96 ..... 10.22 .18(b)(c) .65 .83 (.46) 0.00 0.00
Year ended 11/30/95 ..... 8.97 .27(c) 1.43 1.70 (.45) 0.00 0.00
Year ended 11/30/94 ..... 9.92 .42(c) (.89) (.47) (.48) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the footnotes on page 66.
<CAPTION>
Less Distributions Ratios/Supplemental Data
------------------ -----------------------------------------------------------
Total Net Asset Ratio of Ratio of Net
Dividends Value, Net Assets, Expenses Income/Loss
and End of Total End of Period to Average to Average Portfolio
Fiscal Year or Period Distributions Period Return (a) (000's omitted) Net Assets Net Assets Turnover Rate
--------------------- ------------- --------- ---------- --------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Quasar
Fund (continued)
Class C
Year ended 9/30/98 ...... $ (1.23) $ 20.18 (24.05)% $ 182,110 2.38%(f) (1.35)% 109%
Year ended 9/30/97 ...... (4.11) 27.85 26.74 145,494 2.50 (1.72) 135
Year ended 9/30/96 ...... (4.81) 26.14 41.46 28,541 2.61 (1.94) 168
Year ended 9/30/95 ...... (3.86) 23.05 29.87 1,611 2.64* (1.76)* 160
Year ended 9/30/94 ...... (.82) 21.92 (4.92) 1,220 2.48 (1.96) 110
The Alliance Fund
Class A
Year ended 11/30/98 ..... $ (2.17) $ 5.97 (8.48)% $ 953,181 1.03% (.36)% 106%
Year ended 11/30/97 ..... (1.08) 8.70 31.82 1,201,435 1.03 (.29) 158
Year ended 11/30/96 ..... (1.09) 7.71 16.49 999,067 1.04 .30 80
Year ended 11/30/95 ..... (1.01) 7.72 37.87 945,309 1.08 .31 81
1/1/94 to 11/30/94** .... 0.00 6.63 (3.21) 760,679 1.05* .21* 63
Class B
Year ended 11/30/98 ..... $ (2.17) $ 5.51 (9.27)% $ 85,456 1.84% (1.17)% 106%
Year ended 11/30/97 ..... (1.06) 8.25 30.74 70,461 1.85 (1.12) 158
Year ended 11/30/96 ..... (1.07) 7.40 15.47 44,450 1.87 (.53) 80
Year ended 11/30/95 ..... (1.00) 7.49 36.61 31,738 1.90 (.53) 81
1/1/94 to 11/30/94** .... 0.00 6.50 (3.85) 18,138 1.89* (.60)* 63
Class C
Year ended 11/30/98 ..... $ (2.17) $ 5.50 (9.58)% $ 21,231 1.84% (1.18)% 106%
Year ended 11/30/97 ..... (1.06) 8.26 30.72 18,871 1.83 (1.10) 158
Year ended 11/30/96 ..... (1.07) 7.41 15.48 13,899 1.86 (.51) 80
Year ended 11/30/95 ..... (1.00) 7.50 36.79 10,078 1.89 (.51) 81
1/1/94 to 11/30/94** .... 0.00 6.50 (3.99) 6,230 1.87* (.59)* 63
5/3/93++ to 12/31/93 .... (.76) 6.77 13.95 4,006 1.94* (.74)* 66
Alliance Growth and
Income Fund
Class A
Year ended 10/31/98 ..... $ (.50) $ 3.44 14.70% $ 988,965 .93%(f) .96% 89%
Year ended 10/31/97 ..... (.43) 3.48 33.28 787,566 .92(f) 1.39 88
Year ended 10/31/96 ..... (.26) 3.00 21.51 553,151 .97 1.73 88
Year ended 10/31/95 ..... (.18) 2.71 24.21 458,158 1.05 1.88 142
Year ended 10/31/94 ..... (.24) 2.35 (.67) 414,386 1.03 2.36 68
Class B
Year ended 10/31/98 ..... $ (.48) $ 3.41 14.07% $ 787,730 1.72%(f) .17% 89%
Year ended 10/31/97 ..... (.41) 3.45 31.83 456,399 1.72(f) .56 88
Year ended 10/31/96 ..... (.24) 2.99 21.20 235,263 1.78 .91 88
Year ended 10/31/95 ..... (.15) 2.69 22.84 136,758 1.86 1.05 142
Year ended 10/31/94 ..... (.22) 2.34 (1.50) 102,546 1.85 1.56 68
Class C
Year ended 10/31/98 ..... $ (.48) $ 3.41 14.07% $ 179,487 1.72%(f) .18% 89%
Year ended 10/31/97 ..... (.41) 3.45 31.83 106,526 1.71(f) .58 88
Year ended 10/31/96 ..... (.24) 2.99 20.72 61,356 1.76 .93 88
Year ended 10/31/95 ..... (.15) 2.70 23.30 35,835 1.84 1.04 142
Year ended 10/31/94 ..... (.22) 2.34 (1.50) 19,395 1.84 1.61 68
Alliance Balanced Shares
Class A
Year ended 7/31/98 ...... $ (2.39) $ 15.97 14.99% $ 123,623 1.30%(f) 2.07% 145%
Year ended 7/31/97 ...... (2.12) 16.17 33.46 115,500 1.47(f) 2.11 207
Year ended 7/31/96 ...... (1.89) 14.01 5.23 102,567 1.38 2.41 227
Year ended 7/31/95 ...... (.38) 15.08 15.99 122,033 1.32 3.12 179
Period ended 7/31/94** .. (.57) 13.38 (3.21) 157,637 1.27* 2.50* 116
Class B
Year ended 7/31/98 ...... $ (2.31) $ 15.54 14.13% $ 47,782 2.06%(f) 1.34% 145%
Year ended 7/31/97 ...... (2.04) 15.83 32.34 24,192 2.25(f) 1.32 207
Year ended 7/31/96 ...... (1.79) 13.79 4.45 18,393 2.16 1.61 227
Year ended 7/31/95 ...... (.30) 14.88 15.07 15,080 2.11 2.30 179
Period ended 7/31/94** .. (.51) 13.23 (3.80) 14,347 2.05* 1.73* 116
Class C
Year ended 7/31/98 ...... $ (2.31) $ 15.57 14.09% $ 10,855 2.05%(f) 1.36% 145%
Year ended 7/31/97 ...... (2.04) 15.86 32.37 5,510 2.23(f) 1.37 207
Year ended 7/31/96 ...... (1.79) 13.81 4.52 6,096 2.15 1.63 227
Year ended 7/31/95 ...... (.30) 14.89 15.06 5,108 2.09 2.32 179
Period ended 7/31/94** .. (.51) 13.24 (3.80) 6,254 2.03* 1.81* 116
Alliance Utility Income Fund
Class A
Year ended 11/30/98 ..... $ (.79) $ 14.68 24.99% $ 9,793 1.50%(d) 2.23% 16%
Year ended 11/30/97 ..... (.47) 12.48 23.10 4,117 1.50(d) 2.89 37
Year ended 11/30/96 ..... (.46) 10.59 8.47 3,294 1.50(d) 1.67 98
Year ended 11/30/95 ..... (.45) 10.22 19.58 2,748 1.50(d) 2.48 162
Year ended 11/30/94 ..... (.48) 8.97 (4.86) 1,068 1.50(d) 4.13 30
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
60 & 61
<PAGE>
<TABLE>
<CAPTION>
Income from Investment Operations Less Dividends and Distributions
-------------------------------------------- -----------------------------------------
Net Gains
Net Asset or Losses on Dividends Distributions
Value, Securities Total from from Net in Excess of Distributions
Beginning Net Investment (both realized Investment Investment Net Investment from
Fiscal Year or Period of Period Income (Loss) and unrealized) Operations Income Income Capital Gains
--------------------- --------- -------------- -------------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Utility Income Fund
(continued)
Class B
Year ended 11/30/98 ..... $ 12.46 $ .21(b)(c) $ 2.67 $ 2.88 $ (.25) $ 0.00 $ (.47)
Year ended 11/30/97 ..... 10.57 .25(b)(c) 2.04 2.29 (.27) 0.00 (.13)
Year ended 11/30/96 ..... 10.20 .10(b)(c) .67 .77 (.40) 0.00 0.00
Year ended 11/30/95 ..... 8.96 .18(c) 1.45 1.63 (.39) 0.00 0.00
Year ended 11/30/94 ..... 9.91 .37(c) (.91) (.54) (.41) 0.00 0.00
Class C
Year ended 11/30/98 ..... $ 12.47 $ .21(b)(c) $ 2.69 $ 2.90 $ (.25) $ 0.00 $ (.47)
Year ended 11/30/97 ..... 10.59 .25(b)(c) 2.03 2.28 (.27) 0.00 (.13)
Year ended 11/30/96 ..... 10.22 .11(b)(c) .66 .77 (.40) 0.00 0.00
Year ended 11/30/95 ..... 8.97 .18(c) 1.46 1.64 (.39) 0.00 0.00
Year ended 11/30/94 ..... 9.92 .39(c) (.93) (.54) (.41) 0.00 0.00
Alliance Real Estate
Investment Fund
Class A
Year ended 8/31/98 ...... $ 12.80 $ .52(b) $ (2.33) $ (1.81) $ (.51) $ 0.00 $ (.01)
10/1/96+ to 8/31/97 ..... 10.00 .30(b) 2.88 3.18 (.38)(g) 0.00 0.00
Class B
Year ended 8/31/98 ...... $ 12.79 $ .42(b) $ (2.33) $ (1.91) $ (.43) $ 0.00 $ (.01)
10/1/96+ to 8/31/97 ..... 10.00 .23(b) 2.89 3.12 (.33)(g) 0.00 0.00
Class C
Year ended 8/31/98 ...... $ 12.79 $ .42(b) $ (2.33) $ (1.91) $ (.43) $ 0.00 $ (.01)
10/1/96+ to 8/31/97 ..... 10.00 .23(b) 2.89 3.12 (.33)(g) 0.00 0.00
Alliance New Europe Fund
Class A
Year ended 7/31/98 ...... $ 18.61 $ .05(b) $ 5.28 $ 5.33 $ 0.00 $ (.04) $ (2.05)
Year ended 7/31/97 ...... 15.84 .07(b) 4.20 4.27 (.15) (.03) (1.32)
Year ended 7/31/96 ...... 15.11 .18 1.02 1.20 0.00 0.00 (.47)
Year ended 7/31/95 ...... 12.66 .04 2.50 2.54 (.09) 0.00 0.00
Period ended 7/31/94** .. 12.53 .09 .04 .13 0.00 0.00 0.00
Class B
Year ended 7/31/98 ...... $ 17.87 $ (.08)(b) $ 5.02 $ 4.94 $ 0.00 $ 0.00 $ (2.05)
Year ended 7/31/97 ...... 15.31 (.04)(b) 4.02 3.98 0.00 (.10) (1.32)
Year ended 7/31/96 ...... 14.71 .08 .99 1.07 0.00 0.00 (.47)
Year ended 7/31/95 ...... 12.41 (.05) 2.44 2.39 (.09) 0.00 0.00
Period ended 7/31/94** .. 12.32 .07 .02 .09 0.00 0.00 0.00
Class C
Year ended 7/31/98 ...... $ 17.89 $ (.08)(b) $ 5.01 $ 4.93 $ 0.00 $ 0.00 $ (2.05)
Year ended 7/31/97 ...... 15.33 (.04)(b) 4.02 3.98 0.00 (.10) (1.32)
Year ended 7/31/96 ...... 14.72 .08 1.00 1.08 0.00 0.00 (.47)
Year ended 7/31/95 ...... 12.42 (.07) 2.46 2.39 (.09) 0.00 0.00
Period ended 7/31/94** .. 12.33 .06 .03 .09 0.00 0.00 0.00
Alliance Worldwide
Privatization Fund
Class A
Year ended 6/30/98 ...... $ 13.26 $ .10(b) $ .85 $ .95 $ (.18) $ 0.00 $ (1.36)
Year ended 6/30/97 ...... 12.13 .15(b) 2.55 2.70 (.15) 0.00 (1.42)
Year ended 6/30/96 ...... 10.18 .10(b) 1.85 1.95 0.00 0.00 0.00
Year ended 6/30/95 ...... 9.75 .06 .37 .43 0.00 0.00 0.00
6/2/94+ to 6/30/94 ...... 10.00 .01 (.26) (.25) 0.00 0.00 0.00
Class B
Year ended 6/30/98 ...... $ 13.04 $ .02(b) $ .82 $ .84 $ (.15) $ 0.00 $ (1.36)
Year ended 6/30/97 ...... 11.96 .08(b) 2.50 2.58 (.08) 0.00 (1.42)
Year ended 6/30/96 ...... 10.10 (.02) 1.88 1.86 0.00 0.00 0.00
Year ended 6/30/95 ...... 9.74 .02 .34 .36 0.00 0.00 0.00
6/2/94+ to 6/30/94 ...... 10.00 .00 (.26) (.26) 0.00 0.00 0.00
Class C
Year ended 6/30/98 ...... $ 13.04 $ .05(b) $ .79 $ .84 $ (.15) $ 0.00 $ (1.36)
Year ended 6/30/97 ...... 11.96 .12(b) 2.46 2.58 (.08) 0.00 (1.42
Year ended 6/30/96 ...... 10.10 .03 1.83 1.86 0.00 0.00 0.00
2/8/95++ to 6/30/95 ..... 9.53 .05 .52 .57 0.00 0.00 0.00
Alliance International
Premier Growth
Class A
3/2/98+ to 11/30/98 ..... $ 10.00 $ (.08)(b)(c) $ (.29) $ (.37) $ 0.00 $ 0.00 $ 0.00
Class B
3/2/98+ to 11/30/98 ..... $ 10.00 $ (.13)(b)(c) $ (.29) $ (.42) $ 0.00 $ 0.00 $ 0.00
Class C
3/2/98+ to 11/30/98 ..... $ 10.00 $ (.15)(b)(c) $ (.28) $ (.43) $ 0.00 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the footnotes on page 66.
<CAPTION>
Less Distributions Ratios/Supplemental Data
------------------ -----------------------------------------------------------
Total Net Asset Ratio of Ratio of Net
Dividends Value, Net Assets, Expenses Income/Loss
and End of Total End of Period to Average to Average Portfolio
Fiscal Year or Period Distributions Period Return (a) (000's omitted) Net Assets Net Assets Turnover Rate
--------------------- ------------- --------- ---------- --------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Utility Income
Fund (continued)
Class B
Year ended 11/30/98 .... $ (.72) $ 14.62 24.02% $ 35,550 2.20%(d) 1.56% 16%
Year ended 11/30/97 .... (.40) 12.46 22.35 14,782 2.20(d) 2.27 37
Year ended 11/30/96 .... (.40) 10.57 7.82 13,561 2.20(d) .95 98
Year ended 11/30/95 .... (.39) 10.20 18.66 10,988 2.20(d) 1.60 162
Year ended 11/30/94 .... (.41) 8.96 (5.59) 2,353 2.20(d) 3.53 30
Class C
Year ended 11/30/98 .... $ (.72) $ 14.65 24.16% $ 7,298 2.20%(d) 1.54% 16%
Year ended 11/30/97 .... (.40) 12.47 22.21 3,413 2.20(d) 2.27 37
Year ended 11/30/96 .... (.40) 10.59 7.81 3,376 2.20(d) .94 98
Year ended 11/30/95 .... (.39) 10.22 18.76 3,500 2.20(d) 1.88 162
Year ended 11/30/94 .... (.41) 8.97 (5.58) 2,651 2.20(d) 3.60 30
Alliance Real Estate
Investment Fund
Class A
Year ended 8/31/98 ..... $ (.52) $ 10.47 (14.90)% $ 51,214 1.55% 3.87% 23%
10/1/96+ to 8/31/97 .... (.38) 12.80 32.24 37,638 1.77*(f) 2.73* 20
Class B
Year ended 8/31/98 ..... $ (.44) $ 10.44 (15.56)% $268,856 2.26% 3.16% 23%
10/1/96+ to 8/31/97 .... (.33) 12.79 31.49 186,802 2.44*(f) 2.08* 20
Class C
Year ended 8/31/98 ..... $ (.44) $ 10.44 (15.56)% $ 69,575 2.26% 3.15% 23%
10/1/96+ to 8/31/97 .... (.33) 12.79 31.49 42,719 2.43*(f) 2.06* 20
Alliance New Europe Fund
Class A
Year ended 7/31/98 ..... $ (2.09) $ 21.85 32.21% $130,777 1.85%(f) .25% 99%
Year ended 7/31/97 ..... (1.50) 18.61 28.78 78,578 2.05(f) .40 89
Year ended 7/31/96 ..... (.47) 15.84 8.20 74,026 2.14 1.10 69
Year ended 7/31/95 ..... (.09) 15.11 20.22 86,112 2.09 .37 74
Period ended 7/31/94** . 0.00 12.66 1.04 86,739 2.06* 1.85* 35
Class B
Year ended 7/31/98 ..... $ (2.05) $ 20.76 31.22% $137,425 2.56%(f) (.40)% 99%
Year ended 7/31/97 ..... (1.42) 17.87 27.76 66,032 2.75(f) (.23) 89
Year ended 7/31/96 ..... (.47) 15.31 7.53 42,662 2.86 .59 69
Year ended 7/31/95 ..... (.09) 14.71 19.42 34,527 2.79 (.33) 74
Period ended 7/31/94** . 0.00 12.41 .73 31,404 2.76* 1.15* 35
Class C
Year ended 7/31/98 ..... $ (2.05) $ 20.77 31.19% $ 39,618 2.56%(f) (.41)% 99%
Year ended 7/31/97 ..... (1.42) 17.89 27.73 16,907 2.74(f) (.23) 89
Year ended 7/31/96 ..... (.47) 15.33 7.59 10,141 2.87 .58 69
Year ended 7/31/95 ..... (.09) 14.72 19.40 7,802 2.78 (.33) 74
Period ended 7/31/94** . 0.00 12.42 .73 11,875 2.76* 1.15* 35
Alliance Worldwide
Privatization Fund
Class A
Year ended 6/30/98 ..... $ (1.54) $ 12.67 9.11% $467,960 1.73% .80% 53%
Year ended 6/30/97 ..... (1.57) 13.26 25.16 561,793 1.72 1.27 48
Year ended 6/30/96 ..... 0.00 12.13 19.16 672,732 1.87 .95 28
Year ended 6/30/95 ..... 0.00 10.18 4.41 13,535 2.56 .66 36
6/2/94+ to 6/30/94 ..... 0.00 9.75 (2.50) 4,990 2.75* 1.03* 0
Class B
Year ended 6/30/98 ..... $ (1.51) $ 12.37 8.34% $156,348 2.45% .20% 53%
Year ended 6/30/97 ..... (1.50) 13.04 24.34 121,173 2.43 .66 48
Year ended 6/30/96 ..... 0.00 11.96 18.42 83,050 2.83 (.20) 28
Year ended 6/30/95 ..... 0.00 10.10 3.70 79,359 3.27 .01 36
6/2/94+ to 6/30/94 ..... 0.00 9.74 (2.60) 22,859 3.45* .33* 0
Class C
Year ended 6/30/98 ..... $ (1.51) $ 12.37 8.34% $ 26,635 2.44% .38% 53%
Year ended 6/30/97 ..... (1.50) 13.04 24.33 12,929 2.42 1.06 48
Year ended 6/30/96 ..... 0.00 11.96 18.42 2,383 2.57 .63 28
2/8/95++ to 6/30/95 .... 0.00 10.10 5.98 338 3.27* 1.04* 36
Alliance International
Premier Growth
Class A
3/3/98+ to 11/30/98 .... $ 0.00 $9.63 (3.70)% $ 7,255 2.50%*(d) (.90)%* 151%
Class B
3/3/98+ to 11/30/98 .... $ 0.00 $9.58 (4.20)% $ 11,710 3.20%*(d) (1.41)%* 151%
Class C
3/3/98+ to 11/30/98 .... $ 0.00 $9.57 (4.30)% $ 3,120 3.20%*(d) (1.69)%* 151%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
62 & 63
<PAGE>
<TABLE>
<CAPTION>
Income from Investment Operations Less Dividends and Distributions
-------------------------------------------- -----------------------------------------
Net Gains
Net Asset or Losses on Dividends Distributions
Value, Securities Total from from Net in Excess of Distributions
Beginning Net Investment (both realized Investment Investment Net Investment from
Fiscal Year or Period of Period Income (Loss) and unrealized) Operations Income Income Capital Gains
--------------------- --------- -------------- -------------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Global
Small Cap Fund
Class A
Year ended 7/31/98 ..... $ 12.87 $ (.11)(b) $ .37 $ .26 $ 0.00 $ 0.00 $ (.99)
Year ended 7/31/97 ..... 11.61 (.15)(b) 2.97 2.82 0.00 0.00 (1.56)
Year ended 7/31/96 ..... 10.38 (.14)(b) 1.90 1.76 0.00 0.00 (.53)
Year ended 7/31/95 ..... 11.08 (.09) 1.50 1.41 0.00 0.00 (2.11)(e)
Period ended 7/31/94** . 11.24 (.15)(b) (.01) (.16) 0.00 0.00 0.00
Class B
Year ended 7/31/98 ..... $ 12.03 $ (.18)(b) $ .34 $ .16 $ 0.00 $ 0.00 $ (.99)
Year ended 7/31/97 ..... 11.03 (.21)(b) 2.77 2.56 0.00 0.00 (1.56)
Year ended 7/31/96 ..... 9.95 (.20)(b) 1.81 1.61 0.00 0.00 (.53)
Year ended 7/31/95 ..... 10.78 (.12) 1.40 1.28 0.00 0.00 (2.11)(e)
Period ended 7/31/94** . 11.00 (.17)(b) (.05) (.22) 0.00 0.00 0.00
Class C
Year ended 7/31/98 ..... $ 12.05 $ (.19)(b) $ .35 $ .16 $ 0.00 $ 0.00 $ (.99)
Year ended 7/31/97 ..... 11.05 (.22)(b) 2.78 2.56 0.00 0.00 (1.56)
Year ended 7/31/96 ..... 9.96 (.20)(b) 1.82 1.62 0.00 0.00 (.53)
Year ended 7/31/95 ..... 10.79 (.17) 1.45 1.28 0.00 0.00 (2.11)(e)
Period ended 7/31/94** . 11.00 (.17)(b) (.04) (.21) 0.00 0.00 0.00
Alliance International Fund
Class A
Year ended 6/30/98 ..... $ 18.69 $ (.01)(b) $ 1.13 $ 1.12 $ (.05) $ 0.00 $ (1.21)
Year ended 6/30/97 ..... 18.32 .06(b) 1.51 1.57 (.12) 0.00 (1.08)
Year ended 6/30/96 ..... 16.81 .05(b) 2.51 2.56 0.00 0.00 (1.05)
Year ended 6/30/95 ..... 18.38 .04 .01 .05 0.00 0.00 (1.62)
Year ended 6/30/94 ..... 16.01 (.09) 3.02 2.93 0.00 0.00 (.56)
Class B
Year ended 6/30/98 ..... $ 17.71 $ (.16)(b) $ 1.07 $ .91 $ 0.00 $ 0.00 $ (1.21)
Year ended 6/30/97 ..... 17.45 (.09)(b) 1.43 1.34 0.00 0.00 (1.08)
Year ended 6/30/96 ..... 16.19 (.07)(b) 2.38 2.31 0.00 0.00 (1.05)
Year ended 6/30/95 ..... 17.90 (.01) (.08) (.09) 0.00 0.00 (1.62)
Year ended 6/30/94 ..... 15.74 (.19)(b) 2.91 2.72 0.00 0.00 (.56)
Class C
Year ended 6/30/98 ..... $ 17.73 $ (.15)(b) $ 1.05 $ .90 $ 0.00 $ 0.00 $ (1.21)
Year ended 6/30/97 ..... 17.46 (.09)(b) 1.44 1.35 0.00 0.00 (1.08)
Year ended 6/30/96 ..... 16.20 (.07)(b) 2.38 2.31 0.00 0.00 (1.05)
Year ended 6/30/95 ..... 17.91 (.14) .05 (.09) 0.00 0.00 (1.62)
Year ended 6/30/94 ..... 15.74 (.11) 2.84 2.73 0.00 0.00 (.56)
Alliance Greater
China '97 Fund
Class A
9/3/97+ to 7/31/98 ..... $ 10.00 $ .08(b)(c) $ (5.18) $ (5.10) $ (.06) $ 0.00 $ 0.00
Class B
9/3/97+ to 7/31/98 ..... $ 10.00 $ .03(b)(c) $ (5.17) $ (5.14) $ (.03) $ (.01) $ 0.00
Class C
9/3/97+ to 7/31/98 ..... $ 10.00 $ .03(b)(c) $ (5.17) $ (5.14) $ (.03) $ (.01) $ 0.00
Alliance All-Asia
Investment Fund
Class A
Year ended 10/31/98 .... $ 7.54 $ (.10)(b)(c) $ (1.58) $ (1.68) $ 0.00 $ 0.00 $ 0.00
Year ended 10/31/97 .... 11.04 (.21)(b)(c) (2.95) (3.16) 0.00 0.00 (.34)
Year ended 10/31/96 .... 10.45 (.21)(b)(c) .88 .67 0.00 0.00 (.08)
11/28/94+ to 10/31/95 .. 10.00 (.19)(c) .64 .45 0.00 0.00 0.00
Class B
Year ended 10/31/98 .... $ 7.39 $ (.14)(b)(c) $ (1.54) $ (1.68) $ 0.00 $ 0.00 $ 0.00
Year ended 10/31/97 .... 10.90 (.28)(b)(c) (2.89) (3.17) 0.00 0.00 (.34)
Year ended 10/31/96 .... 10.41 (.28)(b)(c) .85 .57 0.00 0.00 (.08)
11/28/94+ to 10/31/95 .. 10.00 (.25)(c) .66 .41 0.00 0.00 0.00
Class C
Year ended 10/31/98 .... $ 7.40 $ (.14)(b)(c) $ (1.54) $ (1.68) $ 0.00 $ 0.00 $ 0.00
Year ended 10/31/97 .... 10.91 (.27)(b)(c) (2.90) (3.17) 0.00 0.00 (.34)
Year ended 10/31/96 .... 10.41 (.28)(b)(c) .86 .58 0.00 0.00 (.08)
11/28/94+ to 10/31/95 .. 10.00 (.35)(c) .76 .41 0.00 0.00 0.00
Alliance Global
Environment Fund (h)
Class A
Year ended 10/31/98 .... $ 18.77 $ (.24)(b) $ (1.12) $ (1.36) $ 0.00 $ 0.00 $ (9.07)
Year ended 10/31/97 .... 16.48 (.23)(b) 3.65 3.42 0.00 0.00 (1.13)
Year ended 10/31/96 .... 12.37 (.13) 4.26 4.13 (.02) 0.00 0.00
Year ended 10/31/95 .... 11.74 .03 .60 .63 0.00 0.00 0.00
Year ended 10/31/94 .... 10.97 0.00 .77 .77 0.00 0.00 0.00
Class B
Year ended 10/31/98 .... $ 18.76 $ (.27)(b) $ (1.12) $ (1.39) $ 0.00 $ 0.00 $ (9.07)
10/3/97++ to 10/31/97 .. 19.92 (.20)(b) (.96) (1.16) 0.00 0.00 0.00
Class C
11/5/97++ to 10/31/98 .. $ 19.15 $ (.27)(b) $ (1.54) $ (1.81) $ 0.00 $ 0.00 $ (9.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the footnotes on page 66.
<CAPTION>
Less Distributions Ratios/Supplemental Data
------------------ -------------------------------------------------------------
Total Net Asset Ratio of Ratio of Net
Dividends Value, Net Assets, Expenses Income/Loss
and End of Total End of Period to Average to Average Portfolio
Fiscal Year or Period Distributions Period Return (a) (000's omitted) Net Assets Net Assets Turnover Rate
--------------------- ------------- --------- ---------- --------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Global
Small Cap Fund
Class A
Year ended 7/31/98 ..... $ (.99) $ 12.14 2.49% $ 82,843 2.16%(f) (.88)% 113%
Year ended 7/31/97 ..... (1.56) 12.87 26.47 85,217 2.41(f) (1.25) 129
Year ended 7/31/96 ..... (.53) 11.61 17.46 68,623 2.51 (1.22) 139
Year ended 7/31/95 ..... (2.11) 10.38 16.62 60,057 2.54(d) (1.17) 128
Period ended 7/31/94** . 0.00 11.08 (1.42) 61,372 2.42* (1.26)* 78
Class B
Year ended 7/31/98 ..... $ (.99) $ 11.20 1.80% $ 38,827 2.88%(f) (1.58)% 113%
Year ended 7/31/97 ..... (1.56) 12.03 25.42 31,946 3.11(f) (1.92) 129
Year ended 7/31/96 ..... (.53) 11.03 16.69 14,247 3.21 (1.88) 139
Year ended 7/31/95 ..... (2.11) 9.95 15.77 5,164 3.20(d) (1.92) 128
Period ended 7/31/94** . 0.00 10.78 (2.00) 3,889 3.15* (1.93)* 78
Class C
Year ended 7/31/98 ..... $ (.99) $ 11.22 1.79% $ 9,471 2.88%(f) (1.59)% 113%
Year ended 7/31/97 ..... (1.56) 12.05 25.37 8,718 3.10(f) (1.93) 129
Year ended 7/31/96 ..... (.53) 11.05 16.77 4,119 3.19 (1.85) 139
Year ended 7/31/95 ..... (2.11) 9.96 15.75 1,407 3.25(d) (2.10) 128
Period ended 7/31/94** . 0.00 10.79 (1.91) 1,330 3.13* (1.92)* 78
Alliance International Fund
Class A
Year ended 6/30/98 ..... $ (1.26) $ 18.55 6.79% $131,565 1.65%(d) (.05)% 121%
Year ended 6/30/97 ..... (1.20) 18.69 9.30 190,173 1.74(f) .31 94
Year ended 6/30/96 ..... (1.05) 18.32 15.83 196,261 1.72 .31 78
Year ended 6/30/95 ..... (1.62) 16.81 .59 165,584 1.73 .26 119
Year ended 6/30/94 ..... (.56) 18.38 18.68 201,916 1.90 (.50) 97
Class B
Year ended 6/30/98 ..... $ (1.21) $ 17.41 5.92% $ 71,370 2.49%(d) (.90)% 121%
Year ended 6/30/97 ..... (1.08) 17.71 8.37 77,725 2.59(f) (.51) 94
Year ended 6/30/96 ..... (1.05) 17.45 14.87 72,470 2.55 (.46) 78
Year ended 6/30/95 ..... (1.62) 16.19 (.22) 48,998 2.57 (.62) 119
Year ended 6/30/94 ..... (.56) 17.90 17.65 29,943 2.78 (1.15) 97
Class C
Year ended 6/30/98 ..... $ (1.21) $ 17.42 5.85% $ 20,428 2.48%(d) (.90)% 121%
Year ended 6/30/97 ..... (1.08) 17.73 8.42 23,268 2.58(f) (.51) 94
Year ended 6/30/96 ..... (1.05) 17.46 14.85 26,965 2.53 (.47) 78
Year ended 6/30/95 ..... (1.62) 16.20 (.22) 19,395 2.54 (.88) 119
Year ended 6/30/94 ..... (.56) 17.91 17.72 13,503 2.78 (1.12) 97
Alliance Greater
China '97 Fund
Class A
9/3/97+ to 7/31/98 ..... $ (.06) $ 4.84 (51.20)% $ 445 2.52%(d)(f)* 1.20%* 58%
Class B
9/3/97+ to 7/31/98 ..... $ (.04) $ 4.82 (51.53)% $ 1,551 3.22%(d)(f)* .53%* 58%
Class C
9/3/97+ to 7/31/98 ..... $ (.04) $ 4.82 (51.53)% $ 102 3.22%(d)(f)* .50%* 58%
Alliance All-Asia
Investment Fund
Class A
Year ended 10/31/98 .... $ 0.00 $ 5.86 (22.28)% $ 3,778 3.74%(d) (1.50)% 93%
Year ended 10/31/97 .... (.34) 7.54 (29.61) 5,916 3.45(d) (1.97) 70
Year ended 10/31/96 .... (.08) 11.04 6.43 12,284 3.37*(d) (1.75) 66
11/28/94+ to 10/31/95 .. 0.00 10.45 4.50 2,870 4.42*(d) (1.87)* 90
Class B
Year ended 10/31/98 .... $ 0.00 $ 5.71 (22.73)% $ 8,844 4.49%(d) (2.22)% 93%
Year ended 10/31/97 .... (.34) 7.39 (30.09) 11,439 4.15(d) (2.67) 70
Year ended 10/31/96 .... (.08) 10.90 5.49 23,784 4.07(d) (2.44) 66
11/28/94+ to 10/31/95 .. 0.00 10.41 4.10 5,170 5.20*(d) (2.64)* 90
Class C
Year ended 10/31/98 .... $ 0.00 $ 5.72 (22.70)% $ 1,717 4.48%(d) 2.20% 93%
Year ended 10/31/97 .... (.34) 7.40 (30.06) 1,859 4.15(d) (2.66) 70
Year ended 10/31/96 .... (.08) 10.91 5.59 4,228 4.07(d) (2.42) 66
11/28/94+ to 10/31/95 .. 0.00 10.41 4.10 597 5.84*(d) (3.41) 90
Alliance Global
Environment Fund (h)
Class A
Year ended 10/31/98 .... $ (9.07) $ 8.34 (10.51)% $ 13,295 2.80%(f) (2.27)% 205%
Year ended 10/31/97 .... (1.13) 18.77 23.51 52,378 2.39 (1.35) 145
Year ended 10/31/96 .... (.02) 16.48 33.48 100,271 1.60 (.85) 268
Year ended 10/31/95 .... 0.00 12.37 5.37 85,416 1.57 .21 109
Year ended 10/31/94 .... 0.00 11.74 7.02 81,102 1.67 (.04) 42
Class B
Year ended 10/31/98 .... $ (9.07) $ 8.30 (10.79)% $ 152 3.52%(f) (2.93)% 205%
10/3/97++ to 10/31/97 .. 0.00 18.76 (5.82) 235 20.84 (1.03) 145
Class C
11/5/97++ to 10/31/98 .. $ (9.07) $ 8.27 (12.88)% $ 31 3.39%(f) (2.75)% 205%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
64 & 65
<PAGE>
+ Commencement of operations.
++ Commencement of distribution.
* Annualized.
** Reflects a change in fiscal year end.
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and
a redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment returns calculated for periods
of less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waiver and expense reimbursement.
(d) Net of expenses assumed and/or waived/reimbursed. If the following Funds
had borne all expenses in their most recent five fiscal years, their
expense ratios, without giving effect to the expense offset arrangement
described in (i) below, would have been as follows:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Alliance All-Asia Investment Fund
Class A -- 10.57%* 3.61% 3.57% 4.63%
Class B -- 11.32%* 4.33% 4.27% 5.39%
Class C -- 11.38%* 4.30% 4.27% 5.42%
Alliance Growth Fund
Class A 1.46% -- -- -- --
Class B 2.13% -- -- -- --
Class C 2.13%* -- -- -- --
Alliance Global Small Cap Fund
Class A -- 2.61% -- -- --
Class B -- 3.27% -- -- --
Class C -- 3.31% -- -- --
Alliance Utility Income Fund
Class A 13.72% 4.86%* 3.38% 3.55% 2.48%
Class B 14.42% 5.34%* 4.08% 4.28% 3.21%
Class C 14.42% 5.99%* 4.07% 4.28% 3.22%
Alliance International Fund
Class A -- -- -- -- 1.80%
Class B -- -- -- -- 2.64%
Class C -- -- -- -- 2.63%
Alliance Greater China '97 Fund
Class A -- -- -- -- 18.27%*
Class B -- -- -- -- 19.18%*
Class C -- -- -- -- 19.37%*
Alliance International Premier Growth Fund
Class A -- -- -- -- 5.19%
Class B -- -- -- -- 6.14%
Class C -- -- -- -- 6.00%
</TABLE>
- --------------------------------------------------------------------------------
For the expense ratios of the Funds in years prior to fiscal year 1993, assuming
the Funds had borne all expenses, please see the Financial Statements in each
Fund's Statement of Additional Information.
(e) "Distributions from Net Realized Gains" includes a return of capital of
$(.12).
(f) Amounts do not reflect the impact of expense offset arrangements with the
transfer agent. Taking into account such expense offset arrangements, the
ratio of expenses to average net assets, assuming the assumption and/or
waiver/reimbursement of expenses described in (f) above, would have been
as follows:
Alliance Balanced Shares 1997 1998
Class A 1.46% 1.29%
Class B 2.24% 2.05%
Class C 2.22% 2.04%
Alliance Real Estate
Investment Fund 1997 1998
Class A 1.77% --
Class B 2.43% --
Class C 2.42% --
Alliance Growth Fund 1997 1998
Class A 1.25% 1.21%
Class B 1.95% 1.93%
Class C 1.95% 1.92%
Alliance International Fund 1997 1998
Class A 1.73% --
Class B 2.58% --
Class C 2.56% --
Alliance Global
Small Cap Fund 1997 1998
Class A 2.38% 2.14%
Class B 3.08% 2.86%
Class C 3.08% 2.85%
Alliance Technology Fund 1997 1998
Class A 1.66% 1.65%
Class B 2.36% 2.38%
Class C 2.37% 2.38%
Alliance Greater
China '97 Fund 1997 1998
Class A -- 2.50%
Class B -- 3.20%
Class C -- 3.20%
Alliance New Europe Fund 1997 1998
Class A 2.04% 1.84%
Class B 2.74% 2.54%
Class C 2.73% 2.54%
Alliance Growth and
Income Fund 1997 1998
Class A .91% .92%
Class B 1.71% 1.71%
Class C 1.70% 1.71%
Alliance Quasar Fund 1997 1998
Class A -- 1.60
Class B -- 2.38
Class C -- 2.37
Alliance Premier Growth Fund 1997 1998
Class A -- 1.58%
Class B -- 2.27%
Class C -- 2.27%
Alliance Global Environment 1997 1998
Class A -- 2.79%
Class B -- 3.51%
Class C -- 3.38%
(g) Distributions from net investment income include a tax return of capital
of $.08, $.09 and $.08 for Class A, B and C shares, respectively.
(h) Alliance Global Environment Fund operated as a closed-end investment
company through October 3, 1997, when it converted to an open-end
investment company and all shares of its common stock then outstanding
were reclassified as Class A shares.
66
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A
- --------------------------------------------------------------------------------
The following is additional information about the United Kingdom, Japan and
Greater China countries.
Investment in United Kingdom Issuers. 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. Between 1972, when the pound sterling was allowed to float against
other currencies, and the end of 1992, the pound sterling generally depreciated
against most major currencies, including 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 has since recovered due to
interest rate cuts throughout Europe and an upturn in the economy of the United
Kingdom. The average exchange rate of the U.S. Dollar to the pound sterling was
1.50 in 1993 and 1.66 in 1998. On January 22, 1999 the U.S. Dollar-pound
sterling exchange rate was 1.66.
The United Kingdom's largest stock exchange is 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
5,882.6 at the end of 1998, up approximately 15% from the end of 1997. On
October 5, 1998 the FT-SE 100 index closed at 4648.7, the lowest close in the
12-month period prior to that date, after reaching a high of 6179.0 on July 20,
1998. The FT-SE 100 index closed at 5861.2 on January 22, 1999.
The Economic and Monetary Union ("EMU") became effective on January 1, 1999.
When fully implemented in 2002, the EMU will establish a common currency for
European countries that meet the eligibility criteria and choose to
participate. Although the United Kingdom meets the eligibility criteria, the
government has not taken any action to join the EMU.
From 1979 until 1997 the Conservative Party controlled Parliament. In the May 1,
1997 general elections, however, the Labour Party, led by Tony Blair, won a
majority in Parliament, holding 418 of 658 seats in the House of Commons. Mr.
Blair, who was appointed Prime Minister, has launched a number of reform
initiatives, including an overhaul of the monetary policy framework intended to
protect monetary policy from political forces by vesting responsibility for
setting interest rates in a new Monetary Policy Committee headed by the Governor
of the Bank of England, as opposed to the Treasury. Prime Minister Blair has
also undertaken a comprehensive restructuring of the regulation of the financial
services industry. For further information regarding the United Kingdom, see the
Statement of Additional Information of New Europe Fund.
Investment in Japanese Issuers. 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. Between 1985 and 1995,
the Japanese yen generally appreciated against the U.S. dollar, but has since
fallen from its post-World War II high (in 1995) 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 50% through the end of 1997. On
December 31, 1998 the TOPIX closed at 1086.99, down approximately 7% from the
end of 1997. 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.
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 respect to trade issues will continue for the foreseeable future.
Each Fund's investments in Japanese issuers 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. Between
August 1993 and October 1996 Japan was ruled by a series of four coalition
governments. As the result of a general election on October 20, 1996, however,
Japan returned to a single-party government led by Ryutaro Hashimoto, a member
of the Liberal Democratic Party ("LDP"). While the LDP does not control a
majority of the seats in the parliament, subsequent to the 1996 elections it
established a majority in the House of Representatives as individual members
joined the ruling party. The popularity of the LDP declined, however, due to
the dissatisfaction with Mr. Hashimoto's leadership. In the July 1998 House of
Councillors election, the LDP's representation fell to 103 seats from 120
seats. As a result of the LDP's defeat, Mr. Hashimoto resigned as prime
minister and leader of the LDP. Mr. Hashimoto was replaced by Keizo Obuchi.
On January 14, 1999, the LDP formed a coalition government with a major
opposition party. As a result, Mr. Obuchi's administrtion strnghtened its
position in the parliament, where it increased its majority in the House of
Representatives and reduced its shortfall in the House of Councillors. For the
past several years, Japan's banking industry has been weakened by a significant
amount of problem loans.
67
<PAGE>
Japan's banks also have significant exposure to the current financial turmoil
in other Asian markets. Following the insolvency of one of Japan's largest
banks in November 1997, the government proposed several plans designed to
strengthen the weakened banking sector. In October 1998, the Japanese
parliament approved several new laws that will make $508 billion in public
funds available to increase the capital of Japanese banks, to guarantee
depositors' accounts and to nationalize the weakest banks. It is unclear
whether these new laws will achieve their intended effect. For further
information regarding Japan, see the Statements of Additional Information of
Alliance International Fund and Alliance All-Asia Investment Fund.
Investment in Greater China Issuers. China, in particular, but Hong Kong and
Taiwan, as well, in significant measure because of their existing and increasing
economic, and now in the case of Hong Kong, direct political ties with China,
may be subject to a greater degree of economic, political and social instability
than is the case in the United States.
China's economy is very much in transition. While the government still controls
production and pricing in major economic sectors, significant steps have been
taken toward capitalism and China's economy has become increasingly market
oriented. China's strong economic growth and ability to attract significant
foreign investment in recent years stem from the economic liberalization
initiated by Deng Xiaoping who assumed power in the late 1970s. The economic
growth, however, has not been smooth and has been marked by extremes in many
respects of inordinate growth, which has not been tightly controlled, followed
by rigid measures of austerity.
The rapidity and erratic nature of the growth have resulted in inefficiencies
and dislocations, including at times high rates of inflation.
China's economic development has occurred notwithstanding the continuation of
the power of China's Communist Party and China's authoritarian government
control, not only of centrally planned economic decisions, but of many aspects
of the social structure. While a significant portion of China's population has
benefited from China's economic growth, the conditions of many leave much room
for improvement. Notwithstanding restrictions on freedom of expression and the
absence of a free press, and notwithstanding the extreme manner in which past
unrest has been dealt with, the 1989 Tianamen Square uprising being a recent
reminder, the potential for renewed popular unrest associated with demands for
improved social, political and economic conditions cannot be dismissed.
Following the death of Deng Xiaoping in February 1997, Jian Zemin became the
leader of China's Communist Party. The transfer of political power has
progressed smoothly and Jiang's popularity and credibility have gradually
increased. Jiang continues to consolidate his power, but as of yet does not
appear to have the same degree of control as did Deng Xiaoping. Jiang has
continued the market-oriented policies of Deng. Currently, China's major
economic challenge centers on reforming or eliminating inefficient state-owned
enterprises without creating an unacceptable level of unemployment. Recent
capitalistic policies have in many respects effectively outdated the Communist
Party and the governmental structure, but both remain entrenched. The Communist
Party still controls access to governmental positions and closely monitors
governmental action. Essentially there exists an inefficient set of parallel
bureaucracies and attendant opportunities for corruption.
In addition to the economic impact of China's internal political uncertainties,
the potential effect of China's actions, not only on China Itself, but on Hong
Kong and Taiwan as well, could also be significant.
China is heavily dependent on foreign trade, particularly with Hong Kong,
Japan, the U.S., South Korea and Taiwan. Political developments adverse to its
trading partners, as well as political and social repression, could cause the
U.S. and others to alter their trading policy towards China. For example, in
the the U.S., the continued extension of most favored nation trading status to
China which is reviewed regularly and was reviewed in 1998 is an issue of
significant controversy. Loss of that status would clearly hurt China's economy
by reducing its exports. With much of China's trading activity being funneled
through Hong Kong and with trade through Taiwan becoming increasingly
significant, any sizable reduction in demand for goods from China would have
negative implications for both countries. China is believed to be the largest
investor in Hong Kong and its markets and an economic downturn in China would
be expected to reverberate through Hong Kong's markets as well.
China has committed by treaty to preserve Hong Kong's autonomy and its
economic, political and social freedoms for fifty years from the July 1, 1997
transfer of sovereignty from Great Britain to China. Hong Kong is headed by a
chief executive, appointed by the central government of China, whose power is
checked by both the government of China and a Legislative Council. Although Hong
Kong voters voted overwhelmingly for pro-democracy candidates in the recent
election, it remains possible that China could exert its authority so as to
alter the economic structure, political structure or existing social policy of
Hong Kong. Investor and business confidence in Hong Kong can be significantly
affected by such developments, which in turn can affect markets and business
performance. In this connection, it is noted that a substantial portion of the
companies listed on the Hong Kong Stock Exchange are involved in real
estate-related activities.
