-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KPN2pYqQb/UtjnLnufuba1AdHuMcoWQMGzs6r0adZaY7TPgewRLTd3XW0ec3ZL1g 17scLEPLhJ/5unIwx5ioOg== 0000919574-98-000102.txt : 19980202 0000919574-98-000102.hdr.sgml : 19980202 ACCESSION NUMBER: 0000919574-98-000102 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 19980130 EFFECTIVENESS DATE: 19980130 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE PREMIER GROWTH FUND INC CENTRAL INDEX KEY: 0000889508 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-49530 FILM NUMBER: 98517573 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-06730 FILM NUMBER: 98517574 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2013194104 MAIL ADDRESS: STREET 1: ALLIANC CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS 31ST CITY: NEW YORK STATE: NY ZIP: 10105 485BPOS 1 As filed with the Securities and Exchange Commission on January 30, 1998 File Nos. 33-49530 811-6730 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. Post-Effective Amendment No. 14 X and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 16 X Alliance Premier Growth Fund, Inc. (Exact Name of Registrant as Specified in Charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of Principal Executive Office) (Zip Code) Registrant's Telephone Number, including Area Code:(800) 221-5672 EDMUND P. BERGAN, JR. Alliance Capital Management L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Copies of Communications to: Thomas G. MacDonald, Esq. Seward & Kissel One Battery Park Plaza New York, New York 10004 It is proposed that this filing will become effective (check appropriate line) X immediately upon filing pursuant to paragraph (b) on (date) pursuant to paragraph (b) 60 days after filing pursuant to paragraph (a)(1) on (date) pursuant to paragraph (a)(1) 75 days after filing pursuant to paragraph (a)(2) on (date) pursuant to paragraph (a)(2) of Rule 485. If appropriate, check the following box: This post-effective amendment designates a new effective date for a previously filed post-effective amendment. CROSS REFERENCE SHEET (as required by Rule 404(c)) N-lA Item No. Location in Prospectus (Caption) PART A Item 1. Cover Page.................... Cover Page Item 2. Synopsis...................... Expense Information Item 3. Condensed Financial Information................... Financial Highlights Item 4. General Description of Registrant.................... Description of the Fund; General Information Item 5. Management of the Fund........ Management of the Fund; General Information Item 6. Capital Stock and Other Securities.................... Dividends, Distributions and Taxes; General Information Item 7. Purchase of Securities Being Offered....................... Purchase and Sale of Shares; Shareholder Services; How to Exchange Shares; General Information Item 8. Redemption or Repurchase...... Purchase and Sale of Shares; General Information Item 9. Pending Legal Proceedings..... Not Applicable PART B Location in Statement of Additional Information Item 10. Cover Page.................... Cover Page Item 11. Table of Contents............. Cover Page Item 12. General Information and History....................... Management of the Fund; General Information Item 13. Investment Objectives and Policies...................... Description of the Fund Item 14. Management of the Registrant.. Management of the Fund Item 15. Control Persons and Principal Holders of Securities ........ Management of the Fund; General Information Item 16. Investment Advisory and Other Services...................... Management of the Fund Item 17. Brokerage Allocation and Other Practices..................... Portfolio Transactions Item 18. Capital Stock and Other Securities.................... General Information Item 19. Purchase, Redemption and Pricing of Securities Being Offered....................... Purchase, Redemption and Repurchase of Shares; Net Asset Value Item 20. Tax Status.................... Investment Policies and Restrictions; Dividends, Distributions and Taxes Item 21. Underwriters.................. General Information Item 22. Calculation of Performance Data.......................... General Information Item 23. Financial Statements.......... Financial Statements; Report of Independent Accountants THE ALLIANCE - -------------------------------------------------------------------------------- STOCK FUNDS - -------------------------------------------------------------------------------- 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 Prospectus and Application February 2, 1998 Domestic Stock Funds Global Stock Funds - -The Alliance Fund -Alliance International Fund - -Alliance Growth Fund -Alliance Worldwide Privatization Fund - -Alliance Premier Growth Fund -Alliance New Europe Fund - -Alliance Technology Fund -Alliance All-Asia Investment Fund - -Alliance Quasar Fund -Alliance Global Small Cap Fund -Alliance Global Environment Fund Total Return Funds -Alliance Strategic Balanced Fund -Alliance Balanced Shares -Alliance Income Builder Fund -Alliance Utility Income Fund -Alliance Growth and Income Fund -Alliance Real Estate Investment Fund
Table of Contents Page The Funds at a Glance ..................................................... 2 Expense Information ....................................................... 4 Financial Highlights ...................................................... 7 Glossary .................................................................. 19 Description of the Funds .................................................. 20 Investment Objectives and Policies ..................................... 20 Additional Investment Practices ........................................ 31 Certain Fundamental Investment Policies ................................ 38 Risk Considerations .................................................... 41 Purchase and Sale of Shares ............................................... 46 Management of the Funds ................................................... 49 Dividends, Distributions and Taxes ........................................ 53 General Information ....................................................... 55
Adviser Alliance Capital Management L.P. 1345 Avenue Of The Americas New York, New York 10105 The Alliance Stock Funds provide a broad selection of investment alternatives to investors seeking capital growth or high total return. The Domestic Stock Funds invest mainly in the United States equity markets and the Global Stock Funds diversify their investments among equity markets around the world, while the Total Return Funds invest in both equity and fixed-income securities. Each fund or portfolio (each a "Fund") is, or is a series of, an open-end management investment company. This Prospectus sets forth concisely the information which a prospective investor should know about each Fund before investing. A "Statement of Additional Information" for each Fund which provides further information regarding certain matters discussed in this Prospectus and other matters which may be of interest to some investors has been filed with the Securities and Exchange Commission and is incorporated herein by reference. For a free copy, call or write Alliance Fund Services, Inc. at the indicated address or call the "For Literature" telephone number shown above. Each Fund offers three classes of shares through this Prospectus. These shares may be purchased, at the investor's choice, at a price equal to their net asset value (i) plus an initial sales charge imposed at the time of purchase (the "Class A shares"), (ii) with a contingent deferred sales charge imposed on most redemptions made within four years of purchase (the "Class B shares"), or (iii) without any initial or contingent deferred sales charge, as long as the shares are held for one year or more (the "Class C shares"). See "Purchase and Sale of Shares." An investment in these securities is not a deposit or obligation of, or guaranteed or endorsed by, any bank and is not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other agency. Investors are advised to read this Prospectus carefully and to retain it for future reference. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. [LOGO]Alliance(R) Investing without the Mystery.(SM) (R)/SM These are registered marks used under licenses from the owner, Alliance Capital Management L.P. The Funds At A Glance The following summary is qualified in its entirety by the more detailed information contained in this Prospectus. The Funds' Investment Adviser Is . . . Alliance Capital Management L.P. ("Alliance"), a global investment manager providing diversified services to institutions and individuals through a broad line of investments including more than 100 mutual funds. Since 1971, Alliance has earned a reputation as a leader in the investment world with over $217 billion in assets under management as of September 30, 1997. Alliance provides investment management services to employee benefit plans for 28 of the FORTUNE 100 companies. Domestic Stock Funds Alliance Fund Seeks . . . Long-term growth of capital and income primarily through investment in common stocks. Invests Principally in . . . A diversified portfolio of equity securities that, in the judgment of Alliance, have the potential to achieve capital appreciation. Growth Fund Seeks . . . Long-term growth of capital by investing primarily in common stocks and other equity securities. Invests Principally in . . . A diversified portfolio of equity securities of companies with a favorable outlook for earnings and whose rate of growth is expected to exceed that of the United States economy over time. Premier Growth Fund Seeks . . . Long-term growth of capital by investing in the equity securities of a limited number of large, carefully selected, high-quality American companies from a relatively small universe of intensively researched companies. Invests Principally in . . . A diversified portfolio of equity securities that, in the judgment of Alliance, are likely to achieve superior earnings growth. Normally, approximately 40 companies will be represented in the Fund's investment portfolio. The Fund's investments in 25 of these companies most highly regarded at any point in time by Alliance will usually constitute approximately 70% of the Fund's net assets. Technology Fund Seeks . . . Growth of capital through investment in companies expected to benefit from advances in technology. Invests Principally in . . . A diversified portfolio of securities of companies which use technology extensively in the development of new or improved products or processes. Quasar Fund Seeks . . . Growth of capital by pursuing aggressive investment policies. Invests Principally in . . . A diversified portfolio of equity securities of any company and industry and in any type of security which is believed to offer possibilities for capital appreciation. Global Stock Funds International Fund Seeks . . . A total return on its assets from long-term growth of capital and from income. Invests Principally in . . . A diversified portfolio of marketable securities of established non-United States companies, companies participating in foreign economies with prospects for growth, and foreign government securities. Worldwide Privatization Fund Seeks . . . Long-term capital appreciation. Invests Principally in . . . A non-diversified portfolio of equity securities issued by enterprises that are undergoing, or have undergone, privatization. The balance of the Fund's investment portfolio will include securities of companies that are believed by Alliance to be beneficiaries of the privatization process. New Europe Fund Seeks . . . Long-term capital appreciation through investment primarily in the equity securities of companies based in Europe. Invests Principally in . . . A non-diversified portfolio of equity securities of European companies. All-Asia Investment Fund Seeks . . . Long-term capital appreciation. Invests Principally in . . . A non-diversified portfolio of equity securities of Asian/Pacific companies. Global Small Cap Fund Seeks . . . Long-term growth of capital. Invests Principally in . . . A diversified global portfolio of the equity securities of small capitalization companies. Global Environment Fund Seeks . . . Long-term capital appreciation. Invests Principally in . . . A non-diversified portfolio of equity securities of companies expected to benefit from advances or improvements in products, processes or services intended to foster the protection of the environment. Total Return Funds Strategic Balanced Fund Seeks . . . A high long-term total return by investing in a combination of equity and debt securities. 2 Invests Principally in . . . A diversified portfolio of dividend-paying common stocks and fixed-income securities, and also in equity-type securities such as warrants, preferred stocks and convertible debt instruments. Balanced Shares Seeks . . . A high return through a combination of current income and capital appreciation. Invests Principally in . . . A diversified portfolio of equity and fixed-income securities such as common and preferred stocks, U.S. Government and agency obligations, bonds and senior debt securities. Income Builder Fund Seeks . . . Both an attractive level of current income and long-term growth of income and capital. Invests Principally in . . . A non-diversified portfolio of fixed-income securities and dividend-paying common stocks. Alliance currently expects to continue to maintain approximately 60% of the Fund's net assets in fixed-income securities and 40% in equity securities. Utility Income Fund Seeks . . . Current income and capital appreciation through investment in the utilities industry. Invests Principally in . . . A diversified portfolio of equity securities, such as common stocks, securities convertible into common stocks and rights and warrants to subscribe for purchase of common stocks, and in fixed-income securities such as bonds and preferred stocks. Growth and Income Fund Seeks . . . Income and appreciation through investment in dividend-paying common stocks of quality companies. Invests Principally in . . . A diversified portfolio of dividend-paying common stocks of good quality, and, under certain market conditions, other types of securities, including bonds, convertible bonds and preferred stocks. Real Estate Investment Fund Seeks . . . Total return on its assets from long-term growth of capital and from income. Invests Principally in . . . A diversified portfolio of equity securities of issuers that are primarily engaged in or related to the real estate industry. Distributions . . . Balanced Shares, Income Builder Fund, Utility Income Fund, Growth and Income Fund and Real Estate Investment Fund intend to make distributions quarterly to shareholders. These distributions may include ordinary income and capital gain (each of which is taxable) and a return of capital (which is generally non-taxable). See "Dividends, Distributions and Taxes." A Word About Risk . . . The price of the shares of the Alliance Stock Funds will fluctuate as the daily prices of the individual securities in which they invest fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. With respect to those Funds permitted to invest in foreign currency denominated securities, these fluctuations may be magnified by changes in foreign exchange rates. Investment in the Global Stock Funds involves risks not associated with funds that invest primarily in securities of U.S. issuers. While the Funds invest principally in common stocks and other equity securities, in order to achieve their investment objectives the Funds may at times use certain types of investment derivatives such as options, futures, forwards and swaps. These involve risks different from, and, in certain cases, greater than, the risks presented by more traditional investments. An investment in the Real Estate Investment Fund is subject to certain risks associated with the direct ownership of real estate in general, including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. These risks are fully discussed in this Prospectus. Getting Started . . . Shares of the Funds are available through your financial representative and most banks, insurance companies and brokerage firms nationwide. Shares can be purchased for a minimum initial investment of $250, and subsequent investments can be made for as little as $50. For detailed information about purchasing and selling shares, see "Purchase and Sale of Shares." In addition, the Funds offer several time and money saving services to investors. Be sure to ask your financial representative about: - -------------------------------------------------------------------------------- AUTOMATIC REINVESTMENT - -------------------------------------------------------------------------------- AUTOMATIC INVESTMENT PROGRAM - -------------------------------------------------------------------------------- RETIREMENT PLANS - -------------------------------------------------------------------------------- SHAREHOLDER COMMUNICATIONS - -------------------------------------------------------------------------------- DIVIDEND DIRECTION PLANS - -------------------------------------------------------------------------------- AUTO EXCHANGE - -------------------------------------------------------------------------------- SYSTEMATIC WITHDRAWALS - -------------------------------------------------------------------------------- A CHOICE OF PURCHASE PLANS - -------------------------------------------------------------------------------- TELEPHONE TRANSACTIONS - -------------------------------------------------------------------------------- 24-HOUR INFORMATION - -------------------------------------------------------------------------------- [LOGO]Alliance(R) Investing without the Mystery.(SM) (R)/SM These are registered marks used under licenses from the owner, Alliance Capital Management L.P. 3 - -------------------------------------------------------------------------------- EXPENSE INFORMATION - -------------------------------------------------------------------------------- Shareholder Transaction Expenses are one of several factors to consider when you invest in a Fund. The following table summarizes your maximum transaction costs from investing in a Fund and annual expenses for each class of shares of each Fund. For each Fund, the "Examples" to the right of the table below show the cumulative expenses attributable to a hypothetical $1,000 investment in each class for the periods specified.
Class A Shares Class B Shares Class C Shares -------------- -------------- -------------- Maximum sales charge imposed on purchases (as a percentage of offering price) ................................................. 4.25%(a) None None Sales charge imposed on dividend reinvestments .................. None None None Deferred sales charge (as a percentage of original purchase price or redemption proceeds, whichever is lower) ............................................. None(a) 4.0% 1.0% during the during the first year, first year, decreasing 1.0% 0% thereafter annually to 0% after the fourth year (b) Exchange fee .................................................... None None None
- -------------------------------------------------------------------------------- (a) Reduced for larger purchases. Purchases of $1,000,000 or more are not subject to an initial sales charge but may be subject to a 1% deferred sales charge on redemptions within one year of purchase. See "Purchase and Sale of Shares--How to Buy Shares" -page 46. (b) Class B shares of each Fund other than Premier Growth Fund automatically convert to Class A shares after eight years and the Class B shares of Premier Growth Fund convert to Class A shares after six years. See "Purchase and Sale of Shares--How to Buy Shares" -page 46.
Operating Expenses Examples - --------------------------------------------------------- ------------------------------------------------------------- Alliance Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees .68% .68% .68% After 1 year $ 53 $ 59 $ 19 $ 29 $ 19 12b-1 fees .20% 1.00% 1.00% After 3 years $ 74 $ 78 $ 58 $ 58 $ 58 Other expenses (a) .15% .17% .15% After 5 years $ 97 $100 $100 $ 99 $ 99 ---- ---- ---- After 10 years $163 $195(b) $195(b) $215 $215 Total fund operating expenses 1.03% 1.85% 1.83% ==== ==== ==== Growth Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees .74% .74% .74% After 1 year $ 55 $ 60 $ 20 $ 30 $ 20 12b-1 fees .30% 1.00% 1.00% After 3 years $ 81 $ 82 $ 62 $ 62 $ 62 Other expenses (a) .22% .22% .23% After 5 years $109 $106 $106 $106 $106 ---- ---- ---- After 10 years $188 $210(b) $210(b) $230 $230 Total fund operating expenses 1.26% 1.96% 1.97% ==== ==== ==== 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 $ 58 $ 63 $ 23 $ 33 $ 23 12b-1 fees .33% 1.00% 1.00% After 3 years $ 90 $ 90 $ 70 $ 70 $ 70 Other expenses (a) .24% .25% .24% After 5 years $124 $120 $120 $120 $120 ---- ---- ---- After 10 years $221 $241(b) $241(b) $257 $257 Total fund operating expenses 1.57% 2.25% 2.24% ==== ==== ==== Technology Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees (g) 1.04% 1.04% 1.04% After 1 year $ 59 $ 64 $ 24 $ 34 $ 24 12b-1 fees .30% 1.00% 1.00% After 3 years $ 93 $ 94 $ 74 $ 74 $ 74 Other expenses (a) .33% .34% .34% After 5 years $129 $127 $127 $127 $127 ---- ---- ---- After 10 years $232 $254(b) $254(b) $272 $272 Total fund operating expenses 1.67% 2.38% 2.38% ==== ==== ====
- -------------------------------------------------------------------------------- Please refer to the footnotes on page 6. 4
Operating Expenses Examples - --------------------------------------------------------- ------------------------------------------------------------- Quasar Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees (g) 1.16% 1.16% 1.16% After 1 year $ 59 $ 65 $ 25 $ 35 $ 25 12b-1 fees .22% 1.00% 1.00% After 3 years $ 93 $ 98 $ 78 $ 78 $ 78 Other expenses (a) .29% .35% .34% After 5 years $129 $134 $134 $133 $133 ---- ---- ---- After 10 years $232 $264(b) $264(b) $284 $284 Total fund operating expenses 1.67% 2.51% 2.50% ==== ==== ==== International Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees (after waiver) (c) .85% .85% .85% After 1 year $ 58 $ 65 $ 25 $ 35 $ 25 12b-1 fees .17% 1.00% 1.00% After 3 years $ 90 $ 96 $ 76 $ 75 $ 75 Other expenses (a) .56% .58% .57% After 5 years $125 $130 $130 $129 $129 ---- ---- ---- After 10 years $222 $256(b) $256(b) $276 $276 Total fund operating expenses (d) 1.58% 2.43% 2.42% ==== ==== ==== 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 $ 59 $ 65 $ 25 $ 35 $ 25 12b-1 fees .30% 1.00% 1.00% After 3 years $ 94 $ 96 $ 76 $ 75 $ 75 Other expenses (a) .42% .43% .42% After 5 years $132 $130 $130 $129 $129 ---- ---- ---- After 10 years $237 $259(b) $259(b) $276 $276 Total fund operating expenses 1.72% 2.43% 2.42% ==== ==== ==== New Europe Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees 1.06% 1.06% 1.06% After 1 year $ 62 $ 68 $ 28 $ 38 $ 28 12b-1 fees .30% 1.00% 1.00% After 3 years $104 $105 $ 85 $ 85 $ 85 Other expenses (a) .69% .69% .68% After 5 years $148 $145 $145 $145 $145 ---- ---- ---- After 10 years $270 $291(b) $291(b) $307 $307 Total fund operating expenses 2.05% 2.75% 2.74% ==== ==== ==== All-Asia Investment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees After 1 year $ 63 $ 68 $ 28 $ 38 $ 28 (after waiver) (c) .65% .65% .65% After 3 years $104 $106 $ 86 $ 86 $ 86 12b-1 fees .30% 1.00% 1.00% After 5 years $149 $146 $146 $146 $146 Other expenses After 10 years $271 $293(b) $293(b) $310 $310 Administration fees (after waiver) (f) .00% .00% .00% Other operating expenses (a) 1.11% 1.12% 1.12% ---- ---- ---- Total fund operating expenses (d) 2.06% 2.77% 2.77% ==== ==== ==== 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 $ 66 $ 71 $ 31 $ 41 $ 31 12b-1 fees .30% 1.00% 1.00% After 3 years $114 $116 $ 96 $ 96 $ 96 Other expenses (a) 1.11% 1.11% 1.10% After 5 years $166 $163 $163 $163 $163 ---- ---- ---- After 10 years $305 $326(b) $326(b) $341 $341 Total fund operating expenses 2.41% 3.11% 3.10% ==== ==== ==== Global Environment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees 1.10% 1.10% 1.10% After 1 year $ 69 $ 74 $ 34 $ 44 $ 34 12b-1 fees .30% 1.00% 1.00% After 3 years $122 $123 $103 $104 $104 Other expenses (a) 1.29% 1.26% 1.29% After 5 years $179 $175 $175 $176 $176 ---- ---- ---- After 10 years $332 $350(b) $350(b) $368 $368 Total fund operating expenses 2.69% 3.36% 3.39% ==== ==== ====
- -------------------------------------------------------------------------------- Please refer to the footnotes on page 6. 5
Operating Expenses Examples - --------------------------------------------------------- ------------------------------------------------------------- Strategic Balanced Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees (after waiver) (c) .09% .09% .09% After 1 year $ 56 $ 62 $ 22 $ 32 $ 22 12b-1 fees .30% 1.00% 1.00% After 3 years $ 85 $ 86 $ 66 $ 66 $ 66 Other expenses (a) 1.02% 1.03% 1.03% After 5 years $116 $114 $114 $114 $114 ---- ---- ---- After 10 years $204 $227(b) $227(b) $245 $245 Total fund operating expenses (d) 1.41% 2.12% 2.12% ==== ==== ==== 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 $ 57 $ 63 $ 23 $ 33 $ 23 12b-1 fees .24% 1.00% 1.00% After 3 years $ 87 $ 90 $ 70 $ 70 $ 70 Other expenses (a) .60% .62% .60% After 5 years $119 $120 $120 $119 $119 ---- ---- ---- After 10 years $211 $239(b) $239(b) $256 $256 Total fund operating expenses 1.47% 2.25% 2.23% ==== ==== ==== Income Builder 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 $ 63 $ 68 $ 28 $ 38 $ 28 12b-1 fees .30% 1.00% 1.00% After 3 years $105 $107 $ 87 $ 87 $ 87 Other expenses (a) 1.04% 1.05% 1.05% After 5 years $150 $148 $148 $148 $148 ---- ---- ---- After 10 years $274 $296(b) $296(b) $313 $313 Total fund operating expenses 2.09% 2.80% 2.80% ==== ==== ==== Utility Income Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees 0.00% 0.00% 0.00% After 1 year $ 57 $ 62 $ 22 $ 32 $ 22 (after waiver) (c) After 3 years $ 88 $ 89 $ 69 $ 69 $ 69 12b-1 fees .30% 1.00% 1.00% After 5 years $121 $118 $118 $118 $118 Other expenses (a) 1.20% 1.20% 1.20% After 10 years $214 $236(b) $236(b) $253 $253 ---- ---- ---- Total fund operating expenses (e) 1.50% 2.20% 2.20% ==== ==== ==== Growth and Income Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++ ------- ------- ------- ---------------- ------------------ --------- Management fees .49% .49% .49% After 1 year $ 51 $ 57 $ 17 $ 27 $ 17 12b-1 fees .22% 1.00% 1.00% After 3 years $ 71 $ 74 $ 54 $ 54 $ 54 Other expenses (a) .21% .23% .22% After 5 years $ 91 $ 93 $ 93 $ 93 $ 93 ---- ---- ---- After 10 years $151 $182(b) $182(b) $202 $202 Total fund operating expenses .92% 1.72% 1.71% ==== ==== ==== 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 $ 60 $ 65 $ 25 $ 35 $ 25 12b-1 fees .30% 1.00% 1.00% After 3 years $ 96 $ 96 $ 76 $ 76 $ 76 Other expenses (a) .57% .54% .53% After 5 years $134 $130 $130 $130 $130 ---- ---- ---- After 10 years $242 $261(b) $261(b) $277 $277 Total fund operating expenses 1.77% 2.44% 2.43% ==== ==== ====
- -------------------------------------------------------------------------------- + Assumes redemption at end of period. ++ Assumes no redemption at end of period. (a) These expenses include a transfer agency fee payable to Alliance Fund Services, Inc., an affiliate of Alliance. The expenses shown do not reflect the application of credits that reduce Fund expenses. (b) Assumes Class B shares converted to Class A shares after eight years, or six years with respect to Premier Growth Fund. (c) Net of voluntary fee waiver. In the absence of such waiver, management fees would be .75% for Strategic Balanced Fund and Utility Income Fund, 1.00% for All-Asia Investment Fund and 1.01% for International Fund. International Fund's fee, absent the voluntary fee waiver, is calculated based on average daily net assets. Maximum contractual rate, based on quarter-end net assets, is 1.00%. (d) Net of voluntary fee waivers and expense reimbursements. Absent such waivers and reimbursements, total fund operating expenses for Strategic Balanced Fund would have been 2.06%, 2.76% and 2.76%, respectively, for Class A, Class B and Class C shares, total fund operating expenses for All-Asia Investment Fund would have been 2.56%, 3.27% and 3.27%, respectively, for Class A, Class B and Class C shares annualized and total fund operating expenses for International Fund would have been 1.74%, 2.59% and 2.58%, respectively, for Class A, Class B and Class C annualized. (e) Net of expense reimbursements. Absent expense reimbursements, total fund operating expenses for Utility Income Fund would be 3.55%, 4.28%, 4.28%, respectively, for Class A, Class B and Class C shares. (f) Net of voluntary fee waiver. Absent such fee waiver, administration fees would have been .15% for the Fund's Class A, Class B and Class C shares. Reflects the fees payable by All-Asia Investment Fund to Alliance pursuant to an adminstration agreement. (g) Calculated based on average daily net assets. Maximum contractual rate, based on quarter-end net assets, is 1.00% for Quasar Fund and Technology Fund. The purpose of the foregoing table is to assist the investor in understanding the various costs and expenses that an investor in a Fund will bear directly or indirectly. Long-term shareholders of a Fund may pay aggregate sales charges totaling more than the economic equivalent of the maximum initial sales charges permitted by the Conduct Rules of the National Association of Securities Dealers, Inc. See "Management of the Funds--Distribution Services Agreements." The Rule 12b-1 fee for each class comprises a 6 service fee not exceeding .25% of the aggregate average daily net assets of the Fund attributable to the class and an asset-based sales charge equal to the remaining portion of the Rule 12b-1 fee. "Management fees" for International Fund and All-Asia Investment Fund and "Administration fees" for All-Asia Investment Fund have been restated to reflect current voluntary fee waivers. "Other Expenses" for Global Environment Fund are based on estimated amounts for its current fiscal year. The Examples set forth above assume reinvestment of all dividends and distributions and utilize a 5% annual rate of return as mandated by Commission regulations. The Examples should not be considered representative of past or future expenses; actual expenses may be greater or less than those shown. - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The tables on the following pages present, for each Fund, per share income and capital changes for a share outstanding throughout each period indicated. Except as otherwise indicated, the information in the tables for Alliance Fund, Growth Fund, Premier Growth Fund, Strategic Balanced Fund, Balanced Shares, Utility Income Fund, Worldwide Privatization Fund and Growth and Income Fund has been audited by Price Waterhouse LLP, the independent accountants for each Fund, and for All-Asia Investment Fund, Technology Fund, Quasar Fund, International Fund, New Europe Fund, Global Small Cap Fund, Global Environment Fund, Real Estate Investment Fund and Income Builder Fund by Ernst & Young LLP, the independent auditors for each Fund. A report of Price Waterhouse LLP or Ernst & Young LLP, as the case may be, on the information with respect to each Fund, appears in the Fund's Statement of Additional Information. The following information for each Fund should be read in conjunction with the financial statements and related notes which are included in the Fund's Statement of Additional Information. Further information about a Fund's performance is contained in the Fund's annual report to shareholders, which may be obtained without charge by contacting Alliance Fund Services, Inc. at the address or the "For Literature" telephone number shown on the cover of this Prospectus. 7
Net Net Net Asset Realized and Increase Value Unrealized (Decrease) In Dividends From Distributions Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains ------------------- ------------ -------------- -------------- --------------- -------------- -------------- Alliance Fund Class A Year ended 11/30/97 ............ $7.71 $(.02)(b) $2.09 $2.07 $(.02) $(1.06) Year ended 11/30/96 ............ 7.72 .02 1.06 1.08 (.02) (1.07) Year ended 11/30/95 ............ 6.63 .02 2.08 2.10 (.01) (1.00) 1/1/94 to 11/30/94** ........... 6.85 .01 (.23) (.22) 0.00 0.00 Year ended 12/31/93 ............ 6.68 .02 .93 .95 (.02) (.76) Year ended 12/31/92 ............ 6.29 .05 .87 .92 (.05) (.48) Year ended 12/31/91 ............ 5.22 .07 1.70 1.77 (.07) (.63) Year ended 12/31/90 ............ 6.87 .09 (.32) (.23) (.18) (1.24) Year ended 12/31/89 ............ 5.60 .12 1.19 1.31 (.04) 0.00 Year ended 12/31/88 ............ 5.15 .08 .80 .88 (.08) (.35) Class B Year ended 11/30/97 ............ $7.40 $(.08)(b) $1.99 $1.91 $0.00 $(1.06) Year ended 11/30/96 ............ 7.49 (.01) .99 .98 0.00 (1.07) Year ended 11/30/95 ............ 6.50 (.03) 2.02 1.99 0.00 (1.00) 1/1/94 to 11/30/94** ........... 6.76 (.03) (.23) (.26) 0.00 0.00 Year ended 12/31/93 ............ 6.64 (.03) .91 .88 0.00 (.76) Year ended 12/31/92 ............ 6.27 (.01)(b) .87 .86 (.01) (.48) 3/4/91++ to 12/31/91 ........... 6.14 .01(b) .79 .80 (.04) (.63) Class C Year ended 11/30/97 ............ $7.41 $(.08)(b) $1.99 $1.91 $0.00 $(1.06) Year ended 11/30/96 ............ 7.50 (.02) 1.00 .98 0.00 (1.07) Year ended 11/30/95 ............ 6.50 (.03) 2.03 2.00 0.00 (1.00) 1/1/94 to 11/30/94** ........... 6.77 (.03) (.24) (.27) 0.00 0.00 5/3/93++ to 12/31/93 ........... 6.67 (.02) .88 .86 0.00 (.76) Growth Fund (i) Class A Year ended 10/31/97 ............ $34.91 $(.10)(b) $10.17 $10.07 $0.00 $(1.03) Year ended 10/31/96 ............ 29.48 .05 6.20 6.25 (.19) (.63) Year ended 10/31/95 ............ 25.08 .12 4.80 4.92 (.11) (.41) 5/1/94 to 10/31/94** ........... 23.89 .09 1.10 1.19 0.00 0.00 Year ended 4/30/94 ............. 22.67 (.01)(c) 3.55 3.54 0.00 (2.32) Year ended 4/30/93 ............. 20.31 .05(c) 3.68 3.73 (.14) (1.23) Year ended 4/30/92 ............. 17.94 .29(c) 3.95 4.24 (.26) (1.61) 9/4/90++ to 4/30/91 ............ 13.61 .17(c) 4.22 4.39 (.06) 0.00 Class B Year ended 10/31/97 ............ $29.21 $(.31)(b) $8.44 $8.13 $0.00 $(1.03) Year ended 10/31/96 ............ 24.78 (.12) 5.18 5.06 0.00 (.63) Year ended 10/31/95 ............ 21.21 (.02) 4.01 3.99 (.01) (.41) 5/1/94 to 10/31/94** ........... 20.27 .01 .93 .94 0.00 0.00 Year ended 4/30/94 ............. 19.68 (.07)(c) 2.98 2.91 0.00 (2.32) Year ended 4/30/93 ............. 18.16 (.06)(c) 3.23 3.17 (.03) (1.62) Year ended 4/30/92 ............. 16.88 .17(c) 3.67 3.84 (.21) (2.35) Year ended 4/30/91 ............. 14.38 .08(c) 3.22 3.30 (.09) (.71) Year ended 4/30/90 ............. 14.13 .01(b)(c) 1.26 1.27 0.00 (1.02) Year ended 4/30/89 ............. 12.76 (.01)(c) 2.44 2.43 0.00 (1.06) 10/23/87+ to 4/30/88 ........... 10.00 (.02)(c) 2.78 2.76 0.00 0.00 Class C Year ended 10/31/97 ............ $29.22 $(.31)(b) $8.45 $8.14 $0.00 $(1.03) Year ended 10/31/96 ............ 24.79 (.12) 5.18 5.06 0.00 (.63) Year ended 10/31/95 ............ 21.22 (.03) 4.02 3.99 (.01) (.41) 5/1/94 to 10/31/94** ........... 20.28 .01 .93 .94 0.00 0.00 8/2/93++ to 4/30/94 ............ 21.47 (.02)(c) 1.15 1.13 0.00 (2.32) Premier Growth Fund Class A Year ended 11/30/97 ............ $17.98 $(.10)(b) $5.20 $5.10 $0.00 $(1.08) Year ended 11/30/96 ............ 16.09 (.04)(b) 3.20 3.16 0.00 (1.27) Year ended 11/30/95 ............ 11.41 (.03) 5.38 5.35 0.00 (.67) Year ended 11/30/94 ............ 11.78 (.09) (.28) (.37) 0.00 0.00 Year ended 11/30/93 ............ 10.79 (.05) 1.05 1.00 (.01) 0.00 9/28/92+ to 11/30/92 ........... 10.00 .01 .78 .79 0.00 0.00 Class B Year ended 11/30/97 ............ $17.52 $(.23)(b) $5.05 $4.82 $0.00 $(1.08) Year ended 11/30/96 ............ 15.81 (.14)(b) 3.12 2.98 0.00 (1.27) Year ended 11/30/95 ............ 11.29 (.11) 5.30 5.19 0.00 (.67) Year ended 11/30/94 ............ 11.72 (.15) (.28) (.43) 0.00 0.00 Year ended 11/30/93 ............ 10.79 (.10) 1.03 .93 0.00 0.00 9/28/92+ to 11/30/92 ........... 10.00 0.00 .79 .79 0.00 0.00 Class C Year ended 11/30/97 ............ $17.54 $(.24)(b) $5.07 $4.83 $0.00 $(1.08) Year ended 11/30/96 ............ 15.82 (.14)(b) 3.13 2.99 0.00 (1.27) Year ended 11/30/95 ............ 11.30 (.08) 5.27 5.19 0.00 (.67) Year ended 11/30/94 ............ 11.72 (.09) (.33) (.42) 0.00 0.00 5/3/93++ to 11/30/93 ........... 10.48 (.05) 1.29 1.24 0.00 0.00
- -------------------------------------------------------------------------------- Please refer to the footnotes on page 18. 8
Total Net Assets Total Net Asset Investment At End Of Dividends Value Return Based Period And End Of on Net Asset (000's Fiscal Year or Period Distributions Period Value (a) omitted) ------------------- -------------- ---------- ------------ ------------ Alliance Fund Class A Year ended 11/30/97 ............ $(1.08) $8.70 31.82% $1,201,435 Year ended 11/30/96 ............ (1.09) 7.71 16.49 999,067 Year ended 11/30/95 ............ (1.01) 7.72 37.87 945,309 1/1/94 to 11/30/94** ........... 0.00 6.63 (3.21) 760,679 Year ended 12/31/93 ............ (.78) 6.85 14.26 831,814 Year ended 12/31/92 ............ (.53) 6.68 14.70 794,733 Year ended 12/31/91 ............ (.70) 6.29 33.91 748,226 Year ended 12/31/90 ............ (1.42) 5.22 (4.36) 620,374 Year ended 12/31/89 ............ (.04) 6.87 23.42 837,429 Year ended 12/31/88 ............ (.43) 5.60 17.10 760,619 Class B Year ended 11/30/97 ............ $(1.06) $8.25 30.74% $ 70,461 Year ended 11/30/96 ............ (1.07) 7.40 15.47 44,450 Year ended 11/30/95 ............ (1.00) 7.49 36.61 31,738 1/1/94 to 11/30/94** ........... 0.00 6.50 (3.85) 18,138 Year ended 12/31/93 ............ (.76) 6.76 13.28 12,402 Year ended 12/31/92 ............ (.49) 6.64 13.75 3,825 3/4/91++ to 12/31/91 ........... (.67) 6.27 13.10 852 Class C Year ended 11/30/97 ............ $(1.06) $8.26 30.72% $ 18,871 Year ended 11/30/96 ............ (1.07) 7.41 15.48 13,899 Year ended 11/30/95 ............ (1.00) 7.50 36.79 10,078 1/1/94 to 11/30/94** ........... 0.00 6.50 (3.99) 6,230 5/3/93++ to 12/31/93 ........... (.76) 6.77 13.95 4,006 Growth Fund (i) Class A Year ended 10/31/97 ............ $(1.03) $43.95 29.54% $ 783,110 Year ended 10/31/96 ............ (.82) 34.91 21.65 499,459 Year ended 10/31/95 ............ (.52) 29.48 20.18 285,161 5/1/94 to 10/31/94** ........... 0.00 25.08 4.98 167,800 Year ended 4/30/94 ............. (2.32) 23.89 15.66 102,406 Year ended 4/30/93 ............. (1.37) 22.67 18.89 13,889 Year ended 4/30/92 ............. (1.87) 20.31 23.61 8,228 9/4/90++ to 4/30/91 ............ (.06) 17.94 32.40 713 Class B Year ended 10/31/97 ............ $(1.03) $36.31 28.64% $3,578,806 Year ended 10/31/96 ............ (.63) 29.21 20.82 2,498,097 Year ended 10/31/95 ............ (.42) 24.78 19.33 1,052,020 5/1/94 to 10/31/94** ........... 0.00 21.21 4.64 751,521 Year ended 4/30/94 ............. (2.32) 20.27 14.79 394,227 Year ended 4/30/93 ............. (1.65) 19.68 18.16 56,704 Year ended 4/30/92 ............. (2.56) 18.16 22.75 37,845 Year ended 4/30/91 ............. (.80) 16.88 24.72 22,710 Year ended 4/30/90 ............. (1.02) 14.38 8.81 15,800 Year ended 4/30/89 ............. (1.06) 14.13 20.31 7,672 10/23/87+ to 4/30/88 ........... 0.00 12.76 27.60 1,938 Class C Year ended 10/31/97 ............ $(1.03) $36.33 28.66% $ 599,449 Year ended 10/31/96 ............ (.63) 29.22 20.81 403,478 Year ended 10/31/95 ............ (.42) 24.79 19.32 226,662 5/1/94 to 10/31/94** ........... 0.00 21.22 4.64 114,455 8/2/93++ to 4/30/94 ............ (2.32) 20.28 5.27 64,030 Premier Growth Fund Class A Year ended 11/30/97 ............ $(1.08) $22.00 30.46% $ 373,099 Year ended 11/30/96 ............ (1.27) 17.98 21.52 172,870 Year ended 11/30/95 ............ (.67) 16.09 49.95 72,366 Year ended 11/30/94 ............ 0.00 11.41 (3.14) 35,146 Year ended 11/30/93 ............ (.01) 11.78 9.26 40,415 9/28/92+ to 11/30/92 ........... 0.00 10.79 7.90 4,893 Class B Year ended 11/30/97 ............ $(1.08) $21.26 29.62% $ 858,449 Year ended 11/30/96 ............ (1.27) 17.52 20.70 404,137 Year ended 11/30/95 ............ (.67) 15.81 49.01 238,088 Year ended 11/30/94 ............ 0.00 11.29 (3.67) 139,988 Year ended 11/30/93 ............ 0.00 11.72 8.64 151,600 9/28/92+ to 11/30/92 ........... 0.00 10.79 7.90 19,941 Class C Year ended 11/30/97 ............ $(1.08) $21.29 29.64% $ 177,923 Year ended 11/30/96 ............ (1.27) 17.54 20.76 60,194 Year ended 11/30/95 ............ (.67) 15.82 48.96 20,679 Year ended 11/30/94 ............ 0.00 11.30 (3.58) 7,332 5/3/93++ to 11/30/93 ........... 0.00 11.72 11.83 3,899 Ratio Of Net Ratio Of Investment Expenses Income (Loss) Average To Average To Average Portfolio Commission Fiscal Year or Period Net Assets Net Assets Turnover Rate Rate (k) ------------------- ----------- ------------- ------------- ---------- Alliance Fund Class A Year ended 11/30/97 ........... 1.03% (.29)% 158% $0.0571 Year ended 11/30/96 ........... 1.04 .30 80 0.0646 Year ended 11/30/95 ........... 1.08 .31 81 -- 1/1/94 to 11/30/94** .......... 1.05* .21* 63 -- Year ended 12/31/93 ........... 1.01 .27 66 -- Year ended 12/31/92 ........... .81 .79 58 -- Year ended 12/31/91 ........... .83 1.03 74 -- Year ended 12/31/90 ........... .81 1.56 71 -- Year ended 12/31/89 ........... .75 1.79 81 -- Year ended 12/31/88 ........... .82 1.38 65 -- Class B Year ended 11/30/97 ........... 1.85% (1.12)% 158% $0.0571 Year ended 11/30/96 ........... 1.87 (.53) 80 0.0646 Year ended 11/30/95 ........... 1.90 (.53) 81 -- 1/1/94 to 11/30/94** .......... 1.89* (.60)* 63 -- Year ended 12/31/93 ........... 1.90 (.64) 66 -- Year ended 12/31/92 ........... 1.64 (.04) 58 -- 3/4/91++ to 12/31/91 .......... 1.64* .10* 74 -- Class C Year ended 11/30/97 ........... 1.83% (1.10)% 158% $0.0571 Year ended 11/30/96 ........... 1.86 (.51) 80 0.0646 Year ended 11/30/95 ........... 1.89 (.51) 81 -- 1/1/94 to 11/30/94** .......... 1.87* (.59)* 63 -- 5/3/93++ to 12/31/93 .......... 1.94* (.74)* 66 -- Growth Fund (i) Class A Year ended 10/31/97 ........... 1.26%(l) (.25)% 48% $0.0562 Year ended 10/31/96 ........... 1.30 .15 46 0.0584 Year ended 10/31/95 ........... 1.35 .56 61 -- 5/1/94 to 10/31/94** .......... 1.35* .86* 24 -- Year ended 4/30/94 ............ 1.40(f) .32 87 -- Year ended 4/30/93 ............ 1.40(f) .20 124 -- Year ended 4/30/92 ............ 1.40 1.44 137 -- 9/4/90++ to 4/30/91 ........... 1.40* 1.99* 130 -- Class B Year ended 10/31/97 ........... 1.96%(l) (.94)% 48% $0.0562 Year ended 10/31/96 ........... 1.99 (.54) 46 0.0584 Year ended 10/31/95 ........... 2.05 (.15) 61 -- 5/1/94 to 10/31/94** .......... 2.05* .16* 24 -- Year ended 4/30/94 ............ 2.10(f) (.36) 87 -- Year ended 4/30/93 ............ 2.15(f) (.53) 124 -- Year ended 4/30/92 ............ 2.15 .78 137 -- Year ended 4/30/91 ............ 2.10 .56 130 -- Year ended 4/30/90 ............ 2.00 .07 165 -- Year ended 4/30/89 ............ 2.00 (.03) 139 -- 10/23/87+ to 4/30/88 .......... 2.00* (.40)* 52 -- Class C Year ended 10/31/97 ........... 1.97%(l) (.95)% 48% $0.0562 Year ended 10/31/96 ........... 2.00 (.55) 46 0.0584 Year ended 10/31/95 ........... 2.05 (.15) 61 -- 5/1/94 to 10/31/94** .......... 2.05* .16* 24 -- 8/2/93++ to 4/30/94 ........... 2.10*(f) (.31)* 87 -- Premier Growth Fund Class A Year ended 11/30/97 ........... 1.57% (.52)% 76% $0.0594 Year ended 11/30/96 ........... 1.65 (.27) 95 0.0651 Year ended 11/30/95 ........... 1.75 (.28) 114 -- Year ended 11/30/94 ........... 1.96 (.67) 98 -- Year ended 11/30/93 ........... 2.18 (.61) 68 -- 9/28/92+ to 11/30/92 .......... 2.17* .91* 0 -- Class B Year ended 11/30/97 ........... 2.25% (1.20)% 76% $0.0594 Year ended 11/30/96 ........... 2.32 (.94) 95 0.0651 Year ended 11/30/95 ........... 2.43 (.95) 114 -- Year ended 11/30/94 ........... 2.47 (1.19) 98 -- Year ended 11/30/93 ........... 2.70 (1.14) 68 -- 9/28/92+ to 11/30/92 .......... 2.68* .35* 0 -- Class C Year ended 11/30/97 ........... 2.24% (1.22)% 76% $0.0594 Year ended 11/30/96 ........... 2.32 (.94) 95 0.0651 Year ended 11/30/95 ........... 2.42 (.97) 114 -- Year ended 11/30/94 ........... 2.47 (1.16) 98 -- 5/3/93++ to 11/30/93 .......... 2.79* (1.35)* 68 --
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Net Net Net Asset Realized and Increase Value Unrealized (Decrease) In Dividends From Distributions Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains ------------------- ------------ -------------- -------------- --------------- -------------- -------------- Technology Fund Class A Year ended 11/30/97 ............ $51.15 $(.51)(b) $4.22 $3.71 $0.00 $(.42) Year ended 11/30/96 ............ 46.64 (.39)(b) 7.28 6.89 0.00 (2.38) Year ended 11/30/95 ............ 31.98 (.30) 18.13 17.83 0.00 (3.17) 1/1/94 to 11/30/94** ........... 26.12 (.32) 6.18 5.86 0.00 0.00 Year ended 12/31/93 ............ 28.20 (.29) 6.39 6.10 0.00 (8.18) Year ended 12/31/92 ............ 26.38 (.22)(b) 4.31 4.09 0.00 (2.27) Year ended 12/31/91 ............ 19.44 (.02) 10.57 10.55 0.00 (3.61) Year ended 12/31/90 ............ 21.57 (.03) (.56) (.59) 0.00 (1.54) Year ended 12/31/89 ............ 20.35 0.00 1.22 1.22 0.00 0.00 Year ended 12/31/88 ............ 20.22 (.03)(c) .16 .13 0.00 0.00 Class B Year ended 11/30/97 ............ $49.76 $(.88)(b) $4.12 $3.24 $0.00 $(.42) Year ended 11/30/96 ............ 45.76 (.70)(b) 7.08 6.38 0.00 (2.38) Year ended 11/30/95 ............ 31.61 (.60)(b) 17.92 17.32 0.00 (3.17) 1/1/94 to 11/30/94** ........... 25.98 (.23) 5.86 5.63 0.00 0.00 5/3/93++ to 12/31/93 ........... 27.44 (.12) 6.84 6.72 0.00 (8.18) Class C Year ended 11/30/97 ............ $49.76 $(.88)(b) $4.11 $3.23 $0.00 $(.42) Year ended 11/30/96 ............ 45.77 (.70)(b) 7.07 6.37 0.00 (2.38) Year ended 11/30/95 ............ 31.61 (.58)(b) 17.91 17.33 0.00 (3.17) 1/1/94 to 11/30/94** ........... 25.98 (.24) 5.87 5.63 0.00 0.00 5/3/93++ to 12/31/93 ........... 27.44 (.13) 6.85 6.72 0.00 (8.18) Quasar Fund Class A Year ended 9/30/97 ............. $27.92 $(.24)(b) $6.80 $6.56 $0.00 $(4.11) Year ended 9/30/96 ............. 24.16 (.25) 8.82 8.57 0.00 (4.81) Year ended 9/30/95 ............. 22.65 (.22)(b) 5.59 5.37 0.00 (3.86) Year ended 9/30/94 ............. 24.43 (.60) (.36) (.96) 0.00 (.82) Year ended 9/30/93 ............. 19.34 (.41) 6.38 5.97 0.00 (.88) Year ended 9/30/92 ............. 21.27 (.24) (1.53) (1.77) 0.00 (.16) Year ended 9/30/91 ............. 15.67 (.05) 5.71 5.66 (.06) 0.00 Year ended 9/30/90 ............. 24.84 .03(b) (7.18) (7.15) 0.00 (2.02) Year ended 9/30/89 ............. 17.60 .02(b) 7.40 7.42 0.00 (.18) Year ended 9/30/88 ............. 24.47 (.08)(c) (2.08) (2.16) 0.00 (4.71) Class B Year ended 9/30/97 ............. $26.13 $(.42)(b) $(6.23) $5.81 $0.00 $(4.11) Year ended 9/30/96 ............. 23.03 (.20) 8.11 7.91 0.00 (4.81) Year ended 9/30/95 ............. 21.92 (.37)(b) 5.34 4.97 0.00 (3.86) Year ended 9/30/94 ............. 23.88 (.53) (.61) (1.14) 0.00 (.82) Year ended 9/30/93 ............. 19.07 (.18) 5.87 5.69 0.00 (.88) Year ended 9/30/92 ............. 21.14 (.39) (1.52) (1.91) 0.00 (.16) Year ended 9/30/91 ............. 15.66 (.13) 5.67 5.54 (.06) 0.00 9/17/90++ to 9/30/90 ........... 17.17 (.01) (1.50) (1.51) 0.00 0.00 Class C Year ended 9/30/97 ............. $26.14 $(.42)(b) $6.24 $5.82 $0.00 $(4.11) Year ended 9/30/96 ............. 23.05 (.20) 8.10 7.90 0.00 (4.81) Year ended 9/30/95 ............. 21.92 (.37)(b) 5.36 4.99 0.00 (3.86) Year ended 9/30/94 ............. 23.88 (.36) (.78) (1.14) 0.00 (.82) 5/3/93++ to 9/30/93 ............ 20.33 (.10) 3.65 3.55 0.00 0.00 International Fund Class A Year ended 6/30/97 ............. $18.32 $.06(b) $1.51 $1.57 $(.12) $(1.08) Year ended 6/30/96 ............. 16.81 .05(b) 2.51 2.56 0.00 (1.05) Year ended 6/30/95 ............. 18.38 .04 .01 .05 0.00 (1.62) Year ended 6/30/94 ............. 16.01 (.09) 3.02 2.93 0.00 (.56) Year ended 6/30/93 ............. 14.98 (.01) 1.17 1.16 (.04) (.09) Year ended 6/30/92 ............. 14.00 .01(b) 1.04 1.05 (.07) 0.00 Year ended 6/30/91 ............. 17.99 .05 (3.54) (3.49) (.03) (.47) Year ended 6/30/90 ............. 17.24 .03 2.87 2.90 (.04) (2.11) Year ended 6/30/89 ............. 16.09 .05 3.73 3.78 (.13) (2.50) Year ended 6/30/88 ............. 23.70 .17 (1.22) (1.05) (.21) (6.35) Class B Year ended 6/30/97 ............. $17.45 $(.09)(b) $1.43 $1.34 $0.00 $(1.08) Year ended 6/30/96 ............. 16.19 (.07)(b) 2.38 2.31 0.00 (1.05) Year ended 6/30/95 ............. 17.90 (.01) (.08) (.09) 0.00 (1.62) Year ended 6/30/94 ............. 15.74 (.19)(b) 2.91 2.72 0.00 (.56) Year ended 6/30/93 ............. 14.81 (.12) 1.14 1.02 0.00 (.09) Year ended 6/30/92 ............. 13.93 (.11)(b) 1.02 .91 (.03) 0.00 9/17/90++ to 6/30/91 ........... 15.52 .03 (1.12) (1.09) (.03) (.47) Class C Year ended 6/30/97 ............. $17.46 $(.09)(b) $1.44 $1.35 $0.00 $(1.08) Year ended 6/30/96 ............. 16.20 (.07)(b) 2.38 2.31 0.00 (1.05) Year ended 6/30/95 ............. 17.91 (.14) .05 (.09) 0.00 (1.62) Year ended 6/30/94 ............. 15.74 (.11) 2.84 2.73 0.00 (.56) 5/3/93++ to 6/30/93 ............ 15.93 0.00 (.19) (.19) 0.00 0.00
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Total Net Assets Total Net Asset Investment At End Of Dividends Value Return Based Period And End Of on Net Asset (000's Fiscal Year or Period Distributions Period Value (a) omitted) ------------------- -------------- ---------- ------------ ------------ Technology Fund Class A Year ended 11/30/97 ............ $(.42) $54.44 7.32% $ 624,716 Year ended 11/30/96 ............ (2.38) 51.15 16.05 594,861 Year ended 11/30/95 ............ (3.17) 46.64 61.93 398,262 1/1/94 to 11/30/94** ........... 0.00 31.98 22.43 202,929 Year ended 12/31/93 ............ (8.18) 26.12 21.63 173,732 Year ended 12/31/92 ............ (2.27) 28.20 15.50 173,566 Year ended 12/31/91 ............ (3.61) 26.38 54.24 191,693 Year ended 12/31/90 ............ (1.54) 19.44 (3.08) 131,843 Year ended 12/31/89 ............ 0.00 21.57 6.00 141,730 Year ended 12/31/88 ............ 0.00 20.35 0.64 169,856 Class B Year ended 11/30/97 ............ $(.42) $52.58 6.57% $1,053,436 Year ended 11/30/96 ............ (2.38) 49.76 15.20 660,921 Year ended 11/30/95 ............ (3.17) 45.76 60.95 277,111 1/1/94 to 11/30/94** ........... 0.00 31.61 21.67 18,397 5/3/93++ to 12/31/93 ........... (8.18) 25.98 24.49 1,645 Class C Year ended 11/30/97 ............ $(.42) $52.57 6.55% $ 184,194 Year ended 11/30/96 ............ (2.38) 49.76 15.17 108,488 Year ended 11/30/95 ............ (3.17) 45.77 60.98 43,161 1/1/94 to 11/30/94** ........... 0.00 31.61 21.67 7,470 5/3/93++ to 12/31/93 ........... (8.18) 25.98 24.49 1,096 Quasar Fund Class A Year ended 9/30/97 ............. $(4.11) $30.37 27.81% $ 402,081 Year ended 9/30/96 ............. (4.81) 27.92 42.42 229,798 Year ended 9/30/95 ............. (3.86) 24.16 30.73 146,663 Year ended 9/30/94 ............. (.82) 22.65 (4.05) 155,470 Year ended 9/30/93 ............. (.88) 24.43 31.58 228,874 Year ended 9/30/92 ............. (.16) 19.34 (8.34) 252,140 Year ended 9/30/91 ............. (.06) 21.27 36.28 333,806 Year ended 9/30/90 ............. (2.02) 15.67 (30.81) 251,102 Year ended 9/30/89 ............. (.18) 24.84 42.68 263,099 Year ended 9/30/88 ............. (4.71) 17.60 (8.61) 90,713 Class B Year ended 9/30/97 ............. $(4.11) $27.83 26.70% $ 503,037 Year ended 9/30/96 ............. (4.81) 26.13 41.48 112,490 Year ended 9/30/95 ............. (3.86) 23.03 29.78 16,604 Year ended 9/30/94 ............. (.82) 21.92 (4.92) 13,901 Year ended 9/30/93 ............. (.88) 23.88 30.53 16,779 Year ended 9/30/92 ............. (.16) 19.07 (9.05) 9,454 Year ended 9/30/91 ............. (.06) 21.14 35.54 7,346 9/17/90++ to 9/30/90 ........... 0.00 15.66 (8.79) 71 Class C Year ended 9/30/97 ............. $(4.11) $27.85 26.74% $ 145,494 Year ended 9/30/96 ............. (4.81) 26.14 41.46 28,541 Year ended 9/30/95 ............. (3.86) 23.05 29.87 1,611 Year ended 9/30/94 ............. (.82) 21.92 (4.92) 1,220 5/3/93++ to 9/30/93 ............ 0.00 23.88 17.46 118 International Fund Class A Year ended 6/30/97 ............. $(1.20) $18.69 9.30% $ 190,173 Year ended 6/30/96 ............. (1.05) 18.32 15.83 196,261 Year ended 6/30/95 ............. (1.62) 16.81 .59 165,584 Year ended 6/30/94 ............. (.56) 18.38 18.68 201,916 Year ended 6/30/93 ............. (.13) 16.01 7.86 161,048 Year ended 6/30/92 ............. (.07) 14.98 7.52 179,807 Year ended 6/30/91 ............. (.50) 14.00 (19.34) 214,442 Year ended 6/30/90 ............. (2.15) 17.99 16.98 265,999 Year ended 6/30/89 ............. (2.63) 17.24 27.65 166,003 Year ended 6/30/88 ............. (6.56) 16.09 (4.20) 132,319 Class B Year ended 6/30/97 ............. $(1.08) $17.71 8.37% $ 77,725 Year ended 6/30/96 ............. (1.05) 17.45 14.87 72,470 Year ended 6/30/95 ............. (1.62) 16.19 (.22) 48,998 Year ended 6/30/94 ............. (.56) 17.90 17.65 29,943 Year ended 6/30/93 ............. (.09) 15.74 6.98 6,363 Year ended 6/30/92 ............. (.03) 14.81 6.54 5,585 9/17/90++ to 6/30/91 ........... (.50) 13.93 (6.97) 3,515 Class C Year ended 6/30/97 ............. $(1.08) $17.73 8.42% $ 23,268 Year ended 6/30/96 ............. (1.05) 17.46 14.85 26,965 Year ended 6/30/95 ............. (1.62) 16.20 (.22) 19,395 Year ended 6/30/94 ............. (.56) 17.91 17.72 13,503 5/3/93++ to 6/30/93 ............ 0.00 15.74 (1.19) 229 Ratio Of Net Ratio Of Investment Expenses Income (Loss) Average To Average To Average Portfolio Commission Fiscal Year or Period Net Assets Net Assets Turnover Rate Rate (k) ------------------- ----------- ------------- ------------- ---------- Technology Fund Class A Year ended 11/30/97 ............ 1.67%(l) (.97)% 51% $0.0564 Year ended 11/30/96 ............ 1.74 (.87) 30 0.0612 Year ended 11/30/95 ............ 1.75 (.77) 55 -- 1/1/94 to 11/30/94** ........... 1.66* (1.22)* 55 -- Year ended 12/31/93 ............ 1.73 (1.32) 64 -- Year ended 12/31/92 ............ 1.61 (.90) 73 -- Year ended 12/31/91 ............ 1.71 (.20) 134 -- Year ended 12/31/90 ............ 1.77 (.18) 147 -- Year ended 12/31/89 ............ 1.66 .02 139 -- Year ended 12/31/88 ............ 1.42 (.16) 139 -- Class B Year ended 11/30/97 ............ 2.38%(l) (1.70)% 51% $0.0564 Year ended 11/30/96 ............ 2.44 (1.61) 30 0.0612 Year ended 11/30/95 ............ 2.48 (1.47) 55 -- 1/1/94 to 11/30/94** ........... 2.43* (1.95)* 55 -- 5/3/93++ to 12/31/93 ........... 2.57* (2.30)* 64 -- Class C Year ended 11/30/97 ............ 2.38%(l) (1.70)% 51% $0.0564 Year ended 11/30/96 ............ 2.44 (1.60) 30 0.0612 Year ended 11/30/95 ............ 2.48 (1.47) 55 -- 1/1/94 to 11/30/94** ........... 2.41* (1.94)* 55 -- 5/3/93++ to 12/31/93 ........... 2.52* (2.25)* 64 -- Quasar Fund Class A Year ended 9/30/97 ............. 1.67% (.91)% 135% $0.0536 Year ended 9/30/96 ............. 1.79 (1.11) 168 0.0596 Year ended 9/30/95 ............. 1.83 (1.06) 160 -- Year ended 9/30/94 ............. 1.67 (1.15) 110 -- Year ended 9/30/93 ............. 1.65 (1.00) 102 -- Year ended 9/30/92 ............. 1.62 (.89) 128 -- Year ended 9/30/91 ............. 1.64 (.22) 118 -- Year ended 9/30/90 ............. 1.66 .16 90 -- Year ended 9/30/89 ............. 1.73 .10 90 -- Year ended 9/30/88 ............. 1.28 (.40) 58 -- Class B Year ended 9/30/97 ............. 2.51% (1.73)% 135% $0.0536 Year ended 9/30/96 ............. 2.62 (1.96) 168 0.0596 Year ended 9/30/95 ............. 2.65 (1.88) 160 -- Year ended 9/30/94 ............. 2.50 (1.98) 110 -- Year ended 9/30/93 ............. 2.46 (1.81) 102 -- Year ended 9/30/92 ............. 2.42 (1.67) 128 -- Year ended 9/30/91 ............. 2.41 (1.28) 118 -- 9/17/90++ to 9/30/90 ........... 2.09* (.26)* 90 -- Class C Year ended 9/30/97 ............. 2.50% (1.72)% 135% $0.0536 Year ended 9/30/96 ............. 2.61 (1.94) 168 0.0596 Year ended 9/30/95 ............. 2.64* (1.76)* 160 -- Year ended 9/30/94 ............. 2.48 (1.96) 110 -- 5/3/93++ to 9/30/93 ............ 2.49* (1.90)* 102 -- International Fund Class A Year ended 6/30/97 ............. 1.74%(l) .31% 94% $0.0363 Year ended 6/30/96 ............. 1.72 .31 78 -- Year ended 6/30/95 ............. 1.73 .26 119 -- Year ended 6/30/94 ............. 1.90 (.50) 97 -- Year ended 6/30/93 ............. 1.88 (.14) 94 -- Year ended 6/30/92 ............. 1.82 .07 72 -- Year ended 6/30/91 ............. 1.73 .37 71 -- Year ended 6/30/90 ............. 1.45 .33 37 -- Year ended 6/30/89 ............. 1.41 .39 87 -- Year ended 6/30/88 ............. 1.41 .84 55 -- Class B Year ended 6/30/97 ............. 2.59%(l) (.51)% 94% $0.0363 Year ended 6/30/96 ............. 2.55 (.46) 78 -- Year ended 6/30/95 ............. 2.57 (.62) 119 -- Year ended 6/30/94 ............. 2.78 (1.15) 97 -- Year ended 6/30/93 ............. 2.70 (.96) 94 -- Year ended 6/30/92 ............. 2.68 (.70) 72 -- 9/17/90++ to 6/30/91 ........... 3.39* .84* 71 -- Class C Year ended 6/30/97 ............. 2.58%(l) (.51)% 94% $0.0363 Year ended 6/30/96 ............. 2.53 (.47) 78 -- Year ended 6/30/95 ............. 2.54 (.88) 119 -- Year ended 6/30/94 ............. 2.78 (1.12) 97 -- 5/3/93++ to 6/30/93 ............ 2.57* .08* 94 --
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Net Net Net Asset Realized and Increase Value Unrealized (Decrease) In Dividends From Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment Fiscal Year or Period Period Income (Loss) Investments From Operations Income ------------------- ------------ -------------- -------------- --------------- -------------- Worldwide Privatization Fund Class A Year ended 6/30/97........ $12.13 $ .15(b) $2.55 $2.70 $ (.15) Year ended 6/30/96........ 10.18 .10(b) 1.85 1.95 0.00 Year ended 6/30/95........ 9.75 .06 .37 .43 0.00 6/2/94+ to 6/30/94........ 10.00 .01 (.26) (.25) 0.00 Class B Year ended 6/30/97........ $11.96 $ .08(b) $2.50 $2.58 $ (.08) Year ended 6/30/96........ 10.10 (.02) 1.88 1.86 0.00 Year ended 6/30/95........ 9.74 .02 .34 .36 0.00 6/2/94+ to 6/30/94........ 10.00 .00 (.26) (.26) 0.00 Class C Year ended 6/30/97........ $11.96 $ .12(b) $2.46 $2.58 $ (.08) Year ended 6/30/96........ 10.10 .03 1.83 1.86 0.00 2/8/95++ to 6/30/95....... 9.53 .05 .52 .57 0.00 New Europe Fund Class A Year ended 7/31/97........ $15.84 $ .07(b) $4.20 $4.27 $ (.15) Year ended 7/31/96........ 15.11 .18 1.02 1.20 0.00 Year ended 7/31/95........ 12.66 .04 2.50 2.54 (.09) Period ended 7/31/94**.... 12.53 .09 .04 .13 0.00 Year ended 2/28/94........ 9.37 .02(b) 3.14 3.16 0.00 Year ended 2/28/93........ 9.81 .04 (.33) (.29) (.15) Year ended 2/29/92........ 9.76 .02(b) .05 .07 (.02) 4/2/90+ to 2/28/91........ 11.11(e) .26 (.91) (.65) (.26) Class B Year ended 7/31/97........ $15.31 $(.04)(b) $4.02 $3.98 $0.00 Year ended 7/31/96........ 14.71 .08 .99 1.07 0.00 Year ended 7/31/95........ 12.41 (.05) 2.44 2.39 (.09) Period ended 7/31/94**.... 12.32 .07 .02 .09 0.00 Year ended 2/28/94........ 9.28 (.05)(b) 3.09 3.04 0.00 Year ended 2/28/93........ 9.74 (.02) (.33) (.35) (.11) 3/5/91++ to 2/29/92....... 9.84 (.04)(b) (.04) (.08) (.02) Class C Year ended 7/31/97........ $15.33 $(.04)(b) $4.02 $3.98 $0.00 Year ended 7/31/96........ 14.72 .08 1.00 1.08 0.00 Year ended 7/31/95........ 12.42 (.07) 2.46 2.39 (.09) Period ended 7/31/94**.... 12.33 .06 .03 .09 0.00 5/3/93++ to 2/28/94....... 10.21 (.04)(b) 2.16 2.12 0.00 All-Asia Investment Fund Class A Year ended 10/31/97....... $11.04 $(.21)(b)(c) $(2.95) $(3.16) $0.00 Year ended 10/31/96....... 10.45 (.21)(b)(c) .88 .67 0.00 11/28/94+ to 10/31/95..... 10.00 (.19)(c) .64 .45 0.00 Class B Year ended 10/31/97....... $10.90 $(.28)(b)(c) $(2.89) $(3.17) $0.00 Year ended 10/31/96....... 10.41 (.28)(b)(c) .85 .57 0.00 11/28/94+ to 10/31/95..... 10.00 (.25)(c) .66 .41 0.00 Class C Year ended 10/31/97....... $10.91 $(.27)(b)(c) $(2.90) $(3.17) $0.00 Year ended 10/31/96....... 10.41 (.28)(b)(c) .86 .58 0.00 11/28/94+ to 10/31/95..... 10.00 (.35)(c) .76 .41 0.00 Global Small Cap Fund Class A Year ended 7/31/97........ $11.61 $(.15)(b) $2.97 $2.82 $0.00 Year ended 7/31/96........ 10.38 (.14)(b) 1.90 1.76 0.00 Year ended 7/31/95........ 11.08 (.09) 1.50 1.41 0.00 Period ended 7/31/94**.... 11.24 (.15)(b) (.01) (.16) 0.00 Year ended 9/30/93........ 9.33 (.15) 2.49 2.34 0.00 Year ended 9/30/92........ 10.55 (.16) (1.03) (1.19) 0.00 Year ended 9/30/91........ 8.26 (.06) 2.35 2.29 0.00 Year ended 9/30/90........ 15.54 (.05)(b) (4.12) (4.17) 0.00 Year ended 9/30/89........ 11.41 (.03) 4.25 4.22 0.00 Year ended 9/30/88........ 15.07 (.05) (1.83) (1.88) 0.00 Class B Year ended 7/31/97........ $11.03 $(.21)(b) $2.77 $2.56 $0.00 Year ended 7/31/96........ 9.95 (.20)(b) 1.81 1.61 0.00 Year ended 7/31/95........ 10.78 (.12) 1.40 1.28 0.00 Period ended 7/31/94**.... 11.00 (.17)(b) (.05) (.22) 0.00 Year ended 9/30/93........ 9.20 (.15) 2.38 2.23 0.00 Year ended 9/30/92........ 10.49 (.20) (1.06) (1.26) 0.00 Year ended 9/30/91........ 8.26 (.07) 2.30 2.23 0.00 9/17/90++ to 9/30/90...... 9.12 (.01) (.85) (.86) 0.00 Class C Year ended 7/31/97........ $11.05 $(.22)(b) $2.78 $2.56 $0.00 Year ended 7/31/96........ 9.96 (.20)(b) 1.82 1.62 0.00 Year ended 7/31/95........ 10.79 (.17) 1.45 1.28 0.00 Period ended 7/31/94**.... 11.00 (.17)(b) (.04) (.21) 0.00 5/3/93++ to 9/30/93....... 9.86 (.05) 1.19 1.14 0.00 Distributions In Excess Of Distributions Net Investment From Net Fiscal Year or Period Income Realized Gains ------------------- -------------- -------------- Worldwide Privatization Fund Class A Year ended 6/30/97........ $0.00 $(1.42) Year ended 6/30/96........ 0.00 0.00 Year ended 6/30/95........ 0.00 0.00 6/2/94+ to 6/30/94........ 0.00 0.00 Class B Year ended 6/30/97........ $0.00 $(1.42) Year ended 6/30/96........ 0.00 0.00 Year ended 6/30/95........ 0.00 0.00 6/2/94+ to 6/30/94........ 0.00 0.00 Class C Year ended 6/30/97........ $0.00 $(1.42 Year ended 6/30/96........ 0.00 0.00 2/8/95++ to 6/30/95....... 0.00 0.00 New Europe Fund Class A Year ended 7/31/97........ $ (.03) $ (1.32) Year ended 7/31/96........ 0.00 (.47) Year ended 7/31/95........ 0.00 0.00 Period ended 7/31/94**.... 0.00 0.00 Year ended 2/28/94........ 0.00 0.00 Year ended 2/28/93........ 0.00 0.00 Year ended 2/29/92........ 0.00 0.00 4/2/90+ to 2/28/91........ 0.00 (.44) Class B Year ended 7/31/97........ $ (.10) $(1.32) Year ended 7/31/96........ 0.00 (.47) Year ended 7/31/95........ 0.00 0.00 Period ended 7/31/94**.... 0.00 0.00 Year ended 2/28/94........ 0.00 0.00 Year ended 2/28/93........ 0.00 0.00 3/5/91++ to 2/29/92....... 0.00 0.00 Class C Year ended 7/31/97........ $ (.10) $(1.32) Year ended 7/31/96........ 0.00 (.47) Year ended 7/31/95........ 0.00 0.00 Period ended 7/31/94**.... 0.00 0.00 5/3/93++ to 2/28/94....... 0.00 0.00 All-Asia Investment Fund Class A Year ended 10/31/97....... $0.00 $ (.34) Year ended 10/31/96....... 0.00 (.08) 11/28/94+ to 10/31/95..... 0.00 0.00 Class B Year ended 10/31/97....... $0.00 $ (.34) Year ended 10/31/96....... 0.00 (.08) 11/28/94+ to 10/31/95..... 0.00 0.00 Class C Year ended 10/31/97....... $0.00 $ (.34) Year ended 10/31/96....... 0.00 (.08) 11/28/94+ to 10/31/95..... 0.00 0.00 Global Small Cap Fund Class A Year ended 7/31/97........ $0.00 $ (1.56) Year ended 7/31/96........ 0.00 (.53) Year ended 7/31/95........ 0.00 (2.11)(j) Period ended 7/31/94**.... 0.00 0.00 Year ended 9/30/93........ 0.00 (.43) Year ended 9/30/92........ 0.00 (.03) Year ended 9/30/91........ 0.00 0.00 Year ended 9/30/90........ 0.00 (3.11) Year ended 9/30/89........ 0.00 (.09) Year ended 9/30/88........ 0.00 (1.78) Class B Year ended 7/31/97........ $0.00 $ (1.56) Year ended 7/31/96........ 0.00 (.53) Year ended 7/31/95........ 0.00 (2.11)(j) Period ended 7/31/94**.... 0.00 0.00 Year ended 9/30/93........ 0.00 (.43) Year ended 9/30/92........ 0.00 (.03) Year ended 9/30/91........ 0.00 0.00 9/17/90++ to 9/30/90...... 0.00 0.00 Class C Year ended 7/31/97........ $0.00 $ (1.56) Year ended 7/31/96........ 0.00 (.53) Year ended 7/31/95........ 0.00 (2.11)(j) Period ended 7/31/94**.... 0.00 0.00 5/3/93++ to 9/30/93....... 0.00 0.00
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Total Net Assets Total Net Asset Investment At End Of Dividends Value Return Based Period And End Of on Net Asset (000's Fiscal Year or Period Distributions Period Value (a) omitted) --------------------- ------------- --------- ------------ ---------- Worldwide Privatization Fund Class A Year ended 6/30/97........ $(1.57) $13.26 25.16% $561,793 Year ended 6/30/96........ 0.00 12.13 19.16 672,732 Year ended 6/30/95........ 0.00 10.18 4.41 13,535 6/2/94+ to 6/30/94........ 0.00 9.75 (2.50) 4,990 Class B Year ended 6/30/97........ $(1.50) $13.04 24.34% $121,173 Year ended 6/30/96........ 0.00 11.96 18.42 83,050 Year ended 6/30/95........ 0.00 10.10 3.70 79,359 6/2/94+ to 6/30/94........ 0.00 9.74 (2.60) 22,859 Class C Year ended 6/30/97........ $(1.50) $13.04 24.33% $ 12,929 Year ended 6/30/96........ 0.00 11.96 18.42 2,383 2/8/95++ to 6/30/95....... 0.00 10.10 5.98 338 New Europe Fund Class A Year ended 7/31/97........ $(1.50) $18.61 28.78% $ 78,578 Year ended 7/31/96........ (.47) 15.84 8.20 74,026 Year ended 7/31/95........ (.09) 15.11 20.22 86,112 Period ended 7/31/94**.... 0.00 12.66 1.04 86,739 Year ended 2/28/94........ 0.00 12.53 33.73 90,372 Year ended 2/28/93........ (.15) 9.37 (2.82) 79,285 Year ended 2/29/92........ (.02) 9.81 .74 108,510 4/2/90+ to 2/28/91........ (.70) 9.76 (5.63) 188,016 Class B Year ended 7/31/97........ $(1.42) $17.87 27.76% $ 66,032 Year ended 7/31/96........ (.47) 15.31 7.53 42,662 Year ended 7/31/95........ (.09) 14.71 19.42 34,527 Period ended 7/31/94**.... 0.00 12.41 .73 31,404 Year ended 2/28/94........ 0.00 12.32 32.76 20,729 Year ended 2/28/93........ (.11) 9.28 (3.49) 1,732 3/5/91++ to 2/29/92....... (.02) 9.74 .03 1,423 Class C Year ended 7/31/97........ $(1.42) $17.89 27.73% $ 16,907 Year ended 7/31/96........ (.47) 15.33 7.59 10,141 Year ended 7/31/95........ (.09) 14.72 19.40 7,802 Period ended 7/31/94**.... 0.00 12.42 .73 11,875 5/3/93++ to 2/28/94....... 0.00 12.33 20.77 10,886 All-Asia Investment Fund Class A Year ended 10/31/97....... $ (.34) $ 7.54 (29.61)% $ 5,916 Year ended 10/31/96....... (.08) 11.04 6.43 12,284 11/28/94+ to 10/31/95..... 0.00 10.45 4.50 2,870 Class B Year ended 10/31/97....... $ (.34) $ 7.39 (30.09)% $ 11,439 Year ended 10/31/96....... (.08) 10.90 5.49 23,784 11/28/94+ to 10/31/95..... 0.00 10.41 4.10 5,170 Class C Year ended 10/31/97....... $ (.34) $ 7.40 (30.06)% $ 1,859 Year ended 10/31/96....... (.08) 10.91 5.59 4,228 11/28/94+ to 10/31/95..... 0.00 10.41 4.10 597 Global Small Cap Fund Class A Year ended 7/31/97........ $(1.56) $12.87 26.47% $ 85,217 Year ended 7/31/96........ (.53) 11.61 17.46 68,623 Year ended 7/31/95........ (2.11) 10.38 16.62 60,057 Period ended 7/31/94**.... 0.00 11.08 (1.42) 61,372 Year ended 9/30/93........ (.43) 11.24 25.83 65,713 Year ended 9/30/92........ (.03) 9.33 (11.30) 58,491 Year ended 9/30/91........ 0.00 10.55 27.72 84,370 Year ended 9/30/90........ (3.11) 8.26 (31.90) 68,316 Year ended 9/30/89........ (.09) 15.54 37.34 113,583 Year ended 9/30/88........ (1.78) 11.41 (8.11) 90,071 Class B Year ended 7/31/97........ $(1.56) $12.03 25.42% $ 31,946 Year ended 7/31/96........ (.53) 11.03 16.69 14,247 Year ended 7/31/95........ (2.11) 9.95 15.77 5,164 Period ended 7/31/94**.... 0.00 10.78 (2.00) 3,889 Year ended 9/30/93........ (.43) 11.00 24.97 1,150 Year ended 9/30/92........ (.03) 9.20 (12.03) 819 Year ended 9/30/91........ 0.00 10.49 27.00 121 9/17/90++ to 9/30/90...... 0.00 8.26 (9.43) 183 Class C Year ended 7/31/97........ $(1.56) $12.05 25.37% $ 8,718 Year ended 7/31/96........ (.53) 11.05 16.77 4,119 Year ended 7/31/95........ (2.11) 9.96 15.75 1,407 Period ended 7/31/94**.... 0.00 10.79 (1.91) 1,330 5/3/93++ to 9/30/93....... 0.00 11.00 11.56 261 Ratio Of Net Ratio Of Investment Expenses Income (Loss) Average To Average To Average Portfolio Commission Fiscal Year or Period Net Assets Net Assets Turnover Rate Rate (k) --------------------- ---------- ---------- ------------- -------- Worldwide Privatization Fund Class A Year ended 6/30/97........ 1.72% 1.27% 48% $0.0132 Year ended 6/30/96........ 1.87 .95 28 -- Year ended 6/30/95........ 2.56 .66 36 -- 6/2/94+ to 6/30/94........ 2.75* 1.03* 0 -- Class B Year ended 6/30/97........ 2.43% .66% 48% $0.0132 Year ended 6/30/96........ 2.83 (.20) 28 -- Year ended 6/30/95........ 3.27 .01 36 -- 6/2/94+ to 6/30/94........ 3.45* .33* 0 -- Class C Year ended 6/30/97........ 2.42% 1.06% 48% $0.0132 Year ended 6/30/96........ 2.57 .63 28 -- 2/8/95++ to 6/30/95....... 3.27* 2.65* 36 -- New Europe Fund Class A Year ended 7/31/97........ 2.05%(l) .40% 89% $0.0569 Year ended 7/31/96........ 2.14 1.10 69 -- Year ended 7/31/95........ 2.09 .37 74 -- Period ended 7/31/94**.... 2.06* 1.85* 35 -- Year ended 2/28/94........ 2.30 .17 94 -- Year ended 2/28/93........ 2.25 .47 125 -- Year ended 2/29/92........ 2.24 .16 34 -- 4/2/90+ to 2/28/91........ 1.52* 2.71* 48 -- Class B Year ended 7/31/97........ 2.75%(l) (.23)% 89% $0.0569 Year ended 7/31/96........ 2.86 .59 69 -- Year ended 7/31/95........ 2.79 (.33) 74 -- Period ended 7/31/94**.... 2.76* 1.15* 35 -- Year ended 2/28/94........ 3.02 (.52) 94 -- Year ended 2/28/93........ 3.00 (.50) 125 -- 3/5/91++ to 2/29/92....... 3.02* (.71)* 34 -- Class C Year ended 7/31/97........ 2.74%(l) (.23)% 89% $0.0569 Year ended 7/31/96........ 2.87 .58 69 -- Year ended 7/31/95........ 2.78 (.33) 74 -- Period ended 7/31/94**.... 2.76* 1.15* 35 -- 5/3/93++ to 2/28/94....... 3.00* (.52)* 94 -- All-Asia Investment Fund Class A Year ended 10/31/97....... 3.45%(f) (1.97)% 70% $0.0248 Year ended 10/31/96....... 3.37*(f) (1.75) 66 0.0280 11/28/94+ to 10/31/95..... 4.42*(f) (1.87)* 90 -- Class B Year ended 10/31/97....... 4.15%(f) (2.67)% 70% $0.0248 Year ended 10/31/96....... 4.07(f) (2.44) 66 0.0280 11/28/94+ to 10/31/95..... 5.20*(f) (2.64)* 90 -- Class C Year ended 10/31/97....... 4.15%(f) (2.66)% 70% $0.0248 Year ended 10/31/96....... 4.07(f) (2.42) 66 0.0280 11/28/94+ to 10/31/95..... 5.84*(f) (3.41) 90 -- Global Small Cap Fund Class A Year ended 7/31/97........ 2.41%(l) (1.25)% 129% $0.0364 Year ended 7/31/96........ 2.51 (1.22) 139 -- Year ended 7/31/95........ 2.54(f) (1.17) 128 -- Period ended 7/31/94**.... 2.42* (1.26)* 78 -- Year ended 9/30/93........ 2.53 (1.13) 97 -- Year ended 9/30/92........ 2.34 (.85) 108 -- Year ended 9/30/91........ 2.29 (.55) 104 -- Year ended 9/30/90........ 1.73 (.46) 89 -- Year ended 9/30/89........ 1.56 (.17) 106 -- Year ended 9/30/88........ 1.54 (.50) 74 -- Class B Year ended 7/31/97........ 3.11%(l) (1.92)% 129% $0.0364 Year ended 7/31/96........ 3.21 (1.88) 139 -- Year ended 7/31/95........ 3.20(f) (1.92) 128 -- Period ended 7/31/94**.... 3.15* (1.93)* 78 -- Year ended 9/30/93........ 3.26 (1.85) 97 -- Year ended 9/30/92........ 3.11 (1.31) 108 -- Year ended 9/30/91........ 2.98 (1.39) 104 -- 9/17/90++ to 9/30/90...... 2.61* (1.30)* 89 -- Class C Year ended 7/31/97........ 3.10%(l) (1.93)% 129% $0.0364 Year ended 7/31/96........ 3.19 (1.85) 139 -- Year ended 7/31/95........ 3.25 (f) (2.10) 128 -- Period ended 7/31/94**.... 3.13* (1.92)* 78 -- 5/3/93++ to 9/30/93....... 3.75* (2.51)* 97 --
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Net Net Net Asset Realized and Increase Value Unrealized (Decrease) In Dividends From Distributions Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains ------------------- ------------ -------------- -------------- --------------- -------------- -------------- Global Environment Fund (n) Class A Year ended 10/31/97 ............ $16.48 $(.23)(b) $3.65 $3.42 $0.00 $(1.13) Year ended 10/31/96 ............ 12.37 (.13) 4.26 4.13 (.02) 0.00 Year ended 10/31/95 ............ 11.74 .03 .60 .63 0.00 0.00 Year ended 10/31/94 ............ 10.97 0.00 .77 .77 0.00 0.00 Year ended 10/31/93 ............ 10.78 .01 .18 .19 0.00 0.00 Year ended 10/31/92 ............ 13.12 .01 (2.17) (2.16) (.10) (.08) Year ended 10/31/91 ............ 12.46 .13 .87 1.00 (.25) (.09) 6/1/90+ to 10/31/90 ............ 13.83 .20 (1.57) (1.37) 0.00 0.00 Class B 10/3/97++ to 10/31/97 .......... 19.92 $(.20)(b) $(.96) $(1.16) $0.00 $0.00 Strategic Balanced Fund (i) Class A Year ended 7/31/97 ............. $18.48 $.47(b)(c) $3.56 $4.03 $(.39) $(2.33) Year ended 7/31/96 ............. 17.98 .35 (b)(c) 1.08 1.43 (.32) (.61) Year ended 7/31/95 ............. 16.26 .34(c) 1.64 1.98 (.22) (.04) Period ended 7/31/94** ......... 16.46 .07(c) (.27) (.20) 0.00 0.00 Year ended 4/30/94 ............. 16.97 .16(c) .74 .90 (.24) (1.17) Year ended 4/30/93 ............. 17.06 .39(c) .59 .98 (.42) (.65) Year ended 4/30/92 ............. 14.48 .27(c) 2.80 3.07 (.17) (.32) 9/4/90++ to 4/30/91 ............ 12.51 .34(c) 1.66 2.00 (.03) 0.00 Class B Year ended 7/31/97 ............. $15.89 $.28(b)(c) $3.02 $3.30 $(.27) $(2.33) Year ended 7/31/96 ............. 15.56 .16(b)(c) .98 1.14 (.20) (.61) Year ended 7/31/95 ............. 14.10 .22(c) 1.40 1.62 (.12) (.04) Period ended 7/31/94** ......... 14.30 .03(c) (.23) (.20) 0.00 0.00 Year ended 4/30/94 ............. 14.92 .06(c) .63 .69 (.14) (1.17) Year ended 4/30/93 ............. 15.51 .23(c) .53 .76 (.25) (1.10) Year ended 4/30/92 ............. 13.96 .22(c) 2.70 2.92 (.29) (1.08) Year ended 4/30/91 ............. 12.40 .43(c) 1.60 2.03 (.47) 0.00 Year ended 4/30/90 ............. 11.97 .50(b)(c) .60 1.10 (.25) (.42) Year ended 4/30/89 ............. 11.45 .48(c) 1.11 1.59 (.30) (.77) 10/23/87+ to 4/30/88 ........... 10.00 .13(c) 1.38 1.51 (.06) 0.00 Class C Year ended 7/31/97 ............. $15.89 $.28(b)(c) $3.02 $3.30 $(.27) $(2.33) Year ended 7/31/96 ............. 15.57 .14(b)(c) .99 1.13 (.20) (.61) Year ended 7/31/95 ............. 14.11 .16(c) 1.46 1.62 (.12) (.04) Period ended 7/31/94** ......... 14.31 .03(c) (.23) (.20) 0.00 0.00 8/2/93++ to 4/30/94 ............ 15.64 .15(c) (.17) (.02) (.14) (1.17) Balanced Shares Class A Year ended 7/31/97 ............. $14.01 $.31(b) $3.97 $4.28 $(.32) $(1.80) Year ended 7/31/96 ............. 15.08 .37 .45 .82 (.41) (1.48) Year ended 7/31/95 ............. 13.38 .46 1.62 2.08 (.36) (.02) Period ended 7/31/94** ......... 14.40 .29 (.74) (.45) (.28) (.29) Year ended 9/30/93 ............. 13.20 .34 1.29 1.63 (.43) 0.00 Year ended 9/30/92 ............. 12.64 .44 .57 1.01 (.45) 0.00 Year ended 9/30/91 ............. 10.41 .46 2.17 2.63 (.40) 0.00 Year ended 9/30/90 ............. 14.13 .45 (2.14) (1.69) (.40) (1.63) Year ended 9/30/89 ............. 12.53 .42 2.18 2.60 (.46) (.54) Year ended 9/30/88 ............. 16.33 .46 (1.07) (.61) (.44) (2.75) Class B Year ended 7/31/97 ............. $13.79 $.19(b) $3.89 $4.08 $(.24) $(1.80) Year ended 7/31/96 ............. 14.88 .28 .42 .70 (.31) (1.48) Year ended 7/31/95 ............. 13.23 .30 1.65 1.95 (.28) (.02) Period ended 7/31/94** ......... 14.27 .22 (.75) (.53) (.22) (.29) Year ended 9/30/93 ............. 13.13 .29 1.22 1.51 (.37) 0.00 Year ended 9/30/92 ............. 12.61 .37 .54 .91 (.39) 0.00 2/4/91++ to 9/30/91 ............ 11.84 .25 .80 1.05 (.28) 0.00 Class C Year ended 7/31/97 ............. $13.81 $.20(b) $3.89 $4.09 $(.24) $(1.80) Year ended 7/31/96 ............. 14.89 .26 .45 .71 (.31) (1.48) Year ended 7/31/95 ............. 13.24 .30 1.65 1.95 (.28) (.02) Period ended 7/31/94** ......... 14.28 .24 (.77) (.53) (.22) (.29) 5/3/93++ to 9/30/93 ............ 13.63 .11 .71 .82 (.17) 0.00 Income Builder Fund (h) Class A Year ended 10/31/97 ............ $11.57 $.50(b) $1.62 $2.12 $(.51) $(.61) Year ended 10/31/96 ............ 10.70 .56(b) .98 1.54 (.55) (.12) Year ended 10/31/95 ............ 9.69 .93(b) .59 1.52 (.51) 0.00 3/25/94++ to 10/31/94 .......... 10.00 .96 (1.02) (.06) (.05)(g) (.20) Class B Year ended 10/31/97 ............ $11.55 $.42(b) $1.61 $2.03 $(.44) $(.61) Year ended 10/31/96 ............ 10.70 .47(b) .98 1.45 (.48) (.12) Year ended 10/31/95 ............ 9.68 .63(b) .83 1.46 (.44) 0.00 3/25/94++ to 10/31/94 .......... 10.00 .88 (.98) (.10) (.06)(g) (.16)
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Total Net Assets Total Net Asset Investment At End Of Dividends Value Return Based Period And End Of on Net Asset (000's Fiscal Year or Period Distributions Period Value (a) omitted) ------------------- -------------- ---------- ------------ ------------ Global Environment Fund (h) Class A Year ended 10/31/97 ............ $(1.13) $18.77 23.51% $ 52,378 Year ended 10/31/96 ............ (.02) 16.48 33.48 100,271 Year ended 10/31/95 ............ 0.00 12.37 5.37 85,416 Year ended 10/31/94 ............ 0.00 11.74 7.02 81,102 Year ended 10/31/93 ............ 0.00 10.97 1.76 75,805 Year ended 10/31/92 ............ (.18) 10.78 (16.59) 74,442 Year ended 10/31/91 ............ (.34) 13.12 8.66 90,612 6/1/90+ to 10/31/90 ............ 0.00 12.46 (10.68) 86,041 Class B 10/3/97++ to 10/31/97 .......... $0.00 $18.76 (5.82)% $ 235 Strategic Balanced Fund (i) Class A Year ended 7/31/97 ............. $(2.72) $19.79 23.90% $ 20,312 Year ended 7/31/96 ............. (.93) 18.48 8.05 18,329 Year ended 7/31/95 ............. (.26) 17.98 12.40 10,952 Period ended 7/31/94** ......... 0.00 16.26 (1.22) 9,640 Year ended 4/30/94 ............. (1.41) 16.46 5.06 9,822 Year ended 4/30/93 ............. (1.07) 16.97 5.85 8,637 Year ended 4/30/92 ............. (.49) 17.06 20.96 6,843 9/4/90++ to 4/30/91 ............ (.03) 14.48 16.00 443 Class B Year ended 7/31/97 ............. $(2.60) $16.59 23.01% $ 28,037 Year ended 7/31/96 ............. (.81) 15.89 7.41 28,492 Year ended 7/31/95 ............. (.16) 15.56 11.63 37,301 Period ended 7/31/94** ......... 0.00 14.10 (1.40) 43,578 Year ended 4/30/94 ............. (1.31) 14.30 4.29 43,616 Year ended 4/30/93 ............. (1.35) 14.92 4.96 36,155 Year ended 4/30/92 ............. (1.37) 15.51 20.14 31,842 Year ended 4/30/91 ............. (.47) 13.96 16.73 22,552 Year ended 4/30/90 ............. (.67) 12.40 8.85 19,523 Year ended 4/30/89 ............. (1.07) 11.97 14.66 5,128 10/23/87+ to 4/30/88 ........... (.06) 11.45 15.10 2,344 Class C Year ended 7/31/97 ............. $(2.60) $16.59 23.01% $ 3,045 Year ended 7/31/96 ............. (.81) 15.89 7.34 3,157 Year ended 7/31/95 ............. (.16) 15.57 11.62 4,113 Period ended 7/31/94** ......... 0.00 14.11 (1.40) 4,317 8/2/93++ to 4/30/94 ............ (1.31) 14.31 .45 4,289 Balanced Shares Class A Year ended 7/31/97 ............. $(2.12) $16.17 33.46% $ 115,500 Year ended 7/31/96 ............. (1.89) 14.01 5.23 102,567 Year ended 7/31/95 ............. (.38) 15.08 15.99 122,033 Period ended 7/31/94** ......... (.57) 13.38 (3.21) 157,637 Year ended 9/30/93 ............. (.43) 14.40 12.52 172,484 Year ended 9/30/92 ............. (.45) 13.20 8.14 143,883 Year ended 9/30/91 ............. (.40) 12.64 25.52 154,230 Year ended 9/30/90 ............. (2.03) 10.41 (13.12) 140,913 Year ended 9/30/89 ............. (1.00) 14.13 22.27 159,290 Year ended 9/30/88 ............. (3.19) 12.53 (1.10) 111,515 Class B Year ended 7/31/97 ............. $(2.04) $15.83 32.34% $ 24,192 Year ended 7/31/96 ............. (1.79) 13.79 4.45 18,393 Year ended 7/31/95 ............. (.30) 14.88 15.07 15,080 Period ended 7/31/94** ......... (.51) 13.23 (3.80) 14,347 Year ended 9/30/93 ............. (.37) 14.27 11.65 12,789 Year ended 9/30/92 ............. (.39) 13.13 7.32 6,499 2/4/91++ to 9/30/91 ............ (.28) 12.61 8.96 1,830 Class C Year ended 7/31/97 ............. $(2.04) $15.86 32.37% $ 5,510 Year ended 7/31/96 ............. (1.79) 13.81 4.52 6,096 Year ended 7/31/95 ............. (.30) 14.89 15.06 5,108 Period ended 7/31/94** ......... (.51) 13.24 (3.80) 6,254 5/3/93++ to 9/30/93 ............ (.17) 14.28 6.01 1,487 Income Builder Fund (h) Class A Year ended 10/31/97 ............ $(1.12) $12.57 19.36% $ 2,367 Year ended 10/31/96 ............ (.67) 11.57 14.82 2,056 Year ended 10/31/95 ............ (.51) 10.70 16.22 1,398 3/25/94++ to 10/31/94 .......... (.25) 9.69 (.54) 600 Class B Year ended 10/31/97 ............ $(1.05) $12.53 18.53% $ 8,713 Year ended 10/31/96 ............ (.60) 11.55 13.92 5,775 Year ended 10/31/95 ............ (.44) 10.70 15.55 3,769 3/25/94++ to 10/31/94 .......... (.22) 9.68 (.99) 1,998 Ratio Of Net Ratio Of Investment Expenses Income (Loss) Average To Average To Average Portfolio Commission Fiscal Year or Period Net Assets Net Assets Turnover Rate Rate (k) ------------------- ----------- ------------- ------------- ---------- Global Environment Fund (h) Class A Year ended 10/31/97 ............ 2.39% (1.35)% 145% $0.0506 Year ended 10/31/96 ............ 1.60 (.85) 268 0.0313 Year ended 10/31/95 ............ 1.57 .21 109 -- Year ended 10/31/94 ............ 1.67 (.04) 42 -- Year ended 10/31/93 ............ 1.62 .15 25 -- Year ended 10/31/92 ............ 1.63 .10 41 -- Year ended 10/31/91 ............ 1.49 .95 32 -- 6/1/90+ to 10/31/90 ............ 1.72* 3.95* 4 -- Class B 10/3/97++ to 10/31/97 .......... 20.84% (1.03)% 145% $0.0506 Strategic Balanced Fund (i) Class A Year ended 7/31/97 ............. 1.41%(f)(l) 2.50%(c) 170% $0.0395 Year ended 7/31/96 ............. 1.40(f) 1.78 173 -- Year ended 7/31/95 ............. 1.40(f) 2.07 172 -- Period ended 7/31/94** ......... 1.40(f) 1.63* 21 -- Year ended 4/30/94 ............. 1.40*(f) 1.67 139 -- Year ended 4/30/93 ............. 1.40(f) 2.29 98 -- Year ended 4/30/92 ............. 1.40 1.92 103 -- 9/4/90++ to 4/30/91 ............ 1.40* 3.54* 137 -- Class B Year ended 7/31/97 ............. 2.12%(f)(l) 1.78% 170% $0.0395 Year ended 7/31/96 ............. 2.10(f) .99 173 -- Year ended 7/31/95 ............. 2.10(f) 1.38 172 -- Period ended 7/31/94** ......... 2.10*(f) .92* 21 -- Year ended 4/30/94 ............. 2.10(f) .93 139 -- Year ended 4/30/93 ............. 2.15(f) 1.55 98 -- Year ended 4/30/92 ............. 2.15 1.34 103 -- Year ended 4/30/91 ............. 2.10 3.23 137 -- Year ended 4/30/90 ............. 2.00 3.85 120 -- Year ended 4/30/89 ............. 2.00 4.31 103 -- 10/23/87+ to 4/30/88 ........... 2.00* 2.44* 72 -- Class C Year ended 7/31/97 ............. 2.12%(f)(l) 1.78% 170% $0.0395 Year ended 7/31/96 ............. 2.10(f) .99 173 -- Year ended 7/31/95 ............. 2.10(f) 1.38 172 -- Period ended 7/31/94** ......... 2.10*(f) .93* 21 -- 8/2/93++ to 4/30/94 ............ 2.10*(f) .69* 139 -- Balanced Shares Class A Year ended 7/31/97 ............. 1.47%(l) 2.11% 207% $0.0552 Year ended 7/31/96 ............. 1.38 2.41 227 -- Year ended 7/31/95 ............. 1.32 3.12 179 -- Period ended 7/31/94** ......... 1.27* 2.50* 116 -- Year ended 9/30/93 ............. 1.35 2.50 188 -- Year ended 9/30/92 ............. 1.40 3.26 204 -- Year ended 9/30/91 ............. 1.44 3.75 70 -- Year ended 9/30/90 ............. 1.36 4.01 169 -- Year ended 9/30/89 ............. 1.42 3.29 132 -- Year ended 9/30/88 ............. 1.42 3.74 190 -- Class B Year ended 7/31/97 ............. 2.25%(l) 1.32% 207% $0.0552 Year ended 7/31/96 ............. 2.16 1.61 227 -- Year ended 7/31/95 ............. 2.11 2.30 179 -- Period ended 7/31/94** ......... 2.05* 1.73* 116 -- Year ended 9/30/93 ............. 2.13 1.72 188 -- Year ended 9/30/92 ............. 2.16 2.46 204 -- 2/4/91++ to 9/30/91 ............ 2.13* 3.19* 70 -- Class C Year ended 7/31/97 ............. 2.23%(l) 1.37% 207% $0.0552 Year ended 7/31/96 ............. 2.15 1.63 227 -- Year ended 7/31/95 ............. 2.09 2.32 179 -- Period ended 7/31/94** ......... 2.03* 1.81* 116 -- 5/3/93++ to 9/30/93 ............ 2.29* 1.47* 188 -- Income Builder Fund (h) Class A Year ended 10/31/97 ............ 2.09% 4.18% 159% $0.0513 Year ended 10/31/96 ............ 2.20 4.92 108 0.0600 Year ended 10/31/95 ............ 2.38 5.44 92 -- 3/25/94++ to 10/31/94 .......... 2.52* 6.11* 126 -- Class B Year ended 10/31/97 ............ 2.80% 3.48% 159% $0.0513 Year ended 10/31/96 ............ 2.92 4.19 108 0.0600 Year ended 10/31/95 ............ 3.09 4.73 92 -- 3/25/94++ to 10/31/94 .......... 3.09* 5.07* 126 --