The securities markets of China and to a lesser extent Taiwan, 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, Alliance Greater China '97 Fund may experience greater
price volatility and significantly lower liquidity than a portfolio invested
solely in equity securities of U.S. companies. These markets may be subject to
greater influence by adverse events generally affecting the market, and by large
investors trading significant blocks of securities, than is usual in the U.S.
securities settlements may in some instances be subject to delays and related
administrative uncertainties.
Foreign investment in the securities markets of China and Taiwan is restricted
or controlled to varying degrees. These restrictions or controls, which apply to
the Alliance Greater China '97 Fund may at times limit or preclude investment in
68
<PAGE>
certain securities and may increase the cost and expenses of the Fund. China and
Taiwan 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. In addition, the repatriation of investment
income, capital or the proceeds of sales of securities from China and Taiwan 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 restrictions on foreign
capital remittances.
Alliance Greater China '97 Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for repatriation, as well
as by the application to it of other restrictions on investment. The liquidity
of the Fund's investments in any country in which any of these factors exists
could be affected by any such factor or factors on the Fund's investments. The
limited liquidity in certain Greater China markets is a factor to be taken into
account in the Fund's valuation of portfolio securities in this category and may
affect the Fund's ability to dispose of securities in order to meet redemption
requests at the price and time it wishes to do so. It is also anticipated that
transaction costs, including brokerage commissions for transactions both on and
off the securities exchanges in Greater China countries, will be higher than in
the U.S.
Issuers of securities in Greater China countries are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as timely disclosure of information, insider trading rules, restrictions on
market manipulation and shareholder proxy requirements. Reporting, accounting
and auditing standards of Greater China countries may differ, in some cases
significantly, from U.S. standards in important respects, and less information
may be available to investors in securities of Greater China country issuers
than to investors in securities of U.S. issuers.
Investment in Greater China companies which are in the initial stages of their
development involves greater risk than is customarily associated with securities
of more established companies. The securities of such companies may have
relatively limited marketability and may be subject to more abrupt or erratic
market movements than securities of established companies or broad market
indices.
69
<PAGE>
For more information about the Funds, the following documents are available upon
request:
o Annual/Semi-Annual Reports to Shareholders
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected a Fund's performance during its last fiscal year.
o Statement of Additional Information (SAI)
Each Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Funds' SAIs are
incorporated by reference into (and is legally part of) this prospectus.
You may request a free copy of the current annual/semi-annual report or the SAI,
by contacting your broker or other financial intermediary, or by contacting
Alliance:
By Mail: c/o Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
By Phone: For Information: (800) 221-5672
For Literature: (800) 227-4618
Or you may view or obtain these documents from the Commission:
In Person: at the Commission's Public Reference Room in Washington, D.C.
By Phone: 1-800-SEC-0330
By Mail: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
On the Internet: www.sec.gov
Your also may find more information about Alliance and the Funds on the Internet
at: www.Alliancecapital.com
70
<PAGE>
- ----------------------------
Alliance Stock Funds
Subscription Application
- ----------------------------
The Alliance Fund
Growth Fund
Premier Growth Fund
Technology Fund
Quasar Fund
International Fund
International Premier Growth Fund
Worldwide Privatization Fund
New Europe Fund
All-Asia Investment Fund
Alliance Greater China `97 Fund
Global Small Cap Fund
Global Environment Fund
Balanced Shares
Utility Income Fund
Growth & Income Fund
Real Estate Investment Fund
To Open Your New Alliance Account...
Please complete the application and mail it to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, New Jersey 07096-1520
For certified or overnight deliveries, send to:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
Section 1 Your Account Registration (Required)
Complete one of the available choices. To ensure proper tax reporting to the
IRS:
o Individuals, Joint Tenants, Transfer on Death and Gift/Transfer to a
Minor:
o Indicate your name(s) exactly as it appears on your social
security card.
o Transfer on Death:
o Ensure that your state participates
o Trust/Other:
o Indicate the name of the entity exactly as it appeared on the
notice you received from the IRS when your Employer
Identification number was assigned.
Section 2 Your Address (Required)
Complete in full.
o Non-Resident Alien:
o Indicate your permanent country of residence.
Section 3 Your Initial Investment (Required)
For each fund in which you are investing: (1) Write the three digit fund
number in the column titled `Indicate three digit fund number located below'.
(2) Write the dollar amount of your initial purchase in the column titled
`Indicate Dollar Amount'.
(If you are eligible for a reduced sales charge, you must also complete Section
4F). (3) Check off a distribution option for your dividends. (4) Check off a
distribution option for your capital gains. All distributions (dividends and
capital gains) will be reinvested into your fund account unless you direct
otherwise. If you want distributions sent directly to your bank account, then
you must complete Section 4D and attach a preprinted, voided check for that
account. If you want your distributions sent to a third party you must complete
Section 4E.
Section 4 Your Shareholder Options
(Complete only those options you want)
A. Automatic Investment Plans (AIP) - You can make periodic investments into any
of your Alliance Funds in one of three ways. First, by a periodic withdrawal
($25 minimum) directly from your bank account and invested into an Alliance
Fund. Second, you can direct your distributions (dividends and capital gains)
from one Alliance Fund into another Fund. Or third, you can automatically
exchange monthly ($25 minimum) shares of one Alliance Fund for shares of another
Fund. To elect one of these options, complete the appropriate portion of Section
4A & 4D. If more than one dividend direction or monthly exchange is desired,
please call our Literature Center to obtain a Shareholder Account Services
Options Form for completion.
B. Telephone Transactions via EFT - Complete this option if you would like to be
able to transact via telephone between your fund account and your bank account.
C. Systematic Withdrawal Plans (SWP) - Complete this option if you wish to
periodically redeem dollars from one of your fund accounts. Payments can be made
via Electronic Funds Transfer (EFT) to your bank account or by check.
D. Bank Information - If you have elected any options that involve transactions
between your bank account and your fund account or have elected cash
distribution options and would like the payments sent to your bank account,
please tape a preprinted, voided check of the account you wish to use to this
section of the application.
E. Third Party Payment Details - If you have chosen cash distributions and/or a
Systematic Withdrawal Plan and would like the payments sent to a person and/or
address other than those provided in section 1 or 2, complete this option.
Medallion Signature Guarantee is required if your account is not maintained by a
broker dealer.
F. Reduced Charges (Class A only) - Complete if you would like to link fund
accounts that have combined balances that might exceed $100,000 so that future
purchases will receive discounts. Complete if you intend to purchase over
$100,000 within 13 months.
Section 5 Shareholder Authorization
(Required) All owners must sign. If it is a custodial, corporate, or trust
account, the custodian, an authorized officer, or the trustee respectively must
sign.
If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At: (800)
221-5672.
---------------------------------------
For Literature Call: (800) 227-4618
---------------------------------------
<PAGE>
The Alliance Stock Funds Subscription Application
- --------------------------------------------------------------------------------
1. Your Account Registration (Please Print in Capital Letters and Mark Check
Boxes Where Applicable)
- --------------------------------------------------------------------------------
|_| Individual Account [ |_| Male |_| Female ] - or - |_| Joint Account - or -
|_| Transfer On Death [ |_| Male |_| Female ] - or - Gift/Transfer to a Minor
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Owner or Custodian (First Name) (MI) (Last Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
(First Name) Joint Owner*, (MI) (Last Name)
Transfer On Death Beneficiary
or Minor
|_| |_| |_| - |_| |_| - |_| |_| |_| |_|
Social Security Number of Owner or Minor
(required to open account)
If Uniform Gift/Transfer
to Minor Account:
|_| |_| Minor's State of Residence
If Joint Tenants Account: * The Account will be registered "Joint Tenants with
right of Survivorship" unless you indicate otherwise below:
|_| In Common |_| By Entirety |_| Community Property
|_| Trust - or - |_| Corporation - or - |_| Other
-------------------------------
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trustee if applicable (MI) (Last Name)
(First Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trust or Corporation or Other Entity
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trust or Corporation or Other Entity continued
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Trust Dated (MM, DD, YYYY) Tax ID Number (required to open account)
|_| Employer ID Number - OR - |_| Social Security
Number
- --------------------------------------------------------------------------------
2. Your Address
- --------------------------------------------------------------------------------
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Street Number Street Name
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
City State Zip code
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_| |_| |_| - |_| |_| |_| |_|
If Non-U.S., Specify Country Daytime Phone Number
|_| U.S. Citizen |_| Resident Alien |_| Non-Resident Alien
90062GEN-TASFApp-P1 Alliance Capital [LOGO](R)
1
<PAGE>
- --------------------------------------------------------------------------------
3. Your Initial Investment
- --------------------------------------------------------------------------------
I hereby subscribe for shares of the following Alliance Stock Fund(s) Advisor
Class and elect distribution options as indicated.
- ---------------------------------------
Broker/Dealer Use Only: Wire Confirm #
|_| |_| |_| |_| |_| |_| |_| |_|
- ---------------------------------------
Dividend and Capital Gain Distribution Options:
R Reinvest distributions into my fund account.
C Send my distributions in cash to the address I have provided in Section 2.
(Complete Section 4D for direct deposit to your bank account. Complete
Section 4E for payment to a third party).
D Direct my distributions to another Alliance fund. Complete the appropriate
portion of Section 4A to direct your distributions (dividends and capital
gains) to another Alliance Fund.
- ----------- ------------- ---------------------- ---------------------------
Make all Distribution Options
checks* Indicate three *Check One
payable to: digit Fund Indicate Dollar Amount ---------------------------
Alliance number Dividends Capital Gains
Funds located below R C D R C D
- ----------- ------------- ---------------------- ----------- -------------
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
- ----------------------
Total Investment $ |__________________|
- ----------------------
* Cash and money orders are not accepted
- --------------------------------------------------------------------------------
Alliance Stock Fund Names and Numbers
- --------------------------------------------------------------------------------
------------- -------------- ------------
Contingent
Initial Sales Deferred Sales Asset-Based
Charge Charge Sales Charge
A B C
------------- -------------- ------------
The Alliance Fund 044 043 344
----------------------------------------------------------------------
Growth Fund 031 001 331
----------------------------------------------------------------------
Domestic Premier Growth Fund 078 079 378
----------------------------------------------------------------------
Technology Fund 082 282 382
----------------------------------------------------------------------
Quasar Fund 026 029 326
- --------------------------------------------------------------------------------
International Fund 040 041 340
----------------------------------------------------------------------
International Premier Growth 179 279 379
----------------------------------------------------------------------
Worldwide Privatization Fund 112 212 312
----------------------------------------------------------------------
Global New Europe Fund 062 058 362
----------------------------------------------------------------------
All-Asia Investment Fund 118 218 318
----------------------------------------------------------------------
Alliance Greater China '97
Fund 160 260 360
----------------------------------------------------------------------
Global Small Cap Fund 045 048 345
- --------------------------------------------------------------------------------
Global Environment Fund 181 281 381
- --------------------------------------------------------------------------------
Balanced Shares 096 075 396
----------------------------------------------------------------------
Utility Income Fund 009 209 309
Total ----------------------------------------------------------------------
Return Growth & Income Fund 094 074 394
----------------------------------------------------------------------
Real Estate Investment Fund 110 210 310
- --------------------------------------------------------------------------------
90062GEN-TASFApp-P2
2
<PAGE>
- --------------------------------------------------------------------------------
4. Your Shareholder Options
- --------------------------------------------------------------------------------
A. Automatic Investment Plans (AIP)
|_| Withdraw From My Bank Account Via EFT* I authorize Alliance to draw on my
bank account for investment in my fund account(s) as indicated below
(Complete Section 4D also for the bank account you wish to use).
1 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
2 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
3 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
Frequency: M = monthly Q = quarterly A = annually
* Electronic Funds Transfer. Your bank must be a member of the
National Automated Clearing House Association (NACHA)
|_| Direct My Distributions As indicated in Section 3, I would like my
dividends and/or capital gains directed to the same class of shares of
another Alliance Fund.
FROM: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
TO: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
|_| Exchange My Shares Monthly I authorize Alliance to transact monthly
exchanges, within the same class of shares, between my fund accounts as
listed below.
FROM: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
|_| |_| , |_| |_| |_|.00 |_| |_|
Amount ($25 minimum) Day of Exchange**
TO: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
** Shares exchanged will be redeemed at the net asset value on the "Day of
Exchange" (If the "Day of Exchange" is not a fund business day, the
exchange transaction will be processed on the next fund business day). The
exchange privilege is not available if stock certificates have been
issued.
B. Purchases and Redemptions Via EFT
You can call our toll-free number 1-800-221-5672 and instruct Alliance
Fund Services, Inc. in a recorded conversation to purchase, redeem or
exchange shares for your account. Purchase and redemption requests will be
processed via electronic funds transfer (EFT) to and from your bank
account.
Instructions: o Review the information in the Prospectus about
telephone transaction services.
o If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face
of a check from the bank account you wish to use
and attach it to Section 4D of this application.
|_| Purchases and Redemptions via EFT
I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my telephone
instructions or telephone instructions from my Broker/Agent, and to
withdraw money or credit money for such shares via EFT from the bank
account I have selected.
- --------------------------------------------------------------------------------
For shares recently purchased by check or electronic funds transfer
redemption proceeds will not be made available until the Fund is
reasonably assured the check or electronic funds transfer has been
collected, normally 15 calendar days after the purchase date.
- --------------------------------------------------------------------------------
90062GEN-TASFApp-P3
3
<PAGE>
- --------------------------------------------------------------------------------
4. Your Shareholder Options (CONTINUED)
- --------------------------------------------------------------------------------
C. Systematic Withdrawal Plans (SWP)
In order to establish a SWP, you must reinvest all dividends and capital
gains.
|_| I authorize Alliance to transact periodic redemptions from my fund
account and send the proceeds to me as indicated below.
1 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
2 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
3 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
Frequency: M = monthly Q = quarterly A = annually
Please send my SWP proceeds to:
|_| My Address of Record (via check)
|_| The Payee and address specified in section 4E (via check) (Medallion
Signature Guarantee required)
|_| My checking account-via EFT (complete section 4D) Your bank must be
a member of the National Automated Clearing House Association
(NACHA) in order for you to receive SWP proceeds directly into your
bank account. Otherwise payment will be made by check
D. Bank Information This bank account information will be used for:
|_| Distributions (Section 3)
|_| Automatic Investments (Section 4A)
|_| Telephone Transactions (Section 4B)
|_| Withdrawals (Section 4C)
- --------------------------------------------------------------------------------
Please Tape a Pre-printed Voided Check Here*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
* The above services cannot be established without a pre-printed voided
check.
For EFT transactions, the fund requires signatures of bank account owners
exactly as they appear on bank records. If the registration at the bank
differs from that on the Alliance mutual fund, all parties must sign in
Section 5.
|_| |_| |_| |_| |_| |_| |_| |_| |_|
Your Bank's ABA Routing Number
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Your Bank Account Number
|_| Checking Account |_| Savings Account
90062GEN-TASFApp-P4
4
<PAGE>
- --------------------------------------------------------------------------------
4. Your Shareholder Options (CONTINUED)
- --------------------------------------------------------------------------------
E. Third Party Payment Details Your signature(s) in Section 5 must be
Medallion Signature Guaranteed if your account is not maintained by a
broker/dealer. This third party payee information will be used for:
|_| Distributions (section 3) |_| Systematic Withdrawals (section 4C)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name (First Name) (MI) (Last Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Street Number Street Name
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
City State Zip code
F. Reduced Charges (Class A only) If you, your spouse or minor children own
shares in other Alliance funds, you may be eligible for a reduced sales
charge. Please complete the Right to Accumulation section or the Statement
of Intent section.
|_| A. Right of Accumulation
Please link the tax identification numbers or account numbers
listed below for Right of Accumulation privileges, so that this and
future purchases will receive any discount for which they are
eligible.
________________________ ________________________
________________________ ________________________
Tax ID or Account Number Tax ID or Account Number
________________________
________________________
Tax ID or Account Number
|_| B. Statement of Intent
I want to reduce my sales charge by agreeing to invest the
following amount over a 13-month period:
|_| $100,000 |_| $250,000 |_| $500,000 |_| $1,000,000
If the full amount indicated is not purchased within 13 months, I
understand that an additional sales charge must be paid from my
account.
- --------------------------------------------------------------------------------
Dealer/Agent Authorization - For selected Dealers or Agents ONLY.
- --------------------------------------------------------------------------------
We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.
____________________________________ ______________________________________
Dealer/Agent Firm Authorized Signature
___________________________ |_| ______________________________________
Representative First Name MI Last Name
____________________________________ ______________________________________
Dealer/Agent Firm Number Representative Number
____________________________________ ______________________________________
Branch Number Branch Telephone Number
______________________________________________________________________________
Branch Office Address
____________________________________ |_| |_| ____________________________
City State Zip Code
90062GEN-TASFApp-P5
5
<PAGE>
- --------------------------------------------------------------------------------
5. Shareholder Authorization -- This section MUST be completed
- --------------------------------------------------------------------------------
Telephone Exchanges and Redemptions by Check
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an
authorized employee of an investment dealer or agent requesting a
redemption or exchange on my behalf. (NOTE: Telephone exchanges may only
be processed between accounts that have identical registrations.)
Telephone redemption checks will only be mailed to the name and address of
record; and the address must not have changed within the last 30 days. The
maximum telephone redemption amount is $50,000 for redemptions by check.
|_| I do not elect the telephone exchange service
|_| I do not elect the telephone redemption by check service
By selecting any of the above telephone privileges, I agree that neither
the Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund
Services, Inc. or other Fund Agent will be liable for any loss, injury,
damage or expense as a result of acting upon telephone instructions
purporting to be on my behalf, that the Fund reasonably believes to be
genuine, and that neither the Fund nor any such party will be responsible
for the authenticity of such telephone instructions. I understand that any
or all of these privileges may be discontinued by me or the Fund at any
time. I understand and agree that the Fund reserves the right to refuse
any telephone instructions and that my investment dealer or agent reserves
the right to refuse to issue any telephone instructions I may request.
For non-residents only: Under penalties of perjury, I certify that to the
best of my knowledge and belief, I qualify as a foreign person as
indicated in Section 2.
I am of legal age and capacity and have received and read the Prospectus
and agree to its terms.
I certify under penalty of perjury that the number shown in Section 1 of
this form is my correct tax identification number or I am waiting for a
number to be issued to me and that I have not been notified that this
account is subject to backup withholding.
The Internal Revenue Service does not require your consent to any
provision of this document other than the certification required to avoid
backup withholding.
- ----------------------------------------------------------- -------------
Signature Date
- ----------------------------------------------------------- -------------
Signature Date
- --------------------------------------------
Medallion Signature Guarantee required if
completing Section 4E and your mutual
fund is not maintained by a broker dealer
90062GEN-TASFApp-P6 Alliance Capital [LOGO](R)
6
<PAGE>
This is filed pursuant to Rule 497(c).
File Nos. 2-25364 and 811-01415.
<PAGE>
The Alliance
Stock Funds
The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return.
Advisor Class Prospectus and Application
February 1, 1999
Domestic Stock Funds
o Alliance Premier Growth Fund
o Alliance Growth Fund
o Alliance Technology Fund
o Alliance Quasar Fund
o The Alliance Fund
Total Return Funds
o Alliance Growth & Income Fund
o Alliance Balanced Shares
o Alliance Utility Income Fund
o Alliance Real Estate
Investment Fund
Global Stock Funds
o Alliance New Europe Fund
o Alliance Worldwide
Privatization Fund
o Alliance International
Premier Growth Fund
o Alliance Global Small Cap Fund
o Alliance International Fund
o Alliance Greater China '97 Fund
o Alliance All-Asia Investment Fund
o Alliance Global Environment Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Alliance Capital [LOGO](R)
<PAGE>
2
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page
RISK/RETURN SUMMARY......................................................... 3
Domestic Stock Funds........................................................ 4
Total Return Funds.......................................................... 9
Global Stock Funds.......................................................... 13
Summary of Principal Risks.................................................. 21
Principal Risks by Fund..................................................... 22
FEES AND EXPENSES OF THE FUNDS.............................................. 23
GLOSSARY.................................................................... 26
DESCRIPTION OF THE FUNDS.................................................... 27
Investment Objectives and Policies.......................................... 27
Description of Investment Practices......................................... 39
Additional Risk Considerations.............................................. 46
MANAGEMENT OF THE FUNDS..................................................... 50
PURCHASE AND SALE OF SHARES................................................. 53
How The Funds Value Their Shares............................................ 53
How To Buy Shares........................................................... 53
How to Exchange Shares...................................................... 53
How To Sell Shares.......................................................... 53
DIVIDENDS, DISTRIBUTIONS AND TAXES.......................................... 54
CONVERSION FEATURE.......................................................... 55
GENERAL INFORMATION......................................................... 56
FINANCIAL HIGHLIGHTS........................................................ 57
APPENDIX A--ADDITIONAL INFORMATION
ABOUT THE UNITED KINGDOM, JAPAN, AND
GREATER CHINA COUNTRIES..................................................... 61
- --------------------------------------------------------------------------------
The Funds' investment adviser is Alliance Capital Management L.P., a global
investment manager providing diversified services to institutions and
individuals through a broad line of investments including more than 100 mutual
funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the Alliance Stock
Funds. You will find additional information about each Fund, including a
detailed description of the risks of an investment in each Fund, after this
Summary.
The Risk/Return Summary describes the Funds' objectives, principal investment
strategies, principal risks and fees. Each Fund's Summary page includes a
short discussion of some of the principal risks of investing in that Fund. A
further discussion of these and other risks is on page 21.
More detailed descriptions of the Funds, including the risks associated with
investing in the Funds, can be found further back in this Prospectus. Please be
sure to read this additional information BEFORE you invest. Each of the Funds
also may at times use certain types of investment derivatives such as options,
futures, forwards, and swaps. The use of these techniques involves special risks
that are discussed in this Prospectus.
The Summary includes a table for each Fund showing its average annual returns
and a bar chart showing its annual returns. The table and bar chart provide an
indication of the historical risk of an investment in each Fund by showing:
o how the Fund's average annual returns for one, five, and 10 years
(or over the life of the Fund if the Fund is less than 10 years
old) compare to those of a broad based securities market index; and
o changes in the Fund's performance from year to year over 10 years
(or over the life of the Fund if the Fund is less than 10 years
old).
A Fund's past performance, of course, does not necessarily indicate how it will
perform in the future.
Other important things for you to note:
o You may lose money by investing in the Funds.
o An investment in the Funds is not a deposit in a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation
or any other government agency.
3
<PAGE>
DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range of
alternative approaches to investing primarily in U.S. equity markets.
Alliance Premier Growth Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term growth of capital by investing
predominantly in equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of U.S. companies. Unlike most
equity funds, the Fund focuses on a relatively small number of intensively
researched companies. Alliance selects the Fund's investments from a research
universe of more than 600 companies that have strong management, superior
industry positions, excellent balance sheets and superior earnings growth
prospects.
Normally, the Fund invests in about 40-50 companies, with the 25 most highly
regarded of these companies usually constituting approximately 70% of the Fund's
net assets. 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. Through this approach, Alliance seeks to gain positive returns in
good markets while providing some measure of protection in poor markets. The
Fund also may invest up to 20% of its net assets in convertible securities.
Among the principal risks of investing in the Fund is market risk. Because the
Fund invests in a smaller number of securities than many other equity funds,
your investment has the risk that changes in the value of a single security
may have a more significant effect, either negative or positive, on the Fund's
net asset value.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 49.85% 42.97%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 31.43%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 33.11 49.85
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 31.15%, 4th quarter, 1998; and Worst Quarter was down
- -12.02%, 3rd quarter, 1998.
4
<PAGE>
Alliance Growth Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term growth of capital. Current income
is incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests 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 over time. The Fund emphasizes investments in large- and
mid-cap companies. The Fund also may invest up to 25% of its total assets in
lower-rated fixed-income securities and convertible bonds and generally up to
15% of its total assets in foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile then investments in large-cap
companies. To the extent the Fund invests in lower-rated fixed-income
securities and convertible bonds, your investment may have interest rate or
credit risk. The Fund's investments in foreign securities have foreign risk
and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 28.55% 29.34%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 31.43%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 27.46 28.55
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 28.97%, 4th quarter, 1998; and Worst Quarter was down
- -16.20%, 3rd quarter, 1998.
5
<PAGE>
Alliance Technology Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is growth of capital. Current income is
incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in securities of companies that use technology
extensively in the development of new or improved products or processes. Within
this framework, the Fund may invest in any company and industry and in any type
of security with potential for capital appreciation. It invests in well-known,
established companies or in new or unseasoned companies. The Fund also may
invest in debt securities and up to 10% of its total assets in foreign
securities.
Among the principal risks of investing in the Fund is market risk. In addition,
technology stocks, especially those of smaller, less-seasoned companies, tend
to be more volatile than the overall stock market. To the extent the Fund
invests in debt and foreign securities, your investment has credit risk,
currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 63.68% 30.01%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 31.43%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 4.84 63.68
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 39.98%, 4th quarter, 1998; and Worst Quarter was down
- -16.43%, 4th quarter, 1997.
6
<PAGE>
Alliance Quasar Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is growth of capital by pursuing aggressive
investment policies. Current income is incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund generally invests in a widely-diversified portfolio of equity
securities spread among many industries that offer the possibility of
above-average earnings growth. The Fund currently emphasizes investment in small
cap companies. The Fund invests in well-known and established companies and in
new and unseasoned companies. The Fund can invest in the equity securities of
any company and industry and in any type of security with potential for capital
appreciation. 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
capabilities and practices. The Fund also may invest in non-convertible bonds,
preferred stocks, and foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in smaller companies tend to be more volatile than investments in large-cap or
mid-cap companies. To the extent the Fund invests in non-convertible bonds,
preferred stocks, and foreign stocks, your investment has interest rate risk,
credit risk, currency risk and foreign risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class -4.30% 6.74%
- --------------------------------------------------------------------------------
Russell 2000 Index -2.55% 11.83%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 17.48 -4.30
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 17.44%, 4th quarter, 1998; and Worst Quarter was down
- -28.39%, 3rd quarter, 1998.
7
<PAGE>
The Alliance Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term growth of capital and income
primarily through investments in common stocks.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund normally invests substantially all of its assets in high-quality common
stocks that Alliance expects to increase in value. The Fund may invest in a
broad range of companies, from large to small, but tends to emphasize attractive
opportunities in mid-cap companies. While the Fund's diversified and
high-quality investments cannot prevent fluctuations in market values, they tend
to limit investment risk and contribute to achieving the Fund's objective. The
Fund also may invest in convertible securities, U.S. Government securities, and
foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile than investments in large-cap
companies. To the extent the Fund invests in convertible securities and U.S.
Government securities, your investment may have interest rate or credit risk.
The Fund's investments in foreign securities have currency risk and foreign
risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class -2.41% 18.30%
- --------------------------------------------------------------------------------
S&P 400 Mid-Cap Index 18.25% 26.14%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 36.27 -2.41
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 23.88%, 4th quarter, 1998; and Worst Quarter was down
- -24.17%, 3rd quarter, 1998.
8
<PAGE>
TOTAL RETURN FUNDS
The Total Return Funds offer investors seeking both growth of capital and
current income a range of investment alternatives.
Alliance Growth & Income Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is appreciation through investments primarily in
dividend-paying common stocks of good quality, although the Fund also may invest
in fixed-income and convertible securities.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in dividend-paying common stocks of large,
well-established "blue-chip" companies. The Fund also may invest in fixed-income
and convertible securities and in securities of foreign issuers.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. The Fund's investments in foreign securities have
currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 21.48% 27.57%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 31.43%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 29.57 21.48
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 23.28%, 4th quarter, 1998; and Worst Quarter was down
- -13.76%, 3rd quarter, 1998.
9
<PAGE>
Alliance Balanced Shares
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is high return through a combination of current
income and capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in a diversified portfolio of equity and fixed-income
securities. The percentage of the Fund's assets invested in each type of
security will vary, but at least 25% of the Fund's total assets will be invested
in fixed-income senior securities. The Fund invests in common and preferred
stocks, U.S. Government and agency securities, bonds and senior debt
securities. The Fund's investments in each type of security depends on current
economic conditions and market outlooks. The Fund also may invest up to 15% of
its total assets in foreign equity and fixed-income securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk, allocation risk and credit risk. To the extent the Fund invests in
foreign securities, your investment has currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 16.03% 21.61%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 31.43%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 27.43 16.03
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 13.52%, 4th quarter, 1998; and Worst Quarter was down
- -6.36%, 3rd quarter, 1998.
10
<PAGE>
Alliance Utility Income Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in income-producing equity securities. The Fund
invests in securities of utility companies in the electric, telecommunications,
gas, and water utility industries. The Fund may invest in both U.S. and foreign
utility companies, although the Fund will limit its investments in issuers in
any one foreign country to no more than 15% of its total assets. The Fund may
invest up to 35% of its net assets in lower-rated securities and up to 30% of
its net assets in convertible securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. Because the Fund invests a substantial portion of
its assets in companies in a specific industry, there is the risk that factors
affecting utility companies will have a significant effect of the value of the
Fund's investments. To the extent the Fund invests in lower-rated securities,
your investment is subject to more credit risk than a fund that invests in
higher-rated securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 24.83% 28.57%
- --------------------------------------------------------------------------------
NYSE Utility 33.04% 30.13%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 31.16 24.83
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 15.63%, 4th quarter, 1997; and Worst Quarter was down
- -3.01%, 1st quarter, 1997.
11
<PAGE>
Alliance Real Estate Investment Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is total return from long-term growth of capital
and income principally through investing in equity securities of companies that
are primarily engaged in or related to the real estate industry.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of real estate investment trusts
or "REITs" and other real estate industry companies. The Fund invests in real
estate companies that Alliance believes have strong property fundamentals and
management teams. The Fund seeks to invest in real estate companies whose
underlying portfolios are diversified geographically and by property type. The
Fund may invest up to 35% of its total assets in mortgage-backed securities,
which are securities that directly or indirectly represent participations in, or
are collateralized by and payable from, mortgage loans secured by real property.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. Because the Fund invests a substantial portion of
its assets in the real estate market, it has many of the same risks as direct
ownership of real estate including the risk that the value of real estate could
decline due to a variety of factors affecting the real estate market. In
addition, REITs are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by changes in tax
laws. The Fund's investments in mortgage-backed securities have prepayment risk,
which is the risk that mortgage loans will be prepaid when interest rates
decline and the Fund will have to reinvest in securities with lower interest
rates. This risk causes mortgage-backed securities to have significantly greater
price and yield volatility than traditional fixed-income securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class -20.05% 7.79%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 31.43%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 23.27 -20.05
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 14.51%, 3rd quarter, 1997; and Worst Quarter was down
- -12.33%, 3rd quarter, 1998.
12
<PAGE>
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors seeking long-term capital appreciation a
range of alternative approaches to investing in foreign securities.
Alliance New Europe Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation through
investments primarily in the equity securities of companies based in Europe.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of European companies. The Fund
diversifies its investments among a number of European countries and normally
invests in companies based in at least three of these countries, although it may
invest 25% or more of its assets in issuers in a single country. The Fund may
invest up to 35% of its total assets in high-quality U.S. Dollar or foreign
currency denominated fixed-income securities issued or guaranteed by European
governmental entities, European or multinational companies, or supranational
organizations. At December 31, 1998, the Fund had approximately 26% of its
assets invested in securities of United Kingdom issuers.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, the Fund's investments in U.S.
Dollar or foreign currency denominated fixed-income securities have interest
rate and credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 25.39% 23.61%
- --------------------------------------------------------------------------------
MSCI Europe Index 28.91% 28.30%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a 17.08 25.39
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 22.56%, 1st quarter, 1998; and Worst Quarter was down
- -19.61%, 3rd quarter, 1998.
13
<PAGE>
Alliance Worldwide Privatization Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of companies that are
undergoing, or have undergone, privatization. The Fund also invests in
securities of companies that will benefit from privatizations. The Fund takes
advantage of investment opportunities, historically inaccessible to U.S.
individual investors, that result from the privatization of state enterprises in
both established and developing economies. Because privatizations are integral
to a country's economic restructuring, securities sold in initial public
offerings often are attractively priced to secure the issuer's transition to
private sector ownership. In addition, these enterprises often dominate their
local markets and have the potential for significant managerial and operational
efficiency gains.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in four, and usually considerably more, countries. The
Fund may invest up to 30% of its total assets in any one of France, Germany,
Great Britain, Italy, and Japan and may invest all of its assets in a single
world region. The Fund also may invest up to 35% of its total assets in debt
securities and convertible debt securities of privatized companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Investments in companies that are undergoing or,
have undergone, privatization could have more risk because they have no
operating history as a private company. In addition, the Fund's investments in
U.S. Dollar or foreign currency denominated fixed-income securities have
interest rate and credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 9.33% 13.04%
- --------------------------------------------------------------------------------
MSCI EAFE Index 20.33% 11.30%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
89 90 91 92 93 94 95 96 97 98
- --------------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a n/a n/a 13.45 9.33
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 16.58%, 1st quarter, 1998; and Worst Quarter was down
- -17.42%, 3rd quarter, 1998.
14
<PAGE>
Alliance International Premier Growth Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term growth of capital by investing
predominantly in equity securities of a limited number of carefully selected
non-U.S. companies that are judged likely to achieve superior earnings growth.
Current income is incidental to the Fund's objective.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of comparatively large,
high-quality, non-U.S. companies. The Fund invests in at least four, and usually
considerably more, countries. Normally, the Fund invests no more than 15% of its
total assets in issuers of any one foreign country, but may invest up to 25% of
its total assets in each of Canada, France, Germany, Italy, Japan, The
Netherlands, Switzerland and the United Kingdom. Unlike more typical
international equity funds, the Fund focuses on a relatively small number of
intensively researched companies. Alliance selects the Fund's investments from a
research universe of approximately 900 companies.
Normally, the Fund invests in about 60 companies, with the 30 most highly
regarded of these companies usually constituting approximately 70% of the Fund's
net assets. The Fund invests in companies with market values in the range
of the average weighted market capitalizations of companies in the EAFE
index (currently approximately $35 billion). Alliance may take advantage of
market volatility to adjust the Fund's portfolio positions. To the extent
consistent with local market liquidity considerations, the Fund strives
to capitalize on apparently unwarranted price fluctuations, both to
purchase or increase positions on weakness and to sell or reduce overpriced
holdings. The Fund invests primarily in equity securities and also may invest
in convertible securities.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, since the Fund invests in a smaller
number of securities than many other international equity funds, changes in
the value of a single security may have a more significant effect, either
negative or positive, on the Fund's net asset value.
There is no bar chart or performance table for the Fund because it has not
completed a full calendar year of operations.
15
<PAGE>
Alliance Global Small Cap Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term growth of capital through
investment in a global portfolio of equity securities of selected companies with
relatively small market capitalizations.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of global companies, both
domestic and foreign, with relatively small market capitalizations. The Fund's
investments emphasize companies that are in the smallest 20% of the U.S. stock
market (or less than approximately $1.5 billion). Although these companies are
small by U.S. standards, they may be among the largest companies in their own
countries. The Fund may invest up to 35% of its total assets in securities of
companies whose market capitalizations exceed the Fund's size standard. The Fund
invests in at least three countries including the U.S.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 3.81% 6.59%
- --------------------------------------------------------------------------------
MSCI World Index 24.80% 20.87%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
89 90 91 92 93 94 95 96 97 98
- --------------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a n/a n/a 8.44 3.81
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 17.82%, 4th quarter, 1998; and Worst Quarter was down
- -22.96%, 3rd quarter, 1998.
16
<PAGE>
Alliance International Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is total return from long-term growth of capital
and income primarily through investment in 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 in foreign
government securities.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity 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. The Fund diversifies its
investments broadly among countries and normally invests in companies in at
least three foreign countries, although it may invest a substantial portion of
its assets in companies in one or more foreign countries.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class 9.96% 5.85%
- --------------------------------------------------------------------------------
MSCI World Index
(minus the U.S.) 19.11% 11.05%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
89 90 91 92 93 94 95 96 97 98
- --------------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a n/a n/a 1.59 9.96
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 15.81%, 4th quarter, 1998; and Worst Quarter was down
- -17.80%, 3rd quarter, 1998.
17
<PAGE>
Alliance Greater China '97 Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation through
investment of at least 80% of its total assets in equity securities of Greater
China companies.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in equity securities of Greater China companies, which are
companies in China, Hong Kong, and Taiwan. Of these countries, the Fund expects
to invest a significant portion of its assets, which may be greater than 50%, in
Hong Kong companies and may invest all of its assets in Hong Kong companies or
companies of either of the other Greater China countries. The Fund also may
invest in convertible securities and equity-linked debt securities issued or
guaranteed by Greater China companies or Greater China Governments, their
agencies, or instrumentalities. As of December 31, 1998 the Fund had
approximately 75% of its assets invested in securities of Hong Kong companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in Greater China companies,
the Fund's returns will be significantly more volatile and differ
substantially from U.S. markets generally. Your investment also has the
risk that market changes or other events affecting the Greater China
countries, including political instability and unpredictable economic
conditions, may have a more significant effect on the Fund's net asset value.
In addition, the Fund is "non-diversified" meaning that it invests its assets
in a smaller number of companies than many other international funds. As a
result, changes in the value of a single security may have a more significant
effect, either negative or positive, on the Fund's net asset value. The Fund's
investments in debt securities have interest rate and credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class -7.87% -26.74%
- --------------------------------------------------------------------------------
MSCI China Free Index -43.83% -54.48%
- --------------------------------------------------------------------------------
MSCI Hong Kong Index -2.92% -25.58%
- --------------------------------------------------------------------------------
MSCI Taiwan Index -20.64% -30.14%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 9/3/97. Index returns from 9/30/97.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
89 90 91 92 93 94 95 96 97 98
- --------------------------------------------------------------------------------
n/a n/a n/a n/a n/a n/a n/a n/a n/a -7.87
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 27.38%, 4th quarter, 1998; and Worst Quarter was down
- -26.92%, 2nd quarter, 1998.
18
<PAGE>
Alliance All-Asia Investment Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund primarily invests in securities of various types of companies based
in Asia. The Fund invests in equity securities, preferred stocks, and
equity-linked debt securities issued by Asian companies and may invest more
than 50% of its total assets in equity securities of Japanese issuers. The
Fund also 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, and may invest up to 25% of its net assets in convertible
securities. At December 31, 1998, the Fund had approximately 60% of its total
assets invested in securities of Japanese companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in Asian and Pacific region
countries and emerging markets, the Fund's returns will be significantly more
volatile and may differ substantially from the overall U.S. market generally.
Your investment has the risk that market changes or other factors affecting
Asian and Pacific region countries and other emerging markets, including
political instability and unpredictable economic conditions, may have a more
significant effect on the Fund's net asset value. To the extent that the
Fund invests a substantial amount of its assets in Japanese companies, your
investment has the risk that market changes or other events affecting that
country may have a more significant effect on the Fund's net asset value. In
addition, the Fund's investments in debt securities have interest rate and
credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class -12.15% -22.56%
- --------------------------------------------------------------------------------
MSCI All Country Asia
Pacific Index 2.03% -13.49%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 10/1/96. Index return from 10/31/96.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual returns for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a -34.83 -12.15
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 13.57%, 4th quarter, 1998; and Worst Quarter was down
- -18.65%, 4th quarter, 1997.
19
<PAGE>
Alliance Global Environment Fund
- --------------------------------------------------------------------------------
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation through
investment of substantially all of its assets in equity securities of companies
that are expected to benefit from advances or improvements in products,
processes or services intended to foster the protection of the environment.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in environmental companies, which are companies whose
principal business involves the sale of environmental protection systems or
services. The Fund also invests in companies whose principal business lies
outside the environmental sector but who anticipate environmental regulations or
consumer preferences through the development of new products or services that
would contribute to a cleaner and healthier environment. The Fund will invest
substantially all of its assets in these two types of companies. The Fund
invests in securities of companies in at least three, and normally
considerably more, countries. At December 31, 1998, the Fund had approximately
82% invested in equity securities of U.S. companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in non-U.S. companies and in
specific types of companies that provide environmental services, the Fund's
returns will be more volatile and differ, sometimes substantially, from the
overall U.S. market generally. The Fund's investments also have the risk that
government regulations or other action could negatively affect the business of
environmental companies.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- --------------------------------------------------------------------------------
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Advisor Class -2.99% 0.09%
- --------------------------------------------------------------------------------
S&P 500 Index 28.60% 28.60%
- --------------------------------------------------------------------------------
The average annual total returns in the performance table are for the periods
ended December 31, 1998.
*Advisor Class shares inception date: 12/29/97. Index return from 12/31/97.
BAR CHART
- --------------------------------------------------------------------------------
The following chart shows the annual return for the Advisor Class shares since
inception.
[GRAPHIC OMITTED]
[The following table was depicted as a bar chart in the printed material.]
n/a n/a n/a n/a n/a n/a n/a n/a n/a -2.99
- --------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 15.74%, 1st quarter, 1998; and Worst Quarter was down
- -19.83%, 3rd quarter, 1998.
20
<PAGE>
SUMMARY OF PRINCIPAL RISKS
The value of your investment in a Fund will change with changes in the values of
that Fund's investments. Many factors can affect those values. In this Summary,
we describe the principal risks that may affect a Fund's portfolio as a whole.
These risks and the Funds particularly subject to these risks appear in a chart
at the end of the section. All Funds could be subject to additional principal
risks because the types of investments made by each Fund can change over time.
This Prospectus has additional descriptions of the types of investments that
appear in bold type in the discussions under "Description of Investment
Practices" or "Additional Risk Considerations." These sections also include more
information about the Funds, their investments, and related risks.
MARKET RISK
This is the risk that the value of a Fund's investments will fluctuate as the
stock or bond markets fluctuate and that prices overall will decline over short
or longer-term periods. All of the Alliance Stock Funds are subject to market
risk.
SECTOR RISK
This is the risk of investments in a particular industry sector. Market or
economic factors affecting that industry sector could have a major effect on the
value of a Fund's investments. Funds particularly subject to this risk are
Alliance Technology Fund, Alliance Utility Income Fund, Alliance Real Estate
Investment Fund, Alliance Worldwide Privatization Fund and Alliance Global
Environment Fund. This risk may be greater for Alliance Technology Fund because
technology stocks, especially those of smaller, less-seasoned companies, tend to
be more volatile than the overall market.
CAPITALIZATION RISK
This is the risk of investments in small- to mid-capitalization companies.
Investments in mid-cap companies may be volatile than investments in large-cap
companies. Alliance Growth Fund and The Alliance Fund are particularly subject
to this risk. Investments in small-cap companies tend to be more volatile than
investments in large-cap or mid-cap companies. A Fund's investments in smaller
capitalization stocks may have additional risks because these companies often
have limited product lines, markets or financial resources. Alliance Quasar
Fund and Alliance Global Small Cap Fund are particularly subject to this risk.
INTEREST RATE RISK
This is the risk that changes in interest rates will affect the value of a
Fund's investments in income-producing, fixed-income (i.e., debt) securities.
Increases in interest rates may cause the value of a Fund's investments to
decline and this decrease in value may not be offset by the higher interest rate
income. Interest rate risk is particularly applicable to Funds that invest in
fixed-income securities and is greater for those Alliance Stock Funds that
invest a substantial portion of their assets in fixed-income securities, such as
Alliance Growth and Income Fund, Alliance Balanced Shares and Alliance Utility
Income Fund. Interest rate risk is greater for those Funds that invest in
lower-rated securities or comparable unrated securities ("junk bonds") such as
Alliance Utility Income Fund. Alliance Real Estate Investment Fund also has more
exposure to interest rate risk because it invests in real estate industry
companies and in mortgage-backed securities.
CREDIT RISK
This is the risk that the issuer of a security or the other party to an
over-the-counter transaction, will be unable or unwilling to make timely
payments of interest or principal, or to otherwise honor its obligations. The
degree of risk for a particular security may be reflected in its credit rating.
Credit risk is applicable to Funds that invest in fixed-income securities and is
greater for those Alliance Stock Funds that invest a substantial portion of
their assets in lower-rated securities, such as Alliance Utility Income Fund.
FOREIGN RISK
This is the risk of investments in issuers located in foreign countries. All
Alliance Stock Funds with foreign securities are subject to this risk,
including, in particular, Alliance New Europe Fund, Alliance Worldwide
Privatization Fund, Alliance International Premier Growth Fund, Alliance Global
Small Cap Fund, Alliance International Fund, Alliance Greater China '97 Fund,
Alliance All-Asia Investment Fund and Alliance Global Environment Fund. Fund's
investing in foreign securities may experience more rapid and extreme changes in
value than Funds with investments solely in securities of U.S. companies. This
is because the securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small number of
industries. Additionally, foreign securities issuers are usually not subject to
the same degree of regulation as U.S. issuers. Reporting, accounting, and
auditing standards of foreign countries differ, in some cases significantly,
from U.S. standards. Also, nationalization, expropriation or confiscatory
taxation, currency blockage, or political changes or diplomatic developments
could adversely affect a Fund's investments in a foreign country. In the event
of nationalization, expropriation, or other confiscation, a Fund could lose its
entire investment.
COUNTRY OR GEOGRAPHIC RISK
This is the risk of investments in issuers located in a particular country or
geographic region. Market changes or other factors affecting that country or
region, including political instability and unpredictable economic conditions,
may have a particularly significant effect on a Fund's net asset value. The
Funds particularly subject to this risk are Alliance New Europe Fund,
21
<PAGE>
Alliance Worldwide Privatization Fund, Alliance International Fund,
Alliance Greater China '97 Fund and Alliance All-Asia Investment Fund.
CURRENCY RISK
This is the risk that fluctuations in the exchange rates between the U.S.
Dollar and foreign currencies may negatively affect the value of a Fund's
investments. Funds with foreign securities are subject to this risk,
including, in particular, Alliance New Europe Fund, Alliance Worldwide
Privatization Fund, Alliance International Premier Growth Fund, Alliance Global
Small Cap Fund, Alliance International Fund, Alliance Greater China '97 Fund,
Alliance All-Asia Investment Fund and Alliance Global Environment Fund.
MANAGEMENT RISK
Each Alliance Stock Fund is subject to management risk because it is an actively
managed investment portfolio. Alliance will apply its investment techniques and
risk analyses in making investment decisions for the Funds, but there is no
guarantee that its decisions will produce the intended result.
FOCUSED PORTFOLIO RISK
Funds, such as Alliance Premier Growth Fund and Alliance International Premier
Growth Fund, that invest in a limited number of companies, may have more risk
because changes in the value of a single security may have a more significant
effect, either negative or positive, on the Fund's net asset value. Similarly,
Alliance Greater China '97 Fund may have more risk because it is
"non-diversified," meaning that it can invest more of its assets in a smaller
number of companies than many other international funds.
ALLOCATION RISK
Alliance Balanced Shares has the risk that the allocation of its investments
between equity and debt securities may have a more significant effect on the
Fund's net asset value when one of these asset classes is performing more poorly
than the other.
PRINCIPAL RISKS BY FUND
- --------------------------------------------------------------------------------
The following chart summarizes the principal risks of each Fund. Risks not
marked for a particular Fund may, however, still apply to some extent to that
Fund at various times.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Capital- Interest Country or Focused
Market Sector ization Rate Credit Foreign Geographic Currency Manage- Portfolio Allocation
Fund Risk Risk Risk Risk Risk Risk Risk Risk ment Risk Risk Risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Premier
Growth Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth Fund o o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Technology Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Quasar Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
The Alliance Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth and
Income Fund o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Balanced Shares o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Utility
Income Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Real Estate
Investment Fund o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance New Europe Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Worldwide
Privatization Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance International
Premier Growth Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Global
Small Cap Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance International
Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Greater China
'97 Fund o o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance All-Asia
Investment Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Global
Environment Fund o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUNDS
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
Advisor Class Share
-------------------
Maximum Front-end or Deferred Sales Charge (Load) None
(as a percentage of original purchase
price or redemption proceeds,
whichever is lower)
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets) and
EXAMPLES
The Examples are to help you compare the cost of investing in the Funds with the
cost of investing in other funds. They assume that you invest $10,000 in each
Fund for the time periods indicated and then redeem all of your shares at the
end of those periods. They also assume that your investment has a 5% return
each year, that the Fund's operating expenses stay the same and that all
dividends and distributions are reinvested. Your actual costs may be higher or
lower.
Operating Expenses Examples
- ---------------------------------------- ---------------------------------
Alliance Premier Growth Fund
Management fees 1.00% After 1 year $ 128
12b-1 fees None After 3 years $ 400
Other expenses .26% After 5 years $ 692
----- After 10 years $ 1,523
Total fund operating expenses 1.26%
=====
Alliance Growth Fund
Management fees .70% After 1 year $ 95
12b-1 fees None After 3 years $ 296
Other expenses .23% After 5 years $ 515
----- After 10 years $ 1,143
Total fund operating expenses 0.93%
=====
Alliance Technology Fund
Management fees 1.02% After 1 year $ 139
12b-1 fees None After 3 years $ 434
Other expenses .35% After 5 years $ 750
----- After 10 years $ 1,646
Total fund operating expenses 1.37%
=====
Alliance Quasar Fund
Management fees 1.04% After 1 year $ 140
12b-1 fees None After 3 years $ 437
Other expenses .34% After 5 years $ 755
----- After 10 years $ 1,657
Total fund operating expenses 1.38%
=====
The Alliance Fund
Management fees .67% After 1 year $ 85
12b-1 fees None After 3 years $ 265
Other expenses .16% After 5 years $ 460
----- After 10 years $ 1,025
Total fund operating expenses 0.83%
=====
Alliance Growth and Income Fund
Management fees .48% After 1 year $ 78
12b-1 fees None After 3 years $ 243
Other expenses .28% After 5 years $ 422
----- After 10 years $ 942
Total fund operating expenses 0.76%
=====
Alliance Balanced Shares Fund
Management fees .63% After 1 year $ 108
12b-1 fees None After 3 years $ 337
Other expenses .43% After 5 years $ 585
----- After 10 years $ 1,294
Total fund operating expenses 1.06%
=====
23
<PAGE>
Operating Expenses Examples
- ---------------------------------------- ---------------------------------
Alliance Utility Income Fund
Management fees .75% After 1 year $ 122
12b-1 fees None After 3 years $ 381
Other expenses 1.46% After 5 years $ 660
----- After 10 years $ 1,455
Total fund operating expenses 2.21%
=====
Waiver and/or expense
reimbursement (a) (1.01)%
=====
Net expenses 1.20%
=====
Alliance Real Estate Investment Fund
Management fees .90% After 1 year $ 127
12b-1 fees None After 3 years $ 397
Other expenses .35% After 5 years $ 686
----- After 10 years $ 1,511
Total fund operating expenses 1.25%
=====
Alliance New Europe Fund
Management fees 1.02% After 1 year $ 159
12b-1 fees None After 3 years $ 493
Other expenses .54% After 5 years $ 850
----- After 10 years $ 1,856
Total fund operating expenses 1.56%
=====
Alliance Worldwide Privatization Fund
Management fees 1.00% After 1 year $ 148
12b-1 fees None After 3 years $ 459
Other expenses .45% After 5 years $ 792
----- After 10 years $ 1,735
Total fund operating expenses 1.45%
=====
Alliance International Premier Growth Fund
Management fees 1.00% After 1 year $ 223
12b-1 fees None After 3 years $ 688
Other expenses 5.28% After 5 years $ 1,180
----- After 10 years $ 2,534
Total fund operating expenses 6.28%
=====
Waiver and/or expense
reimbursement (a) (4.08)%
Net expenses 2.20%
=====
Alliance Global Small Cap Fund
Management Fees 1.00% After 1 year $ 190
12b-1 Fees None After 3 years $ 588
Other Expenses .87% After 5 years $ 1,011
----- After 10 years $ 2,190
Total fund operating expenses 1.87%
=====
Alliance International Fund
Management fees 1.00% After 1 year $ 150
12b-1 fees None After 3 years $ 465
Other expenses .62% After 5 years $ 803
----- After 10 years $ 1,757
Total fund operating expenses 1.62%
=====
Waiver and/or expense
reimbursement (a) (.15)%
Net expenses 1.47%
=====
Alliance Greater China '97 Fund
Management fees 1.00% After 1 year $ 225
12b-1 fees None After 3 years $ 694
Other expenses 17.13% After 5 years $ 1,190
----- After 10 years $ 2,554
Total fund operating expenses 18.13%
=====
Waiver and/or expense
reimbursement (a) (15.91)%
=====
Net expenses 2.22%
=====
24
<PAGE>
Operating Expenses Examples
- ---------------------------------------- ---------------------------------
Alliance All-Asia Investment Fund
Management fees 1.00% After 1 year $ 273
12b-1 fees None After 3 years $ 838
Administration fees .15% After 5 years $ 1,430
Other operating expenses 3.24% After 10 years $ 3,032
-----
Total fund operating expenses 4.39%
=====
Waiver and/or expense
reimbursement (a) (1.69)%
=====
Net Expenses 2.70%
=====
Alliance Global Environment Fund
Management Fees(b) 1.10% After 1 year $ 472
12b-1 Fees None After 3 years $ 1,419
Other Expenses(b) 3.61% After 5 years $ 2,372
----- After 10 years $ 4,779
Total fund operating expenses 4.71%
=====
(a) Reflects Alliance's contractual waiver of a portion of its advisory fee
and/or reimbursement of a portion of the Fund's operating expenses.
(b) Management fees and other expenses for Alliance Global Environment Fund
are based on estimated amounts for its current fiscal year.
25
<PAGE>
- --------------------------------------------------------------------------------
GLOSSARY
- --------------------------------------------------------------------------------
This Prospectus uses the following terms.
TYPES OF SECURITIES
Convertible securities are fixed-income securities that are convertible into
common stock.
Debt securities are bonds, debentures, notes, bills, loans, other direct debt
instruments, and other fixed, floating and variable rate debt obligations, but
do not include convertible securities.
Depositary receipts include American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and other types of depositary receipts.
Equity securities include (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.
Fixed-income securities are debt securities and dividend-paying preferred
stocks, including floating rate and variable rate instruments.
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.
Qualifying bank deposits are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks that have total assets of more than
$1 billion and are members of the Federal Deposit Insurance Corporation.
Rule 144A securities are securities that may be resold under Rule 144A of the
Securities Act.
U.S. Government securities are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
TYPES OF COMPANIES
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,
the Hong Kong Special Administrative Region of the People's Republic of China
(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.
Beneficiary Companies are Eligible Companies whose principal businesses lie
outside the environmental sector but nevertheless anticipate environmental
regulations or consumer preferences through the development of new products,
processes or services that are intended to contribute to a cleaner and healthier
environment, such as companies that anticipate the demand for plastic
substitutes, aerosol substitutes, alternative fuels and processes that generate
less hazardous waste.
Eligible Companies are companies expected to benefit from advances or
improvements in products, processes or services intended to foster the
protection of the environment.
Environmental companies are Eligible Companies that have a principal business
involving the sale of systems or services intended to foster environmental
protection, such as waste treatment and disposal, remediation, air pollution
control and recycling.
Greater China company is an entity that (i) is organized under the laws of a
Greater China country and conducts business in a Greater China country, (ii)
derives 50% or more of its total revenues from businesses in Greater China
countries, or (iii) issues equity or debt securities that are traded principally
on a stock exchange in a Greater China country. A company of a particular
Greater China country is a company that meets any of these criteria with respect
to that country.
Greater China countries are the People's Republic of China ("China"), the Hong
Kong Special Administrative Region of the People's Republic of China ("Hong
Kong") and the Republic of China ("Taiwan").
Non-U.S. Company is an entity that (i) is organized under the laws of a foreign
country and conducts business in a foreign country, (ii) derives 50% or more of
its total revenues from business in foreign countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in a foreign
country.
RATING AGENCIES, RATED SECURITIES and INDEXES
Duff & Phelps is Duff & Phelps Credit Rating Co.
EAFE Index is Morgan Stanley Capital International Europe, Australasia and Far
East ("EAFE") Index.
Fitch is Fitch IBCA, Inc.
Investment grade securities are fixed-income securities rated Baa and above by
Moody's or B 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."
Moody's is Moody's Investors Service, Inc.
26
<PAGE>
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.
S&P is Standard & Poor's Ratings Services.
S&P 500 Index is S&P's 500 Composite Stock Price Index, a widely recognized
unmanaged index of market activity.
OTHER
1940 Act is the Investment Company Act of 1940, as amended.
Code is the Internal Revenue Code of 1986, as amended.
Commission is the Securities and Exchange Commission.
Exchange is the New York Stock Exchange.
Securities Act is the Securities Act of 1933, as amended.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
This section of the Prospectus provides a more complete description of the
Funds' investment objectives, principal strategies and risks. Of course, there
can be no assurance that any Fund will achieve its investment objective.
Please note that:
o Additional discussion of the Funds' investments, including the risks of
the investments, can be found in the discussion under Description of
Investment Practices following this section.
o The description of the principal risks for a Fund may include risks
described in the Summary of Principal Risks above. Additional information
about the risks of investing in a Fund can be found in the discussion
under Additional Risk Considerations.
o Additional descriptions of each Fund's strategies, investments and risks
can be found in the Fund's Statement of Additional Information or SAI.
o Except as noted, (i) the Funds' investment objectives are "fundamental"
and cannot be changed without a shareholder vote, and (ii) the Funds'
investment policies are not fundamental and thus can be changed without a
shareholder vote.
INVESTMENT OBJECTIVES AND POLICIES
DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range of
alternative approaches to investing in the U.S. equity markets.
Alliance Premier Growth Fund
Alliance Premier Growth Fund 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. 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. A U.S.
company is a company that is organized under United States law, has its
principal office in the United States and issues equity securities that are
traded principally in the United States. Normally, about 40-50 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. The Fund is designed for those
seeking to accumulate capital over time with less volatility than that
associated with investment in smaller companies.
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 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 included in the S&P 500 Index.
The Fund also may:
o invest up to 20% of its net assets in convertible securities;
o invest up to 5% of its net assets in rights or warrants;
o invest up to 15% of its total assets in foreign securities;
o purchase and sell exchange-traded index options and stock index futures
contracts; and
27
<PAGE>
o write covered exchange-traded call options on its securities of up to 15%
of its total assets, and purchase and sell exchange-traded call and put
options on common stocks written by others of up to, for all options, 10%
of its total assets.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment has the risk that changes in the value of a single
security may have a more significant effect, either negative or positive, on the
Fund's net asset value.
Alliance Growth Fund
Alliance Growth Fund seeks long-term growth of capital. Current income is only
an incidental consideration. The Fund seeks to achieve its objective by
investing primarily in equity securities of companies with favorable
earnings outlooks and long-term growth rates that are expected to exceed that of
the U.S. economy over time. The Fund's investment objective is not fundamental.
The Fund also may invest up to 25% of its total assets in lower-rated
fixed-income securities and convertible bonds. The Fund generally will not
invest in securities rated at the time of purchase 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. From time to time, however, 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 of comparable investment quality
if there are prospects for an upgrade or a favorable conversion into equity
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 credit quality
of the security has deteriorated), the Fund may continue to hold the security if
such investment is considered appropriate under the circumstances.
The Fund also may:
o invest in zero-coupon and payment-in-kind bonds;
o invest in foreign securities although not generally in excess of 15% of
its total assets;
o buy or sell foreign currencies, options on foreign currencies, and foreign
currency futures contracts (and related options) and deal in forward
foreign currency exchange contracts;
o enter into forward commitments;
o buy and sell stock index futures contracts and options on future contracts
and on stock indices;
o purchase and sell futures contracts and options on futures contracts and
U.S. Treasury securities;
o write covered call and put options;
o purchase and sell put and call options;
o make loans of portfolio securities of up to 25% of its total assets; and
o enter into repurchase agreements of up to 25% of its total assets;
Alliance Technology Fund
Alliance Technology Fund emphasizes growth of capital and invests for capital
appreciation. Current income is only an incidental consideration. 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, in U.S.
securities, and up to 10% of its total assets 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 also may:
o write covered call options on its securities of up to 15% of its total
assets and purchase exchange-listed call and put options, including
exchange-traded index put options of up to, for all options, 10% of its
total assets;
o invest up to 10% of its total assets in warrants; and
o make loans of portfolio securities of up to 30% of its total assets.
Because the Fund invests primarily in technology companies, factors affecting
those types of companies could have a significant effect on the Fund's net asset
value. In addition, the Fund's investments in technology stocks, especially
those of smaller, less seasoned companies, tend to be more volatile than the
overall market. The Fund's investments in debt and foreign securities have
credit risk and foreign risk.
Alliance Quasar Fund
Alliance Quasar Fund seeks growth of capital by pursuing aggressive investment
policies. The Fund invests for capital appreciation and only incidentally for
current income. The Fund's practice of selecting securities based on the
possibility of appreciation cannot, of course, ensure against a 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 for the
Fund, 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.
28
<PAGE>
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 can periodically
invest in the securities of companies that are expected to appreciate due to a
development particularly or uniquely applicable to a company regardless of
general business conditions or movements of the market as a whole.
The Fund also may:
o make short sales of securities against the box but not more than 15% of
its net assets may be deposited on short sales; and
o write covered call options of up to 15% of its total assets and purchase
and sell put and call options written by others of up to, for all options,
10% of its total assets.
Investments in smaller companies may have more risk because they tend to be more
volatile than the overall stock market. The Fund's investments in
non-convertible bonds, preferred stocks and foreign stocks may have credit risk
and foreign risk.
The Alliance Fund
The Alliance Fund 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. The
Fund also may invest in other types of securities such as convertible
securities, investment grade instruments, U.S. Government securities and high
quality, short-term obligations such as repurchase agreements, bankers'
acceptances and domestic certificates of deposit. The Fund may invest without
limit in foreign securities. The Fund generally does not effect portfolio
transactions in order to realize short-term trading profits or exercise control.
The Fund also may:
o write exchange-traded covered call options on up to 25% of its total
assets;
o make secured loans of portfolio securities of up to 25% of its total
assets;
o enter into repurchase agreements of up to seven days' 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;
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.
TOTAL RETURN FUNDS
The Total Return Funds provide a range of investment alternatives to investors
seeking both growth of capital and current income.
Alliance Growth and Income Fund
Alliance Growth and Income Fund seeks appreciation through investments primarily
in dividend-paying common stocks of good quality. The Fund also may invest in
fixed-income securities and convertible securities.
The Fund also may try to realize income by writing covered call options listed
on domestic securities exchanges. The Fund also invests in foreign securities.
Since the purchase of foreign securities entails certain political and economic
risks, the Fund restricts its investments in these securities to issues of high
quality. The Fund also may purchase and sell financial forward and futures
contracts and options on these securities for hedging purposes.
Alliance Balanced Shares
Alliance Balanced Shares 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 invests in equity securities of high-quality, financially strong,
dividend-paying companies. Normally, the Fund's investments will consist of
about 60% in stocks, but stocks may make up to 75% of its investments. The Fund
will invest at least 25% of its total assets in investment grade debt
securities. These investments may include short- and long-term debt securities,
preferred stocks, convertible debt securities and convertible preferred stocks
to the extent that their values are attributable to their fixed-income
characteristics. Other than this restriction, the percentage of the Fund's
assets invested in each type of security will vary.
The Fund invests in U.S. Government securities, bonds, senior debt securities,
and preferred and common stocks in such proportions and of such type as Alliance
deems 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.
The Fund also may:
o enter into contracts for the purchase or sale for future delivery of
foreign currencies;
o purchase and write put and call options on foreign currencies and enter
into forward foreign currency exchange contracts for hedging purposes; and
o subject to market conditions, write covered call options listed on a
domestic exchange to realize income.
As a balanced fund, the Fund has the risk that the allocation of its investments
between equity and debt securities may have a more significant effect on the
Fund's net asset value when one of these asset classes is performing more poorly
than the other.
Alliance Utility Income Fund
Alliance Utility Income Fund seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. As a
29
<PAGE>
fundamental policy, the Fund normally invests at least 65% of its total assets
in securities of companies in the utilities industry.
The Fund seeks 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. 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.
The Fund may invest in securities of both U.S. and foreign issuers, although the
Fund will invest no more than 15% of its total assets in issuers in any one
foreign country. The Fund invests at least 65% of its total assets 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 invest up to 35% of its net assets in lower-rated 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 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. These securities include U.S. Government securities and
repurchase agreements for those securities, 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 also may:
o invest up to 30% of its net assets in convertible securities;
o invest up to 5% of its net assets in rights or warrants;
o 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";
o write covered call and put options, purchase call and put options on
securities of the types in which it is permitted to invest that are
exchange-traded and over-the-counter, and write uncovered call options for
cross-hedging purposes;
o purchase and sell exchange-traded options on any securities index composed
of the types of securities in which it may invest;
o 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;
o purchase and write call and put options on foreign currencies traded on
U.S. and foreign exchanges or over-the-counter for hedging purposes;
o purchase or sell forward contracts;
o enter into interest rate swaps and purchase or sell interest rate caps and
floors;
o enter into forward commitments;
o enter into standby commitment agreements;
o enter into repurchase agreements for U.S. Government securities;
o make short sales of securities or maintain a short position; and
o make secured loans of portfolio securities of up to 20% of its total
assets.
The Fund's principal risks include those that arise from its investing primarily
in electric utility companies. Factors affecting that industry sector can have a
significant effect on the Fund's net asset value. The U.S. 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, however, could
increase costs or impair the ability of nuclear and conventionally fueled
generating facilities to operate their facilities and reduce their ability to
make dividend payments on their securities. 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
ordinarily lag behind changes in financing costs and can favorably or
unfavorably affect the earnings or dividend pay-outs of utilities stocks
depending upon whether the rates and costs are declining or rising.
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 also can be no assurance that regulatory policies or accounting
standards changes will not negatively affect utility companies' earnings or
dividends. Utility companies are subject to regulation by various authorities
and may be affected by the imposition of special tariffs and changes in tax
laws. To the extent that rates are established or reviewed by governmental
authorities, utility companies are subject to the risk that such authorities
will not authorize increased rates. Because of the Fund's policy of
concentrating its investments in utility companies, the Fund is more susceptible
than most other mutual funds to economic, political or regulatory occurrences
affecting the utilities industry.
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Foreign utility companies, like those in the U.S., are generally subject to
regulation, although the regulation 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. As in the U.S., utility companies generally are required to seek government
approval for rate increases. In addition, many foreign utility companies use
fuels that cause more pollution than those used in the U.S. and 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.
Increases in interest rates may cause the value of the Fund's investments to
decline and the decrease in value may not be offset by higher interest rate
income. The Fund's investments in lower-rated securities may be subject to more
credit risk than a fund that invests in higher-rated securities.
Alliance Real Estate Investment Fund
Alliance Real Estate Investment Fund seeks a total return from long-term growth
of capital and from income principally through investing in a portfolio of
equity securities of issuers that are primarily engaged in or related to the
real estate industry.
The Fund normally invests at least 65% of its total assets in equity securities
of real estate investment trusts, or REITs, and other real estate industry
companies. A "real estate industry company" is a company that derives at least
50% of its gross revenues or net profits from the ownership, development,
construction, financing, management, or sale of commercial, industrial, or
residential real estate or interests in these properties. The Fund invests in
equity securities that include common stock, shares of beneficial interest of
REITs, and securities with common stock characteristics, such as preferred stock
or convertible securities ("Real Estate Equity Securities").
The Fund may invest up to 35% of its total assets in (a) securities that
directly or indirectly represent participations in, or are collateralized by and
payable from, mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real estate mortgage
investment conduit certificates ("REMICs") and collateralized mortgage
obligations ("CMOs") and (b) short-term investments. These securities are
described below.
In selecting Real Estate Equity Securities, Alliance's analysis will focus on
determining the degree to which the company involved can achieve sustainable
growth in cash flow and dividend paying capability. Alliance believes that the
primary determinant of this capability is the economic viability of property
markets in which the company operates and that the secondary determinant of this
capability is the ability of management to add value through strategic focus and
operating expertise. The Fund will purchase Real Estate Equity Securities when,
in the judgment of Alliance, their market price does not adequately reflect this
potential. In making this determination, Alliance will take into account
fundamental trends in underlying property markets as determined by proprietary
models, site visits conducted by individuals knowledgeable in local real estate
markets, price-earnings ratios (as defined for real estate companies), cash flow
growth and stability, the relationship between asset value and market price of
the securities, dividend payment history, and such other factors that Alliance
may determine from time to time to be relevant. Alliance will attempt to
purchase for the Fund Real Estate Equity Securities of companies whose
underlying portfolios are diversified geographically and by property type.
The Fund may invest without limitation in shares of REITs. REITs are pooled
investment vehicles that invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs, or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Similar to investment companies
such as the Fund, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Code. The Fund will
indirectly bear its proportionate share of expenses incurred by REITs in which
the Fund invests in addition to the expenses incurred directly by the Fund.
The Fund's investment strategy with respect to Real Estate Equity Securities is
based on the premise that property market fundamentals are the primary
determinant of growth underlying the performance of Real Estate Equity
Securities. Value and management further distinguishes the most attractive Real
Estate Equity Securities. The Fund's research and investment process is designed
to identify those companies with strong property fundamentals and strong
management teams. This process is comprised of real estate market research,
specific property inspection, and securities analysis. Alliance believes that
this process will result in a portfolio that will consist of Real Estate Equity
Securities of companies that own assets in the most desirable markets across the
country, diversified geographically and by property type.
To implement the Fund's research and investment process, Alliance has retained
the consulting services of CB Richard Ellis, Inc. ("CBRE"), a publicly held
company and the largest real estate services company in the United States.
CBRE's business includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory activities. The
universe of property-owning real estate industry firms consists of approximately
142 companies of sufficient size and quality to merit consideration for
investment by the Fund. As consultant to Alliance, CBRE provides access to its
proprietary model, REIT-Score, which analyzes the approximately 18,000
properties owned by these 142 companies. Using proprietary databases and
algorithms, CBRE analyzes local market rent, expenses, occupancy trends, market
specific transaction pricing, demographic and economic trends, and leading
indicators of real estate supply such as building
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permits. Over 1,000 asset-type specific geographic markets are analyzed and
ranked on a relative scale by CBRE in compiling its REIT-Score database. The
relative attractiveness of these real estate industry companies is similarly
ranked based on the composite rankings of the properties they own.
Once the universe of real estate industry companies has been distilled through
the market research process, CBRE's local market presence provides the
capability to perform site specific inspections of key properties. This analysis
examines specific location, condition, and sub-market trends. CBRE's use of
locally based real estate professionals provides Alliance with a window on the
operations of the portfolio companies as information can immediately be put in
the context of local market events. Only those companies whose specific property
portfolios reflect the promise of their general markets will be considered for
investment by the Fund.
Alliance further screens the universe of real estate industry companies by using
rigorous financial models and by engaging in regular contact with management of
targeted companies. Each management's strategic plan and ability to execute the
plan are determined and analyzed. Alliance makes extensive use of CBRE's network
of industry analysts in order to assess trends in tenant industries. This
information is then used to further evaluate management's strategic plans.
Financial ratio analysis is used to isolate those companies with the ability to
make value-added acquisitions. This information is combined with property market
trends and used to project future earnings potential.
The Fund may invest in short-term investments including: corporate commercial
paper and other short-term commercial obligations, in each case rated or issued
by companies with similar securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; obligations (including
certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks with securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities with
remaining maturities not exceeding 18 months.
The Fund may invest in debt securities rated BBB or higher by S&P or Baa or
higher by Moody's or, if not rated, of equivalent credit quality as determined
by Alliance. The Fund expects that it will not retain a debt security that is
downgraded below BBB or Baa or, if unrated, determined by Alliance to have
undergone similar credit quality deterioration, subsequent to purchase by the
Fund.
The Fund also may:
o invest up to 15% of its net assets in convertible securities;
o enter into forward commitments;
o enter into standby commitment agreements; and
o make short sales of securities or maintain a short position but only if at
all times when a short position is open not more than 25% of the Fund's
net assets is held as collateral for such sales.
o invest up to 10% of its net assets in rights or warrants;
o make loans of portfolio securities of up to 25% of its total assets; and
o enter into repurchase agreements of up to seven days' duration.
Because the Fund invests a substantial portion of its assets in the real estate
market, it is subject to many of the same risks involved in direct ownership of
real estate. For example, the value of real estate could decline due to a
variety of factors affecting the real estate market generally, such as
overbuilding, increases in interest rates, or declines in rental rates. In
addition, REITs are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by changes in tax
laws.
The Fund's investments in mortgage-backed securities have prepayment risk, which
is the risk that mortgage loans will be prepaid when interest rates decline and
the Fund will have to reinvest in securities with lower interest rates. This
risk causes mortgage-backed securities to have significantly greater price and
yield volatility than traditional fixed-income securities. The Fund's
investments in REMICs, CMOs and other types of mortgage-backed securities may be
subject to special risks that are described under "Description of Investment
Practices."
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors the opportunity to participate in the
potential for long-term capital appreciation available from investment in
foreign securities.
Alliance New Europe Fund
Alliance New Europe Fund 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 these securities. The Fund may invest up to 35% of
its total assets 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. In addition, the emergence of new market economies in Europe and
the broadening and strengthening of other European economies may significantly
accelerate economic development. The Fund invests in companies that Alliance
believes possess rapid growth potential. The Fund emphasizes investments in
larger, established companies, but also invests in smaller, emerging companies.
In recent years, economic ties between the former "east bloc" countries of
Eastern Europe and certain other European
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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 these companies and, as
opportunities become available, within the former "east bloc." The Fund will
not invest more than 20% of its total assets in these companies or more than
10% of its total assets in issuers based in any one country.
The Fund diversifies its investments among a number of European countries
and normally invests in companies based in at least three of these countries.
The Fund, however, 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 companies
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.
The Fund also may:
o invest up to 20% of its total assets in rights or warrants;
o invest in depositary receipts or other securities convertible into
securities of companies based in European countries, debt securities of
supranational entities denominated in the Euro or the currency of any
European country, debt securities denominated in the Euro of an
issuer in a European country (including supranational issuers), and
"semi-governmental securities";
o purchase and sell forward contracts;
o write covered call or put options and sell and purchase exchange-traded
put and call options, including exchange-traded index options;
o 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;
o purchase and write put options on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
o enter into standby commitment agreements;
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into forward commitments.
The Fund's investments in non-U.S. countries and smaller countries may have more
risk because they tend to be more volatile than the overall stock market. To the
extent the Fund invests a substantial amount of its assets in a particular
European country, your investment is subject to the risk that market changes or
other events affecting that country may have a more significant effect on the
Fund's net asset value. The Fund's investments in U.S. Dollar- or foreign
currency-denominated fixed-income securities have interest rate and credit risk.
Alliance Worldwide Privatization Fund
Alliance Worldwide Privatization Fund 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. These companies include those in Western
Europe and Scandinavia, Australia, New Zealand, Latin America, Asia, 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.
Privatization is a process through which the ownership and control of companies
or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all or
a portion of its interest in a state enterprise to some form of private
ownership. Governments and states with established economies, including France,
Great Britain, Germany, and Italy, and those with developing economies,
including Argentina, Mexico, Chile, Indonesia, Malaysia, Poland, and Hungary,
are engaged in privatizations. The Fund will invest in any country believed to
present attractive investment opportunities.
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 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.
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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. The Fund may invest up to 15% of its total assets 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.
The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities. The Fund may invest up to 5% of its net assets in
lower-rated 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 also may:
o invest up to 20% of its total assets in rights or warrants;
o write covered call and put options, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for
cross-hedging purposes;
o 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;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into forward commitments;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain a short position;
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
Investments in non-U.S. companies and smaller companies may have more risk
because they tend to be more volatile than the overall stock market. The Fund's
investments in debt securities and convertible securities have interest risk and
credit risk.
Alliance International Premier Growth Fund
Alliance International Premier Growth Fund seeks long term capital appreciation
by investing predominately in the equity securities of a limited number of
carefully selected non-U.S. companies that are judged likely to achieve superior
earnings growth. As a matter of fundamental policy, the Fund will invest under
normal circumstances at least 85% of its total assets in equity securities. The
Fund makes investments based upon their potential for capital appreciation.
Current income is incidental to that objective.
In the main, the Fund's investments will be in comparatively large, high-quality
companies. Normally, about 60 companies will be represented in the Fund's
portfolio, and the 30 most highly regarded of these companies usually will
constitute approximately 70% of the Fund's net assets. The Fund thus differs
from more typical international equity mutual funds by focusing on a relatively
small number of intensively researched companies. The Fund is designed for
investors seeking to accumulate capital over time. Because of market risks
inherent in any investment, the selection of securities on the basis of their
appreciation possibilities cannot ensure against possible loss in value. There
is, of course, no assurance that the Fund's investment objective will be met.
Alliance expects the market capitalization of the companies represented in the
Fund's portfolio normally will be in the range of the average weighted market
capitalization of the companies comprising the EAFE Index. As of December 31,
1998, the average weighted market capitalization of companies in the EAFE
index was approximately $35 billion.
Within the investment framework of the Fund, Alliance's Large Cap Growth Group,
headed by Alfred Harrison, Alliance's Vice Chairman, has responsibility for
managing the Fund's portfolio. As discussed below, in selecting the Fund's
portfolio investments Alliance's Large Cap Growth Group will follow a
structured, disciplined research and investment process that is essentially
similar to that which it employs in managing Premier Growth Fund.
In managing the Fund's assets, Alliance's investment strategy will emphasize
stock selection and investment in the securities of a limited number of issuers.
Alliance depends heavily upon the fundamental analysis and research of its large
global equity research team situated in numerous locations around the world. Its
global equity analysts follow a research universe of approximately 900
companies. As one of the largest multinational investment management firms,
Alliance has access to considerable information concerning the companies in its
research universe, an in-depth understanding of the products, services, markets,
and competition of these companies, and a good knowledge of their management.
Research emphasis is placed on the identification of companies whose superior
prospective earnings growth is not fully reflected in current market valuations.
Alliance constantly adds to and deletes from this universe as fundamentals and
valuations change. Alliance's global equity analysts rate companies in three
categories. The performance of each analyst's ratings is an important
determinant of his or her incentive compensation. The equity securities of
"one-rated" companies are expected to significantly outperform the local market
in local currency terms. All equity securities purchased for the Fund's
portfolio will be selected from the universe of approximately 100 "one-rated"
companies. As noted above, the Fund usually invests approximately 70% of its
net assets in approximately 30 most highly regarded of these companies.
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The Fund's portfolio emphasis upon particular industries or sectors
will be a by-product of the stock selection process rather than the result of
assigned targets or ranges.
The Fund diversifies its investments among at least four, and usually
considerably more, countries. No more than 15% of the Fund's total assets will
be invested in issuers in any one foreign country, except that the Fund may
invest up to 25% of its total assets in issuers in each of Canada, France,
Germany, Italy, Japan, The Netherlands, Switzerland, and the United Kingdom.
Within these limits, geographic distribution of the Fund's investments among
countries or regions also will be a product of the stock selection process
rather than a predetermined allocation. To the extent that the Fund
concentrates its assets within one region, the Fund may be subject to any
special risks associated with that region. While the Fund may engage in
currency hedging programs in periods in which Alliance perceives extreme
exchange rate risk, the Fund normally will not make significant use of
currency hedging strategies.
In the management of the Fund's investment portfolio, Alliance will seek to
utilize market volatility judiciously (assuming no change in company
fundamentals) to adjust the Fund's portfolio positions. To the extent consistent
with local market liquidity considerations, the Fund will strive to capitalize
on apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. Under normal
circumstances, the Fund will remain substantially fully invested in equity
securities and will not take significant cash positions for market timing
purposes. Rather, through "buying into declines" and "selling into strength,"
Alliance seeks superior relative returns over time.
The Fund also may:
o invest up to 20% of its total assets in convertible securities;
o invest up to 20% of its total assets in rights or warrants;
o write covered call and put options, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for cross
hedging purposes;
o 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 such future contracts;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into standby commitment agreements;
o enter into forward commitments;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain short positions of no more than
5% of its net assets as collateral for short sales; and
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment also has the risk that changes in the value of a
single security may have a more significant effect, either negative or positive,
on the Fund's net asset value.
Alliance Global Small Cap Fund
Alliance Global Small Cap Fund 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 $1.5 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 companies. These companies are located in at least
three countries, one of which may be the U.S. The Fund may invest up to 35% of
its total assets 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.
The Fund also may:
o invest up to 20% of its total assets in warrants to purchase equity
securities;
o invest in depositary receipts or other securities representing securities
of companies based in countries other than the U.S.;
o purchase or sell forward foreign currency contracts;
o write covered call options on its securities of up to 15% of its total
assets, and purchase exchange-traded call and put options, including put
options on market indices of up to, for all options, 10% of its total
assets; and
o make secured loans of portfolio securities of up to 30% of its total
assets.
One of the Fund's principal risks is its investments in smaller capitalization
companies. Alliance believes that smaller capitalization companies 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
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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. For these reasons, the
Fund's investments may have a greater chance of loss than investments in
securities of larger capitalization companies. In addition, transaction costs in
small capitalization stocks may be higher than in those of larger capitalization
companies.
The Fund's investments in non-U.S. companies and in smaller companies will be
more volatile and may differ substantially from the overall U.S. market.
Alliance International Fund
Alliance International Fund 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, the Fund will invest more than 80% of its assets in these
types of companies.
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. The Fund may invest in any other type of
investment grade security, including convertible securities, as well as in
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 these countries. 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 that 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 also may:
o purchase or sell forward foreign currency exchange contracts;
o write covered call or put options, sell and purchase U.S. or foreign
exchange-listed put and call options, including exchange-traded index
options;
o 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;
o purchase and write put options on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
o make loans of portfolio securities of up to 30% of its total assets; and
o enter into repurchase agreements of up to seven days' duration for up to
10% of the Fund's total assets.
Investments in non-U.S. countries may have more risk because they tend to be
more volatile than the U.S. stock market. To the extent that the Fund invests a
substantial amount of its assets in a particular foreign country, an investment
in the Fund has the risk that market changes or other events affecting that
country may have a more significant effect, either negative or positive, on the
Fund's net asset value.
Alliance Greater China '97 Fund
Alliance Greater China '97 Fund is a non-diversified investment company that
seeks long-term capital appreciation through investment of at least 80% of its
total assets in equity securities issued by Greater China companies. The Fund
expects to invest a significant portion, which may be greater than 50%, of its
assets in equity securities of Hong Kong companies and may invest, from time to
time, all of its assets in Hong Kong companies or companies of either of the
other Greater China countries.
In recent years, China, Hong Kong and Taiwan have each experienced a high level
of real economic growth, although growth is expected to slow in 1999. This
growth has resulted from advantageous economic conditions, including favorable
demographics, competitive wage rates, and rising per capita income and consumer
demand. Significantly, the growth has also been fueled by an easing by both
China and Taiwan of government restrictions and an increased receptivity to
foreign investment. This expanded, if not yet complete, openness to foreign
investment extends as well to the securities markets of both countries. Hong
Kong's free-market economy has historically included securities markets
completely open to foreign investments. All three countries have regulated stock
exchanges upon which shares of an increasing number of Greater China companies
are traded.
With its population estimated at more than 1.2 billion as a driving force, and
notwithstanding its continuing political rigidity, China's economic growth has
been coupled with significantly reduced government economic intervention and
basic economic structural change. Recent years have seen large increases in
industrial production with a significant decline in the state sector share of
industrial output, and increased involvement of local governmental units and the
private sector in establishing new business enterprises.
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With China's growth has come an increasing direct and indirect economic
involvement of all three Greater China countries. For some time, Hong Kong, a
world financial and trade center in its own right, with a large stock exchange
and offices of many of the world's multinational companies, has been the gateway
to trade with and foreign investment in China. With the transfer on
July 1, 1997 of the sovereignty of Hong Kong from Great Britain to China, not
only the political but the economic ties between China and Hong Kong are
expected to continue to intensify, with the continuation of Hong Kong's economic
system as provided for in the law governing its sovereignty.
Notwithstanding the, at times considerable, political tension between the two
countries, it is generally recognized that substantially increased trade and
investment with China has been generated from Taiwan, in many cases through Hong
Kong. Along with this increased interaction with China, Taiwan is becoming a
regional technological and telecommunication center, while continuing the
process of opening its economy up to foreign investment. Although geographically
limited, Taiwan boasts an economy among the world's 20 largest and its foreign
exchange reserves are third largest in the world measured in U.S. dollars. As
China's economy continues to expand, it is expected that Taiwan's economic
interaction with China will likewise increase.
Alliance believes that over the long-term conditions are favorable for
continuing and expanding economic growth in all three Greater China countries.
It is this potential which the Fund hopes to take advantage of by investing both
in established and new and emerging companies. Appendix A has additional
Information about the Greater China countries.
In addition to investing in equity securities of Greater China companies, the
Fund may invest up to 20% of its total assets in (i) debt securities issued or
guaranteed by Greater China companies or by Greater China governments, their
agencies or instrumentalities, and (ii) equity or debt securities issued by
issuers other than Greater China companies. The Fund will invest only in
investment grade securities. The Fund will sell a security that is downgraded
below investment grade or is determined by Alliance to have undergone a
similar credit quality deterioration, the Fund will sell of that security.
The Fund also may:
o invest up to 25% of its net assets in the convertible securities;
o invest up to 20% of its net assets in rights or warrants;
o invest in depositary receipts, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
o invest up to 25% of its net assets in equity-linked debt securities with
the objective of realizing capital appreciation;
o invest up to 20% of its net assets in loans and other direct debt
securities;
o write covered call and put options, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
o 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;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into interest rate swaps and purchase or sell interest rate caps and
floors;
o enter into forward commitments;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain a short position, in each case
only if against the box;
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
All or some of the policies and practices listed above may not be available to
the Fund in the Greater China countries and the Fund will utilize these policies
only to the extent permissible.
The Fund's investments in Greater China companies will be significantly more
volatile and differ from the overall U.S. market. Your investment also has the
risk that market changes or other events affecting the Greater China countries
may have a more significant effect on the Fund's net asset value. In addition
the Fund is "non-diversified" meaning that it invests its assets in a smaller
number of companies than many other international funds. As a result, changes
in the value of a single security may have a more significant effect, either
negative or positive, on the Fund's net asset value.
Alliance All-Asia Investment Fund
Alliance All-Asia Investment Fund's investment objective is long-term capital
appreciation. The Fund invests 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 will invest at least 80% of its total assets in
Asian companies and Asian debt securities, but also may invest in securities
issued by non-Asian issuers. The Fund expects to invest, from time to time, a
significant portion, which
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may be in excess of 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 that 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 also are 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 that have securities 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. 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 primarily invest in investment grade debt securities, but may
invest up to 5% of its net assets in lower-rated securities, lower-rated
loans, and other lower-rated direct debt instruments. 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 also may:
o invest up to 25% of its net assets in the convertible securities;
o invest up to 20% of its net assets in rights or warrants;
o invest in depositary receipts, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
o invest up to 25% of its net assets in equity-linked debt securities with
the objective of realizing capital appreciation;
o invest up to 25% of its net assets in loans and other direct debt
instruments;
o write covered call and put options, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
o 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;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o purchase or sell forward contracts;
o enter into interest rate swaps and purchase or sell interest rate caps and
floors;
o enter into forward commitments;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make short sales of securities or maintain a short position, in each case
only if against the box;
o make secured loans of portfolio securities of up to 30% of its total
assets; and
o enter into repurchase agreements for U.S. Government securities.
The Fund's investments in Asian and Pacific region countries will be
significantly more volatile and may differ significantly from the overall U.S.
market. To the extent the Fund invests a substantial amount of its assets in
Japanese companies, your investment has the risk that market changes or other
events affecting that country may have a more significant effect on the Fund's
net assets value. The Fund's investments in debt securities have interest rate
and credit risk.
Alliance Global Environment Fund
Alliance Global Environment Fund is a non-diversified investment company that
seeks long-term capital appreciation through investment in equity securities of
Eligible Companies. For purposes of the Fund's investment objective and
investment policies, "equity securities" are common stocks (but not preferred
stocks), rights or warrants to subscribe for or purchase common stocks, and
preferred stocks or debt securities that are convertible into common stocks
without the payment of any further consideration. The Fund invests in two
categories of Eligible Companies--Environmental Companies and Beneficiary
Companies. The Fund
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may invest in a company with a broadly diversified business only a part of
which provides such products, processes, or services, when Alliance believes
that these products, processes or services will yield a competitive
advantage that significantly enhances the issuer's growth prospects. As a
matter of fundamental policy, the Fund will, under normal circumstances, invest
substantially all of its total assets in equity securities of Eligible
Companies.
A major premise of the Fund's investment approach is that environmental concerns
will be a significant source of future growth opportunities, and that
Environmental Companies will see an increased demand for their systems and
services. Environmental Companies operate in the areas of pollution control,
clean energy, solid waste management, hazardous waste treatment and disposal,
pulp and paper recycling, waste-to-energy alternatives, biodegradable cartons,
packages, plastics and other products, remedial projects and emergency cleanup
efforts, manufacture of environmental supplies and equipment, the achievement of
purer air, groundwater, and foods, and the detection, evaluation and treatment
of both existing and potential environmental problems including, among others,
air pollution and acid rain.
The environmental services industry generally is positively affected by
increasing governmental action intended to foster environmental protection. As
environmental regulations are developed and enforced, Environmental Companies
providing the means of compliance with such regulations are afforded substantial
opportunities for growth. Beneficiary Companies may also derive an advantage to
the extent that they have anticipated environmental regulation and are therefore
at a competitive advantage.
In the view of Alliance, increasing public and political awareness of
environmental concerns and resultant environmental regulations are long-term
phenomena that are driven by an emerging global consensus that environmental
protection is a vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other economically
developed countries will have increasing opportunities for earnings growth
resulting not only from an increased demand for their existing products or
services but also from innovative responses to changing regulations and
priorities and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also within many
economically developing countries, such as those of Eastern Europe and the
Pacific Rim. These countries lag well behind developed countries in the
conservation and efficient use of natural resources and in their implementation
of policies that protect the environment.
Alliance believes that global investing offers opportunities for superior
investment returns. The Fund spreads investment risk among the capital markets
of a number of countries and invests in equity securities of companies based in
at least three, and normally considerably more, such countries. The percentage
of the Fund's assets invested in securities of companies in a particular country
or denominated in a particular currency will vary in accordance with Alliance's
assessment of the appreciation potential of such securities and the strength of
that currency.
The Fund also may:
o invest up to 20% of its total assets in warrants to purchase equity
securities;
o invest in depositary receipts;
o purchase and write put and call options on foreign currencies for hedging
purposes;
o enter into forward foreign currency transactions for hedging purposes;
o invest in currency futures and options on such futures for hedging
purposes; and
o make secured loans of portfolio securities of up to 30% of its total
assets.
The Fund's investments in non-U.S. companies and in specific types of companies
that provide environmental services will be more volatile and may differ
substantially from the overall market. The Fund's investments also have the risk
that government regulations or other action could negatively affect the business
of environmental companies.
DESCRIPTION OF INVESTMENT PRACTICES
This section describes the Funds' investment practices and associated risks.
Unless otherwise noted, a Fund's use of any of these practices was specified in
the previous section.
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.
Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which generally
provide a stable stream of income with yields that are generally higher 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 equity security, although the higher yield tends to
make the convertible security less volatile than
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the underlying equity security. As with debt securities, the market value
of convertible securities tends to decrease as interest rates rise 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 offer investors the potential 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.
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. 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 counterparty 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 counterparty to the transaction, the
Fund will have contractual remedies under the transaction agreements.