- -------------------------------------------------------------------------------- 15
Net Net Net Asset Realized and Increase Value Unrealized (Decrease) In Dividends From Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment Fiscal Year or Period Period Income (Loss) Investments From Operations Income ------------------- ------------ -------------- -------------- --------------- -------------- Income Builder Fund (continued) Class C Year ended 10/31/97 ............ $11.52 $.42(b) $1.60 $2.02 $(.44) Year ended 10/31/96 ............ 10.67 .46(b) .99 1.45 (.48) Year ended 10/31/95 ............ 9.66 .40(b) 1.05 1.45 (.44) Year ended 10/31/94 ............ 10.47 .50 (.85) (.35) (.11)(g) Year ended 10/31/93 ............ 9.80 .52 .51 1.03 (.36) Year ended 10/31/92 ............ 10.00 .55 (.28) .27 (.47) 10/25/91+ to 10/31/91 .......... 10.00 .01 0.00 .01 (.01) Utility Income Fund Class A Year ended 11/30/97 ............ $10.59 $.32(b)(c) $2.04 $2.36 $(.34) Year ended 11/30/96 ............ 10.22 .18(b)(c) .65 .83 (.46) Year ended 11/30/95 ............ 8.97 .27(c) 1.43 1 .70 (.45) Year ended 11/30/94 ............ 9.92 .42(c) (.89) (.47) (.48) 10/18/93+ to 11/30/93 .......... 10.00 .02(c) (.10) (.08) 0.00 Class B Year ended 11/30/97 ............ $10.57 $.25(b)(c) $2.04 $2.29 $(.27) Year ended 11/30/96 ............ 10.20 .10(b)(c) .67 .77 (.40) Year ended 11/30/95 ............ 8.96 .18(c) 1.45 1.63 (.39) Year ended 11/30/94 ............ 9.91 .37(c) (.91) (.54) (.41) 10/18/93+ 11/30/93 ............. 10.00 .01(c) (.10) (.09) 0.00 Class C Year ended 11/30/97 ............ $10.59 $.25(b)(c) $2.03 $2.28 $(.27) Year ended 11/30/96 ............ 10.22 .11(b)(c) .66 .77 (.40) Year ended 11/30/95 ............ 8.97 .18(c) 1.46 1.64 (.39) Year ended 11/30/94 ............ 9.92 .39(c) (.93) (.54) (.41) 10/27/93+ to 11/30/93 .......... 10.00 .01(c) (.09) (.08) 0.00 Growth and Income Fund Class A Year ended 10/31/97 ............ $3.00 $.04(b) $ .87 $ .91 $(.05) Year ended 10/31/96 ............ 2.71 .05 .50 .55 (.05) Year ended 10/31/95 ............ 2.35 .02 .52 .54 (.06) Year ended 10/31/94 ............ 2.61 .06 (.08) (.02) (.06) Year ended 10/31/93 ............ 2.48 .06 .29 .35 (.06) Year ended 10/31/92 ............ 2.52 .06 .11 .17 (.06) Year ended 10/31/91 ............ 2.28 .07 .56 .63 (.09) Year ended 10/31/90 ............ 3.02 .09 (.30) (.21) (.10) Year ended 10/31/89 ............ 3.05 .10 .43 .53 (.08) Year ended 10/31/88 ............ 3.48 .10 .33 .43 (.08) Class B Year ended 10/31/97 ............ $2.99 $.02(b) $ .85 $ .87 $(.03) Year ended 10/31/96 ............ 2.69 .03 .51 .54 (.03) Year ended 10/31/95 ............ 2.34 .01 .49 .50 (.03) Year ended 10/31/94 ............ 2.60 .04 (.08) (.04) (.04) Year ended 10/31/93 ............ 2.47 .05 .28 .33 (.04) Year ended 10/31/92 ............ 2.52 .04 .11 .15 (.05) 2/8/91++ to 10/31/91 ........... 2.40 .04 .12 .16 (.04) Class C Year ended 10/31/97 ............ $2.99 $.02(b) $ .85 $ .87 $(.03) Year ended 10/31/96 ............ 2.70 .03 .50 .53 (.03) Year ended 10/31/95 ............ 2.34 .01 .50 .51 (.03) Year ended 10/31/94 ............ 2.60 .04 (.08) (.04) (.04) 5/3/93 ++ to 10/31/93 .......... 2.43 .02 .17 .19 (.02) Real Estate Investment Fund Class A 10/1/96+ to 8/31/97 ............ $10.00 $.30(b) $2.88 $3.18 $(.38)(m) Class B 10/1/96+ to 8/31/97 ............ $10.00 $.23(b) $2.89 $3.12 $(.33)(m) Class C 10/1/96+ to 8/31/97 ............ $10.00 $.23(b) $2.89 $3.12 $(.33)(m) Distributions From Net Fiscal Year or Period Realized Gains ------------------- -------------- Income Builder Fund (continued) Class C Year ended 10/31/97 ............ $(.61) Year ended 10/31/96 ............ (.12) Year ended 10/31/95 ............ 0.00 Year ended 10/31/94 ............ (.35) Year ended 10/31/93 ............ 0.00 Year ended 10/31/92 ............ 0.00 10/25/91+ to 10/31/91 .......... 0.00 Utility Income Fund Class A Year ended 11/30/97 ............ $(.13) Year ended 11/30/96 ............ 0.00 Year ended 11/30/95 ............ 0.00 Year ended 11/30/94 ............ 0.00 10/18/93+ to 11/30/93 .......... 0.00 Class B Year ended 11/30/97 ............ $(.13) Year ended 11/30/96 ............ 0.00 Year ended 11/30/95 ............ 0.00 Year ended 11/30/94 ............ 0.00 10/18/93+ 11/30/93 ............. 0.00 Class C Year ended 11/30/97 ............ $(.13) Year ended 11/30/96 ............ 0.00 Year ended 11/30/95 ............ 0.00 Year ended 11/30/94 ............ 0.00 10/27/93+ to 11/30/93 .......... 0.00 Growth and Income Fund Class A Year ended 10/31/97 ............ $(.38) Year ended 10/31/96 ............ (.21) Year ended 10/31/95 ............ (.12) Year ended 10/31/94 ............ (.18) Year ended 10/31/93 ............ (.16) Year ended 10/31/92 ............ (.15) Year ended 10/31/91 ............ (.30) Year ended 10/31/90 ............ (.43) Year ended 10/31/89 ............ (.48) Year ended 10/31/88 ............ (.78) Class B Year ended 10/31/97 ............ $(.38) Year ended 10/31/96 ............ (.21) Year ended 10/31/95 ............ (.12) Year ended 10/31/94 ............ (.18) Year ended 10/31/93 ............ (.16) Year ended 10/31/92 ............ (.15) 2/8/91++ to 10/31/91 ........... 0.00 Class C Year ended 10/31/97 ............ $(.38) Year ended 10/31/96 ............ (.21) Year ended 10/31/95 ............ (.12) Year ended 10/31/94 ............ (.18) 5/3/93 ++ to 10/31/93 .......... 0.00 Real Estate Investment Fund Class A 10/1/96+ to 8/31/97 ............ $0.00 Class B 10/1/96+ to 8/31/97 ............ $0.00 Class C 10/1/96+ to 8/31/97 ............ $0.00
- -------------------------------------------------------------------------------- Please refer to the footnotes on page 18. 16
Total Net Assets Total Net Asset Investment At End Of Dividends Value Return Based Period And End Of on Net Asset (000's Fiscal Year or Period Distributions Period Value (a) omitted) ------------------- -------------- ---------- ------------ ------------ Income Builder Fund (continued) Class C Year ended 10/31/97 ............ $(1.05) $12.49 18.50% $ 45,765 Year ended 10/31/96 ............ (.60) 11.52 13.96 44,441 Year ended 10/31/95 ............ (.44) 10.67 15.47 49,107 Year ended 10/31/94 ............ (.46) 9.66 (3.44) 64,027 Year ended 10/31/93 ............ (.36) 10.47 10.65 106,034 Year ended 10/31/92 ............ (.47) 9.80 2.70 152,617 10/25/91+ to 10/31/91 .......... (.01) 10.00 .11 41,813 Utility Income Fund Class A Year ended 11/30/97 ............ $(.47) $12.48 23.10% $ 4,117 Year ended 11/30/96 ............ (.46) 10.59 8.47 3,294 Year ended 11/30/95 ............ (.45) 10.22 19.58 2,748 Year ended 11/30/94 ............ (.48) 8.97 (4.86) 1,068 10/18/93+ to 11/30/93 .......... 0.00 9.92 (.80) 229 Class B Year ended 11/30/97 ............ $(.40) $12.46 22.35% $ 14,782 Year ended 11/30/96 ............ (.40) 10.57 7.82 13,561 Year ended 11/30/95 ............ (.39) 10.20 18.66 10,988 Year ended 11/30/94 ............ (.41) 8.96 (5.59) 2,353 10/18/93+ 11/30/93 ............. 0.00 9.91 (.90) 244 Class C Year ended 11/30/97 ............ $(.40) $12.47 22.21% $ 3,413 Year ended 11/30/96 ............ (.40) 10.59 7.81 3,376 Year ended 11/30/95 ............ (.39) 10.22 18.76 3,500 Year ended 11/30/94 ............ (.41) 8.97 (5.58) 2,651 10/27/93+ to 11/30/93 .......... 0.00 9.92 (.80) 18 Growth and Income Fund Class A Year ended 10/31/97 ............ $(.43) $3.48 33.28% $ 787,566 Year ended 10/31/96 ............ (.26) 3.00 21.51 553,151 Year ended 10/31/95 ............ (.18) 2.71 24.21 458,158 Year ended 10/31/94 ............ (.24) 2.35 (.67) 414,386 Year ended 10/31/93 ............ (.22) 2.61 14.98 459,372 Year ended 10/31/92 ............ (.21) 2.48 7.23 417,018 Year ended 10/31/91 ............ (.39) 2.52 31.03 409,597 Year ended 10/31/90 ............ (.53) 2.28 (8.55) 314,670 Year ended 10/31/89 ............ (.56) 3.02 21.59 377,168 Year ended 10/31/88 ............ (.86) 3.05 16.45 350,510 Class B Year ended 10/31/97 ............ $(.41) $3.45 31.83% $ 456,399 Year ended 10/31/96 ............ (.24) 2.99 21.20 235,263 Year ended 10/31/95 ............ (.15) 2.69 22.84 136,758 Year ended 10/31/94 ............ (.22) 2.34 (1.50) 102,546 Year ended 10/31/93 ............ (.20) 2.60 14.22 76,633 Year ended 10/31/92 ............ (.20) 2.47 6.22 29,656 2/8/91++ to 10/31/91 ........... (.04) 2.52 6.83 10,221 Class C Year ended 10/31/97 ............ $(.41) $3.45 31.83% $ 106,526 Year ended 10/31/96 ............ (.24) 2.99 20.72 61,356 Year ended 10/31/95 ............ (.15) 2.70 23.30 35,835 Year ended 10/31/94 ............ (.22) 2.34 (1.50) 19,395 5/3/93 ++ to 10/31/93 .......... (.02) 2.60 7.85 7,774 Real Estate Investment Fund Class A 10/1/96+ to 8/31/97 ............ $(.38) $12.80 32.24% $ 37,638 Class B 10/1/96+ to 8/31/97 ............ $(.33) $12.79 31.49% $ 186,802 Class C 10/1/96+ to 8/31/97 ............ $(.33) $12.79 31.49% $ 42,719 Ratio Of Net Ratio Of Investment Expenses Income (Loss) Average To Average To Average Portfolio Commission Fiscal Year or Period Net Assets Net Assets Turnover Rate Rate (k) ------------------- ----------- ------------- ------------- ---------- Income Builder Fund (continued) Class C Year ended 10/31/97 ............ 2.80% 3.49% 159% $0.0513 Year ended 10/31/96 ............ 2.93 4.13 108 0.0600 Year ended 10/31/95 ............ 3.02 4.81 92 -- Year ended 10/31/94 ............ 2.67 3.82 126 -- Year ended 10/31/93 ............ 2.32 6.85 101 -- Year ended 10/31/92 ............ 2.33 5.47 108 -- 10/25/91+ to 10/31/91 .......... 0.00* .94* 0 -- Utility Income Fund Class A Year ended 11/30/97 ............ 1.50%(f) 2.89% 37% $0.0442 Year ended 11/30/96 ............ 1.50(f) 1.67 98 0.0536 Year ended 11/30/95 ............ 1.50(f) 2.48 162 -- Year ended 11/30/94 ............ 1.50(f) 4.13 30 -- 10/18/93+ to 11/30/93 .......... 1.50*(f) 2.35* 11 -- Class B Year ended 11/30/97 ............ 2.20%(f) 2.27% 37% $0.0442 Year ended 11/30/96 ............ 2.20(f) .95 98 0.0536 Year ended 11/30/95 ............ 2.20(f) 1.60 162 -- Year ended 11/30/94 ............ 2.20(f) 3.53 30 -- 10/18/93+ 11/30/93 ............. 2.20*(f) 2.84* 11 -- Class C Year ended 11/30/97 ............ 2.20%(f) 2.27% 37% $0.0442 Year ended 11/30/96 ............ 2.20(f) .94 98 0.0536 Year ended 11/30/95 ............ 2.20(f) 1.88 162 -- Year ended 11/30/94 ............ 2.20(f) 3.60 30 -- 10/27/93+ to 11/30/93 .......... 2.20*(f) 3.08* 11 -- Growth and Income Fund Class A Year ended 10/31/97 ............ .92%(l) 1.39%* 88% $0.0589 Year ended 10/31/96 ............ .97 1.73 88 0.0625 Year ended 10/31/95 ............ 1.05 1.88 142 -- Year ended 10/31/94 ............ 1.03 2.36 68 -- Year ended 10/31/93 ............ 1.07 2.38 91 -- Year ended 10/31/92 ............ 1.09 2.63 104 -- Year ended 10/31/91 ............ 1.14 2.74 84 -- Year ended 10/31/90 ............ 1.09 3.40 76 -- Year ended 10/31/89 ............ 1.08 3.49 79 -- Year ended 10/31/88 ............ 1.09 3.09 66 -- Class B Year ended 10/31/97 ............ 1.72%(l) .56% 88% $0.0589 Year ended 10/31/96 ............ 1.78 .91 88 0.0625 Year ended 10/31/95 ............ 1.86 1.05 142 -- Year ended 10/31/94 ............ 1.85 1.56 68 -- Year ended 10/31/93 ............ 1.90 1.58 91 -- Year ended 10/31/92 ............ 1.90 1.69 104 -- 2/8/91++ to 10/31/91 ........... 1.99* 1.67* 84 -- Class C Year ended 10/31/97 ............ 1.71%(l) .58% 88% $0.0589 Year ended 10/31/96 ............ 1.76 .93 88 0.0625 Year ended 10/31/95 ............ 1.84 1.04 142 -- Year ended 10/31/94 ............ 1.84 1.61 68 -- 5/3/93 ++ to 10/31/93 .......... 1.96* 1.45* 91 -- Real Estate Investment Fund Class A 10/1/96+ to 8/31/97 ............ 1.77%*(l) 2.73%* 20% $0.0518 Class B 10/1/96+ to 8/31/97 ............ 2.44%*(l) 2.08%* 20% $0.0518 Class C 10/1/96+ to 8/31/97 ............ 2.43%*(l) 2.06%* 20% $0.0518
- -------------------------------------------------------------------------------- 17 - ---------- + Commencement of operations. ++ Commencement of distribution. * Annualized. ** Reflects a change in fiscal year end. (a) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at the net asset value during the period, and a redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total investment returns calculated for periods of less than one year are not annualized. (b) Based on average shares outstanding. (c) Net of fee waiver and expense reimbursement. (d) Adjusted for a 200% stock dividend paid to shareholders of record on January 15, 1988. (e) Net of offering costs of ($.05). (f) Net of expenses assumed and/or waived/reimbursed. If 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 (l) below, would have been as follows:
1993 1994 1995 1996 1997 All-Asia Investment Fund Class A -- -- 10.57%# 3.61% 3.57% Class B -- -- 11.32%# 4.33% 4.27% Class C -- -- 11.38%# 4.30% 4.27% Growth Fund Class A 1.84% 1.46% -- -- -- Class B 2.52% 2.13% -- -- -- Class C -- 2.13%# -- Global Small Cap Fund Class A -- -- 2.61% -- -- Class B -- -- 3.27% -- -- Class C -- -- 3.31% -- -- Strategic Balanced Fund Class A 1.85% 1.70%1 1.81% 1.76% 2.06% 1.94%#2 Class B 2.56% 2.42%1 2.49% 2.47% 2.76% 2.64%#2 Class C -- 2.07%#1 2.50% 2.48% 2.76% 2.64%#2 Utility Income Fund Class A 145.63%# 13.72% 4.86%# 3.38% 3.55% Class B 133.62%# 14.42% 5.34%# 4.08% 4.28% Class C 148.03%# 14.42% 5.99%# 4.07% 4.28%
- ---------- # annualized 1. For the period ended April 30, 1994 2. For the period ended July 31, 1994 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. (g) "Dividends from Net Investment Income" includes a return of capital. Income Builder Fund had a return of capital with respect to Class A shares, for the period ended October 31, 1994, of $(.01); with respect to Class B shares, $(.01); and with respect to Class C shares, for the year ended October 31, 1994, $(.02). (h) On March 25, 1994, all existing shares of Income Builder Fund, previously known as Alliance Multi-Market Income and Growth Trust, were converted into Class C shares. (i) Prior to July 22, 1993, Equitable Capital Management Corporation ("Equitable Capital") served as the investment adviser to the predecessor to The Alliance Portfolios, of which Growth Fund and Strategic Balanced Fund are series. On July 22, 1993, Alliance acquired the business and substantially all assets of Equitable Capital and became investment adviser to the Funds. (j) "Distributions from Net Realized Gains" includes a return of capital of $(.12). (k) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share for trades on which commissions are charged. (l) 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, assumng the assumption and/or waiver/reimbursement of expenses described in (f) above, would have been as follows:
Balanced Shares 1997 International Fund 1997 Strategic Balanced 1997 Class A 1.46% Class A 1.73% Class A 1.40% Class B 2.24% Class B 2.58% Class B 2.10% Class C 2.22% Class C 2.56% Class C 2.10% Real Estate 1997 Global Small Cap Fund 1997 New Europe 1997 Class A 1.77% Class A 2.38% Class A 2.04% Class B 2.43% Class B 3.08% Class B 2.74% Class C 2.42% Class C 3.08% Class C 2.73% Growth Fund 1997 Technology 1997 Growth and Income 1997 Class A 1.25% Class A 1.66% Class A .91% Class B 1.95% Class B 2.36% Class B 1.71% Class C 1.95% Class C 2.37% Class C 1.70% (m) Distributions from net investment income include a tax return of capital of $.08, $.09 and $.08 for Class A, B and C shares, respectively. (n) 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.
18 - -------------------------------------------------------------------------------- GLOSSARY - -------------------------------------------------------------------------------- The following terms are frequently used in this Prospectus. Equity securities, except as noted otherwise, are (i) common stocks, partnership interests, business trust shares and other equity or ownership interests in business enterprises, and (ii) securities convertible into, and rights and warrants to subscribe for the purchase of, such stocks, shares and interests. Debt securities are bonds, debentures, notes, bills, repurchase agreements, loans, other direct debt instruments and other fixed, floating and variable rate debt obligations, but do not include convertible securities. Fixed-income securities are debt securities and dividend-paying preferred stocks and include floating rate and variable rate instruments. Convertible securities are fixed-income securities that are convertible into common stock. U.S. Government securities are securities issued or guaranteed by the United States Government, its agencies or instrumentalities. Foreign government securities are securities issued or guaranteed, as to payment of principal and interest, by governments, quasi-governmental entities, governmental agencies or other governmental entities. Asian company is an entity that (i) is organized under the laws of an Asian country and conducts business in an Asian country, (ii) derives 50% or more of its total revenues from business in Asian countries, or (iii) issues equity or debt securities that are traded principally on a stock exchange in an Asian country. Asian countries are Australia, the Democratic Socialist Republic of Sri Lanka, 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. 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. 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. Moody's is Moody's Investors Service, Inc. S&P is Standard & Poor's Ratings Services. Duff & Phelps is Duff & Phelps Credit Rating Co. Fitch is Fitch IBCA, Inc Investment grade securities are fixed-income securities rated Baa and above by Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by Alliance to be of equivalent quality. Lower-rated securities are fixed-income securities rated Ba or below by Moody's or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be of equivalent quality, and are commonly referred to as "junk bonds." Prime commercial paper is commercial paper rated Prime 1 by Moody's or A-1 or higher by S&P or, if not rated, issued by companies that have an outstanding debt issue rated Aa or higher by Moody's or AA or higher by S&P. Qualifying bank deposits are certificates of deposit, bankers' acceptances and interest-bearing savings deposits of banks having total assets of more than $1 billion and which are members of the Federal Deposit Insurance Corporation. Rule 144A securities are securities that may be resold pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). Depositary receipts include American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and other types of depositary receipts. Commission is the Securities and Exchange Commission. 1940 Act is the Investment Company Act of 1940, as amended. Code is the Internal Revenue Code of 1986, as amended. Exchange is the New York Stock Exchange. 19 - -------------------------------------------------------------------------------- DESCRIPTION OF THE FUNDS - -------------------------------------------------------------------------------- Except as noted, (i) the Funds' investment objectives are "fundamental" and cannot be changed without shareholder vote, and (ii) the Funds' investment policies are not fundamental and thus can be changed without a shareholder vote. No Fund will change a non-fundamental objective or policy without notifying its shareholders. There is no guarantee that any Fund will achieve its investment objective. INVESTMENT OBJECTIVES AND POLICIES DOMESTIC STOCK FUNDS The Domestic Stock Funds have been designed to offer investors seeking capital appreciation a range of alternative approaches to investing in the U.S. equity markets. The Alliance Fund The Alliance Fund, Inc. ("Alliance Fund") is a diversified investment company that seeks long-term growth of capital and income primarily through investment in common stocks. The Fund normally invests substantially all of its assets in common stocks that Alliance believes will appreciate in value, but it may invest in other types of securities such as convertible securities, high grade instruments, U.S. Government securities and high quality, short-term obligations such as repurchase agreements, bankers' acceptances and domestic certificates of deposit, and may invest without limit in foreign securities. While the diversification and generally high quality of the Fund's investments cannot prevent fluctuations in market values, they tend to limit investment risk and contribute to achieving the Fund's objective. The Fund generally does not effect portfolio transactions in order to realize short-term trading profits or exercise control. The Fund may also: (i) make secured loans of its portfolio securities equal in value up to 25% of its total assets to brokers, dealers and financial institutions; (ii) enter into repurchase agreements of up to one week in duration with commercial banks, but only if those agreements together with any restricted securities and any securities which do not have readily available market quotations do not exceed 10% of its net assets; and (iii) write exchange-traded covered call options with respect to up to 25% of its total assets. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Growth Fund Alliance Growth Fund ("Growth Fund") is a diversified investment company that seeks long-term growth of capital. Current income is only an incidental consideration. The Fund seeks to achieve its objective by investing primarily in equity securities of companies with favorable earnings outlooks and whose long-term growth rates are expected to exceed that of the U.S. economy over time. The Fund's investment objective is not fundamental. The Fund may also invest up to 25% of its total assets in lower-rated fixed-income and convertible bonds. See "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." 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. However, from time to time, the Fund may invest in securities rated in the lowest grades (i.e., C by Moody's or D or equivalent by S&P, Duff & Phelps or Fitch), or securities Alliance judges to be of comparable investment quality, if there are prospects for an upgrade or a favorable conversion into equity securities. If the credit rating of a security held by the Fund falls below its rating at the time of purchase (or Alliance determines that the quality of such security has so deteriorated), the Fund may continue to hold the security if such investment is considered appropriate under the circumstances. The Fund may also: (i) invest in "zero-coupon" bonds and "payment-in-kind" bonds; (ii) invest in foreign securities, although the Fund will not generally invest more than 15% of its total assets in foreign securities; (iii) invest in securities that are not publicly traded, including Rule 144A securities; (iv) buy or sell foreign currencies, options on foreign currencies, foreign currency futures contracts (and related options) and deal in forward foreign exchange contracts; (v) lend portfolio securities amounting to not more than 25% of its total assets; (vi) enter into repurchase agreements of up to 25% of its total assets and purchase and sell securities on a forward commitment basis; (vii) buy and sell stock index futures contracts and buy and sell options on those contracts and on stock indices; (viii) purchase and sell futures contracts, options thereon and options with respect to U.S. Treasury securities; (ix) write covered call and put options on securities it owns or in which it may invest; and (x) purchase and sell put and call options. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Premier Growth Fund Alliance Premier Growth Fund, Inc. ("Premier Growth Fund") is a diversified investment company that seeks long-term growth of capital by investing predominantly in the equity securities of a limited number of large, carefully selected, high-quality U.S. companies that are judged likely to achieve superior earnings growth. Normally, about 40 companies will be represented in the Fund's portfolio, with the 25 most highly regarded of these companies usually constituting approximately 70% of the Fund's net assets. The Fund is thus atypical from most equity mutual funds in its focus on a relatively small number of intensively researched companies and is designed for those seeking to accumulate capital over time with less volatility than that associated with investment in smaller companies. As a matter of fundamental policy, the Fund normally invests at least 85% of its total assets in the equity securities of U.S. companies. These are companies (i) organized under U.S. law that have their principal office in the U.S., and (ii) the equity securities of which are traded principally in the U.S. 20 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 comprising the "S&P 500" (the Standard & Poor's 500 Composite Stock Price Index, a widely recognized unmanaged index of market activity). The Fund may also: (i) invest up to 20% of its net assets in convertible securities of companies whose common stocks are eligible for purchase by it; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest up to 15% of its total assets in securities of foreign issuers whose common stocks are eligible for purchase by it; (iv) purchase and sell exchange-traded index options and stock index futures contracts; and (v) write covered exchange-traded call options on common stocks, unless as a result, the amount of its securities subject to call options would exceed 15% of its total assets, and purchase and sell exchange-traded call and put options on common stocks written by others, but the total cost of all options held by the Fund (including exchange-traded index options) may not exceed 10% of its total assets. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." The Fund will not write put options. Alliance Technology Fund Alliance Technology Fund, Inc. ("Technology Fund") is a diversified investment company that emphasizes growth of capital and invests for capital appreciation, and only incidentally for current income. The Fund may seek income by writing listed call options. The Fund invests primarily in securities of companies expected to benefit from technological advances and improvements (i.e., companies that use technology extensively in the development of new or improved products or processes). The Fund will normally have at least 80% of its assets invested in the securities of these companies. The Fund normally will have substantially all its assets invested in equity securities, but it also invests in debt securities offering an opportunity for price appreciation. The Fund will invest in listed and unlisted securities and U.S. and foreign securities, but it will not purchase a foreign security if as a result 10% or more of the Fund's total assets would be invested in foreign securities. The Fund's policy is to invest in any company and industry and in any type of security with potential for capital appreciation. It invests in well-known and established companies and in new and unseasoned companies. The Fund may also: (i) write and purchase exchange-listed call options and purchase listed put options, including exchange-traded index put options; (ii) invest up to 10% of its total assets in warrants; (iii) invest in restricted securities and in other assets having no ready market if as a result no more than 10% of the Fund's net assets are invested in such securities and assets; (iv) lend portfolio securities equal in value to not more than 30% of the Fund's total assets; and (v) invest up to 10% of its total assets in foreign securities. For additional information on the use, risks and costs of the policies and practices see "Additional Investment Practices." Alliance Quasar Fund Alliance Quasar Fund, Inc. ("Quasar Fund") is a diversified investment company that seeks growth of capital by pursuing aggressive investment policies. It invests for capital appreciation and only incidentally for current income. The selection of securities based on the possibility of appreciation cannot prevent loss in value. Moreover, because the Fund's investment policies are aggressive, an investment in the Fund is risky and investors who want assured income or preservation of capital should not invest in the Fund. The Fund invests in any company and industry and in any type of security with potential for capital appreciation. It invests in well-known and established companies and in new and unseasoned companies. When selecting securities, Alliance considers the economic and political outlook, the values of specific securities relative to other investments, trends in the determinants of corporate profits and management capability and practices. The Fund invests principally in equity securities, but it also invests to a limited degree in non-convertible bonds and preferred stocks. The Fund invests in listed and unlisted U.S. and foreign securities. The Fund periodically invests in special situations, which occur when the securities of a company are expected to appreciate due to a development particularly or uniquely applicable to that company and regardless of general business conditions or movements of the market as a whole. 21 The Fund may also: (i) invest in restricted securities and in other assets having no ready market, but not more than 10% of its total assets may be invested in such securities or assets; (ii) make short sales of securities "against the box," but not more than 15% of its net assets may be deposited on short sales; and (iii) write call options and purchase and sell put and call options written by others. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." GLOBAL STOCK FUNDS The Global Stock Funds have been designed to enable investors to participate in the potential for long-term capital appreciation available from investment in foreign securities. Alliance International Fund Alliance International Fund ("International Fund") is a diversified investment company that seeks a total return on its assets from long-term growth of capital and from income primarily through a broad portfolio of marketable securities of established non-U.S. companies, companies participating in foreign economies with prospects for growth, including U.S. companies having their principal activities and interests outside the U.S. and foreign government securities. Normally, more than 80% of the Fund's assets will be invested in such issuers. The Fund expects to invest primarily in common stocks of established non-U.S. companies that Alliance believes have potential for capital appreciation or income or both, but the Fund is not required to invest exclusively in common stocks or other equity securities, and it may invest in any other type of investment grade security, including convertible securities, 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 such countries. In this regard, at December 31, 1997, approximately 20% of the Fund's assets were invested in securities of Japanese issuers. The Fund may invest in companies, wherever organized, that Alliance judges have their principal activities and interests outside the U.S. These companies may be located in developing countries, which involves exposure to economic structures that are generally less diverse and mature, and to political systems which can be expected to have less stability, than those of developed countries. The Fund currently does not intend to invest more than 10% of its total assets in companies in, or governments of, developing countries. The Fund may also: (i) purchase or sell forward foreign currency exchange contracts; (ii) write, sell and purchase U.S. or foreign exchange-listed put and call options, including exchange-traded index options; (iii) enter into financial futures contracts, including contracts for the purchase or sale for future delivery of foreign currencies and stock index futures, and purchase and write put and call options on futures contracts traded on U.S. or foreign exchanges or over-the-counter; (iv) purchase and write put options on foreign currencies traded on securities exchanges or boards of trade or over-the-counter; (v) lend portfolio securities equal in value to not more than 30% of its total assets; and (vi) enter into repurchase agreements of up to seven days' duration, provided that not more than 10% of the Fund's total assets would be so invested. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Worldwide Privatization Fund Alliance Worldwide Privatization Fund, Inc. ("Worldwide Privatization Fund") is a non-diversified investment company that seeks long-term capital appreciation. As a fundamental policy, the Fund invests at least 65% of its total assets in equity securities issued by enterprises that are undergoing, or have undergone, privatization (as described below), although normally significantly more of its assets will be invested in such securities. The balance of its investments will include securities of companies believed by Alliance to be beneficiaries of privatizations. The Fund is designed for investors desiring to take advantage of investment opportunities, historically inaccessible to U.S. individual investors, that are created by privatizations of state enterprises in both established and developing economies, including those in Western Europe and Scandinavia, Australia, New Zealand, Latin America, Asia and Eastern and Central Europe and, to a lesser degree, Canada and the United States. The Fund's investments in enterprises undergoing privatization may comprise three distinct situations. First, the Fund may invest in the initial offering of publicly traded equity securities (an "initial equity offering") of a government-or state-owned or controlled company or enterprise (a "state enterprise"). Secondly, the Fund may purchase securities of a current or former state enterprise following its initial equity offering. Finally, the Fund may make privately negotiated purchases of stock or other equity interests in a state enterprise that has not yet conducted an initial equity offering. Alliance believes that substantial potential for capital appreciation exists as privatizing enterprises rationalize their management structures, operations and business strategies in order to compete efficiently in a market economy, and the Fund will thus emphasize investments in such enterprises. The Fund diversifies its investments among a number of countries and normally invests in issuers based in at least four, and usually considerably more, countries. No more than 15% of the Fund's total assets, however, will be invested in issuers in any one foreign country, except that the Fund may invest up to 30% of its total assets in issuers in any one of France, Germany, Great Britain, Italy and Japan. The Fund may invest all of its assets within a single region of the world. To the extent that the Fund's assets are invested within any one region, the Fund may be subject to any special risks that may be associated with that region. Privatization is a process through which the ownership and control of companies or assets changes in whole or in part from the public sector to the private sector. Through 22 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 so as to secure the issuer's successful transition to private sector ownership. Additionally, these enterprises often dominate their local markets and typically have the potential for significant managerial and operational efficiency gains. Although the Fund anticipates that it will not concentrate its investments in any industry, it is permitted to invest more than 25% of its total assets in issuers whose primary business activity is that of national commercial banking. Prior to so concentrating, however, the Fund's Directors must determine that its ability to achieve its investment objective would be adversely affected if it were not permitted to concentrate. The staff of the Commission is of the view that registered investment companies may not, absent shareholder approval, change between concentration and non-concentration in a single industry. The Fund disagrees with the staff's position but has undertaken that it will not concentrate in the securities of national commercial banks until, if ever, the issue is resolved. If the Fund were to invest more than 25% of its total assets in national commercial banks, the Fund's performance could be significantly influenced by events or conditions affecting this industry, which is subject to, among other things, increases in interest rates and deteriorations in general economic conditions, and the Fund's investments may be subject to greater risk and market fluctuation than if its portfolio represented a broader range of investments. The Fund may invest up to 35% of its total assets in debt securities and convertible debt securities of issuers whose common stocks are eligible for purchase by the Fund. The Fund may maintain not more than 5% of its net assets in lower-rated securities. See "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain a non-convertible security that is downgraded below C or determined by Alliance to have undergone similar credit quality deterioration following purchase. The Fund may also: (i) invest up to 20% of its total assets in rights or warrants; (ii) write covered put and call options and purchase put and call options on securities of the types in which it is permitted to invest and on exchange-traded index options; (iii) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including any index of U.S. Government securities, foreign government securities, or common stock and may purchase and write options on future contracts; (iv) purchase and write put and call options on foreign currencies for hedging purposes; (v) purchase or sell forward contracts; (vi) enter in forward commitments for the purchase or sale of securities; (vii) enter into standby commitment agreements; (viii) enter into currency swaps for hedging purposes; (ix) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (x) make short sales of securities or maintain a short position; and (xi) make secured loans of its portfolio securities not in excess of 30% of its total assets to entities with which it can enter into repurchase agreements. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance New Europe Fund Alliance New Europe Fund, Inc. ("New Europe Fund") is a non-diversified investment company that seeks long-term capital appreciation through investment primarily in the equity securities of companies based in Europe. The Fund intends to invest substantially all of its assets in the equity securities of European companies and has a fundamental policy of normally investing at least 65% of its total assets in such securities. Up to 35% of its total assets may be invested in high quality U.S. dollar or foreign currency denominated fixed-income securities issued or guaranteed by European governmental entities, or by European or multinational companies or supranational organizations. Alliance believes that the quickening pace of economic integration and political change in Europe creates the potential for many European companies to experience rapid growth and that the emergence of new market economies in Europe and the broadening and strengthening of other European economies may significantly accelerate economic development. The Fund will invest in companies that Alliance believes possess rapid growth potential. Thus, the Fund will emphasize investments in larger, established companies, but will also invest 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 investment opportunities among such companies and, as such become available, within the former "east bloc," although the Fund will not invest more than 20% of its total assets in issuers based therein, or more than 10% of its total assets in issuers based in any one such country. The Fund diversifies its investments among a number of European countries and, under normal circumstances, will invest in companies based in at least three such countries. Subject to the foregoing and to the limitation on investment in any one former "east bloc" country, the Fund may invest 23 without limit in a single European country. While the Fund does not intend to concentrate its investments in a single country, at times 25% or more of its assets may be invested in issuers located in a single country. During such times, the Fund would be subject to a correspondingly greater risk of loss due to adverse political or regulatory developments, or an economic downturn, within that country. In this regard, at December 31, 1997, approximately 24% of the Fund's assets were invested in securities of issuers in the United Kingdom. The Fund may also: (i) invest up to 10% of its total assets in securities for which there is no ready market; (ii) invest up to 20% of its total assets in warrants and rights to purchase equity securities of European companies; (iii) invest in depositary receipts or other securities convertible into securities of companies based in European countries, debt securities of supranational entities denominated in the currency of any European country, debt securities denominated in European Currency Units of an issuer in a European country (including supranational issuers) and "semi-governmental securities"; (iv) purchase and sell forward contracts; (v) write, sell and purchase exchange-traded put and call options, including exchange-traded index options; (vi) enter into financial futures contracts, including contracts for the purchase or sale for future delivery of foreign currencies and futures contracts based on stock indices, and purchase and write options on futures contracts; (vii) purchase and write put options on foreign currencies traded on securities exchanges or boards of trade or over-the-counter; (viii) make secured loans of portfolio securities not in excess of 30% of its total assets to brokers, dealers and financial institutions; (ix) enter into forward commitments for the purchase or sale of securities; and (x) enter into standby commitment agreements. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance All-Asia Investment Fund Alliance All-Asia Investment Fund, Inc. ("All-Asia Investment Fund") is a non-diversified investment company whose investment objective is to seek long-term capital appreciation. In seeking to achieve its investment objective, the Fund will invest at least 65% of its total assets in equity securities (for the purposes of this investment policy, rights, warrants and options to purchase common stocks are not deemed to be equity securities), preferred stocks and equity-linked debt securities issued by Asian companies. The Fund may invest up to 35% of its total assets in debt securities issued or guaranteed by Asian companies or by Asian governments, their agencies or instrumentalities. The Fund may also invest in securities issued by non-Asian issuers, provided that the Fund will invest at least 80% of its total assets in securities issued by Asian companies and the Asian debt securities referred to above. The Fund expects to invest, from time to time, a significant portion, but less than 50%, of its assets in equity securities of Japanese companies. In the past decade, Asian countries generally have experienced a high level of real economic growth due to political and economic changes, including foreign investment and reduced government intervention in the economy. Alliance believes that certain conditions exist in Asian countries which create the potential for continued rapid economic growth. These conditions include favorable demographics and competitive wage rates, increasing levels of foreign direct investment, rising per capita incomes and consumer demand, a high savings rate and numerous privatization programs. Asian countries are also becoming more industrialized and are increasing their intra-Asian exports while reducing their dependence on Western export demand. Alliance believes that these conditions are important to the long-term economic growth of Asian countries. As the economies of many Asian countries move through the "emerging market" stage, thus increasing the supply of goods, services and capital available to less developed Asian markets and helping to spur economic growth in those markets, the potential is created for many Asian companies to experience rapid growth. In addition, many Asian companies the securities of which are listed on exchanges in more developed Asian countries will be participants in the rapid economic growth of the lesser developed countries. These companies generally offer the advantages of more experienced management and more developed market regulation. As their economies have grown, the securities markets in Asian countries have also expanded. New exchanges have been created and the number of listed companies, annual trading volume and overall market capitalization have increased significantly. Additionally, new markets continue to open to foreign investments. For example, South Korea and India have recently relaxed investment restrictions and Vietnamese direct investments have recently become available to U.S. investors. The Fund also offers investors the opportunity to access relatively restricted markets. Alliance believes that investment opportunities in Asian countries will continue to expand. The Fund will invest in companies believed to possess rapid growth potential. Thus, the Fund will invest in smaller, emerging companies, but will also invest in larger, more established companies in such growing economic sectors as capital goods, telecommunications and consumer services. The Fund will invest in investment grade debt securities, except that the Fund may maintain not more than 5% of its net assets in lower-rated securities and lower-rated loans and other lower-rated direct debt instruments. See "Risk Considerations--Securities Ratings," "--Investment in Lower-Rated Fixed-Income Securities" and Appendix C in the Fund's Statement of Additional Information for a description of such ratings. The Fund will not retain a security that is downgraded below C or determined by Alliance to have undergone similar credit quality deterioration following purchase. The Fund may also: (i) invest up to 25% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii) invest in depositary receipts, instruments of supranational entities denominated in 24 the currency of any country, securities of multinational companies and "semi-governmental securities;" (iv) invest up to 25% of its net assets in equity-linked debt securities with the objective of realizing capital appreciation; (v) invest up to 25% of its net assets in loans and other direct debt instruments; (vi) write covered put and call options on securities of the types in which it is permitted to invest and on exchange-traded index options; (vii) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including any index of U.S. Government securities, securities issued by foreign government entities, or common stock and may purchase and write options on future contracts; (viii) purchase and write put and call options on foreign currencies for hedging purposes; (ix) purchase or sell forward contracts; (x) enter into interest rate swaps and purchase or sell interest rate caps and floors; (xi) enter into forward commitments for the purchase or sale of securities; (xii) enter into standby commitment agreements; (xiii) enter into currency swaps for hedging purposes; (xiv) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (xv) make short sales of securities or maintain a short position, in each case only if "against the box;" and (xvi) make secured loans of its portfolio securities not in excess of 30% of its total assets to entities with which it can enter into repurchase agreements. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Global Small Cap Fund Alliance Global Small Cap Fund, Inc. ("Global Small Cap Fund") is a diversified investment company that seeks long-term growth of capital through investment in a global portfolio of the equity securities of selected companies with relatively small market capitalization. The Fund's portfolio emphasizes companies with market capitalizations that would have placed them (when purchased) in about the smallest 20% by market capitalization of actively traded U.S. companies, or market capitalizations of up to about $1.5 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 issuers, and these issuers are located in at least three countries, one of which may be the U.S. Up to 35% of the Fund's total assets may be invested in securities of companies whose market capitalizations exceed the Fund's size standard. The Fund's portfolio securities may be listed on a U.S. or foreign exchange or traded over-the-counter. Alliance believes that smaller capitalization issuers often have sales and earnings growth rates exceeding those of larger companies, and that these growth rates tend to cause more rapid share price appreciation. Investing in smaller capitalization stocks, however, involves greater risk than is associated with larger, more established companies. For example, smaller capitalization companies often have limited product lines, markets, or financial resources. They may be dependent for management on one or a few key persons, and can be more susceptible to losses and risks of bankruptcy. Their securities may be thinly traded (and therefore have to be sold at a discount from current market prices or sold in small lots over an extended period of time), may be followed by fewer investment research analysts and may be subject to wider price swings and thus may create a greater chance of loss than when investing in securities of larger capitalization companies. Transaction costs in small capitalization stocks may be higher than in those of larger capitalization companies. The Fund may also: (i) invest up to 10% of its total assets in securities for which there is no ready market; (ii) invest up to 20% of its total assets in warrants to purchase equity securities; (iii) invest in depositary receipts or other securities representing securities of companies based in countries other than the U.S.; (iv) purchase or sell forward foreign currency contracts; (v) write and purchase exchange-traded call options and purchase exchange-traded put options, including put options on market indices; and (vi) make secured loans of portfolio securities not in excess of 30% of its total assets to brokers, dealers and financial institutions. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Global Environment Fund Alliance Global Environment Fund, Inc. ("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. Until October 3, 1997, the Fund operated as a closed-end investment company, and its common stock (which then comprised a single class) was listed on the Exchange. The Fund invests in two categories of Eligible Companies--"Environmental Companies" and "Beneficiary Companies." Environmental Companies are those 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 recyclying. Under normal circumstances, the Fund invests at least 65% of its total assets in equity securities of Environmental Companies. Beneficiary Companies are those 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. Examples of such companies could be companies that anticipate the demand for plastic substitutes, aerosol substitutes, alternative fuels and processes that generate less hazardous waste. In this regard, 25 the Fund may invest in an issuer 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 is generally 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 which 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. As of December 31, 1997, approximately 86% of the Fund's net assets were invested in equity securities of U.S. companies. The Fund may also: (i) invest up to 20% of its total assets in warrants to purchase equity securities to the extent consistent with its investment objective: (ii) invest in depositary receipts; (iii) purchase and write put and call options on foreign currencies for hedging purposes; (iv) enter into forward foreign currency transactions for hedging purposes; (v) invest in currency futures and options on such futures for hedging purposes; and (vi) make secured loans of its portfolio securities not in excess of 30% of its total assets. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." TOTAL RETURN FUNDS The Total Return Funds have been designed to provide a range of investment alternatives to investors seeking both growth of capital and current income. Alliance Strategic Balanced Fund Alliance Strategic Balanced Fund ("Strategic Balanced Fund") is a diversified investment company that seeks a high long-term total return by investing in a combination of equity and debt securities. The portion of the Fund's assets invested in each type of security varies in accordance with economic conditions, the general level of common stock prices, interest rates and other relevant considerations, including the risks associated with each investment medium. The Fund's investment objective is not fundamental. The Fund's equity securities will generally consist of dividend-paying common stocks and other equity securities of companies with favorable earnings outlooks and long-term growth rates that Alliance expects will exceed that of the U.S. economy. The Fund's debt securities may include U.S. Government securities and securities issued by private corporations. The Fund may also invest in mortgage-backed securities, adjustable rate securities, asset-backed securities and so-called "zero-coupon" bonds and "payment-in-kind" bonds. As a fundamental policy, the Fund will invest at least 25% of its total assets in fixed-income securities, which for this purpose include debt securities, preferred stocks and that portion of the value of convertible securities that is attributable to the fixed-income characteristics of those securities. The Fund's debt securities will generally be of investment grade. See "Risk Considerations--Securities Ratings" and "Investment in Lower-Rated Fixed-Income Securities." In the event that the rating of any debt securities held by the Fund falls below investment grade, the Fund will not be obligated to dispose of such obligations and may continue to hold them if considered appropriate under the circumstances. 26 The Fund may also: (i) invest in foreign securities, although the Fund will not generally invest more than 15% of its total assets in foreign securities; (ii) invest, without regard to this 15% limit, in Eurodollar CDs, which are dollar-denominated certificates of deposit issued by foreign branches of U.S. banks that are not insured by any agency or instrumentality of the U.S. Government; (iii) write covered call and put options on securities it owns or in which it may invest; (iv) buy and sell put and call options and buy and sell combinations of put and call options on the same underlying securities; (v) lend portfolio securities amounting to not more than 25% of its total assets; (vi) enter into repurchase agreements on up to 25% of its total assets; (vii) purchase and sell securities on a forward commitment basis; (viii) buy or sell foreign currencies, options on foreign currencies, foreign currency futures contracts (and related options) and deal in forward foreign exchange contracts; (ix) buy and sell stock index futures contracts and buy and sell options on those contracts and on stock indices; (x) purchase and sell futures contracts, options thereon and options with respect to U.S. Treasury securities; and (xi) invest in securities that are not publicly traded, including Rule 144A securities. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Balanced Shares Alliance Balanced Shares, Inc. ("Balanced Shares") is a diversified investment company that seeks a high return through a combination of current income and capital appreciation. Although the Fund's investment objective is not fundamental, the Fund is a "balanced fund" as a matter of fundamental policy. The Fund will not purchase a security if as a result less than 25% of its total assets will be in fixed-income senior securities (including short- and long-term debt securities, preferred stocks, and convertible debt securities and convertible preferred stocks to the extent that their values are attributable to their fixed-income characteristics). Subject to these restrictions, the percentage of the Fund's assets invested in each type of security will vary. The Fund's assets are invested in U.S. Government securities, bonds, senior debt securities and preferred and common stocks in such proportions and of such type as are deemed best adapted to the current economic and market outlooks. The Fund may invest up to 15% of the value of its total assets in foreign equity and fixed-income securities eligible for purchase by the Fund under its investment policies described above. See "Risk Considerations--Foreign Investment." The Fund may also: (i) enter into contracts for the purchase or sale for future delivery of foreign currencies; and (ii) purchase and write put and call options on foreign currencies and enter into forward foreign currency exchange contracts for hedging purposes. Subject to market conditions, the Fund may also seek to realize income by writing covered call options listed on a domestic exchange. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Income Builder Fund Alliance Income Builder Fund, Inc. ("Income Builder Fund") is a non-diversified investment company that seeks an attractive level of current income and long-term growth of income and capital by investing principally in fixed-income securities and dividend-paying common stocks. Its investments in equity securities emphasize common stocks of companies with a historical or projected pattern of paying rising dividends. Normally, at least 65% of the Fund's total assets are invested in income-producing securities. The Fund may vary the percentage of assets invested in any one type of security based upon Alliance's evaluation as to the appropriate portfolio structure for achieving the Fund's investment objective, although Alliance currently maintains approximately 60% of the Fund's net assets in fixed-income securities and 40% in equity securities. The Fund may invest in fixed-income securities of domestic and foreign issuers, including U.S. Government securities and repurchase agreements pertaining thereto, corporate fixed-income securities of U.S. issuers, qualifying bank deposits and prime commercial paper. The Fund may maintain up to 35% of its net assets in lower-rated securities. See "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain a non-convertible security that is downgraded below CCC or determined by Alliance to have undergone similar credit quality deterioration following purchase. Foreign securities in which the Fund invests may include fixed-income securities of foreign corporate and governmental issuers, denominated in U.S. Dollars, and equity securities of foreign corporate issuers, denominated in foreign currencies or in U.S. Dollars. The Fund will not invest more than 10% of its net assets in equity securities of foreign issuers nor more than 15% of its total assets in issuers of any one foreign country. See "Risk Considerations--Foreign Investment." The Fund may also: (i) invest up to 5% of its net assets in rights or warrants; (ii) invest in depositary receipts and U.S. Dollar denominated securities issued by supranational entities; (iii) write covered put and call options and purchase put and call options on securities of the types in which it is permitted to invest that are exchange-traded; (iv) purchase and sell exchange-traded options on any securities index composed of the types of securities in which it may invest; (v) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including any index of U.S. Government securities, foreign government securities, corporate fixed income securities, or common stock, and purchase and write options on future contracts; (vi) purchase and write put and call options on foreign currencies and enter into forward contracts for hedging purposes; (vii) enter into interest rate swaps and purchase or sell interest rate caps and floors; (viii) enter into forward commitments for the purchase or sale of securities; (ix) enter into standby commitment agreements; 27 (x) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (xi) make short sales of securities or maintain a short position as described below under "Additional Investment Policies and Practices--Short Sales;" and (xii) make secured loans of its portfolio securities not in excess of 20% of its total assets to brokers, dealers and financial institutions. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Utility Income Fund Alliance Utility Income Fund, Inc. ("Utility Income Fund") is a diversified investment company that seeks current income and capital appreciation by investing primarily in equity and fixed-income securities of companies in the utilities industry. The Fund may invest in securities of both U.S. and foreign issuers, although no more than 15% of the Fund's total assets will be invested in issuers in any one foreign country. The utilities industry consists of companies engaged in (i) the manufacture, production, generation, provision, transmission, sale and distribution of gas and electric energy, and communications equipment and services, including telephone, telegraph, satellite, microwave and other companies providing communication facilities for the public, or (ii) the provision of other utility or utility-related goods and services, including, but not limited to, entities engaged in water provision, cogeneration, waste disposal system provision, solid waste electric generation, independent power producers and non-utility generators. The Fund is designed to take advantage of the characteristics and historical performance of securities of utility companies, many of which pay regular dividends and increase their common stock dividends over time. As a fundamental policy, the Fund normally invests at least 65% of its total assets in securities of companies in the utilities industry. The Fund considers a company to be in the utilities industry if, during the most recent twelve-month period, at least 50% of the company's gross revenues, on a consolidated basis, were derived from its utilities activities. At least 65% of the Fund's total assets are invested in income-producing securities, but there is otherwise no limit on the allocation of the Fund's investments between equity securities and fixed-income securities. The Fund may maintain up to 35% of its net assets in lower-rated securities. See "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain a security that is downgraded below B or determined by Alliance to have undergone similar credit quality deterioration following purchase. The United States utilities industry has experienced significant changes in recent years. Electric utility companies in general have been favorably affected by lower fuel costs, the full or near completion of major construction programs and lower financing costs. In addition, many utility companies have generated cash flows in excess of current operating expenses and construction expenditures, permitting some degree of diversification into unregulated businesses. Regulatory changes with respect to nuclear and conventionally fueled generating facilities, however, could increase costs or impair the ability of such electric utilities to operate such facilities, thus reducing their ability to service dividend payments with respect to the securities they issue. Furthermore, rates of return of utility companies generally are subject to review and limitation by state public utilities commissions and tend to fluctuate with marginal financing costs. Rate changes, however, ordinarily lag behind the changes in financing costs, and thus can favorably or unfavorably affect the earnings or dividend pay-outs on utilities stocks depending upon whether such rates and costs are declining or rising. Gas transmission companies, gas distribution companies and telecommunications companies are also undergoing significant changes. Gas utilities have been adversely affected by declines in the prices of alternative fuels, and have also been affected by oversupply conditions and competition. Telephone utilities are still experiencing the effects of the break-up of American Telephone & Telegraph Company, including increased competition and rapidly developing technologies with which traditional telephone companies now compete. Although there can be no assurance that increased competition and other structural changes will not adversely affect the profitability of such utilities, or that other negative factors will not develop in the future, in Alliance's opinion, increased competition and change may provide better positioned utility companies with opportunities for enhanced profitability. Utility companies historically have been subject to the risks of increases in fuel and other operating costs, high interest costs, costs associated with compliance with environmental and nuclear safety regulations, service interruptions, economic slowdowns, surplus capacity, competition and regulatory changes. There can also be no assurance that regulatory policies or accounting standards changes will not negatively affect utility companies' earnings or dividends. Utility companies are subject to regulation by various authorities and may be affected by the imposition of special tariffs and changes in tax laws. To the extent that rates are established or reviewed by governmental authorities, utility companies are subject to the risk that such authorities will not authorize increased rates. Because of the Fund's policy of concentrating its investments in utility companies, the Fund is more susceptible than most other mutual funds to economic, political or regulatory occurrences affecting the utilities industry. Foreign utility companies, like those in the U.S., are generally subject to regulation, although such regulations may or may not be comparable to domestic regulations. Foreign utility companies in certain countries may be more heavily regulated by their respective governments than utility companies located in the U.S. and, as in the U.S., generally are required to seek government approval for rate increases. In addition, because many foreign utility companies use fuels that cause more pollution than those used in the U.S., such utilities may yet be required to invest in pollution control equipment. Foreign utility regulatory systems vary from country to country and may 28 evolve in ways different from regulation in the U.S. The percentage of the Fund's assets invested in issuers of particular countries will vary. See "Risk Considerations--Foreign Investment." The Fund may invest up to 35% of its total assets in equity and fixed-income securities of domestic and foreign corporate and governmental issuers other than utility companies, including U.S. Government securities and repurchase agreements pertaining thereto, foreign government securities, corporate fixed-income securities of domestic issuers, corporate fixed-income securities of foreign issuers denominated in foreign currencies or in U.S. dollars (in each case including fixed-income securities of an issuer in one country denominated in the currency of another country), qualifying bank deposits and prime commercial paper. The Fund may also: (i) invest up to 30% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest in depositary receipts, securities of supranational entities denominated in the currency of any country, securities denominated in European Currency Units and "semi-governmental securities;" (iv) write covered put and call options and purchase put and call options on securities of the types in which it is permitted to invest that are exchange-traded and over-the-counter; (v) purchase and sell exchange-traded options on any securities index composed of the types of securities in which it may invest; (vi) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including an index of U.S. Government securities, foreign government securities, corporate fixed-income securities, or common stock, and may purchase and write options on futures contracts; (vii) purchase and write put and call options on foreign currencies traded on U.S. and foreign exchanges or over-the-counter for hedging purposes; (viii) purchase or sell forward contracts; (ix) enter into interest rate swaps and purchase or sell interest rate caps and floors; (x) enter in forward commitments for the purchase or sale of securities; (xi) enter into standby commitment agreements; (xii) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (xiii) make short sales of securities or maintain a short position as described below under "Additional Investment Practices--Short Sales;" and (xiv) make secured loans of its portfolio securities not in excess of 20% of its total assets to brokers, dealers and financial institutions. For additional information on the use, risk and costs of these policies and practices, see "Additional Investment Practices." Alliance Growth and Income Fund Alliance Growth and Income Fund, Inc. ("Growth and Income Fund") is a diversified investment company that seeks appreciation through investments primarily in dividend-paying common stocks of good quality, although it is permitted to invest in fixed-income securities and convertible securities. The Fund may also try to realize income by writing covered call options listed on domestic securities exchanges. The Fund also invests in foreign securities. Since the purchase of foreign securities entails certain political and economic risks, the Fund has restricted its investments in securities in this category to issues of high quality. The Fund may also purchase and sell financial forward and futures contracts and options thereon for hedging purposes. For additional information on the use, risk and costs of these policies and practices, see "Additional Investment Practices." Alliance Real Estate Investment Fund Alliance Real Estate Investment Fund, Inc. ("Real Estate Investment Fund") is a diversified investment company that seeks a total return on its assets 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. Under normal circumstances, at least 65% of the Fund's total assets will be invested in equity securities of real estate investment trusts ("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 therein. The equity securities in which the Fund will invest for this purpose consist of 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 ("REMIC") certificates and collateralized mortgage obligations ("CMOs") and (b) short-term investments. These instruments are described below. The risks associated with the Fund's transactions in REMICs, CMOs and other types of mortgage-backed securities, which are considered to be derivative securities, may include some or all of the following: market risk, leverage and volatility risk, correlation risk, credit risk and liquidity and valuation risk. See "Risk Considerations" for a description of these and other risks. As to any investment in 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 29 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 which 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 which 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. Investment Process for Real Estate Equity Securities. 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 added 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. In implementing the Fund's research and investment process, Alliance will avail itself of the consulting services of CB Commercial Real Estate Group, Inc. ("CBC"), 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 activities (CBC in August of 1997 acquired Koll Management Services ("Koll"), which previously provided these consulting services to Alliance). In 1996, CBC (and Koll, on a combined basis) completed 25,000 sale and lease transactions, managed over 4,100 client properties, created over $3.5 billion in mortgage originations, and completed over 2,600 appraisal and consulting assignments. In addition, they advised and managed for institutions over $4 billion in real estate investments. As consultant to Alliance, CBC provides access to its proprietary model, REIT o Score, that analyzes the approximately 12,000 properties owned by these 130 companies. Using proprietary databases and algorithms, CBC analyzes local market rent, expense, and occupancy trends, market specific transaction pricing, demographic and economic trends, and leading indicators of real estate supply such as building permits. Over 650 asset-type specific geographic markets are analyzed and ranked on a relative scale by CBC in compiling its REIT o Score database. The relative attractiveness of these real estate industry companies is similarly ranked based on the composite rankings of the properties they own. See "Management of the Funds--Consultant to Adviser" for more information about CBC. The universe of property-owning real estate industry firms consists of approximately 130 companies of sufficient size and quality to merit consideration for investment by the Fund. Once the universe of real estate industry companies has been distilled through the market research process, CBC'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. CBC'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 initial and continued 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 will make extensive use of CBC's network of industry analysts in order to assess trends in tenant industries. This information is then used to further interpret 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 short-term investments in which Real Estate Investment Fund may invest are: 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 so rated, of 30 equivalent credit quality as determined by Alliance. The Fund expects that it will not retain a debt security which 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 may also engage in the following investment practices to the extent indicated: (i) invest up to 10% of its net assets in rights or warrants; (ii) invest up to 15% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund; (iii) lend portfolio securities equal in value to not more than 25% of total assets; (iv) enter into repurchase agreements of up to seven days' duration; (v) enter into forward commitment transactions as long as the Fund's aggregate commitments under such transactions are not more than 30% of the Fund's total assets; (vi) enter into standby commitment agreements; (vii) 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 (taken at market value) is held as collateral for such sales; and (viii) invest in illiquid securities unless, as a result, more than 15% of its net assets would be so invested. ADDITIONAL INVESTMENT PRACTICES Some or all of the Funds may engage in the following investment practices to the extent described above. Convertible Securities. Prior to conversion, convertible securities have the same general characteristics as non-convertible debt securities, which 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 stock, although the higher yield tends to make the convertible security less volatile than the underlying common stock. As with debt securities, the market value of convertible securities tends to 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. For a description of these risks, see "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." Rights and Warrants. A Fund will invest in rights or warrants only if the underlying equity securities themselves are deemed appropriate by Alliance for inclusion in the Fund's portfolio. Rights and warrants entitle the holder to buy equity securities at a specific price for a specific period of time. Rights are similar to warrants except that they have a substantially shorter duration. Rights and warrants may be considered more speculative than certain other types of investments in that they do not entitle a holder to dividends or voting rights with respect to the underlying securities nor do they represent any rights in the assets of the issuing company. The value of a right or warrant does not necessarily change with the value of the underlying security, although the value of a right or warrant may decline because of a decrease in the value of the underlying security, the passage of time or a change in perception as to the potential of the underlying security, or any combination thereof. If the market price of the underlying security is below the exercise price set forth in the warrant on the expiration date, the warrant will expire worthless. Moreover, a right or warrant ceases to have value if it is not exercised prior to the expiration date. Depositary Receipts and Securities of Supranational Entities. Depositary receipts may not necessarily be denominated in the same currency as the underlying securities into which they may be converted. In addition, the issuers of the stock of unsponsored depositary receipts are not obligated to disclose material information in the United States and, therefore, there may not be a correlation between such information and the market value of the depositary receipts. ADRs are depositary receipts typically issued by a U.S. bank or trust company that evidence ownership of underlying securities issued by a foreign corporation. GDRs and other types of depositary receipts are typically issued by foreign banks or trust companies and evidence ownership of underlying securities issued by either a foreign or a U.S. company. Generally, depositary receipts in registered form are designed for use in the U.S. securities markets, and depositary receipts in bearer form are designed for use in foreign securities markets. 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 Growth Fund, Strategic Balanced Fund and Income Builder 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 which are not backed by its full faith and credit and general taxing powers. Mortgage-Backed Securities. Interest and principal payments (including prepayments) on the mortgages underlying mortgage-backed securities are passed through to the holders of the securities. As a result of the pass-through of 31 prepayments of principal on the underlying securities, mortgage-backed securities are often subject to more rapid prepayment of principal than their stated maturity would indicate. Prepayments occur when the mortgagor on a mortgage prepays the remaining principal before the mortgage's scheduled maturity date. Because the prepayment characteristics of the underlying mortgages vary, it is impossible to predict accurately the realized yield or average life of a particular issue of pass-through certificates. Prepayments are important because of their effect on the yield and price of the mortgage-backed securities. During periods of declining interest rates, prepayments can be expected to accelerate and a Fund investing in such securities would be required to reinvest the proceeds at the lower interest rates then available. 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. Adjustable Rate Securities. Adjustable rate securities have interest rates that are reset at periodic intervals, usually by reference to some interest rate index or market interest rate. Some adjustable rate securities are backed by pools of mortgage loans. Although the rate-adjustment feature may reduce sharp changes in the value of adjustable rate securities, these securities can change in value based on changes in market interest rates or the issuer's creditworthiness. Changes in the interest rate on adjustable rate securities may lag behind changes in prevailing market interest rates. Also, some adjustable rate securities (or the underlying mortgages) are subject to caps or floors that limit the maximum change in interest rate. Asset-Backed Securities. Asset-backed securities (unrelated to first mortgage loans) represent fractional interests in pools of leases, retail installment loans, revolving credit receivables and other payment obligations, both secured and unsecured. These assets are generally held by a trust and payments of principal and interest or interest only are passed through monthly or quarterly to certificate holders and may be guaranteed up to certain amounts by letters of credit issued by a financial institution affiliated or unaffiliated with the trustee or originator of the trust. Like mortgages underlying mortgage-backed securities, underlying automobile sales contracts or credit card receivables are subject to prepayment, which may reduce the overall return to certificate holders. Certificate holders may also experience delays in payment on the certificates if the full amounts due on underlying sales contracts or receivables are not realized by the trust because of unanticipated legal or administrative costs of enforcing the contracts or because of depreciation or damage to the collateral (usually automobiles) securing certain contracts, or other factors. Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a significant discount from their principal amount in lieu of paying interest periodically. Payment-in-kind bonds allow the issuer to make current interest payments on the bonds in additional bonds. Because zero-coupon bonds and payment-in-kind bonds do not pay current interest in cash, their value is generally subject to greater fluctuation in response to changes in market interest rates than bonds that pay interest in cash currently. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid the need to generate cash to meet current interest payments. Accordingly, such bonds may involve greater credit risks than bonds paying interest currently. Even though such bonds do not pay current interest in cash, a Fund is nonetheless required to accrue interest income on such investments and to distribute such amounts at least annually to shareholders. Thus, a Fund could be required at times to liquidate other investments in order to satisfy its dividend requirements. Equity-Linked Debt Securities. Equity-linked debt securities are securities with respect to which the amount of interest and/or principal that the issuer thereof is obligated to pay is linked to the performance of a specified index of equity securities. Such amount may be significantly greater or less than payment obligations in respect of other types of debt securities. Adverse changes in equity securities indices and other adverse changes in the securities markets may reduce payments made under, and/or the principal of, equity-linked debt securities held by the Fund. Furthermore, as with any debt securities, the values of equity-linked debt securities will generally vary inversely with changes in interest rates. The Fund's ability to dispose of equity-linked debt securities will depend on the availability of liquid markets for such securities. Investment in equity-linked debt securities may be considered to be speculative. As with other securities, the Fund could lose its entire investment in equity-linked debt securities. Loans and Other Direct Debt Instruments. Loans and other direct debt instruments are interests in amounts owed by a corporate, governmental or other borrower to another party. They may represent amounts owed to lenders or lending syndicates (loans and loan participations), to suppliers of goods or services (trade claims or other receivables), or to other creditors. Direct debt instruments involve the risk of loss in case of default or insolvency of the borrower and may offer less legal protection to the Fund in the event of fraud or misrepresentation than debt securities. In addition, loan participations involve a risk of insolvency of the lending bank or other financial intermediary. Direct debt instruments may also include standby financing commitments that obligate the Fund to supply additional cash to the borrower on demand. Loans and other direct debt instruments are generally illiquid and may be transferred only through individually negotiated private transactions. Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. Direct debt instruments may not be rated by any nationally recognized rating service. If the Fund does not receive scheduled interest or principal payments on such indebtedness, the Fund's share price and yield could be adversely affected. Loans that are fully secured offer the 32 Fund more protection than unsecured loans in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower's obligation, or that the collateral can be liquidated. Indebtedness of borrowers whose creditworthiness is poor may involve substantial risks, and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Direct indebtedness of Asian countries will also involve a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and repay principal when due. Investments in loans through direct assignment of a financial institution's interests with respect to a loan may involve additional risks to the Fund. For example, if a loan is foreclosed, the Fund could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary. A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified on the loan agreement. Unless, under the terms of the loan or other indebtedness, the Fund has direct recourse against the borrower, it may have to rely on the agent to apply appropriate credit remedies against a borrower. If assets held by the agent for the benefit of the Fund were determined to be subject to the claims of the agent's general creditors, the Fund might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal or interest. Direct indebtedness purchased by the Fund may include letters of credit, revolving credit facilities, or other standby financing commitments obligating the Fund to pay additional cash on demand. These commitments may have the effect of requiring the Fund to increase its investment in a borrower at a time when it would not otherwise have done so, even if the borrower's condition makes it unlikely that the amount will ever be repaid. Mortgage-Backed Securities and Associated Risks. 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. 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, which 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. 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 thereon. 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 the Fund does not intend to invest in residual interests. Risks. Investing in Mortgage-Backed Securities involves certain unique risks in addition to those generally associated with investing in the real estate industry in general. These unique risks include the failure of a counterparty to meet its commitments, adverse interest rate changes and the effects of prepayments on mortgage cash flows. See "Risk Considerations--Mortgage-Backed Securities" for a more complete description of the characteristics of Mortgage-Backed Securities and associated risks. Illiquid Securities. Subject to any more restrictive applicable fundamental investment policy, none of the Funds will maintain more than 15% of its net assets in illiquid securities. Illiquid securities generally include (i) direct placements or other securities that are subject to legal or contractual restrictions on resale or for which there is no readily available market (e.g., when trading in the security is suspended or, in the case 33 of unlisted securities, when market makers do not exist or will not entertain bids or offers), including many individually negotiated currency swaps and any assets used to cover currency swaps and most privately negotiated investments in state enterprises that have not yet conducted an initial equity offering, (ii) over-the-counter options and assets used to cover over-the-counter options, and (iii) repurchase agreements not terminable within seven days. Because of the absence of a trading market for illiquid securities, a Fund may not be able to realize their full value upon sale. With respect to each Fund that may invest in such securities, Alliance will monitor their illiquidity under the supervision of the Directors of the Fund. To the extent permitted by applicable law, Rule 144A securities will not be treated as "illiquid" for purposes of the foregoing restriction so long as such securities meet liquidity guidelines established by a Fund's Directors. Investment in non-publicly traded securities by each of Growth Fund and Strategic Balanced Fund is restricted to 5% of its total assets (not including for these purposes Rule 144A securities, to the extent permitted by applicable law) and is also subject to the 15% restriction on investment in illiquid securities described above. A Fund that invests in securities for which there is no ready market may therefore not be able to readily sell such securities. To the extent that these securities are foreign securities, there is no law in many of the countries in which a Fund may invest similar to the Securities Act requiring an issuer to register the sale of securities with a governmental agency or imposing legal restrictions on resales of securities, either as to length of time the securities may be held or manner of resale. However, there may be contractual restrictions on resales of securities. Options. An option gives the purchaser of the option, upon payment of a premium, the right to deliver to (in the case of a put) or receive from (in the case of a call) the writer a specified amount of a security on or before a fixed date at a predetermined price. A call option written by a Fund is "covered" if the Fund owns the underlying security, has an absolute and immediate right to acquire that security upon conversion or exchange of another security it holds, or holds a call option on the underlying security with an exercise price equal to or less than that of the call option it has written. A put option written by a Fund is covered if the Fund holds a put option on the underlying securities with an exercise price equal to or greater than that of the put option it has written. A call option is for cross-hedging purposes if a Fund does not own the underlying security, and is designed to provide a hedge against a decline in value in another security which the Fund owns or has the right to acquire. Worldwide Privatization Fund, All-Asia Investment Fund, Income Builder Fund and Utility Income Fund each may write call options for cross-hedging purposes. A Fund would write a call option for cross-hedging purposes, instead of writing a covered call option, when the premium to be received from the cross-hedge transaction would exceed that which would be received from writing a covered call option, while at the same time achieving the desired hedge. In purchasing an option, a Fund would be in a position to realize a gain if, during the option period, the price of the underlying security increased (in the case of a call) or decreased (in the case of a put) by an amount in excess of the premium paid; otherwise the Fund would experience a loss equal to the premium paid for the option. If an option written by a Fund were exercised, the Fund would be obligated to purchase (in the case of a put) or sell (in the case of a call) the underlying security at the exercise price. The risk involved in writing an option is that, if the option were exercised, the underlying security would then be purchased or sold by the Fund at a disadvantageous price. These risks could be reduced by entering into a closing transaction (i.e., by disposing of the option prior to its exercise). A Fund retains the premium received from writing a put or call option whether or not the option is exercised. The writing of covered call options could result in increases in a Fund's portfolio turnover rate, especially during periods when market prices of the underlying securities appreciate. Technology Fund, Quasar Fund, International Fund, New Europe Fund and Global Small Cap Fund will not write uncovered call options. Technology Fund and Global Small Cap Fund will not write a call option if the premium to be received by the Fund in doing so would not produce an annualized return of at least 15% of the then current market value of the securities subject to the option (without giving effect to commissions, stock transfer taxes and other expenses that are deducted from premium receipts). Technology Fund, Quasar Fund and Global Small Cap Fund will not write a call option if, as a result, the aggregate of the Fund's portfolio securities subject to outstanding call options (valued at the lower of the option price or market value of such securities) would exceed 15% of the Fund's total assets or more than 10% of the Fund's assets would be committed to call options that at the time of sale have a remaining term of more than 100 days. The aggregate cost of all outstanding options purchased and held by each of Premier Growth Fund, Technology Fund, Quasar Fund and Global Small Cap Fund will at no time exceed 10% of the Fund's total assets. Neither International Fund nor New Europe Fund will write uncovered put options. A Fund that purchases or writes options on securities in privately negotiated (i.e., over-the-counter) transactions will effect such transactions only with investment dealers and other financial institutions (such as commercial banks or savings and loan institutions) deemed creditworthy by Alliance, and Alliance has adopted procedures for monitoring the creditworthiness of such entities. Options purchased or written by a Fund in negotiated transactions are illiquid and it may not be possible for the Fund to effect a closing transaction at an advantageous time. See "Illiquid Securities." Options on Securities Indices. An option on a securities index is similar to an option on a security except that, rather than 34 the right to take or make delivery of a security at a specified price, an option on a securities index gives the holder the right to receive, upon exercise of the option, an amount of cash if the closing level of the chosen index is greater than (in the case of a call) or less than (in the case of a put) the exercise price of the option. Futures Contracts and Options on Futures Contracts. A "sale" of a futures contract means the acquisition of a contractual obligation to deliver the securities or foreign currencies or other commodity called for by the contract at a specified price on a specified date. A "purchase" of a futures contract means the incurring of an obligation to acquire the securities, foreign currencies or other commodity called for by the contract at a specified price on a specified date. The purchaser of a futures contract on an index agrees to take or make delivery of an amount of cash equal to the difference between a specified dollar multiple of the value of the index on the expiration date of the contract ("current contract value") and the price at which the contract was originally struck. No physical delivery of the securities underlying the index is made. Options on futures contracts written or purchased by a Fund will be traded on U.S. or foreign exchanges or over-the-counter. These investment techniques will be used only to hedge against anticipated future changes in market conditions and interest or exchange rates which otherwise might either adversely affect the value of the Fund's portfolio securities or adversely affect the prices of securities which the Fund intends to purchase at a later date. No Fund will enter into any futures contracts or options on futures contracts if immediately thereafter the market values of the outstanding futures contracts of the Fund and the currencies and futures contracts subject to outstanding options written by the Fund would exceed 50% of its total assets, and Income Builder Fund will also not do so if immediately thereafter the aggregate of initial margin deposits on all the outstanding futures contracts of the Fund and premiums paid on outstanding options on futures contracts would exceed 5% of the market value of the total assets of the Fund. Premier Growth Fund and 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. Premier Growth Fund and 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. Options on Foreign Currencies. As in the case of other kinds of options, the writing of an option on a foreign currency constitutes only a partial hedge, up to the amount of the premium received, and a Fund could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. The purchase of an option on a foreign currency may constitute an effective hedge against fluctuations in exchange rates although, in the event of rate movements adverse to a Fund's position, it may forfeit the entire amount of the premium plus related transaction costs. See the Statement of Additional Information of each Fund that may invest in options on foreign currencies for further discussion of the use, risks and costs of options on foreign currencies. Forward Foreign Currency Exchange Contracts. A Fund purchases or sells forward contracts to minimize the risk to it from adverse changes in the relationship between the U.S. dollar and other currencies. A forward contract is an obligation to purchase or sell a specific currency for an agreed price at a future date, and is individually negotiated and privately traded. A Fund may enter into a forward contract, for example, when it enters into a contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of the security ("transaction hedge"). A Fund will not engage in transaction hedges with respect to the currency of a particular country to an extent greater than the aggregate amount of the Fund's transactions in that currency. When a Fund believes that a foreign currency may suffer a substantial decline against the U.S. dollar, it may enter into a forward sale contract to sell an amount of that foreign currency approximating the value of some or all of the Fund's portfolio securities denominated in such foreign currency, or when the Fund believes that the U.S. dollar may suffer a substantial decline against a foreign currency, it may enter into a forward purchase contract to buy that foreign currency for a fixed dollar amount ("position hedge"). A Fund will not position hedge with respect to 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. International Fund, New Europe Fund and Global Small Cap Fund will not enter into a forward contract with a term of more than one year or if, as a result, more than 50% of its total assets would be committed to such contracts. The dealings of International Fund, New Europe Fund and Global Small Cap Fund in forward contracts will be limited to hedging involving either specific transactions or portfolio positions. Growth Fund and Strategic Balanced Fund may also purchase and sell foreign currency on a spot basis. 35 Forward Commitments. Forward commitments for the purchase or sale of securities may include purchases on a "when-issued" basis or purchases or sales on a "delayed delivery" basis. In some cases, a forward commitment may be conditioned upon the occurrence of a subsequent event, such as approval and consummation of a merger, corporate reorganization or debt restructuring (i.e., a "when, as and if issued" trade). When forward commitment transactions are negotiated, the price is fixed at the time the commitment is made, but delivery and payment for the securities take place at a later date. Normally, the settlement date occurs within two months after the transaction, but settlements beyond two months may be negotiated. Securities purchased or sold under a forward commitment are subject to market fluctuation, and no interest or dividends accrue to the purchaser prior to the settlement date. At the time a Fund intends to enter into a forward commitment, it records the transaction and thereafter reflects the value of the security purchased or, if a sale, the proceeds to be received, in determining its net asset value. Any unrealized appreciation or depreciation reflected in such valuation of a "when, as and if issued" security would be canceled in the event that the required conditions did not occur and the trade was canceled. The use of forward commitments enables a Fund to protect against anticipated changes in interest rates and prices. For instance, in periods of rising interest rates and falling bond prices, a Fund might sell securities in its portfolio on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest rates and rising bond prices, a Fund might sell a security in its portfolio and purchase the same or a similar security on a when-issued or forward commitment basis, thereby obtaining the benefit of currently higher cash yields. However, if Alliance were to forecast incorrectly the direction of interest rate movements, a Fund might be required to complete such when-issued or forward transactions at prices inferior to the then current market values. When-issued securities and forward commitments may be sold prior to the settlement date, but a Fund enters into when-issued and forward commitments only with the intention of actually receiving securities or delivering them, as the case may be. If a Fund chooses to dispose of the right to acquire a when-issued security prior to its acquisition or dispose of its right to deliver or receive against a forward commitment, it may incur a gain or loss. Any significant commitment of Fund assets to the purchase of securities on a "when, as and if issued" basis may increase the volatility of the Fund's net asset value. No forward commitments will be made by New Europe Fund, All-Asia Investment Fund, Worldwide Privatization Fund, Income Builder Fund, Real Estate Investment Fund or Utility Income Fund if, as a result, the Fund's aggregate commitments under such transactions would be more than 30% of the Fund's total assets. In the event the other party to a forward commitment transaction were to default, a Fund might lose the opportunity to invest money at favorable rates or to dispose of securities at favorable prices. Standby Commitment Agreements. Standby commitment agreements commit a Fund, for a stated period of time, to purchase a stated amount of a security that may be issued and sold to the Fund at the option of the issuer. The price and coupon of the security are fixed at the time of the commitment. At the time of entering into the agreement the Fund is paid a commitment fee, regardless of whether the security ultimately is issued, typically equal to approximately 0.5% of the aggregate purchase price of the security the Fund has committed to purchase. A Fund will enter into such agreements only for the purpose of investing in the security underlying the commitment at a yield and price considered advantageous to the Fund and unavailable on a firm commitment basis. No Fund, other than Income Builder Fund, will enter into a standby commitment with a remaining term in excess of 45 days. Investments in standby commitments will be limited so that the aggregate purchase price of the securities subject to the commitments will not exceed 25% with respect to New Europe Fund and Real Estate Investment Fund, 50% with respect to Worldwide Privatization Fund and All-Asia Investment Fund, and 20% with respect to Utility Income Fund, of the Fund's assets taken at the time of making the commitment. There is no guarantee that 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. Currency Swaps. Currency swaps involve the individually negotiated exchange by a Fund with another party of a series of payments in specified currencies. A currency swap may involve the delivery at the end of the exchange period of a substantial amount of one designated currency in exchange for the other designated currency. Therefore the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations. The net amount of the excess, if any, of a Fund's obligations over its entitlements with respect to each currency swap will be accrued on a daily basis. A Fund will not enter into any currency swap unless the credit quality of the unsecured senior debt or the claims-paying ability of the other party thereto is rated in the highest rating category of at least one nationally recognized rating organization at the time of entering into the transaction. If there is a default by the other party to such a transaction, such Fund will have contractual remedies pursuant to the agreements related to the transactions. Interest Rate Transactions. Each Fund that may enter into interest rate transactions expects to do so primarily to preserve a return or spread on a particular investment or portion of its portfolio or to protect against any increase in the price of securities the Fund anticipates purchasing at a later 36 date. The Funds do not intend to use these transactions in a speculative manner. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). Interest rate swaps are entered on a net basis (i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments). With respect to All-Asia Investment Fund and Utility Income Fund, the exchange commitments can involve payments in the same currency or in different currencies. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a contractually-based principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on an agreed principal amount from the party selling the interest rate floor. A Fund may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis, depending upon whether it is hedging its assets or liabilities. The net amount of the excess, if any, of a Fund's obligations over its entitlements with respect to each interest rate swap, cap and floor is accrued daily. A Fund will not enter into an interest rate swap, cap or floor transaction unless the unsecured senior debt or the claims-paying ability of the other party thereto is then rated in the highest rating category of at least one nationally recognized rating organization. Alliance will monitor the creditworthiness of counterparties on an ongoing basis. The swap market has grown substantially in recent years, with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps. The use of interest rate transactions is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If Alliance 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 other party to an interest rate transaction defaults, a Fund's risk of loss consists of the net amount of interest payments that the Fund contractually is entitled to receive. Repurchase Agreements. A repurchase agreement arises when a buyer purchases a security and simultaneously agrees to resell it to the vendor at an agreed-upon future date, normally a day or a few days later. The resale price is greater than the purchase price, reflecting an agreed-upon interest rate for the period the buyer's money is invested in the security. Such agreements permit a Fund to keep all of its assets at work while retaining "overnight" flexibility in pursuit of investments of a longer-term nature. If a vendor defaults on its repurchase obligation, a Fund would suffer a loss to the extent that the proceeds from the sale of the collateral were less than the repurchase price. If a vendor goes bankrupt, a Fund might be delayed in, or prevented from, selling the collateral for its benefit. Alliance monitors the creditworthiness of the vendors with which the Fund enters into repurchase agreements. There is no percentage restriction on a Fund's ability to enter into repurchase agreements, other than as indicated under "Investment Objectives and Policies." Short Sales. A short sale is effected by selling a security that a Fund does not own, or if the Fund does own such security, it is not to be delivered upon consummation of the sale. A short sale is "against the box" to the extent that a Fund contemporaneously owns or has the right to obtain securities identical to those sold short without payment. Worldwide Privatization Fund, All-Asia Investment Fund, Income Builder Fund and Utility Income Fund each may make short sales of securities or maintain short positions only for the purpose of deferring realization of gain or loss for U.S. federal income tax purposes, provided that at all times when a short position is open the Fund owns an equal amount of securities of the same issue as, and equal in amount to, the securities sold short. In addition, each of those Funds may not make a short sale if as a result more than 10% of the Fund's net assets would be held as collateral for short sales, except that All-Asia Investment Fund and Real Estate Investment Fund may not make a short sale if as a result more than 25% of the Fund's net assets would be held as collateral for short sales. If the price of the security sold short increases between the time of the short sale and the time a Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. See "Certain Fundamental Investment Policies." Certain special federal income tax considerations may apply to short sales entered into by a Fund. See "Dividends, Distributions and Taxes" in the relevant Fund's Statement of Additional Information. Loans of Portfolio Securities. The 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 earned thereon and the Fund may invest any cash collateral in portfolio securities, thereby earning additional 37 income, or receive an agreed upon amount of income from a borrower who has delivered equivalent collateral. Each Fund will have the right to regain record ownership of loaned securities or equivalent securities in order to exercise ownership rights such as voting rights, subscription rights and rights to dividends, interest or distributions. A Fund may pay reasonable finders', administrative and custodial fees in connection with a loan. A Fund will not lend its portfolio securities to any officer, director, employee or affiliate of the Fund or Alliance. General. The successful use of the foregoing investment practices draws upon Alliance's special skills and experience with respect to such instruments and usually depends on Alliance's ability to forecast price movements, interest rates or currency exchange rate movements correctly. Should interest rates, prices or exchange rates move unexpectedly, a Fund may not achieve the anticipated benefits of the transactions or may realize losses and thus be in a worse position than if such strategies had not been used. Unlike many exchange-traded futures contracts and options on futures contracts, there are no daily price fluctuation limits with respect to certain options and forward contracts, and adverse market movements could therefore continue to an unlimited extent over a period of time. In addition, the correlation between movements in the prices of futures contracts, options and forward contracts and movements in the prices of the securities and currencies hedged or used for cover will not be perfect and could produce unanticipated losses. A Fund's ability to dispose of its position in futures contracts, options and forward contracts depends on the availability of liquid markets in such instruments. Markets in options and futures with respect to a number of types of securities and currencies are relatively new and still developing, and there is no public market for forward contracts. It is impossible to predict the amount of trading interest that may exist in various types of futures contracts, options and forward contracts. If a secondary market does not exist with respect to an option purchased or written by a Fund, it might not be possible to effect a closing transaction in the option (i.e., dispose of the option), with the result that (i) an option purchased by the Fund would have to be exercised in order for the Fund to realize any profit and (ii) the Fund may not be able to sell currencies or portfolio securities covering an option written by the Fund until the option expires or it delivers the underlying security, futures contract or currency upon exercise. Therefore, no assurance can be given that the Funds will be able to utilize these instruments effectively for the purposes set forth above. Furthermore, a Fund's ability to engage in options and futures transactions may be limited by tax considerations. See "Dividends, Distributions and Taxes" in the Statement of Additional Information of each Fund that invests in options and futures. Future Developments. A Fund may, following written notice to its shareholders, take advantage of other investment practices that are not currently contemplated for use by the Fund or are not available but may yet be developed, to the extent such investment practices are consistent with the Fund's investment objective and legally permissible for the Fund. Such investment practices, if they arise, may involve risks that exceed those involved in the activities described above. Defensive Position. For temporary defensive purposes, each Fund may invest in certain types of short-term, liquid, high grade or high quality (depending on the Fund) debt securities. These securities may include U.S. Government securities, qualifying bank deposits, money market instruments, prime commercial paper and other types of short-term debt securities including notes and bonds. For Funds that may invest in foreign countries, such securities may also include short-term, foreign-currency denominated securities of the type mentioned above issued by foreign governmental entities, companies and supranational organizations. For a complete description of the types of securities each Fund may invest in while in a temporary defensive position, please see such Fund's Statement of Additional Information. Portfolio Turnover. Portfolio turnover rates are set forth under "Financial Highlights." These portfolio turnover rates are greater than those of most other investment companies, including those which emphasize capital appreciation as a basic policy. A high rate of portfolio turnover involves correspondingly greater brokerage and other expenses than a lower rate, which must be borne by the Fund and its shareholders. High portfolio turnover also may result in the realization of substantial net short-term capital gains. See "Dividends, Distributions and Taxes" in each Fund's Statement of Additional Information. CERTAIN FUNDAMENTAL INVESTMENT POLICIES Each Fund has adopted certain fundamental investment policies listed below, which may not be changed without the approval of its shareholders. Additional investment restrictions with respect to a Fund are set forth in its Statement of Additional Information. Alliance Fund may not: (i) invest more than 5% of its total assets in the securities of any one issuer (other than the U.S. Government); (ii) acquire more than 10% of the voting or other securities of any one issuer; or (iii) buy securities of any company that (including its predecessors) has not been in business at least three continuous years. Pursuant to investment policies which are not fundamental, the Fund does not invest (i) in puts or calls (except as discussed above); (ii) in straddles, spreads, or any combination thereof; (iii) in oil, gas or other mineral exploration or development programs; or (iv) more than 5% of its gross assets in securities the disposition of which would be subject to restrictions under the federal securities laws. Growth Fund and Strategic Balanced Fund each may not: (i) invest more than 5% of its total assets in the securities of any one issuer (other than U.S. Government securities and repurchase agreements relating thereto), although up to 25% of each Fund's total assets may be invested without regard to this restriction; or (ii) invest 25% or more of its total assets in the securities of any one industry. 38 Premier Growth Fund may not: (i) purchase more than 10% of the outstanding voting securities of any one issuer; (ii) invest 25% or more of the value of its total assets in the same industry; (iii) borrow money or issue senior securities except for temporary or emergency purposes in an amount not exceeding 5% of the value of its total assets at the time the borrowing is made; (iv) pledge, mortgage, hypothecate or otherwise encumber any of its assets except in connection with the writing of(0) call options and except to secure permitted borrowings; or (v) invest in the securities of any issuer that has a record of less than three years of continuous operation (including the operation of any predecessor) if as a result more than 10% of the value of the total assets of the Fund would be invested in the securities of such issuer or issuers. Technology Fund may not: (i) with respect to 75% of its total assets, have such assets represented by other than:(a) cash and cash items, (b) U.S. Government securities, or (c) securities of any one issuer (other than the U.S. Government and its agencies or instrumentalities) not greater in value than 5% of the Fund's total assets, and not more than 10% of the outstanding voting securities of such issuer; (ii) purchase the securities of any one issuer, other than the U.S. Government and its agencies or instrumentalities, if as a result (a) the value of the holdings of the Fund in the securities of such issuer exceeds 25% of its total assets, or (b) the Fund owns more than 25% of the outstanding securities of any one class of securities of such issuer; (iii) concentrate its investments in any one industry, but the Fund has reserved the right to invest up to 25% of its total assets in a particular industry; and (iv) invest in the securities of any issuer which has a record of less than three years of continuous operation (including the operation of any predecessor) if such purchase would cause 10% or more of its total assets to be invested in the securities of such issuers. Quasar Fund may not: (i) purchase the securities of any one issuer, other than the U.S. Government or any of its agencies or instrumentalities, if as a result more than 5% of its total assets would be invested in such issuer or the Fund would own more than 10% of the outstanding voting securities of such issuer, except that up to 25% of its total assets may be invested without regard to these 5% and 10% limitations; (ii) invest more than 25% of its total assets in any particular industry; (iii) borrow money except for temporary or emergency purposes in an amount not exceeding 5% of its total assets at the time the borrowing is made; or (iv) invest more than 10% of its assets in restricted securities. International Fund may not: (i) invest more than 5% of the value of its total assets in securities of a single issuer (including repurchase agreements with any one entity), except U.S. Government securities or foreign government securities; provided, however, that the Fund may not, with respect to 75% of its total assets, invest more than 5% of its total assets in securities of any one foreign government issuer; (ii) own more than 10% of the outstanding securities of any class of any issuer (for this purpose, all preferred stocks of an issuer shall be deemed a single class, and all indebtedness of an issuer shall be deemed a single class), except U.S. Government securities; (iii) invest more than 25% of the value of its total assets in securities of issuers having their principal business activities in the same industry; provided, that this limitation does not apply to U.S. Government securities or foreign government securities; (iv) invest more than 5% of the value of its total assets in the securities of any issuer that has a record of less than three years of continuous operation (including the operation of any predecessor or unconditional guarantor), except U.S. Government securities or foreign government securities; (v) invest more than 5% of the value of its total assets in securities with legal or contractual restrictions on resale, other than repurchase agreements, or more than 10% of the value of its total assets in securities that are not readily marketable (including restricted securities and repurchase agreements not terminable within seven business days); and (vi) borrow money, except as a temporary measure for extraordinary or emergency purposes, and then only from banks in amounts not exceeding 5% of its total assets. Worldwide Privatization Fund may not: (i) invest 25% or more of its total assets in securities of issuers conducting their principal business activities in the same industry, except that this restriction does not apply to (a) U.S. Government securities, or (b) the purchase of securities of issuers whose primary business activity is in the national commercial banking industry, so long as the Fund's Directors determine, on the basis of factors such as liquidity, availability of investments and anticipated returns, that the Fund's ability to achieve its investment objective would be adversely affected if the Fund were not permitted to invest more than 25% of its total assets in those securities, and so long as the Fund notifies its shareholders of any decision by the Directors to permit or cease to permit the Fund to invest more than 25% of its total assets in those securities, such notice to include a discussion of any increased investment risks to which the Fund may be subjected as a result of the Directors' determination; (ii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the value of the Fund's total assets will be repaid before any investments are made; or (iii) pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings. The exception contained in clause (i)(b) above is subject to the operating policy regarding concentration described in this Prospectus. New Europe Fund may not: (i) purchase more than 10% of the outstanding voting securities of any one issuer; (ii) invest more than 15% of its total assets in the securities of any one issuer or 25% or more of its total assets in the same industry, provided, however, that the foregoing restriction shall not be deemed to prohibit the Fund from purchasing the securities of 39 any issuer pursuant to the exercise of rights distributed to the Fund by the issuer, except that no such purchase may be made if as a result the Fund will fail to meet the diversification requirements of the Code and any such acquisition in excess of the foregoing 15% or 25% limits will be sold by the Fund as soon as reasonably practicable (this restriction does not apply to U.S. Government securities, but will apply to foreign government securities unless the Commission permits their exclusion); (iii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the Fund's total assets will be repaid before any subsequent investments are made; or (iv) purchase a security (unless the security is acquired pursuant to a plan of reorganization or an offer of exchange) if, as a result, the Fund would own any securities of an open-end investment company or more than 3% of the total outstanding voting stock of any closed-end investment company, or more than 5% of the value of the Fund's total assets would be invested in securities of any closed-end investment company, or more than 10% of such value in closed-end investment companies in general. All-Asia Investment Fund may not: (i) invest 25% or more of its total assets in securities of issuers conducting their principal business activities in the same industry; (ii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the value of the Fund's total assets will be repaid before any investments are made; or (iii) pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings. Global Small Cap Fund may not: (i) purchase the securities of any one issuer, other than the U.S. Government or any of its agencies or instrumentalities, if immediately after such purchase more than 5% of the value of its total assets would be invested in such issuer or the Fund would own more than 10% of the outstanding voting securities of such issuer, except that up to 25% of the Fund's total assets may be invested without regard to these 5% and 10% limitations; (ii) invest 25% or more of its total assets in the same industry; this restriction does not apply to U.S. Government securities, but will apply to foreign government securities unless the Commission permits their exclusion; (iii) borrow money except from banks for emergency or temporary purposes in an amount not exceeding 5% of the total assets of the Fund; or (iv) make short sales of securities or maintain a short position, unless at all times when a short position is open it owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of the same issue as, and equal in amount to, the securities sold short and unless not more than 5% of the Fund's net assets is held as collateral for such sales at any one time. Global Environment Fund may not: (i) purchase more than 10% of the outstanding voting securities of any one issuer; (ii) invest more than 15% of the value of its total assets in the securities of any one issuer or 25% or more of the value of its total assets in the same industry, except that the Fund will invest more than 25% of its total assets in Environmental Companies, provided that this restriction does not apply to U.S. Government securities, but will apply to foreign government obligations unless the Commission permits their exclusion; (iii) borrow money or issue senior securities, except that the Fund may borrow (a) from a bank if immediately after such borrowing there is asset coverage of at least 300% as defined in the 1940 Act and (b) for temporary purposes in an amount not exceeding 5% of the value of the total assets of the Fund; (iv) pledge, hypothecate, mortgage or otherwise encumber its assets, except (a) to secure permitted borrowings and (b) in connection with initial and variation margin deposits relating to futures contracts; (v) purchase a security (unless the security is acquired pursuant to a plan of reorganization or an offer of exchange) if, as 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) make short sales of securities or maintain a short position, unless at all times when a short position is open it owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of the same issue as, and equal in amount to, the securities sold short ("short sales against the box"), and unless not more than 5% of the Fund's net assets (taken at market value) is held as collateral for such sales at any one time; or (vii) buy or write (i.e., sell) put or call options, except (a) the Fund may buy foreign currency options or write covered foreign currency options and options on foreign currency futures and (b) the Fund may purchase warrants. Balanced Shares may not: (i) invest more than 5% of its total assets in the securities of any one issuer, except U.S. Government securities; or (ii) own more than 10% of the outstanding voting securities of any one issuer. Income Builder Fund may not: (i) invest 25% or more of its total assets in securities of companies engaged principally in any one industry, except that this restriction does not apply to U.S. Government securities; (ii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than 40 meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time borrowing is made; securities will not be purchased while borrowings in excess of 5% of the Fund's total assets are outstanding; or (iii) pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings. Utility Income Fund may not: (i) invest more than 5% of its total assets in the securities of any one issuer except the U.S. Government, although with respect to 25% of its total assets it may invest in any number of issuers; (ii) invest 25% or more of its total assets in the securities of issuers conducting their principal business activities in any one industry, other than the utilities industry, except that this restriction does not apply to U.S. Government securities; (iii) purchase more than 10% of any class of the voting securities of any one issuer; (iv) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the Fund's total assets will be repaid before any subsequent investments are made; or (v) purchase a security if, as a result (unless the security is acquired pursuant to a plan of reorganization or an offer of exchange), the Fund would own any securities of an open-end investment company or more than 3% of the total outstanding voting stock of any closed-end investment company or more than 5% of the value of the Fund's net assets would be invested in securities of any one or more closed-end investment companies. Growth and Income Fund may not (i) invest more than 5% of its net assets in the security of any one issuer, except U.S. Government obligations or (ii) own more than 10% of the outstanding voting securities of any issuer. Real Estate Investment Fund may not: (i) with respect to 75% of its total assets, have such assets represented by other than: (a) cash and cash items, (b) U.S. Government securities, or (c) securities of any one issuer (other than the U.S. Government and its agencies or instrumentalities) not greater in value than 5% of the Fund's total assets, and not more than 10% of the outstanding voting securities of such issuer; (ii) purchase the securities of any one issuer, other than the U.S. Government and its agencies or instrumentalities, if as a result (a) the value of the holdings of the Fund in the securities of such issuer exceeds 25% of its total assets, or (b) the Fund owns more than 25% of the outstanding securities of any one class of securities of such issuer; (iii) invest 25% or more of its total assets in the securities of issuers conducting their principal business activities in any one industry, other than the real estate industry in which the Fund will invest at least 25% or more of its total assets, except that this restriction does not apply to U.S. Government securities; (iv) purchase or sell real estate, except that it may purchase and sell securities of companies which deal in real estate or interests therein, including Real Estate Equity Securities; or (v) borrow money except for temporary or emergency purposes or to meet redemption requests, in an amount not exceeding 5% of the value of its total assets at the time the borrowing is made. RISK CONSIDERATIONS Investment in certain of the Funds involves the special risk considerations described below. These risks may be heightened when investing in emerging markets. Investment in Privatized Enterprises by Worldwide Privatization Fund. In certain jurisdictions, the ability of foreign entities, such as the Fund, to participate in privatizations may be limited by local law, or the price or terms on which the Fund may be able to participate may be less advantageous than for local investors. Moreover, there can be no assurance that governments that have embarked on privatization programs will continue to divest their ownership of state enterprises, that proposed privatizations will be successful or that governments will not re-nationalize enterprises that have been privatized. Furthermore, in the case of certain of the enterprises in which the Fund may invest, large blocks of the stock of those enterprises may be held by a small group of stockholders, even after the initial equity offerings by those enterprises. The sale of some portion or all of those blocks could have an adverse effect on the price of the stock of any such enterprise. Most state enterprises or former state enterprises go through an internal reorganization of management prior to conducting an initial equity offering in an attempt to better enable these enterprises to compete in the private sector. However, certain reorganizations could result in a management team that does not function as well as the enterprise's prior management and may have a negative effect on such enterprise. After making an initial equity offering, enterprises that may have enjoyed preferential treatment from the respective state or government that owned or controlled them may no longer receive such preferential treatment and may become subject to market competition from which they were previously protected. Some of these enterprises may not be able to effectively operate in a competitive market and may suffer losses or experience bankruptcy due to such competition. In addition, the privatization of an enterprise by its government may occur over a number of years, with the government continuing to hold a controlling position in the enterprise even after the initial equity offering for the enterprise. Currency Considerations. Substantially all of the assets of International Fund, New Europe Fund, All-Asia Investment Fund, and Worldwide Privatization Fund and a substantial portion of the assets of Global Small Cap Fund and Global Environment Fund will be invested in securities denominated in foreign currencies, and a corresponding portion of these Funds' revenues will be received in such currencies. Therefore, the dollar equivalent of their net assets, distributions and income will be adversely affected by reductions in the value of certain foreign currencies relative to the U.S. dollar. If the value of the foreign currencies in which a Fund receives its 41 income falls relative to the U.S. dollar between receipt of the income and the making of Fund distributions, the Fund may be required to liquidate securities in order to make distributions if it has insufficient cash in U.S. dollars to meet distribution requirements that the Fund must satisfy to qualify as a regulated investment company for federal income tax purposes. Similarly, if an exchange rate declines between the time a Fund incurs expenses in U.S. dollars and the time cash expenses are paid, the amount of the currency required to be converted into U.S. dollars in order to pay expenses in U.S. dollars could be greater than the equivalent amount of such expenses in the currency at the time they were incurred. In light of these risks, a Fund may engage in certain currency hedging transactions, which themselves involve certain special risks. See "Additional Investment Practices" above. Foreign Investment. The securities markets of many foreign countries are relatively small, with the majority of market capitalization and trading volume concentrated in a limited number of companies representing a small number of industries. Consequently, a Fund whose investment portfolio includes such securities may experience greater price volatility and significantly lower liquidity than a portfolio invested solely in equity securities of U.S. companies. These markets may be subject to greater influence by adverse events generally affecting the market, and by large investors trading significant blocks of securities, than is usual in the United States. Securities settlements may in some instances be subject to delays and related administrative uncertainties. These problems are particularly severe in India, where settlement is through physical delivery, and, where, currently, a severe shortage of vault capacity exists among custodial banks, although efforts are being undertaken to alleviate the shortage. Certain foreign countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a specific class of securities which may have less advantageous terms (including price) than securities of the company available for purchase by nationals. These restrictions or controls may at times limit or preclude investment in certain securities and may increase the costs and expenses of a Fund. In addition, the repatriation of investment income, capital or the proceeds of sales of securities from certain countries is controlled under regulations, including in some cases the need for certain advance government notification or authority, and if a deterioration occurs in a country's balance of payments, the country could impose temporary restrictions on foreign capital remittances. A Fund could also be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investment. Investing in local markets may require a Fund to adopt special procedures, which may involve additional costs to a Fund. The liquidity of a Fund's investments in any country in which any of these factors exists could be affected and Alliance will monitor the effect of any such factor or factors on a Fund's investments. Furthermore, transaction costs including brokerage commissions for transactions both on and off the securities exchanges in many foreign countries are generally higher than in the 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 or the Fund's investments in such country. In the event of expropriation, nationalization or other confiscation, a Fund could lose its entire investment in the country involved. In addition, laws in foreign countries governing business organizations, bankruptcy and insolvency may provide less protection to security holders such as the Fund than that provided by U.S. laws. Investment in United Kingdom Issuers. 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 continued to fall in early 1993, but recovered due to interest rate cuts throughout Europe and an upturn in the economy of the United Kingdom. The average exchange rate of the U.S. dollar to the pound sterling was 1.50 in 1993 and 1.56 in 1996. On December 31, 1997 the U.S. dollar-pound sterling exchange rate was 1.65. 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 4118.5 at the end of 1996, up approximately 12% from the end 42 of 1995. On December 31, 1997 the FT-SE 100 index closed at 5,135.5, up approximately 25% from the end of 1996. The public sector borrowing requirement ("PSBR"), a mandated measure of the amount required to balance the budget, has been, over the last two fiscal years, higher than forecast. The general government fiscal deficit has been in excess of the eligibility limit prescribed by the European Union for countries that intend to participate in the Economic and Monetary Union ("EMU"), which is scheduled to take effect in January 1999. The government, however, expects that the deficit will be below that limit in the 1997-98 and 1998-99 fiscal years. Although the government has not yet made a formal announcement with respect to the United Kingdom's participation in the EMU, remarks of the Chancellor of the Exchequer made in mid-October 1997 suggest that the United Kingdom will not participate in the EMU beginning in January 1999 but may do so thereafter. From 1979 until 1997 the Conversative 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 1993. In 1994, the TOPIX closed at 1,559.09, up approximately 8% from the end of 1993; in 1995, the TOPIX closed at 1,577.70, up approximately 1% from the end of 1994; and in 1996, the TOPIX closed at 1,470.94, down approximately 7% from the end of 1995. In 1997, the TOPIX closed at 1,175.03, down 20.12% from the end of 1996. 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 has returned to a single-party government led by Prime Minister Ryutaro Hashimoto. While Mr. Hashimoto's party does not control a majority of the seats in the parliament, it is only three seats short of the 251 seats required to attain a majority in the House of Representatives (down from a 12-seat shortfall just after the October 1996 election). For the past several years, Japan's banking industry has been weakened by a significant amount of problem loans. Japan's banks also have significant exposure to the current financial turmoil in other Asian markets. On December 17, 1997 the Japanese government proposed to strengthen Japan's banks by means of an infusion of public funds and other measures. It is unclear whether these proposals, which are under consideration by Japan's parliament, would, if implemented, achieve their intended effect. For further information regarding Japan, see the Statements of Additional Information of All-Asia Investment Fund and International Fund. Investment in Smaller, Emerging Companies. The Funds may invest in smaller, emerging companies. Global Small Cap Fund and New Europe Fund will emphasize investment in, and All-Asia Investment Fund and 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. Investing in Environmental Companies by 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 43 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 Real Estate Investment Fund does not invest directly in real estate, it does invest primarily in Real Estate Equity Securities and does have 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 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. See "Dividends, Distributions and Taxes" in the Statement of Additional Information. 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) are also 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 Index of 500 Common Stocks. Mortgage-Backed Securities. As discussed above, 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 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. 44 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. Investors should review carefully the information discussed under the heading "Dividends, Distributions and Taxes" and should discuss with their tax advisers the specific tax consequences of investing in a Fund. Fixed-Income Securities. The value of each Fund's shares will fluctuate with the value of its investments. The value of each Fund's investments in fixed-income securities will change as the general level of interest rates fluctuates. During periods of falling interest rates, the values of fixed-income securities generally rise. Conversely, during periods of rising interest rates, the values of fixed-income securities generally decline. Under normal market conditions, the average dollar-weighted maturity of a Fund's portfolio of debt or other fixed-income securities is expected to vary between five and 30 years in the case of All-Asia Investment Fund, between eight and 15 years in the case of Income Builder Fund, between five and 25 years in the case of Utility Income Fund and between one year or less and 30 years in the case of all other Funds that invest in such securities. 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. See "Additional Investment Practices--Mortgage-Backed Securities." Securities Ratings. The ratings of securities by S&P, Moody's, Duff & Phelps and Fitch are a generally accepted barometer of credit risk. They are, however, subject to certain limitations from an investor's standpoint. The rating of an issuer is heavily weighted by past developments and does not necessarily reflect probable future conditions. There is frequently a lag between the time a rating is assigned and the time it is updated. In addition, there may be varying degrees of difference in credit risk of securities within each rating category. Securities rated Aaa by Moody's and AAA by S&P, Duff & Phelps and Fitch are considered to be of the highest quality; capacity to pay interest and repay principal is extremely strong. Securities rated Aa by Moody's and AA by S&P, Duff & Phelps and Fitch are considered to be high quality; capacity to repay principal is considered very strong, although elements may exist that make risks appear somewhat larger than exist with securities rated Aaa or AAA. Securities rated A are considered by Moody's to possess adequate factors giving security to principal and interest. S&P, Duff & Phelps and Fitch consider such securities to have a strong capacity to pay interest and repay principal. Such securities are more susceptible to adverse changes in economic conditions and circumstances than higher-rated securities. Securities rated Baa by Moody's and BBB by S&P, Duff & Phelps and Fitch are considered to have an adequate capacity to pay interest and repay principal. Such securities are considered to have speculative characteristics and share some of the same characteristics as lower-rated securities. Sustained periods of deteriorating economic conditions or of rising interest rates are more likely to lead to a weakening in the issuer's capacity to pay interest and repay principal than in the case of higher-rated securities. Securities rated Ba by Moody's and BB by S&P, Duff & Phelps and Fitch are considered to have speculative characteristics with respect to capacity to pay interest and repay principal over time; their future cannot be considered as well-assured. Securities rated B by Moody's, S&P, Duff & Phelps and Fitch are considered to have highly speculative characteristics with respect to capacity to pay interest and repay principal. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Securities rated Caa by Moody's and CCC by S&P, Duff & Phelps and Fitch are of poor standing and there is a present danger with respect to payment of principal or interest. Securities rated Ca by Moody's and CC by S&P and Fitch are minimally protected, and default in payment of principal or interest is probable. Securities rated C by Moody's, S&P and Fitch are in imminent default in payment of principal or interest and have extremely poor prospects of ever attaining any real investment standing. Securities rated D by S&P and Fitch are in default. The issuer of securities rated DD by Duff & Phelps is under an order of liquidation. Investment in Lower-Rated Fixed-Income Securities. Lower-rated securities, i.e., those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps or Fitch, are subject to greater risk of loss of principal and interest than higher-rated securities. They are also generally considered to be subject to greater market risk than higher-rated securities, and the capacity of issuers of lower-rated securities to pay interest and repay principal is more likely to weaken than is that of issuers of higher-rated securities in times of deteriorating economic conditions or rising interest rates. In addition, lower-rated securities may be more susceptible to real or perceived adverse economic conditions than investment grade securities. The market for lower-rated securities may be thinner and less active than that for higher-rated securities, which can adversely affect the prices at which these securities can be sold. To the extent that there is no established secondary market for lower-rated securities, a Fund may experience difficulty in valuing such securities and, in turn, the Fund's assets. In addition, adverse publicity and investor perceptions about lower-rated securities, whether or not factual, may tend to impair their market value and liquidity. Alliance will try to reduce the risk inherent in investment in lower-rated securities through credit analysis, diversification and attention to current developments and trends in interest 45 rates and economic and political conditions. However, there can be no assurance that losses will not occur. Since the risk of default is higher for lower-rated securities, Alliance's research and credit analysis are a correspondingly more important aspect of its program for managing a Fund's securities than would be the case if a Fund did not invest in lower-rated securities. In seeking to achieve a Fund's investment objective, there will be times, such as during periods of rising interest rates, when depreciation and realization of capital losses on securities in a Fund's portfolio will be unavoidable. Moreover, medium- and lower-rated securities and non-rated securities of comparable quality may be subject to wider fluctuations in yield and market values than higher-rated securities under certain market conditions. Such fluctuations after a security is acquired do not affect the cash income received from that security but are reflected in the net asset value of a Fund. See the Statement of Additional Information for each Fund that invests in lower-rated securities for a description of the bond ratings of Moody's, S&P, Duff & Phelps and Fitch. Certain lower-rated securities in which Growth Fund, Income Builder Fund, Strategic Balanced and Utility Income Fund may invest may contain call or buy-back features that permit the issuers thereof to call or repurchase such securities. Such securities may present risks based on prepayment expectations. If an issuer exercises such a provision, a Fund may have to replace the called security with a lower yielding security, resulting in a decreased rate of return to the Fund. Non-Diversified Status. Each of Worldwide Privatization Fund, New Europe Fund, All-Asia Investment Fund, Global Environment Fund, and Income Builder Fund is a "non-diversified" investment company, which means the Fund is not limited in the proportion of its assets that may be invested in the securities of a single issuer. However, each Fund intends to conduct its operations so as to qualify to be taxed as a "regulated investment company" for purposes of the Code, which will relieve the Fund of any liability for federal income tax to the extent its earnings are distributed to shareholders. See "Dividends, Distributions and Taxes" in each Fund's Statement of Additional Information. To so qualify, among other requirements, the Fund will limit its investments so that, at the close of each quarter of the taxable year, (i) not more than 25% of the Fund's total assets will be invested in the securities of a single issuer, and (ii) with respect to 50% of its total assets, not more than 5% of its total assets will be invested in the securities of a single issuer and the Fund will not own more than 10% of the outstanding voting securities of a single issuer. A Fund's investments in U.S. Government securities and other regulated investment companies are not subject to these limitations. Because each of Worldwide Privatization Fund, New Europe Fund, All-Asia Investment Fund and Income Builder Fund is a non-diversified investment company, it may invest in a smaller number of individual issuers than a diversified investment company, and an investment in such Fund may, under certain circumstances, present greater risk to an investor than an investment in a diversified investment company. Foreign government securities are not treated like U.S. Government securities for purposes of the diversification tests described in the preceding paragraph, but instead are subject to these tests in the same manner as the securities of non-governmental issuers. Year 2000. Many computer software systems in use today cannot properly process date-related information from and after January 1, 2000. Should any of the computer systems employed by the Funds' major service providers fail to process this type of information properly, that could have a negative impact on the Funds' operations and the services that are provided to the Funds' shareholders. 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, have advised the Funds that they are reviewing all of their computer systems with the goal of modifying or replacing such systems prior to January 1, 2000 to the extent necessary to foreclose any such negative impact. In addition, Alliance has been advised by each Fund's custodian that they is also in the process of reviewing its systems with the same goal. As of the date of this Prospectus, the Funds and Alliance have no reason to believe that these goals will not be achieved. - -------------------------------------------------------------------------------- PURCHASE AND SALE - -------------------------------------------------------------------------------- OF SHARES - -------------------------------------------------------------------------------- HOW TO BUY SHARES You can purchase shares of any of the Funds at a price based on the next calculation of their net asset value after receipt of a proper purchase order either through broker-dealers, banks or other financial intermediaries, or directly through AFD. The minimum initial investment in each Fund is $250. The minimum for subsequent investments in each Fund is $50. Investments of $25 or more are allowed under the automatic investment program of each Fund. Share certificates are issued only upon request. See the Subscription Application and Statements of Additional Information for more information. Existing shareholders may make subsequent purchases by electronic funds transfer if they have completed the appropriate section of the Subscription Application or the Shareholder Options form obtained from AFS. Telephone purchase orders can be made by calling 800-221-5672 and may not exceed $500,000. Each Fund offers three classes of shares through this prospectus, Class A, Class B and Class C. The Funds may refuse any order to purchase shares. In this regard, 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. 46 Class A Shares--Initial Sales Charge Alternative You can purchase Class A shares at net asset value plus an initial sales charge, as follows:
Initial Sales Charge as % of Commission to Net Amount as % of Dealer/Agent as % Amount Purchased Invested Offering Price of Offering Price - -------------------------------------------------------------------------------------- Less than $100,000 4.44% 4.25% 4.00% - -------------------------------------------------------------------------------------- $100,000 to less than $250,000 3.36 3.25 3.00 - -------------------------------------------------------------------------------------- $250,000 to less than $500,000 2.30 2.25 2.00 - -------------------------------------------------------------------------------------- $500,000 to less than $1,000,000 1.78 1.75 1.50 - --------------------------------------------------------------------------------------
On purchases of $1,000,000 or more, you pay no initial sales charge but may pay a contingent deferred sales charge ("CDSC") equal to 1% of the lesser of net asset value at the time of redemption or original cost if you redeem within one year; Alliance may pay the dealer or agent a fee of up to 1% of the dollar amount purchased. Certain purchases of Class A shares may qualify for reduced or eliminated sales charges in accordance with a Fund's Combined Purchase Privilege, Cumulative Quantity Discount, Statement of Intention, Privilege for Certain Retirement Plans, Reinstatement Privilege and Sales at Net Asset Value programs. Consult the Subscription Application and Statements of Additional Information. Class B Shares--Deferred Sales Charge Alternative You can purchase Class B shares at net asset value without an initial sales charge. A Fund will thus receive the full amount of your purchase. However, you may pay a CDSC if you redeem shares within four years after purchase. The amount of the CDSC (expressed as a percentage of the lesser of the current net asset value or original cost) will vary according to the number of years from the purchase of Class B shares until the redemption of those shares. The amount of the CDSC for Class B shares for each Fund is as set forth below. Class B shares of a Fund purchased prior to the date of this Prospectus may be subject to a different CDSC schedule, which was disclosed in the Fund's prospectus in use at the time of purchase and is set forth in the Fund's current Statement of Additional Information.
Year Since Purchase CDSC -------------------------------------------- First ................................ 4.0% Second ............................... 3.0% Third ................................ 2.0% Fourth ............................... 1.0% Fifth ................................ None
Class B shares are subject to higher distribution fees than Class A shares for a period (after which they convert to Class A shares) of eight years, or six years with respect to Premier Growth Fund. The higher fees mean a higher expense ratio, so Class B shares pay correspondingly lower dividends and may have a lower net asset value than Class A shares. Class C Shares--Asset-Based Sales Charge Alternative You can purchase Class C shares at net asset value without any initial sales charge. A Fund will thus receive the full amount of your purchase, and, if you hold your shares for one year or more, you will receive the entire net asset value of your shares upon redemption. Class C shares incur higher distribution fees than Class A shares and do not convert to any other class of shares of the Fund. The higher fees mean a higher expense ratio, so Class C shares pay correspondingly lower dividends and may have a lower net asset value than Class A shares. Class C shares redeemed within one year of purchase will be subject to a CDSC equal to 1% of the lesser of their original cost or net asset value at the time of redemption. Application of the CDSC Shares obtained from dividend or distribution reinvestment are not subject to the CDSC. The CDSC is deducted from the amount of the redemption and is paid to AFD. The CDSC will be waived on redemptions of shares following the death or disability of a shareholder, to meet the requirements of certain qualified retirement plans or pursuant to a monthly, bimonthly or quarterly systematic withdrawal plan. See the Statements of Additional Information. How the Funds Value Their Shares The net asset value of each Class of shares of a Fund is calculated by dividing the value of the Fund's net assets allocable to that Class by the outstanding shares of that Class. Shares are valued each day the Exchange is open as of the close of regular trading (currently 4:00 p.m. Eastern time). The securities in a Fund are valued at their current market value determined on the basis of market quotations or, if such quotations are not readily available, such other methods as the Fund's Directors believe accurately reflects fair market value. 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 may also 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. General The decision as to which class of shares is more beneficial to you depends on the amount and intended length of your investment. If you are making a large investment, thus qualifying for a reduced sales charge, you might consider Class A shares. If you are making a smaller investment, you might consider Class B shares because 100% of your purchase is invested immediately. If you are unsure of the length of your investment, you might consider Class C shares because there is no initial sales charge and no CDSC as long as the shares are held for one year or more. Consult your 47 financial agent. Dealers and agents may receive differing compensation for selling Class A, Class B or Class C shares. There is no size limit on purchases of Class A shares. The maximum purchase of Class B shares is $250,000. The maximum purchase of Class C shares is $1,000,000. Each Fund offers a fourth class of shares, Advisor Class shares, by means of separate prospectus. Advisor Class shares may be purchased and held solely by (i) accounts established under a fee-based program sponsored and maintained by a registered broker-dealer or other financial intermediary and approved by AFD, (ii) a self-directed defined contribution employee benefit plan (e.g., a 401(k) plan) that has at least 1,000 participants or $25 million in assets and (iii) certain other categories of investors described in the prospectus for the Advisor Class, including investment advisory clients of, and certain other persons associated with, Alliance and its affiliates or the Funds. Advisor Class shares are offered without any initial sales charge or CDSC and without an ongoing distribution fee and are expected, therefore, to have different performance than Class A, Class B or Class C shares. You can obtain more information about Advisor Class shares by contacting AFS at 800-221-5672 or by contacting your financial representative. 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 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. In addition to the discount or commission paid to dealers or agents, AFD from time to time pays additional cash or other incentives to dealers or agents, including EQ Financial Consultants, Inc., an affiliate of AFD, in connection with the sale of shares of the Funds. Such additional amounts may be utilized, in whole or in part, in some cases together with other revenues of such dealers or agents, to provide additional compensation to registered representatives who sell shares of the Funds. On some occasions, such cash or other incentives will be conditioned upon the sale of a specified minimum dollar amount of the shares of a Fund and/or other Alliance Mutual Funds during a specific period of time. Such incentives may take the form of payment for attendance at seminars, meals, sporting events or theater performances, or payment for travel, lodging and entertainment incurred in connection with travel by persons associated with a dealer or agent and their immediate family members to urban or resort locations within or outside the United States. Such dealer or agent may elect to receive cash incentives of equivalent amount in lieu of such payments. HOW TO SELL SHARES You may "redeem"(i.e., sell your shares in a Fund to the Fund) on any day the Exchange is open, either directly or through your financial intermediary. The price you will receive is the net asset value (less any applicable CDSC) next calculated after the Fund receives your request in proper form. Proceeds generally will be sent to you within seven days. However, for shares recently purchased by check or electronic funds transfer, a Fund will not send proceeds until it is reasonably satisfied that the check or electronic funds transfer has been collected (which may take up to 15 days). Selling Shares Through Your Broker Your broker must receive your request before 4:00 p.m. Eastern time, and your broker must transmit your request to the Fund by 5:00 p.m. Eastern time, for you to receive that day's net asset value (less any applicable CDSC). Your broker is responsible for furnishing all necessary documentation to a Fund and may charge you for this service. Selling Shares Directly To A Fund Send a signed letter of instruction or stock power form to AFS along with certificates, if any, that represent the shares you want to sell. For your protection, signatures must be guaranteed by a bank, a member firm of a national stock exchange or other eligible guarantor institution. Stock power forms are available from your financial intermediary, AFS, and many commercial banks. Additional documentation is required for the sale of shares by corporations, intermediaries, fiduciaries and surviving joint owners. For details contact: Alliance Fund Services P.O. Box 1520 Secaucus, NJ 07096-1520 800-221-5672 Alternatively, a request for redemption of shares for which no stock certificates have been issued can also be made by telephone to 800-221-5672. Telephone redemption requests must be made by 4:00 p.m. Eastern time on a Fund business day in order to receive that day's net asset value, and, for redemptions made before March 1, 1998, may be made only once in any 30-day period (except for certain omnibus accounts). A shareholder who has completed the appropriate section of the Subscription Application, or the Shareholder Options form obtained from AFS, can elect to have the proceeds of his or her redemption sent to his or her bank via an electronic funds transfer. Proceeds of telephone redemptions also may be sent by check to a shareholder's address of record. Redemption requests by electronic funds transfer may not exceed $100,000 and redemption requests by check may not exceed $50,000 per day. Telephone redemption is not available for shares held in nominee or "street name" accounts or retirement plan accounts or shares held by a shareholder who has changed his or her address of record within the previous 30 calendar days. General The sale of shares is a taxable transaction for federal tax purposes. Under unusual circumstances, a Fund may suspend redemptions or postpone payment for up to seven days or longer, as permitted by federal securities law. The Funds reserve the right to close an account that through redemption 48 has remained below $200 for 90 days. Shareholders will receive 60 days' written notice to increase the account value before the account is closed. During drastic economic or market developments, you might have difficulty reaching AFS by telephone, in which event you should issue written instructions to AFS. AFS is not responsible for the authenticity of telephonic requests to purchase, sell or exchange shares. AFS will employ reasonable procedures to verify that telephone requests are genuine, and could be liable for losses resulting from unauthorized transactions if it fails to do so. Dealers and agents may charge a commission for handling telephonic requests. The telephone service may be suspended or terminated at any time without notice. SHAREHOLDER SERVICES AFS offers a variety of shareholder services. For more information about these services or your account, call AFS's toll-free number, 800-221-5672. Some services are described in the attached Subscription Application. A shareholder's manual explaining all available services will be provided upon request. To request a shareholder manual, call 800-227-4618. HOW TO EXCHANGE SHARES You may exchange your shares of any Fund for shares of the same class of other Alliance Mutual Funds (including AFD Exchange Reserves, a money market fund managed by Alliance). Exchanges of shares are made at the net asset values next determined, without sales or service charges. Exchanges may be made by telephone or written request. Telephone exchange requests must be received by AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that day's net asset value. Shares will continue to age without regard to exchanges for purposes of determining the CDSC, if any, upon redemption and, in the case of Class B shares, for the purposes of conversion to Class A shares. After an exchange, your Class B shares will automatically convert to Class A shares in accordance with the conversion schedule applicable to the Class B shares of the Alliance Mutual Fund you originally purchased for cash ("original shares"). When redemption occurs, the CDSC applicable to the original shares is applied. Please read carefully the Prospectus of the mutual fund into which you are exchanging before submitting the request. Call AFS at 800-221-5672 to exchange uncertificated shares. An exchange is a taxable capital transaction for federal tax purposes. The exchange service may be changed, suspended, or terminated on 60 days' written notice. - -------------------------------------------------------------------------------- MANAGEMENT OF THE FUNDS - -------------------------------------------------------------------------------- ADVISER Alliance, which is a Delaware limited partnership with principal offices at 1345 Avenue of the Americas, New York, New York 10105, has been retained under an advisory agreement (the "Advisory Agreement") to provide investment advice and, in general, to conduct the management and investment program of each Fund, subject to the general supervision and control of the Directors of the Fund. The following table lists the person or persons who are primarily responsible for the day-to-day management of each Fund's portfolio, the length of time that each person has been primarily responsible, and each person's principal occupation during the past five years.