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 an 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 an 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. For purposes of determining the country of issuance, investments in
depositary receipts of either type are deemed to be investments in the
underlying securities, except with respect to Alliance Growth Fund, where
investments 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.
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 that are not backed by its full faith and credit and
general taxing powers.
Equity-Linked Debt Securities. Equity-linked debt securities are securities on
which the issuer is obligated to pay interest and/or principal that is linked to
the to the performance of a specified index of equity securities. The interest
or principal payments may be significantly greater or less than payment
obligations for 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 a Fund. As with any debt securities, the values of
equity-linked debt securities will generally vary inversely with changes in
interest rates. A 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.
Forward Commitments. Forward commitments for the purchase or sale of securities
may include purchases on a "when-issued" basis or purchases or sales on a
"delayed delivery" basis. In some cases, a forward commitment may be conditioned
upon the occurrence of a subsequent event, such as approval and consummation of
a merger, corporate reorganization or debt restructuring (i.e., a "when, as and
if issued" trade).
When forward commitment transactions are negotiated, the price is fixed at the
time the commitment is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within two months
after the transaction, but a Fund may negotiate settlements beyond two months.
Securities purchased or sold under a forward commitment are subject to market
fluctuations and no interest or dividends accrue to the purchaser prior to the
settlement date.
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 to obtain the benefit of currently
higher cash yields. If, however, 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
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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 Alliance Utility Income Fund, Alliance Real Estate Investment
Fund, Alliance New Europe Fund, Alliance Worldwide Privatization Fund, Alliance
International Premier Growth Fund, Alliance Greater China '97 Fund or Alliance
All-Asia Investment Fund if, as a result, the Fund's aggregate commitments under
the transactions would be more than 30% of its 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.
Forward Foreign Currency Exchange Contracts. A Fund may purchase or sell forward
foreign currency exchange contracts to minimize the risk of 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 a particular currency 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 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. Alliance New Europe Fund,
Alliance Global Small Cap Fund and Alliance International 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. Alliance
New Europe Fund's, Alliance Global Small Cap Fund's and Alliance International
Fund's investments in forward contracts will be limited to hedging involving
either specific transactions or portfolio positions. Alliance Growth Fund also
may purchase and sell foreign currency on a spot basis.
Illiquid Securities. The Funds will limit their investments in illiquid
securities to no more than 15% of their net assets, except the limit is 10% for
Alliance Technology Fund, Alliance Quasar Fund, Alliance New Europe Fund, and
Alliance Global Small Cap Fund and 5% for The Alliance Fund and Alliance
Growth Fund. Illiquunlisted securities, when market makers do not exist or will
not entertain bids or offers), including many individually negotiated currency
swaps and any assets used to cover currency swaps and most privately negotiated
investments in state enterprises that have not yet conducted an initial equity
offering, (ii) over-the-counter options and assets used to cover
over-the-counter options, and (iii) repurchase agreements not terminable within
seven days.
Because of the absence of a trading market for illiquid securities, a Fund may
not be able to realize their full value upon sale. Alliance will monitor the
liquidity of a Fund's investments in illiquid securities. Rule 144A securities
will not be treated as "illiquid" for purposes of this limit on investments.
A Fund that invests in securities for which there is no ready market may not be
able to readily sell such securities. Such securities are unlike securities that
are traded in the open market and can be expected to be sold immediately if the
market is adequate. The sale price of illiquid securities may be lower or higher
than Alliance's most recent estimate of their fair value. Generally, less public
information is available about the issuers of such securities than about
companies whose securities are traded on an exchange. 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 resales of non-publicly traded foreign securities.
Interest Rate Transactions (Swaps, Caps, and Floors). 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 Alliance Utility Income Fund, Alliance Greater China '97 Fund and
Alliance All-Asia Investment 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. 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 is 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 that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance were to incorrectly
forecast 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
counterparty 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.
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 a 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 a 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. Failure to receive scheduled interest or principal payments on these
types of investments could adversely affect a Fund's net asset value and yield.
Loans that are fully secured offer a 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.
Making loans to 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 government issuers 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 a Fund. For
example, if a loan is foreclosed, a 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, a 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 a 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 a Fund may include letters of credit, revolving
credit facilities, or other standby financing commitments obligating a Fund to
pay additional cash on
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demand. These commitments may have the effect of requiring a 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.
Loans of Portfolio Securities. The risk in lending portfolio securities, as with
other extensions of credit, consists of the 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 from the
securities. The Fund may invest any cash collateral in portfolio securities and
earn additional income or receive an agreed-upon amount of income from a
borrower who has delivered equivalent collateral. Each Fund will have the right
to regain record ownership of loaned securities or equivalent securities in
order to exercise ownership rights such as voting rights, subscription rights
and rights to dividends, interest, or distributions. A Fund may pay reasonable
finders', administrative, and custodial fees in connection with a loan.
Mortgage-Backed Securities and Associated Risks. 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 that invests in these
securities would be required to reinvest the proceeds at the lower interest
rates then available. Conversely, during periods of rising interest rates, a
reduction in prepayments may increase the effective maturity of the securities,
subjecting them to a greater risk of decline in market value in response to
rising interest rates. In addition, prepayments of mortgages underlying
securities purchased at a premium could result in capital losses.
Mortgage-Backed Securities include mortgage pass-through certificates and
multiple-class pass-through securities, such as REMIC pass-through certificates,
CMOs and stripped mortgage-backed securities ("SMBS"), and other types of
Mortgage-Backed Securities that may be available in the future.
Guaranteed Mortgage Pass-Through Securities. Alliance Real Estate Investment
Fund may invest in guaranteed mortgage pass-through securities which represent
participation interests in pools of residential mortgage loans and are issued by
U.S. governmental or private lenders and guaranteed by the U.S. Government or
one of its agencies or instrumentalities, including but not limited to the
Government National Mortgage Association ("Ginnie Mae"), the Federal National
Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full
faith and credit of the United States Government for timely payment of principal
and interest on the certificates. Fannie Mae certificates are guaranteed by
Fannie Mae, a federally chartered and privately-owned corporation, for full and
timely payment of principal and interest on the certificates. Freddie Mac
certificates are guaranteed by Freddie Mac, a corporate instrumentality of the
United States Government, for timely payment of interest and the ultimate
collection of all principal of the related mortgage loans.
Multiple-Class Pass-Through Securities and Collateralized Mortgage Obligations.
Mortgage-Backed Securities also include CMOs and REMIC pass-through or
participation certificates that may be issued by, among others, U.S. Government
agencies and instrumentalities as well as private lenders. CMOs and REMIC
certificates are issued in multiple classes and the principal of and interest on
the mortgage assets may be allocated among the several classes of CMOs or REMIC
certificates in various ways. Each class of CMOs or REMIC certificates, often
referred to as a "tranche," is issued at a specific adjustable or fixed interest
rate and must be fully retired no later than its final distribution date.
Generally, interest is paid or accrues on all classes of CMOs or REMIC
certificates on a monthly basis. Alliance Real Estate Investment Fund will not
invest in the lowest tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or Freddie Mac certificates but
also may be collateralized by other mortgage assets such as whole loans or
private mortgage pass-through securities. Debt service on CMOs is provided from
payments of principal and interest on collateral of mortgaged assets and any
reinvestment income.
A REMIC is a CMO that qualifies for special tax treatment under the Code and
invests in certain mortgages primarily secured by interests in real property and
other permitted investments. Investors may purchase "regular" and "residual"
interest shares of beneficial interest in REMIC trusts, although Alliance Real
Estate Investment Fund does not intend to invest in residual interests.
Options on Securities. 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
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against a decline in value in another security which the Fund owns or has
the right to acquire. 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. Entering into a closing transaction
(i.e., by disposing of the option prior to its exercise) could reduce these
risks. 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.
Alliance Technology Fund and Alliance Global Small Cap Fund will not write a
call option if the premium to be received by the Fund 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.
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.
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.
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 and incur 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. For Fund's that may invest in options on
foreign currencies, see the Fund's SAI for further discussion of the use, risks,
and costs of options on foreign currencies.
Futures Contracts and Options on Futures Contracts. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the contract
at a specified price on a specified date. A "purchase" of a futures contract
means the incurring of an obligation to acquire the securities, foreign
currencies or other commodity called for by the contract at a specified price on
a specified date. The purchaser of a futures contract on an index agrees to take
or make delivery of an amount of cash equal to the difference between a
specified dollar multiple of the value of the index on the expiration date of
the contract ("current contract value") and the price at which the contract was
originally struck. No physical delivery of the securities underlying the index
is made.
A Fund will purchase options on futures contracts written or purchased by a Fund
that are 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, or in the case of
Alliance International Premier Growth Fund 100% of its total assets. Alliance
Premier Growth Fund and Alliance Growth and Income 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. Alliance Premier Growth Fund and
Alliance Growth and Income 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.
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.
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Rights and Warrants. A Fund will invest in rights or warrants only if Alliance
deems the underlying equity securities themselves appropriate 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 of these factors. If
the market price of the underlying security is below the exercise price of 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.
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. Alliance Utility Income Fund, Alliance
Worldwide Privatization Fund, Alliance Greater China '97 Fund and Alliance
All-Asia Investment 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 Alliance
Real Estate Investment Fund, Alliance Greater China '97 Fund and Alliance
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.
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. 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
Alliance Real Estate Investment Fund and Alliance New Europe Fund 50% with
respect to Alliance Worldwide Privatization Fund, Alliance International Premier
Growth Fund, Alliance Greater China '97 Fund and Alliance All-Asia Investment
Fund and 20% with respect to Alliance Utility Income Fund, of the Fund's assets
at the time of making the commitment.
There is no guarantee that a security 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.
Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both zero-coupon
and payment-in-kind bonds allow an issuer to avoid the need to generate cash to
meet current interest payments. These bonds may involve greater credit risks
than bonds paying interest currently. Although these 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.
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.
General. The successful use of the investment practices described above draws
upon Alliance's special skills and experience 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 for
certain options and forward contracts, and adverse market movements could
therefore continue to an unlimited
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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 for 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. In addition, a Fund's ability
to engage in options and futures transactions may be limited by tax
considerations and the use of certain hedging techniques may adversely impact
the characterization of income to a Fund for U.S. federal income tax purposes.
Portfolio Turnover. The portfolio turnover rate for each Fund is included in the
Financial Highlights section. The Funds are actively managed and, in some cases
in response to market conditions, a Fund's portfolio turnover may exceed 100%. A
higher rate of portfolio turnover increases brokerage and other expenses, 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, which,
when distributed, are taxable to shareholders.
Temporary Defensive Position. For temporary defensive purposes, each Fund may
reduce its position in equity securities and invest in, without limit, 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 also may include
short-term, foreign-currency denominated securities of the type mentioned above
issued by foreign governmental entities, companies, and supranational
organizations. While the Funds are investing for temporary defensive purposes,
they may not achieve their investment objectives.
ADDITIONAL 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.
Currency Considerations. Substantially all of the assets of Alliance New Europe
Fund, Alliance Worldwide Privatization Fund, Alliance International Premier
Growth Fund, Alliance International Fund, Alliance Greater China '97 Fund and
Alliance All-Asia Investment Fund, and a substantial portion of the assets of
Alliance Global Small Cap Fund and Alliance Global Environment Fund are invested
in securities denominated in foreign currencies. The Funds receive a
corresponding portion of their revenues in foreign 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 currency hedging transactions, as described above, which involve
certain special risks.
Foreign Securities. 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 foreign
securities may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in equity securities of U.S.
companies. These markets may be subject to greater influence by adverse events
generally affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States. Securities settlements
may in some instances be subject to delays and related administrative
uncertainties.
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 that 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 countries is controlled under regulations, including in
some cases the need for certain advance government notification or authority. If
a deterioration occurs in a country's balance of payments, the country could
impose temporary restrictions on foreign capital remittances.
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A Fund also could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
of other restrictions on investment. Investing in local markets may require a
Fund to adopt special procedures that may involve additional costs to a Fund.
These factors may affect the liquidity of a Fund's investments in any country
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 United States.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements, and timely disclosure of information. The reporting, accounting
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects and less information
may be available to investors in foreign securities than to investors in U.S.
securities. 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 and the
Fund's investments. 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.
Alliance International Fund, Alliance Greater China '97 Fund and Alliance
All-Asia Investment Fund may invest substantial amounts of their assets in
United Kingdom issuers, Japanese issuers, and/or Greater China issuers. Please
refer to Appendix A for a discussion of risks associated with investments in
these countries.
Investment in Privatized Enterprises by Alliance 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.
Investment in Smaller, Emerging Companies. The Funds may invest in smaller,
emerging companies. Alliance New Europe Fund and Alliance Global Small Cap Fund
will emphasize investment in, and Alliance All-Asia Investment Fund, Alliance
Greater China '97 Fund and Alliance Global Environment 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. Companies in the earlier stages of their development
often have products and management personnel which have not been thoroughly
tested by time or the marketplace; their financial resources may not be as
substantial as those 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. The revenue flow of such companies may be erratic and their
results of operations may fluctuate widely and may also contribute to stock
price volatility.
Extreme Governmental Action; Less Protective Laws. In contrast to investing in
the U.S., foreign investment may involve in certain situations greater risk of
nationalization, expropriation, confiscatory taxation, currency blockage or
other extreme governmental action which could adversely impact a Fund's
investments. In the event of certain such actions, a Fund could lose its entire
investment in the country involved. In addition, laws in various foreign
countries, including in certain respects each of the Greater China countries,
governing, among other subjects, business organization and practices, securities
and securities trading, bankruptcy and insolvency may provide less protection to
investors such as the Fund than provided under United States laws.
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Investments in Environmental Companies by Alliance Global Environment Fund.
Governmental regulations or other action can inhibit an Environmental Company's
performance, and it may take years to translate environmental legislation into
sales and profits. Environmental Companies generally face competition in fields
often characterized by relatively short product cycles and competitive pricing
policies. Losses may result from large product development or expansion costs,
unprotected marketing or distribution systems, erratic revenue flows and low
profit margins. Additional risks that Environmental Companies may face include
difficulty in financing the high cost of technological development,
uncertainties due to changing governmental regulation or rapid technological
advances, potential liabilities associated with hazardous components and
operations, and difficulty in finding experienced employees.
The Real Estate Industry. Although Alliance Real Estate Investment Fund does not
invest directly in real estate, it invests primarily in Real Estate Equity
Securities and has a policy of concentration of its investments in the real
estate industry. Therefore, an investment in the Fund is subject to certain
risks associated with the direct ownership of real estate and with the real
estate industry in general. These risks include, among others: possible declines
in the value of real estate; risks related to general and local economic
conditions; possible lack of availability of mortgage funds; overbuilding;
extended vacancies of properties; increases in competition, property taxes and
operating expenses; changes in zoning laws; costs resulting from the clean-up
of, and liability to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from floods,
earthquakes or other natural disasters; limitations on and variations in rents;
and changes in interest rates. To the extent that assets underlying the Fund's
investments are concentrated geographically, by property type or in certain
other respects, the Fund may be subject to certain of the foregoing risks to a
greater extent.
In addition, if Alliance Real Estate Investment Fund receives rental income or
income from the disposition of real property acquired as a result of a default
on securities the Fund owns, the receipt of such income may adversely affect the
Fund's ability to retain its tax status as a regulated investment company.
Investments by the Fund in securities of companies providing mortgage servicing
will be subject to the risks associated with refinancings and their impact on
servicing rights.
REITs. Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax-free pass-through of income under the Code and failing to
maintain their exemptions from registration under the 1940 Act.
REITs (especially mortgage REITs) also are subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities. Historically, small
capitalization stocks, such as REITs, have been more volatile in price than the
larger capitalization stocks included in the S&P 500 Index.
Mortgage-Backed Securities. Investing in Mortgage-Backed Securities involves
certain unique risks in addition to those risks associated with investment in
the real estate industry in general. These risks include the failure of a
counterparty to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. When interest rates decline, the
value of an investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of an investment in fixed rate
obligations can be expected to decline. In contrast, as interest rates on
adjustable rate mortgage loans are reset periodically, yields on investments in
such loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
Further, the yield characteristics of Mortgage-Backed Securities, such as those
in which Alliance Real Estate Investment Fund may invest, differ from those of
traditional fixed-income securities. The major differences typically include
more frequent interest and principal payments (usually monthly), the
adjustability of interest rates, and the possibility that prepayments of
principal may be made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social, and other factors, and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Early payment associated
with Mortgage-Backed Securities causes these securities to experience
significantly greater price and yield volatility than that experienced by
traditional fixed-income securities. Under certain interest rate and prepayment
rate scenarios, the Fund may fail to recoup fully its investment in
Mortgage-Backed Securities notwithstanding any direct or
48
<PAGE>
indirect governmental or agency guarantee. When the Fund reinvests amounts
representing payments and unscheduled prepayments of principal, it may receive a
rate of interest that is lower than the rate on existing adjustable rate
mortgage pass-through securities. Thus, Mortgage-Backed Securities, and
adjustable rate mortgage pass-through securities in particular, may be less
effective than other types of U.S. Government securities as a means of "locking
in" interest rates.
U.S. and Foreign Taxes. A Fund's investment in foreign securities may be subject
to taxes withheld at the source on dividend or interest payments. 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.
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 Alliance All-Asia Investment Fund, between five
and 25 years in the case of Alliance Utility Income Fund, and between one year
or less and 30 years in the case of all other Funds that invest in such
securities. In periods of increasing interest rates, each of the Funds may, to
the extent it holds mortgage-backed securities, be subject to the risk that the
average dollar-weighted maturity of the Fund's portfolio of debt or other
fixed-income securities may be extended as a result of lower than anticipated
prepayment rates.
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 credit risk or loss of principal and interest than
higher-rated securities. They also are generally considered to be subject to
greater market risk than higher-rated securities. 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.
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 the securities for the purpose of computing a Fund's net asset value. 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.
Certain lower-rated securities 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.
Year 2000. Many computer systems and applications in use today process
transactions using two-digit date fields for the year of the transaction, rather
than the full four digits. If these systems are not modified or replaced,
transactions occurring after 1999 could be processed as year "1900," which could
result in processing inaccuracies and computer system failures. This is commonly
known as the Year 2000 problem. Should any of the computer systems employed by
the Funds' major service providers fail to process Year 2000 related information
properly, that could have a significant negative impact on the Funds' operations
and the services that are provided to the Funds' shareholders. In addition, to
the extent that the operations of issuers of securities held by the Funds are
impaired by the Year 2000 problem, or prices of securities held by the Funds
decline as a result of real or perceived problems relating to the Year 2000, the
value of the Funds' shares may be materially affected.
With respect to the Year 2000, the Funds have been advised that Alliance, each
Fund's investment adviser, Alliance Fund Distributors, Inc, ("AFD"), each Fund's
principal underwriter, and Alliance Fund Services, Inc. ("AFS"), each Fund's
registrar, transfer agent and dividend disbursing agent (collectively,
"Alliance") began to address the Year 2000 issue several years ago in connection
with the replacement or upgrading of certain computer systems and applications.
During 1997, Alliance began a formal Year 2000 initiative, which established a
structured and coordinated process to deal with the Year 2000
49
<PAGE>
issue. Alliance reports that it has completed its assessment of the Year 2000
issues on its domestic and international computer systems and applications.
Currently, management of Alliance expects that the required modifications for
the majority of its significant systems and applications that will be in use on
January 1, 2000, will be completed and tested in early 1999. Full integration
testing of these systems and testing of interfaces with third-party suppliers
will continue through 1999. At this time, management of Alliance believes that
the costs associated with resolving this issue will not have a material adverse
effect on its operations or on its ability to provide the level of services it
currently provides to the Funds.
The Funds and Alliance have been advised by the Funds' Custodians that they are
also in the process of reviewing their systems with the same goals. As of the
date of this prospectus, the Funds and Alliance have no reason to believe that
the Custodians will be unable to achieve these goals.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Each Fund's Adviser is Alliance Capital Management, L.P., 1345 Avenue of the
Americas, New York, NY 10105. Alliance is a leading international investment
adviser supervising client accounts with assets as of December 31, 1998 totaling
more than $286 billion (of which approximately $115 billion represented assets
of investment companies). Alliance's clients are primarily major corporate
employee benefit plans, public employee retirement systems, investment
companies, foundations, and endowment funds. The 54 registered investment
companies, with more than 118 separate portfolios, managed by Alliance
currently have over 3.5 million shareholder accounts. As of December 31, 1998,
Alliance was retained as investment manager for over 35 of the FORTUNE 100
Companies.
Alliance provides investment advisory services and order placement facilities
for the Funds. For these advisory services, the Funds paid Alliance as a
percentage of average daily net assets:
Fee as a percentage of Fiscal
Fund average daily net assets* Year Ending
- ---- ------------------------- -----------
Alliance Premier Growth Fund 1.00% 11/30/98
Alliance Growth Fund .70 10/31/98
Alliance Technology Fund 1.02 11/30/98
Alliance Quasar Fund 1.04 9/30/98
The Alliance Fund .67 11/30/98
Alliance Growth and Income Fund .48 10/31/98
Alliance Balanced Shares Fund .625 7/31/98
Alliance Utility Income Fund -0-% 11/30/98
Alliance Real Estate Investment Fund .90 8/31/98
Alliance New Europe Fund 1.02 7/31/98
Alliance Worldwide Privatization Fund 1.00 6/30/98
Alliance International Premier Growth Fund -0- 11/30/98
Alliance Global Small Cap Fund 1.00 7/31/98
Alliance International Fund .85 6/30/98
Alliance Greater China '97 Fund -0- 7/31/98
Alliance All-Asia Investment Fund .24 10/31/98
Alliance Global Environment Fund 1.10 10/31/98
- --------------------------------------------------------------------------------
* Fees are stated net of any waivers and/or reimbursements. See the "Fee
Table" at the beginning of the Prospectus for more information about fee
waivers.
In connection with providing advisory services to Alliance Greater China '97
Fund, Alliance has, at its expense, retained as a consultant New Alliance, a
joint venture company headquartered in Hong Kong, which was formed in 1997 by
Alliance and Sun Hung Kai Properties Limited. New Alliance provides Alliance
with ongoing, current, and comprehensive information and analysis of conditions
and developments in Greater China countries.
In connection with investments in real estate securities, Alliance has, at its
expense, retained as a consultant CB Richard Ellis, Inc. ("CBRE"). CBRE is a
publicly held company and the largest real estate services company in the United
States, comprised of real estate brokerage, property, and facilities management,
and real estate finance, and investment advisory services.
Portfolio Manager
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 for the Fund, and each person's
principal occupation during the past five years.
Principal Occupation
During the Past
Fund Employee; Year; Title Five (5) Years*
- -------------------------------------------------------------------------------
Alliance Premier Alfred Harrison; since Associated with
Growth Fund inception--Vice Chairman Alliance
of Alliance Capital
Management Corporation
(ACMC)**
Alliance Growth Tyler Smith; since inception Associated with
Fund --Senior Vice President Alliance
of ACMC
50
<PAGE>
Principal Occupation
During the Past
Fund Employee; Year; Title Five (5) Years*
- -------------------------------------------------------------------------------
Alliance Technology Peter Anastos; since 1992 Associated with
Fund --Senior Vice President Alliance
of ACMC
Gerald T. Malone; since 1992 Associated with
--Senior Vice President Alliance
of ACMC
Alliance Quasar Alden M. Stewart; since 1994 Associated with
Fund --Executive Vice President Alliance
of ACMC
Randall E. Haase; since 1994 Associated with
--Senior Vice President Alliance
of ACMC
The Alliance Fund Alden M. Stewart; since 1997 (see above)
--(see above)
Randall E. Haase; since 1997 (see above)
--(see above)
Alliance Growth and Paul Rissman; since 1994 Associated with
Income Fund --Senior Vice President Alliance
of ACMC
Alliance Balanced Paul Rissman; since 1997 (see above)
Shares Fund --(see above)
Alliance Utility Paul Rissman; since 1996 (see above)
Income Fund --(see above)
Alliance Real Daniel G. Pine; since 1996 Associated with
Estate Investment --Senior Vice President Alliance since 1996;
Fund of ACMC prior thereto;
Senior Vice
President of
Desai Capital
Management
David Kruth; since 1997 Associated with
--Vice President of ACMC Alliance since 1997;
prior thereto; Senior
Vice President of
Yarmouth Group
Alliance New Europe Steven Beinhacker; since 1997 Associated with
Fund --Vice President of ACMC Alliance
Alliance Worldwide Mark H. Breedon; since Associated with
Privatization Fund inception Senior Vice Alliance
President of ACMC and
Director and Vice President
of Alliance Capital Limited***
Alliance Alfred Harrison; since 1998 (see above)
International --(see above)
Premier Growth Fund
Thomas Kamp; since 1998 Associated with
--Senior Vice President Alliance
of ACMC
Alliance Global Alden M. Stewart; since 1994 (see above)
Small Cap Fund --(see above)
Randall E. Haase; since 1994 (see above)
--(see above)
Mark D. Breedon; since 1998 (see above)
--(see above)
Alliance
International Fund Nicholas D.P.Carn; since 1998 Associated with
--Senior Vice President Alliance since 1995;
of ACMC prior thereto; Chief
Investment Officer of
Draycott Partners,
Inc.
Alliance Greater Matthew W.S. Lee; since 1997 Associated with
China '97 Fund --Vice President of ACMC Alliance since 1997;
prior thereto;
associated with
National Mutual Funds
Management (Asia) and
James Capel and Co.
since prior to 1994
Alliance All-Asia Hiroshi Motoki; since 1998 Associated with
Investment Fund --Senior Vice President Alliance since 1994;
of ACMC and director of prior thereto;
Japanese/Asian Equity associated with
research Ford Motor Company
Alliance Global Linda Bolton Weiser; Associated with
Environment Fund since 1998--Vice President Alliance
of ACMC
* Unless indicated otherwise, persons associated with Alliance have been
employed in a portfolio management, research or investment capacity.
** The sole general partner of Alliance.
*** An indirect wholly-owned subsidiary of Alliance.
Performance of Similarly Managed Portfolios. In addition to managing the assets
of Alliance Premier Growth Fund, Mr. Harrison has ultimate responsibility for
the management of discretionary tax-exempt accounts of institutional clients
managed as described below without significant client-imposed restrictions
("Historical Portfolios"). These accounts have substantially the same investment
objectives and policies and are managed in accordance with essentially the same
investment strategies and techniques as those for Alliance Premier Growth Fund,
except for the ability of Alliance Premier Growth Fund to use futures and
options as hedging tools and to invest in warrants. The Historical Portfolios
also are not subject to certain limitations, diversification requirements and
other restrictions imposed under the 1940 Act and the Code to which Alliance
Premier Growth Fund, as a registered investment company, is subject and which,
if applicable to the Historical Portfolios, may have adversely affected the
performance results of the Historical Portfolios. See "Investment Objectives
and Policies."
Set forth below is performance data provided by Alliance relating to the
Historical Portfolios for each of the nineteen full calendar years during which
Mr. Harrison has managed the Historical Portfolios as an employee of Alliance
and cumulatively through December 31, 1998. As of December 31, 1998, the assets
in the Historical Portfolios totaled approximately $15.9 billion and the average
size of an institutional account in the Historical Portfolio was $529 million.
Each Historical Portfolio has a nearly identical composition of investment
holdings and related percentage weightings.
The performance data is net of all fees (including brokerage commissions)
charged to those accounts. The performance data is computed in accordance with
standards formulated by the Association of Investment Management and Research
and has not been adjusted to reflect any fees that will be payable by Alliance
Premier Growth Fund, which are higherthan the fees imposed on the Historical
Portfolio and will result in a higher
51
<PAGE>
expense ratio and lower returns for Alliance Premier Growth Fund. Expenses
associated with the distribution of Class A, Class B, and Class C shares of
Alliance Premier Growth Fund in accordance with the plan adopted by Alliance
Premier Growth Fund's Board of Directors pursuant to Rule 12b-1 under the 1940
Act ("distribution fees") are also excluded. The performance data has also not
been adjusted for corporate or individual taxes, if any, payable by the account
owners.
Alliance has calculated the investment performance of the Historical Portfolios
on a trade-date basis. Dividends have been accrued at the end of the month and
cash flows weighted daily. Composite investment performance for all portfolios
has been determined on an asset weighted basis. New accounts are included in the
composite investment performance computations at the beginning of the quarter
following the initial contribution. The total returns set forth below are
calculated using a method that links the monthly return amounts for the
disclosed periods, resulting in a time-weighted rate of return.
As reflected below, the Historical Portfolios have over time performed favorably
when compared with the performance of recognized performance indices. The S&P
500 Index is a widely recognized, unmanaged index of market activity based upon
the aggregate performance of a selected portfolio of publicly traded common
stocks, including monthly adjustments to reflect the reinvestment of dividends
and other distributions. The S&P 500 Index reflects the total return of
securities comprising the Index, including changes in market prices as well as
accrued investment income, which is presumed to be reinvested. The Russell 1000
universe of securities is compiled by Frank Russell Company and is segmented
into two style indices, based on the capitalization-weighted median
book-to-price ratio of each of the securities. At each reconstitution, the
Russell 1000 constituents are ranked by their book-to-price ratio. Once so
ranked, the breakpoint for the two styles is determined by the median market
capitalization of the Russell 1000. Thus, those securities falling within the
top fifty percent of the cumulative market capitalization (as ranked by
descending book-to-price) become members of the Russell Price-Driven Indices.
The Russell 1000 Growth Index is, accordingly, designed to include those Russell
1000 securities with a greater-than-average growth orientation. In contrast with
the securities in the Russell Price-Driven Indices, companies in the Growth
Index tend to exhibit higher price-to-book and price-earnings ratios, lower
dividend yield and higher forecasted growth values.
To the extent Alliance Premier Growth Fund does not invest in U.S. common stocks
or utilizes investment techniques such as futures or options, the S&P 500 Index
and Russell 1000 Growth Index may not be substantially comparable to Alliance
Premier Growth Fund. The S&P 500 Index and Russell 1000 Growth Index are
included to illustrate material economic and market factors that existed during
the time period shown. The S&P 500 Index and Russell 1000 Growth Index do not
reflect the deduction of any fees. If Alliance Premier Growth Fund were to
purchase a portfolio of securities substantially identical to the securities
comprising the S&P 500 Index or the Russell 1000 Growth Index, Alliance Premier
Growth Fund's performance relative to the index would be reduced by Alliance
Premier Growth Fund's expenses, including brokerage commissions, advisory fees,
distribution fees, custodial fees, transfer agency costs and other
administrative expenses, as well as by the impact on Alliance Premier Growth
Fund's shareholders of sales charges and income taxes.
The Lipper Growth Fund Index is prepared by Lipper Analytical Services, Inc. and
represents a composite index of the investment performance for the 30 largest
growth mutual funds. The composite investment performance of the Lipper Growth
Fund Index reflects investment management and administrative fees and other
operating expenses paid by these mutual funds and reinvested income dividends
and capital gain distributions, but excludes the impact of any income taxes and
sales charges.
The following performance data is provided solely to illustrate Mr. Harrison's
performance in managing the Historical Portfolios and the Alliance Premier
Growth Fund as measured against certain broad based market indices and against
the composite performance of other open-end growth mutual funds. Investors
should not rely on the following performance data of the Historical Portfolios
as an indication of future performance of Alliance Premier Growth Fund. The
composite investment performance for the periods presented may not be indicative
of future rates of return. Other methods of computing investment performance may
produce different results, and the results for different periods may vary.
Schedule of Composite Investment Performance--Historical Portfolios*
<TABLE>
<CAPTION>
Russell Lipper
Premier Historical S&P 500 1000 Growth
Growth Portfolios Index Growth Index Fund Index
Fund Total Return** Total Return Total Return Total Return
<S> <C> <C> <C> <C> <C>
Year ended December:
1998*** ........... 42.97% 52.16% 28.60% 38.71% 25.69%
1997*** ........... 27.05 34.64 33.36 30.49 25.30
1996*** ........... 18.84 22.06 22.96 23.12 17.48
1995*** ........... 40.66 39.83 37.58 37.19 32.65
1994 .............. (9.78) (4.82) (1.32) 2.66 (1.57)
1993 .............. 5.35 10.54 10.08 2.90 11.98
1992 .............. -- 12.18 7.62 5.00 7.63
1991 .............. -- 38.91 30.47 41.16 35.20
1990 .............. -- (1.57) (3.10) (0.26) (5.00)
1989 .............. -- 38.80 31.69 35.92 28.60
1988 .............. -- 10.88 16.61 11.27 15.80
1987 .............. -- 8.49 5.25 5.31 1.00
1986 .............. -- 27.40 18.67 15.36 15.90
1985 .............. -- 37.41 31.73 32.85 30.30
1984 .............. -- (3.31) 6.27 (.95) (2.80)
1983 .............. -- 20.80 22.56 15.98 22.30
1982 .............. -- 28.02 21.55 20.46 20.20
1981 .............. -- (1.09) (4.92) (11.31) (8.40)
1980 .............. -- 50.73 32.50 39.57 37.30
1979 .............. -- 30.76 18.61 23.91 27.40
Cumulative total
return for
the period
January 1, 1979 to
December 31, 1998 -- 4708% 2525% 2373% 2003%
</TABLE>
- --------------------------------------------------------------------------------
* Total return is a measure of investment performance that is based upon the
change in value of an investment from the beginning to the end of a
specified period and assumes reinvestment of all dividends and other
52
<PAGE>
distributions.
The basis of preparation of this data is described in the preceding
discussion. Total returns for Alliance Premier Growth Fund are for Class A
shares, with imposition of the maximum 4.25% sales charge.
** Assumes imposition of the maximum advisory fee charged by Alliance for any
Historical Portfolio for the period involved.
*** During this period, the Historical Portfolios differed from Alliance
Premier Growth Fund in that Alliance Premier Growth Fund invested a
portion of its net assets in warrants on equity securities in which the
Historical Portfolios were unable, by their investment restrictions, to
purchase. In lieu of warrants, the Historical Portfolios acquired the
common stock upon which the warrants were based.
The average annual total returns presented below are based upon the cumulative
total return as of December 31, 1998 and, for more than one year, assume a
steady compounded rate of return and are not year-by-year results, which
fluctuated over the periods as shown.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Russell Lipper
Premier Historical S&P 500 1000 Growth
Growth Portfolios Index Growth Index Fund Index
<S> <C> <C> <C> <C> <C>
One year ......... 42.97% 52.16% 28.60% 38.71% 25.69%
Three years ...... 33.03 35.74 28.23 30.62 23.67
Five years ....... 26.65 27.19 24.05 25.70 19.82
Ten years ........ 24.38+ 22.86 19.19 20.57 17.21
Since January 1,
1979 ............. -- 21.37 17.75 17.40 16.45
</TABLE>
- --------------------------------------------------------------------------------
+ Since inception on 9/28/92
The Funds' SAIs have more detailed information about Alliance and other Fund
service providers.
- --------------------------------------------------------------------------------
PURCHASE AND SALE OF SHARES
- --------------------------------------------------------------------------------
HOW THE FUNDS VALUE THEIR SHARES
The Funds' net asset value or NAV is calculated at 4 p.m. Eastern time each day
the Exchange is open for business. To calculate NAV, a Fund's assets are valued
and totaled, liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. The Funds' value their securities
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 Funds'
directors believe accurately reflect fair market value.
Your order for purchase, sale, or exchange of shares is priced at the next NAV
calculated after your order is accepted by the Fund.
HOW TO BUY SHARES
You may purchase Advisor Class shares through your financial representative at
NAV. Advisor Class shares are not subject to any initial or contingent sales
charges or distribution expenses. You may purchase and hold shares solely:
o through accounts established under a fee-based program, sponsored and
maintained by a registered broker-dealer or other financial intermediary
and approved by the Fund's principal underwriter, Alliance Fund
Distributors, Inc. or AFD;
o 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;
o by investment advisory clients of, and certain other persons associated
with, Alliance and its affiliates or the Funds; and
o through registered investment advisers or other financial intermediaries
who charge a management, consulting or other fee for their services and
who purchase shares through a broker or agent approved by AFD and clients
of such registered investment advisers or financial intermediaries whose
accounts are linked to the master account of such investment adviser or
financial intermediary on the books of such approved broker or agent.
Generally, a fee-based program must charge an asset-based or other similar fee
and must invest at least $250,000 in Advisor Class shares to be approved by AFD
for investment in Advisor Class shares. The Fund's Statement of Additional
Information has more detailed information about who may purchase and hold
Advisor Class shares.
A Fund may refuse any order to purchase Advisor Class shares. In particular, the
Funds' reserve the right to restrict purchases of Advisor Class shares
(including through exchanges) when there appears to be evidence a pattern of
frequent purchases and sales made in response to short-term considerations.
HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares for Advisor Class shares of other
Alliance Mutual Funds. Exchanges of Advisor Class shares are made at the
next-determined NAV, without any sales or service charge. You may request an
exchange by mail or telephone. You must call by 4:00 p.m. Eastern time to
receive that day's NAV. The Funds may change, suspend, or terminate the exchange
service on 60 days' written notice.
HOW TO SELL SHARES
You may "redeem" your shares (i.e., sell your shares to a Fund) on any day the
Exchange is open, either directly or through your financial intermediary. Your
sales price will be the next-determined NAV after the Fund receives your sales
request in proper form. Normally, proceeds will be sent to you within 7 days. If
you recently purchased your shares by check or electronic funds transfer, your
redemption payment may be delayed until the Fund 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 procedures or documents are required by
your fee-based program or employee benefit plan to sell your shares, you should
contact your financial representative.
o Selling Shares Through Your Financial Representative
Your financial representative must receive your sales request by 4:00 p.m.,
Eastern time, and submit it to the Fund by 5:00 p.m., Eastern time, for you to
receive that day's NAV. Your financial representative is responsible for
submitting all
53
<PAGE>
necessary documentation to the Fund and may charge you for this service.
o Selling Shares Directly to the Fund
By Mail:
-- Send a signed letter of instruction or stock power, along with
certificates, to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07906-1520
800-221-5672
-- For your protection, a bank, a member firm of a national stock
exchange, or other eligible guarantor institution, must guarantee
signatures. Stock power forms are available from your financial
intermediary, AFS, and many commercial banks. Additional
documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries, and surviving joint owners. If you have
any questions about these procedures, contact AFS.
By Telephone:
-- You may redeem your shares for which no stock certificates have been
issued by telephone request. Call AFS at 800-221-5672 with
instructions on how you wish to receive your sale proceeds.
-- A telephone redemption request must be received by 4:00 p.m. Eastern
time for you to receive that day's NAV.
-- If you have selected electronic funds transfer in your Shareholder
Application, the redemption proceeds will be sent directly to your
bank. Otherwise, the proceeds will be mailed to you.
-- Redemption requests by electronic funds transfer may not exceed
$100,000 per day and redemption requests by check cannot exceed
$50,000 per day.
-- Telephone redemption is not available for shares held in nominee or
"street name" accounts, retirement plan accounts, or shares held by
a shareholder who has changed his or her address of record within
the previous 30 calendar days.
OTHER
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, service, administrative
or other similar fee may be charged by your broker-dealer, agent, financial
intermediary or other financial representative with respect to the purchase,
sale or exchange of Advisor Class shares made through such financial
representative. Such financial intermediaries may also impose requirements with
respect to the purchase, sale or exchange of shares that are different from, or
in addition to, those imposed by a Fund, including requirements as to the
minimum initial and subsequent investment amounts.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
Each Fund's income dividends and capital gains distributions, 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. If paid in additional shares, the shares will have an aggregate NAV as of
the close of business on the day following the declaration date of the dividend
or distribution equal to the cash amount of the dividend or distribution. You
may make an election to receive dividends and distributions in cash or in shares
at the time you purchase shares. Your election can be changed at any time prior
to a record date for a dividend. There is no sales or other charge in connection
with the reinvestment of dividends or capital gains distributions. Cash
dividends may be paid in check, or at your election, electronically via the ACH
network. There is no sales or other charge on the reinvestment of Fund 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 the 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.
The Funds expect that their distributions will consist either of net income or
long-term capital gains. For federal income tax purposes, the Fund's dividend
distributions of net income (or short-term taxable gains) will be taxable to you
as ordinary income. Any long-term capital gains distributions may be taxable to
you as long-term capital gains. A Fund's distributions also may be subject to
certain state and local taxes.
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 dividend or distribution will depend
on the realization by the 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. Since REITs pay distributions
based on cash flow, without regard to depreciation and amortization, it is
likely that a portion of the distributions paid to Alliance Real Estate
Investment Fund and subsequently distributed to shareholders may be a nontaxable
return of capital. The final determination of the amount of a Fund's return of
capital distributions for the period will be made after the end of each calendar
year.
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the
54
<PAGE>
Code to "pass through" to the Fund's shareholders credits for foreign income
taxes paid (or to permit shareholders to claim a deduction for such foreign
taxes), but there can be no assurance that any Fund will be able to do so.
Furthermore, a shareholder's ability to claim a foreign tax credit or deduction
for foreign taxes paid by a Fund may be subject to certain limitations imposed
by the Code, as a result of which a shareholder may not be permitted to claim a
full credit or deduction for the amount of such taxes.
Under certain circumstances, if a Fund realizes losses (e.g., from fluctuations
in currency exchange rates) after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. Returns of
capital are generally nontaxable, but will reduce a shareholder's basis in
shares of a Fund. If that basis is reduced to zero (which could happen if the
shareholder does not reinvest distributions and returns of capital are
significant), any further returns of capital will be taxable as capital gain.
See the Fund's SAI for a further explanation of these tax issues.
If you buy shares just before a Fund deducts a distribution from its NAV, you
will pay the full price for the shares and then receive a portion of the price
back as a taxable distribution.
The sale or exchange of Fund shares is a taxable transaction for Federal income
tax purposes.
Each year shortly after December 31, the Funds will send you tax information
stating the amount and type of all its distributions for the year. Consult your
tax adviser about the federal, state, and local tax consequences in your
particular circumstances.
- --------------------------------------------------------------------------------
CONVERSION FEATURE
- --------------------------------------------------------------------------------
Conversion
As described above, Advisor Class shares may be held solely through certain
fee-based program accounts, employee benefit plans and registered investment
advisory or other financial intermediary relationships, and by investment
advisory clients of, and certain persons associated with, Alliance and its
affiliates or the Funds. If a holder of Advisor Class shares (i) ceases to
participate in the fee-based program or plan, or to be associated with an
eligible investment advisor or financial intermediary or (ii) is otherwise no
longer eligible to purchase Advisor Class shares (each a "Conversion Event"),
then all Advisor Class shares held by the shareholder will convert automatically
and without notice, to Class A shares of the same Fund during the calendar month
following the month in which the Fund is informed of the occurrence of the
Conversion Event. The failure of a shareholder or a fee-based program to satisfy
the minimum investment requirements to purchase Advisor Class shares will not
constitute a Conversion Event. The conversion would occur on the basis of the
relative NAV of the two classes and without the imposition of any sales load,
fee or other charge.
Description of Class A Shares
The Class A shares of each Fund have a distribution fee of .30% under the Fund's
Rule 12b-1 plan that allows the Fund to pay distribution and service fees for
the distribution and sale of its shares. Because this fee is paid out of the
Fund's assets, Class A shares have a higher expense ratio and may pay lower
dividends and may have a lower NAV than Advisor Class shares.
55
<PAGE>
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
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 in
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephone 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 telephone requests. The telephone
service may be suspended or terminated at any time without notice.
56
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the past 5 years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
share of each Fund. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, the independent accountants for The
Alliance Fund, Alliance Growth Fund, Alliance Premier Growth Fund, Alliance
International Premier Growth Fund, Alliance Balanced Shares, Alliance Utility
Income Fund, Alliance Worldwide Privatization Fund, and Alliance Growth and
Income Fund, and by Ernst & Young LLP, the independent accountants for
Alliance All-Asia Investment Fund, Alliance Technology Fund, Alliance Quasar
Fund, Alliance International Fund, Alliance New Europe Fund, Alliance Global
Small Cap Fund, Alliance Global Environment Fund, Alliance Greater China '97
Fund and Alliance Real Estate Investment Fund, whose reports, along with
each Fund's financial statements, are included in the SAI, which is available
upon request.