Principal occupation during the past Fund Employee; year; title five years - ------------------------------------------------------------------------------------- Alliance Fund Alden M. Stewart since 1997-- Associated with Executive Vice President of Alliance since Alliance Capital Management 1993; prior Corporation (ACMC*) thereto, associated with Equitable Capital Management Corporation ("Equitable Capital")** Randall E. Haase since 1997-- Associated with Senior Vice President of ACMC Alliance since July 1993; prior thereto, associated with Equitable Capital Growth Fund Tyler Smith since inception-- Associated with Senior Vice President of ACMC Alliance since July 1993; prior thereto, associated with Equitable Capital Premier Growth Fund Alfred Harrison since inception-- Associated with Vice Chairman of ACMC Alliance Technology Fund Peter Anastos since 1992-- Associated with Senior Vice President of ACMC Alliance Gerald T. Malone since 1992-- Associated with Senior Vice President of ACMC Alliance since 1992; prior thereto associated with College Retirement Equities Fund Quasar Fund Alden M. Stewart since 1994-- (see above) (see above) Randall E. Haase since 1994-- (see above) (see above) International Fund A. Rama Krishna since 1993-- Associated with Senior Vice President of ACMC Alliance since and director of Asian Equity 1993; prior research thereto, Chief Investment Strategist and Director--Equity Research for CS First Boston Worldwide Privatization Fund Mark H. Breedon since inception-- Associated with Senior Vice President of ACMC Alliance and Director and Vice President of Alliance Capital Limited *** New Europe Fund Steven Beinhacker since 1997-- Associated with Vice President of ACMC Alliance All-Asia Investment A. Rama Krishna since inception-- (see above) Fund (see above)
49
Principal occupation during the past Fund Employee; year; title five years - ------------------------------------------------------------------------------------- Global Small Cap Alden M. Stewart since 1994-- (see above) Fund (see above) Randall E. Haase since 1994-- (see above) (see above) Ronald L. Simcoe since 1993-- Associated with Vice President of ACMC Alliance since 1993; prior thereto, associated with Equitable Capital Global Environment Jeremy R. Kramer since 1995-- Associated with Fund Vice President of ACMC Alliance since 1993; prior thereto, securities analyst with Neuberger & Berman Strategic Balanced Nicholas D.P. Carn Associated with Fund since 1997-- Alliance since Vice President of ACMC 1997; prior thereto, Chief Investment Officer and Portfolio Manager at Draycott Partners Balanced Shares Paul Rissman since 1997-- Associated with Senior Vice President of ACMC Alliance Income Builder Fund Andrew M. Aran since 1994-- Associated with Senior Vice President of ACMC Alliance Thomas M. Perkins since 1991-- Associated with Senior Vice President of ACMC Alliance Vita Marie Pike since 1997 Associated with Vice President of ACMC Alliance Corinne Molof Hill since 1997 Associated with Vice Presidient of ACMC Alliance Utility Income Fund Paul Rissman since 1996-- Associated with (See above) Alliance Growth & Income Paul Rissman since 1994-- Associated with Fund (see above) Alliance Real Estate Daniel G. Pine since 1996-- Associated with Investment Fund Senior Vice President of ACMC Alliance since 1996; 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 the Yarmouth Group - -------------------------------------------------------------------------------------
* The sole general partner of Alliance. ** Equitable Capital was, prior to Alliance's acquisition of it, a management firm under common control with Alliance. *** An indirect wholly-owned subsidiary of Alliance. Alliance is a leading international investment manager supervising client accounts with assets as of September 30, 1997 totaling more than $217 billion (of which approximately $81 billion represented the assets of investment companies). Alliance's clients are primarily major corporate employee benefit funds, public employee retirement systems, investment companies, foundations and endowment funds. The 56 registered investment companies managed by Alliance comprising 118 separate investment portfolios currently have over two million shareholders. As of September 30, 1997, Alliance was an investment manager of employee benefit plan assets for 28 of the Fortune 100 companies. ACMC, the sole general partner of, and the owner of a 1% general partnership interest in, Alliance, is an indirect wholly-owned subsidiary of The Equitable Life Assurance Society of the United States ("Equitable"), one of the largest life insurance companies in the United States, which is a wholly-owned subsidiary of The Equitable Companies Incorporated, a holding company controlled by AXA-UAP, a French insurance holding company. Certain information concerning the ownership and control of Equitable by AXA-UAP is set forth in each Fund's Statement of Additional Information under "Management of the Funds." Performance of Similarly Managed Portfolios. In addition to managing the assets of 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 Premier Growth Fund, except for the ability of Premier Growth Fund to use futures and options as hedging tools and to invest in warrants. The Historical Portfolios are also not subject to certain limitations, diversification requirements and other restrictions imposed under the 1940 Act and the Code to which 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 Objective 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, 1997. As of December 31, 1997, the assets in the Historical Portfolios totaled approximately $11.6 billion and the average size of an institutional account in the Historical Portfolio was $341 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 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 Premier Growth Fund. Expenses associated with the distribution of Class A, Class B and Class C shares of 50 Premier Growth Fund in accordance with the plan adopted by Premier Growth Fund's Board of Directors pursuant to Rule 12b-1 under the 1940 Act ("distribution fees") are also excluded. See "Expense Information." 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 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 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 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, Premier Growth Fund's performance relative to the index would be reduced by 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 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 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 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 PerformanceHistorical Portfolios*
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 ---- -------------- ------------ ------------ ------------ Year ended December: 1997*** 27.05% 34.90% 33.36% 30.49% 25.30% 1996*** 18.84 22.22 22.96 23.12 17.48 1995*** 40.66 40.12 37.58 37.19 32.65 1994 (9.78) (4.83) 1.32 2.66 (1.57) 1993 5.35 10.62 10.08 2.90 11.98 1992 -- 12.27 7.62 5.00 7.63 1991 -- 39.19 30.47 41.16 35.20 1990 -- (1.57) (3.10) (0.26) (5.00) 1989 -- 39.08 31.69 35.92 28.60 1988 -- 10.96 16.61 11.27 15.80 1987 -- 8.57 5.25 5.31 1.00 1986 -- 27.60 18.67 15.36 15.90 1985 -- 37.68 31.73 32.85 30.30 1984 -- (3.33) 6.27 (.95) (2.80) 1983 -- 20.95 22.56 15.98 22.30 1982 -- 28.23 21.55 20.46 20.20 1981 -- (1.10) (4.92) (11.31) (8.40) 1980 -- 51.10 32.50 39.57 37.30 1979 -- 30.99 18.61 23.91 27.40 Cumulative total return for the period January 1, 1979 to December 31, 1997 -- 3,689% 1,946% 1,683% 1,753% - ----------------------------------------------------------------------------------------------
* 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 Premier Growth Fund are for Class A shares, with imposition of the maximum 4.25% sales charge. 51 ** Assumes imposition of the maximum advisory fee charged by Alliance for any Historical Portfolio for the period involved, although not the impact of the payment of that fee on a quarterly rather than an annual basis and the compounding effect thereof over the periods for which return information is provided in the table on page 50, which would correspondingly reduce the returns presented. *** During this period, the Historical Portfolios differed from Premier Growth Fund in that 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, 1997 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 ----------------------------------------------------------------------- Premier Russell Lipper Growth Historical S&P 500 1000 Growth Fund Portfolios** Index Growth Index Fund Index ---- ---------- ----- ------------ ---------- One year ................ 27.05% 34.90% 33.36% 30.49% 25.30% Three years ............. 32.32 32.20 31.15 30.14 25.11 Five years .............. 19.14 19.46 20.27 18.41 16.47 Ten years ............... 20.13+ 19.17 18.05 17.94 15.93 Since January 1, 1979 .................. -- 20.08 17.22 16.37 15.86 - ----------------------------------------------------------------------------------------------------
+ Since inception on 9/28/92 ADMINISTRATOR TO ALL-ASIA INVESTMENT FUND Alliance has been retained by All-Asia Investment Fund under an administration agreement (the "Administration Agreement") to perform administrative services necessary for the operation of the Fund. For a description of such services, see the Statement of Additional Information of the Fund. CONSULTANT TO ALLIANCE WITH RESPECT TO INVESTMENT IN REAL ESTATE SECURITIES Alliance, with respect to investment in real estate securities, has retained as a consultant CB Commercial Real Estate Group, Inc. ("CBC"), 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 activities (CBC in August of 1997 acquired Koll, which previously provided these consulting services to Alliance). In 1996, CBC (and Koll, on a combined basis) completed 25,000 sale and lease transactions, managed over 4,100 client properties, created over $3.5 billion in mortgage originations, and completed over 2,600 appraisal and consulting assignments. In addition, they advised and managed for institutions over $4 billion in real estate investments. CBC will make available to Alliance the CBC National Real Estate Index, which gathers, analyzes and publishes targeted research data for the 65 largest U.S. markets, based on a variety of public-sector and private-sector sources as well as CBC's proprietary database of approximately 60,000 property transactions representing over $400 billion of investment property. This information provides a substantial component of the research and data used to create the REIToScore model. As a consultant, CBC provides to Alliance, at Alliance's expense, such in-depth information regarding the real estate market, the factors influencing regional valuations and analysts of recent transactions in office, retail, industrial and multi-family properties as Alliance shall from time to time request. CBC will not furnish advice or make recommendations regarding the purchase or sale of securities by the Fund nor will it be responsible for making investment decisions involving Fund assets. CBC is one of the three largest fee-based property management firms in the United States, the largest commercial real estate lease brokerage firm in the country, the largest investment property brokerage firm in the country, as well as one of the largest publishers of real estate research, with approximately 6,000 employees nationwide. CBC will provide Alliance with exclusive access to its REIToScore model which ranks approximately 130 REITS based on the relative attractiveness of the property markets in which they own real estate. This model scores the approximately 12,000 individual properties owned by these companies. REIToScore is in turn based on CBC's National Real Estate Index which gathers, analyzes and publishes targeted research for the 65 largest U.S. real estate markets based on a variety of public- and private-sector sources as well as CBC's proprietary database of 60,000 commercial property transactions representing over $400 billion of investment property and over 3,000 tracked properties which report rent and expense data quarterly. CBC has previously provided access to its REIToScore model results primarily to the institutional market through subscriptions. The model is no longer provided to any research publications and the Fund is currently the only mutual fund available to retail investors that has access to CBC's REIT o Score model. DISTRIBUTION SERVICES AGREEMENTS Rule 12b-1 adopted by the Commission under the 1940 Act permits an investment company to pay expenses associated with the distribution of its shares in accordance with a duly adopted plan. Each Fund has adopted one or more "Rule 12b-1 plans" (for each Fund, a "Plan") and has entered into a Distribution Services Agreement (the "Agreement") with AFD. Pursuant to its Plan, a Fund pays to AFD a Rule 12b-1 distribution services fee, which may not exceed an annual rate of .30% (.50% with respect to Growth Fund, Premier Growth Fund and Strategic Balanced Fund) of the Fund's aggregate average daily net assets attributable to the Class A shares, 1.00% of the Fund's aggregate average daily net assets attributable to the Class B shares and 1.00% of the Fund's aggregate average daily net assets attributable to the Class C shares, for distribution expenses. The Directors of Growth Fund and Strategic Balanced Fund currently limit payments with respect to Class A shares under the Plan to .30% of each Fund's aggregate average daily net assets attributable to Class A shares. The Directors of Premier Growth Fund currently limit payments under the Plan with respect to sales of Class A shares made after November 1993 to .30% of the Fund's aggregate average daily net assets. The Plans provide that a portion of the distribution services fee in an amount not to exceed .25% of the 52 aggregate average daily net assets of each Fund attributable to each of the Class A, Class B and Class C shares constitutes a service fee used for personal service and/or the maintenance of shareholder accounts. The Plans provide that AFD will use the distribution services fee received from a Fund in its entirety for payments (i) to compensate broker-dealers or other persons for providing distribution assistance, (ii) to otherwise promote the sale of shares of the Fund, and (iii) to compensate broker-dealers, depository institutions and other financial intermediaries for providing administrative, accounting and other services with respect to the Fund's shareholders. In this regard, some payments under the Plans are used to compensate financial intermediaries with trail or maintenance commissions in an amount equal to .25%, annualized, with respect to Class A shares and Class B shares, and 1.00%, annualized, with respect to Class C shares, of the assets maintained in a Fund by their customers. Distribution services fees received from the Funds, except Growth Fund and Strategic Balanced Fund, with respect to Class A shares will not be used to pay any interest expenses, carrying charges or other financing costs or allocation of overhead of AFD. Distribution services fees received from the Funds, with respect to Class B and Class C shares, may be used for these purposes. The Plans also provide that Alliance may use its own resources to finance the distribution of each Fund's shares. The Funds are not obligated under the Plans to pay any distribution services fee in excess of the amounts set forth above. Except as noted below for Growth Fund and Strategic Balanced Fund, with respect to Class A shares of each Fund, distribution expenses accrued by AFD in one fiscal year may not be paid from distribution services fees received from the Fund in subsequent fiscal years. Except as noted below for Growth Fund and Strategic Balanced Fund, AFD's compensation with respect to Class B and Class C shares under the Plans of the other Funds is directly tied to its expenses incurred. Actual distribution expenses for such Class B and Class C shares for any given year, however, will probably exceed the distribution services fees payable under the applicable Plan with respect to the class involved and, in the case of Class B and Class C shares, payments received from CDSCs. The excess will be carried forward by AFD and reimbursed from distribution services fees payable under the Plan with respect to the class involved and, in the case of Class B and Class C shares, payments subsequently received through CDSCs, so long as the Plan and the Agreement are in effect. Since AFD's compensation under the Plans of Growth Fund and Strategic Balanced Fund is not directly tied to the expenses incurred by AFD, the amount of compensation received by it under the applicable Plan during any year may be more or less than its actual expenses. Unreimbursed distribution expenses incurred as of the end of each Fund's most recently completed fiscal period, and carried over for reimbursement in future years in respect of the Class B and Class C shares for all Funds were, as of that time, as follows:
Amount of Unreimbursed Distribution Expenses (as % of Net Assets of Class) --------------------------------------------------------------------- Class B Class C - ----------------------------------------------------------------------------------------------------------------------------------- Alliance Fund ...................................... $ 3,782,063 (5.37%) $ 1,025,156 (5.43%) Premier Growth Fund ................................ $20,874,319 (2.43%) $ 1,413,557 (0.79%) Technology Fund .................................... $32,259,341 (3.06%) $ 1,464,569 (0.80%) Quasar Fund ........................................ $15,242,262 (3.03% $ 1,262,697 (0.90%) International Fund ................................. $ 2,566,420 (3.30%) $ 807,347 (3.47%) Worldwide Privatization Fund ....................... $ 5,013,479 (4.14%) $ 251,109 (1.94%) New Europe Fund .................................... $ 2,535,456 (3.84%) $ 541,239 (3.20%) All-Asia Investment Fund ........................... $ 1,690,408 (14.78%) $ 162,319 (8.73%) Global Small Cap Fund .............................. $ 2,055,687 (6.43%) $ 586,919 (6.73%) Balanced Shares .................................... $ 1,533,382 (6.34%) $ 463,860 (8.42%) Income Builder Fund ................................ $ 1,096,845 (12.59%) $ 1,904,160 (4.16%) Utility Income Fund ................................ $ 1,400,456 (9.47%) $ 456,135 (13.37%) Growth and Income Fund ............................. $11,066,118 (2.42%) $ 1,326,535 (1.25%) Real Estate Investment Fund ........................ $ 6,726,437 (3.60%) $ 366,120 (0.86%) - -----------------------------------------------------------------------------------------------------------------------------------
The Plans are in compliance with rules of the National Association of Securities Dealers, Inc. which effectively limit the annual asset-based sales charges and service fees that a mutual fund may pay on a class of shares to .75% and .25%, respectively, of the average annual net assets attributable to that class. The rules also limit the aggregate of all front-end, deferred and asset-based sales charges imposed with respect to a class of shares by a mutual fund that also charges a service fee to 6.25% of cumulative gross sales of shares of that class, plus interest at the prime rate plus 1% per annum. The Glass-Steagall Act and other applicable laws may limit the ability of a bank or other depository institution to become an underwriter or distributor of securities. However, in the opinion of the Funds' management, based on the advice of counsel, these laws do not prohibit such depository institutions from providing services for investment companies such as the administrative, accounting and other services referred to in the Agreements. In the event that a change in these laws prevented a bank from providing such services, it is expected that other services arrangements would be made and that shareholders would not be adversely affected. The State of Texas requires that shares of a Fund may be sold in that state only by dealers or other financial institutions that are registered there as broker-dealers. - -------------------------------------------------------------------------------- DIVIDENDS, DISTRIBUTIONS - -------------------------------------------------------------------------------- AND TAXES - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS If you receive an income dividend or capital gains distribution in cash you may, within 120 days following the date of its payment, reinvest the dividend or distribution in additional shares of that Fund without charge by returning to Alliance, with appropriate instructions, the check representing such dividend or distribution. Thereafter, unless you otherwise specify, you will be deemed to have elected to reinvest all subsequent dividends and distributions in shares of that Fund. 53 Each income dividend and capital gains distribution, if any, declared by a Fund on its outstanding shares will, at the election of each shareholder, be paid in cash or in additional shares of the same class of shares of that Fund having an aggregate net asset value as of the close of business on the day following the declaration date of such dividend or distribution equal to the cash amount of such income dividend or distribution. Election to receive dividends and distributions in cash or shares is made at the time shares are initially purchased and may be changed at any time prior to the record date for a particular dividend or distribution. Cash dividends can be paid by check or, if the shareholder so elects, electronically via the ACH network. There is no sales or other charge in connection with the reinvestment of dividends and capital gains distributions. Dividends paid by a Fund, if any, with respect to Class A, Class B and Class C shares will be calculated in the same manner at the same time on the same day and will be in the same amount, except that the higher distribution services fees applicable to Class B and C shares, and any incremental transfer agency costs relating to Class B and Class C shares, will be borne exclusively by the class to which they relate. While it is the intention of each Fund to distribute to its shareholders substantially all of each fiscal year's net income and net realized capital gains, if any, the amount and time of any such dividend or distribution must necessarily depend upon the realization by such Fund of income and capital gains from investments. There is no fixed dividend rate, and there can be no assurance that a Fund will pay any dividends or realize any capital gains. 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 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. If you buy shares just before a Fund deducts a distribution from its net asset value, you will pay the full price for the shares and then receive a portion of the price back as a taxable distribution. FOREIGN INCOME TAXES Investment income received by a Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source. To the extent that any Fund is liable for foreign income taxes withheld at the source, each Fund intends, if possible, to operate so as to meet the requirements of the Code to "pass through" to the Fund's shareholders credits for foreign income taxes paid (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. U.S. FEDERAL INCOME TAXES Each Fund intends to qualify to be taxed as a "regulated investment company" under the Code. To the extent that a Fund distributes its taxable income and net capital gain to its shareholders, qualification as a regulated investment company relieves that Fund of federal income taxes on that part of its taxable income, including net capital gains, which it pays out to its shareholders. Dividends out of net ordinary income and distributions of net short-term capital gains are taxable to the recipient shareholders as ordinary income. In the case of corporate shareholders, such dividends may be eligible for the dividends-received deduction, except that the amount eligible for the deduction is limited to the amount of qualifying dividends received by the Fund. Distributions received from a REIT 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 a Fund is financed with indebtedness. Pursuant to the Taxpayer Relief Act of 1997, two different tax rates apply to net capital gains--that is, the excess of net gains from capital assets held for more than one year over net losses from capital assets held for not more than one year. One rate (generally 28%) applies to net gains on capital assets held for more than one year but not more than 18 months ("mid-term gains"), and a second rate (generally 20%) applies to the balance of such net capital gains ("adjusted net capital gains"). Distributions of mid-term gains and adjusted net capital gains will be taxable to shareholders as such, regardless of how long a shareholder has held shares in the Fund. Distributions of net capital gains are not eligible for the dividends-received deduction referred to above. Under the current federal tax law, the amount of an income dividend or capital gains distribution declared by a Fund during October, November or December of a year to shareholders of record as of a specified date in such a month that is paid during January of the following year is includable in the prior year's taxable income of shareholders that are calendar year taxpayers. Any dividend or distribution received by a shareholder on shares of a Fund will have the effect of reducing the net asset value of such shares by the amount of such dividend or distribution. Furthermore, a dividend or distribution made shortly after the purchase of such shares by a shareholder, although in effect a return of capital to that particular shareholder, would be taxable to him or her as described above. If a shareholder held shares six months or less and during that period received a distribution of net capital gains, any loss realized on the sale of such shares during such six-month period would be a long-term capital loss to the extent of such distribution. A dividend or capital gains distribution with respect to shares of a Fund held by a tax-deferred or qualified plan, such as an individual retirement account, 403(b)(7) retirement plan or corporate pension or profit-sharing plan, 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. 54 A Fund will be required to withhold 31% of any payments made to a shareholder if the shareholder has not provided a certified taxpayer identification number to the Fund, or the Secretary of the Treasury notifies a Fund that a shareholder has not reported all interest and dividend income required to be shown on the shareholder's Federal income tax return. 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 "Dividends, Distributions and Taxes" in the Statement of Additional Information. Shareholders will be advised annually as to the federal tax status of dividends and capital gains and return of capital distributions made by a Fund for the preceding year. Shareholders are urged to consult their tax advisers regarding their own tax situation. Distributions by a Fund may be subject to state and local taxes. - -------------------------------------------------------------------------------- GENERAL INFORMATION - -------------------------------------------------------------------------------- PORTFOLIO TRANSACTIONS Consistent with the Conduct Rules of the National Association of Securities Dealers, Inc., and subject to seeking best price and execution, a Fund may consider sales of its shares as a factor in the selection of dealers to enter into portfolio transactions with the Fund. ORGANIZATION Each of the following Funds is a Maryland corporation organized in the year indicated: The Alliance Fund, Inc. (1938), Alliance Balanced Shares, Inc. (1932), Alliance Premier Growth Fund, Inc. (1992), Alliance Technology Fund, Inc. (1980), Alliance Quasar Fund, Inc. (1968), Alliance Worldwide Privatization Fund, Inc. (1994), Alliance New Europe Fund, Inc. (1990), Alliance All-Asia Investment Fund, Inc. (1994), Alliance Global Small Cap Fund, Inc. (1966), Alliance Global Environment Fund, Inc. (1990), Alliance Income Builder Fund, Inc. (1991), Alliance Utility Income Fund, Inc. (1993), Alliance Growth and Income Fund, Inc. (1932), and Alliance Real Estate Investment Fund, Inc. (1996). Each of the following Funds is either a Massachusetts business trust or a series of a Massachusetts business trust organized in the year indicated: Alliance Growth Fund and Alliance Strategic Balanced Fund (each a series of The Alliance Portfolios) (1987), and Alliance International Fund (1980). Prior to August 2, 1993, The Alliance Portfolios was known as The Equitable Funds, Growth Fund was known as The Equitable Growth Fund and Strategic Balanced Fund was known as The Equitable Balanced Fund. Prior to March 22, 1994, Income Builder Fund was known as Alliance Multi-Market Income and Growth Trust, Inc. It is anticipated that annual shareholder meetings will not be held; shareholder meetings will be held only when required by federal or state law. Shareholders have available certain procedures for the removal of Directors. A shareholder in a Fund 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 Funds are empowered to establish, without shareholder approval, additional portfolios, which may have different investment objectives, and additional classes of shares. If an additional portfolio or class were established in a Fund, each share of the portfolio or class would normally be entitled to one vote for all purposes. Generally, shares of each portfolio and class would vote together as a single class on matters, such as the election of Directors, that affect each portfolio and class in substantially the same manner. Class A, B, 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 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 votes separately with respect to a Fund's Rule 12b-1 distribution plan and other matters for which separate class voting is appropriate under applicable law. Shares are freely transferable, are entitled to dividends as determined by the Directors and, in liquidation of a Fund, are entitled to receive the net assets of the Fund. Since this Prospectus sets forth information about all the Funds, it is theoretically possible that a Fund might be liable for any materially inaccurate or incomplete disclosure in this Prospectus concerning another Fund. Based on the advice of counsel, however, the Funds believe that the potential liability of each Fund with respect to the disclosure in this Prospectus extends only to the disclosure relating to that Fund. Certain additional matters relating to a Fund's organization are discussed in its Statement of Additional Information. REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer agent and dividend-disbursing agent for a fee based upon the number of shareholder accounts maintained for the Funds. The transfer agency fee with respect to the Class B shares will be higher than the transfer agency fee with respect to the Class A shares or Class C shares. PRINCIPAL UNDERWRITER AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of the Americas, New York, New York 10105, is the principal underwriter of shares of the Funds. PERFORMANCE INFORMATION From time to time, the Funds advertise their "total return," which is computed separately for Class A, Class B and Class C shares. Such advertisements disclose a Fund's average annual 55 compounded total return for the periods prescribed by the Commission. A Fund's total return for each such period is computed by finding, through the use of a formula prescribed by the Commission, the average annual compounded rate of return over the period that would equate an assumed initial amount invested to the value of the investment at the end of the period. For purposes of computing total return, income dividends and capital gains distributions paid on shares of a Fund are assumed to have been reinvested when paid and the maximum sales charges applicable to purchases and redemptions of a Fund's shares are assumed to have been paid. Balanced Shares, Growth and Income Fund, Income Builder Fund, Real Estate Investment Fund and Utility Income Fund may also advertise their "yield," which is also computed separately for Class A, Class B and Class C shares. A Fund's yield for any 30-day (or one-month) period is computed by dividing the net investment income per share earned during such period by the maximum public offering price per share on the last day of the period, and then annualizing such 30-day (or one-month) yield in accordance with a formula prescribed by the Commission which provides for compounding on a semi-annual basis. Real Estate Investment Fund, Balanced Shares, Income Builder Fund, Utility Income Fund and Growth and Income Fund may also state in sales literature an "actual distribution rate" for each class which is computed in the same manner as yield except that actual income dividends declared per share during the period in question are substituted for net investment income per share. The actual distribution rate is computed separately for Class A, Class B and Class C shares. A Fund's advertisements may quote performance rankings or ratings of a Fund by financial publications or independent organizations such as Lipper Analytical Services, Inc. and Morningstar, Inc. or compare a Fund's performance to various indices. ADDITIONAL INFORMATION This Prospectus and the Statements of Additional Information, which have been incorporated by reference herein, do not contain all the information set forth in the Registration Statements filed by the Funds with the Commission under the Securities Act. Copies of the Registration Statements may be obtained at a reasonable charge from the Commission or may be examined, without charge, at the offices of the Commission in Washington, D.C. This prospectus does not constitute an offering in any state in which such offering may not lawfully be made. This prospectus is intended to constitute an offer by each Fund only of the securities of which it is the issuer and is not intended to constitute an offer by any Fund of the securities of any other Fund whose securities are also offered by this prospectus. No Fund intends to make any representation as to the accuracy or completeness of the disclosure in this prospectus relating to any other Fund. See "General Information--Organization." 56 ================================================================================ ALLIANCE STOCK FUNDS SUBSCRIPTION APPLICATION ================================================================================ The Alliance Fund Growth Fund Premier Growth Fund Technology Fund Quasar Fund International Fund Worldwide Privatization Fund New Europe Fund All-Asia Investment Fund Global Small Cap Fund Global Environment Fund Strategic Balanced Fund Balanced Shares Income Builder Fund Real Estate Investment Fund Utility Income Fund Growth & Income 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: -- 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. -- Transfer on Death: o Ensure that your state participates -- 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. -- 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 ================================================================================ 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*, Transfer On Death Beneficiary or Minor's Name (MI) (Last Name) |_|_|_|-|_|_|-|_|_|_|_| If Uniform Gift/Transfer Social Security Number of Owner or Minor (required to open account) 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 (First Name) (MI) (Last 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
Alliance Capital[LOGO](R) 1 - -------------------------------------------------------------------------------------------------------------------------- 3. Your Initial Investment The minimum investment is $250 per fund. The maximum investment in Class B is $250,000; Class C is $1,000,000. - -------------------------------------------------------------------------------------------------------------------------- I hereby subscribe for shares of the following Alliance Stock Fund(s) and elect distribution options as indicated. Dividend and Capital Gain Distribution Options: R Reinvest distributions into my fund account. - ------------------------------------------ - Broker/Dealer Use Only: Wire Confirm # 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 (the $250 minimum investment requirement applies to Funds into which distributions are directed). - ------------- ============== ======================== ============================= Indicate three Distributions Options digit Fund "Check One" number located Indicate Dollar Amount ============================= below Dividends Captital Gains Make all ============== ======================== ============================= checks payable to: |_|_|_| $ R C D R C D Alliance Funds |_|_|_| $ R C D R C D - ------------- |_|_|_| $ R C D R C D |_|_|_| $ R C D R C D ========================== Total Investment $ ========================== - -------------------------------------------------------------------------------------------------------------------------- Alliance Stock Fund Names and Numbers - -------------------------------------------------------------------------------------------------------------------------- ============= ============== ================= Contingent Initial Sales Deferred Sales Asset-Based Sales Charge Charge Charge A B C ============= ============== ================= Domestic The Alliance Fund 044 043 344 Growth Fund 031 001 331 Premier Growth Fund 078 079 378 Technology Fund 082 282 382 Quasar Fund 026 029 326 Global International Fund 040 041 340 Worldwide Privatization Fund 112 212 312 New Europe Fund 062 058 362 All-Asia Investment Fund 118 218 318 Global Small Cap Fund 045 048 345 Global Environment Fund 181 281 381 Total Return Balanced Shares 096 075 396 Strategic Balanced Fund 032 002 332 Income Builder Fund 111 211 311 Real Estate Investment Fund 110 210 310 Utility Income Fund 009 209 309 Growth & Income Fund 094 074 394
2 - -------------------------------------------------------------------------------------------------------------------------- 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 (MM,DD) Amount ($25 minimum) Frequency Frequency: 2- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| M = monthly Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Q = quarterly A = Annually 3- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency *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 that the check or electronic fund transfer has been collected, normally 15 calendar days after the purchase date. - --------------------------------------------------------------------------------------------------------------------------
3 - -------------------------------------------------------------------------------------------------------------------------- 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 (MM,DD) Amount ($25 minimum) Frequency Frequency: 2- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| M = monthly Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Q = quarterly A = Annually 3- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Please send my SWP proceeds to: |_| My Address of Record (via check) |_| My checking account-via EFT (complete section 4D) Your bank must be a member of the National Automated Clearing House Association (NACHA) in |_| The Payee and address specified in section 4E (via check) order for you to receive SWP proceeds directly (Medallion Signature Guarantee required) 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) |_| Telephone Transactions (Section 4B) |_| Automatic Investments (Section 4A) |_| Withdrawals (Section 4C) - --------------------------------------------------------------------------------------------------------------------------- Please Tape a Pre-printed Voided Check Here* - --------------------------------------------------------------------------------------------------------------------------- * The above services cannot be established [GRAPHIC OF BLANK CHECK WITH THE WORD VOID PRINTED ON IT.] 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
4 - -------------------------------------------------------------------------------------------------------------------------- 4. YOUR SHAREHOLDER OPTIONS(CONTINUED) - -------------------------------------------------------------------------------------------------------------------------- E. THIRD PARTY PAYMENT DETAILS Your signautre(s) in Section 5 must be Medallion Signature Guaranteed if your account is not maintained by a dealer/broker. 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 of 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 privilieges, 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
5 - -------------------------------------------------------------------------------- 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. This service can be enacted once every 30 days. |_| I do not elect the telephone exchange service. |_| I do not elect the telephone redemption by check service. 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 CERTIFICATE REQUIRED TO AVOID BACKUP WITHHOLDING. |__________________________________________________| |_______________________| Signature Date |__________________________________________________| |_______________________| Signature Date - ---------------------------------------------- Medallion Signautre Guarantee required if completing Section 4E and your mutual fund is not maintained by a broker dealer Alliance Capital [LOGO] 6 THE ALLIANCE - -------------------------------------------------------------------------------- STOCK FUNDS - -------------------------------------------------------------------------------- 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 Prospectus and Application Advisor Class February 2, 1998 Domestic Stock Funds Global Stock Funds - -The Alliance Fund -Alliance International Fund - -Alliance Growth Fund -Alliance Worldwide Privatization Fund - -Alliance Premier Growth Fund -Alliance New Europe Fund - -Alliance Technology Fund -Alliance All-Asia Investment Fund - -Alliance Quasar Fund -Alliance Global Small Cap Fund -Alliance Global Environment Fund Total Return Funds -Alliance Strategic Balanced Fund -Alliance Balanced Shares -Alliance Income Builder Fund -Alliance Utility Income Fund -Alliance Growth and Income Fund -Alliance Real Estate Investment Fund - --------------------------------------------------------------------------------
Table of Contents Page The Funds at a Glance ..................................................... 2 Expense Information ....................................................... 4 Financial Highlights ...................................................... 7 Glossary .................................................................. 10 Description of the Funds .................................................. 11 Investment Objectives and Policies ..................................... 11 Additional Investment Practices ........................................ 22 Certain Fundamental Investment Policies ................................ 29 Risk Considerations .................................................... 32 Purchase and Sale of Shares ............................................... 37 Management of the Funds ................................................... 39 Dividends, Distributions and Taxes ........................................ 42 Conversion Feature ........................................................ 44 General Information ....................................................... 54
- -------------------------------------------------------------------------------- Adviser Alliance Capital Management L.P. 1345 Avenue Of The Americas New York, New York 10105 The Alliance Stock Funds provide a broad selection of investment alternatives to investors seeking capital growth or high total return. The Domestic Stock Funds invest mainly in the United States equity markets and the Global Stock Funds diversify their investments among equity markets around the world, while the Total Return Funds invest in both equity and fixed-income securities. Each fund or portfolio (each a "Fund") is, or is a series of, an open-end management investment company. This Prospectus sets forth concisely the information which a prospective investor should know about each Fund before investing. A "Statement of Additional Information" for each Fund which provides further information regarding certain matters discussed in this Prospectus and other matters which may be of interest to some investors has been filed with the Securities and Exchange Commission and is incorporated herein by reference. For a free copy, call or write Alliance Fund Services, Inc. at the indicated address or call the "For Literature" telephone number shown above. This Prospectus offers the Advisor Class shares of each Fund which may be purchased at net asset value without any initial or contingent deferred sales charges and without ongoing distribution expenses. Advisor Class shares are offered solely to (i) investors participating in fee-based programs meeting certain standards established by Alliance Fund Distributors, Inc., each Fund's principal underwriter, (ii) participants in self-directed defined contribution employee benefit plans (e.g., 401(k) plans) that meet certain minimum standards and (iii) certain other categories of investors described in the Prospectus, including investment advisory clients of, and certain other persons associated with, Alliance Capital Management L.P. and its affiliates or the Funds. See "Purchase and Sale of Shares." An investment in these securities is not a deposit or obligation of, or guaranteed or endorsed by, any bank and is not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other agency. Investors are advised to read this Prospectus carefully and to retain it for future reference. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. [LOGO] Alliance (R) Investing without the Mystery.(SM) (R)/SM These are registered marks used under licenses from the owner, Alliance Capital Management L.P. The Funds At A Glance The following summary is qualified in its entirety by the more detailed information contained in this Prospectus. The Funds' Investment Adviser Is . . . Alliance Capital Management L.P. ("Alliance"), a global investment manager providing diversified services to institutions and individuals through a broad line of investments including more than 100 mutual funds. Since 1971, Alliance has earned a reputation as a leader in the investment world with over $217 billion in assets under management as of September 30, 1997. Alliance provides investment management services to employee benefit plans for 28 of the FORTUNE 100 companies. Domestic Stock Funds Alliance Fund Seeks . . . Long-term growth of capital and income primarily through investment in common stocks. Invests Principally in . . . A diversified portfolio of equity securities that, in the judgment of Alliance, have the potential to achieve capital appreciation. Growth Fund Seeks . . . Long-term growth of capital by investing primarily in common stocks and other equity securities. Invests Principally in . . . A diversified portfolio of equity securities of companies with a favorable outlook for earnings and whose rate of growth is expected to exceed that of the United States economy over time. Premier Growth Fund Seeks . . . Long-term growth of capital by investing in the equity securities of a limited number of large, carefully selected, high-quality American companies from a relatively small universe of intensively researched companies. Invests Principally in . . . A diversified portfolio of equity securities that, in the judgment of Alliance, are likely to achieve superior earnings growth. Normally, approximately 40 companies will be represented in the Fund's investment portfolio. The Fund's investments in 25 of these companies most highly regarded at any point in time by Alliance will usually constitute approximately 70% of the Fund's net assets. Technology Fund Seeks . . . Growth of capital through investment in companies expected to benefit from advances in technology. Invests Principally in . . . A diversified portfolio of securities of companies which use technology extensively in the development of new or improved products or processes. Quasar Fund Seeks . . . Growth of capital by pursuing aggressive investment policies. Invests Principally in . . . A diversified portfolio of equity securities of any company and industry and in any type of security which is believed to offer possibilities for capital appreciation. Global Stock Funds International Fund Seeks . . . A total return on its assets from long-term growth of capital and from income. Invests Principally in . . . A diversified portfolio of marketable securities of established non-United States companies, companies participating in foreign economies with prospects for growth, and foreign government securities. Worldwide Privatization Fund Seeks . . . Long-term capital appreciation. Invests Principally in . . . A non-diversified portfolio of equity securities issued by enterprises that are undergoing, or have undergone, privatization. The balance of the Fund's investment portfolio will include securities of companies that are believed by Alliance to be beneficiaries of the privatization process. New Europe Fund Seeks . . . Long-term capital appreciation through investment primarily in the equity securities of companies based in Europe. Invests Principally in . . . A non-diversified portfolio of equity securities of European companies. All-Asia Investment Fund Seeks . . . Long-term capital appreciation. Invests Principally in . . . A non-diversified portfolio of equity securities of Asian/Pacific companies. Global Small Cap Fund Seeks . . . Long-term growth of capital. Invests Principally in . . . A diversified global portfolio of the equity securities of small capitalization companies. Global Environment Fund Seeks . . . Long-term capital appreciation. Invests Principally in . . . A non-diversified portfolio of equity securities of companies expected to benefit from advances or improvements in products, processes or services intended to foster the protection of the environment. Total Return Funds Strategic Balanced Fund Seeks . . . A high long-term total return by investing in a combination of equity and debt securities. Invests Principally in . . . A diversified portfolio of dividend-paying common stocks and fixed-income securities, and also in equity-type securities such as warrants, preferred stocks and convertible debt instruments. 2 Balanced Shares Seeks . . . A high return through a combination of current income and capital appreciation. Invests Principally in . . . A diversified portfolio of equity and fixed-income securities such as common and preferred stocks, U.S. Government and agency obligations, bonds and senior debt securities. Income Builder Fund Seeks . . . Both an attractive level of current income and long-term growth of income and capital. Invests Principally in . . . A non-diversified portfolio of fixed-income securities and dividend-paying common stocks. Alliance currently expects to continue to maintain approximately 60% of the Fund's net assets in fixed-income securities and 40% in equity securities. Utility Income Fund Seeks . . . Current income and capital appreciation through investment in the utilities industry. Invests Principally in . . . A diversified portfolio of equity securities, such as common stocks, securities convertible into common stocks and rights and warrants to subscribe for purchase of common stocks, and in fixed-income securities such as bonds and preferred stocks. Growth and Income Fund Seeks . . . Income and appreciation through investment in dividend-paying common stocks of quality companies. Invests Principally in . . . A diversified portfolio of dividend-paying common stocks of good quality, and, under certain market conditions, other types of securities, including bonds, convertible bonds and preferred stocks. Real Estate Investment Fund Seeks . . . Total return on its assets from long-term growth of capital and from income. Invests Principally in . . . A diversified portfolio of equity securities of issuers that are primarily engaged in or related to the real estate industry. Distributions . . . Balanced Shares, Income Builder Fund, Utility Income Fund, Growth and Income Fund and Real Estate Investment Fund intend to make distributions quarterly to shareholders. These distributions may include ordinary income and capital gain (each of which is taxable) and a return of capital (which is generally nontaxable). See "Dividends, Distributions and Taxes." A Word About Risk . . . The price of the shares of the Alliance Stock Funds will fluctuate as the daily prices of the individual securities in which they invest fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. With respect to those Funds permitted to invest in foreign currency denominated securities, these fluctuations may be magnified by changes in foreign exchange rates. Investment in the Global Stock Funds involves risks not associated with funds that invest primarily in securities of U.S. issuers. While the Funds invest principally in common stocks and other equity securities, in order to achieve their investment objectives the Funds may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These involve risks different from, and, in certain cases, greater than, the risks presented by more traditional investments. An investment in the Real Estate Investment Fund is subject to certain risks associated with the direct ownership of real estate in general, including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. These risks are fully discussed in this Prospectus. Getting Started . . . Shares of the Funds are available through your financial representative. Each Fund offers multiple classes of shares, of which only the Advisor Class is offered by this Prospectus. Advisor Class shares may be purchased at net asset value without any initial or contingent deferred sales charges and are not subject to ongoing distribution expenses. Advisor Class shares may be purchased and held solely (i) through accounts established under a fee-based program, sponsored and maintained by a registered broker-dealer or other financial intermediary and approved by Alliance Fund Distributors, Inc. ("AFD"), each Fund's principal underwriter, (ii) through a self-directed defined contribution employee benefit plan (e.g., a 401(k) plan) that has at least 1,000 participants or $25 million in assets, (iii) by investment advisory clients of, and certain other persons associated with, Alliance and its affiliates or the Funds, and (iv) through registered investment advisers or other financial intermediaries who charge a management, consulting or other fee for their service 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. A shareholder's Advisor Class shares will automatically convert to Class A shares of the same Fund under certain circumstances. See "Conversion FeatureConversion to Class A Shares." 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 each Fund in which the program invests in order to be approved by AFD for investment in Advisor Class shares. For more detailed information about who may purchase and hold Advisor Class shares see the Statement of Additional Information. Fee-based and other programs through which Advisor Class shares may be purchased may impose different requirements with respect to investment in Advisor Class shares than described above. For detailed information about purchasing and selling shares, see "Purchase and Sale of Shares." [LOGO] Alliance (R) Investing without the Mystery.(SM) (R)/SM These are registered marks used under licenses from the owner, Alliance Capital Management L.P. 3 - -------------------------------------------------------------------------------- EXPENSE INFORMATION - -------------------------------------------------------------------------------- Shareholder Transaction Expenses are one of several factors to consider when you invest in a Fund. The following table summarizes your maximum transaction costs from investing in the Advisor Class shares of each Fund and estimated annual expenses for Advisor Class shares of each Fund. For each Fund, the "Examples" to the right of the table below show the cumulative expenses attributable to a hypothetical $1,000 investment in Advisor Class shares for the periods specified.
Advisor Class Shares -------------------- Maximum sales charge imposed on purchases ........... None Sales charge imposed on dividend reinvestments ...... None Deferred sales charge ............................... None Exchange fee ........................................ None
- --------------------------------------------------------------------------------
Operating Expenses Examples ----------------------------------------- ------------------------------------------ Alliance Fund Advisor Class Advisor Class ------------- ------------- Management fees .68% After 1 year $ 8 12b-1 fees None After 3 years $ 26 Other expenses (a) .15% After 5 years $ 46 ---- After 10 years $103 Total fund operating expenses (b) .83% ==== Growth Fund Advisor Class Advisor Class ------------- ------------- Management fees .74% After 1 year $ 10 12b-1 fees None After 3 years $ 31 Other expenses (a) .24% After 5 years $ 54 ---- After 10 years $120 Total fund operating expenses (b) .98% ==== Premier Growth Fund Advisor Class Advisor Class ------------- ------------- Management fees 1.00% After 1 year $ 13 12b-1 fees None After 3 years $ 40 Other expenses (a) .25% After 5 years $ 69 ---- After 10 years $151 Total fund operating expenses (b) 1.25% ==== Technology Fund Advisor Class Advisor Class ------------- ------------- Management fees (g) 1.04% After 1 year $ 14 12b-1 fees None After 3 years $ 44 Other expenses (a) .35% After 5 years $ 76 ---- After 10 years $167 Total fund operating expenses (b) 1.39% ==== Quasar Fund Advisor Class Advisor Class ------------- ------------- Management fees (g) 1.16% After 1 year $ 16 12b-1 fees None After 3 years $ 50 Other expenses (a) .42% After 5 years $ 86 ---- After 10 years $188 Total fund operating expenses (b) 1.58% ==== International Fund Advisor Class Advisor Class ------------- ------------- Management fees (after waiver) (c) .85% After 1 year $ 16 12b-1 fees None After 3 years $ 48 Other expenses (a) .68% After 5 years $ 83 ---- After 10 years $182 Total fund operating expenses (b) (e) 1.53% ====
- -------------------------------------------------------------------------------- Please refer to the footnotes and the discussion following these tables on page 6. 4
Operating Expenses Examples ------------------------------------------- ------------------------------------------ Worldwide Privatization Fund Advisor Class Advisor Class ------------- ------------- Management fees 1.00% After 1 year $ 20 12b-1 fees None After 3 years $ 62 Other expenses (a) .96% After 5 years $106 ---- After 10 years $229 Total fund operating expenses (b) 1.96% ==== New Europe Fund Advisor Class Advisor Class ------------- ------------- Management fees 1.06% After 1 year $ 17 12b-1 fees None After 3 years $ 54 Other expenses (a) .65% After 5 years $ 93 ---- After 10 years $202 Total fund operating expenses (b) 1.71% ==== All-Asia Investment Fund Advisor Class Advisor Class ------------- ------------- Management fees (after waiver) (c) .65% After 1 year $ 18 12b-1 fees None After 3 years $ 56 Other expenses After 5 years $ 96 Administration fees After 10 years $209 (after waiver) (d) .00% Other operating expenses (a) 1.13% ---- Total fund operating expenses (b) (e) 1.78% ==== Global Small Cap Fund Advisor Class Advisor Class ------------- ------------- Management fees 1.00% After 1 year $ 21 12b-1 fees None After 3 years $ 64 Other expenses (a) 1.05% After 5 years $110 ---- After 10 years $238 Total fund operating expenses (b) 2.05% ==== Global Environment Fund Advisor Class Advisor Class ------------- ------------- Management fees 1.10% After 1 year $ 24 12b-1 fees None After 3 years $ 75 Other expenses (a) 1.29% After 5 years $128 ---- After 10 year $273 Total fund operating expenses (b) 2.39% ==== Strategic Balanced Fund Advisor Class Advisor Class ------------- ------------- Management fees (after waiver) (c) .09% After 1 year $ 11 12b-1 fees None After 3 years $ 35 Other expenses (a) 1.01% After 5 years $ 61 ---- After 10 years $134 Total fund operating expenses (b) (e) 1.10% ==== Balanced Shares Advisor Class Advisor Class ------------- ------------- Management fees .63% After 1 year $ 13 12b-1 fees None After 3 years $ 41 Other expenses (a) .67% After 5 years $ 71 ---- After 10 years $157 Total fund operating expenses (b) 1.30% ==== Income Builder Fund Advisor Class Advisor Class ------------- ------------- Management fees .75% After 1 year $ 17 12b-1 fees None After 3 years $ 52 Other expenses (a) .93% After 5 years $ 89 After 10 years $188 Total fund operating expenses (b) 1.68% ====
5
Operating Expenses Examples ------------------------------------------- ------------------------------------------ Utility Income Fund Advisor Class Advisor Class ------------- ------------- Management fees (after waiver) (c) .00% After 1 year $ 12 12b-1 fees None After 3 years $ 38 Other expenses (a) 1.20% After 5 years $ 66 ---- After 10 years $145 Total fund operating expenses (b) (f) 1.20% ==== Growth and Income Fund Advisor Class Advisor Class ------------- ------------- Management fees .49% After 1 year $ 7 12b-1 fees None After 3 years $ 23 Other expenses (a) .22% After 5 years $ 40 ---- After 10 years $ 88 Total fund operating expenses (b) .71% ==== Real Estate Investment Fund Advisor Class Advisor Class ------------- ------------- Management fees .90% After 1 year $ 15 12b-1 fees None After 3 years $ 46 Other expenses (a) .55% After 5 years $ 79 ---- After 10 years $174 Total fund operating expenses (b) 1.45% ====
- -------------------------------------------------------------------------------- (a) These expenses include a transfer agency fee payable to Alliance Fund Services, Inc., an affiliate of Alliance. The expenses shown do not include the application of credits that reduce Fund expenses. (b) The expense information does not reflect any charges or expenses imposed by your financial representative or your employee benefit plan. (c) Net of voluntary fee waiver. In the absence of such waiver, management fees would be 1.00% for All-Asia Investment Fund and .75% for Strategic Balanced Fund and Utility Income Fund and 1.01% for International Fund. International Fund's fee, absent the voluntary fee waiver, is calculated based on average daily net assets. Maximum contractual rate, based on quarter-end net assets, is 1.00%. (d) Net of voluntary fee waiver. Absent such fee waiver, administration fees would have been .15%. Reflects the fees payable by All-Asia Investment Fund to Alliance pursuant to an administration agreement. (e) Net of voluntary fee waivers and expense reimbursements. Absent such waivers and reimbursements, total fund operating expenses for Strategic Balanced Fund would have been 2.35%, total fund operating expenses for All-Asia Investment Fund would have been 2.28% annualized and total fund operating expenses for International Fund would have been 1.69%, annualized. (f) Net of expense reimbursements. Absent expense reimbursements, total fund operating expenses for Utility Income Fund would be 3.29%. (g) Calculated based on average daily net assets. Maximum contractual rate, based on quarter-end net assets, is 1.00% for Quasar Fund and Technology Fund. The purpose of the foregoing table is to assist the investor in understanding the various costs and expenses that an investor in a Fund will bear directly or indirectly. For International Fund, Worldwide Privatization Fund, New Europe Fund, Global Environment Fund, Global Small Cap Fund, Strategic Balanced Fund, Balanced Shares and Real Estate Investment Fund, "Other Expenses" are based on estimated amounts for those Funds' current fiscal year. "Management fees" for International Fund and All-Asia Investment Fund and "Administration fees" for All-Asia Investment Fund have been restated to reflect current voluntary fee waivers. "Other Expenses" for Global Environment Fund are based on estimated amounts for its current fiscal year. The Examples set forth above assume reinvestment of all dividends and distributions and utilize a 5% annual rate of return as mandated by Commission regulations. The Examples should not be considered representative of future expenses; actual expenses may be greater or less than those shown. 6 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The tables on the following pages present per share income and capital changes for an Advisor Class share outstanding throughout each period indicated. Except as otherwise indicated, information for Alliance Fund, Growth Fund, Premier Growth Fund, Strategic Balanced Fund, Balanced Shares, Utility Income Fund, Worldwide Privatization Fund and Growth and Income Fund has been audited by Price Waterhouse LLP, the independent accountants for each such Fund, and for All-Asia Investment Fund, Technology Fund, Quasar Fund, International Fund, New Europe Fund, Global Small Cap Fund, Real Estate Investment Fund and Income Builder Fund by Ernst & Young LLP, the independent auditors for each such Fund. A report of Price Waterhouse LLP or Ernst & Young LLP, as the case may be, on the information with respect to each Fund, appears in the Fund's Statement of Additional Information. The following information for each Fund should be read in conjunction with the financial statements and related notes which are included in the Fund's Statement of Additional Information. Further information about a Fund's performance is contained in the Fund's annual report to shareholders, which may be obtained without charge by contacting Alliance Fund Services, Inc. at the address or the "For Literature" telephone number shown on the cover of this Prospectus. 7
Net Net Net Asset Realized and Increase Distributions Value Unrealized (Decrease) In Dividends From In Excess Of Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment Net Investment Fiscal Year or Period Period Income (Loss) Investments From Operations Income Income --------------------- ------------ -------------- -------------- --------------- -------------- -------------- Alliance Fund Advisor Class Year ended 11/30/97 $ 7.71 $ (.02)(b) $ 2.10 $ 2.08 $ (.04) $ 0.00 10/2/96+ to 11/30/96 6.99 0.00 .72 .72 0.00 0.00 Growth Fund Advisor Class Year ended 10/31/97 $ 34.91 $ (.05)(b) $ 10.25 $ 10.20 $ 0.00 $ 0.00 10/2/96+ to 10/31/96 34.14 0.00(b) .77 .77 0.00 0.00 Premier Growth Fund Advisor Class Year ended 11/30/97 $ 17.99 $ (.06)(b) $ 5.25 $ 5.19 $ 0.00 $ 0.00 10/2/96+ to 11/30/96 15.94 (.01)(b) 2.06 2.05 0.00 0.00 Technology Fund Advisor Class Year ended 11/30/97 $ 51.17 $ (.45)(b) $ 4.33 $ 3.88 $ 0.00 $ 0.00 10/2/96+ to 11/30/96 47.32 (.05)(b) 3.90 3.85 0.00 0.00 Quasar Fund Advisor Class 10/2/96+ to 9/30/97 $ 27.82 $ (.17)(b) $ 6.88 $ 6.71 $ 0.00 $ 0.00 International Fund Advisor Class 10/2/96+ to 6/30/97 $ 17.96 $ .16(b) $ 1.78 $ 1.94 $ (.15) $ 0.00 Worldwide Privatization Fund Advisor Class 10/2/96+ to 6/30/97 $ 12.14 $ .18(b) $ 2.52 $ 2.70 $ (.19) $ 0.00 New Europe Fund Advisor Class 10/2/96+ to 7/31/97 $ 16.25 $ .11(b) $ 3.76 $ 3.87 $ (.09) $ (.14) All-Asia Investment Fund Advisor Class Year ended 10/31/97 $ 11.04 $ (.15)(b)(c) $ (2.99) $ (3.14) $ 0.00 $ 0.00 10/2/96+ to 10/31/96 11.65 0.00(c) (.61) (.61) 0.00 0.00 Global Small Cap Fund Advisor Class 10/2/96+ to 7/31/97 $ 12.56 $ (.08)(b) $ 1.97 $ 1.89 $ 0.00 $ 0.00 Strategic Balanced Fund Advisor Class 10/2/96+ to 7/31/97 $ 19.49 $ .42(b)(c) $ (.12) $ .30 $ 0.00 $ 0.00 Balanced Shares Advisor Class 10/2/96+ to 7/31/97 $ 14.79 $ .23 $ 3.22 $ 3.45 $ (.27) $ 0.00 Income Builder Fund Advisor Class 10/2/96+ to 10/31/97 $ 11.57 $ .61(b) $ 1.53 $ 2.14 $ (.54) $ 0.00 Utility Income Fund Advisor Class Year ended 11/30/97 $ 10.59 $ .36(b)(c) $ 2.04 $ 2.40 $ (.37) $ 0.00 10/2/96+ to 11/30/96 9.95 .03(b)(c) .61 .64 0.00 0.00 Growth and Income Fund Advisor Class Year ended 10/31/97 $ 3.00 $ .05(b) $ .87 $ .92 $ (0.06) $ 0.00 10/2/96+ to 10/31/96 2.97 0.00 .03 .03 0.00 0.00 Real Estate Investment Fund Advisor Class 10/1/96+ to 8/31/97 $ 10.00 $ .35(b) $ 2.88 $ 3.23 $ (.41)(f) $ 0.00
- -------------------------------------------------------------------------------- + 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 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 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 fiscal year, their expense ratios, without giving effect to the expense offset arrangements described in (e) below, would have been as follows:
1996 1997 1997 All-Asia Investment Fund Strategic Balanced Advisor Class 5.54%# 3.43 Advisor Class 2.35%# Utility Income Fund Advisor Class 3.48%# 3.29 Real Estate Investment Fund Advisor Class -- 1.47%#
8
Total Net Assets Ratio Of Net Total Net Asset Investment At End Of Ratio Of Investment Distributions Dividends Value Return Based Period Expenses Income (Loss) Average From Net And End Of on Net Asset (000's To Average To Average Portfolio Commission Realized Gains Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate Rate - -------------- ------------- --------- ------------ ---------- ---------- ------------- ------------- ---------- $ (1.06) $ (1.10) $ 8.69 32.00% $ 10,275 .83% (.21)% 158% $0.0571 0.00 0.00 7.71 10.30 1,083 .89* 0.38* 80 0.0646 $ (1.03) $ (1.03) $ 44.08 29.92% $101,205 .98%(e) (.12)% 48% $0.0562 0.00 0.00 34.91 2.26 946 1.26* 0.50* 46 0.0584 $ (1.08) $ (1.08) $ 22.10 30.98% $ 53,459 1.25% (.28)% 76% $0.0594 0.00 0.00 17.99 12.86 1,922 1.50* (.48)* 95 0.0651 $ (.42) $ (.42) $ 54.63 7.65% $167,120 1.39%(e) (.81)% 51% $0.0564 0.00 0.00 51.17 8.14 566 1.75* (1.21)* 30 0.0612 $ (4.11) $ (4.11) $ 30.42 28.47% $ 62,455 1.58% (.74)% 135% $0.0536 $ (1.08) $ (1.23) $ 18.67 11.57% $ 8,697 1.69%* 1.47%* 94% $0.0363 $ (1.42) $ (1.61) $ 13.23 25.24% $ 374 1.96%* 2.97%* 48% $0.0132 $ (1.32) $ (1.55) $ 18.57 25.76% $ 4,130 1.71%* .77%* 89% $0.0569 $ (.34) $ (.34) $ 7.56 (29.42)% $ 1,338 3.21%(d) (1.51)% 70% $0.0248 0.00 0.00 11.04 (5.24) 27 3.07*(d) 1.63* 66 0.0280 $ (1.56) $ (1.56) $ 12.89 17.08% $ 333 2.05%*(e) (.84)%* 129% $0.0364 $ 0.00 $ 0.00 $ 19.79 1.54% $ 50 1.10%(d)(e)* 3.40%* 170% $0.0395 $ (1.80) $ (2.07) $ 16.17 25.96% $ 1,565 1.30%*(e) 2.15%* 207% $0.0552 $ (.61) $ (1.15) $ 12.56 19.62% $ 80 1.68% 4.55% 159% $0.0513 $ (.13) $ (.50) $ 12.49 23.57% $ 42 1.20% 3.29% 37% $0.0442 0.00 0.00 10.59 6.33 33 1.20*(d) 4.02* 98 0.0536 $ (.38) $ (.44) $ 3.48 33.61% $ 3,207 .71%(e) 1.42% 88% $ .0589 0.00 0.00 3.00 1.01 87 0.37* 3.40* 88 0.0625 $ 0.00 $ (.41) $ 12.82 32.72% $ 2,313 1.45%*(d)(e) 3.07%* 20% $0.0518
- -------------------------------------------------------------------------------- (e) Amounts do not affect the impact of expense offset arrangements with the transfer agent. Taking into account such expense offsets arrangements the rate of expense to average net assets assuming the assumption and/or waived reimbursement of expenses described in note (d) above would have been as follows:
1997 1997 1997 ---- ---- ---- International Fund New Europe Fund Growth and Income Fund Advisor Class 1.69%# Advisor Class 1.71%# Advisor Class .70% Global Small Cap Fund Balanced Shares Fund Growth Fund Advisor Class 2.04%# Advisor Class 1.29%# Advisor Class .96% Strategic Balanced Fund Real Estate Fund Technology Fund Advisor Class 1.10%# Advisor Class 1.44%# Advisor Class 1.38% ------------- # annualized
(f) Distributions from net investment income include a tax return of capital of $.03. 9 - -------------------------------------------------------------------------------- GLOSSARY - -------------------------------------------------------------------------------- The following terms are frequently used in this Prospectus. Equity securities, except as noted otherwise, are (i) common stocks, partnership interests, business trust shares and other equity or ownership interests in business enterprises, and (ii) securities convertible into, and rights and warrants to subscribe for the purchase of, such stocks, shares and interests. Debt securities are bonds, debentures, notes, bills, repurchase agreements, loans, other direct debt instruments and other fixed, floating and variable rate debt obligations, but do not include convertible securities. Fixed-income securities are debt securities and dividend-paying preferred stocks and include floating rate and variable rate instruments. Convertible securities are fixed-income securities that are convertible into common stock. U.S. Government securities are securities issued or guaranteed by the United States Government, its agencies or instrumentalities. Foreign government securities are securities issued or guaranteed, as to payment of principal and interest, by governments, quasi-governmental entities, governmental agencies or other governmental entities. Asian company is an entity that (i) is organized under the laws of an Asian country and conducts business in an Asian country, (ii) derives 50% or more of its total revenues from business in Asian countries, or (iii) issues equity or debt securities that are traded principally on a stock exchange in an Asian country. Asian countries are Australia, the Democratic Socialist Republic of Sri Lanka, 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. 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. 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. Moody's is Moody's Investors Service, Inc. S&P is Standard & Poor's Ratings Services. Duff & Phelps is Duff & Phelps Credit Rating Co. Fitch is Fitch IBCA, Inc. Investment grade securities are fixed-income securities rated Baa and above by Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by Alliance to be of equivalent quality. Lower-rated securities are fixed-income securities rated Ba or below by Moody's or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be of equivalent quality, and are commonly referred to as "junk bonds." Prime commercial paper is commercial paper rated Prime 1 by Moody's or A-1 or higher by S&P or, if not rated, issued by companies that have an outstanding debt issue rated Aa or higher by Moody's or AA or higher by S&P. Qualifying bank deposits are certificates of deposit, bankers' acceptances and interest-bearing savings deposits of banks having total assets of more than $1 billion and which are members of the Federal Deposit Insurance Corporation. Rule 144A securities are securities that may be resold pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). Depositary receipts include American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and other types of depositary receipts. Commission is the Securities and Exchange Commission. 1940 Act is the Investment Company Act of 1940, as amended. Code is the Internal Revenue Code of 1986, as amended. Exchange is the New York Stock Exchange. 10 - -------------------------------------------------------------------------------- DESCRIPTION OF THE FUNDS - -------------------------------------------------------------------------------- Except as noted, (i) the Funds' investment objectives are "fundamental" and cannot be changed without shareholder vote, and (ii) the Funds' investment policies are not fundamental and thus can be changed without a shareholder vote. No Fund will change a non-fundamental objective or policy without notifying its shareholders. There is no guarantee that any Fund will achieve its investment objective. INVESTMENT OBJECTIVES AND POLICIES DOMESTIC STOCK FUNDS The Domestic Stock Funds have been designed to offer investors seeking capital appreciation a range of alternative approaches to investing in the U.S. equity markets. The Alliance Fund The Alliance Fund, Inc. ("Alliance Fund") is a diversified investment company that seeks long-term growth of capital and income primarily through investment in common stocks. The Fund normally invests substantially all of its assets in common stocks that Alliance believes will appreciate in value, but it may invest in other types of securities such as convertible securities, high grade instruments, U.S. Government securities and high quality, short-term obligations such as repurchase agreements, bankers' acceptances and domestic certificates of deposit, and may invest without limit in foreign securities. While the diversification and generally high quality of the Fund's investments cannot prevent fluctuations in market values, they tend to limit investment risk and contribute to achieving the Fund's objective. The Fund generally does not effect portfolio transactions in order to realize short-term trading profits or exercise control. The Fund may also: (i) make secured loans of its portfolio securities equal in value up to 25% of its total assets to brokers, dealers and financial institutions; (ii) enter into repurchase agreements of up to one week in duration with commercial banks, but only if those agreements together with any restricted securities and any securities which do not have readily available market quotations do not exceed 10% of its net assets; and (iii) write exchange-traded covered call options with respect to up to 25% of its total assets. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Growth Fund Alliance Growth Fund ("Growth Fund") is a diversified investment company that seeks long-term growth of capital. Current income is only an incidental consideration. The Fund seeks to achieve its objective by investing primarily in equity securities of companies with favorable earnings outlooks and whose long-term growth rates are expected to exceed that of the U.S. economy over time. The Fund's investment objective is not fundamental. The Fund may also invest up to 25% of its total assets in lower-rated fixed-income and convertible securities. See "Risk ConsiderationsSecurities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund generally will not invest in securities 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. However, from time to time, the Fund may invest in securities rated in the lowest grades (i.e., C by Moody's or D or equivalent by S&P, Duff & Phelps or Fitch), or securities Alliance judges to be of comparable investment quality, if there are prospects for an upgrade or a favorable conversion into equity securities. If the credit rating of a security held by the Fund falls below its rating at the time of purchase (or Alliance determines that the quality of such security has so deteriorated), the Fund may continue to hold the security if such investment is considered appropriate under the circumstances. The Fund may also: (i) invest in "zero-coupon" bonds and "payment-in-kind" bonds; (ii) invest in foreign securities, although the Fund will not generally invest more than 15% of its total assets in foreign securities; (iii) invest in securities that are not publicly traded, including Rule 144A securities; (iv) buy or sell foreign currencies, options on foreign currencies, foreign currency futures contracts (and related options) and deal in forward foreign exchange contracts; (v) lend portfolio securities amounting to not more than 25% of its total assets; (vi) enter into repurchase agreements of up to 25% of its total assets and purchase and sell securities on a forward commitment basis; (vii) buy and sell stock index futures contracts and buy and sell options on those contracts and on stock indices; (viii) purchase and sell futures contracts, options thereon and options with respect to U.S. Treasury securities; (ix) write covered call and put options on securities it owns or in which it may invest; and (x) purchase and sell put and call options. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Premier Growth Fund Alliance Premier Growth Fund, Inc. ("Premier Growth Fund") is a diversified investment company that seeks long-term growth of capital by investing predominantly in the equity securities of a limited number of large, carefully selected, high-quality U.S. companies that are judged likely to achieve superior earnings growth. Normally, about 40 companies will be represented in the Fund's portfolio, with the 25 most highly regarded of these companies usually constituting approximately 70% of the Fund's net assets. The Fund is thus atypical from most equity mutual funds in its focus on a relatively small number of intensively researched companies and is designed for those seeking to accumulate capital over time with less volatility than that associated with investment in smaller companies. As a matter of fundamental policy, the Fund normally invests at least 85% of its total assets in the equity securities of U.S. companies. These are companies (i) organized under U.S. law that have their principal office in the U.S., and (ii) the equity 11 securities of which are traded principally in the U.S. Alliance's investment strategy for the Fund emphasizes stock selection and investment in the securities of a limited number of issuers. Alliance relies heavily upon the fundamental analysis and research of its large internal research staff, which generally follows a primary research universe of more than 600 companies that have strong management, superior industry positions, excellent balance sheets and superior earnings growth prospects. An emphasis is placed on identifying companies whose substantially above average prospective earnings growth is not fully reflected in current market valuations. In managing the Fund, Alliance seeks to utilize market volatility judiciously (assuming no change in company fundamentals), striving to capitalize on apparently unwarranted price fluctuations, both to purchase or increase positions on weakness and to sell or reduce overpriced holdings. The Fund normally remains nearly fully invested and does not take significant cash positions for market timing purposes. During market declines, while adding to positions in favored stocks, the Fund becomes somewhat more aggressive, gradually reducing the number of companies represented in its portfolio. Conversely, in rising markets, while reducing or eliminating fully valued positions, the Fund becomes somewhat more conservative, gradually increasing the number of companies represented in its portfolio. Alliance thus seeks to gain positive returns in good markets while providing some measure of protection in poor markets. Alliance expects the average market capitalization of companies represented in the Fund's portfolio normally to be in the range, or in excess, of the average market capitalization of companies comprising the "S&P 500" (the Standard & Poor's 500 Composite Stock Price Index, a widely recognized unmanaged index of market activity). The Fund may also: (i) invest up to 20% of its net assets in convertible securities of companies whose common stocks are eligible for purchase by it; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest up to 15% of its total assets in securities of foreign issuers whose common stocks are eligible for purchase by it; (iv) purchase and sell exchange-traded index options and stock index futures contracts; and (v) write covered exchange-traded call options on common stocks, unless as a result, the amount of its securities subject to call options would exceed 15% of its total assets, and purchase and sell exchange-traded call and put options on common stocks written by others, but the total cost of all options held by the Fund (including exchange-traded index options) may not exceed 10% of its total assets. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." The Fund will not write put options. Alliance Technology Fund Alliance Technology Fund, Inc. ("Technology Fund") is a diversified investment company that emphasizes growth of capital and invests for capital appreciation, and only incidentally for current income. The Fund may seek income by writing listed call options. The Fund invests primarily in securities of companies expected to benefit from technological advances and improvements (i.e., companies that use technology extensively in the development of new or improved products or processes). The Fund will normally have at least 80% of its assets invested in the securities of these companies. The Fund normally will have substantially all its assets invested in equity securities, but it also invests in debt securities offering an opportunity for price appreciation. The Fund will invest in listed and unlisted securities and U.S. and foreign securities, but it will not purchase a foreign security if as a result 10% or more of the Fund's total assets would be invested in foreign securities. The Fund's policy is to invest in any company and industry and in any type of security with potential for capital appreciation. It invests in well-known and established companies and in new and unseasoned companies. The Fund may also: (i) write and purchase exchange-listed call options and purchase listed put options, including exchange-traded index put options; (ii) invest up to 10% of its total assets in warrants; (iii) invest in restricted securities and in other assets having no ready market if as a result no more than 10% of the Fund's net assets are invested in such securities and assets; (iv) lend portfolio securities equal in value to not more than 30% of the Fund's total assets; and (v) invest up to 10% of its total assets in foreign securities. For additional information on the use, risks and costs of the policies and practices see "Additional Investment Practices." Alliance Quasar Fund Alliance Quasar Fund, Inc. ("Quasar Fund") is a diversified investment company that seeks growth of capital by pursuing aggressive investment policies. It invests for capital appreciation and only incidentally for current income. The selection of securities based on the possibility of appreciation cannot prevent loss in value. Moreover, because the Fund's investment policies are aggressive, an investment in the Fund is risky and investors who want assured income or preservation of capital should not invest in the Fund. The Fund invests in any company and industry and in any type of security with potential for capital appreciation. It invests in well-known and established companies and in new and unseasoned companies. When selecting securities, Alliance considers the economic and political outlook, the values of specific securities relative to other investments, trends in the determinants of corporate profits and management capability and practices. The Fund invests principally in equity securities, but it also invests to a limited degree in non-convertible bonds and preferred stocks. The Fund invests in listed and unlisted U.S. and foreign securities. The Fund periodically invests in special situations, which occur when the securities of a company are expected to appreciate due to a development particularly or uniquely applicable to that company and regardless of general business conditions or movements of the market as a whole. The Fund may also: (i) invest in restricted securities and in other assets having no ready market, but not more than 10% 12 of its total assets may be invested in such securities or assets; (ii) make short sales of securities "against the box," but not more than 15% of its net assets may be deposited on short sales; and (iii) write call options and purchase and sell put and call options written by others. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." GLOBAL STOCK FUNDS The Global Stock Funds have been designed to enable investors to participate in the potential for long-term capital appreciation available from investment in foreign securities. Alliance International Fund Alliance International Fund ("International Fund") is a diversified investment company that seeks a total return on its assets from long-term growth of capital and from income primarily through a broad portfolio of marketable securities of established non-U.S. companies, companies participating in foreign economies with prospects for growth, including U.S. companies having their principal activities and interests outside the U.S. and foreign government securities. Normally, more than 80% of the Fund's assets will be invested in such issuers. The Fund expects to invest primarily in common stocks of established non-U.S. companies that Alliance believes have potential for capital appreciation or income or both, but the Fund is not required to invest exclusively in common stocks or other equity securities, and it may invest in any other type of investment grade security, including convertible securities, 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 such countries. In this regard, at December 31, 1997, approximately 20% of the Fund's assets were invested in securities of Japanese issuers. The Fund may invest in companies, wherever organized, that Alliance judges have their principal activities and interests outside the U.S. These companies may be located in developing countries, which involves exposure to economic structures that are generally less diverse and mature, and to political systems which can be expected to have less stability, than those of developed countries. The Fund currently does not intend to invest more than 10% of its total assets in companies in, or governments of, developing countries. The Fund may also: (i) purchase or sell forward foreign currency exchange contracts; (ii) write, sell and purchase U.S. or foreign exchange-listed put and call options, including exchange-traded index options; (iii) enter into financial futures contracts, including contracts for the purchase or sale for future delivery of foreign currencies and stock index futures, and purchase and write put and call options on futures contracts traded on U.S. or foreign exchanges or over-the-counter; (iv) purchase and write put options on foreign currencies traded on securities exchanges or boards of trade or over-the-counter; (v) lend portfolio securities equal in value to not more than 30% of its total assets; and (vi) enter into repurchase agreements of up to seven days' duration, provided that not more than 10% of the Fund's total assets would be so invested. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Worldwide Privatization Fund Alliance Worldwide Privatization Fund, Inc. ("Worldwide Privatization Fund") is a non-diversified investment company that seeks long-term capital appreciation. As a fundamental policy, the Fund invests at least 65% of its total assets in equity securities issued by enterprises that are undergoing, or have undergone, privatization (as described below), although normally significantly more of its assets will be invested in such securities. The balance of its investments will include securities of companies believed by Alliance to be beneficiaries of privatizations. The Fund is designed for investors desiring to take advantage of investment opportunities, historically inaccessible to U.S. individual investors, that are created by privatizations of state enterprises in both established and developing economies, including those in Western Europe and Scandinavia, Australia, New Zealand, Latin America, Asia and Eastern and Central Europe and, to a lesser degree, Canada and the United States. The Fund's investments in enterprises undergoing privatization may comprise three distinct situations. First, the Fund may invest in the initial offering of publicly traded equity securities (an "initial equity offering") of a government- or state-owned or controlled company or enterprise (a "state enterprise"). Secondly, the Fund may purchase securities of a current or former state enterprise following its initial equity offering. Finally, the Fund may make privately negotiated purchases of stock or other equity interests in a state enterprise that has not yet conducted an initial equity offering. Alliance believes that substantial potential for capital appreciation exists as privatizing enterprises rationalize their management structures, operations and business strategies in order to compete efficiently in a market economy, and the Fund will thus emphasize investments in such enterprises. The Fund diversifies its investments among a number of countries and normally invests in issuers based in at least four, and usually considerably more, countries. No more than 15% of the Fund's total assets, however, will be invested in issuers in any one foreign country, except that the Fund may invest up to 30% of its total assets in issuers in any one of France, Germany, Great Britain, Italy and Japan. The Fund may invest all of its assets within a single region of the world. To the extent that the Fund's assets are invested within any one region, the Fund may be subject to any special risks that may be associated with that region. Privatization is a process through which the ownership and control of companies or assets changes in whole or in part from the public sector to the private sector. Through 13 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 so as to secure the issuer's successful transition to private sector ownership. Additionally, these enterprises often dominate their local markets and typically have the potential for significant managerial and operational efficiency gains. Although the Fund anticipates that it will not concentrate its investments in any industry, it is permitted to invest more than 25% of its total assets in issuers whose primary business activity is that of national commercial banking. Prior to so concentrating, however, the Fund's Directors must determine that its ability to achieve its investment objective would be adversely affected if it were not permitted to concentrate. The staff of the Commission is of the view that registered investment companies may not, absent shareholder approval, change between concentration and non-concentration in a single industry. The Fund disagrees with the staff's position but has undertaken that it will not concentrate in the securities of national commercial banks until, if ever, the issue is resolved. If the Fund were to invest more than 25% of its total assets in national commercial banks, the Fund's performance could be significantly influenced by events or conditions affecting this industry, which is subject to, among other things, increases in interest rates and deteriorations in general economic conditions, and the Fund's investments may be subject to greater risk and market fluctuation than if its portfolio represented a broader range of investments. The Fund may invest up to 35% of its total assets in debt securities and convertible debt securities of issuers whose common stocks are eligible for purchase by the Fund. The Fund may maintain not more than 5% of its net assets in lower-rated securities. See "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain a non-convertible security that is downgraded below C or determined by Alliance to have undergone similar credit quality deterioration following purchase. The Fund may also: (i) invest up to 20% of its total assets in rights or warrants; (ii) write covered put and call options and purchase put and call options on securities of the types in which it is permitted to invest and on exchange-traded index options; (iii) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including any index of U.S. Government securities, foreign government securities, or common stock and may purchase and write options on future contracts; (iv) purchase and write put and call options on foreign currencies for hedging purposes; (v) purchase or sell forward contracts; (vi) enter in forward commitments for the purchase or sale of securities; (vii) enter into standby commitment agreements; (viii) enter into currency swaps for hedging purposes; (ix) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (x) make short sales of securities or maintain a short position; and (xi) make secured loans of its portfolio securities not in excess of 30% of its total assets to entities with which it can enter into repurchase agreements. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance New Europe Fund Alliance New Europe Fund, Inc. ("New Europe Fund") is a non-diversified investment company that seeks long-term capital appreciation through investment primarily in the equity securities of companies based in Europe. The Fund intends to invest substantially all of its assets in the equity securities of European companies and has a fundamental policy of normally investing at least 65% of its total assets in such securities. Up to 35% of its total assets may be invested in high quality U.S. dollar or foreign currency denominated fixed-income securities issued or guaranteed by European governmental entities, or by European or multinational companies or supranational organizations. Alliance believes that the quickening pace of economic integration and political change in Europe creates the potential for many European companies to experience rapid growth and that the emergence of new market economies in Europe and the broadening and strengthening of other European economies may significantly accelerate economic development. The Fund will invest in companies that Alliance believes possess rapid growth potential. Thus, the Fund will emphasize investments in larger, established companies, but will also invest 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 investment opportunities among such companies and, as such become available, within the former "east bloc," although the Fund will not invest more than 20% of its total assets in issuers based therein, or more than 10% of its total assets in issuers based in any one such country. The Fund diversifies its investments among a number of European countries and, under normal circumstances, will invest in companies based in at least three such countries. Subject to the foregoing and to the limitation on investment in any one former "east bloc" country, the Fund may invest without limit in a single European country. While the Fund does not intend to concentrate its investments in a single country, at times 25% or more of its assets may be invested in issuers located in a single country. During such times, the Fund would 14 be subject to a correspondingly greater risk of loss due to adverse political or regulatory developments, or an economic downturn, within that country. In this regard, at December 31, 1997, approximately 24% of the Fund's assets were invested in securities of issuers in the United Kingdom. The Fund may also: (i) invest up to 10% of its total assets in securities for which there is no ready market; (ii) invest up to 20% of its total assets in warrants and rights to purchase equity securities of European companies; (iii) invest in depositary receipts or other securities convertible into securities of companies based in European countries, debt securities of supranational entities denominated in the currency of any European country, debt securities denominated in European Currency Units of an issuer in a European country (including supranational issuers) and "semi-governmental securities"; (iv) purchase and sell forward contracts; (v) write, sell and purchase exchange-traded put and call options, including exchange-traded index options; (vi) enter into financial futures contracts, including contracts for the purchase or sale for future delivery of foreign currencies and futures contracts based on stock indices, and purchase and write options on futures contracts; (vii) purchase and write put options on foreign currencies traded on securities exchanges or boards of trade or over-the-counter; (viii) make secured loans of portfolio securities not in excess of 30% of its total assets to brokers, dealers and financial institutions; (ix) enter into forward commitments for the purchase or sale of securities; and (x) enter into standby commitment agreements. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance All-Asia Investment Fund Alliance All-Asia Investment Fund, Inc. ("All-Asia Investment Fund") is a non-diversified investment company whose investment objective is to seek long-term capital appreciation. In seeking to achieve its investment objective, the Fund will invest at least 65% of its total assets in equity securities (for the purposes of this investment policy, rights, warrants and options to purchase common stocks are not deemed to be equity securities), preferred stocks and equity-linked debt securities issued by Asian companies. The Fund may invest up to 35% of its total assets in debt securities issued or guaranteed by Asian companies or by Asian governments, their agencies or instrumentalities. The Fund may also invest in securities issued by non-Asian issuers, provided that the Fund will invest at least 80% of its total assets in securities issued by Asian companies and the Asian debt securities referred to above. The Fund expects to invest, from time to time, a significant portion, but less than 50%, of its assets in equity securities of Japanese companies. In the past decade, Asian countries generally have experienced a high level of real economic growth due to political and economic changes, including foreign investment and reduced government intervention in the economy. Alliance believes that certain conditions exist in Asian countries which create the potential for continued rapid economic growth. These conditions include favorable demographics and competitive wage rates, increasing levels of foreign direct investment, rising per capita incomes and consumer demand, a high savings rate and numerous privatization programs. Asian countries are also becoming more industrialized and are increasing their intra-Asian exports while reducing their dependence on Western export demand. Alliance believes that these conditions are important to the long-term economic growth of Asian countries. As the economies of many Asian countries move through the "emerging market" stage, thus increasing the supply of goods, services and capital available to less developed Asian markets and helping to spur economic growth in those markets, the potential is created for many Asian companies to experience rapid growth. In addition, many Asian companies the securities of which are listed on exchanges in more developed Asian countries will be participants in the rapid economic growth of the lesser developed countries. These companies generally offer the advantages of more experienced management and more developed market regulation. As their economies have grown, the securities markets in Asian countries have also expanded. New exchanges have been created and the number of listed companies, annual trading volume and overall market capitalization have increased significantly. Additionally, new markets continue to open to foreign investments. For example, South Korea and India have recently relaxed investment restrictions and Vietnamese direct investments have recently become available to U.S. investors. The Fund also offers investors the opportunity to access relatively restricted markets. Alliance believes that investment opportunities in Asian countries will continue to expand. The Fund will invest in companies believed to possess rapid growth potential. Thus, the Fund will invest in smaller, emerging companies, but will also invest in larger, more established companies in such growing economic sectors as capital goods, telecommunications and consumer services. The Fund will invest in investment grade debt securities, except that the Fund may maintain not more than 5% of its net assets in lower-rated securities and lower-rated loans and other lower-rated direct debt instruments. See "Risk Considerations--Securities Ratings," "--Investment in Lower-Rated Fixed-Income Securities" and Appendix C in the Fund's Statement of Additional Information for a description of such ratings. The Fund will not retain a security that is downgraded below C or determined by Alliance to have undergone similar credit quality deterioration following purchase. The Fund may also: (i) invest up to 25% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii) invest in depositary receipts, instruments of supranational entities denominated in the currency of any country, securities of multinational companies and "semi-governmental securities;" (iv) invest up to 25% of its net assets in equity-linked debt securities with the objective of realizing capital appreciation; (v) invest up to 25% of its net assets in loans and other direct debt instruments; (vi) write 15 covered put and call options on securities of the types in which it is permitted to invest and on exchange-traded index options; (vii) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including any index of U.S. Government securities, securities issued by foreign government entities, or common stock and may purchase and write options on future contracts; (viii) purchase and write put and call options on foreign currencies for hedging purposes; (ix) purchase or sell forward contracts; (x) enter into interest rate swaps and purchase or sell interest rate caps and floors; (xi) enter into forward commitments for the purchase or sale of securities; (xii) enter into standby commitment agreements; (xiii) enter into currency swaps for hedging purposes; (xiv) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (xv) make short sales of securities or maintain a short position, in each case only if "against the box;" and (xvi) make secured loans of its portfolio securities not in excess of 30% of its total assets to entities with which it can enter into repurchase agreements. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Global Small Cap Fund Alliance Global Small Cap Fund, Inc. ("Global Small Cap Fund") is a diversified investment company that seeks long-term growth of capital through investment in a global portfolio of the equity securities of selected companies with relatively small market capitalization. The Fund's portfolio emphasizes companies with market capitalizations that would have placed them (when purchased) in about the smallest 20% by market capitalization of actively traded U.S. companies, or market capitalizations of up to about $1.5 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 issuers, and these issuers are located in at least three countries, one of which may be the U.S. Up to 35% of the Fund's total assets may be invested in securities of companies whose market capitalizations exceed the Fund's size standard. The Fund's portfolio securities may be listed on a U.S. or foreign exchange or traded over-the-counter. Alliance believes that smaller capitalization issuers often have sales and earnings growth rates exceeding those of larger companies, and that these growth rates tend to cause more rapid share price appreciation. Investing in smaller capitalization stocks, however, involves greater risk than is associated with larger, more established companies. For example, smaller capitalization companies often have limited product lines, markets, or financial resources. They may be dependent for management on one or a few key persons, and can be more susceptible to losses and risks of bankruptcy. Their securities may be thinly traded (and therefore have to be sold at a discount from current market prices or sold in small lots over an extended period of time), may be followed by fewer investment research analysts and may be subject to wider price swings and thus may create a greater chance of loss than when investing in securities of larger capitalization companies. Transaction costs in small capitalization stocks may be higher than in those of larger capitalization companies. The Fund may also: (i) invest up to 10% of its total assets in securities for which there is no ready market; (ii) invest up to 20% of its total assets in warrants to purchase equity securities; (iii) invest in depositary receipts or other securities representing securities of companies based in countries other than the U.S.; (iv) purchase or sell forward foreign currency contracts; (v) write and purchase exchange-traded call options and purchase exchange-traded put options, including put options on market indices; and (vi) make secured loans of portfolio securities not in excess of 30% of its total assets to brokers, dealers and financial institutions. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Global Environment Fund Alliance Global Environment Fund, Inc. ("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. Until October 3, 1997, the Fund operated as a closed-end investment company, and its common stock (which then comprised a single class) was listed on the Exchange. The Fund invests in two categories of Eligible Companies--"Environmental Companies" and "Beneficiary Companies." Environmental Companies are those 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. Under normal circumstances, the Fund invests at least 65% of its total assets in equity securities of Environmental Companies. Beneficiary Companies are those 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. Examples of such companies could be companies that anticipate the demand for plastic substitutes, aerosol substitutes, alternative fuels and processes that generate less hazardous waste. In this regard, the Fund may invest in an issuer 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, 16 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 is generally 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 which 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. As of December 31, 1997, approximately 86% of the Fund's net assets were invested in equity securities of U.S. companies. The Fund may also: (i) invest up to 20% of its total assets in warrants to purchase equity securities to the extent consistent with its investment objective; (ii) invest in depositary receipts; (iii) purchase and write put and call options on foreign currencies for hedging purposes; (iv) enter into forward foreign currency transactions for hedging purposes; (v) invest in currency futures and options on such futures for hedging purposes; and (vi) make secured loans of its portfolio securities not in excess of 30% of its total assets. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." TOTAL RETURN FUNDS The Total Return Funds have been designed to provide a range of investment alternatives to investors seeking both growth of capital and current income. Alliance Strategic Balanced Fund Alliance Strategic Balanced Fund ("Strategic Balanced Fund") is a diversified investment company that seeks a high long-term total return by investing in a combination of equity and debt securities. The portion of the Fund's assets invested in each type of security varies in accordance with economic conditions, the general level of common stock prices, interest rates and other relevant considerations, including the risks associated with each investment medium. The Fund's investment objective is not fundamental. The Fund's equity securities will generally consist of dividend-paying common stocks and other equity securities of companies with favorable earnings outlooks and long-term growth rates that Alliance expects will exceed that of the U.S. economy. The Fund's debt securities may include U.S. Government securities and securities issued by private corporations. The Fund may also invest in mortgage-backed securities, adjustable rate securities, asset-backed securities and so-called "zero-coupon" bonds and "payment-in-kind" bonds. As a fundamental policy, the Fund will invest at least 25% of its total assets in fixed-income securities, which for this purpose include debt securities, preferred stocks and that portion of the value of convertible securities that is attributable to the fixed-income characteristics of those securities. The Fund's debt securities will generally be of investment grade. See "Risk Considerations--Securities Ratings" and "Investment in Lower-Rated Fixed-Income Securities." In the event that the rating of any debt securities held by the Fund falls below investment grade, the Fund will not be obligated to dispose of such obligations and may continue to hold them if considered appropriate under the circumstances. The Fund may also: (i) invest in foreign securities, although the Fund will not generally invest more than 15% of its total assets in foreign securities; (ii) invest, without regard to this 15% limit, in Eurodollar CDs, which are dollar-denominated certificates of deposit issued by foreign branches of U.S. banks that are not insured by any agency or instrumentality of the U.S. Government; (iii) write covered call and put options on securities it owns or in which it may invest; (iv) buy and sell put and call options and buy and sell combinations of put and 17 call options on the same underlying securities; (v) lend portfolio securities amounting to not more than 25% of its total assets; (vi) enter into repurchase agreements on up to 25% of its total assets; (vii) purchase and sell securities on a forward commitment basis; (viii) buy or sell foreign currencies, options on foreign currencies, foreign currency futures contracts (and related options) and deal in forward foreign exchange contracts; (ix) buy and sell stock index futures contracts and buy and sell options on those contracts and on stock indices; (x) purchase and sell futures contracts, options thereon and options with respect to U.S. Treasury securities; and (xi) invest in securities that are not publicly traded, including Rule 144A securities. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Balanced Shares Alliance Balanced Shares, Inc. ("Balanced Shares") is a diversified investment company that seeks a high return through a combination of current income and capital appreciation. Although the Fund's investment objective is not fundamental, the Fund is a "balanced fund" as a matter of fundamental policy. The Fund will not purchase a security if as a result less than 25% of its total assets will be in fixed-income senior securities (including short- and long-term debt securities, preferred stocks, and convertible debt securities and convertible preferred stocks to the extent that their values are attributable to their fixed-income characteristics). Subject to these restrictions, the percentage of the Fund's assets invested in each type of security will vary. The Fund's assets are invested in U.S. Government securities, bonds, senior debt securities and preferred and common stocks in such proportions and of such type as are deemed best adapted to the current economic and market outlooks. The Fund may invest up to 15% of the value of its total assets in foreign equity and fixed-income securities eligible for purchase by the Fund under its investment policies described above. See "Risk Considerations--Foreign Investment." The Fund may also: (i) enter into contracts for the purchase or sale for future delivery of foreign currencies; and (ii) purchase and write put and call options on foreign currencies and enter into forward foreign currency exchange contracts for hedging purposes. Subject to market conditions, the Fund may also seek to realize income by writing covered call options listed on a domestic exchange. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Income Builder Fund Alliance Income Builder Fund, Inc. ("Income Builder Fund") is a non-diversified investment company that seeks an attractive level of current income and long-term growth of income and capital by investing principally in fixed-income securities and dividend-paying common stocks. Its investments in equity securities emphasize common stocks of companies with a historical or projected pattern of paying rising dividends. Normally, at least 65% of the Fund's total assets are invested in income-producing securities. The Fund may vary the percentage of assets invested in any one type of security based upon Alliance's evaluation as to the appropriate portfolio structure for achieving the Fund's investment objective, although Alliance currently maintains approximately 60% of the Fund's net assets in fixed-income securities and 40% in equity securities. The Fund may invest in fixed-income securities of domestic and foreign issuers, including U.S. Government securities and repurchase agreements pertaining thereto, corporate fixed-income securities of U.S. issuers, qualifying bank deposits and prime commercial paper. The Fund may maintain up to 35% of its net assets in lower-rated securities. See "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain a non-convertible security that is downgraded below CCC or determined by Alliance to have undergone similar credit quality deterioration following purchase. Foreign securities in which the Fund invests may include fixed-income securities of foreign corporate and governmental issuers, denominated in U.S. Dollars, and equity securities of foreign corporate issuers, denominated in foreign currencies or in U.S. Dollars. The Fund will not invest more than 10% of its net assets in equity securities of foreign issuers nor more than 15% of its total assets in issuers of any one foreign country. See "Risk Considerations--Foreign Investment." The Fund may also: (i) invest up to 5% of its net assets in rights or warrants; (ii) invest in depositary receipts and U.S. Dollar denominated securities issued by supranational entities; (iii) write covered put and call options and purchase put and call options on securities of the types in which it is permitted to invest that are exchange-traded; (iv) purchase and sell exchange-traded options on any securities index composed of the types of securities in which it may invest; (v) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including any index of U.S. Government securities, foreign government securities, corporate fixed income securities, or common stock, and purchase and write options on future contracts; (vi) purchase and write put and call options on foreign currencies and enter into forward contracts for hedging purposes; (vii) enter into interest rate swaps and purchase or sell interest rate caps and floors; (viii) enter into forward commitments for the purchase or sale of securities; (ix) enter into standby commitment agreements; (x) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (xi) make short sales of securities or maintain a short position as described below under "Additional Investment Policies and PracticesShort Sales;" and (xii) make secured loans of its portfolio securities not in excess of 20% of its total assets to brokers, dealers and financial institutions. For additional information on the use, risks and costs of these policies and practices see "Additional Investment Practices." Alliance Utility Income Fund Alliance Utility Income Fund, Inc. ("Utility Income Fund") is a diversified investment company that seeks current income and 18 capital appreciation by investing primarily in equity and fixed-income securities of companies in the utilities industry. The Fund may invest in securities of both U.S. and foreign issuers, although no more than 15% of the Fund's total assets will be invested in issuers in any one foreign country. The utilities industry consists of companies engaged in (i) the manufacture, production, generation, provision, transmission, sale and distribution of gas and electric energy, and communications equipment and services, including telephone, telegraph, satellite, microwave and other companies providing communication facilities for the public, or (ii) the provision of other utility or utility-related goods and services, including, but not limited to, entities engaged in water provision, cogeneration, waste disposal system provision, solid waste electric generation, independent power producers and non-utility generators. The Fund is designed to take advantage of the characteristics and historical performance of securities of utility companies, many of which pay regular dividends and increase their common stock dividends over time. As a fundamental policy, the Fund normally invests at least 65% of its total assets in securities of companies in the utilities industry. The Fund considers a company to be in the utilities industry if, during the most recent twelve-month period, at least 50% of the company's gross revenues, on a consolidated basis, were derived from its utilities activities. At least 65% of the Fund's total assets are invested in income-producing securities, but there is otherwise no limit on the allocation of the Fund's investments between equity securities and fixed-income securities. The Fund may maintain up to 35% of its net assets in lower-rated securities. See "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain a security that is downgraded below B or determined by Alliance to have undergone similar credit quality deterioration following purchase. The United States utilities industry has experienced significant changes in recent years. Electric utility companies in general have been favorably affected by lower fuel costs, the full or near completion of major construction programs and lower financing costs. In addition, many utility companies have generated cash flows in excess of current operating expenses and construction expenditures, permitting some degree of diversification into unregulated businesses. Regulatory changes with respect to nuclear and conventionally fueled generating facilities, however, could increase costs or impair the ability of such electric utilities to operate such facilities, thus reducing their ability to service dividend payments with respect to the securities they issue. Furthermore, rates of return of utility companies generally are subject to review and limitation by state public utilities commissions and tend to fluctuate with marginal financing costs. Rate changes, however, ordinarily lag behind the changes in financing costs, and thus can favorably or unfavorably affect the earnings or dividend pay-outs on utilities stocks depending upon whether such rates and costs are declining or rising. Gas transmission companies, gas distribution companies and telecommunications companies are also undergoing significant changes. Gas utilities have been adversely affected by declines in the prices of alternative fuels, and have also been affected by oversupply conditions and competition. Telephone utilities are still experiencing the effects of the break-up of American Telephone & Telegraph Company, including increased competition and rapidly developing technologies with which traditional telephone companies now compete. Although there can be no assurance that increased competition and other structural changes will not adversely affect the profitability of such utilities, or that other negative factors will not develop in the future, in Alliance's opinion, increased competition and change may provide better positioned utility companies with opportunities for enhanced profitability. Utility companies historically have been subject to the risks of increases in fuel and other operating costs, high interest costs, costs associated with compliance with environmental and nuclear safety regulations, service interruptions, economic slowdowns, surplus capacity, competition and regulatory changes. There can also be no assurance that regulatory policies or accounting standards changes will not negatively affect utility companies' earnings or dividends. Utility companies are subject to regulation by various authorities and may be affected by the imposition of special tariffs and changes in tax laws. To the extent that rates are established or reviewed by governmental authorities, utility companies are subject to the risk that such authorities will not authorize increased rates. Because of the Fund's policy of concentrating its investments in utility companies, the Fund is more susceptible than most other mutual funds to economic, political or regulatory occurrences affecting the utilities industry. Foreign utility companies, like those in the U.S., are generally subject to regulation, although such regulations may or may not be comparable to domestic regulations. Foreign utility companies in certain countries may be more heavily regulated by their respective governments than utility companies located in the U.S. and, as in the U.S., generally are required to seek government approval for rate increases. In addition, because many foreign utility companies use fuels that cause more pollution than those used in the U.S., such utilities may yet be required to invest in pollution control equipment. Foreign utility regulatory systems vary from country to country and may evolve in ways different from regulation in the U.S. The percentage of the Fund's assets invested in issuers of particular countries will vary. See "Risk Considerations--Foreign Investment." The Fund may invest up to 35% of its total assets in equity and fixed-income securities of domestic and foreign corporate and governmental issuers other than utility companies, including U.S. Government securities and repurchase agreements pertaining thereto, foreign government securities, corporate fixed-income securities of domestic issuers, corporate fixed-income securities of foreign issuers denominated in foreign currencies or in U.S. dollars (in each case including fixed-income securities of an issuer in one country denominated in the currency of another country), qualifying bank deposits and prime commercial paper. 19 The Fund may also: (i) invest up to 30% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest in depositary receipts, securities of supranational entities denominated in the currency of any country, securities denominated in European Currency Units and "semi-governmental securities;" (iv) write covered put and call options and purchase put and call options on securities of the types in which it is permitted to invest that are exchange-traded and over-the-counter; (v) purchase and sell exchange-traded options on any securities index composed of the types of securities in which it may invest; (vi) enter into contracts for the purchase or sale for future delivery of fixed-income securities or foreign currencies, or contracts based on financial indices, including an index of U.S. Government securities, foreign government securities, corporate fixed-income securities, or common stock, and may purchase and write options on futures contracts; (vii) purchase and write put and call options on foreign currencies traded on U.S. and foreign exchanges or over-the-counter for hedging purposes; (viii) purchase or sell forward contracts; (ix) enter into interest rate swaps and purchase or sell interest rate caps and floors; (x) enter in forward commitments for the purchase or sale of securities; (xi) enter into standby commitment agreements; (xii) enter into repurchase agreements pertaining to U.S. Government securities with member banks of the Federal Reserve System or primary dealers in such securities; (xiii) make short sales of securities or maintain a short position as described below under "Additional Investment Practices--Short Sales;" and (xiv) make secured loans of its portfolio securities not in excess of 20% of its total assets to brokers, dealers and financial institutions. For additional information on the use, risk and costs of these policies and practices, see "Additional Investment Practices." Alliance Growth and Income Fund Alliance Growth and Income Fund, Inc. ("Growth and Income Fund") is a diversified investment company that seeks appreciation through investments primarily in dividend-paying common stocks of good quality, although it is permitted to invest in fixed-income securities and convertible securities. The Fund may also try to realize income by writing covered call options listed on domestic securities exchanges. The Fund also invests in foreign securities. Since the purchase of foreign securities entails certain political and economic risks, the Fund has restricted its investments in securities in this category to issues of high quality. The Fund may also purchase and sell financial forward and futures contracts and options thereon for hedging purposes. For additional information on the use, rights and costs of these policies and practices, see "Additional Investment Practices." Alliance Real Estate Investment Fund Alliance Real Estate Investment Fund, Inc. ("Real Estate Investment Fund") is a diversified investment company that seeks a total return on its assets 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. Under normal circumstances, at least 65% of the Fund's total assets will be invested in equity securities of real estate investment trusts ("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 therein. The equity securities in which the Fund will invest for this purpose consist of 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 ("REMIC") certificates and collateralized mortgage obligations ("CMOs") and (b) short-term investments. These instruments are described below. The risks associated with the Fund's transactions in REMICs, CMOs and other types of mortgage-backed securities, which are considered to be derivative securities, may include some or all of the following: market risk, leverage and volatility risk, correlation risk, credit risk and liquidity and valuation risk. See "Risk Considerations" for a description of these and other risks. As to any investment in 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 which 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 which 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 20 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. Investment Process for Real Estate Equity Securities. 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 added 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. In implementing the Fund's research and investment process, Alliance will avail itself of the consulting services of CB Commercial Real Estate Group, Inc. ("CBC"), 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 activities (CBC in August of 1997 acquired Koll Management Services ("Koll"), which previously provided these consulting services to Alliance). In 1996, CBC (and Koll, on a combined basis) completed 25,000 sale and lease transactions, managed over 4,100 client properties, created over $3.5 billion in mortgage originations, and completed over 2,600 appraisal and consulting assignments. In addition, they advised and managed for institutions over $4 billion in real estate investments. As consultant to Alliance, CBC provides access to its proprietary model, REIToScore, that analyzes the approximately 12,000 properties owned by these 130 companies. Using proprietary databases and algorithms, CBC analyzes local market rent, expense, and occupancy trends, market specific transaction pricing, demographic and economic trends, and leading indicators of real estate supply such as building permits. Over 650 asset-type specific geographic markets are analyzed and ranked on a relative scale by CBC in compiling its REIToScore database. The relative attractiveness of these real estate industry companies is similarly ranked based on the composite rankings of the properties they own. See "Management of the Funds--Consultant to Advisor" for more information about CBC. The universe of property-owning real estate industry firms consists of approximately 130 companies of sufficient size and quality to merit consideration for investment by the Fund. Once the universe of real estate industry companies has been distilled through the market research process, CBC'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. CBC'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 initial and continued 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 will make extensive use of CBC's network of industry analysts in order to assess trends in tenant industries. This information is then used to further interpret 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 short-term investments in which Real Estate Investment Fund may invest are: 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 so rated, of equivalent credit quality as determined by Alliance. The Fund expects that it will not retain a debt security which 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 may also engage in the following investment practices to the extent indicated: (i) invest up to 10% of its net assets in rights or warrants; (ii) invest up to 15% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund; (iii) lend portfolio securities equal in value to not more than 25% of total assets; (iv) enter into repurchase agreements of up to seven days' duration; (v) enter into forward commitments transactions as long as the Fund's aggregate commitments under such transactions are not more than 30% of the Fund's total assets; (vi) enter into standby commitment agreements; (vii) make short sales of securities or maintain a short position but only if at all times when a short position is open not more 21 than 25% of the Fund's net assets (taken at market value) is held as collateral for such sales; and (viii) invest in illiquid securities unless, as a result, more than 15% of its net assets would be so invested. ADDITIONAL INVESTMENT PRACTICES Some or all of the Funds may engage in the following investment practices to the extent described above. Convertible Securities. Prior to conversion, convertible securities have the same general characteristics as non-convertible debt securities, which 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 stock, although the higher yield tends to make the convertible security less volatile than the underlying common stock. As with debt securities, the market value of convertible securities tends to 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. For a description of these risks, see "Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." Rights and Warrants. A Fund will invest in rights or warrants only if the underlying equity securities themselves are deemed appropriate by Alliance for inclusion in the Fund's portfolio. Rights and warrants entitle the holder to buy equity securities at a specific price for a specific period of time. Rights are similar to warrants except that they have a substantially shorter duration. Rights and warrants may be considered more speculative than certain other types of investments in that they do not entitle a holder to dividends or voting rights with respect to the underlying securities nor do they represent any rights in the assets of the issuing company. The value of a right or warrant does not necessarily change with the value of the underlying security, although the value of a right or warrant may decline because of a decrease in the value of the underlying security, the passage of time or a change in perception as to the potential of the underlying security, or any combination thereof. If the market price of the underlying security is below the exercise price set forth in the warrant on the expiration date, the warrant will expire worthless. Moreover, a right or warrant ceases to have value if it is not exercised prior to the expiration date. Depositary Receipts and Securities of Supranational Entities. Depositary receipts may not necessarily be denominated in the same currency as the underlying securities into which they may be converted. In addition, the issuers of the stock of unsponsored depositary receipts are not obligated to disclose material information in the United States and, therefore, there may not be a correlation between such information and the market value of the depositary receipts. ADRs are depositary receipts typically issued by a U.S. bank or trust company that evidence ownership of underlying securities issued by a foreign corporation. GDRs and other types of depositary receipts are typically issued by foreign banks or trust companies and evidence ownership of underlying securities issued by either a foreign or a U.S. company. Generally, depositary receipts in registered form are designed for use in the U.S. securities markets, and depositary receipts in bearer form are designed for use in foreign securities markets. 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 Growth Fund, Strategic Balanced Fund and Income Builder 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 which are not backed by its full faith and credit and general taxing powers. Mortgage-Backed Securities. Interest and principal payments (including prepayments) on the mortgages underlying mortgage-backed securities are passed through to the holders of the securities. As a result of the pass-through of prepayments of principal on the underlying securities, mortgage-backed securities are often subject to more rapid prepayment of principal than their stated maturity would indicate. Prepayments occur when the mortgagor on a mortgage prepays the remaining principal before the mortgage's scheduled maturity date. Because the prepayment characteristics of the underlying mortgages vary, it is impossible to predict accurately the realized yield or average life of a particular issue of pass-through certificates. Prepayments are important because of their effect on the yield and price of the mortgage-backed securities. During periods of declining interest rates, prepayments can be expected to accelerate and a Fund investing in such securities would be required to reinvest the proceeds at the lower interest rates then available. 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. Adjustable Rate Securities. Adjustable rate securities have interest rates that are reset at periodic intervals, usually by 22 reference to some interest rate index or market interest rate. Some adjustable rate securities are backed by pools of mortgage loans. Although the rate-adjustment feature may reduce sharp changes in the value of adjustable rate securities, these securities can change in value based on changes in market interest rates or the issuer's creditworthiness. Changes in the interest rate on adjustable rate securities may lag behind changes in prevailing market interest rates. Also, some adjustable rate securities (or the underlying mortgages) are subject to caps or floors that limit the maximum change in interest rate. Asset-Backed Securities. Asset-backed securities (unrelated to first mortgage loans) represent fractional interests in pools of leases, retail installment loans, revolving credit receivables and other payment obligations, both secured and unsecured. These assets are generally held by a trust and payments of principal and interest or interest only are passed through monthly or quarterly to certificate holders and may be guaranteed up to certain amounts by letters of credit issued by a financial institution affiliated or unaffiliated with the trustee or originator of the trust. Like mortgages underlying mortgage-backed securities, underlying automobile sales contracts or credit card receivables are subject to prepayment, which may reduce the overall return to certificate holders. Certificate holders may also experience delays in payment on the certificates if the full amounts due on underlying sales contracts or receivables are not realized by the trust because of unanticipated legal or administrative costs of enforcing the contracts or because of depreciation or damage to the collateral (usually automobiles) securing certain contracts, or other factors. Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a significant discount from their principal amount in lieu of paying interest periodically. Payment-in-kind bonds allow the issuer to make current interest payments on the bonds in additional bonds. Because zero-coupon bonds and payment-in-kind bonds do not pay current interest in cash, their value is generally subject to greater fluctuation in response to changes in market interest rates than bonds that pay interest in cash currently. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid the need to generate cash to meet current interest payments. Accordingly, such bonds may involve greater credit risks than bonds paying interest currently. Even though such bonds do not pay current interest in cash, a Fund is nonetheless required to accrue interest income on such investments and to distribute such amounts at least annually to shareholders. Thus, a Fund could be required at times to liquidate other investments in order to satisfy its dividend requirements. Equity-Linked Debt Securities. Equity-linked debt securities are securities with respect to which the amount of interest and/or principal that the issuer thereof is obligated to pay is linked to the performance of a specified index of equity securities. Such amount may be significantly greater or less than payment obligations in respect of other types of debt securities. Adverse changes in equity securities indices and other adverse changes in the securities markets may reduce payments made under, and/or the principal of, equity-linked debt securities held by the Fund. Furthermore, as with any debt securities, the values of equity-linked debt securities will generally vary inversely with changes in interest rates. The Fund's ability to dispose of equity-linked debt securities will depend on the availability of liquid markets for such securities. Investment in equity-linked debt securities may be considered to be speculative. As with other securities, the Fund could lose its entire investment in equity-linked debt securities. Loans and Other Direct Debt Instruments. Loans and other direct debt instruments are interests in amounts owed by a corporate, governmental or other borrower to another party. They may represent amounts owed to lenders or lending syndicates (loans and loan participations), to suppliers of goods or services (trade claims or other receivables), or to other creditors. Direct debt instruments involve the risk of loss in case of default or insolvency of the borrower and may offer less legal protection to the Fund in the event of fraud or misrepresentation than debt securities. In addition, loan participations involve a risk of insolvency of the lending bank or other financial intermediary. Direct debt instruments may also include standby financing commitments that obligate the Fund to supply additional cash to the borrower on demand. Loans and other direct debt instruments are generally illiquid and may be transferred only through individually negotiated private transactions. Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. Direct debt instruments may not be rated by any nationally recognized rating service. If the Fund does not receive scheduled interest or principal payments on such indebtedness, the Fund's share price and yield could be adversely affected. Loans that are fully secured offer the Fund more protection than unsecured loans in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower's obligation, or that the collateral can be liquidated. Indebtedness of borrowers whose creditworthiness is poor may involve substantial risks, and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Direct indebtedness of Asian countries will also involve a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and repay principal when due. Investments in loans through direct assignment of a financial institution's interests with respect to a loan may involve additional risks to the Fund. For example, if a loan is foreclosed, the Fund could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary. A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent 23 administers the terms of the loan, as specified on the loan agreement. Unless, under the terms of the loan or other indebtedness, the Fund has direct recourse against the borrower, it may have to rely on the agent to apply appropriate credit remedies against a borrower. If assets held by the agent for the benefit of the Fund were determined to be subject to the claims of the agent's general creditors, the Fund might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal or interest. Direct indebtedness purchased by the Fund may include letters of credit, revolving credit facilities, or other standby financing commitments obligating the Fund to pay additional cash on demand. These commitments may have the effect of requiring the Fund to increase its investment in a borrower at a time when it would not otherwise have done so, even if the borrower's condition makes it unlikely that the amount will ever be repaid. Mortgage-Backed Securities and Associated Risks. 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. 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, which 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. 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 thereon. 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 the Fund does not intend to invest in residual interests. Risks. Investing in Mortgage-Backed Securities involves certain unique risks in addition to those generally associated with investing in the real estate industry in general. These unique risks include the failure of a counterparty to meet its commitments, adverse interest rate changes and the effects of prepayments on mortgage cash flows. See "Risk Considerations--Mortgage-Backed Securities" for a more complete description of the characteristics of Mortgage-Backed Securities and associated risks. Illiquid Securities. Subject to any more restrictive applicable fundamental investment policy, none of the Funds will maintain more than 15% of its net assets in illiquid securities. Illiquid securities generally include (i) direct placements or other securities that are subject to legal or contractual restrictions on resale or for which there is no readily available market (e.g., when trading in the security is suspended or, in the case of unlisted securities, when market makers do not exist or will not entertain bids or offers), including many individually negotiated currency swaps and any assets used to cover currency swaps and most privately negotiated investments in state enterprises that have not yet conducted an initial equity offering, (ii) over-the-counter options and assets used to cover over-the-counter options, and (iii) repurchase agreements not terminable within seven days. Because of the absence of a trading market for illiquid securities, a Fund may not be able to realize their full value upon sale. With respect to each Fund that may invest in such securities, Alliance will monitor their illiquidity under the supervision of the Directors of the Fund. To the extent permitted by applicable law, Rule 144A securities will not be treated as "illiquid" for purposes of the foregoing restriction so long as such securities meet liquidity guidelines established by a Fund's Directors. Investment in non-publicly traded securities by each of Growth Fund and Strategic Balanced Fund is restricted to 5% of its total assets (not including for these purposes Rule 144A securities, to the extent permitted by applicable law) and is also subject to the 15% restriction on investment in illiquid securities described above. A Fund that invests in securities for which there is no ready market may therefore not be able to readily sell such securities. To the extent that these securities are foreign securities, there is no law in many of the countries in which a Fund may invest similar to the Securities Act requiring an issuer to register the sale of securities with a governmental 24 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 securities. Options. An option gives the purchaser of the option, upon payment of a premium, the right to deliver to (in the case of a put) or receive from (in the case of a call) the writer a specified amount of a security on or before a fixed date at a predetermined price. A call option written by a Fund is "covered" if the Fund owns the underlying security, has an absolute and immediate right to acquire that security upon conversion or exchange of another security it holds, or holds a call option on the underlying security with an exercise price equal to or less than that of the call option it has written. A put option written by a Fund is covered if the Fund holds a put option on the underlying securities with an exercise price equal to or greater than that of the put option it has written. A call option is for cross-hedging purposes if a Fund does not own the underlying security, and is designed to provide a hedge against a decline in value in another security which the Fund owns or has the right to acquire. Worldwide Privatization Fund, All-Asia Investment Fund, Income Builder Fund and Utility Income Fund each may write call options for cross-hedging purposes. A Fund would write a call option for cross-hedging purposes, instead of writing a covered call option, when the premium to be received from the cross-hedge transaction would exceed that which would be received from writing a covered call option, while at the same time achieving the desired hedge. In purchasing an option, a Fund would be in a position to realize a gain if, during the option period, the price of the underlying security increased (in the case of a call) or decreased (in the case of a put) by an amount in excess of the premium paid; otherwise the Fund would experience a loss equal to the premium paid for the option. If an option written by a Fund were exercised, the Fund would be obligated to purchase (in the case of a put) or sell (in the case of a call) the underlying security at the exercise price. The risk involved in writing an option is that, if the option were exercised, the underlying security would then be purchased or sold by the Fund at a disadvantageous price. These risks could be reduced by entering into a closing transaction (i.e., by disposing of the option prior to its exercise). A Fund retains the premium received from writing a put or call option whether or not the option is exercised. The writing of covered call options could result in increases in a Fund's portfolio turnover rate, especially during periods when market prices of the underlying securities appreciate. Technology Fund, Quasar Fund, International Fund, New Europe Fund and Global Small Cap Fund will not write uncovered call options. Technology Fund and Global Small Cap Fund will not write a call option if the premium to be received by the Fund in doing so would not produce an annualized return of at least 15% of the then current market value of the securities subject to the option (without giving effect to commissions, stock transfer taxes and other expenses that are deducted from premium receipts). Technology Fund, Quasar Fund and Global Small Cap Fund will not write a call option if, as a result, the aggregate of the Fund's portfolio securities subject to outstanding call options (valued at the lower of the option price or market value of such securities) would exceed 15% of the Fund's total assets or more than 10% of the Fund's assets would be committed to call options that at the time of sale have a remaining term of more than 100 days. The aggregate cost of all outstanding options purchased and held by each of Premier Growth Fund, Technology Fund, Quasar Fund and Global Small Cap Fund will at no time exceed 10% of the Fund's total assets. Neither International Fund nor New Europe Fund will write uncovered put options. A Fund that purchases or writes options on securities in privately negotiated (i.e., over-the-counter) transactions will effect such transactions only with investment dealers and other financial institutions (such as commercial banks or savings and loan institutions) deemed creditworthy by Alliance, and Alliance has adopted procedures for monitoring the creditworthiness of such entities. Options purchased or written by a Fund in negotiated transactions are illiquid and it may not be possible for the Fund to effect a closing transaction at an advantageous time. See "Illiquid Securities." Options on Securities Indices. An option on a securities index is similar to an option on a security except that, rather than the right to take or make delivery of a security at a specified price, an option on a securities index gives the holder the right to receive, upon exercise of the option, an amount of cash if the closing level of the chosen index is greater than (in the case of a call) or less than (in the case of a put) the exercise price of the option. Futures Contracts and Options on Futures Contracts. A "sale" of a futures contract means the acquisition of a contractual obligation to deliver the securities or foreign currencies or other commodity called for by the contract at a specified price on a specified date. A "purchase" of a futures contract means the incurring of an obligation to acquire the securities, foreign currencies or other commodity called for by the contract at a specified price on a specified date. The purchaser of a futures contract on an index agrees to take or make delivery of an amount of cash equal to the difference between a specified dollar multiple of the value of the index on the expiration date of the contract ("current contract value") and the price at which the contract was originally struck. No physical delivery of the securities underlying the index is made. Options on futures contracts written or purchased by a Fund will be traded on U.S. or foreign exchanges or over-the-counter. These investment techniques will be used only to hedge against anticipated future changes in market conditions and interest or exchange rates which otherwise might either adversely affect the value of the Fund's portfolio securities or adversely affect the prices of securities which the Fund intends to purchase at a later date. No Fund will enter into any futures contracts or options on futures contracts if immediately thereafter the market values of 25 the outstanding futures contracts of the Fund and the currencies and futures contracts subject to outstanding options written by the Fund would exceed 50% of its total assets, and Income Builder Fund will also not do so if immediately thereafter the aggregate of initial margin deposits on all the outstanding futures contracts of the Fund and premiums paid on outstanding options on futures contracts would exceed 5% of the market value of the total assets of the Fund. Premier Growth Fund and 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. Premier Growth Fund and 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. Options on Foreign Currencies. As in the case of other kinds of options, the writing of an option on a foreign currency constitutes only a partial hedge, up to the amount of the premium received, and a Fund could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. The purchase of an option on a foreign currency may constitute an effective hedge against fluctuations in exchange rates although, in the event of rate movements adverse to a Fund's position, it may forfeit the entire amount of the premium plus related transaction costs. See the Statement of Additional Information of each Fund that may invest in options on foreign currencies for further discussion of the use, risks and costs of options on foreign currencies. Forward Foreign Currency Exchange Contracts. A Fund purchases or sells forward contracts to minimize the risk to it from adverse changes in the relationship between the U.S. dollar and other currencies. A forward contract is an obligation to purchase or sell a specific currency for an agreed price at a future date, and is individually negotiated and privately traded. A Fund may enter into a forward contract, for example, when it enters into a contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of the security ("transaction hedge"). A Fund will not engage in transaction hedges with respect to the currency of a particular country to an extent greater than the aggregate amount of the Fund's transactions in that currency. When a Fund believes that a foreign currency may suffer a substantial decline against the U.S. dollar, it may enter into a forward sale contract to sell an amount of that foreign currency approximating the value of some or all of the Fund's portfolio securities denominated in such foreign currency, or when the Fund believes that the U.S. dollar may suffer a substantial decline against a foreign currency, it may enter into a forward purchase contract to buy that foreign currency for a fixed dollar amount ("position hedge"). A Fund will not position hedge with respect to 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. International Fund, New Europe Fund and Global Small Cap Fund will not enter into a forward contract with a term of more than one year or if, as a result, more than 50% of its total assets would be committed to such contracts. The dealings of International Fund, New Europe Fund and Global Small Cap Fund in forward contracts will be limited to hedging involving either specific transactions or portfolio positions. Growth Fund and Strategic Balanced Fund may also purchase and sell foreign currency on a spot basis. Forward Commitments. Forward commitments for the purchase or sale of securities may include purchases on a "when-issued" basis or purchases or sales on a "delayed delivery" basis. In some cases, a forward commitment may be conditioned upon the occurrence of a subsequent event, such as approval and consummation of a merger, corporate reorganization or debt restructuring (i.e., a "when, as and if issued" trade). When forward commitment transactions are negotiated, the price is fixed at the time the commitment is made, but delivery and payment for the securities take place at a later date. Normally, the settlement date occurs within two months after the transaction, but settlements beyond two months may be negotiated. Securities purchased or sold under a forward commitment are subject to market fluctuation, and no interest or dividends accrue to the purchaser prior to the settlement date. At the time a Fund intends to enter into a forward commitment, it records the transaction and thereafter reflects the value of the security purchased or, if a sale, the proceeds to be received, in determining its net asset value. Any unrealized appreciation or depreciation reflected in such valuation of a "when, as and if issued" security would be canceled in the event that the required conditions did not occur and the trade was canceled. The use of forward commitments enables a Fund to protect against anticipated changes in interest rates and prices. For instance, in periods of rising interest rates and falling bond prices, a Fund might sell securities in its portfolio on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest rates and rising bond prices, a Fund might sell a security in its portfolio and purchase the same or 26 a similar security on a when-issued or forward commitment basis, thereby obtaining the benefit of currently higher cash yields. However, if Alliance were to forecast incorrectly the direction of interest rate movements, a Fund might be required to complete such when-issued or forward transactions at prices inferior to the then current market values. When-issued securities and forward commitments may be sold prior to the settlement date, but a Fund enters into when-issued and forward commitments only with the intention of actually receiving securities or delivering them, as the case may be. If a Fund chooses to dispose of the right to acquire a when-issued security prior to its acquisition or dispose of its right to deliver or receive against a forward commitment, it may incur a gain or loss. Any significant commitment of Fund assets to the purchase of securities on a "when, as and if issued" basis may increase the volatility of the Fund's net asset value. No forward commitments will be made by New Europe Fund, All-Asia Investment Fund, Worldwide Privatization Fund, Income Builder Fund, Utility Income Fund or Real Estate Investment Fund if, as a result, the Fund's aggregate commitments under such transactions would be more than 30% of the Fund's total assets. In the event the other party to a forward commitment transaction were to default, a Fund might lose the opportunity to invest money at favorable rates or to dispose of securities at favorable prices. Standby Commitment Agreements. Standby commitment agreements commit a Fund, for a stated period of time, to purchase a stated amount of a security that may be issued and sold to the Fund at the option of the issuer. The price and coupon of the security are fixed at the time of the commitment. At the time of entering into the agreement the Fund is paid a commitment fee, regardless of whether the security ultimately is issued, typically equal to approximately 0.5% of the aggregate purchase price of the security the Fund has committed to purchase. A Fund will enter into such agreements only for the purpose of investing in the security underlying the commitment at a yield and price considered advantageous to the Fund and unavailable on a firm commitment basis. No Fund, other than Income Builder Fund, will enter into a standby commitment with a remaining term in excess of 45 days. Investments in standby commitments will be limited so that the aggregate purchase price of the securities subject to the commitments will not exceed 25% with respect to New Europe Fund and Real Estate Investment Fund, 50% with respect to Worldwide Privatization Fund and All-Asia Investment Fund, and 20% with respect to Utility Income Fund, of the Fund's assets taken at the time of making the commitment. There is no guarantee that 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. Currency Swaps. Currency swaps involve the individually negotiated exchange by a Fund with another party of a series of payments in specified currencies. A currency swap may involve the delivery at the end of the exchange period of a substantial amount of one designated currency in exchange for the other designated currency. Therefore the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations. The net amount of the excess, if any, of a Fund's obligations over its entitlements with respect to each currency swap will be accrued on a daily basis. A Fund will not enter into any currency swap unless the credit quality of the unsecured senior debt or the claims-paying ability of the other party thereto is rated in the highest rating category of at least one nationally recognized rating organization at the time of entering into the transaction. If there is a default by the other party to such a transaction, such Fund will have contractual remedies pursuant to the agreements related to the transactions. Interest Rate Transactions. Each Fund that may enter into interest rate transactions expects to do so primarily to preserve a return or spread on a particular investment or portion of its portfolio or to protect against any increase in the price of securities the Fund anticipates purchasing at a later date. The Funds do not intend to use these transactions in a speculative manner. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). Interest rate swaps are entered on a net basis (i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments). With respect to All-Asia Investment Fund and Utility Income Fund, the exchange commitments can involve payments in the same currency or in different currencies. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a contractually-based principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on an agreed principal amount from the party selling the interest rate floor. A Fund may enter into interest rate swaps, caps and floors on either an asset-based or liability-based basis, depending upon whether it is hedging its assets or liabilities. The net amount of the excess, if any, of a Fund's obligations over its entitlements with respect to each interest rate swap, cap and floor is accrued daily. A Fund will not enter into an interest rate swap, cap or floor transaction unless the unsecured senior debt or the claims-paying ability of the other party thereto is then rated in the highest rating category of at least one nationally recognized rating organization. Alliance will monitor the creditworthiness of counterparties on an ongoing basis. The swap market has grown substantially in recent years, with a large number of banks and investment banking firms acting 27 both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps. The use of interest rate transactions is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If Alliance 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 other party to an interest rate transaction defaults, a Fund's risk of loss consists of the net amount of interest payments that the Fund contractually is entitled to receive. Repurchase Agreements. A repurchase agreement arises when a buyer purchases a security and simultaneously agrees to resell it to the vendor at an agreed-upon future date, normally a day or a few days later. The resale price is greater than the purchase price, reflecting an agreed-upon interest rate for the period the buyer's money is invested in the security. Such agreements permit a Fund to keep all of its assets at work while retaining "overnight" flexibility in pursuit of investments of a longer-term nature. If a vendor defaults on its repurchase obligation, a Fund would suffer a loss to the extent that the proceeds from the sale of the collateral were less than the repurchase price. If a vendor goes bankrupt, a Fund might be delayed in, or prevented from, selling the collateral for its benefit. Alliance monitors the creditworthiness of the vendors with which the Fund enters into repurchase agreements. There is no percentage restriction on a Fund's ability to enter into repurchase agreements, other than as indicated under "Investment Objectives and Policies." Short Sales. A short sale is effected by selling a security that a Fund does not own, or if the Fund does own such security, it is not to be delivered upon consummation of the sale. A short sale is "against the box" to the extent that a Fund contemporaneously owns or has the right to obtain securities identical to those sold short without payment. Worldwide Privatization Fund, All-Asia Investment Fund, Income Builder Fund and Utility Income Fund each may make short sales of securities or maintain short positions only for the purpose of deferring realization of gain or loss for U.S. federal income tax purposes, provided that at all times when a short position is open the Fund owns an equal amount of securities of the same issue as, and equal in amount to, the securities sold short. In addition, each of those Funds may not make a short sale if as a result more than 10% of the Fund's net assets would be held as collateral for short sales, except that All-Asia Investment Fund and Real Estate Investment Fund may not make a short sale if as a result more than 25% of the Fund's net assets would be held as collateral for short sales. If the price of the security sold short increases between the time of the short sale and the time a Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. See "Certain Fundamental Investment Policies." Certain special federal income tax considerations may apply to short sales entered into by a Fund. See "Dividends, Distributions and Taxes" in the relevant Fund's Statement of Additional Information. Loans of Portfolio Securities. The 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 earned thereon and the Fund may invest any cash collateral in portfolio securities, thereby earning additional income, or receive an agreed upon amount of income from a borrower who has delivered equivalent collateral. Each Fund will have the right to regain record ownership of loaned securities or equivalent securities in order to exercise ownership rights such as voting rights, subscription rights and rights to dividends, interest or distributions. A Fund may pay reasonable finders', administrative and custodial fees in connection with a loan. A Fund will not lend its portfolio securities to any officer, director, employee or affiliate of the Fund or Alliance. General. The successful use of the foregoing investment practices draws upon Alliance's special skills and experience with respect to such instruments and usually depends on Alliance's ability to forecast price movements, interest rates or currency exchange rate movements correctly. Should interest rates, prices or exchange rates move unexpectedly, a Fund may not achieve the anticipated benefits of the transactions or may realize losses and thus be in a worse position than if such strategies had not been used. Unlike many exchange-traded futures contracts and options on futures contracts, there are no daily price fluctuation limits with respect to certain options and forward contracts, and adverse market movements could therefore continue to an unlimited extent over a period of time. In addition, the correlation between movements in the prices of futures contracts, options and forward contracts and movements in the prices of the securities and currencies hedged or used for cover will not be perfect and could produce unanticipated losses. A Fund's ability to dispose of its position in futures contracts, options and forward contracts depends on the availability of liquid markets in such instruments. Markets in options and futures with respect to a number of types of securities and currencies are relatively new and still developing, and there is 28 no public market for forward contracts. It is impossible to predict the amount of trading interest that may exist in various types of futures contracts, options and forward contracts. If a secondary market does not exist with respect to an option purchased or written by a Fund, it might not be possible to effect a closing transaction in the option (i.e., dispose of the option), with the result that (i) an option purchased by the Fund would have to be exercised in order for the Fund to realize any profit and (ii) the Fund may not be able to sell currencies or portfolio securities covering an option written by the Fund until the option expires or it delivers the underlying security, futures contract or currency upon exercise. Therefore, no assurance can be given that the Funds will be able to utilize these instruments effectively for the purposes set forth above. Furthermore, a Fund's ability to engage in options and futures transactions may be limited by tax considerations. See "Dividends, Distributions and Taxes" in the Statement of Additional Information of each Fund that invests in options and futures. Future Developments. A Fund may, following written notice to its shareholders, take advantage of other investment practices that are not currently contemplated for use by the Fund or are not available but may yet be developed, to the extent such investment practices are consistent with the Fund's investment objective and legally permissible for the Fund. Such investment practices, if they arise, may involve risks that exceed those involved in the activities described above. Defensive Position. For temporary defensive purposes, each Fund may invest in certain types of short-term, liquid, high grade or high quality (depending on the Fund) debt securities. These securities may include U.S. Government securities, qualifying bank deposits, money market instruments, prime commercial paper and other types of short-term debt securities including notes and bonds. For Funds that may invest in foreign countries, such securities may also include short-term, foreign-currency denominated securities of the type mentioned above issued by foreign governmental entities, companies and supranational organizations. For a complete description of the types of securities each Fund may invest in while in a temporary defensive position, please see such Fund's Statement of Additional Information. Portfolio Turnover. Portfolio turnover rates for the existing classes of shares of the Fund are set forth in the tables that begin on page 8. These portfolio turnover rates are greater than those of most other investment companies, including those which emphasize capital appreciation as a basic policy. A high rate of portfolio turnover involves correspondingly greater brokerage and other expenses than a lower rate, which must be borne by the Fund and its shareholders. High portfolio turnover also may result in the realization of substantial net short-term capital gains. See "Dividends, Distributions and Taxes" in each Fund's Statement of Additional Information. CERTAIN FUNDAMENTAL INVESTMENT POLICIES Each Fund has adopted certain fundamental investment policies listed below, which may not be changed without the approval of its shareholders. Additional investment restrictions with respect to a Fund are set forth in its Statement of Additional Information. Alliance Fund may not: (i) invest more than 5% of its total assets in the securities of any one issuer (other than the U.S. Government); (ii) acquire more than 10% of the voting or other securities of any one issuer; or (iii) buy securities of any company that (including its predecessors) has not been in business at least three continuous years. Pursuant to investment policies which are not fundamental, the Fund does not invest (i) in puts or calls (except as discussed above); (ii) in straddles, spreads, or any combination thereof; (iii) in oil, gas or other mineral exploration or development programs; or (iv) more than 5% of its gross assets in securities the disposition of which would be subject to restrictions under the federal securities laws. Growth Fund and Strategic Balanced Fund each may not: (i) invest more than 5% of its total assets in the securities of any one issuer (other than U.S. Government securities and repurchase agreements relating thereto), although up to 25% of each Fund's total assets may be invested without regard to this restriction; or (ii) invest 25% or more of its total assets in the securities of any one industry. Premier Growth Fund may not: (i) purchase more than 10% of the outstanding voting securities of any one issuer; (ii) invest 25% or more of the value of its total assets in the same industry; (iii) borrow money or issue senior securities except for temporary or emergency purposes in an amount not exceeding 5% of the value of its total assets at the time the borrowing is made; (iv) pledge, mortgage, hypothecate or otherwise encumber any of its assets except in connection with the writing of call options and except to secure permitted borrowings; or (v) invest in the securities of any issuer that has a record of less than three years of continuous operation (including the operation of any predecessor) if as a result more than 10% of the value of the total assets of the Fund would be invested in the securities of such issuer or issuers. Technology Fund may not: (i) with respect to 75% of its total assets, have such assets represented by other than: (a) cash and cash items, (b) U.S. Government securities, or (c) securities of any one issuer (other than the U.S. Government and its agencies or instrumentalities) not greater in value than 5% of the Fund's total assets, and not more than 10% of the outstanding voting securities of such issuer; (ii) purchase the securities of any one issuer, other than the U.S. Government and its agencies or instrumentalities, if as a result (a) the value of the holdings of the Fund in the securities of such issuer exceeds 25% of its total assets, or (b) the Fund owns more than 25% of the outstanding securities of any one class of securities of such issuer; (iii) concentrate its investments in any one industry, but the Fund has reserved the right to invest up to 25% of its total assets in a particular industry; and (iv) invest in the securities of any issuer which has a record of less than three years of continuous operation (including the operation of any predecessor) if such purchase 29 would cause 10% or more of its total assets to be invested in the securities of such issuers. Quasar Fund may not: (i) purchase the securities of any one issuer, other than the U.S. Government or any of its agencies or instrumentalities, if as a result more than 5% of its total assets would be invested in such issuer or the Fund would own more than 10% of the outstanding voting securities of such issuer, except that up to 25% of its total assets may be invested without regard to these 5% and 10% limitations; (ii) invest more than 25% of its total assets in any particular industry; (iii) borrow money except for temporary or emergency purposes in an amount not exceeding 5% of its total assets at the time the borrowing is made; or (iv) invest more than 10% of its assets in restricted securities. International Fund may not: (i) invest more than 5% of the value of its total assets in securities of a single issuer (including repurchase agreements with any one entity), except U.S. Government securities or foreign government securities; provided, however, that the Fund may not, with respect to 75% of its total assets, invest more than 5% of its total assets in securities of any one foreign government issuer; (ii) own more than 10% of the outstanding securities of any class of any issuer (for this purpose, all preferred stocks of an issuer shall be deemed a single class, and all indebtedness of an issuer shall be deemed a single class), except U.S. Government securities; (iii) invest more than 25% of the value of its total assets in securities of issuers having their principal business activities in the same industry; provided, that this limitation does not apply to U.S. Government securities or foreign government securities; (iv) invest more than 5% of the value of its total assets in the securities of any issuer that has a record of less than three years of continuous operation (including the operation of any predecessor or unconditional guarantor), except U.S. Government securities or foreign government securities; (v) invest more than 5% of the value of its total assets in securities with legal or contractual restrictions on resale, other than repurchase agreements, or more than 10% of the value of its total assets in securities that are not readily marketable (including restricted securities and repurchase agreements not terminable within seven business days); and (vi) borrow money, except as a temporary measure for extraordinary or emergency purposes, and then only from banks in amounts not exceeding 5% of its total assets. Worldwide Privatization Fund may not: (i) invest 25% or more of its total assets in securities of issuers conducting their principal business activities in the same industry, except that this restriction does not apply to (a) U.S. Government securities, or (b) the purchase of securities of issuers whose primary business activity is in the national commercial banking industry, so long as the Fund's Directors determine, on the basis of factors such as liquidity, availability of investments and anticipated returns, that the Fund's ability to achieve its investment objective would be adversely affected if the Fund were not permitted to invest more than 25% of its total assets in those securities, and so long as the Fund notifies its shareholders of any decision by the Directors to permit or cease to permit the Fund to invest more than 25% of its total assets in those securities, such notice to include a discussion of any increased investment risks to which the Fund may be subjected as a result of the Directors' determination; (ii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the value of the Fund's total assets will be repaid before any investments are made; or (iii) pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings. The exception contained in clause (i)(b) above is subject to the operating policy regarding concentration described in this Prospectus. New Europe Fund may not: (i) purchase more than 10% of the outstanding voting securities of any one issuer; (ii) invest more than 15% of its total assets in the securities of any one issuer or 25% or more of its total assets in the same industry, provided, however, that the foregoing restriction shall not be deemed to prohibit the Fund from purchasing the securities of any issuer pursuant to the exercise of rights distributed to the Fund by the issuer, except that no such purchase may be made if as a result the Fund will fail to meet the diversification requirements of the Code and any such acquisition in excess of the foregoing 15% or 25% limits will be sold by the Fund as soon as reasonably practicable (this restriction does not apply to U.S. Government securities, but will apply to foreign government securities unless the Commission permits their exclusion); (iii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the Fund's total assets will be repaid before any subsequent investments are made; or (iv) purchase a security (unless the security is acquired pursuant to a plan of reorganization or an offer of exchange) if, as a result, the Fund would own any securities of an open-end investment company or more than 3% of the total outstanding voting stock of any closed-end investment company, or more than 5% of the value of the Fund's total assets would be invested in securities of any closed-end investment company, or more than 10% of such value in closed-end investment companies in general. All-Asia Investment Fund may not: (i) invest 25% or more of its total assets in securities of issuers conducting their principal business activities in the same industry; (ii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not 30 exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the value of the Fund's total assets will be repaid before any investments are made; or (iii) pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings. Global Small Cap Fund may not: (i) purchase the securities of any one issuer, other than the U.S. Government or any of its agencies or instrumentalities, if immediately after such purchase more than 5% of the value of its total assets would be invested in such issuer or the Fund would own more than 10% of the outstanding voting securities of such issuer, except that up to 25% of the Fund's total assets may be invested without regard to these 5% and 10% limitations; (ii) invest 25% or more of its total assets in the same industry; this restriction does not apply to U.S. Government securities, but will apply to foreign government securities unless the Commission permits their exclusion; (iii) borrow money except from banks for emergency or temporary purposes in an amount not exceeding 5% of the total assets of the Fund; or (iv) make short sales of securities or maintain a short position, unless at all times when a short position is open it owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of the same issue as, and equal in amount to, the securities sold short and unless not more than 5% of the Fund's net assets is held as collateral for such sales at any one time. Global Environment Fund may not: (i) purchase more than 10% of the outstanding voting securities of any one issuer; (ii) invest more than 15% of the value of its total assets in the securities of any one issuer or 25% or more of the value of its total assets in the same industry, except that the Fund will invest more than 25% of its total assets in Environmental Companies, provided that this restriction does not apply to U.S. Government securities, but will apply to foreign government obligations unless the Commission permits their exclusion; (iii) borrow money or issue senior securities, except that the Fund may borrow (a) from a bank if immediately after such borrowing there is asset coverage of at least 300% as defined in the 1940 Act and (b) for temporary purposes in an amount not exceeding 5% of the value of the total assets of the Fund; (iv) pledge, hypothecate, mortgage or otherwise encumber its assets, except (a) to secure permitted borrowings and (b) in connection with initial and variation margin deposits relating to futures contracts; (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) make short sales of securities or maintain a short position, unless at all times when a short position is open it owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of the same issue as, and equal in amount to, the securities sold short ("short sales against the box"), and unless not more than 5% of the Fund's net assets (taken at market value) is held as collateral for such sales at any onetime; or (vii) buy or write (i.e., sell) put or call options, except (a) the Fund may buy foreign currency options or write covered foreign currency options and options on foreign currency futures and (b) the Fund may purchase warrants. Balanced Shares may not: (i) invest more than 5% of its total assets in the securities of any one issuer, except U.S. Government securities; or (ii) own more than 10% of the outstanding voting securities of any one issuer. Income Builder Fund may not: (i) invest 25% or more of its total assets in securities of companies engaged principally in any one industry, except that this restriction does not apply to U.S. Government securities; (ii) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time borrowing is made; securities will not be purchased while borrowings in excess of 5% of the Fund's total assets are outstanding; or (iii) pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings. Utility Income Fund may not: (i) invest more than 5% of its total assets in the securities of any one issuer except the U.S. Government, although with respect to 25% of its total assets it may invest in any number of issuers; (ii) invest 25% or more of its total assets in the securities of issuers conducting their principal business activities in any one industry, other than the utilities industry, except that this restriction does not apply to U.S. Government securities; (iii) purchase more than 10% of any class of the voting securities of any one issuer; (iv) borrow money except from banks for temporary or emergency purposes, including the meeting of redemption requests that might require the untimely disposition of securities; borrowing in the aggregate may not exceed 15%, and borrowing for purposes other than meeting redemptions may not exceed 5%, of the Fund's total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing is made; outstanding borrowings in excess of 5% of the Fund's total assets will be repaid before any subsequent investments are made; or (v) purchase a security if, as a result (unless the security is acquired pursuant to a plan of reorganization or an offer of exchange), the Fund would own any securities of an open-end investment company or more than 3% of the total outstanding voting stock of any closed-end investment company or more than 5% of the value of the Fund's net assets would be invested in securities of any one or more closed-end investment companies. 31 Growth and Income Fund may not (i) invest more than 5% of its net assets in the security of any one issuer, except U.S. Government obligations or (ii) own more than 10% of the outstanding voting securities of any issuer. Real Estate Investment Fund may not: (i) with respect to 75% of its total assets, have such assets represented by other than: (a) cash and cash items, (b) U.S. Government securities, or (c) securities of any one issuer (other than the U.S. Government and its agencies or instrumentalities) not greater in value than 5% of the Fund's total assets, and not more than 10% of the outstanding voting securities of such issuer; (ii) purchase the securities of any one issuer, other than the U.S. Government and its agencies or instrumentalities, if as a result (a) the value of the holdings of the Fund in the securities of such issuer exceeds 25% of its total assets, or (b) the Fund owns more than 25% of the outstanding securities of any one class of securities of such issuer; (iii) invest 25% or more of its total assets in the securities of issuers conducting their principal business activities in any one industry, other than the real estate industry in which the Fund will invest at least 25% or more of its total assets, except that this restriction does not apply to U.S. Government securities; (iv) purchase or sell real estate, except that it may purchase and sell securities of companies which deal in real estate or interests therein, including Real Estate Equity securities; or (v) borrow money except for temporary or emergency purposes or to meet redemption requests, in an amount not exceeding 5% of the value of its total assets at the time the borrowing is made. RISK CONSIDERATIONS Investment in certain of the Funds involves the special risk considerations described below. These risks may be heightened when investing in emerging markets. Investment in Privatized Enterprises by Worldwide Privatization Fund. In certain jurisdictions, the ability of foreign entities, such as the Fund, to participate in privatizations may be limited by local law, or the price or terms on which the Fund may be able to participate may be less advantageous than for local investors. Moreover, there can be no assurance that governments that have embarked on privatization programs will continue to divest their ownership of state enterprises, that proposed privatizations will be successful or that governments will not re-nationalize enterprises that have been privatized. Furthermore, in the case of certain of the enterprises in which the Fund may invest, large blocks of the stock of those enterprises may be held by a small group of stockholders, even after the initial equity offerings by those enterprises. The sale of some portion or all of those blocks could have an adverse effect on the price of the stock of any such enterprise. Most state enterprises or former state enterprises go through an internal reorganization of management prior to conducting an initial equity offering in an attempt to better enable these enterprises to compete in the private sector. However, certain reorganizations could result in a management team that does not function as well as the enterprise's prior management and may have a negative effect on such enterprise. After making an initial equity offering, enterprises that may have enjoyed preferential treatment from the respective state or government that owned or controlled them may no longer receive such preferential treatment and may become subject to market competition from which they were previously protected. Some of these enterprises may not be able to effectively operate in a competitive market and may suffer losses or experience bankruptcy due to such competition. In addition, the privatization of an enterprise by its government may occur over a number of years, with the government continuing to hold a controlling position in the enterprise even after the initial equity offering for the enterprise. Currency Considerations. Substantially all of the assets of International Fund, New Europe Fund, All-Asia Investment Fund, and Worldwide Privatization Fund and a substantial portion of the assets of Global Small Cap Fund and Global Environment Fund will be invested in securities denominated in foreign currencies, and a corresponding portion of these Funds' revenues will be received in such currencies. Therefore, the dollar equivalent of their net assets, distributions and income will be adversely affected by reductions in the value of certain foreign currencies relative to the U.S. dollar. If the value of the foreign currencies in which a Fund receives its income falls relative to the U.S. dollar between receipt of the income and the making of Fund distributions, the Fund may be required to liquidate securities in order to make distributions if it has insufficient cash in U.S. dollars to meet distribution requirements that the Fund must satisfy to qualify as a regulated investment company for federal income tax purposes. Similarly, if an exchange rate declines between the time a Fund incurs expenses in U.S. dollars and the time cash expenses are paid, the amount of the currency required to be converted into U.S. dollars in order to pay expenses in U.S. dollars could be greater than the equivalent amount of such expenses in the currency at the time they were incurred. In light of these risks, a Fund may engage in certain currency hedging transactions, which themselves involve certain special risks. See "Additional Investment Practices" above. Foreign Investment. The securities markets of many foreign countries are relatively small, with the majority of market capitalization and trading volume concentrated in a limited number of companies representing a small number of industries. Consequently, a Fund whose investment portfolio includes such securities may experience greater price volatility and significantly lower liquidity than a portfolio invested solely in equity securities of U.S. companies. These markets may be subject to greater influence by adverse events generally affecting the market, and by large investors trading significant blocks of securities, than is usual in the United States. Securities settlements may in some instances be subject to delays and related administrative uncertainties. These problems are particularly severe in India, where settlement is through physical delivery, and, where, currently, a severe shortage of vault capacity exists among custodial banks, although efforts are being undertaken to alleviate the shortage. Certain foreign countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage 32 of an issuer's outstanding securities or a specific class of securities which may have less advantageous terms (including price) than securities of the company available for purchase by nationals. These restrictions or controls may at times limit or preclude investment in certain securities and may increase the costs and expenses of a Fund. In addition, the repatriation of investment income, capital or the proceeds of sales of securities from certain countries is controlled under regulations, including in some cases the need for certain advance government notification or authority, and if a deterioration occurs in a country's balance of payments, the country could impose temporary restrictions on foreign capital remittances. A Fund could also be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation, as well as by the application to it of other restrictions on investment. Investing in local markets may require a Fund to adopt special procedures, which may involve additional costs to a Fund. The liquidity of a Fund's investments in any country in which any of these factors exists could be affected and Alliance will monitor the effect of any such factor or factors on a Fund's investments. Furthermore, transaction costs including brokerage commissions for transactions both on and off the securities exchanges in many foreign countries are generally higher than in the 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 or the Fund's investments in such country. In the event of expropriation, nationalization or other confiscation, a Fund could lose its entire investment in the country involved. In addition, laws in foreign countries governing business organizations, bankruptcy and insolvency may provide less protection to security holders such as the Fund than that provided by U.S. laws. Investment in United Kingdom Issuers. 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 continued to fall in early 1993, but recovered due to interest rate cuts throughout Europe and an upturn in the economy of the United Kingdom. The average exchange rate of the U.S. dollar to the pound sterling was 1.50 in 1993 and 1.56 in 1996. On December 31, 1997 the U.S. dollar-pound sterling exchange rate was 1.65. 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 4118.5 at the end of 1996, up approximately 12% from the end of 1995. On December 31, 1997 the FT-SE 100 index closed at 5,135.5, up approximately 25% from the end of 1996. The public sector borrowing requirement, a mandated measure of the amount required to balance the budget, has been, over the last two fiscal years, higher than forecast. The general government fiscal deficit has been in excess of the eligibility limit prescribed by the European Union for countries that intend to participate in the Economic and Monetary Union ("EMU"), which is scheduled to take effect in January 1999. The government, however, expects that the deficit will be below that limit in the 1997-98 and 1998-99 fiscal years. Although the government has not yet made a formal announcement with respect to the United Kingdom's participation in the EMU, remarks of the Chancellor of the Exchequer made in mid-October 1997 suggest that the United Kingdom will not participate in the EMU beginning in January 1999 but may do so thereafter. 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 33 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 1993. In 1994, the TOPIX closed at 1,559.09, up approximately 8% from the end of 1993; in 1995, the TOPIX closed at 1,577.70, up approximately 1% from the end of 1994; and in 1996, the TOPIX closed at 1,470.94, down approximately 7% from the end of 1995. In 1997, the TOPIX closed at 1,175.03, down 20.12% from the end of 1996. 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 has returned to a single-party government led by Prime Minister Ryutaro Hashimoto. While Mr. Hashimoto's party does not control a majority of the seats in the parliament, it is only three seats short of the 251 seats required to attain a majority in the House of Representatives (down from a 12-seat shortfall just after the October 1996 election). For the past several years, Japan's banking industry has been weakened by a significant amount of problem loans. Japan's banks also have significant exposure to the current financial turmoil in other Asian markets. On December 17, 1997 the Japanese government proposed to strengthen Japan's banks by means of an infusion of public funds and other measures. It is unclear whether these proposals, which are under consideration by Japan's parliament, would, if implemented, achieve their intended effect. For further information regarding Japan, see the Statements of Additional Information for All-Asia Investment Fund and International Fund. Investment in Smaller, Emerging Companies. The Funds may invest in smaller, emerging companies. Global Small Cap Fund and New Europe Fund will emphasize investment in, and All-Asia Investment Fund and 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. Investing in Environmental Companies by 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 difficult in finding experienced employees. The Real Estate Industry. Although Real Estate Investment Fund does not invest directly in real estate, it does invest primarily in Real Estate Equity Securities and does have 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 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. See "Dividends, Distributions and Taxes" in the Statement of Additional Information. Investments by the Fund 34 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) are also 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 Index of 500 Common Stocks. Mortgage-Backed Securities. As discussed above, 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 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 be creditable or deductible by U.S. shareholders for U.S. income tax purposes. No assurance can be given that applicable tax laws and interpretations will not change in the future. Moreover, non-U.S. investors may not be able to credit or deduct such foreign taxes. Investors should review carefully the information discussed under the heading "Dividends, Distributions and Taxes" and should discuss with their tax advisers the specific tax consequences of investing in a Fund. Fixed-Income Securities. The value of each Fund's shares will fluctuate with the value of its investments. The value of each Fund's investments in fixed-income securities will change as the general level of interest rates fluctuates. During periods of falling interest rates, the values of fixed-income securities generally rise. Conversely, during periods of rising interest rates, the values of fixed-income securities generally decline. Under normal market conditions, the average dollar-weighted maturity of a Fund's portfolio of debt or other fixed-income securities is expected to vary between five and 30 years in the case of All-Asia Investment Fund, between eight and 15 years in the case of Income Builder Fund, between five and 25 years in the case of Utility Income Fund and between one year or less and 30 years in the case of all other Funds that invest in such securities. 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. See "Additional Investment Practices--Mortgage-Backed Securities." Securities Ratings. The ratings of securities by S&P, Moody's, Duff & Phelps and Fitch are a generally accepted barometer of 35 credit risk. They are, however, subject to certain limitations from an investor's standpoint. The rating of an issuer is heavily weighted by past developments and does not necessarily reflect probable future conditions. There is frequently a lag between the time a rating is assigned and the time it is updated. In addition, there may be varying degrees of difference in credit risk of securities within each rating category. Securities rated Aaa by Moody's and AAA by S&P, Duff & Phelps and Fitch are considered to be of the highest quality; capacity to pay interest and repay principal is extremely strong. Securities rated Aa by Moody's and AA by S&P, Duff & Phelps and Fitch are considered to be high quality; capacity to repay principal is considered very strong, although elements may exist that make risks appear somewhat larger than exist with securities rated Aaa or AAA. Securities rated A are considered by Moody's to possess adequate factors giving security to principal and interest. S&P, Duff & Phelps and Fitch consider such securities to have a strong capacity to pay interest and repay principal. Such securities are more susceptible to adverse changes in economic conditions and circumstances than higher-rated securities. Securities rated Baa by Moody's and BBB by S&P, Duff & Phelps and Fitch are considered to have an adequate capacity to pay interest and repay principal. Such securities are considered to have speculative characteristics and share some of the same characteristics as lower-rated securities. Sustained periods of deteriorating economic conditions or of rising interest rates are more likely to lead to a weakening in the issuer's capacity to pay interest and repay principal than in the case of higher-rated securities. Securities rated Ba by Moody's and BB by S&P, Duff & Phelps and Fitch are considered to have speculative characteristics with respect to capacity to pay interest and repay principal over time; their future cannot be considered as well-assured. Securities rated B by Moody's, S&P, Duff & Phelps and Fitch are considered to have highly speculative characteristics with respect to capacity to pay interest and repay principal. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Securities rated Caa by Moody's and CCC by S&P, Duff & Phelps and Fitch are of poor standing and there is a present danger with respect to payment of principal or interest. Securities rated Ca by Moody's and CC by S&P and Fitch are minimally protected, and default in payment of principal or interest is probable. Securities rated C by Moody's, S&P and Fitch are in imminent default in payment of principal or interest and have extremely poor prospects of ever attaining any real investment standing. Securities rated D by S&P and Fitch are in default. The issuer of securities rated DD by Duff & Phelps is under an order of liquidation. Investment in Lower-Rated Fixed-Income Securities. Lower-rated securities, i.e., those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps or Fitch, are subject to greater risk of loss of principal and interest than higher-rated securities. They are also generally considered to be subject to greater market risk than higher-rated securities, and the capacity of issuers of lower-rated securities to pay interest and repay principal is more likely to weaken than is that of issuers of higher-rated securities in times of deteriorating economic conditions or rising interest rates. In addition, lower-rated securities may be more susceptible to real or perceived adverse economic conditions than investment grade securities. The market for lower-rated securities may be thinner and less active than that for higher-rated securities, which can adversely affect the prices at which these securities can be sold. To the extent that there is no established secondary market for lower-rated securities, a Fund may experience difficulty in valuing such securities and, in turn, the Fund's assets. In addition, adverse publicity and investor perceptions about lower-rated securities, whether or not factual, may tend to impair their market value and liquidity. Alliance will try to reduce the risk inherent in investment in lower-rated securities through credit analysis, diversification and attention to current developments and trends in interest rates and economic and political conditions. However, there can be no assurance that losses will not occur. Since the risk of default is higher for lower-rated securities, Alliance's research and credit analysis are a correspondingly more important aspect of its program for managing a Fund's securities than would be the case if a Fund did not invest in lower-rated securities. In seeking to achieve a Fund's investment objective, there will be times, such as during periods of rising interest rates, when depreciation and realization of capital losses on securities in a Fund's portfolio will be unavoidable. Moreover, medium- and lower-rated securities and non-rated securities of comparable quality may be subject to wider fluctuations in yield and market values than higher-rated securities under certain market conditions. Such fluctuations after a security is acquired do not affect the cash income received from that security but are reflected in the net asset value of a Fund. See the Statement of Additional Information for each Fund that invests in lower-rated securities for a description of the bond ratings of Moody's, S&P, Duff & Phelps and Fitch. Certain lower-rated securities in which Growth Fund, Income Builder Fund, Strategic Balanced Fund and Utility Income Fund may invest may contain call or buy-back features that permit the issuers thereof to call or repurchase such securities. Such securities may present risks based on prepayment expectations. If an issuer exercises such a provision, a Fund may have to replace the called security with a lower yielding security, resulting in a decreased rate of return to the Fund. Non-Diversified Status. Each of Worldwide Privatization Fund, New Europe Fund, All-Asia Investment Fund, Global Environmental Fund and Income Builder Fund is a "non-diversified" investment company, which means the Fund is not limited in the proportion of its assets that may be invested in the securities of a single issuer. However, each Fund intends to conduct its operations so as to qualify to be taxed as a "regulated investment company" for purposes of the Code, which will relieve the Fund of any liability for federal income tax to the extent its earnings are distributed to shareholders. See "Dividends, Distributions and Taxes" in each Fund's Statement 36 of Additional Information. To so qualify, among other requirements, the Fund will limit its investments so that, at the close of each quarter of the taxable year, (i) not more than 25% of the Fund's total assets will be invested in the securities of a single issuer, and (ii) with respect to 50% of its total assets, not more than 5% of its total assets will be invested in the securities of a single issuer and the Fund will not own more than 10% of the outstanding voting securities of a single issuer. A Fund's investments in U.S. Government securities and other regulated investment companies are not subject to these limitations. Because each of Worldwide Privatization Fund, New Europe Fund, All-Asia Investment Fund and Income Builder Fund is a non-diversified investment company, it may invest in a smaller number of individual issuers than a diversified investment company, and an investment in such Fund may, under certain circumstances, present greater risk to an investor than an investment in a diversified investment company. Foreign government securities are not treated like U.S. Government securities for purposes of the diversification tests described in the preceding paragraph, but instead are subject to these tests in the same manner as the securities of non-governmental issuers. Year 2000. Many computer software systems in use today cannot properly process date-related information from and after January 1, 2000. Should any of the computer systems employed by the Fund's major service providers fail to process this type of information properly, that could have a negative impact on the Fund's operations and the services that are provided to the Fund's shareholders. 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, have advised the Funds that they are reviewing all of their computer systems with the goal of modifying or replacing such systems prior to January 1, 2000 to the extent necessary to foreclose any such negative impact. In addition, Alliance has been advised by each Fund's custodian that they are also in the process of reviewing their systems with the same goal. As of the date of this Prospectus, the Funds and Alliance have no reason to believe that these goals will not be achieved. - -------------------------------------------------------------------------------- PURCHASE AND SALE - -------------------------------------------------------------------------------- OF SHARES - -------------------------------------------------------------------------------- HOW TO BUY SHARES Each Fund offers multiple classes of shares, of which only the Advisor Class is offered by this Prospectus. Advisor Class shares of each Fund may be purchased through your financial representative at net asset value without any initial or contingent deferred sales charges and are not subject to ongoing distribution expenses. Advisor Class shares may be purchased and held solely (i) through accounts established under a fee-based program, sponsored and maintained by a registered broker-dealer or other financial intermediary and approved by AFD, (ii) through a self-directed defined contribution employee benefit plan (e.g., a 401(k) plan) that has at least 1,000 participants or $25 million in assets, (iii) by investment advisory clients of, and certain other persons associated with, Alliance and its affiliates or the Funds, and (iv) through registered investment advisers or other financial intermediaries who charge a management, consulting or other fee for their service 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. For more detailed information about who may purchase and hold Advisor Class shares see the Statements of Additional Information. A shareholder's Advisor Class shares will automatically convert to Class A shares of the same Fund under certain circumstances. For a more detailed description of the conversion feature and Class A shares, see "Conversion Feature." 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 each Fund in which the program invests in order to be approved by AFD for investment in Advisor Class shares. Share certificates are issued only upon request. See the Subscription Application and the Statements of Additional Information for more information. The Funds may refuse any order to purchase Advisor Class shares. In this regard, the Funds reserve the right to restrict purchases of Advisor Class shares (including through exchanges) when there appears to be evidence of a pattern of frequent purchases and sales made in response to short-term considerations. How the Funds Value Their Shares The net asset value of Advisor Class shares of a Fund is calculated by dividing the value of the Fund's net assets allocable to the Advisor Class by the outstanding shares of the Advisor Class. Shares are valued each day the Exchange is open as of the close of regular trading (currently 4:00 p.m. Eastern time). The securities in a Fund are valued at their current market value determined on the basis of market quotations or, if such quotations are not readily available, such other methods as the Fund's Directors believe accurately reflects fair market value. HOW TO SELL SHARES You may "redeem" (i.e., sell your shares in a Fund to the Fund) on any day the Exchange is open, either directly or through your financial representative. The price you will receive is the net asset value next calculated after the Fund receives your request in proper form. Proceeds generally will be sent to you within seven days. However, for shares recently purchased by check or electronic funds transfer, a Fund will not send proceeds until it is reasonably satisfied that the check or electronic funds transfer has been collected (which may take up to 15 days). If you are in doubt about what documents are required by your fee-based program or employee benefit plan, you should contact your financial representative. 37 Selling Shares Through Your Financial Representative Your financial representative must receive your request before 4:00 p.m. Eastern time, and your financial representative must transmit your request to the Fund by 5:00 p.m. Eastern time, for you to receive that day's net asset value. Your financial representative is responsible for furnishing all necessary documentation to a Fund and may charge you for this service. Selling Shares Directly To A Fund Send a signed letter of instruction or stock power form to AFS along with certificates, if any, that represent the shares you want to sell. For your protection, signatures must be guaranteed by a bank, a member firm of a national stock exchange or other eligible guarantor institution. Stock power forms are available from your financial representative, AFS, and many commercial banks. Additional documentation is required for the sale of shares by corporations, intermediaries, fiduciaries and surviving joint owners. For details contact: Alliance Fund Services P.O. Box 1520 Secaucus, NJ 07096-1520 800-221-5672 Alternatively, a request for redemption of shares for which no stock certificates have been issued can also be made by telephone to 800-221-5672. Telephone redemption requests must be made by 4 p.m. Eastern time on a Fund business day in order to receive that day's net asset value, and, for redemptions made before March 1, 1998 may be made only once in any 30-day period (except for certain omnibus accounts). A shareholder who has completed the appropriate section of the Subscription Application, or the Shareholder Options form obtained from AFS, can elect to have the proceeds of his or her redemption sent to his or her bank via an electronic funds transfer. Proceeds of telephone redemptions also may be sent by check to a shareholder's address of record. Except for certain omnibus accounts, redemption requests by electronic funds transfer may not exceed $100,000 and redemption requests by check may not exceed $50,000 per day. Telephone redemption is not available for shares held in nominee or "street name" accounts or retirement plan accounts or shares held by a shareholder who has changed his or her address of record within the previous 30 calendar days. General The sale of shares is a taxable transaction for federal tax purposes. Under unusual circumstances, a Fund may suspend redemptions or postpone payment for up to seven days or longer, as permitted by federal securities law. The Funds reserve the right to close an account that through redemption has remained below $200 for 90 days. Shareholders will receive 60 days' written notice to increase the account value before the account is closed. During drastic economic or market developments, you might have difficulty reaching AFS by telephone, in which event you should issue written instructions to AFS. AFS is not responsible for the authenticity of telephonic requests to purchase, sell or exchange shares. AFS will employ reasonable procedures to verify that telephone requests are genuine, and could be liable for losses resulting from unauthorized transactions if it failed to do so. Dealers and agents may charge a commission for handling telephonic requests. The telephone service may be suspended or terminated at any time without notice. SHAREHOLDER SERVICES AFS offers a variety of shareholder services. For more information about these services or your account, call AFS's toll-free number, 800-221-5672. HOW TO EXCHANGE SHARES You may exchange your Advisor Class shares of any Fund for Advisor Classshares of other Alliance Mutual Funds (including AFD Exchange Reserves, a money market fund managed by Alliance). 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 AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that day's net asset value. Please read carefully the prospectus of the mutual fund into which you are exchanging before submitting the request. Call AFS at 800-221-5672 to exchange uncertificated shares. An exchange is a taxable capital transaction for federal tax purposes. The exchange service may be changed, suspended, or terminated on 60 days' written notice. GENERAL If you are a Fund shareholder through an account established under a fee-based program, your fee-based program may impose requirements with respect to the purchase, sale or exchange of Advisor Class shares of a Fund that are different from those described in this Prospectus. A transaction, 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. Each Fund offers three classes of shares other than the Advisor Class, which are Class A, Class B and Class C. All classes of shares of a Fund have a common investment objective and investment portfolio. Class A shares are offered with an initial sales charge and pay a distribution services fee. Class B shares have a contingent deferred sales charge (a "CDSC") and also pay a distribution services fee. Class C shares have no initial sales charge or CDSC as long as they are not redeemed within one year of purchase, but pay a distribution services fee. Because 38 Advisor Class shares have no initial sales charge or CDSC and pay no distribution services fee, Advisor Class shares are expected to have different performance from Class A, Class B or Class C shares. You can obtain more information about Class A, Class B and Class C shares, which are not offered by this Prospectus, by contacting AFS by telephone at 800-221-5672 or by contacting your financial representative. - -------------------------------------------------------------------------------- MANAGEMENT OF THE FUNDS - -------------------------------------------------------------------------------- ADVISER Alliance, which is a Delaware limited partnership with principal offices at 1345 Avenue of the Americas, New York, New York 10105, has been retained under an advisory agreement (the "Advisory Agreement") to provide investment advice and, in general, to conduct the management and investment program of each Fund, subject to the general supervision and control of the Directors of the Fund. The following table lists the person or persons who are primarily responsible for the day-to-day management of each Fund's portfolio, the length of time that each person has been primarily responsible, and each person's principal occupation during the past five years.