57
<PAGE>
<TABLE>
<CAPTION>
Income from Investment Operations Less Dividends and Distributions
--------------------------------------------- --------------------------------------------
Net Gains
Net Asset or Losses on Dividends Distributions
Value, Securities Total from from Net in Excess of Distributions
Beginning Net Investment (both realized Investment Investment Net Investment from
Fiscal Year or Period of Period Income (Loss) and unrealized) Operations Income Income Capital Gains
- --------------------- ------------ -------------- -------------- ------------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Premier
Growth Fund
Year ended 11/30/98 .... $ 22.10 $(.07)(b) $ 7.14 $ 7.07 $0.00 $0.00 $(1.46)
Year ended 11/30/97 .... 17.99 (.06)(b) 5.25 5.19 0.00 0.00 (1.08)
10/2/96+ to 11/30/96 ... 15.94 (.01)(b) 2.06 2.05 0.00 0.00 0.00
Alliance Growth Fund
Year ended 10/31/98 .... $ 44.08 $ .08(b) $ 6.22 $ 6.30 $0.00 $0.00 $(2.91)
Year ended 10/31/97 .... 34.91 (.05)(b) 10.25 10.20 0.00 0.00 (1.03)
10/2/96+ to 10/31/96 ... 34.14 0.00(b) .77 .77 0.00 0.00 0.00
Alliance Technology Fund
Year ended 11/30/98 .... $ 54.63 $(.50)(b) $15.49 $14.99 $0.00 $0.00 $ (.58)
Year ended 11/30/97 .... 51.17 (.45)(b) 4.33 3.88 0.00 0.00 (.42)
10/2/96+ to 11/30/96 ... 47.32 (.05)(b) 3.90 3.85 0.00 0.00 0.00
Alliance Quasar Fund
Year ended 9/30/98 ..... $ 30.42 $(.09)(b) $(6.73) $(6.82) $0.00 $0.00 $(1.23)
10/2/96+ TO 9/30/97 .... 27.82 (.17)(b) 6.88 6.71 0.00 0.00 (4.11)
The Alliance Fund
Year ended 11/30/98 .... $ 8.69 $(.01)(b) $ (.53) $ (.54) $0.00 $0.00 $(2.17)
Year ended 11/30/97 .... 7.71 (.02)(b) 2.10 2.08 (.04) 0.00 (1.06)
10/2/96+ to 11/30/96 ... 6.99 0.00 .72 .72 0.00 0.00 0.00
Alliance Growth and
Income Fund
Year ended 10/31/98 .... $ 3.48 $ .04(b) $ .43 $ .47 $(.05) $0.00 $ (.46)
Year ended 10/31/97 .... 3.00 .05(b) .87 .92 (0.06) 0.00 (.38)
10/2/96+ to 10/31/96 ... 2.97 0.00 .03 .03 0.00 0.00 0.00
Alliance Balanced Shares
Year ended 7/31/98 ..... $ 16.17 $ .37(b) $ 1.87 $ 2.24 $(.36) $0.00 $(2.07)
10/2/96+ to 7/31/97 .... 14.79 .23(b) 3.22 3.45 (.27) 0.00 (1.80)
Alliance Utility
Income Fund
Year ended 11/30/98 .... $ 12.49 $ .37(b)(c) $ 2.66 $ 3.03 $(.35) $0.00 $(.47)
Year ended 11/30/97 .... 10.59 .36(b)(c) 2.04 2.40 (.37) 0.00 (.13)
10/2/96+ to 11/30/96 ... 9.95 .03(b)(c) .61 .64 0.00 0.00 0.00
Alliance Real Estate
Investment Fund
Year ended 8/31/98 ..... $ 12.82 $ .55(b) $(2.34) $(1.79) $(.54) $0.00 $ (.01)
10/1/96+ to 8/31/97 .... 10.00 .35(b) 2.88 3.23 (.41)(f) 0.00 0.00
Alliance New Europe Fund
Year ended 7/31/98 ..... $ 18.57 $ .08(b) $ 5.28 $ 5.36 $0.00 $(.09) $(2.05)
10/2/96+ to 7/31/97 .... 16.25 .11(b) 3.76 3.87 (.09) (.14) (1.32)
Alliance Worldwide
Privatization Fund
Year ended 6/30/98 ..... $ 13.23 $ .19(b) $ .80 $ .99 $(.23) $0.00 $(1.36)
10/2/96+ to 6/30/97 .... 12.14 .18(b) 2.52 2.70 (.19) 0.00 (1.42)
Alliance International
Premier Growth Fund
3/3/98+ to 11/30/98 .... $ 10.00 $ .01(b)(c) $ (.37) $ (.36) $0.00 $0.00 $ 0.00
Alliance Global
Small Cap Fund
Year ended 7/31/98 ..... $ 12.89 $ .07(b) $ .37 $ .30 $0.00 $0.00 $ (.99)
10/2/96+ to 7/31/97 .... 12.56 (.08)(b) 1.97 1.89 0.00 0.00 (1.56)
Alliance International
Fund
Year ended 6/30/98 ..... $ 18.67 $ .02(b)(c) $ 1.13 $ 1.15 $(.07) $0.00 $(1.21)
10/2/96+ to 6/30/97 .... 17.96 .16(b) 1.78 1.94 (.15) 0.00 (1.08)
Alliance Greater
China '97 Fund
9/3/97+ to 7/31/98 ..... $ 10.00 $ .10(b)(c) $(5.18) $(5.08) $(.07) $0.00 $ 0.00
Alliance All-Asia
Investment Fund
Year ended 10/31/98 .... $ 7.56 $(.08)(b)(c) $(1.58) $(1.66) $0.00 $0.00 $ 0.00
Year ended 10/31/97 .... 11.04 (.15)(b)(c) (2.99) (3.14) 0.00 0.00 (.34)
10/2/96+ to 10/31/96 ... 11.65 0.00(c) (.61) (.61) 0.00 0.00 0.00
Alliance Global
Environment Fund
12/29/97+ to 10/31/98 .. $ 9.15 $(.20) $ (.58) $ (.78) $0.00 $0.00 $ 0.00
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
Less
Distributions Ratios/Supplemental Data
------------- -----------------------------------------------------------
Total Net Asset Ratio of Ratio of Net
Dividends Value, Net Assets, Expenses Income (Loss)
and End of Total End of Period to Average to Average Portfolio
Fiscal Year or Period Distributions Period Return (a) (000's omitted) Net Assets Net Assets Turnover Rate
- --------------------- -------------- ------------- ------------ --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Premier
Growth Fund
Year ended 11/30/98 .... $(1.46) $27.71 34.31% $271,661 1.26%(e) (.28)% 82%
Year ended 11/30/97 .... (1.08) 22.10 30.98 53,459 1.25 (.28) 76
10/2/96+ to 11/30/96 ... 0.00 17.99 12.86 1,922 1.50 (.48) 95
Alliance Growth Fund
Year ended 10/31/98 .... $(2.91) $47.47 14.92% $174,745 .93%(e) .17% 61%
Year ended 10/31/97 .... (1.03) 44.08 29.92 101,205 .98(e) (.12) 48
10/2/96+ to 10/31/96 ... 0.00 34.91 2.26 946 1.26* 0.50 46
Alliance Technology Fund
Year ended 11/30/98 .... $ (.58) $69.04 27.73% $230,295 1.37%(e) (.84)% 67%
Year ended 11/30/97 .... (.42) 54.63 7.65 167,120 1.39(e) (.81) 51
10/2/96+ to 11/30/96 ... 0.00 51.17 8.14 566 1.75* (1.21)* 30
Alliance Quasar Fund
Year ended 9/30/98 ..... $(1.23) $22.37 (23.24)% $175,037 1.38% (.32)% 109%
10/2/96+ TO 9/30/97 .... (4.11) 30.42 28.47 62,455 1.58 (.74) 135
The Alliance Fund
Year ended 11/30/98 .... $(2.17) $ 5.98 (8.19)% $ 11,305 .83% (.16)% 106%
Year ended 11/30/97 .... (1.10) 8.69 32.00 10,275 .83 (.21) 158
10/2/96+ to 11/30/96 ... 0.00 7.71 10.30 1,083 .89* 0.38* 80
Alliance Growth and
Income Fund
Year ended 10/31/98 .... $ (.51) $ 3.44 14.96% $ 22,786 .76%(e) 1.14% 89%
Year ended 10/31/97 .... (.44) 3.48 33.61 3,207 .71(e) 1.42 88
10/2/96+ to 10/31/96 ... 0.00 3.00 1.01 87 0.37* 3.40* 88
Alliance Balanced Shares
Year ended 7/31/98 ..... $(2.43) $15.98 15.32% $ 2,079 1.06%(e) 2.33% 145%
10/2/96+ to 7/31/97 .... (2.07) 16.17 25.96 1,565 1.30*(e) 2.15* 207
Alliance Utility
Income Fund
Year ended 11/30/98 .... $(.82) $14.70 25.34% $ 523 1.20%(d) 2.83% 16%
Year ended 11/30/97 .... (.50) 12.49 23.57 42 1.20(d) 3.29 37
10/2/96+ to 11/30/96 ... 0.00 10.59 6.33 33 1.20(d) 4.02 98
Alliance Real Estate
Investment Fund
Year ended 8/31/98 ..... $ (.55) $10.48 (14.74)% $ 2,899 1.25% 4.08% 23%
10/1/96+ to 8/31/97 .... (.41) 12.82 32.72 2,313 1.45*(d)(e) 3.07* 20
Alliance New Europe Fund
Year ended 7/31/98 ..... $(2.14) $21.79 32.55% $ 3,143 1.56%(e) .39% 99%
10/2/96+ to 7/31/97 .... (1.55) 18.57 25.76 4,130 1.71* .77* 89
Alliance Worldwide
Privatization Fund
Year ended 6/30/98 ..... $(1.59) $12.63 9.48% $ 1,716 1.45% 1.48% 53%
10/2/96+ to 6/30/97 .... (1.61) 13.23 25.24 374 1.96* 2.97* 48
Alliance International
Premier Growth Fund
3/2/98+ to 11/30/98 .... $ 0.00 $ 9.64 (3.60)% $ 1,386 2.20%(d)* .13%* 151%
Alliance Global
Small Cap Fund
Year ended 7/31/98 ..... $ (.99) $12.20 2.82% $ 392 1.87%(e) (.57)% 113%
10/2/96+ to 7/31/97 .... (1.56) 12.89 17.08 333 2.05*(e) (.84)* 129
Alliance International
Fund
Year ended 6/30/98 ..... $(1.28) $18.54 6.98% $47,154 1.47% .13% 121%
10/2/96+ to 6/30/97 .... (1.23) 18.67 11.57 8,697 1.69(d) 1.47* 94
Alliance Greater
China '97 Fund
9/3/97+ to 7/31/98 ..... $ (.07) $ 4.85 (51.06)% $ 60 2.22(d)(e) 1.51% 58%
Alliance All-Asia
Investment Fund
Year ended 10/31/98 .... $ 0.00 $ 5.90 (21.96)% $ 2,012 3.46(d)(e) 1.22% 93%
Year ended 10/31/97 .... (.34) 7.56 (29.42) 1,338 3.21(d) (1.51) 70
10/2/96+ to 10/31/96 ... 0.00 11.04 (5.24) 27 4.97*(d) 1.63 66
Alliance Global
Environment Fund
12/29/97+ to 10/31/98 .. $ 0.00 $ 8.37 (8.52)% $ 5 3.04%*(e) (2.39)%* 205%
</TABLE>
- --------------------------------------------------------------------------------
Please refer to footnotes on page 60.
59
<PAGE>
+ Commencement of distribution.
* Annualized.
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and
a redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment returns calculated for periods
of less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waiver and expense reimbursement.
(d) Net of expenses assumed and/or waived/reimbursed. If the following Funds
had borne all expenses in their most recent five fiscal years, their
expense ratios, without giving effect to the expense offset arrangement
described in (e) below, would have been as follows:
1996 1997 1998
Alliance All-Asia Investment Fund
Advisor Class 5.54%* 3.43% 4.39%
Alliance Utility Income Fund
Advisor Class 3.48%* 3.29% 2.21%
Alliance Real Estate Investment Fund
Advisor Class -- 1.47%* --
Alliance International Premier Growth Fund
Advisor Class -- -- 6.28%
Alliance International Fund
Advisor Class -- 1.62%
Alliance Greater China '97 Fund
Advisor Class -- 18.13%*
(e) Amounts do not reflect the impact of expense offset arrangements with the
transfer agent. Taking into account such expense offset arrangements, the
rate of expenses to average net assets assuming the assumption and/or
waived reimbursement of expenses described in note (d) above would have
been as follows:
1997 1998
Alliance International Fund
Advisor Class 1.69%* --
Alliance Global Small Cap Fund
Advisor Class 2.04%* 1.84%
Alliance New Europe Fund
Advisor Class 1.71%* 1.54%
Alliance All-Asia Investment Fund
Advisor Class -- 3.41%
Alliance Balanced Shares
Advisor Class 1.29%* 1.05%
Alliance Real Estate Investment Fund
Advisor Class 1.44%* --
Alliance Growth and Income Fund
Advisor Class .70% .75%
Alliance Growth Fund
Advisor Class .96% 92%
Alliance Technology Fund Fund
Advisor Class 1.38% 1.36%
Alliance Greater China '97 Fund
Advisor Class -- 2.20%*
Alliance Premier Growth Fund
Advisor Class -- 1/25%
Alliance Global Environment Fund
Advisor Class -- 3.03%
(f) Distributions from net investment income include a tax return of capital
of $.03.
60
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A
- --------------------------------------------------------------------------------
The following is additional information about the United Kingdom, Japan and
Greater China countries.
Investment in United Kingdom Issuers. 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. Between 1972, when the pound sterling was allowed to float against
other currencies, and the end of 1992, the pound sterling generally depreciated
against most major currencies, including 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 has since recovered due to
interest rate cuts throughout Europe and an upturn in the economy of the United
Kingdom. The average exchange rate of the U.S. Dollar to the pound sterling was
1.50 in 1993 and 1.66 in 1998. On January 22, 1999 the U.S. Dollar-pound
sterling exchange rate was 1.66.
The United Kingdom's largest stock exchange is 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
5,882.6 at the end of 1998, up approximately 15% from the end of 1997. On
October 5, 1998 the FT-SE 100 index closed at 4648.7, the lowest close in the
12-month period prior to that date, after reaching a high of 6179.0 on July 20,
1998. The FT-SE 100 index closed at 4990.1 on January 22, 1999.
The Economic and Monetary Union ("EMU") became effective on January 1, 1999.
When fully implemented in 2002, the EMU will establish a common currency for
European countries that meet the eligibility criteria and choose to participate.
Although the United Kingdom meets the eligibility criteria, the government has
not taken any action to join the EMU.
From 1979 until 1997 the Conservative Party controlled Parliament. In the May 1,
1997 general elections, however, the Labour Party, led by Tony Blair, won a
majority in Parliament, holding 418 of 658 seats in the House of Commons. Mr.
Blair, who was appointed Prime Minister, has launched a number of reform
initiatives, including an overhaul of the monetary policy framework intended to
protect monetary policy from political forces by vesting responsibility for
setting interest rates in a new Monetary Policy Committee headed by the Governor
of the Bank of England, as opposed to the Treasury. Prime Minister Blair has
also undertaken a comprehensive restructuring of the regulation of the financial
services industry. For further information regarding the United Kingdom, see the
Statement of Additional Information of New Europe Fund.
Investment in Japanese Issuers. 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. Between 1985 and 1995,
the Japanese yen generally appreciated against the U.S. dollar, but has since
fallen from its post-World War II high (in 1995) 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 50% through the end of 1997. On
December 31, 1998 the TOPIX closed at 1086.99, down approximately 7% from the
end of 1997. 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.
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 respect to trade issues will continue for the foreseeable future.
Each Fund's investments in Japanese issuers 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. Between
August 1993 and October 1996 Japan was ruled by a series of four coalition
governments. As the result of a general election on October 20, 1996, however,
Japan returned to a single-party government led by Ryutaro Hashimoto, a member
of the Liberal Democratic Party ("LDP"). While the LDP does not control a
majority of the seats in the parliament, subsequent to the 1996 elections
it established a majority in the House of Representatives as individual
members joined the ruling party. The popularity of the LDP declined, however,
due to the dissatisfaction with Mr. Hashimoto's leadership. In the July 1998
House of Councillors election, the LDP's representation fell to 103 seats from
120 seats. As a result of the LDP's defeat, Mr. Hashimoto resigned as prime
minister and leader of the LDP. Mr. Hashimoto was replaced by Keizo Obuchi.
On January 14, 1999, the LDP formed a coalition government with a major
opposition party. As a result, Mr. Obuchi's administration strengthened
its position in the parliament, where it increased its majority in the
House of Representatives and reduced its shortfall in the House of
Councillors. For the past several years, Japan's banking industry has been
weakened by a significant
61
<PAGE>
amount of problem loans. Japan's banks also have significant exposure to the
current financial turmoil in other Asian markets. Following the insolvency of
one of Japan's largest banks in November 1997, the government proposed several
plans designed to strengthen the weakened banking sector. In October 1998, the
Japanese parliament approved several new laws that will make $508 billion in
public funds available to increase the capital of Japanese banks, to guarantee
depositors' accounts and to nationalize the weakest banks. It is unclear whether
these new laws will achieve their intended effect. For further information
regarding Japan, see the Statements of Additional Information of Alliance
International Fund and Alliance All-Asia Investment Fund.
Investment in Greater China Issuers. China, in particular, but Hong Kong and
Taiwan, as well, in significant measure because of their existing and increasing
economic, and now in the case of Hong Kong, direct political ties with China,
may be subject to a greater degree of economic, political and social instability
than is the case in the United States.
China's economy is very much in transition. While the government still controls
production and pricing in major economic sectors, significant steps have been
taken toward capitalism and China's economy has become increasingly market
oriented. China's strong economic growth and ability to attract significant
foreign investment in recent years stem from the economic liberalization
initiated by Deng Xiaoping who assumed power in the late 1970s. The economic
growth, however, has not been smooth and has been marked by extremes in many
respects of inordinate growth, which has not been tightly controlled, followed
by rigid measures of austerity.
The rapidity and erratic nature of the growth have resulted in inefficiencies
and dislocations, including at times high rates of inflation.
China's economic development has occurred notwithstanding the continuation of
the power of China's Communist Party and China's authoritarian government
control, not only of centrally planned economic decisions, but of many aspects
of the social structure. While a significant portion of China's population has
benefited from China's economic growth, the conditions of many leave much room
for improvement. Notwithstanding restrictions on freedom of expression and the
absence of a free press, and notwithstanding the extreme manner in which past
unrest has been dealt with, the 1989 Tianamen Square uprising being a recent
reminder, the potential for renewed popular unrest associated with demands for
improved social, political and economic conditions cannot be dismissed.
Following the death of Deng Xiaoping in February 1997, Jian Zemin became the
leader of China's Communist Party. The transfer of political power has
progressed smoothly and Jiang's popularity and credibility have gradually
increased. Jiang continues to consolidate his power, but as of yet does not
appear to have the same degree of control as did Deng Xiaoping. Jiang has
continued the market-oriented policies of Deng. Currently, China's major
economic challenge centers on reforming or eliminating inefficient state-owned
enterprises without creating an unacceptable level of unemployment. Recent
capitalistic policies have in many respects effectively outdated the Communist
Party and the governmental structure, but both remain entrenched. The Communist
Party still controls access to governmental positions and closely monitors
governmental action. Essentially there exists an inefficient set of parallel
bureaucracies and attendant opportunities for corruption.
In addition to the economic impact of China's internal political uncertainties,
the potential effect of China's actions, not only on China Itself, but on Hong
Kong and Taiwan as well, could also be significant.
China is heavily dependent on foreign trade, particularly with Japan, the U.S.,
South Korea and Germany. Political developments adverse to its trading partners,
as well as political and social repression, could cause the U.S. and others to
alter their trading policy towards China. For example, in the U.S., the
continued extension of most favored nation trading status to China which is
reviewed regularly and was reviewed in 1998 is an issue of significant
controversy. Loss of that status would clearly hurt China's economy by reducing
its exports. With much of China's trading activity being funneled through Hong
Kong and with trade through Taiwan becoming increasingly significant, any
sizable reduction in demand for goods from China would have negative
implications for both countries. China is believed to be the largest investor in
Hong Kong and its markets and an economic downturn in China would be expected to
reverberate through Hong Kong's markets as well.
Although China has committed by treaty to preserve Hong Kong's autonomy and its
economic, political and social freedoms for fifty years from the July 1, 1997
transfer of sovereignty from Great Britain to China. Hong Kong is headed by a
chief executive, appointed by the central government of China, whose power is
checked by both the government of China and a Legislative Council. Although Hong
Kong voters voted overwhelmingly for pro-democracy candidates in the recent
election, it remains possible that China could exert its authority so as to
alter the economic structure, political structure or existing social policy of
Hong Kong. Investor and business confidence in Hong Kong can be significantly
affected by such developments, which in turn can affect markets and business
performance. In this connection, it is noted that a substantial portion of the
companies listed on the Hong Kong Stock Exchange are involved in real
estate-related activities. The securities markets of China and to a lesser
extent Taiwan, 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, Alliance Greater China '97 Fund may
experience greater price volatility and significantly lower liquidity than a
portfolio invested solely in equity securities of U.S. companies. These markets
may be subject to greater influence by adverse events generally affecting the
market, and by large investors trading significant blocks of securities, than is
usual in the U.S. securities settlements may in some instances be subject to
delays and related administrative uncertainties.
62
<PAGE>
Foreign investment in the securities markets of China and Taiwan is restricted
or controlled to varying degrees. These restrictions or controls, which apply to
the Alliance Greater China '97 Fund may at times limit or preclude investment in
certain securities and may increase the cost and expenses of the Fund. China and
Taiwan 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. In addition, the repatriation of investment
income, capital or the proceeds of sales of securities from China and Taiwan 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 restrictions on foreign
capital remittances.
Alliance Greater China '97 Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for repatriation, as well
as by the application to it of other restrictions on investment. The liquidity
of the Fund's investments in any country in which any of these factors exists
could be affected by any such factor or factors on the Fund's investments. The
limited liquidity in certain Greater China markets is a factor to be taken into
account in the Fund's valuation of portfolio securities in this category and may
affect the Fund's ability to dispose of securities in order to meet redemption
requests at the price and time it wishes to do so. It is also anticipated that
transaction costs, including brokerage commissions for transactions both on and
off the securities exchanges in Greater China countries, will be higher than in
the U.S.
Issuers of securities in Greater China countries are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as timely disclosure of information, insider trading rules, restrictions on
market manipulation and shareholder proxy requirements. Reporting, accounting
and auditing standards of Greater China countries may differ, in some cases
significantly, from U.S. standards in important respects, and less information
may be available to investors in securities of Greater China country issuers
than to investors in securities of U.S. issuers.
Investment in Greater China companies which are in the initial stages of their
development involves greater risk than is customarily associated with securities
of more established companies. The securities of such companies may have
relatively limited marketability and may be subject to more abrupt or erratic
market movements than securities of established companies or broad market
indices.
63
<PAGE>
For more information about the Funds, the following documents are available upon
request:
o Annual/Semi-Annual Reports to Shareholders
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected a Fund's performance during its last fiscal year.
o Statement of Additional Information (SAI)
Each Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Funds' SAIs are
incorporated by reference into (and is legally part of) this prospectus.
You may request a free copy of the current annual/semi-annual report or the SAI,
by contacting your broker or other financial intermediary, or by contacting
Alliance:
By Mail: c/o Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07096-1520
By Phone: For Information: (800) 221-5672
For Literature: (800) 227-4618
Or you may view or obtain these documents from the Commission:
In Person: at the Commission's Public Reference Room
in Washington, D.C.
By Phone: 1-800-SEC-0330
By Mail: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
On The Internet: www.sec.gov
You also may find more information about Alliance and the Funds on the internet
at www.Alliancecapital.com
64
<PAGE>
- ---------------------------
Alliance Stock Funds
Subscription Application
- Advisor Class
- ---------------------------
The Alliance Fund
Growth Fund
Premier Growth Fund
Technology Fund
Quasar Fund
International Fund
International Premier Growth Fund
Worldwide Privatization Fund
New Europe Fund
All-Asia Investment Fund
Greater China '97 Fund
Global Small Cap Fund
Global Environment Fund
Balanced Shares
Utility Income Fund
Growth & Income Fund
Real Estate Investment Fund
To Open Your New Alliance Account...
Please complete the application and mail it to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, New Jersey 07096-1520
For certified or overnight deliveries, send to:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
Section 1 Your Account Registration
(Required)
Complete one of the available choices. To ensure proper tax reporting to the
IRS:
o Individuals, Joint Tenants, Transfer on Death and Gift/Transfer to a
Minor:
o Indicate your name(s) exactly as it appears on your social
security card.
o Transfer on Death:
o Ensure that your state participates
o Trust/Other:
o Indicate the name of the entity exactly as it appeared on the
notice you received from the IRS when your Employer
Identification number was assigned.
Section 2 Your Address (Required) Complete in full.
o Non-Resident Alien:
o Indicate your permanent country of residence.
Section 3 Your Initial Investment (Required)
For each fund in which you are investing: (1) Write the three digit fund number
in the column titled 'Indicate three digit fund number located below'.
(2) Write the dollar amount of your initial purchase in the column titled
'Indicate Dollar Amount'.
(3) Check off a distribution option for your dividends.
(4) Check off a distribution option for your capital gains. All distributions
(dividends and capital gains) will be reinvested into your fund account unless
you direct otherwise. If you want distributions sent directly to your bank
account, then you must complete Section 4D and attach a preprinted, voided check
for that account. If you want your distributions sent to a third party you must
complete Section 4E.
Section 4 Your Shareholder Options
(Complete only those options you want)
A. Automatic Investment Plans (AIP) - You can make periodic investments into any
of your Alliance Funds in one of three ways. First, by a periodic withdrawal
($25 minimum) directly from your bank account and invested into an Alliance
Fund. Second, you can direct your distributions (dividends and capital gains)
from one Alliance Fund into another Fund. Or third, you can automatically
exchange monthly ($25 minimum) shares of one Alliance Fund for shares of another
Fund. To elect one of these options, complete the appropriate portion of Section
4A & 4D. If more than one dividend direction or monthly exchange is desired,
please call our Literature Center to obtain a Shareholder Account Services
Options Form for completion.
B. Telephone Transactions via EFT - Complete this option if you would like to be
able to transact via telephone between your fund account and your bank account.
C. Systematic Withdrawal Plans (SWP) - Complete this option if you wish to
periodically redeem dollars from one of your fund accounts. Payments can be made
via Electronic Funds Transfer (EFT) to your bank account or by check.
D. Bank Information - If you have elected any options that involve transactions
between your bank account and your fund account or have elected cash
distribution options and would like the payments sent to your bank account,
please tape a preprinted, voided check of the account you wish to use to this
section of the application.
E. Third Party Payment Details - If you have chosen cash distributions and/or a
Systematic Withdrawal Plan and would like the payments sent to a person and/or
address other than those provided in section 1 or 2, complete this option.
Medallion Signature Guarantee is required if your account is not maintained by a
broker dealer.
Section 5 Shareholder Authorization
(Required) All owners must sign. If it is a custodial, corporate, or trust
account, the custodian, an authorized officer, or the trustee respectively must
sign.
If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At: (800)
221-5672.
-----------------------------------
For Literature Call: (800) 227-4618
-----------------------------------
<PAGE>
The Alliance Stock Funds Subscription Application
- - Advisor Class
- --------------------------------------------------------------------------------
1. Your Account Registration (Please Print in Capital Letters and Mark Check
Boxes Where Applicable)
- --------------------------------------------------------------------------------
|_| Individual Account [ |_| Male |_| Female ] - or - |_| Joint Account - or -
|_| Transfer On Death [ |_| Male |_| Female ] - or - Gift/Transfer to a Minor
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Owner or Custodian (First Name) (MI) (Last Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
(First Name) Joint Owner*, (MI) (Last Name)
Transfer On Death Beneficiary
or Minor
|_| |_| |_| - |_| |_| - |_| |_| |_| |_|
Social Security Number of Owner or Minor
(required to open account)
If Uniform Gift/Transfer
to Minor Account:
|_| |_| Minor's State of Residence
If Joint Tenants Account: * The Account will be registered "Joint Tenants with
right of Survivorship" unless you indicate otherwise below:
|_| In Common |_| By Entirety |_| Community Property
|_| Trust - or - |_| Corporation - or - |_| Other
-------------------------------
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trustee if applicable (MI) (Last Name)
(First Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trust or Corporation or Other Entity
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trust or Corporation or Other Entity continued
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Trust Dated (MM, DD, YYYY) Tax ID Number (required to open account)
|_| Employer ID Number - OR - |_| Social Security
Number
- --------------------------------------------------------------------------------
2. Your Address
- --------------------------------------------------------------------------------
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Street Number Street Name
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
City State Zip code
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_| |_| |_| - |_| |_| |_| |_|
If Non-U.S., Specify Country Daytime Phone Number
|_| U.S. Citizen |_| Resident Alien |_| Non-Resident Alien
90063GEN-TASFApp-Advisor-P1 Alliance Capital [LOGO](R)
1
<PAGE>
- --------------------------------------------------------------------------------
3. Your Initial Investment
- --------------------------------------------------------------------------------
I hereby subscribe for shares of the following Alliance Stock Fund(s) Advisor
Class and elect distribution options as indicated.
- ---------------------------------------
Broker/Dealer Use Only: Wire Confirm #
|_| |_| |_| |_| |_| |_| |_| |_|
- ---------------------------------------
Dividend and Capital Gain Distribution Options:
R Reinvest distributions into my fund account.
C Send my distributions in cash to the address I have provided in Section 2.
(Complete Section 4D for direct deposit to your bank account. Complete
Section 4E for payment to a third party).
D Direct my distributions to another Alliance fund. Complete the appropriate
portion of Section 4A to direct your distributions (dividends and capital
gains) to another Alliance Fund.
- ----------- ------------- ---------------------- ---------------------------
Make all Distribution Options
checks* Indicate three *Check One
payable to: digit Fund Indicate Dollar Amount ---------------------------
Alliance number Dividends Capital Gains
Funds located below R C D R C D
- ----------- ------------- ---------------------- ----------- -------------
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
|_| |_| |_| $ |__________________| |R| |C| |D| |R| |C| |D|
- ----------------------
Total Investment $ |__________________|
- ----------------------
* Cash and money orders are not accepted
- --------------------------------------------------------------------------------
Alliance Stock Fund Names and Numbers
- --------------------------------------------------------------------------------
-------
Advisor
Class
-------
- --------------------------------------------------------------------------------
The Alliance Fund 444
------------------------------------------------------------
Growth Fund 431
------------------------------------------------------------
Domestic Premier Growth Fund 478
------------------------------------------------------------
Technology Fund 482
------------------------------------------------------------
Quasar Fund 426
- --------------------------------------------------------------------------------
International Fund 440
------------------------------------------------------------
International Premier Growth 479
------------------------------------------------------------
Worldwide Privatization Fund 412
------------------------------------------------------------
Global New Europe Fund 462
------------------------------------------------------------
All-Asia Investment Fund 418
------------------------------------------------------------
Greater China '97 Fund 460
------------------------------------------------------------
Global Small Cap Fund 445
------------------------------------------------------------
Global Environment Fund 481
- --------------------------------------------------------------------------------
Balanced Shares 496
------------------------------------------------------------
Utility Income Fund 409
Total ------------------------------------------------------------
Return Growth & Income Fund 494
------------------------------------------------------------
Real Estate Investment Fund 410
- --------------------------------------------------------------------------------
90063GEN-TASFApp-Advisor-P2
2
<PAGE>
- --------------------------------------------------------------------------------
4. Your Shareholder Options
- --------------------------------------------------------------------------------
A. Automatic Investment Plans (AIP)
|_| Withdraw From My Bank Account Via EFT* I authorize Alliance to draw on my
bank account for investment in my fund account(s) as indicated below
(Complete Section 4D also for the bank account you wish to use).
1 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
2 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
3 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
Frequency: M = monthly Q = quarterly A = annually
* Electronic Funds Transfer. Your bank must be a member of the
National Automated Clearing House Association (NACHA)
|_| Direct My Distributions As indicated in Section 3, I would like my
dividends and/or capital gains directed to the same class of shares of
another Alliance Fund.
FROM: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
TO: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
|_| Exchange My Shares Monthly I authorize Alliance to transact monthly
exchanges, within the same class of shares, between my fund accounts as
listed below.
FROM: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
|_| |_| , |_| |_| |_|.00 |_| |_|
Amount ($25 minimum) Day of Exchange**
TO: |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
** Shares exchanged will be redeemed at the net asset value on the "Day of
Exchange" (If the "Day of Exchange" is not a fund business day, the
exchange transaction will be processed on the next fund business day). The
exchange privilege is not available if stock certificates have been
issued.
B. Purchases and Redemptions Via EFT
You can call our toll-free number 1-800-221-5672 and instruct Alliance
Fund Services, Inc. in a recorded conversation to purchase, redeem or
exchange shares for your account. Purchase and redemption requests will be
processed via electronic funds transfer (EFT) to and from your bank
account.
Instructions: o Review the information in the Prospectus about
telephone transaction services.
o If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face
of a check from the bank account you wish to use
and attach it to Section 4D of this application.
|_| Purchases and Redemptions via EFT
I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my telephone
instructions or telephone instructions from my Broker/Agent, and to
withdraw money or credit money for such shares via EFT from the bank
account I have selected.
- --------------------------------------------------------------------------------
For shares recently purchased by check or electronic funds transfer
redemption proceeds will not be made available until the Fund is
reasonably assured the check or electronic funds transfer has been
collected, normally 15 calendar days after the purchase date.
- --------------------------------------------------------------------------------
90063GEN-TASFApp-Advisor-P3
3
<PAGE>
- --------------------------------------------------------------------------------
4. Your Shareholder Options (CONTINUED)
- --------------------------------------------------------------------------------
C. Systematic Withdrawal Plans (SWP)
In order to establish a SWP, you must reinvest all dividends and capital
gains.
|_| I authorize Alliance to transact periodic redemptions from my fund
account and send the proceeds to me as indicated below.
1 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
2 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
3 - |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date Amount ($25 minimum) Frequency
(MM,DD)
Frequency: M = monthly Q = quarterly A = annually
Please send my SWP proceeds to:
|_| My Address of Record (via check)
|_| The Payee and address specified in section 4E (via check) (Medallion
Signature Guarantee required)
|_| My checking account-via EFT (complete section 4D) Your bank must be
a member of the National Automated Clearing House Association
(NACHA) in order for you to receive SWP proceeds directly into your
bank account. Otherwise payment will be made by check
D. Bank Information This bank account information will be used for:
|_| Distributions (Section 3)
|_| Automatic Investments (Section 4A)
|_| Telephone Transactions (Section 4B)
|_| Withdrawals (Section 4C)
- --------------------------------------------------------------------------------
Please Tape a Pre-printed Voided Check Here*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
* The above services cannot be established without a pre-printed voided
check.
For EFT transactions, the fund requires signatures of bank account owners
exactly as they appear on bank records. If the registration at the bank
differs from that on the Alliance mutual fund, all parties must sign in
Section 5.
|_| |_| |_| |_| |_| |_| |_| |_| |_|
Your Bank's ABA Routing Number
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Your Bank Account Number
|_| Checking Account |_| Savings Account
90063GEN-TASFApp-Advisor-P4
4
<PAGE>
- --------------------------------------------------------------------------------
4. Your Shareholder Options (CONTINUED)
- --------------------------------------------------------------------------------
E. Third Party Payment Details Your signature(s) in Section 5 must be
Medallion Signature Guaranteed if your account is not maintained by a
broker/dealer. This third party payee information will be used for:
|_| Distributions (section 3) |_| Systematic Withdrawals (section 4C)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name (First Name) (MI) (Last Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Street Number Street Name
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
City State Zip code
- --------------------------------------------------------------------------------
Dealer/Agent Authorization - For selected Dealers or Agents ONLY.
- --------------------------------------------------------------------------------
We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.
____________________________________ ______________________________________
Dealer/Agent Firm Authorized Signature
___________________________ |_| ______________________________________
Representative First Name MI Last Name
____________________________________ ______________________________________
Dealer/Agent Firm Number Representative Number
____________________________________ ______________________________________
Branch Number Branch Telephone Number
______________________________________________________________________________
Branch Office Address
____________________________________ |_| |_| ____________________________
City State Zip Code
90063GEN-TASFApp-Advisor-P5
5
<PAGE>
- --------------------------------------------------------------------------------
5. Shareholder Authorization -- This section MUST be completed
- --------------------------------------------------------------------------------
Telephone Exchanges and Redemptions by Check
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an
authorized employee of an investment dealer or agent requesting a
redemption or exchange on my behalf. (NOTE: Telephone exchanges may only
be processed between accounts that have identical registrations.)
Telephone redemption checks will only be mailed to the name and address of
record; and the address must not have changed within the last 30 days. The
maximum telephone redemption amount is $50,000 for redemptions by check.
|_| I do not elect the telephone exchange service
|_| I do not elect the telephone redemption by check service
By selecting any of the above telephone privileges, I agree that neither
the Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund
Services, Inc. or other Fund Agent will be liable for any loss, injury,
damage or expense as a result of acting upon telephone instructions
purporting to be on my behalf, that the Fund reasonably believes to be
genuine, and that neither the Fund nor any such party will be responsible
for the authenticity of such telephone instructions. I understand that any
or all of these privileges may be discontinued by me or the Fund at any
time. I understand and agree that the Fund reserves the right to refuse
any telephone instructions and that my investment dealer or agent reserves
the right to refuse to issue any telephone instructions I may request.
For non-residents only: Under penalties of perjury, I certify that to the
best of my knowledge and belief, I qualify as a foreign person as
indicated in Section 2.
I am of legal age and capacity and have received and read the Prospectus
and agree to its terms.
I certify under penalty of perjury that the number shown in Section 1 of
this form is my correct tax identification number or I am waiting for a
number to be issued to me and that I have not been notified that this
account is subject to backup withholding.
The Internal Revenue Service does not require your consent to any
provision of this document other than the certification required to avoid
backup withholding.
- ----------------------------------------------------------- -------------
Signature Date
- ----------------------------------------------------------- -------------
Signature Date
- --------------------------------------------
Medallion Signature Guarantee required if
completing Section 4E and your mutual
fund is not maintained by a broker dealer
90063GEN-TASFApp-Advisor-P6 Alliance Capital [LOGO](R)
6
<PAGE>
This is filed pursuant to Rule 497(c).
File Nos. 2-25364 and 811-01415.
<PAGE>
(LOGO)
ALLIANCE GLOBAL SMALL CAP
FUND, INC.
_______________________________________________________________
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
_______________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
November 2, 1998 (as amended February 1, 1999)
_______________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus for the Alliance Global Small Cap Fund, Inc. (the
"Fund") that offers the Class A, Class B and Class C shares of
the Fund and the current Prospectus for the Fund that offers the
Advisor Class shares of the Fund (the "Advisor Class Prospectus"
and, together with the Prospectus for the Fund that offers the
Class A, Class B and Class C shares of the Fund, the
"Prospectus"). Copies of such Prospectuses may be obtained by
contacting Alliance Fund Services, Inc. at the address or the
"For Literature" telephone number shown above.
TABLE OF CONTENTS
Page
Description of the Fund...................................
Management of the Fund....................................
Expenses of the Fund......................................
Purchase of Shares........................................
Redemption and Repurchase of Shares.......................
Shareholder Services......................................
Net Asset Value...........................................
Dividends, Distributions and Taxes........................
Portfolio Transactions....................................
General Information.......................................
Report of Independent Auditors and Financial Statements...
Appendix A: Certain Employee Benefit Plans............... A-1
________________________
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
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_______________________________________________________________
DESCRIPTION OF THE FUND
_______________________________________________________________
Alliance Global Small Cap Fund, Inc. (the "Fund") is a
diversified, open-end investment company. Except as otherwise
indicated, the investment policies of the Fund are not
"fundamental policies" and, therefore, may be changed by the
Board of Directors without a shareholder vote. However, the Fund
will not change its investment policies without contemporaneous
written notice to its shareholders. The Fund's investment
objective may not be changed without shareholder approval. There
can be, of course, no assurance that the Fund will achieve its
investment objective.
Investment Objective
The investment objective of the Fund is to seek long-
term growth of capital through investment in a global portfolio
of the equity securities (i.e., common stocks, rights or warrants
to purchase common stocks and securities convertible into common
stocks) of selected companies with relatively small market
capitalization. Current income is not a consideration.
Investing in smaller companies and in foreign securities involves
both opportunities and risks that are different from those
associated with investing solely in larger United States
companies.
How The Fund Pursues Its Objective
The Fund will select its portfolio investments primarily
from among companies whose individual market capitalizations
would place them (at the time of purchase) in the same size range
as companies in approximately the lowest 20% by market
capitalization of companies that have equity securities listed on
a U.S. national securities exchange or traded in the NASDAQ
system. Based on recent U.S. share prices, the Fund's portfolio
companies typically will have individual market capitalizations
of between approximately $50 million and $1 billion (although the
Fund will be free to invest in smaller capitalization companies
that satisfy the Fund's size standard). Because the Fund applies
the U.S. size standard on a global basis, its investment outside
the U.S. might rank above the lowest 20% by market capitalization
in local markets and, in fact, might in some countries rank among
the largest companies in terms of capitalization.
Under normal market conditions, the Fund will invest at
least 65% of its assets in equity securities of such smaller
capitalization issuers, and such issuers will be located in at
least three countries, one of which may be the U.S. Up to 35% of
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the Fund's total assets may be invested in securities of
companies whose market capitalizations exceed the Fund's size
standard. Equity securities in which the Fund invests may be
listed on a U.S. or foreign exchange or traded over the counter.
Special Investment Considerations. Alliance Capital
Management L.P. (the "Adviser") believes that the issuers of
smaller capitalization stocks often have sales and earnings
growth rates which exceed those of larger companies, and that
such growth rates may in turn be reflected in more rapid share
price appreciation. However, investing in smaller capitalization
stocks can involve greater risk than is customarily associated
with larger, more established companies. For example, smaller
capitalization companies often have limited product lines,
markets, or financial resources. They may be dependent for
management on one or a few key persons, and can be more
susceptible to losses and risks of bankruptcy. Also, their
securities may be thinly traded (and therefore have to be sold at
a discount from current market prices or sold in small lots over
an extended period of time), may be followed by fewer investment
research analysts and may be subject to wider price swings and
thus may create a greater chance of loss than investing in
securities of larger capitalization companies. Transaction costs
in smaller capitalization stocks may be higher than those of
larger capitalization companies.
The Adviser believes that global investing offers
opportunities for superior investment returns. A portfolio
containing the securities of companies located in a number of
countries may offer the opportunity for greater capital
appreciation than investment in a portfolio composed only of the
securities of U.S. companies. The Adviser will adjust the Fund's
exposure to particular national economies based on its perception
of the most favorable markets and issuers. The Fund intends to
spread investment risk among the capital markets of a number of
countries and will invest in equity securities of companies based
in at least three, and normally considerably more such countries,
one of which may be the U.S. The percentage of the Fund's assets
invested in securities of companies in a particular country or
denominated in a particular currency will vary in accordance with
the Adviser's assessment of the appreciation potential of such
securities and the strength of that currency. Investing in
securities issued by foreign corporations involves considerations
and possible risks not typically associated with investing in
obligations issued by U.S. corporations. The values of foreign
investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including
withholding taxes, changes in governmental administration or
economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Costs are
incurred in connection with conversions between various
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currencies. In addition, foreign brokerage commissions are
generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less
subject to governmental supervision than in the United States.
Investments in foreign countries could be affected by other
factors not present in the United States, including
expropriation, confiscatory taxation, lack of uniform accounting
and auditing standards and potential difficulties in enforcing
contractual obligations and could be subject to extended
settlement periods.
The Fund may invest up to 10% of its total assets in
securities for which there is no ready market. The Fund may
therefore not be able to readily sell such securities. While
there may not be securities sales registration requirements
comparable to those under U.S. laws or laws imposing legal
restrictions on resales of securities in many of the countries in
which the Fund may invest, there may be contractual restrictions
on resale of securities.
The Fund has the ability to invest up to 20% of its
total assets in warrants to purchase equity securities issued by
European companies to the extent consistent with the Fund's
investment objective; however, the Fund does not presently intend
to invest more than 10% of its total assets in such warrants.
The warrants in which the Fund may invest are a type of security,
usually issued together with another security of an issuer, that
entitles the holder to buy a fixed amount of common or preferred
stock of such issuer at a specified price for a fixed period of
time (which may be in perpetuity). Generally, warrants are
commonly issued attached to other securities of the issuer as a
method of making such securities more attractive and are usually
detachable and, thus, may be bought or sold separately from the
issued security. Warrants can be a speculative investment and
may be considered more speculative than certain other types of
investments in that they neither entitle a holder to dividends or
voting rights with respect to the securities which may be
purchased nor represent any rights in the assets of the issuing
company. Also, the value of a warrant does not necessarily
change with the value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to the
expiration date. The value of a warrant may decline because of a
decrease in the value of the underlying stock, the passage of
time or a change in perception as to the potential of the
underlying stock, or any combination thereof. If the market
price of the underlying stock is below the exercise price set
forth in the warrant on the expiration date, the warrant will
expire worthless. Warrants are freely transferable and are
generally traded on one or more stock exchanges. The Fund
anticipates that the warrants in which it will invest will have
exercise periods of approximately two to ten years. In addition
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to purchasing corporate securities of non-U.S. issuers in
overseas markets, the Fund may invest in American Depository
Receipts, European Depository Receipts or other securities
representing securities of companies based in countries other
than the United States.
For temporary defensive purposes, the Fund may vary from
its investment policy during periods in which conditions in
securities markets or other economic or political conditions
warrant. In such circumstances, the Fund will be able to invest
without limit in large capitalization companies or reduce its
position in equity securities and increase its position in debt
securities, which may include short-term U.S. Government
securities and U.S. dollar- or foreign currency-denominated
short-term indebtedness (including commercial paper), cash
equivalents and fixed income securities issued or guaranteed by
governmental entities, or by companies or supranational
organizations (e.g., International Bank for Reconstruction and
Development and the European Community) rated AA or better by
Standard & Poor's Corporation or Aa or better by Moody's
Investors Service, Inc. or if not so rated, of equivalent
investment quality as determined by the Adviser. Apart from
periods of defensive investment, the Fund may also at any time
temporarily invest funds awaiting reinvestment or held as
reserves for dividends and other distributions to shareholders in
U.S. dollar-denominated money market instruments.
Additional Investment Practices And Policies
The following additional investment policies supplement
those set forth in the Prospectus.
Options. In seeking to attain capital growth, the Fund
may supplement customary investment practices by writing and
purchasing call options listed on one or more U.S. or foreign
securities exchanges and purchasing listed put options, including
put options on market indexes. A put option gives the buyer of
such option, upon payment of a premium, the right to deliver a
specified number of shares of a stock to the writer of the option
on or before a fixed date, at a predetermined price. A call
option gives the purchaser of the option, upon payment of a
premium, the right to call upon the writer to deliver a specified
number of shares of a specified stock on or before a fixed date,
at a predetermined price, usually the market price at the time
the contract is negotiated. Prior to the expiration of the
option, the seller (the "writer") of the option has an obligation
to sell the underlying security to the holder of the option at
the exercise price regardless of the market price of the security
at the time the option is exercised. The premium received by the
Fund is recorded as a liability and is subsequently adjusted to
the current market value of the option written. Premiums
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received from writing options which expire unexercised are
treated by the Fund on the expiration date as realized capital
gains. The difference between the premium and the amount paid
upon executing a closing purchase transaction, including
brokerage commissions, is also treated as a gain, or if the
premium is less than the amount paid for the closing purchase
transaction, as a loss. If a call option is exercised, the
premium is added to the proceeds from the sale in determining
whether the Fund has realized a gain or loss.