Principal occupation during the past Fund Employee; year; title five years - ----------------------------------------------------------------------------------------- Alliance Fund Alden M. Stewart since 1997-- Associated with Executive Vice President of Alliance since Alliance Capital Management 1993; prior Corporation ("ACMC")* thereto, associated with Equitable Capital Management Corporation ("Equitable Capital")** Randall E. Haase since 1997-- Associated with Senior Vice President of ACMC Alliance since July 1993; prior thereto, associated with Equitable Capital Growth Fund Tyler Smith since inception-- Associated with Senior Vice President of ACMC Alliance since July 1993; prior thereto, associated with Equitable Capital Premier Growth Fund Alfred Harrison since inception-- Associated with Vice Chairman of ACMC Alliance Technology Fund Peter Anastos since 1992-- Associated with Senior Vice President of ACMC Alliance Gerald T. Malone since 1992-- Associated with Senior Vice President of ACMC Alliance since 1992; prior thereto associated with College Retirement Equities Fund Quasar Fund Alden M. Stewart since 1994-- (see above) (see above) Randall E. Haase since 1994-- (see above) (see above) International Fund A. Rama Krishna since 1993-- Associated with Senior Vice President of ACMC Alliance since and director of Asian Equity 1993, prior research thereto, Chief Investment Strategist and Director--Equity Research for CS First Boston Worldwide Privatization Mark H. Breedon since inception-- Associated with Fund Senior Vice President of ACMC Alliance and Director and Vice President of Alliance Capital Limited *** New Europe Fund Steven Beinhacker since 1997-- Associated with Vice President of ACMC Alliance All-Asia Investment A. Rama Krishna since inception-- (see above) Fund (see above) Global Small Cap Alden M. Stewart since 1994-- (see above) Fund (see above) Randall E. Haase since 1994-- (see above) (see above) Ronald L. Simcoe since 1993-- Associated with Vice President of ACMC Alliance since 1993; prior thereto, associated with Equitable Capital Global Environment Jeremy R. Kramer since 1995-- Associated with Fund Vice President of ACMC Alliance since 1993; prior thereto, securities analyst with Neuberger & Berman Strategic Balanced Nicholas D.P. Carn since 1997-- Associated with Fund Vice President of ACMC Alliance since 1997; prior thereto, Chief Investment Officer and Portfolio Manager at Draycott Partners Balanced Shares Paul Rissman since 1997-- Associated with Senior Vice President of ACMC Alliance Income Builder Fund Andrew M. Aran since 1994-- Associated with Senior Vice President of ACMC Alliance Thomas M. Perkins since 1991-- Associated with Senior Vice President of ACMC Alliance Vita Marie Pike since 1997-- Associated with Vice President of ACMC Alliance Corinne Molof Hill since 1997-- Associated with Vice President of ACMC Alliance Utility Income Fund Paul Rissman since 1996-- Associated with (see above) Alliance Growth & Income Paul Rissman since 1994-- Associated with Fund (see above) Alliance
39
Principal occupation during the past Fund Employee; year; title five years - ----------------------------------------------------------------------------------------- Real Estate Daniel G. Pine since 1996 Associated with Investment Fund Senior Vice President Alliance since of ACMC 1996; 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 the Yarmouth Group
- -------------------------------------------------------------------------------- * The sole general partner of Alliance. ** Equitable Capital was, prior to Alliance's acquisition of it, a management firm under common control with Alliance. *** An indirect wholly-owned subsidiary of Alliance. Alliance is a leading international investment manager supervising client accounts with assets as of September 30, 1997 totaling more than $217 billion (of which approximately $81 billion represented the assets of investment companies). Alliance's clients are primarily major corporate employee benefit funds, public employee retirement systems, investment companies, foundations and endowment funds. The 56 registered investment companies managed by Alliance comprising 118 separate investment portfolios currently have over two million shareholders. As of September 30, 1997, Alliance was an investment manager of employee benefit plan assets for 28 of the Fortune 100 companies. ACMC, the sole general partner of, and the owner of a 1% general partnership interest in, Alliance, is an indirect wholly-owned subsidiary of The Equitable Life Assurance Society of the United States ("Equitable"), one of the largest life insurance companies in the United States, which is a wholly-owned subsidiary of The Equitable Companies Incorporated, a holding company controlled by AXA-UAP, a French insurance holding company. Certain information concerning the ownership and control of Equitable by AXA-UAP is set forth in each Fund's Statement of Additional Information under "Management of the Funds." Performance of Similarly Managed Portfolios. In addition to managing the assets of 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 Premier Growth Fund, except for the ability of Premier Growth Fund to use futures and options as hedging tools and to invest in warrants. The Historical Portfolios are also not subject to certain limitations, diversification requirements and other restrictions imposed under the 1940 Act and the Code to which 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 Objective 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, 1997. As of December 31, 1997, the assets in the Historical Portfolios totaled approximately $11.6 billion and the average size of an institutional account in the Historical Portfolio was $341 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 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 Premier Growth Fund. Expenses associated with the distribution of Class A, Class B and Class C shares of Premier Growth Fund in accordance with the plan adopted by Premier Growth Fund's Board of Directors pursuant to Rule 12b-1 under the 1940 Act ("distribution fees") are also excluded. See "Expense Information." 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 40 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 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 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 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, Premier Growth Fund's performance relative to the index would be reduced by 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 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 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 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*
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 ------- -------------- ------------ ------------ ------------ Year ended: 1997*** .......... 27.05% 34.90% 33.36% 30.49% 25.30% 1996*** .......... 18.84 22.22 22.96 23.12 17.48 1995*** .......... 40.66 40.12 37.58 37.19 32.65 1994 ............. (9.78) (4.83) 1.32 2.66 (1.57) 1993 ............. 5.35 10.62 10.08 2.90 11.98 1992 ............. -- 12.27 7.62 5.00 7.63 1991 ............. -- 39.19 30.47 41.16 35.20 1990 ............. -- (1.57) (3.10) (0.26) (5.00) 1989 ............. -- 39.08 31.69 35.92 28.60 1988 ............. -- 10.96 16.61 11.27 15.80 1987 ............. -- 8.57 5.25 5.31 1.00 1986 ............. -- 27.60 18.67 15.36 15.90 1985 ............. -- 37.68 31.73 32.85 30.30 1984 ............. -- (3.33) 6.27 (.95) (2.80) 1983 ............. -- 20.95 22.56 15.98 22.30 1982 ............. -- 28.23 21.55 20.46 20.20 1981 ............. -- (1.10) (4.92) (11.31) (8.40) 1980 ............. -- 51.10 32.50 39.57 37.30 1979 ............. -- 30.99 18.61 23.91 27.40 Cumulative total return for the period January 1, 1979 to December 31, 1997 ............. -- 3,689% 1,946% 1,683% 1,753%
- -------------------------------------------------------------------------------- * 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 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, although not the impact of the payment of that fee on a quarterly rather than an annual basis and the compounding effect thereof over the periods for which return information is provided in the table on page 50, which would correspondingly reduce the returns presented. *** During this period, the Historical Portfolios differed from Premier Growth Fund in that 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, 1997, 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 ------------------------------------------------------------------------------------- Premier Russell Lipper Growth Historical S&P 500 1000 Growth Fund Portfolios** Index Growth Index Fund Index ------- ---------- ------- ------------ ---------- One year ............................ 27.05% 34.90% 33.36% 30.49% 25.30% Three years ......................... 32.32 32.20 31.15 30.14 25.11 Five years .......................... 19.14 19.46 20.27 18.41 16.47 Ten years+ .......................... 20.13 19.17 18.05 17.94 15.93 Since January 1, 1979 .............................. -- 20.08 17.22 16.37 15.86
- -------------------------------------------------------------------------------- + Since inception on 9/28/92 41 ADMINISTRATOR TO ALL-ASIA INVESTMENT FUND Alliance has been retained by All-Asia Investment Fund under an administration agreement (the "Administration Agreement") to perform administrative services necessary for the operation of the Fund. For a description of such services, see the Statement of Additional Information of the Fund. CONSULTANT TO ALLIANCE WITH RESPECT TO INVESTMENT IN REAL ESTATE SECURITIES Alliance, with respect to investment in real estate securities, has retained as a consultant CB Commercial Real Estate Group, Inc. ("CBC"), 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 activities (CBC in August of 1997 acquired Koll, which previously provided these consulting services to Alliance). In 1996, CBC (and Koll, on a combined basis) completed 25,000 sale and lease transactions, managed over 4,100 client properties, created over $3.5 billion in mortgage originations, and completed over 2,600 appraisal and consulting assignments. In addition, they advised and managed for institutions over $4 billion in real estate investments. CBC will make available to Alliance the CBC National Real Estate Index, which gathers, analyzes and publishes targeted research data for the 65 largest U.S. markets, based on a variety of public-sector and private-sector sources as well as CBC's proprietary database of approximately 60,000 property transactions representing over $400 billion of investment property. This information provides a substantial component of the research and data used to create the REIToScore model. As a consultant, CBC provides to Alliance, at Alliance's expense, such in-depth information regarding the real estate market, the factors influencing regional valuations and analysts of recent transactions in office, retail, industrial and multi-family properties as Alliance shall from time to time request. CBC will not furnish advice or make recommendations regarding the purchase or sale of securities by the Fund nor will it be responsible for making investment decisions involving Fund assets. CBC is one of the three largest fee-based property management firms in the United States, the largest commercial real estate lease brokerage firm in the country, the largest investment property brokerage firm in the country, as well as one of the largest publishers of real estate research, with approximately 6,000 employees nationwide. CBC will provide Alliance with exclusive access to its REIToScore model which ranks approximately 130 REITs based on the relative attractiveness of the property markets in which they own real estate. This model scores the approximately 12,000 individual properties owned by these companies. REIToScore is in turn based on CBC's National Real Estate Index which gathers, analyzes and publishes targeted research for the 65 largest U.S. real estate markets based on a variety of public- and private-sector sources as well as CBC's proprietary database of 60,000 commercial property transactions representing over $400 billion of investment property and over 3,000 tracked properties which report rent and expense data quarterly. CBC has previously provided access to its REIToScore model results primarily to the institutional market through subscriptions. The model is no longer provided to any research publications and the Fund is currently the only mutual fund available to retail investors that has access to CBC's REIToScore model. DISTRIBUTION SERVICES AGREEMENTS Each Fund has entered into a Distribution Services Agreement with AFD with respect to the Advisor Class shares. The Glass-Steagall Act and other applicable laws may limit the ability of a bank or other depository institution to become an underwriter or distributor of securities. However, in the opinion of the Funds' management, based on the advice of counsel, these laws do not prohibit such depository institutions from providing services for investment companies such as the administrative, accounting and other services referred to in the Agreements. In the event that a change in these laws prevented a bank from providing such services, it is expected that other service arrangements would be made and that shareholders would not be adversely affected. The State of Texas requires that shares of a Fund may be sold in that state only by dealers or other financial institutions that are registered there as broker-dealers. - -------------------------------------------------------------------------------- DIVIDENDS, DISTRIBUTIONS - -------------------------------------------------------------------------------- AND TAXES - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS If you receive an income dividend or capital gains distribution in cash you may, within 120 days following the date of its payment, reinvest the dividend or distribution in additional shares of that Fund without charge by returning to Alliance, with appropriate instructions, the check representing such dividend or distribution. Thereafter, unless you otherwise specify, you will be deemed to have elected to reinvest all subsequent dividends and distributions in shares of that Fund. Each income dividend and capital gains distribution, if any, declared by a Fund on its outstanding shares will, at the election of each shareholder, be paid in cash or in additional shares of the same class of shares of that Fund having an aggregate net asset value as of the payment date of such dividend or distribution equal to the cash amount of such income dividend or distribution. Election to receive dividends and distributions in cash or shares is made at the time shares are initially purchased and may be changed at any time prior to the record date for a particular dividend or distribution. Cash dividends can be paid by check or, if the shareholder so elects, electronically via the ACH network. There is no sales or other charge in connection with the reinvestment of dividends and capital gains distributions. 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 42 capital gains, if any, the amount and time of any such dividend or distribution must necessarily depend upon the realization by such Fund of income and capital gains from investments. There is no fixed dividend rate, and there can be no assurance that a Fund will pay any dividends or realize any capital gains. 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 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. If you buy shares just before a Fund deducts a distribution from its net asset value, you will pay the full price for the shares and then receive a portion of the price back as a taxable distribution. FOREIGN INCOME TAXES Investment income received by a Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source. To the extent that any Fund is liable for foreign income taxes withheld at the source, each Fund intends, if possible, to operate so as to meet the requirements of the Code to "pass through" to the Fund's shareholders credits for foreign income taxes paid (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. U.S. FEDERAL INCOME TAXES Each Fund intends to qualify to be taxed as a "regulated investment company" under the Code. To the extent that a Fund distributes its taxable income and net capital gain to its shareholders, qualification as a regulated investment company relieves that Fund of federal income taxes on that part of its taxable income including net capital gains which it pays out to its shareholders. Dividends out of net ordinary income and distributions of net short-term capital gains are taxable to the recipient shareholders as ordinary income. In the case of corporate shareholders, such dividends may be eligible for the dividends-received deduction, except that the amount eligible for the deduction is limited to the amount of qualifying dividends received by the Fund. Dividends received from REITs 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 a Fund is financed with indebtedness. Pursuant to the Taxpayer Relief Act of 1997, two different tax rates apply to net capital gains--that is, the excess of net gains from capital assets held for more than one year over net losses from capital assets held for not more than one year. One rate (generally 28%) applies to net gains on capital assets held for more than one year but not more than 18 months ("mid-term gains"), and a second rate (generally 20%) applies to the balance of such net capital gains ("adjusted net capital gains"). Distributions of mid-term gains and adjusted net capital gains will be taxable to shareholders as such, regardless of how long a shareholder has held shares in the Fund. Distributions of net capital gains are not eligible for the dividends-received deduction referred to above. Under the current federal tax law, the amount of an income dividend or capital gains distribution declared by a Fund during October, November or December of a year to shareholders of record as of a specified date in such a month that is paid during January of the following year is includable in the prior year's taxable income of shareholders that are calendar year taxpayers. Any dividend or distribution received by a shareholder on shares of a Fund will have the effect of reducing the net asset value of such shares by the amount of such dividend or distribution. Furthermore, a dividend or distribution made shortly after the purchase of such shares by a shareholder although in effect a return of capital to that particular shareholder, would be taxable to him or her as described above. If a shareholder held shares six months or less and during that period received a distribution of net capital gains, any loss realized on the sale of such shares during such six-month period would be a long-term capital loss to the extent of such distribution. A dividend or capital gains distribution with respect to shares of a Fund held by a tax-deferred or qualified plan, generally such as an individual retirement account, 403(b)(7) retirement plan or corporate pension or profit-sharing plan, will not be taxable to the plan. Distributions from such plans will be taxable to individual participants under applicable tax rules without regard to the character of the income earned by the qualified plan. A Fund will be required to withhold 31% of any payments made to a shareholder if the shareholder has not provided a certified taxpayer identification number to the Fund, or the Secretary of the Treasury notifies a Fund that a shareholder has not reported all interest and dividend income required to be shown on the shareholder's Federal income tax return. 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 "Dividends, Distributions and Taxes" in the Statements of Additional Information. Shareholders will be advised annually as to the tax status of dividends and capital gains and return of capital distributions. Shareholders are urged to consult their tax advisors regarding their own tax situation. Distributions by a Fund may be subject to state and local taxes. 43 - -------------------------------------------------------------------------------- CONVERSION FEATURE - -------------------------------------------------------------------------------- CONVERSION TO CLASS A SHARES Advisor Class shares may be held solely through the fee-based program accounts, employee benefit plans and registered investment advisory or other financial intermediary relationships described above under "Purchase and Sale of SharesHow to Buy Shares," and by investment advisory clients of, and certain other persons associated with, Alliance and its affiliates or the Funds. If (i) a holder of Advisor Class shares ceases to participate in the fee-based program or plan, or to be associated with an investment advisor or financial intermediary, in each case that satisfies the requirements to purchase shares set forth under "Purchase and Sale of Shares--How to Buy Shares" or (ii) the holder is otherwise no longer eligible to purchase Advisor Class shares as described in this Prospectus (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 this Prospectus, 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 will 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. DESCRIPTION OF CLASS A SHARES The following sets forth maximum transaction costs, annual expenses, per share income and capital charges for Class A shares of each of the Funds. Class A shares are subject to a distribution fee that may not exceed an annual rate of .30%. The higher fees mean a higher expense ratio, so Class A shares pay correspondingly lower dividends and may have a lower net asset value than Advisor Class shares. Shareholder Transaction Expenses are one of several factors to consider when you invest in a Fund. The following table summarizes your maximum transaction costs from investing in Class A shares of a Fund and annual expenses for Class A shares of each Fund. For each Fund, the "Examples" to the right of the table below show the cumulative expenses attributable to a hypothetical $1,000 investment for the periods specified.
Class A Shares -------------- Maximum sales charge imposed on purchases (as a percentage of offering price) (a) ..................................................... None (sales charge waived) Sales charge imposed on dividend reinvestments .......................... None Deferred sales charge (as a percentage of original purchase price or redemption proceeds, whichever is lower) ................................ None Exchange fee ............................................................ None
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Operating Expenses Examples(a) - --------------------------------------- ---------------------------- Alliance Fund Class A Class A ------- ------- Management fees .68% After 1 year $ 11 12b-1 fees .20% After 3 years $ 33 Other expenses (b) .15% After 5 years $ 57 ---- After 10 years $126 Total fund operating expenses 1.03% ==== Growth Fund Class A Class A ------- ------- Management fees .74% After 1 year $ 13 12b-1 fees .30% After 3 years $ 40 Other expenses (b) .22% After 5 years $ 69 ---- After 10 years $152 Total fund operating expenses 1.26% ====
- -------------------------------------------------------------------------------- Please refer to the footnotes on page 46. 44
Operating Expenses Examples(a) - ----------------------------------------- ---------------------------- Premier Growth Fund Class A Class A ------- ------- Management fees 1.00% After 1 year $ 16 12b-1 fees .33% After 3 years $ 50 Other expenses (b) .24% After 5 years $ 86 ---- After 10 years $187 Total fund operating expenses 1.57% ==== Technology Fund Class A Class A ------- ------- Management fees (g) 1.04% After 1 year $ 17 12b-1 fees .30% After 3 years $ 53 Other expenses (b) .33% After 5 years $ 91 ---- After 10 years $198 Total fund operating expenses 1.67% ==== Quasar Fund Class A Class A ------- ------- Management fees (g) 1.16% After 1 year $ 17 12b-1 fees .22% After 3 years $ 53 Other expenses (b) .29% After 5 years $ 91 ---- After 10 years $198 Total fund operating expenses 1.67% ==== International Fund Class A Class A ------- ------- Management fees (after waiver) (c) .85% After 1 year $ 16 12b-1 fees .17% After 3 years $ 50 Other expenses (b) .56% After 5 years $ 86 ---- After 10 years $188 Total fund operating expenses (d) 1.58% ==== Worldwide Privatization Fund Class A Class A ------- ------- Management fees 1.00% After 1 year $ 17 12b-1 fees .30% After 3 years $ 54 Other expenses (b) .42% After 5 years $ 93 ---- After 10 years $203 Total fund operating expenses 1.72% ==== New Europe Fund Class A Class A ------- ------- Management fees 1.06% After 1 year $ 21 12b-1 fees .30% After 3 years $ 64 Other expenses (b) .69% After 5 years $110 ---- After 10 years $238 Total fund operating expenses 2.05% ==== All-Asia Investment Fund Class A Class A ------- ------- Management fees After 1 year $ 21 (after waiver) (c) .65% After 3 years $ 65 12b-1 fees .30% After 5 years $111 Other expenses After 10 years $239 Administration fees (after waiver) (d) 0.00% Other operating expenses(b) 1.11% ---- Total fund operating expenses (e) 2.06% ==== Global Small Cap Fund Class A Class A ------- ------- Management fees 1.00% After 1 year $ 24 12b-1 fees .30% After 3 years $ 75 Other expenses (b) 1.11% After 5 years $129 ---- After 10 years $275 Total fund operating expenses 2.41% ====
- -------------------------------------------------------------------------------- Please refer to the footnotes on page 46. 45
Operating Expenses Examples(a) - --------------------------------------- ---------------------------- Global Environment Fund Class A Class A ------- ------- bb bb Management fees 1.10% After 1 year $ 27 12b-1 fees .30% After 3 years $ 84 Other expenses (b) 1.29% After 5 years $142 ---- After 10 years $302 Total fund operating expenses 2.69% ==== Strategic Balanced Fund Class A Class A ------- ------- Management fees (after waiver) (c) .09% After 1 year $ 14 12b-1 fees .30% After 3 years $ 44 Other expenses (b) 1.01% After 5 years $ 77 ---- After 10 years $168 Total fund operating expenses (e) 1.40% ==== Balanced Shares Class A Class A ------- ------- Management fees .63% After 1 year $ 15 12b-1 fees .24% After 3 years $ 46 Other expenses (b) .60% After 5 years $ 80 ---- After 10 years $176 Total fund operating expenses 1.47% ==== Income Builder Fund Class A Class A ------- ------- Management fees .75% After 1 year $ 21 12b-1 fees .30% After 3 years $ 65 Other expenses (b) 1.04% After 5 years $112 ---- After 10 years $242 Total fund operating expenses 2.09% ==== Utility Income Fund Class A Class A ------- ------- Management fees (after waiver) (c) 0.00% After 1 year $ 15 12b-1 fees .30% After 3 years $ 47 Other expenses (b) 1.20% After 5 years $ 82 ---- After 10 years $179 Total fund operating expenses (f) 1.50% ==== Growth and Income Fund Class A Class A ------- ------- Management fees .49% After 1 year $ 9 12b-1 fees .22% After 3 years $ 29 Other expenses (b) .21% After 5 years $ 51 ---- After 10 years $113 Total fund operating expenses .92% ==== Real Estate Investment Fund Class A Class A ------- ------- Management fees .90% After 1 year $ 18 12b-1 fees .30% After 3 years $ 56 Other expenses (b) .57% After 5 years $ 96 ---- After 10 years $208 Total fund operating expenses 1.77% ====
- -------------------------------------------------------------------------------- (a) Advisor Class shares convert to Class A shares at net asset value and without the imposition of any sales charge and accordingly the maximum sales charge of 4.25% on most purchases of Class A shares for cash does not apply. (b) These expenses include a transfer agency fee payable to Alliance Fund Services, Inc., an affiliate of Alliance. (c) Net of voluntary fee waiver. In the absence of such waiver, management fees would be .75% for Strategic Balanced Fund and Utility Income Fund and 1.00% for All-Asia Investment Fund and 1.01% for International Fund. International Fund's fee, absent the voluntary fee waiver, is calculated based on average daily net assets. Maximum contractual rate, based on quarter-end net assets, is 1.00%. (d) Net voluntary fee waiver. Absent such fee waiver, administration fees would have been .15% for the Fund's Class A shares. Reflects the fees payable by All-Asia Investment Fund to Alliance pursuant to an administration agreement. (e) Net of voluntary fee waivers and expense reimbursements. Absent such waivers and reimbursements, total fund operating expenses for Strategic Balanced Fund would have been 2.08 for Class A shares. Total fund operating expenses for All-Asia Investment Fund would have been 2.56% for Class A shares annualized and total fund operating expenses for International Fund would have been 1.74%, for Class A, annualized. (f) Net of expense reimbursements. Absent expense reimbursements, total fund operating expenses for Utility Income Fund would be 3.55% for Class A shares. (g) Calculated based on average daily net assets. Maximum contractual rate, based on quarter-end net assets, is 1.00% for Quasar Fund and Technology Fund. 46 The purpose of the foregoing table is to assist the investor in understanding the various costs and expenses that an investor in a Fund will bear directly or indirectly. Long-term shareholders of Class A shares of a Fund may pay aggregate sales charges totaling more than the economic equivalent of the maximum initial sales charges permitted by the Conduct Rules of the National Association of Securities Dealers, Inc. The Rule 12b-1 fee for Class A comprises a service fee not exceeding .25% of the aggregate average daily net assets of the Fund attributable to Class A and an asset-based sales charge equal to the remaining portion of the Rule 12b-1 fee. "Management fees" for International Fund and All-Asia Investment Fund and "Administration fees" for All-Asia Investment Fund have been restated to reflect current voluntary fee waivers. "Other Expenses" are based on estimated amounts for the Global Environment Fund's current fiscal year. The Examples set forth above assume reinvestment of all dividends and distributions and utilize a 5% annual rate of return as mandated by Commission regulations. The Examples should not be considered representative of past or future expenses; actual expenses may be greater or less than those shown. Financial Highlights. The tables on the following pages present, for each Fund, per share income and capital changes for a Class A share outstanding throughout each period indicated. Except as indicated below, the information in the tables for Alliance Fund, Growth Fund, Premier Growth Fund, Strategic Balanced Fund, Balanced Shares, Utility Income Fund, Worldwide Privatization Fund and Growth and Income Fund has been audited by Price Waterhouse LLP, the independent accountants for each Fund, and for All-Asia Investment Fund, Technology Fund, Quasar Fund, International Fund, New Europe Fund, Global Small Cap Fund, Global Environment Fund, Real Estate Investment Fund and Income Builder Fund by Ernst & Young LLP, the independent auditors for each Fund. A report of Price Waterhouse LLP or Ernst & Young LLP, as the case may be, on the information with respect to each Fund, appears in the Fund's Statement of Additional Information. The following information for each Fund should be read in conjunction with the financial statements and related notes which are included in the Fund's Statement of Additional Information. Further information about a Fund's performance is contained in the Fund's annual report to shareholders, which may be obtained without charge by contacting AFS at the address or the "For Literature" telephone number shown on the cover of this Prospectus. 47
Net Net Net Asset Realized and Increase Value Unrealized (Decrease) In Dividends From Distributions Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains --------------------- ------------ -------------- -------------- --------------- -------------- -------------- Alliance Fund Class A Year ended 11/30/97 ..... $ 7.71 $ (.02)(b) $ 2.09 $ 2.07 $ (.02) $ (1.06) Year ended 11/30/96 ..... 7.72 .02 1.06 1.08 (.02) (1.07) Year ended 11/30/95 ..... 6.63 .02 2.08 2.10 (.01) (1.00) 1/1/94 to 11/30/94** .... 6.85 .01 (.23) (.22) 0.00 0.00 Year ended 12/31/93 ..... 6.68 .02 .93 .95 (.02) (.76) Year ended 12/31/92 ..... 6.29 .05 .87 .92 (.05) (.48) Year ended 12/31/91 ..... 5.22 .07 1.70 1.77 (.07) (.63) Year ended 12/31/90 ..... 6.87 .09 (.32) (.23) (.18) (1.24) Year ended 12/31/89 ..... 5.60 .12 1.19 1.31 (.04) 0.00 Year ended 12/31/88 ..... 5.15 .08 .80 .88 (.08) (.35) Growth Fund (i) Class A Year ended 10/31/97 ..... $ 34.91 $ (.10)(b) $ 10.17 $ 10.07 $ 0.00 $ (1.03) Year ended 10/31/96 ..... 29.48 .05 6.20 6.25 (.19) (.63) Year ended 10/31/95 ..... 25.08 .12 4.80 4.92 (.11) (.41) 5/1/94 to 10/31/94** .... 23.89 .09 1.10 1.19 0.00 0.00 Year ended 4/30/94 ...... 22.67 (.01)(c) 3.55 3.54 0.00 (2.32) Year ended 4/30/93 ...... 20.31 .05(c) 3.68 3.73 (.14) (1.23) Year ended 4/30/92 ...... 17.94 .29(c) 3.95 4.24 (.26) (1.61) 9/4/90++ to 4/30/91 ..... 13.61 .17(c) 4.22 4.39 (.06) 0.00 Premier Growth Fund Class A Year ended 11/30/97 ..... $ 17.98 $ (.10)(b) $ 5.20 $ 5.10 $ 0.00 $ (1.08) Year ended 11/30/96 ..... 16.09 (.04)(b) 3.20 3.16 0.00 (1.27) Year ended 11/30/95 ..... 11.41 (.03) 5.38 5.35 0.00 (.67) Year ended 11/30/94 ..... 11.78 (.09) (.28) (.37) 0.00 0.00 Year ended 11/30/93 ..... 10.79 (.05) 1.05 1.00 (.01) 0.00 9/28/92+ to 11/30/92 .... 10.00 .01 .78 .79 0.00 0.00 Technology Fund Class A Year ended 11/30/97 ..... $ 51.15 $ (.51)(b) $ 4.22 $ 3.71 $ 0.00 $ (.42) Year ended 11/30/96 ..... 46.64 .39 (b) 7.28 6.89 0.00 (2.38) Year ended 11/30/95 ..... 31.98 (.30)(b) 18.13 17.83 0.00 (3.17) 1/1/94 to 11/30/94** .... 26.12 (.32) 6.18 5.86 0.00 0.00 Year ended 12/31/93 ..... 28.20 (.29) 6.39 6.10 0.00 (8.18) Year ended 12/31/92 ..... 26.38 (.22)(b) 4.31 4.09 0.00 (2.27) Year ended 12/31/91 ..... 19.44 (.02) 10.57 10.55 0.00 (3.61) Year ended 12/31/90 ..... 21.57 (.03) (.56) (.59) 0.00 (1.54) Year ended 12/31/89 ..... 20.35 0.00 1.22 1.22 0.00 0.00 Year ended 12/31/88 ..... 20.22 (.03) .16 .13 0.00 0.00 Quasar Fund Class A Year ended 9/30/97 ...... $ 27.92 $ (.24)(b) $ 6.80 $ 6.56 $ 0.00 $ (4.11) Year ended 9/30/96 ...... 24.16 (.25) 8.82 8.57 0.00 (4.81) Year ended 9/30/95 ...... 22.65 (.22)(b) 5.59 5.37 0.00 (3.86) Year ended 9/30/94 ...... 24.43 (.60) (.36) (.96) 0.00 (.82) Year ended 9/30/93 ...... 19.34 (.41) 6.38 5.97 0.00 (.88) Year ended 9/30/92 ...... 21.27 (.24) (1.53) (1.77) 0.00 (.16) Year ended 9/30/91 ...... 15.67 (.05) 5.71 5.66 (.06) 0.00 Year ended 9/30/90 ...... 24.84 .03(b) (7.18) (7.15) 0.00 (2.02) Year ended 9/30/89 ...... 17.60 .02(b) 7.40 7.42 0.00 (.18) Year ended 9/30/88 ...... 24.47 (.08) (2.08) (2.16) 0.00 (4.71) International Fund Class A Year ended 6/30/97 ...... $ 18.32 $ .06(b) $ 1.51 $ 1.57 $ (.12) $ (1.08) Year ended 6/30/96 ...... 16.81 .05(b) 2.51 2.56 0.00 (1.05) Year ended 6/30/95 ...... 18.38 .04 .01 .05 0.00 (1.62) Year ended 6/30/94 ...... 16.01 (.09) 3.02 2.93 0.00 (.56) Year ended 6/30/93 ...... 14.98 (.01) 1.17 1.16 (.04) (.09) Year ended 6/30/92 ...... 14.00 .01(b) 1.04 1.05 (.07) 0.00 Year ended 6/30/91 ...... 17.99 .05 (3.54) (3.49) (.03) (.47) Year ended 6/30/90 ...... 17.24 .03 2.87 2.90 (.04) (2.11) Year ended 6/30/89 ...... 16.09 .05 3.73 3.78 (.13) (2.50) Year ended 6/30/88 ...... 23.70 .17 (1.22) (1.05) (.21) (6.35) - ------------------------------------------------------------------------------------------------------------------------------------
Please refer to footnotes on page 52. 48
Total Net Assets Ratio of Net Total Net Asset Investment At End Of Ratio Of Investment Dividends Value Return Based Period Expenses Income (Loss) Average And End Of on Net Asset (000's To Average To Average Portfolio Commission Fiscal Year or Period Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate Rate(k) --------------------- ------------- --------- ----------- ----------- ----------- ----------- ------------- ---------- Alliance Fund Class A Year ended 11/30/97...... $ (1.08) $ 8.70 31.82% $ 1,201,435 1.03% (.29)% 158% $ 0.0571 Year ended 11/30/96...... (1.09) 7.71 16.49 999,067 1.04 .30 80 0.0646 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 -- Year ended 12/31/93...... (.78) 6.85 14.26 831,814 1.01 .27 66 -- Year ended 12/31/92...... (.53) 6.68 14.70 794,733 .81 .79 58 -- Year ended 12/31/91...... (.70) 6.29 33.91 748,226 .83 1.03 74 -- Year ended 12/31/90...... (1.42) 5.22 (4.36) 620,374 .81 1.56 71 -- Year ended 12/31/89...... (.04) 6.87 23.42 837,429 .75 1.79 81 -- Year ended 12/31/88...... (.43) 5.60 17.10 760,619 .82 1.38 65 -- Growth Fund (i) Class A Year ended 10/31/97...... $ (1.03) $ 43.95 29.54% $ 783,110 1.26%(l) (.25)% 48% $ 0.0562 Year ended 10/31/96...... (.82) 34.91 21.65 499,459 1.30 .15 46 0.0584 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 (f) .32 87 -- Year ended 4/30/93....... (1.37) 22.67 18.89 13,889 1.40 (f) .20 124 -- Year ended 4/30/92....... (1.87) 20.31 23.61 8,228 1.40 1.44 137 -- 9/4/90++ to 4/30/91...... (.06) 17.94 32.40 713 1.40* 1.99* 130 -- Premier Growth Fund Class A Year ended 11/30/97...... $ (1.08) $ 22.00 30.46% $ 373,099 1.57% (.52)% 76% $ 0.0594 Year ended 11/30/96...... (1.27) 17.98 21.52 172,870 1.65 (.27) 95 0.0651 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 -- Year ended 11/30/93...... (.01) 11.78 9.26 40,415 2.18 (.61) 68 -- 9/28/92+ to 11/30/92..... 0.00 10.79 7.90 4,893 2.17* .91* 0 -- Technology Fund Class A Year ended 11/30/97...... $ (.42) $ 54.44 7.32% $ 624,716 1.67%(l) (.97)% 51% $ 0.0564 Year ended 11/30/96...... (2.38) 51.15 16.05 594,861 1.74 (.87) 30 0.0612 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 -- Year ended 12/31/93...... (8.18) 26.12 21.63 173,732 1.73 (1.32) 64 -- Year ended 12/31/92...... (2.27) 28.20 15.50 173,566 1.61 (.90) 73 -- Year ended 12/31/91...... (3.61) 26.38 54.24 191,693 1.71 (.20) 134 -- Year ended 12/31/90...... (1.54) 19.44 (3.08) 131,843 1.77 (.18) 147 -- Year ended 12/31/89...... 0.00 21.57 6.00 141,730 1.66 .02 139 -- Year ended 12/31/88...... 0.00 20.35 0.64 169,856 1.42 (.16) 139 -- Quasar Fund Class A Year ended 9/30/97....... $ (4.11) $ 30.37 27.81% $ 402,081 1.67% (.91)% 135% $ 0.0536 Year ended 9/30/96....... (4.81) 27.92 42.42 229,798 1.79 (1.11) 168 0.0596 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 -- Year ended 9/30/93....... (.88) 24.43 31.58 228,874 1.65 (1.00) 102 -- Year ended 9/30/92....... (.16) 19.34 (8.34) 252,140 1.62 (.89) 128 -- Year ended 9/30/91....... (.06) 21.27 36.28 333,806 1.64 (.22) 118 -- Year ended 9/30/90....... (2.02) 15.67 (30.81) 251,102 1.66 .16 90 -- Year ended 9/30/89....... (.18) 24.84 42.68 263,099 1.73 .10 90 -- Year ended 9/30/88....... (4.71) 17.60 (8.61) 90,713 1.28 (.40) 58 -- International Fund Class A Year ended 6/30/97....... $ (1.20) $ 18.69 9.30% $ 190,173 1.74% .31% 94% $ 0.0363 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 -- Year ended 6/30/93....... (.13) 16.01 7.86 161,048 1.88 (.14) 94 -- Year ended 6/30/92....... (.07) 14.98 7.52 179,807 1.82 .07 72 -- Year ended 6/30/91....... (.50) 14.00 (19.34) 214,442 1.73 .37 71 -- Year ended 6/30/90....... (2.15) 17.99 16.98 265,999 1.45 .33 37 -- Year ended 6/30/89....... (2.63) 17.24 27.65 166,003 1.41 .39 87 -- Year ended 6/30/88....... (6.56) 16.09 (4.20) 132,319 1.41 .84 55 -- - ----------------------------------------------------------------------------------------------------------------------------------
49
Net Net Net Distributions Asset Realized and Increase In Excess Value Unrealized (Decrease) In Dividends From Of Net Distributions Beginning Of Net Investment Gain(Loss)On Net Asset Value Net Investment Investment From Net Fiscal Year or Period Period Income (Loss) Investments From Operations Income Income Realized Gains --------------------- ------------- -------------- ------------- --------------- ------------- ----------- -------------- Worldwide Privatization Fund Class A 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 New Europe Fund Class A 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 Year ended 2/28/94 ...... 9.37 .02(b) 3.14 3.16 0.00 0.00 0.00 Year ended 2/28/93 ...... 9.81 .04 (.33) (.29) (.15) 0.00 0.00 Year ended 2/29/92 ...... 9.76 .02(b) .05 .07 (.02) 0.00 0.00 4/2/90+ to 2/28/91 ...... 11.11(e) .26 (.91) (.65) (.26) 0.00 (.44) All-Asia Investment Fund Class A 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 Global Small Cap Fund Class A 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)(j) Period ended 7/31/94** .. 11.24 (.15)(b) (.01) (.16) 0.00 0.00 0.00 Year ended 9/30/93 ...... 9.33 (.15) 2.49 2.34 0.00 0.00 (.43) Year ended 9/30/92 ...... 10.55 (.16) (1.03) (1.19) 0.00 0.00 (.03) Year ended 9/30/91 ...... 8.26 (.06) 2.35 2.29 0.00 0.00 0.00 Year ended 9/30/90 ...... 15.54 (.05)(b) (4.12) (4.17) 0.00 0.00 (3.11) Year ended 9/30/89 ...... 11.41 (.03) 4.25 4.22 0.00 0.00 (.09) Year ended 9/30/88 ...... 15.07 (.05) (1.83) (1.88) 0.00 0.00 (1.78) Global Environment Fund (n) Class A 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 Year ended 10/31/93 ..... 10.78 .01 .18 .19 0.00 0.00 0.00 Year ended 10/31/92 ..... 13.12 .01 (2.17) (2.16) (.10) 0.00 (.08) Year ended 10/31/91 ..... 12.46 .13 .87 1.00 (.25) 0.00 (.09) 1/1/90+ to 10/31/90 ..... 13.83 .20 (1.57) (1.37) 0.00 0.00 0.00 Strategic Balanced Fund (i) Class A Year ended 7/31/97 ...... $ 18.48 $ .47(b)(c) $ 3.56 $ 4.03 $ (.39) $ 0.00 $ (2.33) Year ended 7/31/96 ...... 17.98 .35(b)(c) 1.08 1.43 (.32) 0.00 (.61) Year ended 7/31/95 ...... 16.26 .34(c) 1.64 1.98 (.22) 0.00 (.04) Period ended 7/31/94** .. 16.46 .07(c) (.27) (.20) 0.00 0.00 0.00 Year ended 4/30/94 ...... 16.97 .16(c) .74 .90 (.24) 0.00 (1.17) Year ended 4/30/93 ...... 17.06 .39(c) .59 .98 (.42) 0.00 (.65) Year ended 4/30/92 ...... 14.48 .27(c) 2.80 3.07 (.17) 0.00 (.32) 9/4/90++ to 4/30/91 ..... 12.51 .34(c) 1.66 2.00 (.03) 0.00 0.00 Balanced Shares Class A Year ended 7/31/97 ...... $ 14.01 $ .31(b) $ 3.97 $ 4.28 $ (.32) $ 0.00 $ (.18) 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) Year ended 9/30/93 ...... 13.20 .34 1.29 1.63 (.43) 0.00 0.00 Year ended 9/30/92 ...... 12.64 .44 .57 1.01 (.45) 0.00 0.00 Year ended 9/30/91 ...... 10.41 .46 2.17 2.63 (.40) 0.00 0.00 Year ended 9/30/90 ...... 14.13 .45 (2.14) (1.69) (.40) 0.00 (1.63) Year ended 9/30/89 ...... 12.53 .42 2.18 2.60 (.46) 0.00 (.54) Year ended 9/30/88 ...... 16.33 .46 (1.07) (.61) (.44) 0.00 (2.75) Income Builder Fund (h) Class A Year ended 10/31/97 ..... $ 11.57 $ .50(b) $ 1.62 $ 2.12 $ (.51) $ 0.00 $ (.61) Year ended 10/31/96 ..... 10.70 .56(b) .98 1.54 (.55) 0.00 (.12) Year ended 10/31/95 ..... 9.69 .93(b) .59 1.52 (.51) 0.00 0.00 3/25/94++ to 10/31/94 ... 10.00 .96 (1.02) (.06) (.05)(g) 0.00 (.20) - ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the footnotes on page 52. 50
Total Net Assets Ratio of Net Total Net Asset Investment At End Of Ratio Of Investment Dividends Value Return Based Period Expenses Income (Loss) Average And End Of on Net Asset (000's To Average To Average Portfolio Commission Fiscal Year or Period Distributions Period Value(a) omitted) Net Assets Net Assets Turnover Rate Rate(k) --------------------- ------------- --------- ------------ ---------- ---------- ----------- ------------- --------- Worldwide Privatization Fund Class A Year ended 6/30/97 ...... $ (1.57) $ 13.26 25.16% $ 561,793 1.72% 1.27% 48% $0.0132 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 -- New Europe Fund Class A Year ended 7/31/97 ...... $ (1.50) $ 18.61 28.78% $ 78,578 2.05%(l) .40% 89% $0.0569 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 -- Year ended 2/28/94 ...... 0.00 12.53 33.73 90,372 2.30 .17 94 -- Year ended 2/28/93 ...... (.15) 9.37 (2.82) 79,285 2.25 .47 125 -- Year ended 2/29/92 ...... (.02) 9.81 .74 108,510 2.24 .16 34 -- 4/2/90+ to 2/28/91 ...... (.70) 9.76 (5.63) 188,016 1.52* 2.71* 48 -- All-Asia Investment Fund Class A Year ended 10/31/97 ..... $ (.34) $ 7.54 (29.61)% $ 5,916 3.45%(f) (1.97)% 70% $0.0248 Year ended 10/31/96 ..... (.08) 11.04 6.43 12,284 3.37(f) (1.75) 66 0.0280 11/28/94+ to 10/31/95 ... 0.00 10.45 4.50 2,870 4.42(f)* (1.87)* 90 -- Global Small Cap Fund Class A Year ended 7/31/97 ...... $ (1.56) $ 12.87 26.47% $ 85,217 2.41%(l) (1.25)% 129% $0.0364 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(f) (1.17) 128 -- Period ended 7/31/94** .. 0.00 11.08 (1.42) 61,372 2.42* (1.26)* 78 -- Year ended 9/30/93 ...... (.43) 11.24 25.83 65,713 2.53 (1.13) 97 -- Year ended 9/30/92 ...... (.03) 9.33 (11.30) 58,491 2.34 (.85) 108 -- Year ended 9/30/91 ...... 0.00 10.55 27.72 84,370 2.29 (.55) 104 -- Year ended 9/30/90 ...... (3.11) 8.26 (31.90) 68,316 1.73 (.46) 89 -- Year ended 9/30/89 ...... (.09) 15.54 37.34 113,583 1.56 (.17) 106 -- Year ended 9/30/88 ...... (1.78) 11.41 (8.11) 90,071 1.54 (.50) 74 -- Global Environment Fund (n) Class A Year ended 10/31/97 ..... $ (1.13) $ 18.77 23.51% $ 52,378 2.39% (1.35)% 145% $0.0506 Year ended 10/31/96 ..... (.02) 16.48 33.48 100,271 1.60 (.85) 268 0.0313 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 -- Year ended 10/31/93 ..... 0.00 10.97 1.76 75,805 1.62 .15 25 -- Year ended 10/31/92 ..... (.18) 10.78 (16.59) 74,442 1.63 .10 41 -- Year ended 10/31/91 ..... (.34) 13.12 8.66 90,612 1.49 .95 32 -- 1/1/90+ to 10/31/90 ..... 0.00 12.46 (10.68) 86,041 1.72* 3.95* 4 -- Strategic Balanced Fund (i) Class A Year ended 7/31/97 ...... $ (2.72) $ 19.79 23.90% $ 20,312 1.41%(f)(l) 2.50% 170% $0.0395 Year ended 7/31/96 ...... (.93) 18.48 8.05 18,329 1.40(f) 1.78 173 -- Year ended 7/31/95 ...... (.26) 17.98 12.40 10,952 1.40(f) 2.07 172 -- Period ended 7/31/94** .. 0.00 16.26 (1.22) 9,640 1.40*(f) 1.63* 21 -- Year ended 4/30/94 ...... (1.41) 16.46 5.06 9,822 1.40(f) 1.67 139 -- Year ended 4/30/93 ...... (1.07) 16.97 5.85 8,637 1.40(f) 2.29 98 -- Year ended 4/30/92 ...... (.49) 17.06 20.96 6,843 1.40 1.92 103 -- 9/4/90++ to 4/30/91 ..... (.03) 14.48 16.00 443 1.40* 3.54* 137 -- Balanced Shares Class A Year ended 7/31/97 ...... $ (2.12) $ 16.17 33.46% $ 115,500 1.47%(m) 2.11% 207% $0.0552 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 -- Year ended 9/30/93 ...... (.43) 14.40 12.52 172,484 1.35 2.50 188 -- Year ended 9/30/92 ...... (.45) 13.20 8.14 143,883 1.40 3.26 204 -- Year ended 9/30/91 ...... (.40) 12.64 25.52 154,230 1.44 3.75 70 -- Year ended 9/30/90 ...... (2.03) 10.41 (13.12) 140,913 1.36 4.01 169 -- Year ended 9/30/89 ...... (1.00) 14.13 22.27 159,290 1.42 3.29 132 -- Year ended 9/30/88 ...... (3.19) 12.53 (1.10) 111,515 1.42 3.74 190 -- Income Builder Fund (h) Class A Year ended 10/31/97 ..... $ (1.12) $ 12.57 19.36% $ 2,367 2.09% 4.18% 159% $0.0513 Year ended 10/31/96 ..... (.67) 11.57 14.82 2,056 2.20 4.92 108 0.0600 Year ended 10/31/95 ..... (.51) 10.70 16.22 1,398 2.38 5.44 92 -- 3/25/94++ to 10/31/94 ... (.25) 9.69 (.54) 600 2.52* 6.11* 126 -- - ------------------------------------------------------------------------------------------------------------------------------------
51
Net Net Net Distributions Asset Realized and Increase In Excess Value Unrealized (Decrease) In Dividends From Of Net Distributions Beginning Of Net Investment Gain(Loss)On Net Asset Value Net Investment Investment From Net Fiscal Year or Period Period Income (Loss) Investments From Operations Income Income Realized Gains --------------------- ------------- -------------- ------------- --------------- ------------- ----------- -------------- Utility Income Fund Class A 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 10/18/93+ to 11/30/93 ... 10.00 .02(c) (.10) (.08) 0.00 0.00 0.00 Growth and Income Fund Class A 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) Year ended 10/31/93 ..... 2.48 .06 .29 .35 (.06) 0.00 (.16) Year ended 10/31/92 ..... 2.52 .06 .11 .17 (.06) 0.00 (.15) Year ended 10/31/91 ..... 2.28 .07 .56 .63 (.09) 0.00 (.30) Year ended 10/31/90 ..... 3.02 .09 (.30) (.21) (.10) 0.00 (.43) Year ended 10/31/89 ..... 3.05 .10 .43 .53 (.08) 0.00 (.48) Year ended 10/31/88 ..... 3.48 .10 .33 .43 (.08) 0.00 (.78) Real Estate Investment Fund Class A 10/1/96+ to 8/31/97 ..... $ 10.00 $ .30(b) $ 2.88 $ 3.18 $ (.38)(m) $ 0.00 $ 0.00 - ------------------------------------------------------------------------------------------------------------------------------------
+ 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 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 returns. Total investment returns calculated for a period of less than one year is not annualized. (b) Based on average shares outstanding. (c) Net of fee waivers and expense reimbursements. (d) Adjusted for a 200% stock dividend paid to shareholders of record on January 15, 1988. (e) Net of offering costs of ($.05). (f) Net of expenses assumed and/or waived/reimbursed. If 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 (l) below, would have been as follows:
1993 1994 1995 1996 1997 All-Asia Investment Fund Class A -- -- 10.57%# 3.61% 3.57% Growth Fund Class A 1.84% 1.46% -- -- Global Small Cap Fund Class A -- -- 2.61% -- Strategic Balanced Fund Class A 1.85% 1.70%1 1.81% 1.76% 2.06% 1.94%#2 Utility Income Fund Class A 145.63%# 13.72% 4.86%# 3.38% 3.55%
- ------------ # annualized 1. For the period ended April 30, 1994 2. For the period ended July 31, 1994 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. (g) "Dividends from Net Investment Income" includes a return of capital. Income Builder Fund had a return of capital with respect to Class A shares, for the period ended October 31, 1994, of $(.01). (h) On March 25, 1994, all existing shares of Income Builder Fund, previously known as Alliance Multi-Market Income and Growth Trust, were converted into Class C shares. (i) Prior to July 22, 1993, Equitable Capital Management Corporation ("Equitable Capital") served as the investment adviser to the predecessor to The Alliance Portfolios, of which Growth Fund and Strategic Balanced Fund are series. On July 22, 1993, Alliance acquired the business and substantially all assets of Equitable Capital and became investment adviser to the Funds. (j) "Distributions from Net Realized Gains" includes a return of capital. Global Small Cap Fund had a return of capital with respect to Class A shares, for the year ended July 31, 1995, of $(.12). (k) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share for trades on which commissions are changed. (l) Amounts do not reflect the impact of expense offset arrangements with the transfer agent. Taking into account such expense offset arrangements, the ratios of expenses to average net assets, assuming the assumption and/or waiver/reimbursement of expenses described in (f) above, would have been as follows:
1997 1997 ---- ---- International Fund Growth Fund Class A 1.73% Class A 1.25% Global Small Cap Fund Technology Fund Class A 2.38% Class A 1.66% Strategic Balanced Fund Class A 1.40% New Europe Fund Class A 2.04% Balanced Shares Class A 1.46% Growth and Income Class A .91%
(m) Distributions from net investment income include a tax return of capital of $0.08. (n) The 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. 52
Total Net Assets Ratio of Net Total Net Asset Investment At End Of Ratio Of Investment Dividends Value Return Based Period Expenses Income (Loss) Average And End Of on Net Asset (000's To Average To Average Portfolio Commission Fiscal Year or Period Distributions Period Value(a) omitted) Net Assets Net Assets Turnover Rate Rate(k) --------------------- ------------- --------- ------------ ---------- ---------- ----------- ------------- --------- Utility Income Fund Class A Year ended 11/30/97 ..... $ (.47) $ 12.48 23.10% $ 4,117 1.50%(f) 2.89% 37% $ 0.0442 Year ended 11/30/96 ..... (.46) 10.59 8.47 3,294 1.50 (f) 1.67 98 0.0536 Year ended 11/30/95 ..... (.45) 10.22 19.58 2,748 1.50 (f) 2.48 162 -- Year ended 11/30/94 ..... (.48) 8.97 (4.86) 1,068 1.50 (f) 4.13 30 -- 10/18/93+ to 11/30/93 ... 0.00 9.92 (.80) 229 1.50*(f) 2.35* 11 -- Growth and Income Fund Class A Year ended 10/31/97 ..... $ (.43) $ 3.48 33.28% $ 787,566 .92%(l) 1.39% 88% $ 0.0589 Year ended 10/31/96 ..... (.26) 3.00 21.51 553,151 .97 1.73 88 0.0625 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 -- Year ended 10/31/93 ..... (.22) 2.61 14.98 459,372 1.07 2.38 91 -- Year ended 10/31/92 ..... (.21) 2.48 7.23 417,018 1.09 2.63 104 -- Year ended 10/31/91 ..... (.39) 2.52 31.03 409,597 1.14 2.74 84 -- Year ended 10/31/90 ..... (.53) 2.28 (8.55) 314,670 1.09 3.40 76 -- Year ended 10/31/89 ..... (.56) 3.02 21.59 377,168 1.08 3.49 79 -- Year ended 10/31/88 ..... (.86) 3.05 16.45 350,510 1.09 3.09 66 -- Real Estate Investment Fund Class A 10/1/96+ to 8/31/97 ..... $ (.38) $ 12.80 32.24% $ 37,638 1.77%(l) 2.73%* 20% $ 0.0518
53 - -------------------------------------------------------------------------------- GENERAL INFORMATION - -------------------------------------------------------------------------------- PORTFOLIO TRANSACTIONS Consistent with the Conduct Rules of the National Association of Securities Dealers, Inc., and subject to seeking best price and execution, a Fund may consider sales of its shares as a factor in the selection of dealers to enter into portfolio transactions with the Fund. ORGANIZATION Each of the following Funds is a Maryland corporation organized in the year indicated: The Alliance Fund, Inc. (1938), Alliance Balanced Shares, Inc. (1932), Alliance Premier Growth Fund, Inc. (1992), Alliance Technology Fund, Inc. (1980), Alliance Quasar Fund, Inc. (1968), Alliance Worldwide Privatization Fund, Inc. (1994), Alliance New Europe Fund, Inc. (1990), Alliance All-Asia Investment Fund, Inc. (1994), Alliance Global Small Cap Fund, Inc. (1966), Alliance Global Environment Fund, Inc. (1990), Alliance Income Builder Fund, Inc. (1991), Alliance Utility Income Fund, Inc. (1993), Alliance Growth and Income Fund, Inc. (1932) and Real Estate Investment Fund, Inc. (1996). Each of the following Funds is either a Massachusetts business trust or a series of a Massachusetts business trust organized in the year indicated: Alliance Growth Fund and Alliance Strategic Balanced Fund (each a series of The Alliance Portfolios) (1987), and Alliance International Fund (1980). Prior to August 2, 1993, The Alliance Portfolios was known as The Equitable Funds, Growth Fund was known as The Equitable Growth Fund and Strategic Balanced Fund was known as The Equitable Balanced Fund. Prior to March 22, 1994, Income Builder Fund was known as Alliance Multi-Market Income and Growth Trust, Inc. It is anticipated that annual shareholder meetings will not be held; shareholder meetings will be held only when required by federal or state law. Shareholders have available certain procedures for the removal of Directors. A shareholder in a Fund 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. The Funds are empowered to establish, without shareholder approval, additional portfolios, which may have different investment objectives, and additional classes of shares. If an additional portfolio or class were established in a Fund, each share of the portfolio or class would normally be entitled to one vote for all purposes. Generally, shares of each portfolio and class would vote together as a single class on matters, such as the election of Directors, that affect each portfolio and class in substantially the same manner. Advisor Class, Class A, Class B and Class C shares have identical voting, dividend, liquidation and other rights, except that each class bears its own transfer agency expenses, each of Class A, Class B and Class C shares bears its own distribution expenses and Class B and Advisor Class shares convert to Class A shares under certain circumstances. Each class of shares votes separately with respect to matters for which separate class voting is appropriate under applicable law. Shares are freely transferable, are entitled to dividends as determined by the Directors and, in liquidation of a Fund, are entitled to receive the net assets of the Fund. Since this Prospectus sets forth information about all the Funds, it is theoretically possible that a Fund might be liable for any materially inaccurate or incomplete disclosure in this Prospectus concerning another Fund. Based on the advice of counsel, however, the Funds believe that the potential liability of each Fund with respect to the disclosure in this Prospectus extends only to the disclosure relating to that Fund. Certain additional matters relating to a Fund's organization are discussed in its Statement of Additional Information. REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer agent and dividend-disbursing agent for a fee based upon the number of shareholder accounts maintained for the Funds. PRINCIPAL UNDERWRITER AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of the Americas, New York, New York 10105, is the principal underwriter of shares of the Funds. PERFORMANCE INFORMATION From time to time, the Funds advertise their "total return," which is computed separately for each class of shares, including Advisor Class shares. Such advertisements disclose a Fund's average annual compounded total return for the periods prescribed by the Commission. A Fund's total return for each such period is computed by finding, through the use of a formula prescribed by the Commission, the average annual compounded rate of return over the period that would equate an assumed initial amount invested to the value of the investment at the end of the period. For purposes of computing total return, income dividends and capital gains distributions paid on shares of a Fund are assumed to have been reinvested when paid and the maximum sales charges applicable to purchases and redemptions of a Fund's shares are assumed to have been paid. Balanced Shares, Growth and Income Fund, Income Builder Fund, Real Estate Investment Fund and Utility Income Fund may also advertise their "yield," which is also computed separately for each class of shares, including Advisor Class shares. A Fund's yield for any 30-day (or one-month) period is computed by dividing the net investment income per share earned during such period by the maximum public offering price per share on the last day of the period, and then annualizing such 30-day (or one-month) yield in accordance with a formula prescribed by the Commission which provides for compounding on a semi-annual basis. 54 Balanced Shares, Income Builder Fund, Utility Income Fund, Real Estate Investment Fund and Growth and Income Fund may also state in sales literature an "actual distribution rate" for each class which is computed in the same manner as yield except that actual income dividends declared per share during the period in question are substituted for net investment income per share. The actual distribution rate is computed separately for each class of shares, including Advisor Class shares. A Fund's advertisements may quote performance rankings or ratings of a Fund by financial publications or independent organizations such as Lipper Analytical Services, Inc. and Morningstar, Inc. or compare a Fund's performance to various indices. ADDITIONAL INFORMATION This Prospectus and the Statements of Additional Information, which have been incorporated by reference herein, do not contain all the information set forth in the Registration Statements filed by the Funds with the Commission under the Securities Act. Copies of the Registration Statements may be obtained at a reasonable charge from the Commission or may be examined, without charge, at the offices of the Commission in Washington, D.C. This prospectus does not constitute an offering in any state in which such offering may not lawfully be made. This prospectus is intended to constitute an offer by each Fund only of the securities of which it is the issuer and is not intended to constitute an offer by any Fund of the securities of any other Fund whose securities are also offered by this prospectus. No Fund intends to make any representation as to the accuracy or completeness of the disclosure in this prospectus relating to any other Fund. See "General Information--Organization." 55 ================================================================================ Alliance Stock Funds Subscription Application - - Advisor Class ================================================================================ The Alliance Fund Growth Fund Premier Growth Fund Technology Fund Quasar Fund International Fund Worldwide Privatization Fund New Europe Fund All-Asia Investment Fund Global Small Cap Fund Global Environment Fund Strategic Balanced Fund Balanced Shares Income Builder Fund Real Estate Investment Fund Utility Income Fund Growth & Income 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: -- 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. -- Transfer on Death: o Ensure that your state participates -- 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. -- 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 ================================================================================ 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*, Transfer On Death Beneficiary or Minor's Name (MI) (Last Name) |_|_|_|-|_|_|-|_|_|_|_| If Uniform Gift/Transfer Social Security Number of Owner or Minor (required to open account) 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 (First Name) (MI) (Last 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
Alliance Capital[LOGO](R) 1 - -------------------------------------------------------------------------------------------------------------------------- 3. Your Initial Investment - -------------------------------------------------------------------------------------------------------------------------- I hereby subscribe for shares of the following Alliance Stock Fund(s) and elect distribution options as indicated. Dividend and Capital Gain Distribution Options: R Reinvest distributions into my fund account. - ------------------------------------------ - Broker/Dealer Use Only: Wire Confirm # 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. - ------------- ============== ======================== ============================= Indicate three Distributions Options digit Fund "Check One" number located Indicate Dollar Amount ============================= below Dividends Captital Gains Make all ============== ======================== ============================= checks payable to: |_|_|_| $ R C D R C D Alliance Funds |_|_|_| $ R C D R C D - ------------- |_|_|_| $ R C D R C D |_|_|_| $ R C D R C D ========================== Total Investment $ ========================== - -------------------------------------------------------------------------------------------------------------------------- Alliance Stock Fund Names and Numbers - -------------------------------------------------------------------------------------------------------------------------- ======= Advisor Class ======= Domestic The Alliance Fund 444 Growth Fund 431 Premier Growth Fund 478 Technology Fund 482 Quasar Fund 426 Global International Fund 440 Worldwide Privatization Fund 412 New Europe Fund 462 All-Asia Investment Fund 418 Global Small Cap Fund 445 Global Environment Fund 481 Total Return Strategic Balanced Fund 432 Balanced Shares 496 Income Builder Fund 411 Real Estate Investment Fund 410 Utility Income Fund 409 Growth & Income Fund 494
2 - -------------------------------------------------------------------------------------------------------------------------- 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 (MM,DD) Amount ($25 minimum) Frequency Frequency: 2- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| M = monthly Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Q = quarterly A = Annually 3- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency *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 that the check or electronic fund transfer has been collected, normally 15 calendar days after the purchase date. - --------------------------------------------------------------------------------------------------------------------------
3 - -------------------------------------------------------------------------------------------------------------------------- 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 (MM,DD) Amount ($25 minimum) Frequency Frequency: 2- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| M = monthly Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Q = quarterly A = Annually 3- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Please send my SWP proceeds to: |_| My Address of Record (via check) |_| My checking account-via EFT (complete section 4D) Your bank must be a member of the National Automated Clearing House Association (NACHA) in |_| The Payee and address specified in section 4E (via check) order for you to receive SWP proceeds directly (Medallion Signature Guarantee required) 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) |_| Telephone Transactions (Section 4B) |_| Automatic Investments (Section 4A) |_| Withdrawals (Section 4C) - --------------------------------------------------------------------------------------------------------------------------- Please Tape a Pre-printed Voided Check Here* - --------------------------------------------------------------------------------------------------------------------------- * The above services cannot be established [GRAPHIC OF BLANK CHECK WITH THE WORD VOID PRINTED ON IT.] 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
4 - -------------------------------------------------------------------------------------------------------------------------- 4. YOUR SHAREHOLDER OPTIONS(CONTINUED) - -------------------------------------------------------------------------------------------------------------------------- E. THIRD PARTY PAYMENT DETAILS Your signautre(s) in Section 5 must be Medallion Signature Guaranteed if your account is not maintained by a dealer/broker. 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
5 - -------------------------------------------------------------------------------- 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 CERTIFICATE REQUIRED TO AVOID BACKUP WITHHOLDING. |__________________________________________________| |_______________________| Signature Date |__________________________________________________| |_______________________| Signature Date - ---------------------------------------------- Medallion Signautre Guarantee required if completing Section 4E and your mutual fund is not maintained by a broker dealer Alliance Capital [LOGO] 6 [LOGO] ALLIANCE PREMIER GROWTH 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 February 2, 1998 ___________________________________________________________ This Statement of Additional Information is not a prospectus but supplements and should be read in conjunction with the current Prospectus for Alliance Premier Growth Fund, Inc. (the "Fund") that offers 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 either Prospectus may be obtained by contacting Alliance Fund Services, Inc. at the address or the "For Literature" telephone numbers 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......................... BROKERAGE AND PORTFOLIO TRANSACTIONS..................................... GENERAL INFORMATION........................................ REPORT OF INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS............................................... APPENDIX A................................................. A-1 __________________________ (R) This registered service mark used under license from the owner, Alliance Capital Management, L.P. ___________________________________________________________ DESCRIPTION OF THE FUND ___________________________________________________________ Except as otherwise indicated, the investment policies of the Fund are not "fundamental policies" and may, therefore, be changed by the Board of Directors without a shareholder vote. However, the Fund will not change its investment policies without contemporaneous written notice to its shareholders. In addition, 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 Fund is a diversified, open-end management investment company whose investment objective is to seek long- term growth of capital by investing predominantly in the equity securities (common stocks, securities convertible into common stocks and rights and warrants to subscribe for or purchase common stocks) of a limited number of large, carefully selected, high-quality American companies that, in the judgment of Alliance Capital Management L.P., the Fund's adviser (the "Adviser"), are likely to achieve superior earnings growth. The Fund's investments in the 25 of these companies most highly regarded at any point in time by the Adviser will usually constitute approximately 70% of the Fund's net assets. Normally, approximately 40 companies will be represented in the Fund's investment portfolio. The Fund thus differs from more typical equity mutual funds by investing most of its assets in a relatively small number of intensively researched companies. The Fund is designed for the investor who seeks to accumulate capital over a period of years with less volatility than that typically associated with a more aggressive strategy of investment in smaller companies. How the Fund Pursues its Objective As a matter of fundamental policy, the Fund will, under normal circumstances, invest at least 85% of the value of its total assets in the equity securities of American companies (except when in a temporarily defensive position). The Fund defines American companies to be entities (i) that are organized under the laws of the United States and have their principal office in the United States, and (ii) the equity securities of which are traded principally in the United States securities markets. Within the investment framework described herein, Alfred Harrison, who heads the Adviser's "Large Cap Growth Group," is ultimately responsible for the investment decisions for the Fund. 2 In managing the Fund's assets, the Adviser's investment strategy emphasizes stock selection and investment in the securities of a limited number of issuers. The Adviser depends heavily upon the fundamental analysis and research of its large internal research staff in making investment decisions for the Fund. The research staff generally follows a primary research universe of approximately 600 companies which are considered by the Adviser to have strong management, superior industry positions, excellent balance sheets and the ability to demonstrate superior earnings growth. As one of the largest multi-national investment firms, the Adviser has access to considerable information concerning all of the companies followed, an in-depth understanding of the products, services, markets and competition of these companies and a good knowledge of the managements of most of the companies in its research universe. The Adviser's analysts prepare their own earnings estimates and financial models for each company followed. While each analyst has responsibility for following companies in one or more identified sectors and/or industries, the lateral structure of the Adviser's research organization and constant communication among the analysts result in decision-making based on the relative attractiveness of stocks among industry sectors. The focus during this process is on the early recognition of change on the premise that value is created through the dynamics of changing company, industry and economic fundamentals. Research emphasis is placed on the identification of companies whose substantially above average prospective earnings growth is not fully reflected in current market valuations. The Adviser continually reviews its primary research universe of approximately 600 companies to maintain a list of favored securities, the "Alliance 100," considered by the Adviser to have the most clearly superior earnings potential and valuation attraction. The Adviser's concentration on a limited universe of companies allows it to devote its extensive resources to constant intensive research of these companies. Companies are constantly added to and deleted from the Alliance 100 as fundamentals and valuations change. The Adviser's Large Cap Growth Group, in turn, further refines, on a weekly basis, the selection process for the Fund with each portfolio manager in the Group selecting 25 such companies which appear to the manager most attractive at current prices. These individual ratings are then aggregated and ranked to produce a composite list of the 25 most highly regarded stocks, the "Favored 25." As noted above, approximately 70% of the Fund's net assets will usually be invested in the Favored 25 with the balance of the Fund's investment portfolio consisting principally of other stocks in the Alliance 100. Portfolio emphasis upon particular industries or sectors is a by-product of the stock selection process rather than the result of assigned targets or ranges. 3 In the management of the Fund's investment portfolio, the Adviser will seek to utilize market volatility judiciously (assuming no change in company fundamentals) to adjust the Fund's portfolio positions. 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, during a market decline, while adding to positions in favored stocks, the Fund will tend to become somewhat more aggressive, gradually reducing somewhat the number of companies represented in the Fund's portfolio. Conversely, in rising markets, while reducing or eliminating fully valued positions, the Fund will tend to become somewhat more conservative, gradually increasing somewhat the number of companies represented in the Fund's portfolio. Through this "buying into declines" and "selling into strength," the Adviser seeks to gain positive returns in good markets while providing some measure of protection in poor markets. The Adviser expects the average weighted market capitalization of companies represented in the Fund's portfolio (i.e., the number of a company's shares outstanding multiplied by the price per share) to normally be in the range of or exceed the average weighted market capitalization of companies comprising the Standard & Poor's 500 Composite Stock Price Index, a widely recognized unmanaged index of market activity based upon the aggregate performance of a selected portfolio of publicly traded stocks, including monthly adjustments to reflect the reinvestment of dividends and distributions. Investments will be made upon their potential for capital appreciation. Because of the market risks inherent in any investment, the selection of securities on the basis of their appreciation possibilities cannot ensure against possible loss in value, and there is, of course, no assurance that the Fund's investment objective will be met. Additional Investment Policies and Practices The following investment policies and restrictions supplement those set forth above and in the Prospectus. Except as otherwise noted, the Fund's investment policies described below are not designated "fundamental policies" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act") and may be changed by the Directors of the Fund without shareholder approval. However, the Fund will not change its investment policies without contemporaneous written notice to shareholders. Convertible Securities. The Fund may invest in convertible securities which include bonds, debentures, corporate 4 notes and preferred stocks that are convertible at a stated exchange rate into common stock. Prior to their conversion, convertible securities have the same general characteristics as non-convertible debt securities which provide a stable stream of income with generally higher yields than those of equity securities of the same or similar issuers. As with all debt securities, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. While convertible securities generally offer lower interest or dividend yields than non- convertible debt securities of similar quality, they do enable the investor to benefit from increases in the market price of the underlying common stock. When the market price of the common stock underlying a convertible security increases, the price of the convertible security increasingly reflects the value of the underlying common stock and may rise accordingly. As the market price of the underlying common stock declines, the convertible security tends to trade increasingly on a yield basis, and thus may not depreciate to the same extent as the underlying common stock. Convertible securities rank senior to common stocks on an issuer's capital structure. They are consequently of higher quality and entail less risk than the issuer's common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. The Fund may invest up to 20% of its net assets in the convertible securities of companies whose common stocks are eligible for purchase by the Fund under the investment policies described above. Rights and Warrants. The Fund may invest up to 5% of its net assets in rights or warrants which entitle the holder to buy equity securities at a specific price for a specific period of time, but will do so only if the equity securities themselves are deemed appropriate by the Adviser for inclusion in the Fund's portfolio. Rights and warrants may be considered more speculative than certain other types of investments in that they do not entitle a holder to dividends or voting rights with respect to the securities which may be purchased nor do they represent any rights in the assets of the issuing company. Also, the value of a right or warrant does not necessarily change with the value of the underlying securities and a right or warrant ceases to have value if it is not exercised prior to the expiration date. Foreign Securities. The Fund may invest up to 15% of the value of its total assets in securities of foreign issuers whose common stocks are eligible for purchase by the Fund under the investment policies described above. Foreign securities investments are affected by exchange control regulations as well as by changes in governmental administration, economic or monetary policy (in the United States and abroad) and changed 5 circumstances in dealings between nations. Currency exchange rate movements will increase or reduce the U.S. dollar value of the Fund's net assets and income attributable to foreign securities. Costs are incurred in connection with the conversion of currencies held by the Fund. There may be less publicly available information about foreign issuers than about domestic issuers, and foreign issuers may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those of domestic issuers. Securities of some foreign issuers are less liquid and more volatile than securities of comparable domestic issuers, and foreign brokerage commissions are generally higher than in the United States. Foreign securities markets may also 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 and potential difficulties in enforcing contractual obligations. Illiquid Securities. The Fund will not maintain more than 15% of its net assets in illiquid securities. For this purpose, illiquid securities include, among others, direct placements or other securities which are subject to legal or contractual restrictions on resale or for which there is no readily available market (e.g., trading in the security is suspended or, in the case of unlisted securities, market makers do not exist or will not entertain bids or offers). Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the "Securities Act") and securities which are otherwise not readily marketable. Securities which have not been registered under the Securities Act are referred to as private placements or restricted securities and are purchased directly from the issuer or in the secondary market. Mutual funds do not typically hold a significant amount of these restricted or other illiquid securities because of the potential for delays on resale and uncertainty in valuation. Limitations on resale may have an adverse effect on the marketability of portfolio securities and a mutual fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty satisfying redemptions within seven days. A mutual fund might also have to register such restricted securities in order to dispose of them, resulting in additional expense and delay. Adverse market conditions could impede such a public offering of securities. In recent years, however, a large institutional market has developed for certain securities that are not registered under the Securities Act, including foreign securities. 6 Institutional investors depend on an efficient institutional market in which the unregistered security can be readily resold or on an issuer's ability to honor a demand for repayment. The fact that there are contractual or legal restrictions on resale to the general public or to certain institutions may not be indicative of the liquidity of such investments. The Fund may invest up to 5% of its net assets (taken at market value) in restricted securities (excluding Rule 144A securities) issued under Section 4(2) of the Securities Act, which exempts from registration "transactions by an issuer not involving any public offering." Section 4(2) instruments are restricted in the sense that they can only be resold through the issuing dealers to institutional investors and in private transactions; they cannot be resold to the general public without registration. Rule 144A under the Securities Act allows a broader institutional trading market for securities otherwise subject to restriction on resale to the general public. Rule 144A establishes a "safe harbor" from the registration requirements of the Securities Act for resales of certain securities to qualified institutional buyers. An insufficient number of qualified institutional buyers interested in purchasing certain restricted securities held by the Fund, however, could affect adversely the marketability of such portfolio securities and the Fund might be unable to dispose of such securities promptly or at reasonable prices. Rule 144A has already produced enhanced liquidity for many restricted securities, and market liquidity for such securities may continue to expand as a result of this regulation and the consequent inception of the PORTAL System, which is an automated system for the trading, clearance and settlement of unregistered securities of domestic and foreign issuers sponsored by the National Association of Securities Dealers, Inc. The Fund's Adviser, acting under the supervision of the Board of Directors, will monitor the liquidity of restricted securities in the Fund's portfolio that are eligible for resale pursuant to Rule 144A. In reaching liquidity decisions, the Fund's Adviser will consider, among others, the following factors: (1) the frequency of trades and quotes for the security; (2) the number of dealers making quotations to purchase or sell the security; (3) the number of other potential purchasers of the security; (4) the number of dealers undertaking to make a market in the security; (5) the nature of the security (including its unregistered nature) and the nature of the marketplace for the security (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer); and (6) any applicable Securities and Exchange Commission interpretation or position with respect to such type of securities. 7 General. When business or financial conditions warrant, the Fund may assume a temporary defensive position and invest in high-grade short-term fixed-income securities, which may include U.S. Government securities, or hold its assets in cash. Other Investment Practices While the Fund does not anticipate utilizing them on a regular basis, the Fund may from time to time employ the following investment practices. Puts and Calls. The Fund may write exchange-traded call options on common stocks, for which it will receive a purchase premium from the buyer, and may purchase and sell exchange-traded call and put options on common stocks written by others or combinations thereof. The Fund will not write put options. Writing, purchasing and selling call options are highly specialized activities and entail greater than ordinary investment risks. A call option gives the purchaser of the option, in exchange for paying the writer 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. A put option gives the buyer of the option, in exchange for paying the writer 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. The writing of call options will, therefore, involve a potential loss of opportunity to sell securities at higher prices. In exchange for the premium received, the writer of a fully collateralized call option assumes the full downside risk of the securities subject to such option. In addition, the writer of the call gives up the gain possibility of the stock protecting the call. Generally, the opportunity for profit from the writing of options is higher, and consequently the risks are greater when the stocks involved are lower priced or volatile, or both. While an option that has been written is in force, the maximum profit that may be derived from the optioned stock is the premium less brokerage commissions and fees. The Fund will not sell a call written by it unless the Fund at all times during the option period owns either (a) the optioned securities or has an absolute and immediate right to acquire that security without additional cash consideration (or for additional cash consideration held in a segregated account by its custodian) upon conversion or exchange of other securities held in its portfolio or (b) a call option on the same security and in the same principal amount as the call written where the exercise price of the call held (i) is equal to or less than the exercise price of the call written or (ii) is greater than the exercise price of the call written if the difference is maintained by the Fund in liquid assets in a segregated account with its Custodian. 8 Premiums received by the Fund in connection with writing call options will vary widely depending primarily on supply and demand. Commissions, stock transfer taxes and other expenses of the Fund must be deducted from such premium receipts. Calls written by the Fund will ordinarily be sold either on a national securities exchange or through put and call dealers, most, if not all, of whom are members of a national securities exchange on which options are traded, and will in such cases be endorsed or guaranteed by a member of a national securities exchange or qualified broker-dealer, which may be Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of the Adviser. The endorsing or guaranteeing firm requires that the option writer (in this case the Fund) maintain a margin account containing either corresponding stock or other equity as required by the endorsing or guaranteeing firm. The Fund will not sell a call option written by it if, as a result of the sale, 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. In buying a call, the Fund would be in a position to realize a gain if, during the option period, the price of the shares increased by an amount in excess of the premium paid and commissions payable on exercise. It would realize a loss if the price of the security declined or remained the same or did not increase during the period by more than the amount of the premium and commissions payable on exercise. By buying a put, the Fund would be in a position to realize a gain if, during the option period, the price of the shares declined by an amount in excess of the premium paid and commissions payable on exercise. It would realize a loss if the price of the security increased or remained the same or did not decrease during that period by more than the amount of the premium and commissions payable on exercise. In addition, the Fund could realize a gain or loss on such options by selling them. As noted above, the Fund may also purchase and sell call and put options written by others or combinations thereof, but the aggregate cost of all outstanding options purchased and held by the Fund, including options on market indices as described below, will at no time exceed 10% of the Fund's total assets. If an option is not sold and expires without being exercised, the Fund would suffer a loss in the amount of the premium paid by the Fund for the option. Options on Market Indices. The Fund may purchase and sell exchange-traded index options. 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 9 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. Stock Index Futures. The Fund may purchase and sell stock index futures contracts. A stock index assigns relative values to the common stocks comprising the index. A stock index futures contract is a bilateral agreement pursuant to which two parties agree to take or make delivery of an amount of liquid assets equal to a specified dollar amount multiplied by the difference between the stock index value at the close of the last trading day of the contract and the price at which the futures contract is originally struck. No physical delivery of the underlying stocks in the index is made. The Fund will not purchase and sell options on stock index futures contracts. The Fund may not purchase or sell a stock index future if, immediately thereafter, more than 30% of its total assets would be hedged by stock index futures. In connection with its purchase of stock index futures contracts the Fund will deposit in a segregated account with the Fund's custodian an amount of liquid assets equal to the market value of the futures contracts less any amounts maintained in a margin account with the Fund's broker. The 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. For a more detailed description of stock index futures contracts, see Appendix A. General. The successful use of the foregoing investment practices, which may be used as a hedge against changes in the values of securities resulting from market conditions, draws upon the Adviser's special skills and experience with respect to such instruments and usually depends on the Adviser's ability to forecast movements of specific securities or stock indices correctly. Should these securities or indices move in an 10 unexpected manner, the Fund may not achieve the anticipated benefits of options and stock index futures contracts or may realize losses and, thus, be in a worse position than if such strategies had not been used. In addition, the correlation between movements in the prices of such instruments and movements in the price of securities being hedged or used for cover will not be perfect and could produce unanticipated losses. The Fund's ability to dispose of its position in options and stock index futures will depend on the availability of liquid markets in these instruments. No assurance can be given that the Fund will be able to close a particular option or stock index futures position. Portfolio Turnover. The Fund's investment policies as described above (see "Investment Objective" and "How the Fund Pursues its Objective") are based on the Adviser's assessment of fundamentals in the context of changing market valuations. They may therefore involve frequent purchases and sales of shares of a particular issuer as well as the replacement of securities. While it is anticipated that the Fund's annual portfolio turnover rate will not normally exceed 100%, it could, under some conditions, exceed 100%. A 100% annual turnover rate would occur, for example, if all of the stocks in the Fund's portfolio were replaced once in a period of one year. The Fund expects that more of its portfolio turnover will be attributable to increases and decreases in the size of particular portfolio positions rather than to the complete elimination of a particular issuer's securities from the Fund's portfolio. A high portfolio turnover rate will cause the Fund to realize short-term capital gains or losses on the sale of certain securities and correspondingly greater brokerage commission expenses than would a lower rate, which expenses must be borne by the Fund and its shareholders. The annual portfolio turnover rate of securities of the Fund for the fiscal years ended in 1996 and 1997 were 95% and 76%, respectively. See "Dividends, Distributions and Taxes." Certain Fundamental Investment Policies The following restrictions may not be changed without a vote of a majority of the Fund's outstanding voting securities. The approval of a majority of the Fund's outstanding voting securities means the affirmative vote of (i) 67% or more of the shares represented at a meeting at which more than 50% of the outstanding shares are present in person or by proxy, or (ii) more than 50% of the outstanding shares, whichever is less. As a matter of fundamental policy, the Fund may not: (a) purchase more than 10% of the outstanding voting securities of any one issuer; 11 (b) invest 25% or more of the value of its total assets in the same industry except that this restriction does not apply to securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities; (c) borrow money or issue senior securities except for temporary or emergency purposes in an amount not exceeding 5% of the value of its total assets at the time the borrowing is made; (d) pledge, mortgage, hypothecate or otherwise encumber any of its assets except in connection with the writing of call options and except to secure permitted borrowings; (e) invest in the securities of any issuer which has a record of less than three years of continuous operation (including the operation of any predecessor) if the investment at the time thereof would cause more than 10% of the value of the total assets of the Fund to be invested in the securities of such issuer or issuers; (f) make loans except through the purchase of debt obligations in accordance with its investment objective and policies; (g) participate on a joint or joint and several basis in any securities trading account; (h) invest in companies for the purpose of exercising control; (i) write put options; (j) purchase the securities of any other investment company or investment trust, except when such purchase is part of a merger, consolidation or acquisition of assets; or (k)(i) purchase or sell real estate except that it may purchase and sell securities of companies which deal in real estate or interests therein, (ii) purchase or sell commodities or commodity contracts (other than stock index futures contracts), (iii) 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, (iv) make short sales of securities or purchase securities on margin except for such short-term credits as may be necessary for the clearance of transactions, or (v) act as an underwriter of securities, except that the Fund may acquire restricted securities or securities in private placements under 12 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. In addition, the Fund has undertaken with the Securities Administrators of certain states where the Fund's shares are sold not to purchase the securities of any company that has a record of less than three years of continuous operation (including that of predecessors) if such purchase at the time thereof would cause more than 5% of its total assets, taken at current value, to be invested in the securities of such companies, that it will not purchase puts, calls, straddles, spreads and any combination thereof if by reason thereof the value of its aggregate investment in such classes of securities will exceed 5% of its total assets, it will not engage in options in the over-the- counter market if such options are available on an exchange, it will only transact in over-the-counter options with major broker- dealer and financial institutions whom the Fund's Adviser considers creditworthy, it will only engage in options which are liquid and readily marketable, i.e., the market will be of sufficient depth and liquidity so as not to create undue risk, the aggregate premiums paid on all options which are held at any time do not exceed 20% of the company's total net assets, the Fund prohibits the purchase or retention of the securities of any issuer if its officers, Directors or Advisors owning beneficially more than one-half of one percent of the securities of each issuer together own beneficially more than five percent of such securities, any securities transaction effected through an affiliated broker-dealer will be fair and reasonable in compliance with Rule 17e-1 under the 1940 Act, the Fund will not purchase illiquid securities if immediately after such investment more than 10% of the Fund's net assets (taken at market value would be so invested) and that special meetings of stockholders for any purpose may be called by 10% of its outstanding shareholders. The Fund will not invest in warrants if such warrants valued at the lower of cost or market would exceed 5% of the value of the Fund's net assets. Included within such amount, but not to exceed 2% of the Fund's net assets, may be warrants which are not listed on the New York Stock Exchange or the American Stock Exchange. Warrants acquired by the Fund in units or attached to securities may be deemed to be without value. The Fund will not invest in real estate partnerships and will not invest in mineral leases. 