Writing and purchasing options are highly specialized
activities and entail greater than ordinary investment risks.
The Fund will not write a call option unless the Fund at all
times during the option period owns either (a) the optioned
securities, or securities convertible into or carrying rights to
acquire the optioned securities, or (b) an offsetting call option
on the same securities.
It is the Fund's policy not to write a call option if
the premium to be received by the Fund in connection with such
option would not produce an annualized return of at least 15% of
the then current market value of the securities subject to option
(without giving effect to commissions, stock transfer taxes and
other expenses of the Fund which are deducted from premium
receipts). The Fund will also not write a call option if, as a
result, the aggregate of the Fund's portfolio securities subject
to outstanding call options (valued at the lower of the option
price or market value of such securities) would exceed 15% of the
Fund's total assets. The Fund will not sell any call option if
such sale would result in more than 10% of the Fund's assets
being committed to call options written by the Fund which, at the
time of sale by the Fund, have a remaining term of more than 100
days. The aggregate cost of all outstanding options purchased
and held by the Fund will at no time exceed 10% of the Fund's
total assets.
In the event the option is exercised, the Fund will be
obligated to sell stocks below the current market price. The
Fund's potential for gain is limited to the difference between
the exercise price plus the premium less the cost of the
security. Alternatively, the option's position could be closed
out by purchasing a like option. It is possible, although
considered unlikely, that the Fund might be unable to execute
such a closing purchase transaction. If the price of a security
declines below the amount to be received from the exercise price
less the amount of the call premium received and if the option
could not be closed, the Fund would hold a security which might
otherwise have been sold to protect against depreciation. In
addition, the Fund's portfolio turnover may increase to the
extent that the market price of the underlying securities covered
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by call options written by the Fund increases and the Fund has
not entered into a closing purchase transaction.
If an option purchased by the Fund expires without being
exercised, its premium would be lost by the Fund.
Options on Market Indexes. Options on securities
indexes are similar to options on a security except that, rather
than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder
the right to receive, upon exercise of the option, an amount of
cash if the closing level of the chosen index is greater than (in
the case of a call) or less than (in the case of a put) the
exercise price of the option.
Through the purchase of listed index options, the Fund
could achieve many of the same objectives as through the use of
options on individual securities. Price movements in the Fund's
portfolio securities probably will not correlate perfectly with
movements in the level of the index and, therefore, the Fund
would bear a risk of loss on index options purchased by it if
favorable price movements of the hedged portfolio securities do
not equal or exceed losses on the options or if adverse price
movements of the hedged portfolio securities are greater than
gains realized from the options.
Restricted Securities. Where registration is required,
the Fund may be obligated to pay all or part of the registration
expense, and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to
sell a security under an effective registration statement. If,
during such a period adverse market conditions were to develop,
the Fund might obtain a less favorable price than prevailed when
it decided to sell. Restricted securities will be valued in such
manner as the Board of Directors of the Fund, in good faith,
deems appropriate to reflect their fair market value.
Currency Hedging Techniques. The Fund may engage in
various portfolio strategies to hedge its portfolio against
currency risks. These strategies include the use of forward
foreign currency transactions, currency options and futures and
options on such futures. The Fund may enter into such
transactions only in connection with hedging strategies. While
the Fund's use of hedging strategies is intended to reduce the
risk of declines in the net asset value of Fund shares, there can
be no assurance that the Fund's hedging transactions will be
effective. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not
entered into such hedging transactions. Furthermore, the Fund
will only engage in hedging activities from time to time and may
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not necessarily be engaging in hedging activities when movements
in the currency exchange rates occur.
Although certain risks are involved in forward, futures
and options transactions, the Adviser believes that, because the
Fund will only engage in these transactions for hedging purposes,
the forward, futures and options portfolio strategies of the Fund
will not subject the Fund to the risks frequently associated with
the speculative use of futures transactions.
Forward Foreign Currency Exchange Contracts. The Fund
may purchase or sell forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund
from adverse changes in the relationship between the U.S. dollar
and other currencies. Generally, the foreign exchange
transactions of the Fund will be conducted on a spot, i.e., cash,
basis at the spot rate for purchasing or selling currency
prevailing in the foreign exchange market. Under normal market
conditions, this rate differs from the prevailing exchange rate
in an amount generally less than one-tenth of one percent due to
the costs of converting from one currency to another. However,
the Fund has authority to deal in forward foreign exchange
between currencies of the different countries in whose securities
it will invest as a hedge against possible variations in the
foreign exchange rates between these currencies. A forward
contract is an obligation to purchase or sell a specific currency
for an agreed price at a future date (up to one year) which is
individually negotiated and privately traded by currency traders
and their customers. The Fund's dealings in forward contracts
will be limited to hedging involving either specific transactions
or portfolio positions. Transaction hedging is the purchase or
sale of forward contracts with respect to specific receivables or
payables of the Fund accruing in connection with the purchase and
sale of its portfolio securities or the payment of dividends and
distributions by the Fund. Position hedging is the sale of
forward contracts with respect to portfolio security positions
denominated or quoted in such foreign currency.
The Fund may not position hedge with respect to the
currency of a particular country to an extent greater than the
aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in that
particular foreign currency. If the Fund enters into a position
hedging transaction, its custodian bank will place, to the extent
required by applicable law, liquid assets in a segregated account
of the Fund in an amount equal to the value of the Fund's total
assets committed to the consummation of such forward contract.
If the value of the assets placed in the segregated account
declines, additional liquid assets will be placed in the account
so that the value of the account will equal the amount of the
Fund's commitment with respect to such contracts. In addition,
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the Fund may use such other methods of "cover" as are permitted
by applicable law. The Fund will not commit more than 50% of the
value of its assets to position hedging contracts.
Forward contracts reduce the potential gain from a
positive change in the relationship between U.S. dollar and other
currencies. The Fund will not enter into a forward contract with
a term of more than one year or if, as a result thereof, more
than 50% of the Fund's total assets would be committed to such
contracts.
Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities denominated in such currency or prevent losses if the
prices of such securities decline. Such transactions also
preclude the opportunity for gain if the value of the hedge
currency should rise. Moreover, it may not be possible for the
Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the
currency at a price above the devaluation level it anticipates.
The cost to the Fund of engaging in foreign currency transactions
varies with such factors as the currency involved, the length of
the contract period and the market conditions then prevailing.
Since transactions in foreign currency exchange are usually
conducted on a principal basis, no fees or commissions are
involved.
Foreign Currency Options, Foreign Currency Futures and
Options on Foreign Currency Futures. The Fund is also authorized
to purchase or sell listed or unlisted foreign currency options,
foreign currency futures and related options on foreign currency
futures as a short or long hedge against possible variations in
foreign exchange rates. Such transactions may be effected with
respect to hedges on non-U.S. dollar denominated securities owned
by the Fund, sold by the Fund but not yet delivered, or committed
or anticipated to be purchased by the Fund. As an illustration,
the Fund may use such techniques to hedge the stated value in
U.S. dollars of an investment in a pound sterling denominated
security. In such circumstances, for example, the Fund may
purchase a foreign currency put option enabling it to sell a
specified amount of pounds for dollars at a specified price by a
future date. To the extent the hedge is successful, a loss in
the value of the pound relative to the dollar will tend to be
offset by an increase in the value of the put option. To offset,
in whole or in part, the cost of acquiring such a put option, the
Fund may also sell a call option which, if exercised, requires it
to sell a specified amount of pounds for dollars at a specified
price by a future date (a technique called a "straddle"). By
selling such call option in this illustration, the Fund gives up
the unlimited opportunity to profit from increases in the
relative value of the pound to the dollar. All options written
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by the Fund must be "covered," and must remain "covered" as long
as the Fund is obligated as a writer. For example, where the
Fund sells a call option on a futures or forward contract, it may
cover either by entering into a long position in the same
contract at a price no higher than the strike price of the call
option or by owning the instruments or currency underlying the
futures or forward contracts. The Fund could also cover this
position by holding a separate call option permitting it to
purchase the same futures or forward contract at a price no
higher than the strike price of the call option sold by the Fund.
A put option written by the Fund may be "covered" if the Fund
maintains liquid assets with a value equal to the exercise price
in a segregated account with its custodian, or else owns a put on
the same contract as the put written where the exercise price of
the put held is equal or greater than the exercise price of the
put written.
Certain differences exist between these foreign currency
hedging instruments. Foreign currency options provide the holder
thereof the right to buy or sell a currency at a fixed price on a
future date. Listed options are third-party contracts (i.e.,
performance of the parties' obligations is guaranteed by an
exchange or clearing corporation) which are issued by a clearing
corporation, traded on an exchange and have standardized strike
prices and expiration dates. Unlisted options are two- party
contracts and have negotiated strike prices and expiration dates.
The Fund will engage in unlisted transactions involving options
only with member banks of the Federal Reserve System and primary
dealers in United States Government securities or with affiliates
of such banks or dealers which have capital of at least $50
million or whose obligations are guaranteed by an entity having
capital of at least $50 million. The Fund will acquire only
those unlisted options for which management believes the Fund can
receive on each business day at least two independent bids or
offers (one of which will be from an entity other than a party to
the option). A futures contract on a foreign currency is an
agreement between two parties to buy or sell a specified amount
of a currency for a set price on a future date. Certain futures
contracts and options on futures contracts are traded on boards
of trade or futures exchanges. The Fund may enter into such
transactions only in connection with hedging strategies against
variations on exchange rates.
The Fund will not speculate in foreign currency options,
futures or related options. Accordingly, the Fund will not hedge
a currency substantially in excess of (i) the market value of the
securities denominated in such currency which it owns; (ii) the
expected acquisition price of securities which it has committed
or anticipates to purchase which are denominated in such
currency; and (iii) in the case of securities which have been
sold by the Fund but not yet delivered, the proceeds thereof in
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its denominated currency. Further, the Fund will segregate in a
segregated account with its custodian bank liquid assets having a
market value substantially representing any subsequent decrease
in the market value of such hedged security, less any initial or
variation margin held in the account of its broker. The Fund may
not incur potential net liabilities of more than 33 1/3% of its
total assets from foreign currency options, futures or related
options.
Risk Factors in Options, Futures and Currency
Transactions. Utilization of futures transactions involves the
risk of imperfect correlation in movements in the price of
futures contracts and movements in the price of the currencies
which are the subject of the hedge. If the price of the futures
contract moves more or less than the price of the currency, the
Fund will experience a gain or loss which will not be completely
offset by movements in the price of the currencies which are the
subject of the hedge. Unanticipated changes in currency prices
may result in poorer overall performance for the Fund than if it
had not entered into such contract. Transactions in options and
options on futures contracts involve similar risks. The
successful use of such instruments draws upon the Adviser's
special skills with respect to such instruments and usually
depends on the Adviser's ability to forecast currency exchange
rate movements correctly.
Other risks inherent in the use of these forward,
futures and options on futures strategies include: imperfect
correlation between movements in the prices of futures contracts
or options thereon and movements in the exchange rates of the
currencies hedged, the fact that skills and techniques needed to
trade futures contracts and options thereon are different from
those needed to select equity securities, no assurance that a
liquid secondary market will exist for any particular futures
contract or option thereon at any particular time, the fact that
some futures markets have daily price movements limits, and the
possible need to defer closing out of certain futures contracts
and options thereon in order to continue to qualify for
beneficial tax treatment under the Internal Revenue Code of 1986,
as amended (the "Code") (which requires the Fund to limit its
gains from the disposition of securities and certain other
investments held for less than three months to no more than 30%
of the Fund's annual gross income). There are similar risks
inherent in the use of options on foreign currencies.
Prior to exercise or expiration, an exchange-traded
option position written by the Fund can only be terminated by
entering into a closing purchase or sale transaction. This
requires a secondary market on an exchange for call or put
options of the same series. The Fund will enter into an option
or futures transaction on an exchange only if there appears to be
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a liquid secondary market for such options or futures. However,
there can be no assurance that a liquid secondary market will
exist for any particular call or put option or futures contract
at any specific time. Thus, it may not be possible for the Fund
to close a particular option or futures position. The Fund will
acquire only unlisted options for which management believes the
Fund can receive on each business day at least two independent
bids or offers (one of which will be from an entity other than a
party to the option). In the case of a futures position, in the
event of adverse price movements, the Fund would continue to be
required to make daily cash payments of variation margin. In
such situations, if the Fund has insufficient cash, it may have
to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so.
In addition, the Fund may be required to take or make delivery of
the currency underlying the currency futures contracts it holds.
The inability to close options and futures positions also could
have an adverse impact on the Fund's ability to effectively hedge
its portfolio. There is also the risk of loss by the Fund of
margin deposits in the event of the bankruptcy of a broker with
whom the Fund has an open position in the futures contract or
related option.
The exchanges on which the Fund intends to conduct
options transactions have generally established "position limits"
which are limitations governing the maximum number of call or put
options on the same underlying currency (whether or not covered)
which may be written by a single investor, whether acting alone
or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written
on one or more accounts or through one or more brokers).
"Trading limits" are imposed on the maximum number of contracts
which any person may trade on a particular trading day. An
exchange may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or
restrictions. The Adviser does not believe that these position
and trading limits will have any adverse impact on the portfolio
strategies for hedging the Fund's portfolio. On the other hand,
the protections afforded to exchange participants by position and
trading limits are not available with respect to transactions in
unlisted options.
Lending of Portfolio Securities. In order to increase
income, the Fund may from time to time lend portfolio securities
to brokers, dealers and financial institutions and receive
collateral in the form of liquid assets or bank letters of
credit. Under the Fund's procedures, collateral for such loans
must be maintained at all times in an amount equal to at least
100% of the market value of the loaned securities (including
interest accrued on the loaned securities) adjusted (marking-to-
market) with the borrower each day the securities are on loan to
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provide for price fluctuations. The interest accruing on the
loaned securities will be paid to the Fund and the Fund will have
the right, on demand, to call back the loaned securities. The
Fund may pay fees to arrange the loans. The Fund will neither
lend portfolio securities in excess of 30% of the value of its
total assets nor lend its portfolio securities to any officer,
director, employee or affiliate of the Fund or the Adviser.
While such securities are on loan, the borrower will pay
the Fund any income earned thereon and the Fund may invest any
cash collateral in portfolio securities, thereby earning
additional income, or receive an agreed upon amount of income
from a borrower who has delivered equivalent collateral. The
Fund will not lend its portfolio securities if such loans are not
permitted by the laws or regulations of any state within which
its shares are qualified for sale. Loans will be subject to
termination by the Fund in the normal settlement time, currently
five business days after notice, or by the borrower on one day's
notice. Although voting rights may pass with the loaned
securities, if a material event affecting the investment is to be
voted on, the loan must be terminated and the securities voted by
the Fund. Borrowed or equivalent securities must be returned
when the loan is terminated. Any gain or loss in the market
price of the borrowed securities that occurs during the term of
the loan inures to the Fund and its shareholders. The Fund may
pay reasonable finders', borrowers', administrative, and
custodial fees in connection with a loan. The Board of
Directors will monitor the Fund's lending of portfolio
securities.
ADRs and EDRs. In addition to purchasing corporate
securities of non-U.S. issuers in overseas securities markets,
the Fund may invest in American Depository Receipts (ADRs),
European Depository Receipts (EDRs) or other securities
representing securities of companies based in countries other
than the United States. Transactions in these securities may not
necessarily be settled in the same currency as transactions in
the securities into which they represent. Generally, ADRs, in
registered form, are designed for use in the U.S. securities
markets and EDRs, in bearer form, are designed for use in
European securities markets.
Portfolio Turnover. Generally, the Fund's policy with
respect to portfolio turnover is to purchase securities with a
view to holding them for periods of time sufficient to assure
long-term capital gains treatment upon their sale and not for
trading purposes. However, it is also the Fund's policy to sell
any security whenever, in the judgment of the Fund's Adviser, its
appreciation possibilities have been substantially realized or
the business or market prospects for such security have
deteriorated, irrespective of the length of time that such
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security has been held. This policy may result in the Fund
realizing short-term capital gains or losses on the sale of
certain securities. See "Dividends, Distributions and Taxes." It
is anticipated that the Fund's rate of portfolio turnover will
approximate 100% in future years. A 100% annual turnover rate
would occur, for example, if all the stocks in the Fund's
portfolio were replaced within a period of one year. A portfolio
turnover rate approximating 100% involves correspondingly greater
brokerage commission expenses than would a lower rates, which
expenses must be borne by the Fund and its shareholders.
Certain Fundamental Investment Policies. The following
restrictions may not be changed without shareholder approval,
which means the affirmative vote of the holders of(a) 67% or more
of the shares represented at a meeting at which more than 50% of
the outstanding shares are represented or (b) more than 50% of
the outstanding shares, whichever is less. Whenever any
investment restriction states a maximum percentage of the Fund's
assets which may be invested in any security or other asset, it
is intended that such maximum percentage limitation be determined
immediately after and as a result of the Fund's acquisition of
such securities or other assets. Accordingly, any later increase
or decrease in percentage beyond the specified limitation
resulting from a change in values or net assets will not be
considered a violation.
The Fund may not:
(i) purchase the securities of any one issuer, other
than the U.S. Government or any of its agencies
or instrumentalities, if immediately after such
purchase more than 5% of the value of its total
assets would be invested in such issuer or the
Fund would own more than 10% of the outstanding
voting securities of such issuer, except that up
to 25% of the value of the Fund's total assets
may be invested without regard to such 5% and 10%
limitations;
(ii) invest 25% or more of the value of its total
assets in the same industry; this restriction
does not apply to U.S. Government securities, but
will apply to foreign government securities
unless the U.S. Securities and Exchange
Commission (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;
14
<PAGE>
(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;
(v) purchase a security (unless the security is
acquired pursuant to a plan of reorganization or
an offer of exchange) if, as a result, the Fund
would own any securities of an open-end
investment company or more than 3% of the total
outstanding voting stock of any closed-end
investment company, or more than 5% of the value
of the Fund's total assets would be invested in
securities of any closed-end investment company
or more than 10% of such value in closed-end
investment companies in the aggregate;
(vi) invest in companies for the purpose of exercising
control;
(vii) purchase or sell real estate, except that it may
purchase and sell securities of companies which
deal in real estate or interests therein;
(viii) purchase or sell commodities or commodity
contracts (except foreign currencies, foreign
currency options and futures and forward
contracts or contracts for the future acquisition
or delivery of foreign currencies and related
options on futures contracts and other similar
contracts);
(ix) invest in interests in oil, gas, or other mineral
exploration or development programs, except that
it may purchase and sell securities of companies
that deal in oil, gas or other mineral
exploration or development programs;
(x) purchase securities on margin, except for such
short-term credits as may be necessary for the
clearance of transactions; or
(xi) act as an underwriter of securities, except that
the Fund may acquire securities in private
15
<PAGE>
placements under circumstances in which, if such
securities were sold, the Fund might be deemed to
be an underwriter within the meaning of the
Securities Act of 1933, as amended (the
"Securities Act").
In addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in
certain states, the Fund may not invest in mineral leases nor may
the Fund invest in real estate limited partnerships.
_______________________________________________________________
MANAGEMENT OF THE FUND
_______________________________________________________________
Adviser
Alliance Capital Management L.P., a Delaware limited
partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision of the Fund's Board of Directors (see "Management of
the Fund" in the Prospectus).
The Adviser is a leading international investment
manager supervising client accounts with assets as of
December 31, 1998, totaling more than $286 billion (of which more
than $118 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. The 54
registered investment companies managed by the Adviser,
comprising 118 separate investment portfolios, currently have
more than 3.5 million shareholder accounts. As of December 31,
1998, the Adviser and its subsidiaries employed approximately
2,000 employees who operate out of domestic offices and the
offices of subsidiaries in Bahrain, Bangalore, Cairo, Chennai,
Hong Kong, Istanbul, Johannesburg, London, Luxembourg, Madrid,
Moscow, Mumbai, New Delhi, Paris, Pune, Sao Paolo, Seoul,
Singapore, Sydney, Tokyo, Toronto, Vienna and Warsaw. As of
December 31, 1998, the Adviser was retained as an investment
manager for employee benefit plan assets of 35 of the FORTUNE 100
companies.
Alliance Capital Management Corporation ("ACMC"), the
sole general partner of, and the owner of a 1% general
partnership interest in the Adviser, is an indirect wholly-owned
subsidiary of the Equitable Life Assurance Society of the United
16
<PAGE>
States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of the
Equitable Companies Incorporated ("ECI"). ECI is a holding
company controlled by AXA-UAP ("AXA") a French insurance holding
company which at March 1, 1998, beneficially owned approximately
59% of the outstanding voting shares of ECI. As of June 30,
1998, 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%
of the issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser.
AXA is a 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
principally in Western Europe, North America and the Asia/Pacific
area. AXA is also engaged in asset management, investment
banking, securities trading, brokerage, real estate and other
financial services activities principally in the United States,
as well as in Western Europe and the Asia/Pacific area.
Based on information provided by AXA, as of March 31,
1998, more than 30% of the voting power of AXA was controlled
directly and indirectly by FINAXA, a French holding company. As
of March 31, 1998 approximately 74% of the voting power of FINAXA
was controlled directly and indirectly by four French mutual
insurance companies (the "Mutuelles AXA"), one of which, AXA
Assurances I.A.R.D. Mutuelle, itself controlled directly and
indirectly more than 42% of the voting power of FINAXA. Acting
as a group, the Mutuelles AXA control AXA and FINAXA.
Under the Management Agreement, the Adviser furnishes
advice and recommendations with respect to the Fund's portfolio
of securities and investments and provides persons satisfactory
to the Board of Directors to act as officers and employees of the
Fund. Such officers and employees, as well as certain Directors
of the Fund may be employees of the Adviser or its affiliates.
The Adviser is, under the Management Agreement,
responsible for certain expenses incurred by the Fund, including,
for example, the costs of clerical and accounting assistance to
the Directors and expenses of office rental. The Fund has, under
the Management Agreement, assumed the obligation for payment of
all of its other expenses.
For the services rendered by the Adviser under the
Management Agreement, the Fund pays a monthly fee to the Adviser
at the annual rate of 1.00% of the average daily net assets of
17
<PAGE>
the Fund during the month. The Fund may utilize personnel
employed by the Adviser or by other subsidiaries of Equitable.
The Fund may employ its own personnel or contract for services to
be performed by third parties. In such event, the services will
be provided to the Fund at cost and the payments specifically
approved by the Fund's Board of Directors. The Fund paid to the
Adviser a total of $135,500 in respect of such services during
the fiscal year of the Fund ended July 31, 1998.
For the fiscal years ended in 1996, 1997 and 1998, the
Adviser received from the Fund management fees of $772,166,
$1,054,834 and $1,347,278, respectively.
The Management Agreement became effective on July 22,
1992. The Management Agreement was approved by the unanimous
vote, cast in person, of the Fund's Directors (including the
Directors who are not parties to the Management Agreement or
interested persons, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), of any such party) at a
meeting called for the purpose and held on October 17, 1991. At
a meeting held on June 11, 1992, a majority of the outstanding
voting securities of the Fund approved the Management Agreement.
The Management Agreement must be approved each year
either by (a) a majority vote of the Board of Directors of the
Fund or (b) a majority vote of the outstanding voting securities
of the Fund, and, in either case, by majority vote of the
Directors who are neither parties to the Management Agreement nor
"interested persons" of any such party (as defined by the 1940
Act), cast in person at a meeting called for the purpose of
voting on such approval. Any changes in the terms of the
Management Agreement must be approved by the shareholders. Most
recently, the continuance of the Management Agreement until
September 30, 1999 was approved by a vote, cast in person, of the
Directors, including a majority of the Directors who were not
parties to the Management Agreement or "interested persons" of
any such party, at a meeting called for that purpose on July 16,
1998.
The Management Agreement automatically terminates upon
its assignment. In addition, the Management Agreement is
terminable at any time without penalty by the Board of Directors
of the Fund or by vote of a majority of the Fund's outstanding
voting securities on 60 days written notice to the Adviser or by
the Adviser on any January 1 on 60 days written notice to the
Fund. The term "majority of the Fund's outstanding voting
securities" as used above means (i) 67% or more of the
outstanding shares present at a meeting, if the holders of more
than 50% of the outstanding shares of the Fund are represented at
the meeting or (ii) more than 50% of the outstanding shares of
the Fund, whichever is less.
18
<PAGE>
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The Adviser
may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients
simultaneously with the Fund. If transactions on behalf of more
than one client during the same period increase the demand for
securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. It is
the policy of the Adviser to allocate advisory recommendations
and the placing of orders in a manner which is deemed equitable
by the Adviser to the accounts involved, including the Fund.
When two or more of the clients of the Adviser (including the
Fund) are purchasing or selling the same security on a given day
from the same broker-dealer, such transactions may be averaged as
to price.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to AFD Exchange Reserves, Alliance All-
Asia Investment Fund, Inc., Alliance Balanced Shares, Inc.,
Alliance Bond Fund, Inc., Alliance Capital Reserves, Alliance
Global Strategic Income Trust, Inc., Alliance Global Dollar
Government Fund, Inc., Alliance Global Environment Fund, Inc.,
Alliance Government Reserves, Alliance Greater China '97 Fund,
Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield
Fund, Inc., Alliance Institutional Funds, Inc., Alliance
Institutional Reserves, Inc., Alliance International Fund,
Alliance International Premier Growth Fund, Inc., 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 Real Estate Investment
Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc.,
Alliance Select Investor Series, Inc., Alliance Technology Fund,
Inc., Alliance Utility Income Fund, Inc., Alliance Variable
Products Series Fund, Inc., Alliance Worldwide Privatization
Fund, Inc., The Alliance Fund, Inc., The Alliance Portfolios 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 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.
19
<PAGE>
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,* 53, Chairman of the Board, is the
President, Chief Operating Officer and a Director of ACMC, with
which he has been associated since prior to 1994.
RUTH BLOCK, 67, was formerly an Executive Vice President
and the Chief Insurance Officer of Equitable. She is a Director
of Ecolab Incorporated (specialty chemicals) and BP Amoco
Corporation (oil and gas). Her address is 75 Briar Woods Trail,
Stamford, Connecticut 06903.
DAVID H. DIEVLER, 69, is an independent consultant. He
was formerly a Senior Vice President of ACMC until December 1994.
His address is P.O. Box 167, Spring Lake, New Jersey 07762.
JOHN H. DOBKIN, 56, has been the President of Historic
Hudson Valley (historic preservation) since prior to 1994.
Previously, he was Director of the National Academy of Design.
His address is 150 White Plains Road, Tarrytown, New York 10591.
WILLIAM H. FOULK, JR., 66, is an Investment Adviser and
an independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1994. His address is
Room 100, 2 Greenwich Plaza, Greenwich, Connecticut 06830.
DR. JAMES M. HESTER, 74, is President of the Harry Frank
Guggenheim Foundation, with which he has been associated since
prior to 1994. He was formerly President of New York University,
the New York Botanical Garden and Rector of the United Nations
University. His address is 25 Cleveland Lane, Princeton, New
Jersey 08540.
CLIFFORD L. MICHEL, 59, is a member of the law firm of
Cahill Gordon & Reindel, with which he has been associated since
prior to 1994. He is President and Chief Executive Officer of
____________________
* An "interested person" of the Fund as defined in the 1940
Act.
20
<PAGE>
Wenonah Development Company (investments) and a Director of
Placer Dome, Inc. (mining). His address is St. Bernard's Road,
Gladstone, New Jersey 07934.
DONALD J. ROBINSON, 64, is Senior Counsel to the law
firm of Orrick, Herrington & Sutcliffe and was formerly a senior
partner and a member of the Executive Committee of that firm. He
was also a Trustee of the Museum of the City of New York from
1977 to 1995. His address is 98 Hell's Peak Road, Weston,
Vermont 05161.
Officers
JOHN D. CARIFA, Chairman and President, see biography
above.
ALDEN M. STEWART, Senior Vice President - Investments,
51, has been an Executive Vice President of ACMC since July,
1993. Prior thereto he was associated with ECMC.
KATHLEEN A. CORBERT, Senior Vice President, 38, is an
Executive Vice President of ACMC, with which she has been
associated since prior to 1994.
RANDALL E. HAASE, Vice President, 34, is a Vice
President of ACMC, with which he has been associated since prior
to 1994.
RONALD L. SIMCOE, Vice President, 52, is a Vice
President of ACMC, with which he has been associated since July,
1993.
THOMAS BARDONG, Vice President, 53, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1994.
EDMUND P. BERGAN, JR., Secretary, 48, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and Alliance Fund Services, Inc. ("AFS"), with which
he has been associated since prior to 1994.
MARK D. GERSTEN, Treasurer and Chief Financial Officer,
48, is a Senior Vice President of AFS, with which he has been
associated since prior to 1994.
ANDREW L. GANGOLF, Assistant Secretary, 44, is a Vice
President and Assistant General Counsel of AFD, with which he has
been associated since December 1994. Prior thereto he was a Vice
President and Assistant Secretary of Delaware Management Company,
Inc.
21
<PAGE>
DOMENICK PUGLIESE, Assistant Secretary, 37, is a Vice
President and Assistant General Counsel of AFD, with which he has
been associated since May 1995. Prior thereto, he was a Vice
President and Counsel of Concord Holding Corporation since 1994,
Vice President and Associate General Counsel of Prudential
Securities since prior to 1994.
EMILIE D. WRAPP, Assistant Secretary, 42, is a Vice
President and Assistant General Counsel of AFD, with which she
has been associated since prior to 1994.
VINCENT S. NOTO, Controller and Chief Accounting
Officer, 34, is a Vice President of AFS, with which he has been
associated since prior to 1994.
The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended July 31, 1998, the
aggregate compensation paid to each of the Directors during
calendar year 1998 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 (and separate investment portfolios within
those 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.
22
<PAGE>
Total Number
Total Number of Investment
of Investment Portfolios
Companies in Within the
the Alliance Alliance Fund
Total Fund Complex, Complex,
Compensation Including the Including the
From the Fund, as to Fund, as to
Alliance Fund which the which the
Aggregate Complex, Director is a Director is
Compensation Including the Director or a Director
Name of Director From the Fund Fund Trustee or Trustee
________________ _____________ _____________ _____________ _____________
John D. Carifa $0 $-0- 50 114
Ruth Block $4,058 $180,763 37 77
David H. Dievler $4,059 $216,288 43 80
John H. Dobkin $4,025 $185,363 41 91
William H. Foulk, Jr. $4,055 $241,003 45 109
Dr. James M. Hester $4,062 $172,913 37 74
Clifford L. Michel $4,062 $187,763 38 90
Donald J. Robinson $3,986 $192,439 41 103
As of January 8, 1999, the Directors and officers of the
Fund as a group owned 12.1% of the Advisor Class shares of the
Fund and less than 1% of any other class of 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 shares and to permit the Fund to pay distribution
services fees to defray expenses associated with the distribution
of its Class A shares, Class B shares and Class C shares in
accordance with a plan of distribution which is included in the
Agreement and has been duly adopted and approved in accordance
with Rule 12b-1 adopted by the Commission under the 1940 Act (the
"Rule 12b-1 Plan").
In approving the Agreement, the Directors of the Fund
determined that there was a reasonable likelihood that the
Agreement would benefit the Fund and its shareholders. The
distribution services fee of a particular class will not be used
23
<PAGE>
to subsidize the provision of distribution services with respect
to any other class.
During the Fund's fiscal year ended July 31, 1998, with
respect to Class A shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $261,526, which constituted approximately .30%, of the average
daily net assets attributable to the Class A Shares during the
year and the Adviser made payments from its own resources, as
described above, aggregating $147,439. Of the $408,965 paid by
the Fund and the Adviser under the Plan with respect to Class A
shares, $41,757 was spent on advertising, $3,971 on printing and
mailing of prospectuses for persons other than current
shareholders, $227,134 for compensation to broker-dealers and
other financial intermediaries (including $83,424 to the Fund's
Principal Underwriter), $11,717 for compensation to sales
personnel and $124,386 was spent on printing of sales literature,
travel, entertainment, due diligence and other promotional
expenses.
During the Fund's fiscal year ended July 31, 1998, with
respect to Class B shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $379,215, which constituted approximately 1.07% of the average
daily net assets attributable to Class B Shares during the year
and the Adviser made payments from its own resources, as
described above, aggregating $538,577. Of the $917,792 paid by
the Fund and the Adviser under the Plan with respect to Class B
shares, $48,583 was spent on advertising, $3,035 on printing and
mailing of prospectuses for persons other than current
shareholders, $661,888 for compensation to broker- dealers and
other financial intermediaries (including $105,491 to the Fund's
Principal Underwriter), $11,789 for compensation to sales
personnel, $152,448 was spent on printing of sales literature,
travel, entertainment, due diligence and other promotional
expenses and $40,049 was spent on Class B share financing.
During the Fund's fiscal year ended July 31, 1998, with
respect to Class C shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $92,628 which constituted approximately 1.0%, annualized, of
the average daily net assets attributable to the Class C shares
during the year and the Adviser made payments from its own
resources, as described above, aggregating $89,705. Of the
$182,333 paid by the Fund and the Adviser under the Plan with
respect to Class C shares, $13,355 was spent on advertising, $376
on printing and mailing of prospectuses for persons other than
current shareholders, $115,182 for compensation to broker-
dealers and other financial intermediaries (including $27,859 to
the Fund's Principal Underwriter), $2,705 for compensation to
sales personnel and $41,012 was spent on printing of sales
24
<PAGE>
literature, travel, entertainment, due diligence and other
promotional expenses and $9,703 was spent on Class C share
financing.
Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge, and at the same time to permit the
Principal Underwriter to compensate broker-dealers in connection
with the sale of such shares. In this regard the purpose and
function of the combined contingent deferred sales charge and
distribution services fee on the Class B shares and Class C
shares are the same as those of the initial sales charge and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and distribution services fee
provide for the financing of the distribution of the relevant
class of the Fund's shares.
In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares,
Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.
The Agreement will continue in effect for successive
twelve-month periods (computed from each October 1) provided,
however, that such continuance is specifically approved at least
annually by the Directors, or by vote of the holders of a
majority of the Fund's outstanding voting securities (as defined
in the 1940 Act), of that class, and in either case, by a
majority of the Directors who are not parties to the Agreement or
interested persons, as defined in the 1940 Act, of any such party
(other than as directors of the Fund) and who have no direct or
indirect financial interest in the operation of the Rule 12b-1
plan or any agreement related thereto. Most recently the
continuance of the Agreement was approved until September 30,
1999 by a vote, cast in person, of the Board of Directors,
including a majority of the Directors who are not "interested
persons", as defined in the 1940 Act, at their Regular Meeting
held on July 16, 1998.
The Adviser may, from time to time and from its own
funds or such other resources as may be permitted by rules of the
Commission, make payments for distribution services to the
25
<PAGE>
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance.
Unreimbursed distribution expenses incurred as of the
end of the Fund's most recently completed fiscal year, and
carried over for reimbursement in future years in respect of the
Class B and Class C shares for the Fund were, respectively,
$2,594,264 (6.68% of the net assets of Class B) and $676,624
(7.14% of the net assets of Class C).
The Rule 12b-1 Plan is in compliance with rules of the
National Association of Securities Dealers, Inc. which
effectively limit the annual asset-based sales charges and
service fees that a mutual fund may pay on a class of shares to
.75% and .25%, respectively, of the average annual net assets
attributable to that class. The rules also limit the aggregate of
all front-end, deferred and asset-based sales charges imposed
with respect to a class of shares by a mutual fund that also
charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per
annum.
The Glass-Steagall Act and other applicable laws may
limit the ability of a bank or other depository institution to
become an underwriter or distributor of securities. However, in
the opinion of the Fund's 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
Agreement. 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.
Transfer Agency Agreement
Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser located at 500 Plaza Drive, Secaucus,
New Jersey 07904, receives a transfer agency fee per account
holder of each of the Class A shares, Class B shares, Class C
shares and Advisor Class shares of the Fund, plus reimbursement
for out-of-pocket expenses. The transfer agency fee with respect
to the Class B and Class C shares is higher than the transfer
agency fee with respect to the Class A and Advisor Class shares,
reflecting the additional costs associated with the Class B and
Class C contingent deferred sales charge. During the fiscal year
ended in 1998, the Fund paid Alliance Fund Services, Inc.
$309,875 for transfer agency services.
26
<PAGE>
_______________________________________________________________
PURCHASE OF SHARES
_______________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How to Buy Shares."
General
Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), without any
initial sales charge and, as long as the shares are held for one
year or more, without any contingent deferred sales charge
("Class C shares"), or, to investors eligible to purchase Advisor
Class shares, without any initial, contingent deferred or asset-
based sales charge, in each case as described below. Shares of
the Fund that are offered subject to a sales charge are offered
through (i) investment dealers that are members of the National
Association of Securities Dealers, Inc. and have entered into
selected dealer agreements with the Principal Underwriter
("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered
into selected agent agreements with the Principal Underwriter
("selected agents"), and (iii) the Principal Underwriter.
Advisor Class shares of the Fund may be purchased and
held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers
or other financial intermediaries and approved by the Principal
Underwriter, (ii) through self-directed defined contribution
employee benefit plans (e.g., 401(k) plans) that have at least
1,000 participants or $25 million in assets, (iii) by the
categories of investors described in clauses (i) through (iv)
below under "--Sales at Net Asset Value" (other than officers,
directors and present and full-time employees of selected dealers
or agents, or relatives of such person, or any trust, individual
retirement account or retirement plan account for the benefit of
such relative, all of whom are not eligible to purchase and hold
Advisor Class shares) or, (iv) by directors and present or
retired full-time employees of CB Richard Ellis, Inc. Generally,
a fee-based program must charge an asset-based or other similar
fee and must invest at least $250,000 in Advisor Class shares of
the Fund in order to be approved by the Principal Underwriter for
investment in Advisor Class shares.
Investors may purchase shares of the Fund either through
selected broker-dealers, agents, financial intermediaries or
27
<PAGE>
other financial representatives or directly through the Principal
Underwriter. A transaction, service, administrative or other
similar fee may be charged by your broker-dealer, agent,
financial intermediary or other financial representative with
respect to the purchase, sale or exchange of shares made through
such financial representative. Such financial representative may
also impose requirements with respect to the purchase, sale or
exchange of shares that are different from, or in addition to,
those imposed by the Fund, including requirements as to the
minimum initial and subsequent investment amounts. Sales
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B, Class C or Advisor Class shares.
The Fund may refuse any order for the purchase of
shares. The Fund reserves the right to suspend the sale of its
shares to the public in response to conditions in the securities
markets or for other reasons.
The public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares, a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below under
"Class A Shares." On each Fund business day on which a purchase
or redemption order is received by the Fund and trading in the
types of securities in which the Fund invests might materially
affect the value of Fund shares, the per share net asset value is
computed in accordance with the Fund's Articles of Incorporation
and By-Laws as of the next close of regular trading on the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m. 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 day on which the Exchange is open for
trading.
The respective per share net asset values of the
Class A, Class B, Class C and Advisor Class shares are expected
to be substantially the same. Under certain circumstances,
however, the per share net asset values of the Class B and
Class C shares may be lower than the per share net asset value of
the Class A and Advisor Class shares, as a result of the
differential daily expense accruals of the distribution and
transfer agency fees applicable with respect to those classes of
shares. Even under those circumstances, the per share net asset
values of the four classes eventually will tend to converge
immediately after the payment of dividends, which will differ by
approximately the amount of the expense accrual differential
among the classes.
The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
28
<PAGE>
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers, agents or financial representatives, as
applicable, the applicable public offering price will be the net
asset value as so determined, but only if the selected dealer,
agent or 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
selected dealer, agent or financial representative, as
applicable, is responsible for transmitting such orders by
5:00 p.m. Eastern time (certain selected dealers, agents or
financial representatives may enter into operating agreements
permitting them to transmit purchase information to the Principal
Underwriter after 5:00 p.m. Eastern time and receive that day's
net asset value). If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative, as
applicable. If the selected dealer, agent or financial
representative, as applicable, receives the order after the close
of regular trading on the Exchange, the price will be based on
the net asset value determined as of the close of regular trading
on the Exchange on the next day it is open for trading.
Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Except with respect to certain omnibus accounts,
telephone purchase orders may not exceed $500,000. Payment for
shares purchased by telephone can be made only by electronic
funds transfer from a bank account maintained by the shareholder
at a bank that is a member of the National Automated Clearing
House Association ("NACHA"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a
Fund business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day.
Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
29
<PAGE>
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.
In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash or other incentives to dealers or agents, in
connection with the sale of shares of the Fund. Such additional
amounts may be utilized, in whole or in part, to provide
additional compensation to registered representatives who sell
shares of the Fund. On some occasions, such cash or other
incentives will be conditioned upon the sale of a specified
minimum dollar amount of the shares of the Fund and/or other
Alliance Mutual Funds, as defined below, during a specific period
of time. On some occasions, such cash or other incentives may
take the form of payment for attendance at seminars, meals,
sporting events or theater performances, or payment for travel,
lodging and entertainment incurred in connection with travel
taken by persons associated with a dealer or agent to urban or
resort locations within or outside the United States. Such
dealer or agent may elect to receive cash incentives of
equivalent amount in lieu of such payments.
Class A, Class B, Class C and Advisor Class shares each
represent an interest in the same portfolio of investments of the
Fund, have the same rights and are identical in all respects,
except that (i) Class A shares bear the expense of the initial
sales charge (or contingent deferred sales charge, when
applicable) and Class B and Class C shares bear the expense of
the deferred sales charge, (ii) Class B and Class C shares each
bear the expense of a higher distribution services fee than do
Class A shares, and Advisor Class shares do not bear such a fee,
(iii) Class B and Class C shares bear higher transfer agency
costs than those borne by Class A and Advisor Class shares,
(iv) each of Class A, Class B and Class C shares has exclusive
voting rights with respect to provisions of the Rule 12b-1 Plan
pursuant to which its distribution services fee is paid and other
matters for which separate class voting is appropriate under
applicable law, provided that, if the Fund submits to a vote of
the Class A shareholders, an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder
with respect to the Class A shares, then such amendment will also
be submitted to the Class B and Advisor Class shareholders and
the Class A, Class B and Advisor Class shareholders will vote
separately by class and (v) Class B and Advisor Class shares are
subject to a conversion feature. Each class has different
30
<PAGE>
exchange privileges and certain different shareholder service
options available.
The Directors of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B, Class C and Advisor Class shares. On an ongoing basis,
the Directors of the Fund, pursuant to their fiduciary duties
under the 1940 Act and state law, will seek to ensure that no
such conflict arises.
Alternative Retail Purchase Arrangements -- Class A, Class B and
Class C Shares.**
Class A, Class B and Class C shares have the following
alternative purchase arrangements: Class A shares are sold to
investors choosing the initial sales charge alternative, Class B
shares are sold to investors choosing the deferred sales charge
alternative, and Class C shares are sold to investors choosing
the asset-based sales charge alternative. These alternative
purchase arrangements permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the
shares, and other circumstances. Investors should consider
whether, during the anticipated life of their investment in the
Fund, the accumulated distribution services fee and contingent
deferred sales charges on Class B shares prior to conversion, or
the accumulated distribution services fee and contingent deferred
sales charges on Class C shares, would be less than the initial
sales charge and accumulated distribution services fee on Class A
shares purchased at the same time, and to what extent such
differential would be offset by the higher return of Class A
shares. Class A shares will normally be more beneficial than
Class B shares to the investor who qualifies for reduced initial
sales charges on Class A shares, as described below. In this
regard, the Principal Underwriter will reject any order (except
orders from certain retirement plans and certain employee benefit
plans) for more than $250,000 for Class B shares. (See
Appendix A for information concerning the eligibility of certain
employee benefit plans to purchase Class B shares at net asset
value without being subject to a contingent deferred sales charge
and the ineligibility of certain such plans to purchase Class A
shares.) Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at net asset
value. For this reason, the Principal Underwriter will reject
any order for more than $1,000,000 for Class C shares.
____________________
** Advisor Class shares are sold only to investors described
above in this section under "General."
31
<PAGE>
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.
Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and
being subject to a contingent deferred sales charge for a four-
year and one-year period, respectively. For example, based on
current fees and expenses, an investor subject to the 4.25%
initial sales charge on Class A shares would have to hold his or
her investment approximately seven years for the Class C
distribution services fee to exceed the initial sales charge plus
the accumulated distribution services fee of Class A shares. In
this example, an investor intending to maintain his or her
investment for a longer period might consider purchasing Class A
shares. This example does not take into account the time value
of money, which further reduces the impact of the Class C
distribution services fees on the investment, fluctuations in net
asset value or the effect of different performance assumptions.
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.
During the Fund's fiscal year ended July 31, 1998,
July 31, 1997 and July 31, 1996, the aggregate amount of
underwriting commissions paid with respect to shares of the Fund
were $135,268, $268,095 and $136,901, respectively. Of that
amount, the Principal Underwriter, received $8,313, 10,485 and
$8,247, respectively, representing that portion of the sales
charges paid on shares of the Fund sold during the year which was
not reallowed to selected dealers or agents (and was,
accordingly, retained by the Principal Underwriter). During the
Fund's fiscal years ended in 1998, 1997 and 1996, the Principal
Underwriter received contingent deferred sales charges of $3, $0
32
<PAGE>
and $0, respectively, on Class A Shares, $100,848, $27,720 and
$11,791, respectively, on Class B shares, and $2,747, $1,969 and
$0, respectively, on Class C shares.
Class A Shares
The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below.
Sales Charge
Discount or
Commission
As % of to Dealers
As % of the Public or Agents
Amount of Net Amount Offering as % of
Purchase Invested Price Offering Price
_________ __________ __________ ______________
Less than
$100,000 4.44% 4.25% 4.00%
$100,000 but
less than
$250,000 3.36 3.25 3.00
$250,000 but
less than
$500,000 2.30 2.25 2.00
$500,000 but
less than
$1,000,000* 1.78 1.75 1.50
____________________
* There is no initial sales charge on transactions of $1,000,000
or more.
With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, as described below under "--Class B
Shares." In determining the contingent deferred sales charge
applicable to a redemption of Class A shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because an
initial sales charge was paid with respect to the shares, or they
have been held beyond the period during which the charge applies
33
<PAGE>
or were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge. Proceeds from the
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment
of compensation to selected dealers and agents for selling
Class A shares. With respect to purchases of $1,000,000 or more
made through selected dealers or agents, the Adviser may,
pursuant to the Distribution Services Agreement described above,
pay such dealers or agents from its own resources a fee of up to
1% of the amount invested to compensate such dealers or agents
for their distribution assistance in connection with such
purchases.
No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" (as that term is
defined under "--Combined Purchase Privilege" below), except that
an initial sales charge will be imposed on Class A shares issued
in exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge or (iii) upon the automatic conversion of Class B
shares or Advisor Class shares as described below under "Class B
shares-- Conversion Feature" and "--Conversion of Advisor Class
shares to Class A shares." The Fund receives the entire net
asset value of its Class A shares sold to investors. The
Principal Underwriter's commission is the sales charge shown
above less any applicable discount or commission "reallowed" to
selected dealers and agents. The Principal Underwriter will
reallow discounts to selected dealers and agents in the amounts
indicated in the table above. In this regard, the Principal
Underwriter may elect to reallow the entire sales charge to
selected dealers and agents for all sales with respect to which
orders are placed with the Principal Underwriter. A selected
dealer who receives reallowance in excess of 90% of such a sales
charge may be deemed to be an "underwriter" under the Securities
Act.
Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but may be subject in most such cases to a
contingent deferred sales charge) or (ii) a reduced initial sales
charge. The circumstances under which such investors may pay a
reduced initial sales charge are described below.
34
<PAGE>
Combined Purchase Privilege. Certain persons may
qualify for the sales charge reductions indicated in the schedule
of such charges above by combining purchases of shares of the
Fund into a single "purchase", if the resulting "purchase" totals
at least $100,000. The term "purchase" refers to: (i) a single
purchase by an individual, or to concurrent purchases, which in
the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company", as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund." Currently,
the Alliance Mutual Funds include:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
35
<PAGE>
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios
-Alliance Growth Fund
-Alliance Conservative Investors Fund
-Alliance Growth Investors Fund
-Alliance Short-Term U.S. Government Fund
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
shown on the front cover of this Statement of Additional
Information.
Cumulative Quantity Discount (Right of Accumulation). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on
the previous day) of (a) all shares of the Fund
held by the investor and (b) all shares of any
other Alliance Mutual Fund held by the investor;
and
(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder
eligible to combine his or her purchase with that
of the investor into a single "purchase" (see
above).
36
<PAGE>
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the initial sales charge for the $100,000
purchase would be at the 2.25% rate applicable to a single
$300,000 purchase of shares of the Fund, rather than the 3.25%
rate.
To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.
Statement of Intention. Class A investors may also
obtain the reduced sales charges shown in the table above by
means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B,
Class C and/or Advisor Class shares) of the Fund or any other
Alliance Mutual Fund. Each purchase of shares under a Statement
of Intention will be made at the public offering price or prices
applicable at the time of such purchase to a single transaction
of the dollar amount indicated in the Statement of Intention. At
the investor's option, a Statement of Intention may include
purchases of shares of the Fund or any other Alliance Mutual Fund
made not more than 90 days prior to the date that the investor
signs a Statement of Intention; however, the 13-month period
during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to
invest a total of $60,000 during the following 13 months in
shares of the Fund or any other Alliance Mutual Fund, to qualify
for the 3.25% sales charge on the total amount being invested
(the sales charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated. The
minimum initial investment under a Statement of Intention is 5%
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher sales
charge applicable to the shares actually purchased if the full
37
<PAGE>
amount indicated is not purchased, and such escrowed shares will
be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow
will be released. To the extent that an investor purchases more
than the dollar amount indicated on the Statement of Intention
and qualifies for a further reduced sales charge, the sales
charge will be adjusted for the entire amount purchased at the
end of the 13-month period. The difference in the sales charge
will be used to purchase additional shares of the Fund subject to
the rate of sales charge applicable to the actual amount of the
aggregate purchases.
Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.
Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of sales charges set forth in this Statement
of Additional Information, to an investment 13 times larger than
such initial purchase. The sales charge applicable to each
succeeding monthly purchase will be that normally applicable,
under such schedule, to an investment equal to the sum of (i) the
total purchase previously made during the 13-month period and
(ii) the current month's purchase multiplied by the number of
months (including the current month) remaining in the 13-month
period. Sales charges previously paid during such period will
not be retroactively adjusted on the basis of later purchases.
Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A or Class B shares of the Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that
(i) such reinvestment is made within 120 calendar days after the
redemption or repurchase date and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinstatement of
such shares. Shares are sold to a reinvesting shareholder at the
net asset value next determined as described above. A
38
<PAGE>
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal income tax purposes
except that no loss will be recognized to the extent that the
proceeds are reinvested in shares of the Fund within 30 calendar
days after the redemption or repurchase transaction. Investors
may exercise the reinstatement privilege by written request sent
to the Fund at the address shown on the cover of this Statement
of Additional Information.
Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without an initial sales charge)
and without any contingent deferred sales charge to certain
categories of investors, including: (i) investment management
clients of the Adviser or its affiliates; (ii) officers and
present or former Directors of the Fund; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser, the Principal Underwriter, Alliance Fund Services, Inc.
and their affiliates; officers and directors of ACMC, the
Principal Underwriter, Alliance Fund Services, Inc. and their
affiliates; officers, directors and present and full-time
employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively "relatives")
of any such person; or any trust, individual retirement account
or retirement plan account for the benefit of any such person or
relative; or the estate of any such person or relative, if such
shares are purchased for investment purposes (such shares may not
be resold except to the Fund); (iii) the Adviser, Principal
Underwriter, Alliance Fund Services, Inc. and their affiliates;
certain employee benefit plans for employees of the Adviser, the
Principal Underwriter, Alliance Fund Services, Inc. and their
affiliates; (iv) registered investment advisers or other
financial intermediaries who charge a management, consulting or
other fee for their services and who purchase shares through a
broker or agent approved by the Principal Underwriter and clients
of such registered investment advisers or financial
intermediaries whose accounts are linked to the master account of
such investment adviser or financial intermediary on the books of
such approved broker or agent; (v) persons participating in a
fee-based program, sponsored and maintained by a registered
broker-dealer or other financial intermediary and approved by the
Principal Underwriter, pursuant to which such persons pay an
asset-based fee to such broker-dealer or financial intermediary,
or its affiliate or agent, for services in the nature of
investment advisory or administrative services; (vi) persons who
establish to the Principal Underwriter's satisfaction that they
are investing within such time period as may be designated by the
Principal Underwriter, proceeds of redemption of shares of such
other registered investment companies as may be designated from
time to time by the Principal Underwriter; and (vii) employer-
39
<PAGE>
sponsored qualified pensions or profit-sharing plans (including
Section 401(k) plans), custodial accounts maintained pursuant to
Section 403(b)(7) retirement plans and individual retirement
accounts (including individual retirement accounts to which
simplified employee pension ("SEP") contributions are made), if
such plans or accounts are established or administered under
programs sponsored by administrators or other persons that have
been approved by the Principal Underwriter.
Class B Shares
Investors may purchase Class B shares at the public
offering price equal to the net asset value per share of the
Class B shares on the date of purchase without the imposition of
a sales charge at the time of purchase. The Class B shares are
sold without an initial sales charge so that the Fund will
receive the full amount of the investor's purchase payment.
Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the
payment of compensation to selected dealers and agents for
selling Class B shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class B shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class B shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares.
Contingent Deferred Sales Charge. Class B shares that
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions.
To illustrate, assume that on or after November 19, 1993
an investor purchased 100 Class B shares at $10 per share (at a
cost of $1,000) and in the second year after purchase, the net
asset value per share is $12 and, during such time, the investor
has acquired 10 additional Class B shares upon dividend
reinvestment. If at such time the investor makes his or her first
redemption of 50 Class B shares (proceeds of $600), 10 Class B
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<PAGE>
shares will not be subject to charge because of dividend
reinvestment. With respect to the remaining 40 Class B shares,
the charge is applied only to the original cost of $10 per share
and not to the increase in net asset value of $2 per share.
Therefore, $400 of the $600 redemption proceeds will be charged
at a rate of 3.0% (the applicable rate in the second year after
purchase, as set forth below).
The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.
Contingent Deferred Sales Charge as a %
of Dollar Amount Subject to Charge
Shares Purchased Shares Purchased
Before On Or After
Years Since Purchase November 19, 1993 November 19, 1993
First 5.50% 4.0%
Second 4.50% 3.0%
Third 3.50% 2.0%
Fourth 2.50% 1.0%
Fifth 1.50% None
Sixth 0.50% None
Seventh and thereafter None None
In determining the contingent deferred sales charge
applicable to a redemption of Class B shares, it will be assumed
that the redemption is, first, of any shares that were acquired
upon the reinvestment of dividends or distributions and, second,
of shares held longest during the time they are subject to the
sales charge. When shares acquired in an exchange are redeemed,
the applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied at the time of the
purchase of shares of the corresponding class of the Alliance
Mutual Fund originally purchased by the shareholder.
The contingent deferred sales charge is waived on
redemptions of shares (i) following the death or disability, as
defined in the Code, of a shareholder, (ii) to the extent that
the redemption represents a minimum required distribution from an
individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2, (iii) that had
been purchased by present or former Directors of the Fund, by the
relative of any such person, by any trust, individual retirement
account or retirement plan account for the benefit of any such
person or relative, or by the estate of any such person or
41
<PAGE>
relative, or (iv) pursuant to a systematic withdrawal plan (see
"Shareholder Services--Systematic Withdrawal Plan" below).
Conversion Feature. Eight years after the end of the
calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A
shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the
relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The purpose
of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
compensated for distribution expenses incurred in the sale of
such shares.
For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.
The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that the conversion of Class B shares to Class A
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending eight years after the end of the calendar month in which
the shareholder's purchase order was accepted.
Class C Shares
Investors may purchase Class C shares at the public
offering price equal to the net asset value per share of the
Class C shares on the date of purchase without the imposition of
a sales charge either at the time of purchase or, as long as the
shares are held for one year or more, upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and, as long as the shares are held for one year or more, without
a contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
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<PAGE>
enables the Fund to sell Class C shares without either an initial
or contingent deferred sales charge, as long as the shares are
held for one year or more. Class C shares do not convert to any
other class of shares of the Fund and incur higher distribution
services fees than Class A shares, and will thus have a higher
expense ratio and pay correspondingly lower dividends than
Class A shares.
Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares
derived from reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge on Class C
shares will be waived on certain redemptions, as described above
under "--Class B Shares." In determining the contingent deferred
sales charge applicable to a redemption of Class C shares, it
will be assumed that the redemption is, first, of any shares that
are not subject to a contingent deferred sales charge (for
example, because the shares have been held beyond the period
during which the charge applies or were acquired upon the
reinvestment of dividends or distributions) and, second, of
shares held longest during the time they are subject to the sales
charge.
Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares.
Conversion of Advisor Class Shares to Class A Shares
Advisor Class shares may be held solely through the fee-
based program accounts and employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase of Shares-- General," and by
investment advisory clients of, and certain other persons
associated with, the Adviser and its affiliates or the Fund. If
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(i) a holder of Advisor Class shares ceases to participate in a
fee-based program or plan that satisfies the requirements to
purchase shares set forth under "Purchase of Shares--General" or
(ii) the holder is otherwise no longer eligible to purchase
Advisor Class shares as described in the Advisor Class Prospectus
and this Statement of Additional Information (each, a "Conversion
Event"), then all Advisor Class shares held by the shareholder
will convert automatically and without notice to the shareholder,
other than the notice contained in the Advisor Class Prospectus
and this Statement of Additional Information, to Class A shares
of the Fund during the calendar month following the month in
which the Fund is informed of the occurrence of the Conversion
Event. The failure of a shareholder or a fee-based program to
satisfy the minimum investment requirements to purchase Advisor
Class shares shall not constitute a Conversion Event. The
conversion would occur on the basis of the relative net asset
values of the two classes and without the imposition of any sales
load, fee or other charge. Class A shares currently bear a .30%
distribution services fee and have a higher expense ratio than
Advisor Class shares. As a result, Class A shares may pay
correspondingly lower dividends and have a lower net asset value
than Advisor Class shares. The conversion would occur on the
basis of the relative net asset values of the two classes and
without the imposition of any sales load, fee or other charge.
Class A shares currently bear a .30% distribution services fee
and have a higher expense ratio than Advisor Class shares. As a
result, Class A shares may pay correspondingly lower dividends
and have a lower net asset value than Advisor Class shares.
The conversion of Advisor Class shares to Class A shares
is subject to the continuing availability of an opinion of
counsel to the effect that the conversion of Advisor Class shares
to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Advisor Class shares
to Class A shares may be suspended if such an opinion is no
longer available at the time such conversion is to occur. In
that event, the Advisor Class shareholder would be required to
redeem his Advisor Class shares, which would constitute a taxable
event under federal income tax law.
_______________________________________________________________
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." If you are an Advisor Class
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
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<PAGE>
of the Fund that are different from those described herein. 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.
Redemption
Subject only to the limitations described below, the
Fund's Articles of Incorporation require that the Fund redeem the
shares tendered to it, as described below, at a redemption price
equal to their net asset value as next computed following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge which may be applicable
to Class A, Class B or Class C shares, there is no redemption
charge. Payment of the redemption price will be made within
seven days after the Fund's receipt of such tender for
redemption. 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 shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A, Class B and Class C
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.
To redeem shares of the Fund for which no share
certificates have been issued, the registered owner or owners
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<PAGE>
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 shares of the Fund represented by share
certificates, the investor should forward the appropriate share
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.
Telephone Redemption By Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption by electronic
funds transfer of shares for which no share certificates have
been issued by telephone at (800) 221-5672 by a shareholder who
has completed the appropriate portion of the Subscription
Application or, in the case of an existing shareholder, an
"Autosell" application obtained from AFS. 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 noted below, each Fund shareholder is
eligible to request redemption by check of Fund 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. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to AFS or by checking the appropriate box on the
Subscription Application found in the Prospectus.
Telephone Redemptions - 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
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<PAGE>
(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. Telephone
redemption is not available with respect to 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. Neither the Fund nor
the Adviser, the Principal Underwriter or Alliance Fund Services,
Inc. will be responsible for the authenticity of telephone
requests for redemptions that the Fund reasonably believes to be
genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine,
including, among others, recording such telephone instructions
and causing written confirmations of the resulting transactions
to be sent to shareholders. If the Fund did not employ such
procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a commission for handling telephone
requests for redemptions.
Repurchase
The Fund may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents. The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. Eastern time (certain
selected dealers, agents or financial representatives may enter
into operating agreements permitting them to transmit purchase
information to the Principal Underwriter after 5:00 p.m. Eastern
time and receive that day's net asset value). If the financial
intermediary or selected dealer or agent fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the dealer or agent. A
shareholder may offer shares of the Fund to the Principal
Underwriter either directly or through a selected dealer or
agent. Neither the Fund nor the Principal Underwriter charges a
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<PAGE>
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares). Normally, if
shares of the Fund are offered through a financial intermediary
or selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.
General
The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. No contingent
deferred sales charge will be deducted from the proceeds of this
redemption. In the case of a redemption or repurchase of shares
of the Fund recently purchased by check, redemption proceeds will
not be made available until the Fund is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.
_______________________________________________________________
SHAREHOLDER SERVICES
_______________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated. If you are an
Advisor Class 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
herein. 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.
Automatic Investment Program
Investors may purchase shares of the Fund through an
automatic investment program utilizing electronic funds transfer
drawn on the investor's own bank account. Under such a program,
pre-authorized monthly drafts for a fixed amount (at least $25)
are used to purchase shares through the selected dealer or
selected agent designated by the investor at the public offering
price next determined after the Principal Underwriter receives
48
<PAGE>
the proceeds from the investor's bank. In electronic form,
drafts can be made on or about a date each month selected by the
shareholder. Investors wishing to establish an automatic
investment program in connection with their initial investment
should complete the appropriate portion of the Subscription
Application found in the Prospectus. Current shareholders should
contact Alliance Fund Services, Inc. at the address or telephone
numbers shown on the cover of this Statement of Additional
Information to establish an automatic investment program.
Exchange Privilege
You may exchange your investment in the Fund for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by the Adviser).
In addition, (i) present officers and full-time employees of the
Adviser, (ii) present Directors or Trustees of any Alliance
Mutual Fund and (iii) certain employee benefit plans for
employees of the Adviser, the Principal Underwriter, Alliance
Fund Services, Inc. and their affiliates may, on a tax-free
basis, exchange Class A shares of the Fund for Advisor Class
shares of the Fund. Exchanges of shares are made at the net
asset value next determined and without sales or service charges.
Exchanges may be made by telephone or written request. Telephone
exchange requests must be received by Alliance Fund Services,
Inc. by 4:00 p.m. Eastern time on a Fund business day in order to
receive that day's net asset value.
Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
in the case of Class B shares, for the purpose of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.
Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call Alliance Fund Services, Inc. at (800) 221-5672 to exchange
uncertificated shares. Except with respect to exchanges of
Class A shares of the Fund for Advisor Class shares of the Fund,
exchanges of shares as described above in this section are
taxable transactions for federal income tax purposes. The
exchange service may be changed, suspended, or terminated on 60
days' written notice.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
49
<PAGE>
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date. Exchanges of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for federal income tax purposes.
Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless
Alliance Fund Services, Inc. receives written instruction to the
contrary from the shareholder, or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.
Exchanges of shares of Alliance Mutual Funds will generally
result in the realization of a capital gain or loss for federal
income tax purposes.
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
before 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 to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund. Auto Exchange transactions
50
<PAGE>
normally occur on the 12th day of each month, or the following
Fund business day prior thereto.
None of the Alliance Mutual Funds, the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
exchanges that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that
telephone requests for exchanges are genuine, including, among
others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to
shareholders. If the Fund did not employ such procedures, it
could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Selected dealers, agents or
financial representatives, as applicable may charge a commission
for handling telephone requests for exchanges.
The exchange privilege is available only in states where
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 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 "For Literature" telephone number on the cover of
this Statement of Additional Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
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<PAGE>
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.
If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan reaches $1 million
on or before December 15 in any year, all Class B or Class C
shares of the Fund held by the plan can be exchanged, at the
plan's request, without any sales charge, for Class A shares of
the Fund.
Simplified Employee Pension Plan ("SEP"). Sole
proprietors, partnerships and corporations may sponsor a SEP
under which they make annual tax-deductible contributions to an
IRA established by each eligible employee within prescribed
limits based on employee compensation.
403(b)(7) Retirement Plan. Certain tax-exempt
organizations and public educational institutions may sponsor
retirements plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable, which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to Alliance Fund Services, Inc. as compensation for its services
to the retirement plan accounts maintained with the Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact Alliance
Fund Services, Inc.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund accounts,
a Class A, Class B, Class C or Advisor Class account with one or
more other Alliance Mutual Funds may direct that income dividends
52
<PAGE>
and/or capital gains paid on the shareholder's Class A, Class B,
Class C or Advisor Class Fund shares be automatically reinvested,
in any amount, without the payment of any sales or service
charges, in shares of the same class of such other Alliance
Mutual Fund(s). Further information can be obtained by
contacting Alliance Fund Services, Inc. at the address or the
"For Literature" telephone number shown on the cover of this
Statement of Additional Information. Investors wishing to
establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases shares
of the Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.
Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions and, except as discussed
below, any applicable contingent deferred sales charge. Shares
acquired with reinvested dividends and distributions will be
liquidated first to provide such withdrawal payments and
thereafter other shares will be liquidated to the extent
necessary, and depending upon the amount withdrawn, the
investor's principal may be depleted. A systematic withdrawal
plan may be terminated at any time by the shareholder or the
Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to the Fund's involuntary redemption provisions. See
"Redemption and Repurchase of Shares--General." Purchases of
additional shares concurrently with withdrawals are undesirable
because of sales charges when purchases are made. While an
occasional lump-sum investment may be made by a holder of Class A
shares who is maintaining a systematic withdrawal plan, such
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<PAGE>
investment should normally be an amount equivalent to three times
the annual withdrawal or $5,000, whichever is less.
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "For Literature" telephone number shown on the cover of this
Statement of Additional Information.
CDSC Waiver for Class B and Class C Shares. Under a
systematic withdrawal plan, up to 1% monthly, 2% bi-monthly or 3%
quarterly of the value at the time of redemption of the Class B
or Class C shares in a shareholder's account may be redeemed free
of any contingent deferred sales charge.
With respect to Class B shares, the waiver applies only
with respect to shares acquired after July 1, 1995. Class B
shares that are not subject to a contingent deferred sales charge
(such as shares acquired with reinvested dividends or
distributions) will be redeemed first and will count toward the
foregoing limitations. Remaining Class B shares that are held
the longest will be redeemed next. Redemptions of Class B shares
in excess of the foregoing limitations will be subject to any
otherwise applicable contingent deferred sales charge.
With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.
Statements and Reports
Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent auditors, Ernst & Young LLP, as
well as a confirmation of each purchase and redemption. By
contacting his or her broker or Alliance Fund Services, Inc., a
shareholder can arrange for copies of his or her account
statements to be sent to another person.
54
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_______________________________________________________________
NET ASSET VALUE
_______________________________________________________________
The per share net asset value is computed in accordance
with the Fund's Articles of Incorporation and By-Laws at the next
close of regular trading on the Exchange (ordinarily 4:00 p.m.
Eastern time) following receipt of a purchase or redemption order
by the Fund on each Fund business day on which such an order is
received and on such other days as the Board of Directors deems
appropriate or necessary in order to comply with Rule 22c-1 under
the 1940 Act. The Fund's per share net asset value is calculated
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 on which the Exchange is open
for trading.
In accordance with applicable rules under the 1940 Act,
portfolio securities are valued at current market value or at
fair value as determined in good faith by the Board of Directors.
The Board of Directors has delegated to the Adviser certain of
the Board's duties with respect to the following procedures.
Readily marketable securities listed on the Exchange or on a
foreign securities exchange (other than foreign securities
exchanges whose operations are similar to those of the United
States over-the-counter market) are valued, except as indicted
below, at the last sale price reflected on the consolidated tape
at the close of the Exchange or, in the case of a foreign
securities exchange, at the last quoted sale price, in each case
on the business day as of which such value is being determined.
If there has been no sale on such day, the securities are valued
at the mean of the closing bid and asked prices on such day. If
no bid or asked prices are quoted on such day, then the security
is valued in good faith at fair value by, or in accordance with
procedures established by, the Board of Directors. Readily
marketable securities not listed on the Exchange or on a foreign
securities exchange but listed on other United States national
securities exchanges or traded on The Nasdaq Stock Market, Inc.
are valued in like manner. Portfolio securities traded on the
Exchange and on one or more foreign or other national securities
exchanges, and portfolio securities not traded on the Exchange
but traded on one or more foreign or other national securities
exchanges are valued in accordance with these procedures by
reference to the principal exchange on which the securities are
traded.
Readily marketable securities traded in the over-the-
counter market, securities listed on a foreign securities
exchange whose operations are similar to those of the United
States over-the-counter market, and securities listed on a U.S.
55
<PAGE>
national securities exchange whose primary market is believed to
be over-the-counter (but excluding securities traded on The
Nasdaq Stock Market, Inc.), are valued at the mean of the current
bid and asked prices as reported by Nasdaq or, in the case of
securities not quoted by Nasdaq, the National Quotation Bureau or
another comparable sources.
Listed put or call options purchased by the Fund are
valued at the last sale price. If there has been no sale on that
day, such securities will be valued at the closing bid prices on
that day.
Open futures contracts and options thereon will be
valued using the closing settlement price or, in the absence of
such a price, the most recent quoted bid price, If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used.
U.S. Government Securities and other debt instruments
having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less, or
by amortizing their fair value as of the 61st day prior to
maturity if their original term to maturity exceeded 60 days
(unless in either case the Board of Directors determines that
this method does not represent fair value).
Fixed-income securities may be valued on the basis of
prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
The prices provided by pricing service take into account many
factors, including institutional size trading in similar groups
of securities and any developments related to specific
securities.
All other assets of the Fund are valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors.
Trading in securities on Far Eastern and European
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each Fund business
day. In addition, trading in foreign markets may not take place
on all Fund business days. Furthermore, trading may take place
in various foreign markets on days that are not Fund business
days. The Fund's calculation of the net asset value per share,
therefore, does not always take place contemporaneously with the
most recent determination of the prices of portfolio securities
in these markets. Events affecting the values of these portfolio
securities that occur between the time their prices are
determined in accordance with the above procedures and the close
of the Exchange will not be reflected in the Fund's calculation
56
<PAGE>
of net asset value unless it is believed that these prices do not
reflect current market value, in which case the securities will
be valued in good faith by, or in accordance with procedures
established by, the Board of Directors at fair value.
The Board of Directors may suspend the determination of
the Fund's, net asset value (and the offering and sale of
shares), subject to the rules of the Commission and other
governmental rules and regulations, at a time when: (1) the
Exchange is closed, other than customary weekend and holiday
closings, (2) an emergency exists as a result of which it is not
reasonably practicable for the Fund to dispose of securities
owned by it or to determine fairly the value of its net assets,
or (3) for the protection of shareholders, the Commission by
order permits a suspension of the right of redemption or a
postponement of the date of payment on redemption.
For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in a
foreign currency will be converted into U.S. dollars at the mean
of the current bid and asked prices of such currency against the
U.S. dollar last quoted by a major bank that is a regular
participant in the relevant foreign exchange market or on the
basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If such quotations are
not available as of the close of the Exchange, the rate of
exchange will be determined in good faith by, or under the
direction of, the Board of Directors.
The assets attributable to the Class A shares, Class B
shares, Class C shares 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
liabilities allocated to that class from the assets belonging to
that class in conformance with the provisions of a plan adopted
by the Fund in accordance with Rule 18f-3 under the 1940 Act.
_______________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_______________________________________________________________
Dividends paid by the Fund, if any, with respect to
Class A, Class B, Class C and Advisor Class shares will be
calculated in the same manner at the same time on the same day
and will be in the same amount, except that the higher
distribution services applicable to Class B and C shares, and any
incremental transfer agency costs relating to Class B and Class C
shares, will be borne exclusively by the class to which they
relate.
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<PAGE>
The Fund intends to qualify to be taxed as a "regulated
investment company" under Sections 851-855 of the Internal
Revenue Code of 1986, as amended (the "Code"). To so qualify,
the Fund must, among other things, (i) derive at least 90% of its
gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or
other disposition of stock or securities or foreign currency, or
certain other income (including but not limited to gains from
options, futures and forward contracts) derived with respect to
its business of investing in stock, securities or currency; and
(ii) diversify its holdings so that, at the end of each quarter
of its taxable year, the following two conditions are met:
(a) at least 50% of the total value of the Fund's assets is
represented by cash, U.S. Government securities, securities of
other regulated investment companies and other securities (for
this purpose, such other securities will qualify only if the
Fund's investment is limited, in respect of any one issuer, to an
amount not greater than 5% of the Fund's total assets and 10% of
the outstanding voting securities of such issuer) and (b) not
more than 25% of the total value of the Fund's assets is invested
in securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment
companies).
The Treasury Department is authorized to issue
regulations to provide that foreign currency gains that are "not
directly related" to the Fund's principal business of investing
in stock or securities may be excluded from the income that
qualifies for purposes of the 90% gross income requirement
described above with respect to the Fund's qualification as a
"regulated investment company." No such regulations have yet
been issued.
If the Fund qualifies as a regulated investment company
and makes a timely distribution of 90% or more of its taxable net
investment company taxable income for that year (calculated
without regard to its net capital gain, i.e., the excess of its
net long-term capital gain over its net short-term capital loss),
it will not be subject to federal income tax on the portion of
its investment company taxable income (including any net capital
gain) that it distributes to its shareholders.
The Fund will also avoid the nondeductible 4% federal
excise tax that would otherwise apply to certain undistributed
income for a given calendar year if it meets certain minimum
distribution requirements by the end of each calendar year. For
this purpose, income or gain retained by the Fund that is subject
to corporate income tax will be considered to have been
distributed by the Fund by year-end. For purposes of the 4%
excise tax and federal income tax, dividends declared and payable
as of a date in October, November or December will be treated as
58
<PAGE>
if they were paid on December 31 of that year if the dividends
are actually paid during the following January.
In the case of corporate shareholders, a portion of the
Fund's dividends may be eligible for the dividends-received
deduction. The amount eligible for the deduction is limited to
the amount of qualifying dividends received by the Fund.
Dividends received from foreign corporations generally do not
constitute qualifying dividends. A corporation's dividends-
received deduction generally will be disallowed unless the
corporation holds shares in the Fund at least 46 days during the
90-day period beginning 45 days before the date on which the
corporation becomes entitled to receive the dividend.
Furthermore, the dividends-received deduction will be disallowed
to the extent a corporation's investment in shares of the Fund is
financed with indebtedness.
A dividend or capital gains distribution with respect to
shares of the 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, generally 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.
The following discussion relates to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year. This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.
Currency Fluctuations - "Section 988" Gains or Losses.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, or from the disposition of a forward contract
denominated in a foreign currency which are attributable to
fluctuations in the value of the foreign currency between the
date of acquisition of the asset and the date of disposition also
are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its shareholders as
ordinary income, rather than increasing or decreasing the amount
59
<PAGE>
of the Fund's net capital gain. Because section 988 losses
reduce the amount of ordinary dividends the Fund will be allowed
to distribute for a taxable year, such section 988 losses may
result in all or a portion of prior dividend distributions for
such year being recharacterized as a non-taxable return of
capital to shareholders, rather than as an ordinary dividend,
reducing each shareholder's basis in his Fund shares. To the
extent that such distributions exceed such shareholder's basis,
each distribution will be treated as a gain from the sale of
shares.
Options, Futures and Forward Contracts. Certain listed
options, regulated futures contracts, and forward foreign
currency contracts are considered "section 1256 contracts" for
federal income tax purposes. Section 1256 contracts held by the
Fund at the end of each taxable year will be "marked to market"
and treated for federal income tax purposes as though sold for
fair market value on the last business day of such taxable year.
Gain or loss realized by the Fund on section 1256 contracts other
than forward foreign currency contracts will be considered 60%
long-term and 40% short-term capital gain or loss. Gain or loss
realized by the Fund on forward foreign currency contracts will
be treated as section 988 gain or loss and will therefore be
characterized as ordinary income or loss and will increase or
decrease the amount of the Fund's net investment income available
to be distributed to shareholders as ordinary income, as
described above. The Fund can elect to exempt its section 1256
contracts which are part of a "mixed straddle" (as described
below) from the application of section 1256.
The Treasury Department has the authority to issue
regulations that would permit or require the Fund either to
integrate a foreign currency hedging transaction with the
investment that is hedged and treat the two as a single
transaction, or otherwise to treat the hedging transaction in a
manner that is consistent with the hedged investment. The
regulations issued under this authority generally should not
apply to the type of hedging transactions in which the Fund
intends to engage.
With respect to equity options or options traded
over-the-counter or on certain foreign exchanges, gain or loss
realized by the Fund upon the lapse or sale of such options held
by the Fund will be either long-term or short-term capital gain
or loss depending upon the Fund's holding period with respect to
such option. However, gain or loss realized upon the lapse or
closing out of such options that are written by the Fund will be
treated as short-term capital gain or loss. In general, if the
Fund exercises an option, or an option that the Fund has written
is exercised, gain or loss on the option will not be separately
recognized but the premium received or paid will be included in
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the calculation of gain or loss upon disposition of the property
underlying the option.
Gain or loss realized by the Fund on the lapse or sale
of put and call options on foreign currencies which are traded
over- the-counter or on certain foreign exchanges will be treated
as section 988 gain or loss and will therefore be characterized
as ordinary income or loss and will increase or decrease the
amount of the Fund's net investment income available to be
distributed to shareholders as ordinary income, as described
above. The amount of such gain or loss shall be determined by
subtracting the amount paid, if any, for or with respect to the
option (including any amount paid by the Fund upon termination of
an option written by the Fund) from the amount received, if any,
for or with respect to the option (including any amount received
by the Fund upon termination of an option held by the Fund). In
general, if the Fund exercises such an option on a foreign
currency, or such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option. The foregoing rules will also
apply to other put and call options which have as their
underlying property foreign currency and which are traded over-
the-counter or on certain foreign exchanges to the extent gain or
loss with respect to such options is attributable to fluctuations
in foreign currency exchange rates.
Tax Straddles. Any option, futures contract, currency
swap, forward foreign currency contract, or other position
entered into or held by the Fund in conjunction with any other
position held by the Fund may constitute a "straddle" for federal
income tax purposes. A straddle of which at least one, but not
all, the positions are section 1256 contracts may constitute a
"mixed straddle". In general, straddles are subject to certain
rules that may affect the character and timing of the Fund's
gains and losses with respect to straddle positions by requiring,
among other things, that (i) loss realized on disposition of one
position of a straddle not be recognized to the extent that the
Fund has unrealized gains with respect to the other position in
such straddle; (ii) the Fund's holding period in straddle
positions be suspended while the straddle exists (possibly
resulting in gain being treated as short-term capital gain rather
than long-term capital gain); (iii) losses recognized with
respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as
60% long-term and 40% short-term capital loss; (iv) losses
recognized with respect to certain straddle positions which would
otherwise constitute short-term capital losses be treated as
long-term capital losses; and (v) the deduction of interest and
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<PAGE>
carrying charges attributable to certain straddle positions may
be deferred. The Treasury Department is authorized to issue
regulations providing for the proper treatment of a mixed
straddle where at least one position is ordinary and at least one
position is capital. No such regulations have yet been issued.
Various elections are available to the Fund which may mitigate
the effects of the straddle rules, particularly with respect to
mixed straddles. In general, the straddle rules described above
do not apply to any straddles held by the Fund all of the
offsetting positions of which consist of section 1256 contracts.
Foreign Tax Credits. Income received by the Fund may
also be subject to foreign income taxes, including withholding
taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to
be invested within various countries is not known. If more than
50% of the value of the Fund's total assets at the close of its
taxable year consists of stocks or securities of foreign
corporations, the Fund will be eligible and intends to file an
election with the Internal Revenue Service to pass through to its
shareholders the amount of foreign taxes paid by the Fund.
However, there can be no assurance that the Fund will be able to
do so. Pursuant to this election a shareholder will be required
to (i) include in gross income (in addition to taxable dividends
actually received) his pro rata share of foreign taxes paid by
the Fund, (ii) treat his pro rata share of such foreign taxes as
having been paid by him, and (iii) either deduct such pro rata
share of foreign taxes in computing his taxable income or treat
such foreign taxes as a credit against United States federal
income taxes. Shareholders who are not liable for federal income
taxes, such as retirement plans qualified under section 401 of
the Code, will not be affected by any such pass-through of taxes
by the Fund. No deduction for foreign taxes may be claimed by an
individual shareholder who does not itemize deductions. In
addition, certain shareholders may be subject to rules which
limit or reduce their ability to fully deduct, or claim a credit
for, their pro rata share of the foreign taxes paid by the Fund.
A shareholder's foreign tax credit with respect to a dividend
received from the Fund will be disallowed unless the shareholder
holds shares in the Fund on the ex-dividend date and for at least
15 other days during the 30-day period beginning 15 days prior to
the ex-dividend date. Each shareholder will be notified within
60 days after the close of the Fund's taxable year whether the
foreign taxes paid by the Fund will pass through for that year
and, if so, such notification will designate (i) the
shareholder's portion of the foreign taxes paid to each such
country and (ii) the portion of dividends that represents income
derived from sources within each such country.
The federal income tax status of each year's
distributions by the Fund will be reported to shareholders and to
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<PAGE>
the Internal Revenue Service. The foregoing is only a general
description of the treatment of foreign taxes under the United
States federal income tax laws. Because the availability of a
foreign tax credit or deduction will depend on the particular
circumstances of each shareholder, potential investors are
advised to consult their own tax advisers.
The foregoing discussion relates only to U.S. Federal
income tax law as it affects shareholders who are U.S. residents
or U.S. corporations. The effects of Federal income tax law on
shareholders who are non-resident aliens or foreign corporations
may be substantially different. Foreign investors should consult
their counsel for further information as to the U.S. tax
consequences of receipt of income from the Fund.
_______________________________________________________________
PORTFOLIO TRANSACTIONS
_______________________________________________________________
Subject to the general supervision and control of the
Directors of the Fund, the Adviser makes the Fund's portfolio
decisions and determines the broker to be used in each specific
transaction with the objective of negotiating best price and
execution. When consistent with the objective of obtaining best
execution, brokerage may be directed to persons or firms
supplying investment information to the Adviser. There may be
occasions where the transaction cost charged by a broker may be
greater than that which another broker may charge if the Fund
determines in good faith that the amount of such transaction cost
is reasonable in relation to the value of the brokerage, research
and statistical services provided by the executing broker.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking best execution,
the Fund may consider sales of shares of the Fund as a factor in
the selection of brokers to execute portfolio transactions for
the Fund.
Neither the Fund nor the Adviser has entered into
agreements or understandings with any brokers regarding the
placement of securities transactions because of research or
statistical services they provide. To the extent that such
persons or firms supply investment information to the Adviser for
use in rendering investment advice to the Fund, such information
may be supplied at no cost to the Adviser. While it is
impossible to place an actual dollar value on such investment
information, its receipt by the Adviser probably does not reduce
the overall expenses of the Adviser to any material extent.
The investment information provided to the Adviser is of
the type described in Section 28(e)(3) of the Securities Exchange
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<PAGE>
Act of 1934 and is designed to augment the Adviser's own internal
research and investment strategy capabilities. Research and
statistical services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its client accounts but not all such services may
be used by the Adviser in connection with the Fund.
The Fund may deal in some instances in securities which
are not listed on a national stock exchange but are traded in the
over-the-counter market. The Fund may also purchase listed
securities through the third market, i.e., from a dealer which is
not a member of the exchange on which a security is listed.
Where transactions are executed in the over-the-counter market or
third market, the Fund will seek to deal with the primary market
makers; but when necessary in order to obtain the best price and
execution, it will utilize the services of others. In all cases,
the Fund will attempt to negotiate best execution.
The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, and with brokers which may have
their transactions cleared or settled, or both, by the Pershing
Division of DLJ, for which DLJ may receive a portion of the
brokerage commissions. In such instances, the placement of
orders with such brokers would be consistent with the Fund's
objective of obtaining best execution and would not be dependent
upon the fact that DLJ is an affiliate of the Adviser.
During the Fund's fiscal years ended July 31, 1998, 1997
and 1996, the Fund incurred brokerage commissions amounting in
the aggregate to $512,201, $573,677 and $444,996, respectively.
During the fiscal years ended July 31, 1998, 1997 and 1996,
brokerage commissions amounting in the aggregate to $90, $-0- and
$-0-, respectively, were paid to DLJ and no brokerage commissions
were paid to brokers utilizing the Pershing Division of DLJ.
During the fiscal year ended July 31, 1998, the brokerage
commissions paid to DLJ constituted 0% of the Fund's aggregate
brokerage commissions and the brokerage commissions paid to
brokers utilizing the Pershing Division of DLJ constituted -0-%
of the Fund's aggregate brokerage commissions. During the fiscal
year ended July 31, 1998, of the Fund's aggregate dollar amount
of brokerage transactions involving the payment of commissions,
0.02% were effected through DLJ and -0-% were effected through
brokers utilizing the Pershing Division of DLJ. During the
fiscal year ended July 31, 1998, transactions in portfolio
securities of the Fund aggregating $288,199,293 with associated
brokerage commissions of approximately $348,960 were allocated
to persons or firms supplying research services to the Fund or
the Adviser.
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_______________________________________________________________
GENERAL INFORMATION
_______________________________________________________________
Capitalization
The Fund was organized as a corporation in Maryland in
1966. The authorized capital stock of the Fund currently
consists of 3,000,000,000 shares of Class A Common Stock,
3,000,000,000 shares of Class B Common Stock, 3,000,000,000 of
Class C Common Stock and 3,000,000,000 shares of 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 and
classes without shareholder approval. Accordingly, the Directors
in the future, for reasons such as the desire to establish one or
more additional portfolios with different investment objectives,
policies or restrictions, may create additional classes or series
of shares. Any issuance of shares of another class or series
would be governed by the 1940 Act and the law of the State of
Maryland. If shares of another series were issued in connection
with the creation of a second portfolio, each share of either
portfolio would normally be entitled to one vote for all
purposes. Generally, shares of both portfolios would vote as a
single series on matters, such as the election of Directors, that
affected both portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of
the Advisory Agreement and changes in investment policy, shares
of each portfolio would vote as a separate series.
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.
It is anticipated that annual shareholder meetings will
not be held; shareholder meetings will be held only when required
by federal or state law. Shareholders have available certain
procedures for the removal of Directors.
A shareholder will be entitled to share pro rata with
other holders of the same class of shares all dividends and
distributions arising from the Fund's assets and, upon redeeming
shares, will receive the then current net asset value of the Fund
represented by the redeemed shares less any applicable CDSC. The
Fund is empowered to establish, without shareholder approval,
additional portfolios, which may have different investment
65
<PAGE>
objectives and policies than those of the Fund, and additional
classes of shares within the Fund. If an additional portfolio or
class were established in the Fund, each share of the portfolio
or class would normally be entitled to one vote for all purposes.
Generally, shares of each portfolio and class would vote together
as a single class on matters, such as the election of Directors,
that affect each portfolio and class in substantially the same
manner. Class A, B, C and Advisor Class shares have identical
voting, dividend, liquidation and other rights, except that each
class bears its own transfer agency expenses, each of Class A,
Class B and Class C shares of the Fund bears its own distribution
expenses and Class B shares and Advisor Class shares convert to
Class A shares under certain circumstances. Each class of shares
of the Fund votes separately with respect to the Fund's Rule 12b-
1 distribution plan and other matters for which separate class
voting is appropriate under applicable law. Shares are freely
transferable, are entitled to dividends as determined by the
Directors and, in liquidation of the Fund, are entitled to
receive the net assets of the Fund.
At the close of business on January 8, 1999 there were
7,044,306 Class A shares, 3,454,235 Class B shares, 791,643
Class C shares and 17,175 Advisor Class shares of common stock of
the Fund outstanding. To the knowledge of the Fund, the
following persons owned of record or beneficially, 5% or more of
the outstanding shares of the Fund as of January 8, 1999:
Name and Address Shares % of Class
Class A
MLPF&S 378,152 5.3%
For the Sole Benefit of
Its Customers
Attn: Fund Administration (976X8)
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246-6486
Class B
MLPF&S 578,591 16.75%
For the Sole Benefit of
Its Customers
Attn: Fund Administration (976X2)
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246-6486
Class C
MLPF&S 251,4493 31.75%
For the Sole Benefit of
66
<PAGE>
Its Customers
Attn: Fund Administration (97BG0)
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246-6486
Advisor Class
Mark J. Dunbar 1,018 5.93%
5608 Pecan Spring Ct.
Dallas, TX 75252-2670
Josephine Metz 1,091 6.35%
13 Remsen Circle
Yonkers, NY 10710-1006
Merrill Lynch 1,185 6.90%
4800 Deer Lake Dr East
Jacksonville, FL 32246-6486
Christopher J. MacDonald & 1,619 9.43%
Deirdre M. Schroeder JT TEN
1880 E. El Camino Real #6
San Celemente, CA 92672-4901
Katherine B. Michel 3,420 19.91%
1989 Grantor Trust
BS Michel, CL Michel & KB
Michel TTEES U/A DTS 8/25/89
80 Pine Street
New York, NY 10005-1702
Counsel
Legal matters in connection with the issuance of the
shares of Common Stock offered hereby are passed upon by Seward &
Kissel, New York, New York. Seward & Kissel has relied upon the
opinion of Venable, Baetjer and Howard, LLP, Baltimore, Maryland,
for matters relating to Maryland law.
Independent Auditors
Ernst & Young LLP, New York, New York, has been
appointed as the independent auditors for the Fund.
Custodian
State Street Bank and Trust Company, 225 Franklin St.,
Boston, Massachusetts, will act as the Fund's custodian for the
assets of the Fund but plays no part in deciding the purchase or
sale of portfolio securities. Subject to the supervision of the
Fund's Directors, State Street Bank and Trust Company may enter
67
<PAGE>
into sub-custodial agreements for the holding of the Fund's
foreign securities.
Principal Underwriter
Alliance Fund Distributors, Inc., 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 Fund. Under the Agreement between the Fund and
the Principal Underwriter, the Fund has agreed to indemnify the
Principal Underwriter, in the absence of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities,
including liabilities under the Securities Act of 1933, as
amended.
Performance Information
From time to time the Fund advertises its "total
return," which is computed separately for Class A, Class B, Class
C and Advisor Class shares. Such advertisements disclose the
Fund's average annual compounded total return for the periods
prescribed by the Commission. The 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 the Fund are
assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases and redemptions of the Fund's
shares are assumed to have been paid.
The Fund's average annual compounded total return for
the one, five and ten year periods ended July 31, 1998 (or since
inception through that date, as noted) was as follows:
One Year Ended 5 Years Ended 10 Years Ended
7/31/98 7/31/98 7/31/98
Class A 2.49% 13.66% 9.02%*
Class B 1.80% 12.85% 10.13%*
Class C 1.79% 12.87% 12.88%*
Advisor Class 2.82% 10.67%* N/A
*Inception Dates: Class A - September 17, 1990
Class B - September 17, 1990
Class C - May 3, 1993
Advisor Class - October 1, 1996
68
<PAGE>
The Fund's total return is computed separately for
Class A, Class B, Class C and Advisor Class shares. The Fund's
total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and
quality of the securities in the Fund's portfolio and the Fund's
expenses. Total return information is useful in reviewing the
Fund's performance but such information may not provide a basis
for comparison with bank deposits or other investments which pay
a fixed return for a stated period of time. An investor's
principal invested in the Fund is not fixed and will fluctuate in
response to prevailing market conditions.