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 13 change in values or net assets will not be considered a violation of any such maximum. ___________________________________________________________ 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 September 30, 1997 totaling more than $217 billion (of which approximately $81 billion represented the assets of investment companies). The Adviser's clients are primarily major corporate employee benefit funds, public employee retirement systems, investment companies, foundation and endowment funds. As of September 30, 1997, the Adviser was an investment manager of employee benefit fund assets for 28 of the FORTUNE 100 companies. As of that date, the Adviser and its subsidiaries employed approximately 1,500 employees who operated out of domestic offices and the offices of subsidiaries in Bahrain, Bangalore, Chennai, Istanbul, London, Madrid, Mumbai, Paris, Singapore, Tokyo and Toronto and affiliate offices located in Vienna, Warsaw, Hong Kong, Sao Paulo and Moscow. The 56 registered investment companies comprising more than 118 separate investment portfolios managed by the Adviser currently have more than two million shareholders. Alliance Capital Management Corporation, the sole general partner of, and the owner of a 1% general partnership interest in, the Adviser, is an indirect wholly-owned subsidiary of The Equitable Life Assurance Society of the United States ("Equitable"), one of the largest life insurance companies in the United States and a wholly-owned subsidiary of The Equitable Companies Incorporated ("ECI"). ECI is a holding company controlled by AXA-UAP, a French insurance holding company which, at September 30, 1997, beneficially owned approximately 59% of the outstanding voting shares of ECI. As of June 30, 1997, 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 14 and outstanding units representing assignments of beneficial ownership of limited partnership interests in the Adviser. AXA-UAP is a holding company for an international group of insurance and related financial services companies. AXA-UAP'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-UAP 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-UAP, as of September 30, 1997 more than 25% of the voting power of AXA-UAP was controlled directly and indirectly by FINAXA, a French holding company. As of September 30, 1997 more than 25% 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 25% of the voting power of FINAXA. Acting as a group, the Mutuelles AXA control AXA-UAP and FINAXA. Under the Advisory 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 may be employees of the Adviser or its affiliates. The Adviser is, under the Advisory Agreement, responsible for certain expenses incurred by the Fund, including, for example, office facilities and certain administrative services, and any expenses incurred in promoting the sale of Fund shares (other than the portion of the promotional expenses borne by the Fund in accordance with an effective plan pursuant to Rule 12b-1 under the 1940 Act, and the costs of printing Fund prospectuses and other reports to shareholders and fees related to registration with the Securities and Exchange Commission and with state regulatory authorities). The Fund has, under the Advisory Agreement, assumed the obligation for payment of all of its other expenses. As to the obtaining of services other than those specifically provided to the Fund by the Adviser, 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 15 approved by the Fund's Board of Directors. The Fund paid to the Adviser a total of $130,000 in respect of such services during the fiscal year of the Fund ended in 1997. For the services rendered by the Adviser under the Advisory Agreement, the Fund pays the Adviser at an annualized rate of 1% of the average daily value of the Fund's net assets. The fee is accrued daily and paid monthly. For the fiscal years of the Fund ended in 1997, 1996 and 1995, the Adviser received from the Fund advisory fees of $9,721,137, $4,725,709 and $2,261,352, respectively. The Advisory Agreement became effective on September 17, 1992, having been approved by the unanimous vote, cast in person, of the Fund's Directors (including the Directors who are not parties to the Advisory Agreement or interested persons, as defined by the 1940 Act, of any such party) at a meeting called for that purpose held on July 21, 1992, and by the initial holder of Class A shares and Class B shares of the Fund on August 6, 1992. The Advisory Agreement remains in effect for successive twelve-month periods computed from each August 1, provided that such continuance is specifically approved at least annually by a vote of a majority of the Fund's outstanding voting securities or by the Fund's Board of Directors, including in either case approval by a majority of the Directors who are not parties to the Advisory Agreement or interested persons of any such party as defined by the 1940 Act, of any such party at a meeting in person called for the purpose of voting on such matter. Most recently, continuance of the Advisory Agreement was approved for the period ending July 31, 1998 by 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 15, 1997. The Advisory Agreement is terminable without penalty by a vote of a majority of the Fund's outstanding voting securities or by a vote of a majority of the Fund's Directors on 60 days' written notice, or by the Adviser on 60 days' written notice, and will automatically terminate in the event of its assignment. The Advisory Agreement provides that in the absence of willful misfeasance, bad faith or gross negligence on the part of the Adviser, or of reckless disregard of its obligations thereunder, the Adviser shall not be liable for any action or failure to act in accordance with its duties thereunder. 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 16 simultaneously with the Fund. If transactions on behalf of more than one client during the same period increase the demand for securities being purchased or the supply of securities being sold, there may be an adverse effect on price or quantity. It is the policy of the Adviser to allocate advisory recommendations and the placing of orders in a manner which is deemed equitable by the Adviser to the accounts involved, including the Fund. When two or more of the clients of the Adviser (including the Fund) are purchasing or selling the same security on a given day from the same broker-dealer, such transactions may be averaged as to price. The Adviser may act as an investment adviser to other persons, firms or corporations, including investment companies, and is investment adviser to ACM Institutional Reserves, Inc., AFD Exchange Reserves, The Alliance Fund, Inc., Alliance All-Asia Investment Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital Reserves, Alliance Developing Markets Fund, Inc., Alliance Global Dollar Government Fund, Inc., Alliance Global Environment Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Government Reserves, Alliance Greater China '97 Fund, Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder Fund, Inc., Alliance Institutional Funds, 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 Quasar Fund, Inc., Alliance Real Estate Investment Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc., Alliance Short-Term Multi-Market Trust, Inc., Alliance Technology Fund, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., The Alliance Portfolios, Fiduciary Management Associates and The Hudson River Trust, all registered open-end investment companies; and to ACM Government Income Fund, Inc., ACM Government Securities Fund, Inc., ACM Government Spectrum Fund, Inc., ACM Government Opportunity Fund, Inc., ACM Managed Income Fund, Inc., ACM Managed Dollar Income Fund, Inc., ACM Municipal Securities Income Fund, Inc., Alliance All-Market Advantage Fund, Inc., Alliance World Dollar Government Fund, Inc., Alliance World Dollar Government Fund II, Inc., The Austria Fund, Inc., The Korean Investment Fund, Inc., The Southern Africa Fund, Inc., and The Spain Fund, Inc., all registered closed-end investment companies. 17 Directors and Officers The Directors and principal officers of the Fund, their ages and their principal occupations during the past five years are set forth below. Each of the Directors and Officers are trustees, directors and officers of other registered investment companies sponsored by the Adviser. Unless otherwise specified, the address of each of the following persons is 1345 Avenue of the Americas, New York, New York 10105. Directors JOHN D. CARIFA,* 52, Chairman and President of the Fund, is the President and Chief Operating Officer and a Director of Alliance Capital Management Corporation ("ACMC"), with which he has been associated since prior to 1993. 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 Amoco Corporation (oil and gas). Her address is P.O. Box 4653, Stamford, Connecticut 06903. DAVID H. DIEVLER, 68, was formerly a Senior Vice President of ACMC, with which he had been associated since prior to 1992 through 1994. He is currently an independent consultant. His address is P.O. Box 167, Spring Lake, New Jersey 07762. JOHN H. DOBKIN, 55, has been the President of Historic Hudson Valley (historic preservation) prior to 1993. Previously, he was Director of the National Academy of Design. His address is Historic Hudson Valley, 150 White Plains Road, New York, New York 10591. WILLIAM H. FOULK, JR., 65, 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 1993. His address is Suite 100, 2 Greenwich Plaza, Greenwich, Connecticut 06830. DR. JAMES M. HESTER, 73, is President of the Harry Frank Guggenheim Foundation and a Director of Union Carbide Corporation, with which he has been associated since prior to 1993. He was formerly President of New York University, the New York Botanical Garden and Rector of the United Nations University. His address is 45 East 89th Street, New York, New York 10128. ____________________ * An "interested person" of the Fund as defined in the 1940 Act. 18 CLIFFORD L. MICHEL, 58, is a partner in the law firm of Cahill Gordon & Reindel since prior to 1993. He is President, Chief Executive Officer and a Director of Wenonah Development Company (investments) and a Director of Placer Dome, Inc. (mining). His address is 80 Pine Street, New York, New York, 10005. DONALD J. ROBINSON, 63, was formerly a senior partner in the law firm of Orrick, Herrington & Sutcliffe and is currently senior counsel to that firm. His address is 666 Fifth Avenue, New York, New York, 10103. Officers JOHN D. CARIFA, Chairman and President, see biography under "Directors," above. ALFRED HARRISON, Executive Vice President, 59, is Vice Chairman of the Board of ACMC, with which he has been associated since prior to 1993. THOMAS BARDONG, Vice President, 52, is a Senior Vice President of ACMC, with which he has been associated since prior to 1993. DANIEL PANKER, Vice President, 58, is a Senior Vice President of ACMC, with which he has been associated since prior to 1993. JAMES G. REILLY, Vice President, 36, is a Vice President of ACMC, with which he has been associated since prior to 1993. EDMUND P. BERGAN, JR., Secretary, 47, is a Senior Vice President and the General Counsel of Alliance Fund Distributors, Inc. ("AFD"), with which he has been associated since prior to 1993. DOMENICK PUGLIESE, Assistant Secretary, 36, is a Vice President and Assistant General Counsel of AFD with which he has been associated since May 1995. Previously, he was Vice President and Counsel of Concord Holding Corporation since 1994 and Vice President and Associate General Counsel of Prudential Securities since prior to 1993. ANDREW L. GANGOLF, Assistant Secretary, 43, is Vice President and Assistant General Counsel of AFD since December 1994. Prior thereto, he was Vice President and Assistant Secretary of Delaware Management Co., Inc. since prior to 1993. 19 EMILIE D. WRAPP, Assistant Secretary, 41, is a Vice President and Special Counsel of AFD, with which she has been associated since prior to 1993. MARK D. GERSTEN, Treasurer and Chief Financial Officer, 47, is a Senior Vice President of AFS with which he has been associated since prior to 1993. VINCENT S. NOTO, Controller, 33, is a Vice President of Alliance Fund Services, Inc., with which he has been associated since prior to 1993. JOSEPH MANTINEO, Assistant Controller, 38, has been a Vice President of AFS with which he has been associated since prior to 1993. PHYLLIS CLARKE, Assistant Controller, 37, is an Accounting Manager of Mutual Funds for AFS with which she has been associated since prior to 1993. The aggregate compensation paid by the Fund to each of the Directors during its fiscal year ended November 30, 1997, the aggregate compensation paid to each of the Directors during calendar year 1997 by all of the registered investment companies to which the Adviser provides investment advisory services (collectively, the "Alliance Fund Complex") and the total number of registered investment companies (and separate investment fundsportfolios 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 registered investment company 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. 20 Total Number Total Number of Investment of Investment Companies in Portfolios the Alliance within the Total Fund Complex, Alliance Fund Compensation Including the Complex From the Fund, as to including the Aggregate Alliance Fund which the Fund,as to which Compensation Complex, Director is a the Director Name of Director From the Including the Director or is a Director of the Fund Fund Fund Trustee or Trustee John D. Carifa $0 $0 54 118 Ruth Block $3,865 $163,997 40 80 David H. Dievler $3,871 $188,526 47 83 John H. Dobkin $3,857 $127,775 44 80 William H. Foulk, Jr. $3,932 $174,996 48 113 Dr. James M. Hester $3,832 $156,499 40 76 Clifford L. Michel $3,832 $194,499 41 92 Donald J. Robinson $3,797 $235,500 41 94 As of January 5, 1998, the Directors and officers of the Fund as a group owned less than 1% of the shares 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 distribution of its Class A, Class B 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 Securities and Exchange Commission under the 1940 Act (the "Rule 12b-1 Plan"). Distribution services fees are accrued daily and paid monthly and are charged as expenses of the Fund as accrued. The distribution services fees attributable to the Class B shares and Class C shares are designed to permit an investor to purchase such shares through broker-dealers without the assessment of an initial sales charge, and at the same time to permit the 21 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. Under the Agreement, the Treasurer of the Fund reports the amounts expended under the Rule 12b-1 Plan and the purposes for which such expenditures were made to the Directors of the Fund for their review on a quarterly basis. Also, the Agreement provides that the selection and nomination of Directors who are not "interested persons" of the Fund, as defined in the 1940 Act, are committed to the discretion of such disinterested Directors then in office. The Agreement will continue in effect for successive twelve-month periods (computed from each August 1), provided, however, that such continuance is specifically approved at least annually by the Directors of the Fund or by vote of the holders of a majority of the outstanding voting securities (as defined in the 1940 Act) of that class, and, in either case, by a majority of the Directors of the Fund who are not parties to the Agreement or interested persons, as defined in the 1940 Act, of any such party (other than as Directors of the Fund) and who have no direct or indirect financial interest in the operation of the Rule 12b-1 Plan or any agreement related thereto. Most recently the continuance of the Agreement until July 31, 1998 was approved by a vote, cast in person, of the Directors, including a majority of the Directors who are not "interested persons", as defined in the 1940 Act, at their meeting held on July 15, 1997. The Agreement became effective on September 17, 1992 with respect to Class A shares and Class B shares, was amended as of April 30, 1993 to permit the distribution of an additional class of shares, Class C shares and again on July 16, 1996 to permit the distribution of Advisor Class shares. The Adviser may from time to time and from its own funds or such other resources as may be permitted by rules of the Securities and Exchange Commission make payments for distribution services to the Principal Underwriter; the latter may in turn pay part or all of such compensation to brokers or other persons for their distribution assistance. During the Fund's fiscal year ended November 30, 1997, the Fund paid distribution services fees for expenditures under the Agreement, with respect to Class A shares, in aggregating 22 amounts $805,434, which constituted .33% of the Fund's average daily net assets attributable to Class A shares during the period, and the Adviser made payments from its own resources as described above aggregating $689,511. Of the $1,494,945 paid by the Fund and the Adviser under the Agreement, $53,201 was spent on advertising, $15,457 on the printing and mailing of prospectuses for persons other than current shareholders, $576,648 for compensation to broker-dealers and other financial intermediaries (including, $117,485 to the Fund's Principal Underwriter), $393,073 for compensation to sales personnel, $339,081 was spent on the printing of sales literature, travel, entertainment, due diligence and other promotional expenses and $0 on interest on Class A shares financing. During the Fund's fiscal year ended November 30, 1997, the Fund paid distribution services fees for expenditures under the Agreement, with respect to Class B shares, in aggregating amounts $5,916,522, which constituted 1.00% of the Fund's average daily net assets attributable to the Class B shares during the period, and the Adviser made payments from its own resources as described above aggregating $11,694,962. Of the $17,611,484 paid by the Fund and the Adviser under the Agreement, $133,357 was spent on advertising, $42,002 on the printing and mailing of prospectuses for persons other than current shareholders, $15,750,342 for compensation to broker-dealers and other financial intermediaries (including, $286,451 to the Fund's Principal Underwriter), $300,426 for compensation to sales personnel, $416,838 was spent on the printing of sales literature, travel, entertainment, due diligence and other promotional expenses and $681,988 on interest on Class B shares financing. During the Fund's fiscal year ended November 30, 1997, the Fund paid distribution services fees for expenditures under the Agreement, with respect to Class C shares, in the amounts aggregating $1,042,541, which constituted 1.00% of the Fund's average daily net assets attributable to the Class C shares during the period, and the Adviser made payments from its own resources as described above aggregating $815,620. Of the $1,858,160 paid by the Fund and the Adviser under the Agreement, $31,905 was spent on advertising, $10,475 on the printing and mailing of prospectuses for persons other than current shareholders, $1,449,616 for compensation to broker-dealers and other financial intermediaries (including, $69,479 to the Fund's Principal Underwriter), $78,285 for compensation to sales personnel, $104,226 was spent on the printing of sales literature, travel, entertainment, due diligence and other promotional expenses and $114,174 on interest on Class C shares financing. 23 In the event that the Agreement is terminated or not continued with respect to the Class A shares, Class B shares or Class C shares, (i) no distribution services fees (other than current amounts accrued but not yet paid) would be owed by the Fund to the Principal Underwriter with respect to that class, and (ii) the Fund would not be obligated to pay the Principal Underwriter for any amounts expended under the Agreement not previously recovered by the Principal Underwriter from distribution services fees in respect of shares of such class or through deferred sales charges. All material amendments to the Agreement must be approved by a vote of the Directors or the holders of the Fund's outstanding voting securities, voting separately by class, and in either case by a majority of the disinterested Directors, cast in person at a meeting called for the purpose of voting on such approval; and the Agreement may not be amended in order to increase materially the costs that the Fund may bear pursuant to the Agreement without the approval of a majority of the holders of the outstanding voting shares of the class or classes affected. The Agreement may be terminated (a) by the Fund without penalty at any time by a majority vote of the holders of the outstanding voting securities of the Fund, voting separately by class, or by a majority vote of the Directors who are not "interested persons" as defined in the 1940 Act, or (b) by the Principal Underwriter. To terminate the Agreement, any party must give the other parties 60 days' written notice; to terminate the Rule 12b-1 Plan only, the Fund need give no notice to the Principal Underwriter. The Agreement will terminate automatically in the event of its assignment. Transfer Agency Agreement Alliance Fund Services, Inc., an indirect wholly-owned subsidiary of the Adviser, receives a transfer agency fee per account holder of each of the Class A 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 charges. For the fiscal year ended November 30, 1997, the Fund paid AFS $904,566 pursuant to the Transfer Agency Agreement. 24 _________________________________________________________________ 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, none of whom is eligible on the basis solely of such status to purchase and hold Advisor Class shares), or (iv) by directors and present or retired full-time employees of CB Commercial Real Estate Group, 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. 25 If you are a Fund shareholder through an account established under a fee-based program, your fee-based program may impose requirements with respect to the purchase, sale or exchange of Advisor Class shares of the Fund that are different from those described in the Advisor Class Prospectus and this Statement of Additional Information. Investors may purchase shares of the Fund either through selected broker-dealers, agents, financial intermediaries or 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 Class A, Class B, Class C or Advisor Class 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 "Initial Sales Charge Alternative--Class A Shares." On each Fund business day on which a purchase or redemption order is received by the Fund and trading in the types of securities in which the Fund invests might materially affect the value of Fund shares, the per share net asset value is computed 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 values of the Class A and Advisor Class shares, as a result of the 26 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 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. 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 27 offering price will be the public offering price determined as of the close of business on such following business day. Full and fractional shares are credited to a subscriber's account in the amount of his or her subscription. As a convenience to the subscriber, and to avoid unnecessary expense to the Fund, stock certificates representing shares of the Fund are not issued except upon written request to the Fund by the shareholder or his or her authorized selected dealer or agent. This facilitates later redemption and relieves the shareholder of the responsibility for and inconvenience of lost or stolen certificates. No certificates are issued for fractional shares, although such shares remain in the shareholder's account on the books of the Fund. In addition to the discount or commission paid to dealers or agents, the Principal Underwriter from time to time pays additional cash or other incentives to dealers or agents, including EQ Financial Consultants, Inc., formerly Equico Securities, Inc., an affiliate of the Principal Underwriter, in connection with the sale of shares of the Fund. Such additional amounts may be utilized, in whole or in part to provide additional compensation to registered representatives who sell shares of the Fund. On some occasions, cash or other incentives will be conditioned upon the sale of a specified minimum dollar amount of the shares of the Fund and/or other Alliance Mutual Funds, as defined below, during a specific period of time. On some occasions, such cash or other incentives may take the form of payment for attendance at seminars, meals, sporting events or theater performances, or payment for travel, lodging and entertainment incurred in connection with travel taken by persons associated with a dealer or agent and their immediate family members to urban or resort locations within or outside the United States. Such dealer or agent may elect to receive cash incentives of equivalent amount in lieu of such payments. 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 shares and Class C shares each bear the expense of a higher distribution services fee than that borne by Class A shares, and Advisor Class shares do not bear such a fee, (iii) Class B shares and Class C shares bear higher transfer agency costs than those borne by Class A shares and Advisor Class shares, (iv) each of Class A, Class B and Class C 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 28 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 shareholders and Advisor Class shareholders and the Class A, Class B and the Advisor Class shareholders will vote separately by class and (v) Class B shares and Advisor Class shares are subject to a conversion feature. Each class has different 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** The alternative purchase arrangements available with respect to Class A, Class B and Class C shares 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 charge on Class B shares prior to conversion, or the accumulated distribution services fee and contingent deferred sales charge on Class C shares, would be less than the initial sales charge and accumulated distribution services fee on Class A shares purchased at the same time, and to what extent such differential would be offset by the higher return of Class A shares. Class A shares will normally be more beneficial than Class B shares to the investor who qualifies for reduced initial sales charges on Class A shares, as described below. In this regard, the Principal Underwriter will reject any order (except orders from certain retirement plans) for more than $250,000 for Class B shares. Class C shares will normally not be suitable for the investor who qualifies to purchase Class A shares at net asset value. For this reason, the Principal Underwriter will reject any order for more than $1,000,000 for Class C shares. Class A shares are subject to a lower distribution services fee and, accordingly, pay correspondingly higher ____________________ ** Advisor Class shares are sold only to investors described above in this section under "-General." 29 dividends per share than Class B shares or Class C shares. However, because initial sales charges are deducted at the time of purchase, most investors purchasing Class A shares would not have all their funds invested initially and, therefore, would initially own fewer shares. Investors not qualifying for reduced initial sales charges who expect to maintain their investment for an extended period of time might consider purchasing Class A shares because the accumulated continuing distribution charges on Class B shares or Class C shares may exceed the initial sales charge on Class A shares during the life of the investment. Again, however, such investors must weigh this consideration against the fact that, because of such initial sales charges, not all their funds will be invested initially. Other investors might determine, however, that it would be more advantageous to purchase Class B shares or Class C shares in order to have all their funds invested initially, although remaining subject to higher continuing distribution charges and 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 years ended in 1997, 1996 and 1995, the aggregate amounts of underwriting commission payable with respect to shares of the Fund were $6,270,803, $1,904,035 and $656,527. Of that amount, the Principal Underwriters received the amounts of $177,799, $88,718 and $33,038, 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 (and was, accordingly, retained by the Principal Underwriters). During the Fund's fiscal years ended in 1997, 1996 and 1995, the Principal Underwriter received contingent deferred sales charges of $4,277, $0, and $0, respectively, on Class A shares, $718,189, $354,346 and $239,569, 30 respectively, on Class B shares, and $35,775, $11,718, 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 or were acquired upon the reinvestment of dividends or 31 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 or agents for selling Class A Shares. With respect to purchases of $1,000,000 or more made through selected dealers and 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, or (ii) in exchange for Class A shares of other "Alliance Mutual Funds" (as that term is defined under "Combined Purchase Privilege" below), except that an initial sales charge will be imposed on Class A shares issued in exchange for Class A shares of AFD Exchange Reserves ("AFDER") that were purchased for cash without the payment of an initial sales charge and without being subject to a contingent deferred sales charge 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. Set forth below is an example of the method of computing the offering price of the Class A shares. The example assumes a purchase of Class A shares of the Fund aggregating less than $100,000 subject to the schedule of sales charges set forth above at a price based upon the net asset value of Class A shares of the Fund on January 5, 1998: Net Asset Value per Class A Share 32 at January 5, 1998 $21.14 Class A Per Share Sales Charge - 4.25% of offering price (4.44% of net asset value per share) $ .94 ______ Class A Per Share Offering Price to the public $22.08 ====== 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. 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 The Alliance Fund, Inc. Alliance All-Asia Investment Fund, Inc. Alliance Balanced Shares, Inc. Alliance Bond Fund, Inc. -Corporate Bond Portfolio 33 -U.S. Government Portfolio Alliance Developing Markets Fund, Inc. Alliance Global Dollar Government Fund, Inc. Alliance Global Environment Fund, Inc. Alliance Global Small Cap 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 Income Builder 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 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/Regent Sector Opportunity Fund, Inc. Alliance Short-Term Multi-Market Trust, Inc. Alliance Technology Fund, Inc. Alliance Utility Income Fund, Inc. Alliance World Income Trust, Inc. Alliance Worldwide Privatization Fund, Inc. The Alliance Portfolios -Alliance Growth Fund -Alliance Conservative Investors Fund -Alliance Growth Investors Fund -Alliance Strategic Balanced Fund -Alliance Short-Term U.S. Government Fund Prospectuses for the Alliance Mutual Funds may be obtained without charge by contacting Alliance Fund Services, 34 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). 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 the Statement of Intention; however, the 13-month period 35 during which the Statement of Intention is in effect will begin on the date of the earliest purchase to be included. Investors qualifying for the Combined Purchase Privilege described above may purchase shares of the Alliance Mutual Funds under a single Statement of Intention. For example, if at the time an investor signs a Statement of Intention to invest at least $100,000 in Class A shares of the Fund, the investor and the investor's spouse each purchase shares of the Fund worth $20,000 (for a total of $40,000), it will only be necessary to invest a total of $60,000 during the following 13 months in shares of the Fund or any other Alliance Mutual Fund, to qualify for the 3.25% sales charge on the total amount being invested (the sales charge applicable to an investment of $100,000). The Statement of Intention is not a binding obligation upon the investor to purchase the full amount indicated. The minimum initial investment under a Statement of Intention is 5% of such amount. Shares purchased with the first 5% of such amount will be held in escrow (while remaining registered in the name of the investor) to secure payment of the higher sales charge applicable to the shares actually purchased if the full amount indicated is not purchased, and such escrowed shares will be involuntarily redeemed to pay the additional sales charge, if necessary. Dividends on escrowed shares, whether paid in cash or reinvested in additional Fund shares, are not subject to escrow. When the full amount indicated has been purchased, the escrow will be released. To the extent that an investor purchases more than the dollar amount indicated on the Statement of Intention and qualifies for a further reduced sales charge, the sales charge will be adjusted for the entire amount purchased at the end of the 13-month period. The difference in the sales charge will be used to purchase additional shares of the Fund subject to the rate of the 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, 36 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 reinvestment of such shares. Shares are sold to a reinvesting shareholder at the net asset value next determined as described above. A reinstatement pursuant to this privilege will not cancel the redemption or repurchase transaction; therefore, any gain or loss so realized will be recognized for federal 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 a 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 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, the Principal 37 Underwriter, Alliance Fund Services, Inc. and their affiliates; and 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 affiliates or agents, 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- sponsored qualified pension 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 on the Class B shares are paid to the Principal Underwriter and are used by the Principal Underwriter to defray the expenses of the Principal Underwriter related to providing distribution-related services to the Fund in connection with the sale of the Class B shares, such as the payment of compensation to selected dealers and agents for selling Class B shares. The combination of the contingent deferred sales charge and the distribution services fee enables the Fund to sell the Class B shares without a sales charge being deducted at the time of purchase. The higher distribution services fee incurred by Class B shares will cause 38 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 shares will not be subject to the 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 Year Since Purchase November 19, 1993 November 19, 1993 First 3.0% 4.0% Second 2.0% 3.0% Third 1.0% 2.0% Fourth None 1.0% Fifth 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, 39 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 Internal Revenue Code of 1986 as amended (the "Code"), of a shareholder, (ii) to the extent that the redemption represents a minimum required distribution from an individual retirement account or other retirement plan to a shareholder who has attained the age of 70-1/2, (iii) that had been purchased by present or former Directors of the Fund, by the relative of any such person, by any trust, individual retirement account or retirement plan account for the benefit of any such person or relative, or by the estate of any such person or relative, or (iv) pursuant to a systematic withdrawal plan (see "Shareholder Services -Systemic Withdrawal Plan" below). Conversion Feature. Six 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 40 continue to be subject to the higher distribution services fee for an indefinite period which may extend beyond the period ending six 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 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 and transfer agency costs than Class A shares and Advisor Class shares, and will thus have a higher expense ratio and pay correspondingly lower dividends than Class A shares and Advisor Class 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 41 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 and Advisor Class shares. Conversion of Advisor Class Shares to Class A Shares Advisor Class shares may be held solely through the fee- based program accounts, 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 by certain other persons associated with, the Adviser and its affiliates or the Fund. If (i) a holder of Advisor Class shares ceases to participate in the fee-based program or plan, or to be associated with the investment adviser or financial intermediary, in each case, 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 will 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 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 42 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 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 Securities and Exchange Commission determines that trading thereon is restricted, or for any period during which an emergency (as determined by the Securities and Exchange Commission) exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable or as a result of which it is not reasonably practicable for the Fund fairly to determine the value of its net assets, or for such other periods as the Securities and Exchange Commission may by order permit for the protection of security holders of the Fund. 43 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 stock certificates have been issued, the registered owner or owners should forward a letter to the Fund containing a request for redemption. The signature or signatures on the letter must be guaranteed by an institution that is an "eligible guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended. To redeem shares of the Fund represented by stock certificates, the investor should forward the appropriate stock certificate or certificates, endorsed in blank or with blank stock powers attached, to the Fund with the request 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 stock 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 by electronic funds transfer from Alliance Fund Services, Inc. Prior to March 1, 1998, this service can be employed only once in any 30-day period (except for certain omnibus accounts). A telephone redemption request by electronic funds transfer 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 44 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. 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. Prior to March 1, 1998, this service can be employed only once in any 30-day period (except for certain omnibus accounts). 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 Alliance Fund Services, Inc., 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 (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 45 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. 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 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 at least 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 46 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 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 47 ("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 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. 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. 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 48 difficulty in reaching Alliance Fund Services, Inc. by telephone (although no such difficulty was apparent at any time in connection with the 1987 market break). If a shareholder were to experience such difficulty, the shareholder should issue written instructions to Alliance Fund Services, Inc. at the address shown on the cover of this Statement of Additional Information. A shareholder may elect to initiate a monthly "Auto Exchange" whereby a specified dollar amount's worth of his or her Fund shares (minimum $25) is automatically exchanged for shares of another Alliance Mutual Fund. Auto Exchange transactions normally occur on the 12th day of each month, or the following Fund business day 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: 49 Alliance Fund Services, Inc. Retirement Plans P.O. Box 1520 Secaucus, New Jersey 07096-1520 Individual Retirement Account ("IRA"). Individuals who receive compensation, including earnings from self-employment, are entitled to establish and make contributions to an IRA. Taxation of the income and gains paid to an IRA by the Fund is deferred until distribution from the IRA. An individual's eligible contribution to an IRA will be deductible if neither the individual nor his or her spouse is an active participant in an employer-sponsored retirement plan. If the individual or his or her spouse is an active participant in an employer-sponsored retirement plan, the individual's contributions to an IRA may be deductible, in whole or in part, depending on the amount of the adjusted gross income of the individual and his or her spouse. Employer-Sponsored Qualified Retirement Plans. Sole proprietors, partnerships and corporations may sponsor qualified money purchase pension and profit-sharing plans, including Section 401(k) plans ("qualified plans"), under which annual tax- deductible contributions are made within prescribed limits based on compensation paid to participating individuals. 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 $5 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 retirement 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 50 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 account, a Class A, Class B Class C or Advisor Class account with one or more other Alliance Mutual Funds may direct that income dividends 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 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 51 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 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 shares 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. 52 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 accountants, Price Waterhouse LLP, as well as a confirmation of each purchase and redemption. By contacting his or her broker or Alliance Fund Services, Inc., a shareholder can arrange for copies of his or her account statements to be sent to another person. _________________________________________________________________ NET ASSET VALUE _________________________________________________________________ The 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 53 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. 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 54 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 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. 55 _________________________________________________________________ DIVIDENDS, DISTRIBUTIONS AND TAXES _________________________________________________________________ United States Federal Income Taxation of Dividends and Distributions General The Fund intends for each taxable year to qualify as a "regulated investment company" under the Code. Such qualification relieves the Fund of federal income tax liability on the part of its net ordinary income and net realized capital gains which it timely distributes to its shareholders. Such qualification does not, of course, involve governmental supervision of management or investment practices or policies. Investors should consult their own counsel for a complete understanding of the requirements the Fund must meet to qualify to be taxed as a "regulated investment company." The information set forth in the Prospectus and the following discussion relate solely to the significant United States federal income taxes on dividends and distributions by the Fund and assumes that the Fund qualifies to be taxed as a regulated investment company. An investor should consult his or her own tax counsel with respect to the specific tax consequences of being a shareholder of the Fund, including the effect and applicability of federal, state and local tax laws to his or her own particular situation and the possible effects of changes therein. It is the present policy of the Fund to distribute to shareholders all net investment income annually and to distribute net realized capital gains, if any, annually. The amount of any such distributions must necessarily depend upon the realization by the Fund of income and capital gains from investments. The Fund intends to declare and distribute dividends in the amounts and at the times necessary to avoid the application of the 4% federal excise tax imposed on certain undistributed income of regulated investment companies. The Fund will be required to pay the 4% excise tax to the extent it does not distribute to its shareholders during any calendar year an amount equal to the sum of (i) 98% of its ordinary taxable income for the calendar year, (ii) 98% of its capital gain net income and foreign currency gains for the twelve months ended October 31 (or November 30 if elected by the Fund) of such year and (iii) any ordinary income or capital gain net income from the preceding calendar year that was not distributed during such year. For this purpose, income or gain retained by the Fund that is subject 56 to corporate income tax will be considered to have been distributed by the Fund by year-end. For federal income and excise tax purposes, dividends declared and payable to shareholders of record as of a date in October, November or December but actually paid during the following January will be taxable to these shareholders for the year declared, and not for the subsequent calendar year in which the shareholders actually receive the dividend. Dividends of the Fund's net ordinary income and distributions of any net realized short-term capital gain are taxable to shareholders as ordinary income. Dividends paid by the Fund and received by a corporate shareholder are eligible for the dividends received deduction to the extent that the Fund's income is derived from certain dividends received from domestic corporations, provided the corporate shareholder holds shares in the Fund for at least 46 days during the 90-day period beginning 45 days before the date on which the shareholder becomes entitled to receive the dividend. In determining the holding period of such shares for this purpose, any period during which a shareholder's risk of loss is offset by means of options, short sales or similar transactions is not counted. In addition, the dividends received deduction will be disallowed to the extent the investment in shares of the Fund is financed with indebtedness. Pursuant to the Taxpayer Relief Act of 1997, two different tax rates apply to net capital gains--that is, the excess of net gains from capital assets held for more than one year over net losses from capital assets held for not more than one year. One rate (generally 28%) applies to net gains on capital assets held for more than one year but not more than 18 months ("mid-term gains"), and a second rate (generally 20%) applies to the balance of such net capital gains ("adjusted net capital gains"). Distributions of net capital gains will be treated in the hands of shareholders as mid-terms gains to the extent designated by the Fund as deriving from net gains from assets held for more than one year but not more than 18 months, and the balance will be treated as adjusted net capital gains, regardless of how long a shareholder has held shares in the Fund. Any dividend or distribution received by a shareholder on shares of the Fund will have the effect of reducing the net asset value of such shares by the amount of such dividend or distribution. Furthermore, a dividend or distribution made shortly after the purchase of such shares by a shareholder, although in effect a return of capital to that particular shareholder, would be taxable to him or her as described above. If a shareholder has held shares in the Fund for six months or less and during that period has received a distribution of net capital gains, any loss recognized by the shareholder on the sale of those shares during the six-month period will be treated as a long-term capital loss to the extent of the distribution. In determining the holding 57 period of such shares for this purpose, any period during which a shareholder's risk of loss is offset by means of options, short sales or similar transactions is not counted. Any loss realized by a shareholder on a sale or exchange of shares of the Fund will be disallowed to the extent the shares disposed of are replaced within a period of 61 days beginning 30 days before and ending 30 days after the shares are sold or exchanged. For this purpose, acquisitions pursuant to the Dividend Reinvestment Plan would constitute a replacement if made within the period. If disallowed, the loss will be reflected in an upward adjustment to the basis of the shares acquired. Dividends are taxable in the manner discussed regardless of whether they are paid to the shareholder in cash or are reinvested in additional shares of the Fund. The Fund may be required to withhold federal income tax at the rate of 31% of all taxable distributions payable to shareholders who fail to provide the Fund with their correct taxpayer identification numbers or to make required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. Corporate shareholders and certain other shareholders specified in the Code are exempt from such backup withholding. Backup withholding is not an additional tax; any amounts so withheld may be credited against a shareholder's federal income tax liability or refunded. United States Federal Income Taxation of the Fund The following discussion relates to certain significant United States federal income tax consequences to the Fund with respect to the determination of its "investment company taxable income" each year. This discussion assumes that the Fund will be taxed as a regulated investment company for each of its taxable years. Options, Futures Contracts and Warrants. Regulated futures contracts and certain listed options 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 generally will be considered 60% long-term and 40% short-term capital gain or loss. 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. 58 With respect to put and call equity options, 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 if an option that the Fund has written is exercised, gain or loss on the option will not be separately recognized but the premium received or paid will be included in the calculation of gain or loss upon disposition of the property underlying the option. Warrants which are invested in by the Fund will generally be treated in the same manner for federal income tax purposes as options held by the Fund. Tax Straddles. Any option, futures contract, or other position entered into or held by the Fund in conjunction with any other position held by the Fund may constitute a "straddle" for federal income tax purposes. A straddle of which at least one, but not all, the positions are section 1256 contracts may constitute a "mixed straddle." In general, straddles are subject to certain rules that may affect the character and timing of the Fund's gains and losses with respect to straddle positions by requiring, among other things, that (i) loss realized on disposition of one position of a straddle not be recognized to the extent that the Fund has unrealized gains with respect to the other position in such straddle; (ii) the Fund's holding period in straddle positions be suspended while the straddle exists (possibly resulting in gain being treated as short-term capital gain rather than long-term capital gain); (iii) losses recognized with respect to certain straddle positions which are part of a mixed straddle and which are non-section 1256 positions be treated as 60% long-term and 40% short-term capital loss; (iv) losses recognized with respect to certain straddle positions which would otherwise constitute short-term capital losses be treated as long-term capital losses; and (v) the deduction of interest and carrying charges attributable to certain straddle positions may be deferred. Various elections are available to the Fund which may mitigate the effects of the straddle rules, particularly with respect to mixed straddles. In general, the straddle rules described above do not apply to any straddles held by the Fund all of the offsetting positions of which consist of section 1256 contracts. Taxation of Foreign Stockholders The foregoing discussion relates only to United States federal income tax law as it affects shareholders who are United States citizens or residents or United States corporations. The effects of federal income tax law on shareholders who are non- resident alien individuals or foreign corporations may be 59 substantially different. Foreign investors should therefore consult their counsel for further information as to the United States tax consequences of receipt of income from the Fund. _________________________________________________________________ BROKERAGE AND PORTFOLIO TRANSACTIONS _________________________________________________________________ Subject to the general supervision of the Board of Directors of the Fund, the Adviser is responsible for the investment decisions and the placing of orders for portfolio transactions for the Fund. The Adviser determines the broker to be used in each specific transaction with the objective of negotiating a combination of the most favorable commission and the best price obtainable on each transaction (generally defined as best 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. Neither the Fund nor the Adviser has entered into agreements or understandings with any brokers regarding the placement of securities transactions because of research 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 and, therefore, may have the effect of reducing the expenses of the Adviser in rendering advice to the Fund. While it is impossible to place an actual dollar value on such investment information, its receipt by the Adviser probably does not reduce the overall expenses of the Adviser to any material extent. The investment information provided to the Adviser is of the type described in Section 28(e)(3) of the Securities Exchange Act of 1934 and is designed to augment the Adviser's own internal research and investment strategy capabilities. Research services furnished by brokers through which the Fund effects securities transactions are used by the Adviser in carrying out its investment responsibilities with respect to all its client accounts. 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 60 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 extent to which commissions that will be charged by broker-dealers selected by the Fund may reflect an element of value for research cannot presently be determined. To the extent that research services of value are provided by broker-dealers with or through whom the Fund places portfolio transactions, the Adviser may be relieved of expenses which it might otherwise bear. Research services furnished by broker-dealers could be useful and of value to the Adviser in servicing its other clients as well as the Fund; but, on the other hand, certain research services obtained by the Adviser as a result of the placement of portfolio brokerage of other clients could be useful and of value to it in serving the Fund. 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 or other investment companies managed by the Adviser as a factor in the selection of brokers to execute portfolio transactions for the Fund. The Fund may from time to time place orders for the purchase or sale of securities (including listed call options) with 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. With respect to orders placed with DLJ for execution on a national securities exchange, commissions received must conform to Section 17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which permit an affiliated person of a registered investment company (such as the Fund), or any affiliated person of such person, to receive a brokerage commission from such registered investment company provided that such commission is reasonable and fair compared to the commissions received by other brokers in connection with comparable transactions involving similar securities during a comparable period of time. During the fiscal years ended November 30, 1997, 1996 and 1995, the Fund incurred brokerage commissions amounting in the aggregate to $1,637,773, $1,002,908 and $619,643. During the fiscal years ended November 30, 1997, 1996 and 1995, brokerage commissions amounting in the aggregate to $0, $0 and $0, respectively, were paid to DLJ and brokerage commissions 61 amounting in the aggregate to $0, $0 and $0, respectively, were paid to brokers utilizing the Pershing Division of DLJ. During the fiscal year ended November 30, 1997, 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 November 30, 1997, of the Fund's aggregate dollar amount of brokerage transactions involving the payment of commissions 0% were effected through DLJ and 0% were effected through brokers utilizing the Pershing Division of DLJ. During the fiscal year ended November 30, 1997, transactions in the portfolio securities of the Fund aggregating $743,447,215 with associated brokerage commissions of approximately $615,929 were allocated to persons or firms supplying research services to the Fund or the Adviser. _________________________________________________________________ GENERAL INFORMATION _________________________________________________________________ Capitalization The Fund is a Maryland corporation organized in 1992. The authorized capital stock of the Fund consists of 3,000,000,000 shares of Class A common stock, 3,000,000,000 shares of Class B common stock and 3,000,000,000 shares of Class C common stock and 3,000,000,000 shares of Advisor Class common stock, each having $.001 par value. 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 Contract and changes in investment policy, shares of each portfolio would vote as a separate series. Procedures for calling a shareholders' meeting for the removal of Directors of the Fund, similar to those set forth in Section 16(c) of the 1940 62 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. At the close of business on January 5, 1998 there were 78,107,685 shares of common stock of the Fund outstanding including 20,194,953 Class A shares, 45,369,795 Class B shares, 9,604, 83 Class C shares and 2,938,854 Advisor Class shares. To the knowledge of the Fund, the following persons owned of record or beneficially, 5% or more of a class of the outstanding shares of the Fund as of January 5, 1998: No. of % of Shares % of % of % of Advisor Name and Address: of Class Class A Class B Class C Class Merrill Lynch 2,614,976 12.95% 4800 Deer Lake Dr. 10,294,109 22.69% Jacksonville, FL 3,738,959 38.93% 32246 Bank of New York Equity League Pension Trust 1 Wall Street New York, NY 10005-2502 273,094 9.29% Bank of New York AFM & EPW Fund 1 Wall Street New York, NY 10005-2502 260,783 8.87% Trust for Profit Sharing For Alliance Capital Employees 1345 Avenue of the Americas New York, NY 10105 1,037,251 35.29% Custodian State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, 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 63 to the supervision of the Fund's Directors, State Street Bank and Trust Company may enter into sub-custodial agreements for the holding of the Fund's foreign securities. Principal Underwriter Alliance Fund Distributors, Inc., 1345 Avenue of the Americas, New York, New York 10105, serves as the Fund's Principal Underwriter and as such may solicit orders from the public to purchase shares of the Fund. Under the Distribution Services 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. 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 Accountants Price Waterhouse LLP, New York, New York, has been appointed as independent accountants for the Fund. Performance Information From time to time the Fund advertises its "total return." Computed separately for each class, the Fund's total return is its average annual total return for its most recently completed one-, five- and ten-year periods (or the period since the Fund's inception). The Fund's total return for each such period is computed by finding, through the use of a formula prescribed by the Securities and Exchange Commission, the average annual compounded rate of return over the period that would equate an assumed initial amount invested to the value of such investment at the end of the period. For purposes of computing total return, income dividends and capital gains distributions paid on shares of the Fund are assumed to have been reinvested when received and the maximum sales charge applicable to purchases of Fund shares is assumed to have been paid. The Fund's average total return is computed separately for Class A, Class B, Class C and Advisor Class shares. The average annual compounded total return based on net asset value for each class of share for the one- and five- and ten-year 64 periods ended November 30, 1997 (or since inception through that date, as noted) was as follows: Year 5 years 10 years ended ended ended 11/30/97 11/30/97 11/30/97 Class A 24.91% 19.22% 20.30%* Class B 25.62% 19.53% 20.59%* Class C 28.64% 22.25%* N/A Advisor Class 30.98%* 39.66%* N/A * Inception dates: Class A shares: September 28, 1992; Class B shares: September 28, 1992; Class C shares: April 30, 1993; Advisor Class shares: October 1, 1996 The Fund's total return is computed separately for Class A, Class B, Class C and Advisor Class shares. The Fund's yield and total return are 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, the Fund's average portfolio maturity and its expenses. Yield and total return information is useful in reviewing the Fund's performance, but such information may not provide a basis for comparison with bank deposits or other investments which pay a fixed yield for a stated period of time. An investor's principal invested in the Fund is not fixed and will fluctuate in response to prevailing market conditions. Advertisements quoting performance rankings or ratings of the Fund as measured by financial publications or independent organizations such as Lipper Analytical Services, Inc. ("Lipper") 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 investor or placed in newspapers, 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. The Fund has been ranked by Lipper in the category known as "Growth Fund." Additional Information Any shareholder inquiries may be directed to the shareholder's broker or to Alliance Fund Services, Inc. at the address or telephone number shown on the front cover of this Statement of Additional Information. This Statement of Additional Information does not contain all the information set forth in the Registration Statement filed by the Fund with the Securities and Exchange Commission. Copies of the Registration Statement may be obtained at a reasonable charge from the 65 Commission or may be examined, without charge, at the offices of the Commission in Washington, D.C. 66 _________________________________________________________________ REPORT OF INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS _________________________________________________________________ 67 ALLIANCE PREMIER GROWTH FUND ANNUAL REPORT NOVEMBER 30, 1997 PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1997 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ COMPANY SHARES VALUE - ------------------------------------------------------------------------- COMMON STOCKS AND OTHERINVESTMENTS-97.2% TECHNOLOGY-30.3% COMMUNICATIONS EQUIPMENT-8.7% Ericsson (L.M.) Telephone Co. Cl.B (ADR) (a) 899,090 $ 36,356,952 Lucent Technologies, Inc. 187,400 15,015,425 Nokia Corp. Class A (ADR) (b) 910,400 75,677,000 ------------- 127,049,377 COMPUTER HARDWARE-9.7% COMPAQ Computer Corp. (c) 1,185,450 74,016,534 Dell Computer Corp. (c) 801,200 67,451,025 ------------- 141,467,559 COMPUTER SERVICES-0.6% First Data Corp. 311,100 8,808,019 COMPUTER SOFTWARE-2.5% Microsoft Corp. (c) 256,500 36,294,750 NETWORK SOFTWARE-3.7% Cisco Systems, Inc. (c) 635,200 54,786,000 SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.1% Applied Materials, Inc. (c) 67,800 2,237,400 SEMI-CONDUCTOR COMPONENTS-5.0% Intel Corp. warrants, expiring 3/14/98 (c) 963,000 54,830,813 Texas Instruments, Inc. 362,000 17,828,500 ------------- 72,659,313 ------------- 443,302,418 CONSUMER SERVICES-18.8% AIRLINES-5.1% KLM Royal Dutch Air 330,182 11,886,552 Northwest Airlines Corp. Cl.A (c) 450,200 18,683,300 UAL Corp. (c) 519,200 44,132,000 ------------- 74,701,852 BROADCASTING & CABLE-4.2% AirTouch Communications, Inc. (c) 1,128,100 44,277,925 Tele-Communications, Inc.- Liberty Media Group Cl.A (c) 524,875 17,714,531 ------------- 61,992,456 ENTERTAINMENT & LEISURE-2.2% Walt Disney Co. 343,400 32,601,538 RESTAURANTS & LODGING-0.4% Marriot International, Inc. 73,900 5,353,131 RETAIL - GENERAL MERCHANDISE-6.9% Dayton Hudson Corp. 277,600 18,443,050 Home Depot, Inc. 1,136,000 63,545,000 Kohl's Corp. (c) 257,400 18,629,325 ------------- 100,617,375 ------------- 275,266,352 FINANCE-17.9% BANKING - MONEY CENTERS-2.1% Citicorp 258,900 31,051,819 BANKING - REGIONAL-0.7% Banc One Corp. 189,100 9,715,012 6 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ COMPANY SHARES VALUE - ------------------------------------------------------------------------- BROKERAGE & MONEY MANAGEMENT-5.6% Merrill Lynch & Co., Inc. 637,200 $ 44,723,475 Morgan Stanley, Dean Witter, Discover and Co. 697,135 37,863,145 ------------ 82,586,620 INSURANCE-1.6% American International Group, Inc. 193,225 19,479,495 Progressive Corp. 40,500 4,131,000 ------------ 23,610,495 MORTGAGE BANKING-1.1% Federal Home Loan Mortgage Corp. 225,800 9,314,250 Federal National Mortgage Assn. 136,800 7,224,750 ------------ 16,539,000 MISCELLANEOUS-6.8% Household International, Inc. 143,100 18,030,600 MBNA Corp. 2,719,550 72,238,047 MGIC Investment Corp. 145,500 8,502,656 ------------ 98,771,303 ------------ 262,274,249 HEALTH CARE-10.8% DRUGS-6.7% Merck & Co., Inc. 350,200 33,115,788 Pfizer, Inc. 602,800 43,853,700 Schering-Plough Corp. 336,700 21,106,881 ------------ 98,076,369 MEDICAL PRODUCTS-1.1% Medtronic, Inc. 322,500 15,399,375 MEDICAL SERVICES-3.0% United Healthcare Corp. 853,700 44,445,756 ------------ 157,921,500 CONSUMER STAPLES-6.3% COSMETICS-0.2% Gillette Co. 39,900 3,683,269 FOOD-0.2% Coca-Cola Co. 37,600 2,350,000 HOUSEHOLD PRODUCTS-0.1% Colgate-Palmolive Co. 27,600 1,844,025 TOBACCO-5.8% Philip Morris Cos., Inc. 1,940,300 84,403,050 ------------ 92,280,344 CAPITAL GOODS-3.6% MISCELLANEOUS-3.6% Allied-Signal, Inc. 289,400 10,743,975 United Technologies Corp. 564,900 42,332,194 ------------ 53,076,169 MULTI INDUSTRY COMPANIES-3.2% Tyco International, Ltd. 1,201,800 47,170,650 CONSUMER MANUFACTURING-2.4% AUTO & RELATED-2.4% Ford Motor Co. 803,400 34,546,200 UTILITIES-2.1% TELEPHONE UTILITY-2.1% MCI Communications Corp. 359,200 15,782,350 WorldCom, Inc. (c) 436,490 13,967,680 ------------ 29,750,030 ENERGY-1.8% OIL SERVICES-1.8% Baker Hughes, Inc. 211,300 8,848,188 Halliburton Co. 88,300 4,762,681 Schlumberger, Ltd. 154,600 12,725,512 ------------ 26,336,381 Total Common Stocks and Other Investments (cost $1,147,491,661) 1,421,924,293 7 PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ PRINCIPAL AMOUNT COMPANY (000) VALUE - ------------------------------------------------------------------------- SHORT-TERM INVESTMENT-2.3% COMMERCIAL PAPER-2.3% General Electric Capital Corp. 5.80%, 12/01/97 (amortized cost $33,356,000) $33,356 $ 33,356,000 TOTAL INVESTMENTS-99.5% (cost $1,180,847,661) $1,455,280,293 Other assets less liabilities-0.5% 7,649,482 NET ASSETS-100% $1,462,929,775 (a) Country of origin--Sweden. (b) Country of origin--Finland. (c) Non-income producing security. Glossary: ADR - American Depositary Receipt. See notes to financial statements. 8 STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1997 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $1,180,847,661) $1,455,280,293 Cash 518 Receivable for capital stock sold 18,663,245 Receivable for investment securities sold 10,527,587 Dividends receivable 414,694 Total assets 1,484,886,337 LIABILITIES Payable for investment securities purchased 13,497,551 Payable for capital stock redeemed 5,789,584 Advisory fee payable 1,159,248 Distribution fee payable 919,565 Accrued expenses and other liabilities 590,614 Total liabilities 21,956,562 NET ASSETS $1,462,929,775 COMPOSITION OF NET ASSETS Capital stock, at par $ 68,109 Additional paid-in capital 1,095,121,183 Accumulated net realized gain on investments 93,307,851 Net unrealized appreciation of investments 274,432,632 $1,462,929,775 CALCULATION OF MAXIMUM OFFERING PRICE CLASS A SHARES Net asset value and redemption price per share ($373,099,448/ 16,956,377 shares of capital stock issued and outstanding) $22.00 Sales charge--4.25% of public offering price .98 Maximum offering price $22.98 CLASS B SHARES Net asset value and offering price per share ($858,448,726/ 40,376,157 shares of capital stock issued and outstanding) $21.26 CLASS C SHARES Net asset value and offering price per share ($177,923,008/ 8,357,140 shares of capital stock issued and outstanding) $21.29 ADVISOR CLASS SHARES Net asset value, redemption and offering price per share ($53,458,593/2,419,222 shares of capital stock issued and outstanding) $22.10 See notes to financial statements. 9 STATEMENT OF OPERATIONS YEAR ENDED NOVEMBER 30, 1997 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $91,741) $8,223,561 Interest 1,885,055 $ 10,108,616 EXPENSES Advisory fee 9,721,137 Distribution fee - Class A 805,434 Distribution fee - Class B 5,916,522 Distribution fee - Class C 1,042,541 Transfer agency 1,292,595 Registration 264,601 Printing 235,163 Custodian 204,021 Administrative 130,000 Audit and legal 97,421 Taxes 71,624 Amortization of organization expenses 48,190 Directors' fees 28,000 Miscellaneous 18,796 Total expenses 19,876,045 Net investment loss (9,767,429) REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investment transactions 103,667,327 Net change in unrealized appreciation of investments 130,879,567 Net gain on investments 234,546,894 NET INCREASE IN NET ASSETS FROM OPERATIONS $224,779,465 See notes to financial statements. 10 STATEMENT OF CHANGES IN NET ASSETS ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30, 1997 1996 --------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (9,767,429) $ (3,627,229) Net realized gain on investment transactions 103,667,327 41,215,867 Net change in unrealized appreciation of investments 130,879,567 83,009,880 Net increase in net assets from operations 224,779,465 120,598,518 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net realized gain on investments Class A (10,426,403) (5,922,043) Class B (25,045,493) (19,710,627) Class C (3,698,398) (1,909,603) Advisor Class (115,497) -0- CAPITAL STOCK TRANSACTIONS Net increase 638,313,131 214,933,808 Total increase 823,806,805 307,990,053 NET ASSETS Beginning of year 639,122,970 331,132,917 End of year $1,462,929,775 $639,122,970 See notes to financial statements. 11 NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES Alliance Premier Growth Fund, Inc. (the "Fund"), organized as a Maryland corporation on July 9, 1992, 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 six years after the end of the calendar month of purchase. Class C shares 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 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 Fund's 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 value of such securities. 2. ORGANIZATION EXPENSES Organization expenses of approximately, $316,110 have been deferred and were amortized on a straight-line basis through September, 1997. 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 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 discount and amortizes premiums 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 Advisory Class shares have no distribution fees. 6. DIVIDENDS AND DISTRIBUTIONS Dividends and distributions to shareholders are recorded on the ex-dividend date. 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 12 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ current fiscal year, permanent differences, primarily due to net investment losses, resulted in a net decrease in accumulated net investment losses and a corresponding decrease in accumulated net realized gain on investment transactions. This reclassification had no effect on net assets. NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of an investment advisory agreement, the Fund pays Alliance Capital Management L.P., (the "Adviser"), an advisory 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 advisory agreement, the Fund paid $130,000 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the year ended November 30, 1997. The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. Such compensation amounted to $904,566 for the year ended November 30, 1997. Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The Distributor received front-end sales charges of $177,799 from the sale of Class A shares and $4,277, $718,789 and $35,775 in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the year ended November 30, 1997. Brokerage commissions paid on investment transactions for the year ended November 30, 1997, amounted to $1,637,773, none of which was paid to brokers utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities Corp. ("DLJ"), an affiliate of the Adviser nor to DLJ directly. NOTE C: DISTRIBUTION SERVICES AGREEMENT The Fund has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays a distribution fee to the Distributor at an annual rate of up to .50 of 1% of the average daily net assets attributable to the Class A shares and 1% of the average daily net assets attributable to the Class B and Class C shares. There is no distribution fee on the Advisor Class shares. Such fee is accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amount of $20,874,319 and $1,413,557 for Class B and C shares, respectively; such costs may be recovered from the Fund in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs, incurred by the Distributor, beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Fund's shares. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments and U.S. government securities) aggregated $1,281,153,857 and $696,099,375, respectively, for the year ended November 30, 1997. There were purchases of $12,510,037 and sales of $20,297,154 of U.S. government and government agency obligations for the year ended November 30, 1997. At November 30, 1997 the cost of investments for federal income tax purposes was $1,186,692,920. Accordingly, gross unrealized appreciation of investments was $278,836,781 and gross unrealized depreciation of investments was $10,249,408 resulting in net unrealized appreciation of $268,587,373. 13 NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ NOTEE:ACQUISITION OF ALLIANCE COUNTERPOINT FUND On March 22, 1996, the Fund acquired all of the assets and certain liabilities of Alliance Counterpoint Fund ("Counterpoint") pursuant to a plan of acquisition approved by the shareholders of the Fund on February 29, 1996. The acquisition was accomplished by a tax-free exchange of 2,527,242 shares of the Fund for 2,310,177 shares of Counterpoint on March 22, 1996. The aggregate net assets of the Fund and Counterpoint immediately before the acquisition were $417,543,018 and $38,613,769 respectively. Of Counterpoint's total net assets of $38,613,769, $16,595,716 was related to unrealized appreciation of investment transactions. Immediately after the acquisition, the combined net assets of the Fund amounted to $456,156,787. NOTE F: CAPITAL STOCK There are 12,000,000,000 shares of $0.001 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 NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, 1997 1996 1997 1996 ------------ ------------ -------------- -------------- CLASS A Shares sold 10,222,249 4,320,321 $ 212,359,400 $ 66,548,324 Shares issued in reinvestment of distributions 538,004 382,395 8,771,167 5,537,079 Shares issued in connection with the acquisition of Alliance Counterpoint Fund -0- 2,358,660 -0- 19,714,212 Shares converted from Class B 1,665,278 775,326 33,372,081 12,236,562 Shares redeemed (5,085,060) (2,718,348) (100,132,948) (41,968,817) Net increase 7,340,471 5,118,354 $ 154,369,700 $ 62,067,360 CLASS B Shares sold 22,054,486 11,059,187 $ 438,050,160 $166,656,584 Shares issued in reinvestment of distributions 1,184,755 1,010,144 18,778,873 14,344,050 Shares issued in connection with the acquisition of Alliance Counterpoint Fund -0- 122,630 -0- 1,653,071 Shares converted to Class A (1,719,123) (793,985) (33,372,081) (12,236,562) Shares redeemed (4,213,179) (3,389,077) (80,849,390) (51,382,097) Net increase 17,306,939 8,008,899 $ 342,607,562 $119,035,046 14 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ SHARES AMOUNT --------------------------- ------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, 1997 1996 1997 1996 ------------ ------------ -------------- -------------- CLASS C Shares sold 6,050,953 2,912,986 $120,803,565 $ 43,855,129 Shares issued in reinvestment of distributions 140,395 73,916 2,228,162 1,050,350 Shares issued in connection with the acquisition of Alliance Counterpoint Fund -0- 45,952 -0- 650,770 Shares redeemed (1,266,415) (907,459) (24,575,722) (13,527,197) Net increase 4,924,933 2,125,395 $ 98,456,005 $ 32,029,052 YEAR ENDED OCT. 2,1996(A) YEAR ENDED OCT. 2,1996(A) NOVEMBER 30, TO NOVEMBER 30, TO 1997 NOV. 30,1996 1997 NOV. 30,1996 ------------ ------------ -------------- -------------- ADVISOR CLASS Shares sold 2,430,024 106,845 $45,316,504 $1,802,350 Shares issued in reinvestment of distributions 7,030 -0- 114,668 -0- Shares redeemed (124,677) -0- (2,551,308) -0- Net increase 2,312,377 106,845 $42,879,864 $1,802,350 (a) Commencement of distribution. 15 FINANCIAL HIGHLIGHTS ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
CLASS A ---------------------------------------------------------------- YEAR ENDED NOVEMBER 30, ---------------------------------------------------------------- 1997 1996 1995 1994 1993 ------------ ------------ ----------- ----------- ---------- Net asset value, beginning of year $17.98 $16.09 $11.41 $11.78 $10.79 INCOME FROM INVESTMENT OPERATIONS Net investment loss (.10)(a) (.04)(a) (.03) (.09) (.05) Net realized and unrealized gain (loss) on investment transactions 5.20 3.20 5.38 (.28) 1.05 Net increase (decrease) in net asset value from operations 5.10 3.16 5.35 (.37) 1.00 LESS: DIVIDEND AND DISTRIBUTIONS Dividends from net investment income -0- -0- -0- -0- (.01) Distributions from net realized gains (1.08) (1.27) (.67) -0- -0- Total dividends and distributions (1.08) (1.27) (.67) -0- (.01) Net asset value, end of year $22.00 $17.98 $16.09 $11.41 $11.78 TOTAL RETURN Total investment return based on net asset value (b) 30.46% 21.52% 49.95% (3.14)% 9.26% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $373,099 $172,870 $72,366 $35,146 $40,415 Ratio of expenses to average net assets 1.57% 1.65% 1.75% 1.96% 2.18% Ratio of net investment loss to average net assets (.52)% (.27)% (.28)% (.67)% (.61)% Portfolio turnover rate 76% 95% 114% 98% 68% Average commission rate (c) $.0594 $.0651 -- -- --
See footnote summary on page 19. 16 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
CLASS B ---------------------------------------------------------------- YEAR ENDED NOVEMBER 30, ---------------------------------------------------------------- 1997 1996 1995 1994 1993 ------------ ------------ ----------- ----------- ---------- Net asset value, beginning of year $17.52 $15.81 $11.29 $11.72 $10.79 INCOME FROM INVESTMENT OPERATIONS Net investment loss (.23)(a) (.14)(a) (.11) (.15) (.10) Net realized and unrealized gain (loss) on investment transactions 5.05 3.12 5.30 (.28) 1.03 Net increase (decrease) in net asset value from operations 4.82 2.98 5.19 (.43) .93 LESS: DISTRIBUTIONS Distributions from net realized gains (1.08) (1.27) (.67) -0- -0 Net asset value, end of year $21.26 $17.52 $15.81 $11.29 $11.72 TOTAL RETURN Total investment return based on net asset value (b) 29.62% 20.70% 49.01% (3.67)% 8.64% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $858,449 $404,137 $238,088 $139,988 $151,600 Ratio of expenses to average net assets 2.25% 2.32% 2.43% 2.47% 2.70% Ratio of net investment loss to average net assets (1.20)% (.94)% (.95)% (1.19)% (1.14)% Portfolio turnover rate 76% 95% 114% 98% 68% Average commission rate (c) $.0594 $.0651 -- -- --
See footnote summary on page 19. 17 FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C ------------------------------------------------------------------- MAY 3,1993(D) YEAR ENDED NOVEMBER 30, TO ---------------------------------------------------- NOVEMBER 30, 1997 1996 1995 1994 1993 ------------ ------------ ----------- ----------- ------------- Net asset value, beginning of period $17.54 $15.82 $11.30 $11.72 $10.48 INCOME FROM INVESTMENT OPERATIONS Net investment loss (.24)(a) (.14)(a) (.08) (.09) (.05) Net realized and unrealized gain (loss) on investment transactions 5.07 3.13 5.27 (.33) 1.29 Net increase (decrease) in net asset value from operations 4.83 2.99 5.19 (.42) 1.24 LESS:DISTRIBUTIONS Distributions from net realized gains (1.08) (1.27) (.67) -0- -0- Net asset value, end of period $21.29 $17.54 $15.82 $11.30 $11.72 TOTAL RETURN Total investment return based on net asset value (b) 29.64% 20.76% 48.96% (3.58)% 11.83% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $177,923 $60,194 $20,679 $7,332 $3,899 Ratio of expenses to average net assets 2.24% 2.32% 2.42% 2.47% 2.79%(e) Ratio of net investment loss to average net assets (1.22)% (.94)% (.97)% (1.16)% (1.35)%(e) Portfolio turnover rate 76% 95% 114% 98% 68% Average commission rate (c) $.0594 $.0651 -- -- --