Advertisements quoting performance ratings of the Fund
as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc. and advertisements presenting the historical
record of payments of income dividends by the Fund may also from
time to time be sent to investors or placed in newspapers and
magazines such as The New York Times, The Wall Street Journal,
Barrons, Investor's Daily, Money Magazine, Changing Times,
Business Week and Forbes or other media on behalf of the Fund.
Additional Information
Any shareholder inquiries may be directed to the
shareholder's broker or other financial adviser or to Alliance
Fund Services, Inc. at the address or telephone numbers shown on
the front cover of this Statement of Additional Information.
This Statement of Additional Information does not contain all the
information set forth in the Registration Statement filed by the
Fund with the Commission under the Securities Act. Copies of the
Registration Statement may be obtained at a reasonable charge
from the Commission or may be examined, without charge, at the
offices of the Commission in Washington, D.C.
69
<PAGE>
____________________________________________________________
REPORT OF INDEPENDENT
AUDITOR AND FINANCIAL STATEMENTS
____________________________________________________________
70
<PAGE>
ALLIANCE GLOBAL SMALL CAP FUND
ANNUAL REPORT
JULY 31, 1998
ALLIANCE CAPITAL
PORTFOLIO OF INVESTMENTS
JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-94.6%
UNITED STATES INVESTMENTS-45.5%
CONSUMER SERVICES-20.8%
AIRLINES-2.8%
Alaska Air Group, Inc. (a) 42,000 $ 1,758,750
America West Holdings Corp. Cl.B (a) 59,000 1,419,687
Mesa Air Group, Inc. (a) 61,100 481,163
------------
3,659,600
APPAREL-2.8%
Mens Wearhouse, Inc. (a) 27,300 863,362
Nautica Enterprises, Inc. (a) 18,900 487,266
The Finish Line, Inc. Cl.A (a) 29,400 635,775
Tommy Hilfiger Corp. (a) 17,600 986,700
Wolverine World Wide, Inc. 45,400 737,750
------------
3,710,853
BROADCASTING & CABLE-1.3%
Sinclair Broadcast Group, Inc. Cl.A (a) 27,400 717,537
Young Broadcasting, Inc. Cl.A (a) 15,800 1,034,900
------------
1,752,437
BUSINESS SERVICES-0.6%
TeleSpectrum Worldwide, Inc. (a) 104,100 728,700
ENTERTAINMENT & LEISURE-2.8%
Bally Total Fitness Holding Corp. (a) 38,100 945,356
Family Golf Centers, Inc. (a) 20,450 506,138
N2K, Inc. (a) 15,500 220,875
Premier Parks, Inc. (a) 18,900 1,207,237
Sunterra Corp. (a) 60,400 671,950
Trans World Entertainment Corp. (a) 2,900 114,188
------------
3,665,744
RESTAURANTS & LODGING-1.0%
Capstar Hotel Co. 35,800 897,238
Florida Panthers Holdings, Inc. (a) 33,700 488,650
QPQ Corp. warrants, expiring 9/22/98 (a) 16,400 0
------------
1,385,888
RETAIL-GENERAL MERCHANDISE-7.3%
Abercrombie & Fitch Co. Cl.A (a) 23,100 1,072,706
Brylane, Inc. (a) 27,300 1,062,994
Circuit City Stores, Inc.-CarMax Group (a) 101,600 876,300
Furniture Brands International, Inc. (a) 29,100 822,075
Group 1 Automotive, Inc. (a) 44,100 661,500
Movado Group, Inc. 21,700 520,800
Pacific Sunwear of California (a) 32,600 961,700
Petco Animal Supplies, Inc. (a) 29,000 300,875
Petsmart, Inc. (a) 41,100 336,506
Stride Rite Corp. 52,300 634,138
Tiffany & Co. 33,300 1,429,819
United Auto Group, Inc. (a) 43,100 910,487
------------
9,589,900
MISCELLANEOUS-2.2%
Carriage Services, Inc. C1.A (a) 20,900 462,413
Central Garden & Pet Co. (a) 26,100 603,562
8
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Century Business Services, Inc. (a) 61,200 $ 1,208,700
International Alliance Services, Inc.
warrants, expiring 12/30/99 (a) 61,100 619,493
------------
2,894,168
------------
27,387,290
TECHNOLOGY-4.7%
COMMUNICATION EQUIPMENT-0.5%
Global TeleSystems Group, Inc. (a) 3,000 160,500
Globecomm Systems, Inc. (a) 10,600 80,825
GST Telecommunications, Inc. (a) 34,000 463,250
------------
704,575
COMPUTER HARDWARE-0.7%
Apex PC Solutions, Inc. (a) 33,500 875,188
Radius, Inc. (a) 15 30
------------
875,218
COMPUTER SERVICES-1.1%
DBT Online, Inc. (a) 36,100 798,712
Renaissance Worldwide, Inc. (a) 38,800 586,850
------------
1,385,562
COMPUTER SOFTWARE-1.6%
CheckFree Holdings Corp. (a) 20,300 502,425
Harbinger Corp. (a) 35,800 309,894
Insight Enterprises, Inc. (a) 27,000 1,302,750
Transaction Systems Architects, Inc. (a) 1,000 38,625
------------
2,153,694
NETWORKING SOFTWARE-0.3%
Xylan Corp. (a) 13,900 343,156
SEMI-CONDUCTOR COMPONENTS-0.1%
Brooks Automation, Inc. (a) 2,900 28,819
Photronics, Inc. (a) 9,300 168,562
------------
197,381
MISCELLANEOUS-0.4%
Carrier Access Corp. (a) 1,000 16,125
Excalibur Technologies Corp. (a) 21,000 215,250
Preview Travel, Inc. (a) 14,600 317,550
------------
548,925
------------
6,208,511
TRANSPORTATION-4.4%
AUTO & RELATED-1.6%
Avis Rent A Car, Inc. (a) 12,000 309,750
Budget Group, Inc. Cl.A (a) 65,100 1,749,562
------------
2,059,312
SHIPPING-1.4%
Knightsbridge Tankers, Ltd. 13,300 325,850
Marine Transport Corp. 16,880 29,012
OMI Corp. (a) 168,800 844,000
Teekay Shipping Corp. 31,400 675,100
------------
1,873,962
TRUCKING-0.8%
Consolidated Freightways Corp. (a) 91,300 1,061,363
MISCELLANEOUS-0.6%
Carey International, Inc. (a) 31,500 791,438
------------
5,786,075
HEALTH CARE-4.0%
BIOTECHNOLOGY-3.3%
Centocor, Inc. (a) 21,400 754,350
Geltex Pharmaceuticals, Inc. (a) 59,500 1,197,438
Gensia Sicor, Inc. (a) 83,800 282,825
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
MedImmune, Inc. (a) 20,100 $ 1,181,503
Physio-Control International Corp. (a) 35,300 944,275
------------
4,360,391
DRUGS-0.3%
Aradigm Corp. (a) 32,300 335,113
Corixa Corp. (a) 12,600 72,450
------------
407,563
MEDICAL SERVICES-0.4%
Veterinary Centers of America, Inc. (a) 27,100 511,512
------------
5,279,466
CONSUMER MANUFACTURING-3.5%
APPLIANCES-0.4%
Mettler-Toledo International, Inc. (a) 26,700 564,037
AUTO & RELATED-0.7%
Miller Industries, Inc. (a) 49,800 333,038
Monaco Coach Corp. (a) 24,150 588,656
------------
921,694
TEXTILE PRODUCTS-1.9%
Mohawk Industries, Inc. (a) 69,900 2,175,637
Novel Denim Holdings, Ltd. (a) 13,300 290,938
------------
2,466,575
MISCELLANEOUS-0.5%
Synetic, Inc. (a) 13,900 719,325
------------
4,671,631
FINANCE-3.3%
BROKERAGE & MONEY MANAGEMENT-0.4%
Reinsurance Group of America, Inc. (a) 8,800 489,500
REAL ESTATE-2.9%
Chelsea GCA Realty, Inc. 47,400 1,718,250
Glenborough Realty Trust, Inc. 25,300 623,012
Golf Trust of America, Inc. 22,600 692,125
Taubman Centers, Inc. 58,800 768,075
------------
3,801,462
------------
4,290,962
BASIC INDUSTRIES-1.9%
BUILDING & RELATED-0.2%
Associate Materials, Inc. (a) 26,900 322,800
MINING & METALS-1.7%
Bethlehem Steel Corp. (a) 191,400 2,069,512
Royal Oak Mines, Ltd. (a) 204,100 127,563
------------
2,197,075
------------
2,519,875
CAPITAL GOODS-1.7%
ELECTRICAL EQUIPMENT-0.2%
Rofin Sinar Technologies, Inc. (a) 15,000 223,125
MACHINERY-1.5%
Comverse Technology, Inc. (a) 18,100 924,231
United Rentals, Inc. (a) 31,100 1,055,457
------------
1,979,688
------------
2,202,813
ENERGY-1.1%
OIL SERVICE-0.5%
Oceaneering International, Inc. (a) 15,600 218,400
Parker Drilling Co. (a) 89,800 465,837
------------
684,237
PIPELINES-0.6%
Southern Union Co. 45,502 756,471
------------
1,440,708
CONSUMER STAPLES-0.1%
MISCELLANEOUS-0.1%
Hines Horticulture, Inc. (a) 12,700 127,000
Total United States Investments
(cost $59,087,973) 59,914,331
10
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
FOREIGN INVESTMENTS-49.1%
AUSTRALIA-1.3%
Australian Gas Light Co.,Ltd. 20,000 $ 132,492
Brambles Industries, Ltd. 20,000 422,669
Broken Hill Proprietary Co., Ltd. 10,000 81,152
Cultus Petroleum NL 50,000 19,749
ERG, Ltd. 320,000 219,726
GIO Australia Holdings 80,000 208,400
Great Central Mines, Ltd. 15,000 13,672
Hoyts Cinemas Group (b) 105,000 151,852
Oil Search, Ltd. 87,000 137,450
Orogen Minerals, Ltd. (GDS) (b) 10,000 136,800
Spectrum Network Systems, Ltd. 246,832 97,492
Suncorp-Metway, Ltd. 15,450 36,145
Village Roadshow, Ltd. pfd. 30,000 43,386
WMC, Ltd. 15,121 45,390
------------
1,746,375
AUSTRIA-1.4%
Austria Mikro Systeme International AG 900 43,128
Austria Tabakwerke AG 5,155 310,840
Bank Austria AG 4,200 332,082
BWT AG 600 112,611
Erste Bank Der Oesterreichi schen Sparkassen AG 5,610 337,828
KTM Motorradholding AG 3,000 253,973
Mayr Melnhof Karton AG 5,000 318,265
OMV AG 1,200 153,342
------------
1,862,069
BRAZIL-0.6%
Companhia Paranaense de
Energia (ADS) 33,000 358,875
Companhia Riograndense de Telecom pfd. 395,183 360,168
------------
719,043
CANADA-0.7%
Boardwalk Equities, Inc. (a) 9,000 101,264
FirstService Corp. (a) 6,100 73,963
Fracmaster, Ltd. Inst. Receipts (b) 57,100 189
Kingsway Financial Services, Inc. (a) 20,000 167,450
Leitch Technology Corp. (a) 4,700 73,102
National Bank Canada Montreal Quebec 10,000 179,363
Nelvana, Ltd. (a) (b) (c) 8,000 164,141
Royal Group Technologies, Ltd. (a) (b) 5,000 118,803
------------
878,275
CHILE-0.1%
Enersis, SA (ADR) 3,000 83,625
Santa Isabel, SA (ADR) 665 7,357
------------
90,982
DENMARK-0.6%
Carli Gry International A/S (b) 8,000 624,272
Coloplast 1,500 134,974
Vestas Wind Systems A/S 1,600 65,377
------------
824,623
FINLAND-2.6%
Amer Group, Ltd. 10,600 182,299
Hartwall Oy AB C1.A 4,000 126,489
Helsingin Puhelin Oy 9,160 542,052
KCI Konecranes International Corp. (b) 2,000 112,804
Kesko 9,600 153,562
Nokia AB Oy Corp. Series A 20,000 1,756,787
Orion-Yhtyma Oy Cl.B 16,000 491,160
------------
3,365,153
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
FRANCE-3.2%
Accor 1,500 $ 401,308
Alcatel Alsthom (c) 1,400 278,099
Bouygues Offshore, SA (ADR) 5,000 104,062
Canal Plus (ADR) 1,390 267,957
Coflexip, SA (ADR) 6,000 297,000
Compagnie Generale de Geophysique,
SA (ADR) (a) 20,000 500,000
Lafarge, SA 1,600 157,975
Louis Dreyfus Citrus (b) (c) 5,700 195,876
Michelin Cl.B (c) 2,000 110,133
Moulinex 11,000 233,258
S T Dupont (a) (b) (c) 7,540 82,156
Sanofi, SA 3,200 384,612
SEITA (c) 7,000 315,531
Societe Generale 1,200 288,861
Total, SA C1.B 800 91,325
Viverdi (c) 2,030 443,738
------------
4,151,891
GERMANY-1.3%
Apcoa Parking AG (b) 1,390 97,477
Bayer AG 3,000 136,095
BUS Berzelius Umwelt
Service AG 7,800 135,927
Gesco Industries, Inc. AG 12,000 303,558
ProSieben Media AG pfd. 5,800 309,742
SGL Carbon AG (b) 4,000 445,219
Veba AG 2,600 153,466
Viag AG 200 141,998
------------
1,723,482
GREECE-0.6%
Hellenic Telecommunication Organization, SA 5,972 169,630
Petzetakis, SA 100,000 625,571
------------
795,201
HONG KONG-0.2%
Cheung Kong Holdings, Ltd. 24,000 104,072
HSBC Holdings Plc 4,000 97,567
ITC Corporation, Ltd. 287,800 1,040
Television Broadcasting, Ltd. 21,000 51,087
------------
253,766
HUNGARY-0.3%
Magyar Tavkozlesirt (ADS) 14,000 447,125
INDIA-0.2%
Gujarat Narmada Valley
Fertilizers Co., Ltd. (GDR) (b) (d) 4,000 9,497
SIEL, Ltd. (GDR) (b) 18,000 18,000
Videsh Sanchar Nigam, Ltd. (GDS) (b) 16,000 186,000
------------
213,497
INDONESIA-0.1%
Great River International 427,000 8,930
Gulf Indonesia Resources, Ltd. (a) 11,400 109,725
PT Indosat (ADR) 4,000 43,000
------------
161,655
IRELAND-1.8%
Crean (James) Plc 55,000 114,549
Fyffes Plc 280,000 581,302
Irish Continental Group Plc 15,000 230,911
Irish Life Plc 90,000 808,583
Marlborough International Plc (a) 75,000 333,656
Unidare Plc 91,500 277,835
------------
2,346,836
12
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
ITALY-2.3%
Banca Naz del Lavoro 3,000 $ 90,353
Gildemeister Italiana SpA 52,500 247,787
Industrie Natuzzi SpA (ADR) 64,300 1,603,481
Mediaset SpA 30,000 188,818
Seat SpA 1,265,000 886,570
Zucchini SpA 9,050 72,134
------------
3,089,143
JAPAN-8.7%
Aiful Corp (c) 8,100 417,266
Akita Bank (c) 6,000 26,138
Asahi Bank (c) 7,000 24,395
Asahi Diamond Industrial (c) 4,852 21,036
Bank of Tokyo Mitsubishi, Ltd. (c) 19,250 192,074
Canon, Inc. 1,000 22,818
Credit Saison Co. (c) 36,015 692,309
Daibiru Corp. (c) 4,000 27,437
Dai-Ichi Kangyo Bank, Ltd. (c) 21,000 109,632
Daito Trust Construction Co., Ltd. (c) 1,400 11,617
Data Communication System 1,000 21,090
DDI Corp. (c) 30 89,614
Disco Corp. (c) 7,000 188,771
Familymart Co. (c) 7,700 291,239
Fuji Photo Film Co. (c) 9,000 331,697
Fuji Software ABC, Inc. (c) 6,680 242,498
Fujikura (c) 28,000 118,684
Fujimi, Inc. (c) 6,340 220,510
Home Wide Corp. (c) 4,000 16,180
Honda Motor Co. 2,000 74,540
Ishihara Sangyo 6,000 8,671
Japan Airport Terminal (c) 12,200 63,269
Japan Industrial Land Development (c) 5,200 7,623
Japan Tobacco, Inc. (c) 24 162,301
Kaneshita Construction (c) 5,000 23,683
Kao Corp. 16,000 263,311
Kawasaki Heavy Industries (c) 2,000 4,425
Keyence Corp. (c) 2,600 293,044
Kikuchi Co. (c) 3,000 8,713
King Co. (c) 10,000 13,484
Koa Fire & Marine (c) 3,000 10,579
Matsuda Sangyo 2,000 15,765
Meitec Corp. 4,900 188,045
Micronics Japan Co. (c) 5,500 77,963
Minebea Co. (c) 12,000 127,368
Misumi Corp. (c) 12,500 209,601
Mitsubishi Heavy Industries, Ltd. (c) 4,000 14,880
Mitsubishi Trust and Banking (c) 5,000 36,371
Mitsui Home Co. 3,000 15,205
Mori Seiki Co., Ltd. (c) 14,000 167,957
Murata Manufacturing Co., Ltd. (c) 10,000 340,202
Nanno Construction (c) 7,000 7,793
NIC Corp. (c) 3,000 22,611
Nichiei Co., Ltd. (c) 5,100 382,623
Nichiha Corp. (c) 12,900 70,021
Nichii Gakkan Co. (c) 1,000 31,462
Nikon Corp. (c) 13,000 80,722
Nintendo Corp., Ltd. (c) 2,800 266,215
Nippon Broadcasting System (c) 4,000 157,655
Nippon Denwa Shisetsu (c) 5,500 16,277
Nippon Kanzai Co. (c) 200 2,475
Nippon Paper Industries Co. (c) 7,000 28,316
Nippon System Development (c) 14,600 349,302
Nippon Telegraph & Telephone Corp. 16 138,294
Nippon Television Network Corp. (c) 650 187,647
Nireco Corp. (c) 4,000 19,085
Nitta Corp. (c) 8,000 48,956
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Nitto Kohki Co. (c) 4,800 $ 48,624
Noritsu Koki Co. (c) 9,000 205,366
Ohmoto Gumi Co. (c) 1,400 6,438
Oie Sangyo Co., Ltd. (c) 4,400 17,190
Paris Miki, Inc. (c) 9,880 133,218
PS Corp. (c) 5,000 19,396
Ricoh Elemex Corp. (c) 3,000 19,499
Rohm Co., Ltd. (c) 3,000 323,399
Sankyo Co., Ltd. (c) 32,000 716,913
Sankyo Engineering 1,000 4,398
Santen Pharmaceutical Co. (c) 25,420 290,901
Sanyo Engineering and Construction Co. (c) 2,000 6,956
Sanyo Pax Co. (c) 8,500 58,775
Sanyo Shinpan Finance Co., Ltd. 1,200 44,724
Sato Corp. (c) 13,100 197,469
Seven-Eleven Japan (c) 4,400 268,040
Shimano, Inc. (c) 3,000 73,434
Shizuoka Bank (c) 3,000 29,415
Sho Bond Corp. 6,000 108,906
SMC Corp. 4,400 329,802
Sodick Co. (c) 28,000 75,508
Sumitomo Bank, Ltd. (c) 9,000 84,822
Sumitomo Metal Industries (c) 44,000 65,413
Sumitomo Realty & Development Co., Ltd. (c) 14,000 58,180
Taisho Pharmaceutical Co. (c) 1,000 20,053
Toei Co. (c) 7,000 21,249
Toho Bank (c) 16,000 57,530
Toho Titanium Co. (c) 10,000 69,907
Tokyo Broadcasting (c) 18,000 217,812
Tokyo Cathode Laboratory 2,000 17,978
Toso Co., Ltd. (c) 6,500 25,619
Toyoda Gosei 1,000 3,872
Wesco, Inc. (c) 1,600 3,872
Yamaichi Electronics Co., Ltd. (c) 5,000 95,768
Yamanouchi Pharmaceutical Co., Ltd. (c) 29,000 600,574
Yokogawa Electric (c) 20,000 107,869
------------
11,430,348
LUXEMBOURG-0.9%
Millicom International Cellular, SA (a) 24,500 1,145,375
MALAYSIA-0.1%
Lingkaran Trans Kota Holdings (b) 40,000 21,255
Metacorp Berhad 40,000 10,434
Pernas International Holdings Berhad 80,000 14,492
Sime Darby Berhad 50,000 29,467
Sriwani Holdings Berhad 39,000 5,134
Star Publications 10,000 9,227
UMW Holdings Berhad 30,000 13,115
------------
103,124
MEXICO-0.5%
Grupo Elektra 150,000 118,452
Grupo Industrial Durango, SA (ADS) (a) 11,000 71,500
Grupo Television, SA de CV (a) 12,000 423,000
Industrias Campos Hermanos Cl.B (a) 20,000 71,789
------------
684,741
NETHERLANDS-3.5%
Aegon NV 6,000 552,185
Akzo Nobel NV 5,600 285,325
ASR Verzekeringsgroep NV 6,100 576,289
Content Beheer NV (b) 9,000 314,081
Elsevier NV 17,100 271,097
Fortis Amev NV 5,900 445,621
Fugro NV 9,000 341,003
Hagemeyer NV 4,000 169,105
IHC Caland NV 5,000 259,242
ING Groep NV 6,000 453,773
KLM Royal Dutch Airlines NV 4,000 170,701
14
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Numico NV 4,800 $ 157,938
Nutreco Holding NV 6,500 241,419
Philips Electronics NV 1,200 97,216
Vedior 10,000 315,577
------------
4,650,572
NEW ZEALAND-0.1%
Restaurant Brands, Ltd. 93,700 39,328
Tourism Holdings, Ltd. 49,450 24,805
Warehouse Group, Ltd. 28,000 52,884
------------
117,017
NORWAY-1.6%
Choice Hotels Scandinavia ASA (a) 135,000 420,021
Frontline, Ltd. (a) 261,080 141,718
London & Overseas Freighters (a) 15,216 3,205
Navia ASA 36,000 145,369
ProSafe ASA 10,000 145,634
Schibsted ASA 12,000 203,357
Sparebanken NOR (c) 8,000 238,310
Tomra Systems ASA 26,500 863,078
------------
2,160,692
PANAMA-0.1%
Banco Latinoamericano de Exportaciones,
SA (ADR) 6,000 162,375
PERU-0.2%
Telefonica del Peru, SA (ADS) 14,000 297,500
PHILIPPINES-0.0%
Asian Terminals, Inc. 193,333 3,903
PORTUGAL-1.3%
BPI Soc Gestora 6,000 236,673
CIA de Seguros Imperio, SA 49,000 520,335
Electricidade de Portugal, SA 11,900 279,654
Portugal Telecom, SA 670 38,440
Telecel-Comunicacaoes Pesscasis, SA (b) 3,400 591,791
------------
1,666,893
RUSSIA-0.2%
Sun Brewing, Ltd. (ADR) (a) (b) 25,000 309,150
SINGAPORE-0.3%
City Developments 14,000 39,896
Keppel Telecomunications & Transportation, Ltd. 156,000 65,056
Lim Kah Ngam, Ltd. 30,000 6,429
Singapore Land, Ltd. 20,000 36,606
United Overseas Bank 8,000 22,983
Venture Manufacturing (Singapore), Ltd. 62,000 158,726
------------
329,696
SOUTH KOREA-0.2%
Samsung Electronics Co., Ltd. (GDR) (a) (b) 10,912 105,628
bonus shares (GDR) (a) (b) 1,089 22,216
SK Telecom Co., Ltd. (ADR) 19,500 151,125
------------
278,969
SPAIN-3.0%
Aldeasa, SA 10,000 382,477
Argentaria Corp. BC 22,000 535,005
BCO Central Hispan (a) 3,000 112,957
Catalana Occidente, SA (c) 9,800 304,791
Construcciones Y Aux de Ferr (c) 2,000 78,084
Corporacion Mapfre, SA 9,700 352,389
Gas Y Electricidad (c) 7,000 548,901
Iberdrola II, SA 15,000 237,229
Portland Valderriv 900 104,758
Repsol, SA (c) 5,000 271,969
Tabacalera, SA Series A 20,000 441,371
Telefonica, SA 7,000 341,384
TelePizza, SA (a) 20,000 181,975
------------
3,893,290
SWEDEN-1.9%
Asticus AB (a) 18,440 206,438
Astra AB Series A (c) 5,001 96,247
Autoliv, Inc. (ADS) (b) (c) 2,000 68,177
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Dahl International AB (b) 11,000 $ 185,411
ForeningsSparbanken AB 200 5,975
Frontec AB 10,000 104,404
Kalmar Industries AB (b) 6,750 95,095
Lindex AB 4,500 156,794
Mandamus Fastigheter AB (a) 10 60
Netcom Systems AB (b) 800 36,227
Nordbanken Holding AB 30,000 215,097
Scandic Hotels AB (b) 10,800 478,874
Skandia Forsakrings AB 10,000 171,071
Skandinaviska Enskilda Banken 27,300 472,176
Swedish Match AB (c) 73,847 235,013
------------
2,527,059
SWITZERLAND-1.6%
Barry Callebaut AB (a) 2,050 474,505
Ciba Specialty Chemicals AG 1,500 174,606
Gretag Imaging Group 4,500 480,040
Nestle, SA 150 311,573
Novartis AG 140 236,136
Roche Holdings AG, Ltd. 20 215,364
Selecta Gruppe 500 113,385
Tag Heuer International, SA (ADR) 11,600 101,500
------------
2,107,109
THAILAND-0.0%
CMIC Finance & Securities Co. (d) 110,000 0
Thai Engine Manufacturing 39,300 18,590
------------
18,590
UNITED KINGDOM-7.6%
Amvescap Plc 20,000 231,630
Bank of Scotland 20,000 218,889
Barclays Plc 10,000 285,863
BPB Plc 25,000 136,704
British Aerospace 26,000 198,340
British Airways Plc 4,000 40,576
Carpetright Plc 5,000 22,052
Compass Group Plc 80,000 825,898
Cordiant Communications Group Plc 120,000 254,826
De La Rue Plc 5,000 20,827
Diageo Plc 51,840 616,476
Dixons Group Plc 25,000 218,399
EMI Group Plc 15,000 117,857
Energis Plc (a) 40,000 614,196
Filtronic Comtek Plc 90,000 639,148
Harvey Nichols Plc (b) 10,000 31,527
House of Fraser Plc 30,000 74,243
Imperial Tobacco Group Plc 37,000 312,775
Johnson Matthey Plc 10,000 70,812
Johnston Press Plc 40,000 137,214
LucasVarity Plc 28,000 97,879
M.S. International Plc 130,000 46,718
Misys Plc 10,000 477,799
National Grid Group Plc 45,000 313,142
National Power Plc 36,000 304,615
Powerscreen International Plc 70,000 117,775
Reed International Plc 30,000 288,150
Rentokil Initial Plc 42,000 267,567
Senior Engineering Group Plc 80,000 229,997
Siebe Plc 7,000 126,237
Smith (WH) Group Plc 18,000 154,660
SmithKline Beecham Plc 10,000 116,142
Thistle Hotels Plc (b) 36,000 127,609
Thomson Travel Group Plc (a) 56,000 160,998
Tomkins Plc 40,000 206,475
Virgin Express Holdings Plc (ADS) (a) 32,000 394,000
Vodafone Group Plc 30,000 413,848
WPP Group Plc 56,000 373,222
16
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
Yule Catto & Co. Plc 20,944 $ 100,926
Zeneca Group Plc 16,000 606,617
------------
9,992,628
Total Foreign Investments
(cost $58,539,493) 64,548,147
Total Common Stocks & Other Investments
(cost $117,627,466) 124,462,478
SHORT-TERM INVESTMENTS-5.2%
COMMERCIAL PAPER-5.2%
Ford Motor Credit Corp.5.59%, 8/03/98 $ 400 399,876
Prudential Funding Corp.5.56%, 8/03/98 6,400 6,398,023
Total Short-Term Investments
(amortized cost $6,797,899) 6,797,899
TOTAL INVESTMENTS -99.8%
(cost $124,425,365) 131,260,377
Other assets less liabilities-0.2% 272,267
NET ASSETS-100% $131,532,644
(a) Non-income producing security.
(b) 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 July 31, 1998, these securities
amounted to $4,720,630 representing 3.6% of net assets.
(c) Securities, or portion thereof, with aggregate market value of $13,168,832
have been segregated to collateralize forward exchange currency contracts.
(d) Illiquid security, valued at fair market value (see Note A).
Glossary of Terms:
ADR - American Depositary Receipt
ADS - American Depositary Shares
GDR - Global Depositary Receipt
GDS - Global Depositary Shares
See notes to financial statements.
17
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $124,425,365) $131,260,377
Cash, at value (cost $477,838) 477,078
Receivable for investment securities sold 1,237,509
Receivable for capital stock sold 374,281
Unrealized appreciation of forward exchange currency
contracts 156,113
Dividends receivable 86,632
Foreign taxes receivable 35,049
Total assets 133,627,039
LIABILITIES
Payable for investment securities and foreign currency
contracts purchased 802,270
Unclaimed dividends 634,139
Payable for capital stock redeemed 176,324
Management fee payable 118,998
Distribution fee payable 66,443
Accrued expenses and other liabilities 296,221
Total liabilities 2,094,395
NET ASSETS $131,532,644
COMPOSITION OF NET ASSETS
Capital stock, at par $ 111,680
Additional paid-in capital 113,701,242
Accumulated net investment loss (353,121)
Accumulated net realized gain on investments and
foreign currency transactions 11,082,859
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 6,989,984
$131,532,644
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($82,842,736/6,825,187 shares of capital stock issued
and outstanding) $12.14
Sales charge--4.25% of public offering price .54
Maximum offering price $12.68
CLASS B SHARES
Net asset value and offering price per share
($38,826,722/3,466,690 shares of capital stock issued
and outstanding) $11.20
CLASS C SHARES
Net asset value and offering price per share
($9,471,457/843,816 shares of capital stock issued
and outstanding) $11.22
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($391,729/32,113 shares of capital stock issued
and outstanding) $12.20
See notes to financial statements.
18
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $155,744) $ 1,238,967
Interest 457,856 $ 1,696,823
EXPENSES
Management fee 1,347,278
Distribution fee - Class A 261,526
Distribution fee - Class B 379,215
Distribution fee - Class C 92,628
Transfer agency 441,207
Custodian 342,765
Administrative 135,500
Audit and legal 93,445
Printing 71,361
Registration 50,907
Directors' fees 30,000
Miscellaneous 6,185
Total expenses 3,252,017
Less: expense offset arrangement (see Note B) (36,217)
Net expenses 3,215,800
Net investment loss (1,518,977)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 14,184,263
Net realized gain on foreign currency
transactions 692,929
Net change in unrealized appreciation of:
Investments (9,895,727)
Foreign currency denominated assets and
liabilities (607,534)
Net gain on investments and foreign currency
transactions 4,373,931
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,854,954
See notes to financial statements.
19
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1998 1997
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (1,518,977) $ (1,513,106)
Net realized gain on investments
and foreign currency transactions 14,877,192 10,850,949
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency denominated
assets and liabilities (10,503,261) 15,515,927
Net increase in net assets
from operations 2,854,954 24,853,770
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (6,916,095) (9,231,726)
Class B (3,117,806) (2,729,321)
Class C (796,527) (783,298)
Advisor Class (28,565) (38,258)
CAPITAL STOCK TRANSACTIONS
Net increase 13,322,160 27,153,600
Total increase 5,318,121 39,224,767
NET ASSETS
Beginning of year 126,214,523 86,989,756
End of year $131,532,644 $126,214,523
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Small Cap Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund offers Class A, Class B, Class C and Advisor Class shares.
Class A shares are sold with a front-end sales charge of up to 4.25% for
purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or
more, Class A shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge of 1%. Class B shares are currently sold with
a contingent deferred sales charge which declines from 4% 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 Cshares are subject to a contingent deferred sales charge of 1%
on redemptions made within the first year after purchase. Advisor Class shares
are sold without an initial or contingent deferred sales charge and are not
subject to ongoing distribution expenses. Advisor Class shares are offered to
investors participating in fee-based programs and to certain retirement plan
accounts. All four 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 financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair market value of such securities.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities and foreign exchange
currency contracts, currency gains and losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of interest recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid. The Fund does not isolate the effect of
fluctuations in foreign currency exchange rates when determining the gain or
loss upon the sale of equity securities. Net currency gains and losses from
valuing foreign currency denominated assets and liabilities at year end
exchange rates are reflected as a component of net unrealized appreciation of
investments and foreign currency denominated assets and liabilities.
3. 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
21
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
company taxable income and net realized gains, if any, to shareholders.
Therefore, no provisions for federal income or excise taxes are required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the trade date the
securities are purchased or sold. The Fund accretes discounts as adjustments to
interest income. Investment gains and losses are determined on the identified
cost basis.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisor Class shares have no distribution fees.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to net investment loss and the tax treatment of foreign currency
gains, resulted in a net increase in accumulated net investment loss and a
corresponding decrease in accumulated net realized gains on investments and
foreign currency denominated assets and liabilities. This reclassification had
no effect on net assets.
NOTE B: MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Manager") a management fee at an annual rate of
1% of the average daily net assets of the Fund. Such fee is accrued daily and
paid monthly.
Pursuant to the management agreement, the Fund paid $135,500 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, 1998.
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 $309,875 for the year ended July 31, 1998.
In addition, for the year ended July 31, 1998, the Fund's expenses were reduced
by $36,217 under an expense offset arrangement with Alliance Fund Services.
Transfer agency fees reported in the statement of operations exclude these
credits.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned
subsidiary of the Manager, serves as the Distributor of the Fund's shares. The
Distributor received front-end sales charges of $8,313 from the sales of Class
A shares and $100,848 and $2,747 in contingent deferred sales charges imposed
upon redemptions by shareholders of Class B and Class C shares, respectively,
for the year ended July 31, 1998.
Brokerage commissions paid on investment transactions for the year ended July
31, 1998 amounted to $512,201, of which $90 was paid to Donaldson, Lufkin &
Jenrette Securities Corp., an affiliate of the Manager.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the Fund's average daily net assets attributable to
Class A shares and 1% of the average daily net assets attributable to both
Class B and Class C shares. There is no distribution fee on the Advisor Class
shares. The fees are accrued daily and paid monthly. The Agreement provides
that the Distributor will use such payments in their entirety for
22
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
distribution assistance and promotional activities. The Distributor has
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $2,594,264 and $676,624 for Class B and Class C shares,
respectively; such costs may be recovered from the Fund in future periods so
long as the Agreement is in effect. In accordance with the Agreement, there is
no provision for recovery of unreimbursed distribution costs incurred by the
Distributor beyond the current fiscal year for Class A shares. The Agreement
also provides that the 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
and U.S. government securities) aggregated $145,822,450 and $142,376,843,
respectively, for the year ended July 31, 1998. There were no purchases or
sales of U.S. government and government agency obligations for the year ended
July 31, 1998.
At July 31, 1998, the cost of investments for federal income tax purposes was
$125,296,288. Accordingly, gross unrealized appreciation of investments was
$24,524,186 and gross unrealized depreciation of investments was $18,560,097,
resulting in net unrealized appreciation of $5,964,089, excluding foreign
currency transactions.
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 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.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. 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 July 31, 1998, the Fund had outstanding forward exchange currency contracts
to buy 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,
settling 8/10/98 550,000 $4,191,434 $3,808,469 $(382,965)
FOREIGN CURRENCY
SALE CONTRACTS
Japanese Yen,
settling 8/10/98 550,000 4,211,977 3,808,468 403,509
Japanese Yen,
settling 10/29/98 814,000 5,837,427 5,701,858 135,569
$ 156,113
23
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C, and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 1997 1998 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 1,542,623 993,161 $19,248,639 $11,718,840
Shares issued in
reinvestment of
distributions 491,450 632,521 5,622,159 6,982,712
Shares converted
from Class B 78,190 62,837 969,207 741,976
Shares redeemed (1,908,638) (975,383) (23,505,697) (11,573,247)
Net increase 203,625 713,136 $ 2,334,308 $ 7,870,281
CLASS B
Shares sold 1,841,143 2,096,355 $21,462,154 $23,394,278
Shares issued in
reinvestment of
distributions 257,260 179,345 2,725,087 1,859,822
Shares converted
to Class A (84,225) (65,905) (969,207) (741,976)
Shares redeemed (1,202,471) (846,665) (13,793,910) (9,385,983)
Net increase 811,707 1,363,130 $ 9,424,124 $15,126,141
CLASS C
Shares sold 620,351 781,046 $ 7,209,073 $ 8,633,201
Shares issued in
reinvestment of
distributions 69,804 37,793 741,394 392,675
Shares redeemed (569,558) (468,473) (6,465,829) (5,183,229)
Net increase 120,597 350,366 $ 1,484,638 $ 3,842,647
YEAR ENDED OCT. 2, 1996(A) YEAR ENDED OCT. 2, 1996(A)
JULY 31, TO JULY 31, TO
1998 JULY 31, 1997 1998 JULY 31, 1997
------------ ------------ -------------- --------------
ADVISOR CLASS
Shares sold 6,144 32,509 $ 77,324 $ 401,185
Shares issued in
reinvestment of
distributions 2,093 2,983 24,004 32,937
Shares redeemed (1,981) (9,635) (22,238) (119,591)
Net increase 6,256 25,857 $ 79,090 $ 314,531
(a) Commencement of distribution.
24
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE F: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility") to
provide short-term financing if necessary, subject to certain restrictions in
connection with abnormal redemption activity. Commitment fees related to the
Facility are paid by the participating funds and are included in the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended July 31, 1998.
25
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
OCTOBER 1,
1993
YEAR ENDED JULY 31, TO
-------------------------------------------------- JULY 31,
1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.87 $11.61 $10.38 $11.08 $11.24
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.11)(b) (.15)(b) (.14)(b) (.09) (.15)(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .37 2.97 1.90 1.50 (.01)
Net increase (decrease) in net
asset value from operations .26 2.82 1.76 1.41 (.16)
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- (.12) -0-
Total distributions (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $12.14 $12.87 $11.61 $10.38 $11.08
TOTAL RETURN
Total investment return based on net
asset value (c) 2.49% 26.47% 17.46% 16.62% (1.42)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $82,843 $85,217 $68,623 $60,057 $61,372
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.16%(d) 2.41%(d) 2.51% 2.54%(e) 2.42%(f)
Net investment loss (.88)% (1.25)% (1.22)% (1.17)% (1.26)%(f)
Portfolio turnover rate 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 29.
26
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
OCTOBER 1,
1993
YEAR ENDED JULY 31, TO
-------------------------------------------------- JULY 31,
1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.03 $11.03 $9.95 $10.78 $11.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.18)(b) (.21)(b) (.20)(b) (.12) (.17)(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .34 2.77 1.81 1.40 (.05)
Net increase (decrease) in net asset
value from operations .16 2.56 1.61 1.28 (.22)
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- (.12) -0-
Total distributions (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $11.20 $12.03 $11.03 $9.95 $10.78
TOTAL RETURN
Total investment return based on net
asset value (c) 1.80% 25.42% 16.69% 15.77% (2.00)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $38,827 $31,946 $14,247 $5,164 $3,889
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.88%(d) 3.11%(d) 3.21% 3.20%(e) 3.15%(f)
Net investment loss (1.58)% (1.92)% (1.88)% (1.92)% (1.93)%(f)
Portfolio turnover rate 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 29.
27
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
OCTOBER 1,
1993
YEAR ENDED JULY 31, TO
-------------------------------------------------- JULY 31,
1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.05 $11.05 $9.96 $10.79 $11.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.19)(b) (.22)(b) (.20)(b) (.17) (.17)(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .35 2.78 1.82 1.45 (.04)
Net increase (decrease) in net
asset value from operations .16 2.56 1.62 1.28 (.21)
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- (.12) -0-
Total distributions (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $11.22 $12.05 $11.05 $9.96 $10.79
TOTAL RETURN
Total investment return based on net
asset value (c) 1.79% 25.37% 16.77% 15.75% (1.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $9,471 $8,718 $4,119 $1,407 $1,330
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.88%(d) 3.10%(d) 3.19% 3.25%(e) 3.13%(f)
Net investment loss (1.59)% (1.93)% (1.85)% (2.10)% (1.92)%(f)
Portfolio turnover rate 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 29.
28
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
---------------------------
OCTOBER 2,
1996(G)
YEAR ENDED TO
JULY 31, JULY 31,
1998 1997
------------- ------------
Net asset value, beginning of period $12.89 $12.56
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.07) (.08)
Net realized and unrealized gain on
investments and foreign
currency transactions .37 1.97
Net increase in net asset value
from operations .30 1.89
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56)
Net asset value, end of period $12.20 $12.89
TOTAL RETURN
Total investment return based on
net asset value (c) 2.82% 17.08%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $392 $333
Ratios to average net assets of:
Expenses, net of waivers/reimbursements (d) 1.87% 2.05%(f)
Net investment loss (.57)% (.84)%(f)
Portfolio turnover rate 113% 129%
(a) The Fund changed its fiscal year end from September 30 to July 31.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(d) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended July 31, 1998 and the year ended July 31,
1997, the ratios of expenses net of waivers/reimbursements were 2.14% and 2.38%
for Class A shares, 2.86% and 3.08% for Class B shares, 2.85% and 3.08% for
Class C shares and 1.84% and 2.04% for Advisor Class shares, respectively.
(e) 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.
(f) Annualized.
(g) Commencement of distribution.
29
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, 1998, 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, 1998, 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, 1998, 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.
New York, New York
September 9, 1998
TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $987,204 and $1,480,806 of the capital gain distributions
paid by the Fund during the fiscal year July 31, 1998 are subject to maximum
tax rates of 28% and 20% respectively.
In addition, the Fund intends to make an election under Internal Revenue Code
Section 853 to pass through foreign taxes paid by the Fund to its shareholders.
The total amount of foreign taxes that may be passed through to the
shareholders for the fiscal year ended July 31, 1998 is $155,744. The foreign
source income for information reporting purposes is $155,744.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 1999.
30
<PAGE>
____________________________________________________________
APPENDIX A:
CERTAIN EMPLOYEE BENEFIT PLANS
____________________________________________________________
Employee benefit plans described below which are
intended to be tax-qualified under section 401(a) of the Internal
Revenue Code of 1986, as amended ("Tax Qualified Plans"), for
which Merrill Lynch, Pierce, Fenner & Smith Incorporated or an
affiliate thereof ("Merrill Lynch") is recordkeeper (or with
respect to which recordkeeping services are provided pursuant to
certain arrangements as described in paragraph (ii) below)
("Merrill Lynch Plans") are subject to specific requirements as
to the Fund shares which they may purchase. Notwithstanding
anything to the contrary contained elsewhere in this Statement of
Additional Information, the following Merrill Lynch Plans are not
eligible to purchase Class A shares and are eligible to purchase
Class B shares of the Fund at net asset value without being
subject to a contingent deferred sales charge:
(i) Plans for which Merrill Lynch is the recordkeeper on a
daily valuation basis, if when the plan is established
as an active plan on Merrill Lynch's recordkeeping
system:
(a) the plan is one which is not already
investing in shares of mutual funds or
interests in other commingled investment
vehicles of which Merrill Lynch Asset
Management, L.P. is investment adviser or
manager ("MLAM Funds"), and either (A) the
aggregate assets of the plan are less than
$3 million or (B) the total of the sum of
(x) the employees eligible to participate in
the plan and (y) those persons, not
including any such employees, for whom a
plan account having a balance therein is
maintained, is less than 500, each of (A)
and (B) to be determined by Merrill Lynch in
the normal course prior to the date the plan
is established as an active plan on Merrill
Lynch's recordkeeping system (an "Active
Plan"); or
(b) the plan is one which is already investing
in shares of or interests in MLAM Funds and
the assets of the plan have an aggregate
value of less than $5 million, as determined
A-1
<PAGE>
by Merrill Lynch as of the date the plan
becomes an Active Plan.
For purposes of applying (a) and (b), there
are to be aggregated all assets of any Tax-
Qualified Plan maintained by the sponsor of
the Merrill Lynch Plan (or any of the
sponsor's affiliates) (determined to be such
by Merrill Lynch) which are being invested
in shares of or interests in MLAM Funds,
Alliance Mutual Funds or other mutual funds
made available pursuant to an agreement
between Merrill Lynch and the principal
underwriter thereof (or one of its
affiliates) and which are being held in a
Merrill Lynch account.
(ii) Plans for which the recordkeeper is not Merrill Lynch,
but which are recordkept on a daily valuation basis by
a recordkeeper with which Merrill Lynch has a
subcontracting or other alliance arrangement for the
performance of recordkeeping services, if the plan is
determined by Merrill Lynch to be so eligible and the
assets of the plan are less than $3 million.
Class B shares of the Fund held by any of the
above-described Merrill Lynch Plans are to be replaced at
Merrill Lynch's direction through conversion, exchange or
otherwise by Class A shares of the Fund on the earlier of
the date that the value of the plan's aggregate assets first
equals or exceeds $5 million or the date on which any Class
B share of the Fund held by the plan would convert to a
Class A share of the Fund as described under "Purchase of
Shares" and "Redemption and Repurchase of Shares."
Any Tax Qualified Plan, including any Merrill Lynch
Plan, which does not purchase Class B shares of the Fund
without being subject to a contingent deferred sales charge
under the above criteria is eligible to purchase Class B
shares subject to a contingent deferred sales charge as well
as other classes of shares of the Fund as set forth above
under "Purchase of Shares" and "Redemption and Repurchase of
Shares."
A-2
00250176.AO2