See footnote summary on page 19. 18 ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD ADVISOR CLASS --------------------------- OCTOBER 2, 1996(D) YEAR ENDED TO NOVEMBER 30, NOVEMBER 30, 1997 1996 ------------ ------------- Net asset value, beginning of period $17.99 $15.94 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (.06) (.01) Net realized and unrealized gain on investment transactions 5.25 2.06 Net increase in net asset value from operations 5.19 2.05 LESS: DISTRIBUTIONS Distributions from net realized gains (1.08) -0- Net asset value, end of period $22.10 $17.99 TOTAL RETURN Total investment return based on net asset value (b) 30.98% 12.86% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $53,459 $1,922 Ratio of expenses to average net assets 1.25% 1.50%(e) Ratio of net investment loss to average net assets (.28)% (.48)%(e) Portfolio turnover rate 76% 95% Average commission rate $.0594 $.0651 (a) Based on average shares oustanding. (b) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total investment return. Total investment return calculated for a period of less than one year is not annualized. (c) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share for trades on which commissions are charged. (d) Commencement of distribution. (e) Annualized. 19 REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE PREMIER GROWTH FUND _______________________________________________________________________________ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE PREMIER GROWTH FUND, INC. In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Alliance Premier Growth Fund, Inc. (the "Fund") at November 30, 1997, 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 periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at November 30, 1997 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP New York, New York January 9, 1998 _________________________________________________________________ APPENDIX A _________________________________________________________________ Stock Index Futures Characteristics. Currently, stock index futures contracts can be purchased or sold with respect to the Standard & Poor's 500 Stock Index on the Chicago Mercantile Exchange, the New York Stock Exchange Composite Index on the New York Futures Exchange and the Value Line Stock Index on the Kansas City Board of Trade. The Adviser does not believe that differences in composition of the three indices will create any differences in the price movements of the stock index futures contracts in relation to the movements in such indices. However, such differences in the indices may result in differences in correlation of the futures contracts with movements in the value of the securities being hedged. The Fund reserves the right to purchase or sell stock index futures contracts that may be created in the future. Certain exchanges and Boards of Trade have established daily limits on the amount that the price of a stock index futures contract may vary, either up or down, from the previous day's settlement price which limitations may restrict the Fund's ability to purchase or sell certain stock index futures contracts on a particular day. Unlike the purchase or sale of a specific security by the Fund, no price is paid or received by the Fund upon the purchase or sale of a futures contract. Initially, the Fund will be required to deposit with the broker through which such transaction is effected or in a segregated account with the Fund's Custodian an amount of cash or U.S. Government securities or other liquid high-quality debt securities equal to the market value of the stock index futures contract less any amounts maintained in a margin account with the Fund's broker. This amount is known as initial margin. The nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds to finance transactions. Rather, the initial margin is in the nature of a performance bond or good faith deposit on the contract which is returned to the Fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. Additional payments of cash, Government securities or other liquid high-quality debt securities, called variation margin, to and from the broker may be made on a daily basis as the price of the underlying stock index fluctuates, a process known as marking to the market. For example, when the Fund has purchased a stock index futures contract and the price of the futures contract has risen in response to a rise in the underlying stock index, that position will have increased in value and the Fund will receive from the A-1 broker a variation margin payment equal to that increase in value. Conversely, where the Fund has purchased a stock index futures contract and the price of the futures contract has declined in response to a decrease in the underlying stock index, the position would be less valuable and the Fund would be required to make a variation margin payment to the broker. At any time prior to expiration of the futures contract, the Adviser may elect to close the position by taking an opposite position which will operate to terminate the Fund's position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund, and the Fund realizes a loss or gain. Risks of Transactions in Stock Index Futures. There are several risks in connection with the use of stock index futures by the Fund as a hedging device. One risk arises because of the imperfect correlation between movements in the price of the stock index futures and movements in the price of the securities which are the subject of the hedge. The price of the stock index futures may move more than or less than the price of the securities being hedged. If the price of the stock index futures moves less than the price of the securities which are the subject of the hedge, the hedge will not be fully effective but, if the price of the securities being hedged has moved in an unfavorable direction, the Fund would be in a better position than if it had not hedged at all. If the price of the securities being hedged has moved in a favorable direction, this advantage will be partially offset by the loss on the index future. If the price of the future moves more than the price of the stock, the Fund will experience either a loss or gain on the future which will not be completely offset by movements in the price of the securities which are the subject of the hedge. To compensate for the imperfect correlation of movements in the price of securities being hedged and movements in the price of the stock index futures, the Fund may buy or sell stock index futures contracts in a greater dollar amount than the dollar amount of securities being hedged if the volatility over a particular time period of the prices of such securities has been greater than the volatility over such time period for the index, or if otherwise deemed to be appropriate by the Adviser. Conversely, the Fund may buy or sell fewer stock index futures contracts if the volatility over a particular time period of the prices of the securities being hedged is less than the volatility over such time period of the stock index, or if otherwise deemed to be appropriate by the Adviser. It is also possible that, where the Fund has sold futures to hedge its portfolio against a decline in the market, the market may advance and the value of securities held in the Fund may decline. If this occurred, the Fund would lose money on the futures contract and also experience a decline in value in its portfolio securities. However, over time the value of the Fund's portfolio should tend to move in the same A-2 direction as the market indices upon which the futures are based, although there may be deviations arising from differences between the composition of the Fund and the stocks comprising the index. Where futures are purchased to hedge against a possible increase in the price of stock before the Fund is able to invest its cash (or cash equivalents) in stocks (or options) in an orderly fashion, it is possible that the market may decline instead. If the Fund then concludes not to invest in stock or options at that time because of concern as to possible further market decline or for other reasons, the Fund will realize a loss on the futures contract that is not offset by a reduction in the price of securities purchased. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the stock index futures and the portion of the portfolio being hedged, the price of stock index futures may not correlate perfectly with movement in the stock index due to certain market distortions. Rather than meeting additional margin deposit requirements, investors may close futures contracts through off-setting transactions which could distort the normal relationship between the index and futures markets. Secondly, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may also cause temporary price distortions. Due to the possibility of price distortion in the futures market, and because of the imperfect correlation between the movements in the stock index and movements in the price of stock index futures, a correct forecast of general market trends by the Adviser may still not result in a successful hedging transaction over a short time frame. Positions in stock index futures may be closed out only on an exchange or board of trade which provides a secondary market for such futures. Although the Fund intends to purchase or sell futures only on exchanges or boards of trade where there appear to be active secondary markets, there is no assurance that a liquid secondary market on any exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures investment position, and in the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin. However, in the event futures contracts have been used to hedge portfolio securities, such securities will not be sold until the futures contract can be terminated. In such circumstances, an increase in the price of the securities, if any, may partially or completely offset losses on the futures contract. However, as described above, there is no guarantee that the price of the securities will in fact correlate with the price A-3 movements in the futures contract and thus provide an offset on a futures contract. The Fund's Adviser intends to purchase and sell futures contracts on the stock index for which it can obtain the best price with due consideration to liquidity. Successful use of stock index futures by the Fund is also subject to the Adviser's ability to predict correctly movements in the direction of the market. For example, if the Fund has hedged against the possibility of a decline in the market adversely affecting stocks held in its portfolio and stock prices increase instead, the Fund will lose part or all of the benefit of the increased value of its stock which it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if the Fund has insufficient cash, it may have to sell securities to meet daily variation margin requirements. Such sales of securities may be, but will not necessarily be, at increased prices which reflect the rising market. The Fund may have to sell securities at a time when it may be disadvantageous to do so. A-4 PART C OTHER INFORMATION ITEM 24. Financial Statements and Exhibits (a) Financial Statements Included in Registrant's Prospectus: Financial Highlights Included in the Registrant's Statement of Additional Information: Portfolio of Investments, November 30, 1997. Statement of Assets and Liabilities, November 30, 1997. Statement of Operations, year ended November 30, 1997. Statement of Changes in Net Assets, years ended November 30, 1996 and November 30, 1997. Notes to Financial Statements, November 30, 1997. Financial Highlights - for Class A and Class B shares for years ended November 30, 1993 through November 30, 1997; for Class C shares for years ended November 30, 1994 through November 30, 1997 and period May 3, 1993 (commencement of distribution) to November 30, 1993; for Advisor Class shares for year ended November 30, 1997 and period October 2, 1996 (commencement of distribution) to November 30, 1996. Report of Independent Accountants Included in Part C of the Registration Statement: All other financial statements or schedules are either inapplicable or the required information is contained in the Statement of Assets and Liabilities or the notes thereto. (b) Exhibits (1) (a) Articles of Incorporation of the Registrant as now in effect - filed herewith. (b) Articles of Amendment to Articles of Incorporation - filed herewith. (2) Bylaws of the Registrant - filed herewith. (3) Not Applicable. (4) See Exhibits 1 & 2 hereto. C-1 (5) Investment Advisory Agreement between the Registrant and Alliance Capital Management L.P. - filed herewith. (6) (a) Distribution Services Agreement between the Registrant and Alliance Fund Distributors, Inc. - filed herewith. (b) Amendment to the Distribution Services Agreement between the Registrant and Alliance Fund Distributors, Inc. - Incorporated by reference from Registrant's Registration Statement on Form N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities and Exchange Commission on February 3, 1997. (c) Selected Dealer Agreement between Alliance Fund Distributors, Inc. and selected dealers offering shares of Registrant - filed herewith. (d) Selected Agent Agreement between Alliance Fund Distributors, Inc. and selected agents making available shares of Registrant - filed herewith. (7) Not applicable. (8) Custodian Contract between the Registrant and State Street Bank and Trust Company - filed herewith. (9) Transfer Agency Agreement between the Registrant and Alliance Fund Services, Inc. - filed herewith. (10) (a) Opinion and Consent of Seward & Kissel - filed herewith. (b) Opinion and Consent of Venable, Baetjer and Howard, LLP - Incorporated by reference from Registrant's Registration Statement on Form N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities and Exchange Commission on August 19, 1992. (11) Consent of Independent Accountants - filed herewith. (12) Not applicable. (13) Not applicable. C-2 (14) Not applicable. (15) Rule 12b-1 Plan - See Exhibit 6(a) hereto. (16) Schedule of Computation of Average Annual Compounded Total Return - filed herewith. (17) Financial Data Schedule - filed herewith. (18) (a) Rule 18f-3 Plan - Incorporated by reference from Registrant's Registration Statement on Form N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities and Exchange Commission on January 31, 1996. (b) Amended and Restated Rule 18f-3 Plan - Incorporated by reference from Registrant's Registration Statement on Form N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities and Exchange Commission on February 3, 1997. Other Exhibits: Powers of Attorney for: John D. Carifa, Ruth Block, David H. Dievler, John H. Dobkin, William H. Foulk, Jr., James M. Hester, Clifford L. Michel and Donald J. Robinson - filed herewith. ITEM 25. Persons Controlled by or under Common Control with Registrant. None. ITEM 26. Number of Holders of Securities. Title of Class Number of Record Holders (as of January 5, 1998) Shares of Common Stock par value .001 Class A 24,113 Class B 57,608 Class C 9,515 Advisor Class 686 ITEM 27. Indemnification It is the Registrant's policy to indemnify its directors and officers, employees and other agents to the maximum extent permitted by Section 2-418 of the General C-3 Corporation Law of the State of Maryland and as set forth in Article EIGHTH of Registrant's Articles of Incorporation, filed as Exhibit 1 in response to Item 24, Article VII and Article VIII of the Registrant's By-Laws filed as Exhibit 2 in response to item 24 and Section 10 of the Distribution Services Agreement filed as Exhibit 6(a) in response to Item 24, all as set forth below. The liability of the Registrant's directors and officers is dealt with in Article EIGHTH of Registrant's Articles of Incorporation, and Article VII, Section 7 and Article VIII, Section 1 through Section 6 of the Registrant's By-Laws, as set forth below. The Adviser's liability for any loss suffered by the Registrant or its shareholders is set forth in Section 4 of the Advisory Agreement filed as Exhibit 5 to this Registration Statement, as set forth below. Section 2-418 of the Maryland General Corporation Law reads as follows: "2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. - --(a) In this section the following words have the meaning indicated. (1) "Director" means any person who is or was a director of a corporation and any person who, while a director of a corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan. (2) "Corporation" includes any domestic or foreign predecessor entity of a corporation in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of the transaction. (3) "Expenses" include attorney's fees. (4) "Official capacity" means the following: (i) When used with respect to a director, the office of director in the corporation; and (ii) When used with respect to a person other than a director as contemplated in subsection (j), the elective or appointive office in the corporation C-4 held by the officer, or the employment or agency relationship undertaken by the employee or agent in behalf of the corporation. (iii) "Official capacity" does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan. (5) "Party" includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (6) "Proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative. (b)(1) A corporation may indemnify any director made a party to any proceeding by reason of service in that capacity unless it is established that: (i) The act or omission of the director was material to the matter giving rise to the proceeding; and 1. Was committed in bad faith; or 2. Was the result of active and deliberate dishonesty; or (ii) The director actually received an improper personal benefit in money, property, or services; or (iii) In the case of any criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful. (i) Indemnification may be against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the director in connection with the proceeding. (ii) However, if the proceeding was one by or in the right of the corporation, indemnification may not be made in respect of any proceeding in which the director shall have been adjudged to be liable to the corporation. (3)(i) The termination of any proceeding by judgment, order or settlement does not create a presumption that the director did not meet the C-5 requisite standard of conduct set forth in this subsection. (ii) The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the director did not meet that standard of conduct. (c) A director may not be indemnified under subsection (b) of this section in respect of any proceeding charging improper personal benefit to the director, whether or not involving action in the director's official capacity, in which the director was adjudged to be liable on the basis that personal benefit was improperly received. (d) Unless limited by the charter: (1) A director who has been successful, on the merits or otherwise, in the defense of any proceeding referred to in subsection (b) of this section shall be indemnified against reasonable expenses incurred by the director in connection with the proceeding. (2) A court of appropriate jurisdiction upon application of a director and such notice as the court shall require, may order indemnification in the following circumstances: (i) If it determines a director is entitled to reimbursement under paragraph (1) of this subsection, the court shall order indemnification, in which case the director shall be entitled to recover the expenses of securing such reimbursement; or (ii) If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director has met the standards of conduct set forth in subsection (b) of this section or has been adjudged liable under the circumstances described in subsection (c) of this section, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any proceeding by or in the right of the corporation or in which liability shall have been adjudged in the circumstances described in subsection (c) shall be limited to expenses. C-6 (3) A court of appropriate jurisdiction may be the same court in which the proceeding involving the director's liability took place. (e)(1) Indemnification under subsection (b) of this section may not be made by the corporation unless authorized for a specific proceeding after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in subsection (b) of this section. (2) Such determination shall be made: (i) By the board of directors by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such a quorum cannot be obtained, then by a majority vote of a committee of the board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full board in which the designated directors who are parties may participate; (ii) By special legal counsel selected by the board or a committee of the board by vote as set forth in subparagraph (i) of this paragraph, or, if the requisite quorum of the full board cannot be obtained therefor and the committee cannot be established, by a majority vote of the full board in which directors who are parties may participate; or (iii) By the stockholders. (3) Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible. However, if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses shall be made in the manner specified in subparagraph (ii) of paragraph (2) of this subsection for selection of such counsel. (4) Shares held by directors who are parties to the proceeding may not be voted on the subject matter under this subsection. (f)(1) Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the C-7 corporation in advance of the final disposition of the proceeding, upon receipt by the corporation of: (i) A written affirmation by the director of the director's good faith belief that the standard of conduct necessary for indemnification by the corporation as authorized in this section has been met; and (ii) A written undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the standard of conduct has not been met. (2) The undertaking required by subparagraph (ii) of paragraph (1) of this subsection shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make the repayment. (3) Payments under this subsection shall be made as provided by the charter, bylaws, or contract or as specified in subsection (e) of this section. (g) The indemnification and advancement of expenses provided or authorized by this section may not be deemed exclusive of any other rights, by indemnification or otherwise, to which a director may be entitled under the charter, the bylaws, a resolution of stockholders or directors, an agreement or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. (h) This section does not limit the corporation's power to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when the director has not been made a named defendant or respondent in the proceeding. (i) For purposes of this section: (1) The corporation shall be deemed to have requested a director to serve an employee benefit plan where the performance of the director's duties to the corporation also imposes duties on, or otherwise involves services by, the director to the plan or participants or beneficiaries of the plan: (2) Excise taxes assessed on a director with respect to an employee benefit plan pursuant to applicable law shall be deemed fines; and C-8 (3) Action taken or omitted by the director with respect to an employee benefit plan in the performance of the director's duties for a purpose reasonably believed by the director to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation. (j) Unless limited by the charter: (1) An officer of the corporation shall be indemnified as and to the extent provided in subsection (d) of this section for a director and shall be entitled, to the same extent as a director, to seek indemnification pursuant to the provisions of subsection (d); (2) A corporation may indemnify and advance expenses to an officer, employee, or agent of the corporation to the same extent that it may indemnify directors under this section; and (3) A corporation, in addition, may indemnify and advance expenses to an officer, employee, or agent who is not a director to such further extent, consistent with law, as may be provided by its charter, bylaws, general or specific action of its board of directors or contract. (k)(1) A corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request, of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against any liability asserted against and incurred by such person in any such capacity or arising out of such person's position, whether or not the corporation would have the power to indemnify against liability under the provisions of this section. (2) A corporation may provide similar protection, including a trust fund, letter of credit, or surety bond, not inconsistent with this section. (3) The insurance or similar protection may be provided by a subsidiary or an affiliate of the corporation. (l) Any indemnification of, or advance of expenses to, a director in accordance with this section, if arising out of a proceeding by or in the right of the corporation, C-9 shall be reported in writing to the stockholders with the notice of the next stockholders' meeting or prior to the meeting." Article EIGHTH of the Registrant's Articles of Incorporation reads as follows: "(1) To the full extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Corporation shall have any liability to the Corporation or its stockholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted. "(2) The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the full extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may by By-Law, resolution or agreement make further provisions for indemnification of directors, officers, employees and agents to the full extent permitted by the Maryland General Corporation Law. "(3) No provision of this Article shall be effective to protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its stockholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. "(4) References to the Maryland General Corporation Law in this Article are to that law as from time to time amended. No amendment to the Charter of the Corporation shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment." Article VII, Section 7 of the Registrant's By-Laws reads as C-10 follows: Section 7. Insurance Against Certain Liabilities. The Corporation shall not bear the cost of insurance that protects or purports to protect directors and officers of the Corporation against any liabilities to the Corporation or its security holders to which any such director or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Article VIII of the Registrant's By-Laws reads as follows: "Section 1. Indemnification of Directors and Officers. The Corporation shall indemnify its directors to the full extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify its officers to the same extent as its directors and to such further extent as is consistent with law. The Corporation shall indemnify its directors and officers who while serving as directors or officers also serve at the request of the Corporation as a director, officer, partner, trustee, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan to the full extent consistent with law. The indemnification and other rights provided by this Article shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. This Article shall not protect any such person against any liability to the Corporation or any stockholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office ("disabling conduct"). "Section 2. Advances. Any current or former director or officer of the Corporation seeking indemnification within the scope of this Article shall be entitled to advances from the Corporation for payment of the reasonable expenses incurred by him in connection with the matter as to which he is seeking indemnification in the manner and to the full extent permissible under the Maryland General Corporation Law. The person seeking indemnification shall provide to the Corporation a written affirmation of his good faith belief that the C-11 standard of conduct necessary for indemnification by the Corporation has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the person seeking indemnification shall provide a security in form and amount acceptable to the Corporation for his undertaking; (b) the Corporation is insured against losses arising by reason of the advance; or (c) a majority of a quorum of directors of the Corporation who are neither "interested persons" as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor parties to the proceeding ("disinterested non-party directors"), or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Corporation at the time the advance is proposed to be made, that there is reason to believe that the person seeking indemnification will ultimately be found to be entitled to indemnification. "Section 3. Procedure. At the request of any person claiming indemnification under this Article, the Board of Directors shall determine, or cause to be determined, in a manner consistent with the Maryland General Corporation Law, whether the standards required by this Article have been met. Indemnification shall be made only following: (a) a final decision on the merits by a court or other body before whom the proceeding was brought that the person to be indemnified was not liable by reason of disabling conduct or (b) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the person to be indemnified was not liable by reason of disabling conduct by (i) the vote of a majority of a quorum of disinterested non-party directors or (ii) an independent legal counsel in a written opinion. "Section 4. Indemnification of Employees and Agents. Employees and agents who are not officers or directors of the Corporation may be indemnified, and reasonable expenses may be advanced to such employees or agents, as may be provided by action of the Board of Directors or by contract, subject to any limitations imposed by the Investment Company Act of 1940. C-12 "Section 5. Other Rights. The Board of Directors may make further provision consistent with law for indemnification and advance of expenses to directors, officers, employees and agents by resolution, agreement or otherwise. The indemnification provided by this Article shall not be deemed exclusive of any other right, with respect to indemnification or otherwise, to which those seeking indemnification may be entitled under any insurance or other agreement or resolution of stockholders or disinterested directors or otherwise. The rights provided to any person by this Article shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as a director, officer, employee, or agent as provided above. "Section 6. Amendments. References in this Article are to the Maryland General Corporation Law and to the Investment Company Act of 1940 as from time to time amended. No amendment of these By-laws shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment. The Advisory Agreement to be between the Registrant and Alliance Capital Management L.P. provides that Alliance Capital Management L.P. will not be liable under such agreements for any mistake of judgment or in any event whatsoever except for lack of good faith and that nothing therein shall be deemed to protect Alliance Capital Management L.P. against any liability to the Registrant or its security holders to which it would otherwise be subject by reason of wilful misfeasance, bad faith or gross negligence in the performance of its duties thereunder, or by reason of reckless disregard of its duties and obligations thereunder. The Distribution Services Agreement between the Registrant and Alliance Fund Distributors, Inc. provides that the Registrant will indemnify, defend and hold Alliance Fund Distributors, Inc., and any person who controls it within the meaning of Section 15 of the Securities Act of 1933 (the ``Securities Act"), free and harmless from and against any and all claims, demands, liabilities and expenses which Alliance Fund Distributors, Inc. or any controlling person may incur arising out of or based upon any alleged untrue statement of a material fact C-13 contained in the Registrant's Registration Statement, Prospectus or Statement of Additional Information or arising out of, or based upon any alleged omission to state a material fact required to be stated in any one of the foregoing or necessary to make the statements in any one of the foregoing not misleading. The foregoing summaries are qualified by the entire text of Registrant's Articles of Incorporation and By-Laws, the Advisory Agreement between Registrant and Alliance Capital Management L.P. and the Distribution Services Agreement between Registrant and Alliance Fund Distributors, Inc. which are filed herewith as Exhibits 1, 2, 5 and 6(a), respectively, in response to Item 24 and each of which are incorporated by reference herein. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. In accordance with Release No. IC-11330 (September 2, 1980), the Registrant will indemnify its directors, officers, investment manager and principal underwriters only if (1) a final decision on the merits was issued by the court or other body before whom the proceeding was brought that the person to be indemnified (the "indemnitee") was not liable by reason or willful misfeasance, bad faith, gross negligence or reckless disregard of the duties C-14 involved in the conduct of his office ("disabling conduct") or (2) a reasonable determination is made, based upon a review of the facts, that the indemnitee was not liable by reason of disabling conduct, by (a) the vote of a majority of a quorum of the directors who are neither "interested persons" of the Registrant as defined in section 2(a)(19) of the Investment Company Act of 1940 nor parties to the proceeding ("disinterested, non-party directors"), or (b) an independent legal counsel in a written opinion. The Registrant will advance attorneys fees or other expenses incurred by its directors, officers, investment adviser or principal underwriters in defending a proceeding, upon the undertaking by or on behalf of the indemnitee to repay the advance unless it is ultimately determined that he is entitled to indemnification and, as a condition to the advance, (1) the indemnitee shall provide a security for his undertaking, (2) the Registrant shall be insured against losses arising by reason of any lawful advances, or (3) a majority of a quorum of disinterested, non-party directors of the Registrant, or an independent legal counsel in a written opinion, shall determine, based on a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the indemnitee ultimately will be found entitled to indemnification. The Registrant participates in a Joint directors and officers liability insurance policy issued by the ICI Mutual Insurance Company. Coverage under this policy has been extended to directors, trustees and officers of the investment companies managed by Alliance Capital Management L.P. Under this policy, outside trustees and directors would be covered up to the limits specified for any claim against them for acts committed in their capacities as trustee or director. A pro rata share of the premium for this coverage is charged to each investment company and to the Adviser. ITEM 28. Business and Other Connections of Investment Adviser. The descriptions of Alliance Capital Management L.P. under the captions "Management of the Fund" in the Prospectus and in the Statement of Additional Information constituting Parts A and B, respectively, of this Registration Statement are incorporated by reference herein. C-15 The information as to the directors and executive officers of Alliance Capital Management Corporation, the general partner of Alliance Capital Management L.P., set forth in Alliance Capital Management L.P.'s Form ADV filed with the Securities and Exchange Commission on April 21, 1988 (File No. 801- 32361) and amended through the date hereof, is incorporated by reference. ITEM 29. Principal Underwriters (a)Alliance Fund Distributors, Inc., the Registrant's Principal Underwriter in connection with the sale of shares of the Registrant. Alliance Fund Distributors, Inc. also acts as Principal Underwriter or Distributor for the following investment companies: ACM Institutional Reserves, Inc. AFD Exchange Reserves Alliance All-Asia Investment Fund, Inc. Alliance Balanced Shares, Inc. Alliance Bond Fund, Inc. Alliance Capital Reserves Alliance Developing Markets Fund, Inc. Alliance Global Dollar Government Fund, Inc. Alliance Global Environment Fund, Inc. Alliance Global Small Cap Fund, Inc. Alliance Global Strategic Income Trust, Inc. Alliance Government Reserves Alliance Growth and Income Fund, Inc. Alliance Greater China '97 Fund, Inc. Alliance Income Builder Fund, Inc. Alliance Institutional Funds, 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 Short-Term Multi-Market Trust, Inc. C-16 Alliance Technology Fund, Inc. Alliance Utility Income Fund, Inc. Alliance Variable Products Series Fund, Inc. Alliance World Income Trust, Inc. Alliance Worldwide Privatization Fund, Inc. Fiduciary Management Associates The Alliance Fund, Inc. The Alliance Portfolios (b) The following are the Directors and Officers of Alliance Fund Distributors, Inc., the principal place of business of which is 1345 Avenue of the Americas, New York, New York, 10105. Name Positions and Positions and Offices With Offices with Underwriter Registrant Michael J. Laughlin Chairman Robert L. Errico President Edmund P. Bergan, Jr. Senior Vice President, Secretary General Counsel and Secretary Karen J. Bullot Senior Vice President James S. Comforti Senior Vice President James L. Cronin Senior Vice President Daniel J. Dart Senior Vice President Richard A. Davies Senior Vice President Managing Director Byron M. Davis Senior Vice President Anne S. Drennan Senior Vice President & Treasurer Mark J. Dunbar Senior Vice President Bradley F. Hanson Senior Vice President Geoffrey L. Hyde Senior Vice President Robert H. Joseph, Jr. Senior Vice President and Chief Financial Officer C-17 Richard E. Khaleel Senior Vice President Stephen R. Laut Senior Vice President Daniel D. McGinley Senior Vice President Ryne A. Nishimi Senior Vice President Antonios G. Poleondakis Senior Vice President Robert E. Powers Senior Vice President Richard K. Saccullo Senior Vice President Gregory K. Shannahan Senior Vice President Joseph F. Sumanski Senior Vice President Peter J. Szabo Senior Vice President Nicholas K. Willett Senior Vice President Richard A. Winge Senior Vice President Jamie A. Atkinson Vice President Benji A. Baer Vice President Kenneth F. Barkoff Vice President Casimir F. Bolanowski Vice President Timothy W. Call Vice President Kevin T. Cannon Vice President John R. Carl Vice President William W. Collins, Jr. Vice President Leo H. Cook Vice President Richard W. Dabney Vice President John F. Dolan Vice President John C. Endahl Vice President Sohaila S. Farsheed Vice President William C. Fisher Vice President C-18 Gerard J. Friscia Vice President & Controller Andrew L. Gangolf Vice President Assistant and Assistant Secretary General Counsel Mark D. Gersten Vice President Treasurer and Chief Financial Officer Joseph W. Gibson Vice President Charles M. Greenberg Vice President Alan Halfenger Vice President William B. Hanigan Vice President Daniel M. Hazard Vice President Scott F. Heyer Vice President George R. Hrabovsky Vice President Valerie J. Hugo Vice President Scott Hutton Vice President Thomas K. Intoccia Vice President Larry P. Johns Vice President Richard D. Keppler Vice President Gwenn M. Kessler Vice President Donna M. Lamback Vice President James M. Liptrot Vice President James P. Luisi Vice President Christopher J. MacDonald Vice President Michael F. Mahoney Vice President Lori E. Master Vice President Shawn P. McClain Vice President C-19 Maura A. McGrath Vice President Thomas F. Monnerat Vice President Joanna D. Murray Vice President Jeanette M. Nardella Vice President Nicole Nolan-Koester Vice President John C. O'Connell Vice President John J. O'Connor Vice President Robert T. Pigozzi Vice President James J. Posch Vice President Domenick Pugliese Vice President Assistant and Assistant Secretary General Counsel Bruce W. Reitz Vice President Dennis A. Sanford Vice President Karen C. Satterberg Vice President Robert C. Schultz Vice President Raymond S. Sclafani Vice President Richard J. Sidell Vice President Teris A. Sinclair Vice President Andrew D. Strauss Vice President Michael J. Tobin Vice President Joseph T. Tocyloski Vice President Martha D. Volcker Vice President Patrick E. Walsh Vice President William C. White Vice President Emilie D. Wrapp Vice President and Assistant Special Counsel Secretary C-20 Michael W. Alexander Assistant Vice President Richard J. Appaluccio Assistant Vice President Charles M. Barrett Assistant Vice President Robert F. Brendli Assistant Vice President Maria L. Carreras Assistant Vice President John P. Chase Assistant Vice President Russell R. Corby Assistant Vice President John W. Cronin Assistant Vice President Terri J. Daly Assistant Vice President Ralph A. DiMeglio Assistant Vice President Faith C. Dunn Assistant Vice President John C. Endahl Assistant Vice President John E. English Assistant Vice President Duff C. Ferguson Assistant Vice President John Grambone Assistant Vice President Brian S. Hanigan Assistant Vice President James J. Hill Assistant Vice President Edward W. Kelly Assistant Vice President Michael Laino Assistant Vice President Nicholas J. Lapi Assistant Vice President Patrick Look Assistant Vice President & Assistant Treasurer Kristine J. Luisi Assistant Vice President Richard F. Meier Assistant Vice President Richard J. Olszewski Assistant Vice President Catherine N. Peterson Assistant Vice President C-21 Carol H. Rappa Assistant Vice President Clara Sierra Assistant Vice President Gayle S. Stamer Assistant Vice President Vincent T. Strangio Assistant Vice President Wesley S. Williams Assistant Vice President Christopher J. Zingaro Assistant Vice President Mark R. Manley Assistant Secretary (c) Not applicable. ITEM 30. Location of Accounts and Records. The majority of the accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules thereunder are maintained as follows: journals, ledgers, securities records and other original records are maintained principally at the offices of Alliance Fund Services, Inc., 500 Plaza Drive, Secaucus, New Jersey, 07094 and at the offices of State Street Bank and Trust Company, the Registrant's custodian, 225 Franklin Street, Boston, MA 02110. All other records so required to be maintained are maintained at the offices of Alliance Capital Management L.P., 1345 Avenue of the Americas, New York, New York, 10105. ITEM 31. Management Services. Not applicable. ITEM 32. Undertakings The Registrant undertakes to furnish each person to whom a prospectus is delivered with a copy of the Registrant's latest report to shareholders, upon request and without charge. The Registrant undertakes to provide assistance to shareholders in communications concerning the removal of any Director of the Fund in accordance with Section 16 of the Investment Company Act of 1940. C-22 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Amendment to its Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and the State of New York, on the 30th day of January, 1998. ALLIANCE PREMIER GROWTH FUND, INC. By:/s/John D. Carifa ------------------------- John D. Carifa Chairman and President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date 1) Principal Executive Officer /s/John D. Carifa - ------------------- Chairman and John D. Carifa President January 30, 1998 2) Principal Financial and Accounting Officer /s/Mark D. Gersten - ------------------- Treasurer and Chief Mark D. Gersten Financial Officer January 30, 1998 3) All of the Directors Ruth Block John D. Carifa David H. Dievler John H. Dobkin C-23 William H. Foulk, Jr. James M. Hester Clifford L. Michel Robert C. White By:/s/Edmund P. Bergan, Jr. ------------------------ January 30, 1998 (Attorney-in-fact) Edmund P. Bergan, Jr. C-24 Index to Exhibits Exhibit No. Description of Exhibits (1) (a) Articles of Incorporation (b) Articles of Amendment to Articles of Incorporation (2) Bylaws (5) Investment Advisory Agreement (6) (a) Distribution Services Agreement (c) Selected Dealer Agreement (d) Selected Agent Agreement (8) Custodian Contract (9) Transfer Agency Agreement (10) (a) Opinion and Consent of Seward & Kissel (11) Consent of Independent Accountants (16) Schedule of Computation of Average Annual Compounded Total Return (17) Financial Data Schedule Other Exhibits - Powers of Attorney of Ruth Block, John D. Carifa, David H. Dievler, John H. Dobkin, John D. Foulk, Jr., James M. Hester, Clifford L. Michel and Donald J. Robinson C-25 00250118.AC3 EX-99.1A 2 ARTICLES OF INCORPORATION OF ALLIANCE WEALTH BUILDER FUND, INC. FIRST: (1) The name of the incorporator is Donna L. Schaeffer. (2) The incorporator's post office address is One Battery Park Plaza, New York, New York 10004. (3) The incorporator is over eighteen years of age. (4) The incorporator is forming the corporation named in these Articles of Incorporation under the general laws of the State of Maryland. SECOND: The name of the corporation (hereinafter called the Corporation) is Alliance Wealth Builder Fund, Inc. THIRD: (1) The purposes for which the Corporation is formed is to conduct, operate and carry on the business of an investment company. (2) The Corporation may engage in any other business and shall have all powers conferred upon or permitted to corporations by the Maryland General Corporation Law. FOURTH: The post office address of the principal office of the Corporation within the State of Maryland is 32 South Street, Baltimore, Maryland 21202 in care of The Corporation Trust, Incorporated. The resident agent of the Corporation in the State of Maryland is The Corporation Trust, Incorporated, 32 South Street, Baltimore, Maryland 21202. FIFTH: (1) The total number of shares of capital stock which the Corporation shall have authority to issue is six billion (6,000,000,000), all of which shall be Common Stock having a par value of one-tenth of one cent ($.001) per share and an aggregate par value of six million dollars ($6,000,000). Until such time as the Board of Directors shall provide otherwise in accordance with paragraph (a)(iv) of Article SEVENTH hereof, three billion (3,000,000,000) of the authorized shares of Common Stock of the Corporation are designated as Class A Common Stock and three billion (3,000,000,000) of such shares are designated as Class B Common Stock. (2) As more fully set forth hereafter, the assets and liabilities and the income and expenses of each class of the Corporation's stock may be determined separately and, accordingly, the net asset value, the dividends payable to holders, and the amounts distributable in the event of dissolution of the Corporation to holders of shares of the Corporation's stock may vary from class to class. Except for these differences and certain other differences hereafter set forth, each class of the Corporation's stock shall have the same preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of and rights to require redemption. (3) All consideration received by the Corporation for the issue or sale of shares of a class of the Corporation's stock, together with all funds derived from any investment and reinvestment thereof and, in the case of Class A Common Stock, all assets attributable to shares of Class A Common Stock into which shares of Class B Common Stock have been converted, shall irrevocably belong to that class for all purposes, subject only to the automatic conversion of Class B Common Stock into Class A Common Stock and the rights of creditors, and shall be so recorded upon the books of account of the Corporation. Such consideration and assets attributable to shares that have been converted as well as any funds derived from any investment and reinvestment are herein referred to as "assets belonging to" that class. The assets belonging to the Class A Common Stock and the assets belonging to the Class B Common Stock shall be invested in the same investment portfolio of the Corporation. (4) The allocation of the assets and liabilities, investment income or capital gains and expenses of the Corporation between the Class A Common Stock and Class B Common Stock shall be determined by the Board of Directors in a manner that is consistent with the order dated January 8, 1990 (Investment Company Act of 1940 Release No. 17295) issued by the Securities and Exchange Commission in connection with the application for exemption filed by Alliance Capital Management L.P., et al., and any amendment to such order or any rule or interpretation under the Investment Company Act of 1940 that modifies or supersedes such order. The determination of the Board of Directors shall be conclusive as to the allocation of investment income or capital gains, expenses and liabilities (including accrued expenses and reserves) and assets to a particular class or classes. (5) Shares of each class of stock shall be entitled to such dividends or distributions, in stock or in cash or both, as may be declared from time to time by the Board of Directors with respect to such class. Dividends or distributions 2 shall be paid on shares of a class of stock only out of the assets belonging to that class. Specifically, and without limiting the generality of the foregoing, the dividends and distributions of investment income and capital gains with respect to the Class A Common Stock may vary from dividends and distributions of investment income and capital gains with respect to the Class B Common Stock to reflect differing allocations of expenses of the Corporation between the holders of the Class A Common Stock and the holders of the Class B Common Stock and any resultant differences between the net asset value of the Class A Common Stock and the net asset value of the Class B Common Stock, to such extent and for such purposes as the Board of Directors may deem appropriate. The Board of Directors may provide that dividends shall be payable only with respect to those shares of stock that have been held of record continuously by the stockholder for a specified period, not to exceed 72 hours, prior to the record date of the dividend. (6) On each matter submitted to a vote of the stockholders, each holder of stock shall be entitled to one vote for each share standing in his name on the books of the Corporation. Subject to any applicable requirements of the Investment Company Act of 1940, as from time to time in effect, or rules or orders of the Securities and Exchange Commission or any successor thereto, all holders of shares of stock shall vote as a single class except with respect to any matter which affects only one or more classes of stock, in which case only the holders of shares of the classes affected shall be entitled to vote. The holders of the Class A Common Stock shall have (i) exclusive voting rights with respect to provisions of any distribution plan adopted by the Corporation pursuant to Rule 12b-1 under the Investment Company Act of 1940 (a "Plan") applicable to the Class A Common Stock and (ii) no voting rights with respect to provisions of any Plan applicable to the Class B Common Stock. The holders of the Class B Common Stock shall have (i) exclusive voting rights with respect to provisions of any Plan applicable to the Class B Common Stock and (ii) no voting rights with respect to provisions of any Plan applicable to the Class A Common Stock. (7) In the event of the liquidation or dissolution of the Corporation, the stockholders of a class of the Corporation's stock shall be entitled to receive, as a class, out of the assets of the Corporation available for distribution to stockholders, the assets belonging to that class less the liabilities allocated to that class. The assets so distributable to the stockholders of a class shall be distributed among such stockholders in proportion to the number of shares of that class held by them and recorded on the books of the Corporation. In the event that there are any assets available for distribution that are not attributable to any particular class of stock, such 3 assets shall be allocated to all classes in proportion to the net asset value of the respective classes. (8)(a) Each holder of stock may require the Corporation to redeem all or any part of the stock owned by that holder, upon request to the Corporation or its designated agent, at the net asset value of the shares of stock next determined following receipt of the request in a form approved by the Corporation and accompanied by surrender of the certificate or certificates for the shares, if any, less the amount of any applicable redemption charge or deferred sales charge imposed by the Board of Directors (to the extent consistent with applicable law). The Board of Directors may establish procedures for redemption of stock. (b) The proceeds of the redemption of a share of the Class B Common Stock (including a fractional share) shall be reduced by the amount of any contingent deferred sales charge payable on such redemption pursuant to the terms of issuance of such share. (c)(i) The term "Minimum Amount" when used herein shall mean two hundred dollars ($200) unless otherwise fixed by the Board of Directors from time to time, provided that the Minimum Amount may not in any event exceed twenty-five thousand dollars ($25,000). The Board of Directors may establish differing Minimum Amounts for categories of holders of stock based on such criteria as the Board of Directors may deem appropriate. (ii) If the net asset value of the shares of a class of stock held by a stockholder shall be less than the Minimum Amount then in effect with respect to the category of holders in which the stockholder is included, the Corporation may redeem all of those shares, upon notice given to the holder in accordance with paragraph (iii) of this subsection (c), to the extent that the Corporation may lawfully effect such redemption under the laws of the State of Maryland. (iii) The notice referred to in paragraph (ii) of this subsection (c) shall be in writing personally delivered or deposited in the mail, at least thirty days (or such other number of days as may be specified from time to time by the Board of Directors) prior to such redemption. If mailed, the notice shall be addressed to the stockholder at his post office address as shown on the books of the Corporation, and sent by first class mail, postage prepaid. The price for shares acquired by the Corporation pursuant to this subsection (c) shall be an amount equal to the net asset value of such shares. 4 (d) Payment by the Corporation for shares of stock of the Corporation surrendered to it for redemption shall be made by the Corporation within seven days of such surrender out of the funds legally available therefor, provided that the Corporation may suspend the right of the stockholders to redeem shares of stock and may postpone the right of those holders to receive payment for any shares when permitted or required to do so by applicable statutes or regulations. Payment of the aggregate price of shares surrendered for redemption may be made in cash or, at the option of the Corporation, wholly or partly in such portfolio securities of the Corporation as the Corporation shall select. (9)(a) Each share of the Class B Common Stock, other than a share purchased through the automatic reinvestment of a dividend or a distribution with respect to the Class B Common Stock, shall be converted automatically, and without any action or choice on the part of the holder thereof, into shares of the Class A Common Stock on the Conversion Date. The term "Conversion Date" when used herein shall mean either (i) the date that is the first Corporation business day in the month following the month in which the sixth anniversary date of the date of issuance of the share falls, or (ii) any such other date as may be determined by the Board of Directors and set forth in the Corporation's prospectus, as such prospectus may be amended from time to time, provided that any such date determined by the Board of Directors shall be a date that will occur prior to the date set forth in clause (i) and any other date theretofore determined by the Board of Directors pursuant to this clause (ii). For the purpose of calculating the holding period required for conversion, the date of issuance of a share of Class B Common Stock shall mean (i) in the case of a share of Class B Common Stock obtained by the holder thereof through a subscription to the Corporation, the date of the issuance of such share of Class B Common Stock, or (ii) in the case of a share of Class B Common Stock obtained by the holder thereof through an exchange, or through a series of exchanges, from another eligible investment company, the date of issuance of the share of the Class B common stock of the eligible investment company to which the holder originally subscribed. For this purpose an "eligible investment company" shall be an investment company designated for that purpose in the Corporation's prospectus, as such prospectus may be amended from time to time. (b) Each share of Class B Common Stock purchased through the automatic reinvestment of a dividend or a distribution with respect to the Class B Common Stock shall be segregated in a separate sub-account on the stock records of the Corporation for each of the holders of record thereof. On any Conversion Date, a number of the shares held in the sub-account of the holder of record of the share or shares being converted, 5 calculated in accordance with the next following sentence, shall be converted automatically, and without any action or choice on the part of the holder, into shares of the Class A Common Stock. The number of shares in the holder's sub-account so converted shall bear the same relation to the total number of shares maintained in the sub-account on the Conversion Date (immediately prior to conversion) as the number of shares of the holder converted on the Conversion Date pursuant to paragraph (9)(a) hereof bears to the total number of shares of the Class B Common Stock of the holder on the Conversion Date (immediately prior to conversion) not purchased through the automatic reinvestment of dividends or distributions with respect to the Class B Common Stock. (c) The number of shares of the Class A Common Stock into which a share of the Class B Common Stock is converted pursuant to paragraph (9)(a) and (9)(b) hereof shall equal the number (including for this purpose fractions of a share) obtained by dividing the net asset value per share of the Class B Common Stock for purposes of sales and redemptions thereof on the Conversion Date by the net asset value per share of the Class A Common Stock for purposes of sales and redemptions thereof on the Conversion Date. (d) On the Conversion Date, the shares of the Class B Common Stock converted into shares of the Class A Common Stock will cease to accrue dividends and will no longer be deemed outstanding and the rights of the holders thereof (except the right to receive the number of shares of Class A Common Stock into which the shares of Class B Common Stock have been converted and declared but unpaid dividends to the Conversion Date) will cease. Certificates resulting from the conversion need not be issued until certificates representing shares of the Class A Common Stock converted, if issued, have been received by the Corporation or its agent duly endorsed for transfer. (e) The automatic conversion of the Class B Common Stock into Class A Common Stock as set forth in paragraphs 9(a) and 9(b) of this Article FIFTH shall be suspended at any time that the Board of Directors determines (i) that there is not available a reasonably satisfactory opinion of counsel to the effect that (x) the assessment of the higher distribution services fee and transfer agency costs with respect to the Class B Common Stock does not result in the Corporation's dividends or distributions constituting a "preferential dividend" under the Internal Revenue Code of 1986, as amended, and (y) the conversion of the Class B Common Stock does not constitute a taxable event under federal income tax law, or (ii) any other condition set forth in the Corporation's prospectus, as such prospectus may be amended from time to time, is not satisfied. 6 (10) For the purpose of allowing the net asset value per share of a class of the Corporation's stock to remain constant, the Corporation shall be entitled to declare and pay and/or credit as dividends daily the net income (which may include or give effect to realized and unrealized gains and losses, as determined in accordance with the Corporation's accounting and portfolio valuation policies) of the Corporation attributable to the assets belonging to that class. If the amount so determined for any day is negative, the Corporation shall be entitled, without the payment of monetary compensation but in consideration of the interest of the Corporation and its stockholders in maintaining a constant net asset value per share of that class, to redeem pro rata from all the holders of record of shares of that class at the time of such redemption (in proportion to their respective holdings thereof) sufficient outstanding shares of that class, or fractions thereof, as shall permit the net asset value per share of that class to remain constant. (11) The Corporation may issue shares of stock in fractional denominations to the same extent as its whole shares, and shares in fractional denominations shall be shares of stock having proportionately to the respective fractions represented thereby all the rights of whole shares, including, without limitation, the right to vote, the right to receive dividends and distributions, and the right to participate upon liquidation of the Corporation, but excluding the right to receive a stock certificate representing fractional shares. (12) No stockholder shall be entitled to any preemptive right other than as the Board of Directors may establish. SIXTH: The number of directors of the Corporation shall be one. The number of directors of the Corporation may be changed pursuant to the By-Laws of the Corporation. The name of the person who shall act as director of the Corporation until the first annual meeting or until his successor is chosen and qualified is David H. Dievler. SEVENTH: The following provisions are inserted for the purpose of defining, limiting and regulating the powers of the Corporation and of the Board of Directors and stockholders. (a) In addition to its other powers explicitly or implicitly granted under these Articles of Incorporation, by law or otherwise, the Board of Directors of the Corporation: (i) is expressly authorized to make, alter, amend or repeal the By-Laws of the Corporation; 7 (ii) may from time to time determine whether, to what extent, at what times and places, and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account, book or document of the Corporation except as conferred by statute or as authorized by the Board of Directors of the Corporation; (iii) is empowered to authorize, without stockholder approval, the issuance and sale from time to time of shares of stock of the Corporation whether now or hereafter authorized; (iv) is authorized to classify or to reclassify, from time to time, any unissued shares of stock of the Corporation, whether now or hereafter authorized, by setting, changing or eliminating the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms and conditions of or rights to require redemption of the stock. The provisions of these Articles of Incorporation (including those in Article FIFTH hereof) shall apply to each class of stock unless otherwise provided by the Board of Directors prior to issuance of any shares of that class; and (v) is authorized to adopt procedures for determination of and to maintain constant the net asset value of shares of any class of the Corporation's stock. (b) Notwithstanding any provision of the Maryland General Corporation Law requiring a greater proportion than a majority of the votes of all classes or of any class of the Corporation's stock entitled to be cast in order to take or authorize any action, any such action may be taken or authorized upon the concurrence of a majority of the aggregate number of votes entitled to be cast thereon subject to any applicable requirements of the Investment Company Act of 1940, as from time to time in effect, or rules or orders of the Securities and Exchange Commission or any successor thereto. (c) The presence in person or by proxy of the holders of shares entitled to cast one-third of the votes entitled to be cast (without regard to class) shall constitute a quorum at any meeting of the stockholders, except with respect to any matter which, under applicable statutes or regulatory requirements, requires approval by a separate vote of one or more classes of stock, in which case the presence in person or by proxy of the holders of shares entitled to cast one-third of the votes entitled to be cast by each class entitled to vote as a class on the matter shall constitute a quorum. 8 (d) Any determination made in good faith by or pursuant to the direction of the Board of Directors, as to the amount of the assets, debts, obligations, or liabilities of the Corporation as to the amount of any reserves or charges set up and the propriety thereof, as to the time of or purpose for creating such reserves or charges, as to the use, alteration or cancellation of any reserves or charges (whether or not any debt, obligation, or liability for which such reserves or charges shall have been created shall be then or thereafter required to be paid or discharged), as to the value of or the method of valuing any investment owned or held by the Corporation, as to market value or fair value of any investment or fair value of any other asset of the Corporation, as to the allocation of any asset of the Corporation to a particular class or classes of the Corporation's stock, as to the charging of any liability of the Corporation to a particular class or classes of the Corporation's stock, as to the number of shares of the Corporation outstanding, as to the estimated expense to the Corporation in connection with purchases of its shares, as to the ability to liquidate investments in orderly fashion, or as to any other matters relating to the issue, sale, redemption or other acquisition or disposition of investments or shares of the Corporation, shall be final and conclusive and shall be binding upon the Corporation and all holders of its shares, past, present and future, and shares of the Corporation are issued and sold on the condition and understanding that any and all such determinations shall be binding as aforesaid. EIGHTH: (1) To the full extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Corporation shall have any liability to the Corporation or its stockholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not that person is a director or officer at the time of any proceeding in which liability is asserted. (2) The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the full extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and may do so to such further extent as is consistent with law. The Board of Directors may by By-Law, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the full extent permitted by the Maryland Corporation Law. (3) No provision of this Article shall be effective to protect or purport to protect any director or 9 officer of the Corporation against any liability to the Corporation or its stockholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. (4) References to the Maryland General Corporation Law in this Article are to that law as from time to time amended. No amendment to the charter of the Corporation shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment. NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation or in any amendment hereto in the manner now or hereafter prescribed by the laws of the State of Maryland, including any amendment which alters the contract rights, as expressly set forth in these Articles of Incorporation, of any outstanding stock, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF, the undersigned, being the incorporator of the Corporation, has adopted and signed these Articles of Incorporation and does hereby acknowledge that the adoption and signing are her act. /s/ Donna L. Schaeffer ________________________ Donna L. Schaeffer Dated: July 9, 1992 10 00250118.AL9 EX-99.1B 3 ALLIANCE WEALTH BUILDER FUND, INC. (changing its name to Alliance Premier Growth Fund, Inc.) ARTICLES OF AMENDMENT ALLIANCE WEALTH BUILDER FUND, INC., a Maryland corporation having its principal office in the State of Maryland in the City of Baltimore (hereinafter called the "Corporation"), certifies that: FIRST: The Articles of Incorporation of the Corporation are hereby amended by striking out Article SECOND and inserting in lieu thereof the following: "SECOND: The name of the corporation (hereinafter called the "Corporation") is Alliance Premier Growth Fund, Inc." SECOND: The amendment of the Articles of Incorporation of the Corporation as set forth above has been duly approved by the Board of Directors. No stock entitled to vote on the matter was outstanding or subscribed for at the time of approval. The undersigned Alliance Wealth Builder Fund, Inc. has caused these Articles of Amendment to be signed in its name and on its behalf by its duly authorized officer who acknowledges that these Articles of Amendment are the act of the Corporation, and states that to the best of his knowledge, information and belief all matters and facts set forth therein relating to the authorization and approval of the Articles of Amendment are true in all material respects and that this statement is made under the penalties of perjury. IN WITNESS WHEREOF, these Articles of Amendment have been executed on behalf of Alliance Wealth Builder Fund, Inc. this 31st day of July, 1992. ALLIANCE WEALTH BUILDER FUND, INC. By: /s/ Daniel V. Panker __________________________ Daniel V. Panker Vice President Attest: /s/ Edmund P. Bergan, Jr. __________________________ Edmund P. Bergan, Jr. Secretary 2 00250118.AM2 EX-99.2 4 BY-LAWS OF ALLIANCE WEALTH BUILDER FUND, INC. ________________ ARTICLE I Offices Section 1. Principal Office in Maryland. The Corporation shall have a principal office in the City of Baltimore, State of Maryland. Section 2. Other Offices. The Corporation may have offices also at such other places within and without the State of Maryland as the Board of Directors may from time to time determine or as the business of the Corporation may require. ARTICLE II Meetings of Stockholders Section 1. Place of Meeting. Meetings of stockholders shall be held at such place, either within the State of Maryland or at such other place within the United States, as shall be fixed from time to time by the Board of Directors. Section 2. Annual Meetings. Annual meetings of stockholders shall be held on a date fixed from time to time by the Board of Directors not less than ninety nor more than one hundred twenty days following the end of each fiscal year of the Corporation, for the election of directors and the transaction of any other business within the powers of the Corporation; provided, however, that the Corporation shall not be required to hold an annual meeting in any year in which the election of directors is not required to be acted on by stockholders under the Investment Company Act of 1940. Section 3. Notice of Annual Meeting. Written or printed notice of the annual meeting, stating the place, date and hour thereof, shall be given to each stockholder entitled to vote thereat and each other stockholder entitled to notice thereof not less than ten nor more than ninety days before the date of the meeting. Section 4. Special Meetings. Special meetings of stockholders may be called by the chairman, the president or by the Board of Directors and shall be called by the secretary upon the written request of holders of shares entitled to cast not less than twenty-five percent of all the votes entitled to be cast at such meeting. Such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on thereat. In the case of such request for a special meeting, upon payment by such stockholders to the Corporation of the estimated reasonable cost of preparing and mailing a notice of such meeting, the secretary shall give the notice of such meeting. The secretary shall not be required to call a special meeting to consider any matter which is substantially the same as a matter acted upon at any special meeting of stockholders held within the preceding twelve months unless requested to do so by holders of shares entitled to cast not less than a majority of all votes 2 entitled to be cast at such meeting. Notwithstanding the foregoing, special meetings of stockholders for the purpose of voting upon the question of removal of any director or directors of the Corporation shall be called by the secretary upon the written request of holders of shares entitled to cast not less than ten percent of all the votes entitled to be cast at such meeting. Section 5. Notice of Special Meeting. Written or printed notice of a special meeting of stockholders, stating the place, date, hour and purpose thereof, shall be given by the secretary to each stockholder entitled to vote thereat and each other stockholder entitled to notice thereof not less than ten nor more than ninety days before the date fixed for the meeting. 3 Section 6. Business of Special Meetings. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice thereof. Section 7. Quorum. The holders of shares entitled to cast one-third of the votes entitled to be cast thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except with respect to any matter which, under applicable statutes or regulatory requirements, requires approval by a separate vote of one or more classes of stock, in which case the presence in person or by proxy of the holders of one-third of the shares of stock of each class required to vote as a class on the matter shall constitute a quorum. Section 8. Voting. When a quorum is present at any meeting, the affirmative vote of a majority of the votes cast, or, with respect to any matter requiring a class vote, the affirmative vote of a majority of the votes cast of each class entitled to vote as a class on the matter, shall decide any question brought before such meeting (except that directors may be elected by the affirmative vote of a plurality of the votes cast), unless the question is one upon which by express provision of the Investment Company Act of 1940, as from time to time in effect, or other statutes or rules or orders of the Securities and Exchange Commission or any successor thereto or of the Articles of Incorporation a different vote is required, in which 4 case such express provision shall govern and control the decision of such question. Section 9. Proxies. Each stockholder shall at every meeting of stockholders be entitled to one vote in person or by proxy for each share of the stock having voting power held by such stockholder, but no proxy shall be voted after eleven months from its date, unless otherwise provided in the proxy. Section 10. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date which shall be not more than ninety days and, in the case of a meeting of stockholders, not less than ten days prior to the date on which the particular action requiring such determination of stockholders is to be taken. In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period, but not to exceed, in any case, twenty days. If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least 5 ten days immediately preceding such meeting. If no record date is fixed and the stock transfer books are not closed for the determination of stockholders: (1) The record date for the determination of stockholders entitled to notice of, or to vote at, a meeting of stockholders shall be at the close of business on the day on which notice of the meeting of stockholders is mailed or the day thirty days before the meeting, whichever is the closer date to the meeting; and (2) The record date for the determination of stockholders entitled to receive payment of a dividend or an allotment of any rights shall be at the close of business on the day on which the resolution of the Board of Directors, declaring the dividend or allotment of rights, is adopted, provided that the payment or allotment date shall not be more than sixty days after the date of the adoption of such resolution. Section 11. Inspectors of Election. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take 6 and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting or any stockholder, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. Section 12. Informal Action by Stockholders. Except to the extent prohibited by the Investment Company Act of 1940, as from time to time in effect, or rules or orders of the Securities and Exchange Commission or any successor thereto, any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting if a consent in writing, setting forth such action, is signed by all the stockholders entitled to vote on the subject matter thereof and any other stockholders entitled to notice of a meeting of stockholders (but not to vote thereat) have waived in writing any rights which they may have to 7 dissent from such action, and such consent and waiver are filed with the records of the Corporation. ARTICLE III Board of Directors Section 1. Number of Directors. The number of directors constituting the entire Board of Directors (which initially was fixed at one in the Corporation's Articles of Incorporation) may be increased or decreased from time to time by the vote of a majority of the entire Board of Directors within the limits permitted by law but at no time may be more than twenty, but the tenure of office of a director in office at the time of any decrease in the number of directors shall not be affected as a result thereof. The directors shall be elected to hold offices at the annual meeting of stockholders, except as provided in Section 2 of this Article, and each director shall hold office until the next annual meeting of stockholders or until his successor is elected and qualified. Any director may resign at any time upon written notice to the Corporation. Any director may be removed, either with or without cause, at any meeting of stockholders duly called and at which a quorum is present by the affirmative vote of the majority of the votes entitled to be cast thereon, and the vacancy in the Board of Directors caused by such removal may be filled by the stockholders at the time of such removal. Directors need not be stockholders. 8 Section 2. Vacancies and Newly-Created Directorships. Any vacancy occurring in the Board of Directors for any cause other than by reason of an increase in the number of directors may be filled by a majority of the remaining members of the Board of Directors although such majority is less than a quorum. Any vacancy occurring by reason of an increase in the number of directors may be filled by a majority of the entire Board of Directors. A director elected by the Board of Directors to fill a vacancy shall be elected to hold office until the next annual meeting of stockholders or until his successor is elected and qualifies. Section 3. Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these By-Laws conferred upon or reserved to the stockholders. Section 4. Meetings. The Board of Directors of the Corporation or any committee thereof may hold meetings, both regular and special, either within or without the State of Maryland. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the chairman, the president or by two or more directors. Notice of special 9 meetings of the Board of Directors shall be given by the secretary to each director at least three days before the meeting if by mail or at least 24 hours before the meeting if given in person or by telephone or by telegraph. The notice need not specify the business to be transacted. Section 5. Quorum and Voting. During such times when the Board of Directors shall consist of more than one director, a quorum for the transaction of business at meetings of the Board of Directors shall consist of two of the directors in office at the time but in no event shall a quorum consist of less than one- third of the entire Board of Directors. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. Committees. The Board of Directors may appoint from among its members an executive committee and other committees of the Board of Directors, each committee to be composed of two or more of the directors of the Corporation. The Board of Directors may delegate to such committees any of the powers of the Board of Directors except those which may not by law be delegated to a committee. Such committee or committees shall have the name or names as may be determined from time to 10 time by resolution adopted by the Board of Directors. Unless the Board of Directors designates one or more directors as alternate members of any committee, who may replace an absent or disqualified member at any meeting of the committee, the members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member of such committee. At meetings of any such committee, a majority of the members or alternate members of such committee shall constitute a quorum for the transaction of business and the act of a majority of the members or alternate members present at any meeting at which a quorum is present shall be the act of the committee. Section 7. Minutes of Committee Meetings. The committees shall keep regular minutes of their proceedings. Section 8. Informal Action by Board of Directors and Committees. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or committee, provided, however, that such written consent shall not constitute approval of any matter which pursuant to the Investment Company 11 Act of 1940 and the rules thereunder requires the approval of directors by vote cast in person at a meeting. Section 9. Meetings by Conference Telephone. The members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time and such participation shall constitute presence in person at such meeting, provided, however, that such participation shall not constitute presence in person with respect to matters which pursuant to the Investment Company Act of 1940 and the rules thereunder require the approval of directors by vote cast in person at a meeting. Section 10. Fees and Expenses. The directors may be paid their expenses of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors, a stated salary as director or such other compensation as the Board of Directors may approve. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings. 12 ARTICLE IV Notices Section 1. General. Notices to directors and stockholders mailed to them at their post office addresses appearing on the books of the Corporation shall be deemed to be given at the time when deposited in the United States mail. Section 2. Waiver of Notice. Whenever any notice is required to be given under the provisions of the statutes, of the Articles of Incorporation or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed the equivalent of notice and such waiver shall be filed with the records of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE V Officers Section 1. General. The officers of the Corporation shall be chosen by the Board of Directors at its first meeting after each annual meeting of stockholders and shall be a chairman of the Board of Directors, a president, a secretary and a treasurer. The Board of Directors may choose also such vice 13 presidents and additional officers or assistant officers as it may deem advisable. Any number of offices, except the offices of president and vice president and chairman and vice president, may be held by the same person. No officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law to be executed, acknowledged or verified by two or more officers. Section 2. Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it desires who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. Section 3. Tenure of Officers. The officers of the Corporation shall hold office at the pleasure of the Board of Directors. Each officer shall hold his office until his successor is elected and qualifies or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors when, in its judgment, the best interests of the Corporation will be served thereby. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors. Section 4. Chairman of the Board of Directors. The chairman of the Board of Directors shall preside at all meetings 14 of the stockholders and of the Board of Directors. He shall be the chief executive officer and shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall be ex officio a member of all committees designated by the Board of Directors except as otherwise determined by the Board of Directors. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. Section 5. President. The president shall act under the direction of the chairman and in the absence or disability of the chairman shall perform the duties and exercise the powers of the chairman. He shall perform such other duties and have such other powers as the chairman or the Board of Directors may from time to time prescribe. He shall execute on behalf of the Corporation, and may affix the seal or cause the seal to be affixed to, all instruments requiring such execution except to the extent that signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. Section 6. Vice Presidents. The vice presidents shall act under the direction of the chairman and in the absence or 15 disability of the president shall perform the duties and exercise the powers of the president. They shall perform such other duties and have such other powers as the chairman or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more executive vice presidents or may otherwise specify the order of seniority of the vice presidents and, in that event, the duties and powers of the president shall descend to the vice presidents in the specified order of seniority. Section 7. Secretary. The secretary shall act under the direction of the chairman. Subject to the direction of the chairman he shall attend all meetings of the Board of Directors and all meetings of stockholders and record the proceedings in a book to be kept for that purpose and shall perform like duties for the committees designated by the Board of Directors when required. He shall give, or cause to be given, notice of all meetings of stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the chairman or the Board of Directors. He shall keep in safe custody the seal of the Corporation and shall affix the seal or cause it to be affixed to any instrument requiring it. Section 8. Assistant Secretaries. The assistant secretaries in the order of their seniority, unless otherwise determined by the chairman or the Board of Directors, shall, in 16 the absence or disability of the secretary, perform the duties and exercise the powers of the secretary. They shall perform such other duties and have such other powers as the chairman or the Board of Directors may from time to time prescribe. Section 9. Treasurer. The treasurer shall act under the direction of the chairman. Subject to the direction of the chairman he shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the chairman or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the chairman and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the Corporation. Section 10. Assistant Treasurers. The assistant treasurers in the order of their seniority, unless otherwise determined by the chairman or the Board of Directors, shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer. They shall perform such other duties and have such other powers as the chairman or the Board of Directors may from time to time prescribe. 17 ARTICLE VI Certificates of Stock Section 1. General. Every holder of stock of the Corporation who has made full payment of the consideration for such stock shall be entitled upon request to have a certificate, signed by, or in the name of the Corporation by, the chairman, the president or a vice president and countersigned by the treasurer or an assistant treasurer or the secretary or an assistant secretary of the Corporation, certifying the number and, if additional shares of stock should be authorized, the class of whole shares of stock owned by him in the Corporation. Section 2. Fractional Share Interests. The Corporation may issue fractions of a share of stock. Fractional shares of stock shall have proportionately to the respective fractions represented thereby all the rights of whole shares, including the right to vote, the right to receive dividends and distributions and the right to participate upon liquidation of the Corporation, excluding, however, the right to receive a stock certificate representing such fractional shares. Section 3. Signatures on Certificates. Any of or all the signatures on a certificate may be a facsimile. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall cease to be such officer before such certificate is issued, it may be issued with the same effect as if he were such officer at the date of issue. The seal of the 18 Corporation or a facsimile thereof may, but need not, be affixed to certificates of stock. Section 4. Lost, Stolen or Destroyed Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of any affidavit of that fact by the person claiming the certificate or certificates to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost, stolen or destroyed. Section 5. Transfer of Shares. Upon request by the registered owner of shares, and if a certificate has been issued to represent such shares upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares of stock duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation, if it is satisfied that all provisions of the Articles of Incorporation, of the By-Laws and of the law 19 regarding the transfer of shares have been duly complied with, to record the transaction upon its books, issue a new certificate to the person entitled thereto upon request for such certificate, and cancel the old certificate, if any. Section 6. Registered Owners. The Corporation shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Maryland. ARTICLE VII Miscellaneous Section 1. Reserves. There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve. Section 2. Dividends. Dividends upon the stock of the Corporation may, subject to the provisions of the Articles of Incorporation and of applicable law, be declared by the Board of 20 Directors at any time. Dividends may be paid in cash, in property or in shares of the Corporation's stock, subject to the provisions of the Articles of Incorporation and of applicable law. Section 3. Capital Gains Distributions. The amount and number of capital gains distributions paid to the stockholders during each fiscal year shall be determined by the Board of Directors. Each such payment shall be accompanied by a statement as to the source of such payment, to the extent required by law. Section 4. Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 5. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 6. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Maryland." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in another manner reproduced. Section 7. Insurance Against Certain Liabilities. The Corporation shall not bear the cost of insurance that protects or purports to protect directors and officers of the Corporation against any liabilities to the Corporation or its security 21 holders to which any such director or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. ARTICLE VIII Indemnification Section 1. Indemnification of Directors and Officers. The Corporation shall indemnify its directors to the full extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify its officers to the same extent as its directors and to such further extent as is consistent with law. The Corporation shall indemnify its directors and officers who while serving as directors or officers also serve at the request of the Corporation as a director, officer, partner, trustee, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan to the full extent consistent with law. The indemnification and other rights provided by this Article shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. This Article shall not protect any such person against any liability to the Corporation or any stockholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of 22 the duties involved in the conduct of his office ("disabling conduct"). Section 2. Advances. Any current or former director or officer of the Corporation seeking indemnification within the scope of this Article shall be entitled to advances from the Corporation for payment of the reasonable expenses incurred by him in connection with the matter as to which he is seeking indemnification in the manner and to the full extent permissible under the Maryland General Corporation Law. The person seeking indemnification shall provide to the Corporation a written affirmation of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the person seeking indemnification shall provide a security in form and amount acceptable to the Corporation for his undertaking; (b) the Corporation is insured against losses arising by reason of the advance; or (c) a majority of a quorum of directors of the Corporation who are neither "interested persons" as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor parties to the proceeding ("disinterested non-party directors"), or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the 23 Corporation at the time the advance is proposed to be made, that there is reason to believe that the person seeking indemnification will ultimately be found to be entitled to indemnification. Section 3. Procedure. At the request of any person claiming indemnification under this Article, the Board of Directors shall determine, or cause to be determined, in a manner consistent with the Maryland General Corporation Law, whether the standards required by this Article have been met. Indemnification shall be made only following: (a) a final decision on the merits by a court or other body before whom the proceeding was brought that the person to be indemnified was not liable by reason of disabling conduct or (b) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the person to be indemnified was not liable by reason of disabling conduct by (i) the vote of a majority of a quorum of disinterested non-party directors or (ii) an independent legal counsel in a written opinion. Section 4. Indemnification of Employees and Agents. Employees and agents who are not officers or directors of the Corporation may be indemnified, and reasonable expenses may be advanced to such employees or agents, as may be provided by action of the Board of Directors or by contract, subject to any limitations imposed by the Investment Company Act of 1940. 24 Section 5. Other Rights. The Board of Directors may make further provision consistent with law for indemnification and advance of expenses to directors, officers, employees and agents by resolution, agreement or otherwise. The indemnification provided by this Article shall not be deemed exclusive of any other right, with respect to indemnification or otherwise, to which those seeking indemnification may be entitled under any insurance or other agreement or resolution of stockholders or disinterested directors or otherwise. The rights provided to any person by this Article shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as a director, officer, employee, or agent as provided above. Section 6. Amendments. References in this Article are to the Maryland General Corporation Law and to the Investment Company Act of 1940 as from time to time amended. No amendment of these By-laws shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment. ARTICLE IX Amendments The Board of Directors shall have the power to make, alter and repeal by-laws of the Corporation. 25 00250118.AM0 EX-99.5 5 ADVISORY AGREEMENT Alliance Premier Growth Fund, Inc. 1345 Avenue Of The Americas New York, New York 10105 September 17, 1992 Alliance Capital Management L.P. 1345 Avenue of the Americas New York, New York 10105 Dear Sirs: We, the undersigned Alliance Premier Growth Fund, Inc. herewith confirm our agreement with you as follows: 1. We are an, open-end, non-diversified management investment company registered under the Investment Company Act of 1940, as amended (the "Act"). We are currently authorized to issue separate classes of shares and our Directors are authorized to reclassify and issue any unissued shares to any number of additional classes or series (portfolios) each having its own investment objective, policies and restrictions, all as more fully described in the prospectus and the statement of additional information constituting parts of the Registration Statement filed on our behalf under the Securities Act of 1933, as amended, and the Act. We propose to engage in the business of investing and reinvesting the assets of each of our portfolios in securities ("the portfolio assets") of the type and in accordance with the limitations specified in our Articles of Incorporation, By-Laws, Registration Statement filed with the Securities and Exchange Commission under the securities Act of 1933 and the Act, and any representations made in our prospectus and statement of additional information, all in such manner and to such extent as may from time to time be authorized by our Board of Directors. We enclose copies of the documents listed above and will from time to time furnish you with any amendments thereof. 2. (a) We hereby employ you to manage the investment and reinvestment of the portfolio assets as above specified and, without limiting the generality of the foregoing, to provide management and other services specified below. (b) You will make decisions with respect to all purchases and sales of the portfolio assets. To carry out such decisions, you are hereby authorized, as our agent and attorney- in-fact, for our account and at our risk and in our name, to place orders for the investment and reinvestment of the portfolio assets. In all purchases, sales and other transactions in the portfolio assets you are authorized to exercise full discretion and act for us in the same manner and with the same force and effect as we might or could do with respect to such purchases, sales or other transactions, as well as with respect to all other things necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions. (c) You will report to our Board of Directors at each meeting thereof all changes in the portfolio assets since the prior report, and will also keep us in touch with important 2 developments affecting the portfolio assets and on your own initiative will furnish us from time to time with such information as you may believe appropriate for this purpose, whether concerning the individual issuers whose securities are included in the portfolio assets, the industries in which they engage, or the conditions prevailing in the economy generally. You will also furnish us with such statistical and analytical information with respect to the portfolio assets as you may believe appropriate or as we reasonably may request. In making such purchases and sales of the portfolio assets, you will bear in mind the policies set from time to time by our Board of Directors as well as the limitations imposed by our Articles of Incorporation and in our Registration Statement under the Act and the Securities Act of 1933, the limitations in the Act and of the Internal Revenue Code of 1986, as amended, in respect of regulated investment companies and the investment objective, policies and restrictions applicable to each of our portfolios. (d) It is understood that you will from time to time employ or associate with yourselves such persons as you believe to be particularly fitted to assist you in the execution of your duties hereunder, the cost of performance of such duties to be borne and paid by you. No obligation may be incurred on our behalf in any such respect. During the continuance of this agreement at our request you will provide us persons satisfactory to our Board of Directors to serve as our officers. You or your 3 affiliates will also provide persons, who may be our officers, to render such clerical, accounting and other services to us as we may from time to time request of you. Such personnel may be employees of you or your affiliates. We will pay to you or your affiliates the cost of such personnel for rendering such services to us, provided that all time devoted to the investment or reinvestment of the portfolio assets shall be for your account. Nothing contained herein shall be construed to restrict our right to hire our own employees or to contract for services to be performed by third parties. Furthermore, you or your affiliates shall furnish us without charge with such management supervision and assistance and such office facilities as you may believe appropriate or as we may reasonably request subject to the requirements of any regulatory authority to which you may be subject. You or your affiliates shall also be responsible for the payment of any expenses incurred in promoting the sale of our shares (other than the portion of the promotional expenses to be borne by us in accordance with an effective plan pursuant to Rule 12b-1 under the Act and the costs of printing our prospectuses and other reports to shareholders and fees related to registration with the Securities and Exchange Commission and with state regulatory authorities). 3. It is further agreed that you shall be responsible for the portion of the net expenses of each of our portfolios (except interest, taxes, brokerage, fees paid in accordance with 4 an effective plan pursuant to Rule 12b-1 under the Act, expenditures which are capitalized in accordance with generally accepted accounting principles and extraordinary expenses, all to the extent permitted by applicable state law and regulation) incurred by us during each of our fiscal years or portion thereof that this agreement is in effect between us which, as to a portfolio, in any such year exceeds the limits applicable to such portfolio under the laws or regulations of any state in which our shares are qualified for sale (reduced pro rata for any portion of less than a year). We hereby confirm that, subject to the foregoing, we shall be responsible and hereby assume the obligation for payment of all our other expenses, including: (a) payment of the fee payable to you under paragraph 5 hereof; (b) custody, transfer, and dividend disbursing expenses; (c) fees of directors who are not your affiliated persons; (d) legal and auditing expenses; (e) clerical, accounting and other office costs; (f) the cost of personnel providing services to us, as provided in subparagraph (d) of paragraph 2 above; (g) costs of printing our prospectuses and stockholder reports; (h) cost of maintenance of corporate existence; (i) interest charges, taxes, brokerage fees and commissions; (j) costs of stationery and supplies; (k) expenses and fees related to registration and filing with the Securities and Exchange Commission and with state regulatory authorities; and (l) such promotional expenses as may be contemplated by an effective plan pursuant to Rule 12b-1 under 5 the Act provided, however, that our payment of such promotional expenses shall be in the amounts, and in accordance with the procedures, set forth in such plan. 4. We shall expect of you, and you will give us the benefit of, your best judgment and efforts in rendering these services to us, and we agree as an inducement to your undertaking these services that you shall not be liable hereunder for any mistake of judgment or in any event whatsoever, except for lack of good faith, provided that nothing herein shall be deemed to protect, or purport to protect, you against any liability to us or to our security holders to which you would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of your duties hereunder, or by reason of your reckless disregard of your obligations and duties hereunder. 5. In consideration of the foregoing we will pay you a monthly fee at an annualized rate of 1% of our average daily net assets. Such fee shall be payable in arrears on the last day of each calendar month for services performed hereunder during such month. If our initial Registration Statement is declared effective by the Securities and Exchange Commission after the beginning of a month or this agreement terminates prior to the end of a month, such fee shall be prorated according to the proportion which such portion of the month bears to the full month. 6 6. This agreement shall become effective on the date on which our pending Registration Statement on Form N-1A relating to our shares becomes effective and shall remain in effect until the first meeting of our shareholders held after such date and, if approved by the vote of a majority of the outstanding voting securities, as defined in the Act, at such meeting, continue in effect until July 31, 1994 and may be continued for successive twelve-month periods (computed from each August 1 thereafter) with respect to each portfolio provided that such continuance is specifically approved at least annually by the Board of Directors or by the vote of a majority of the outstanding voting securities of such portfolio (as defined in the Act), and, in either case, by a majority of the Board of Directors who are not parties to this agreement or interested persons, as defined in the Act, Of any party to this agreement (other than as Directors of our corporation), provided further, however, that if the continuation of this agreement is not approved as to a portfolio, you may continue to render to such portfolio the services described herein in the manner and to the extent permitted by the Act and the rules and regulations thereunder. Upon the effectiveness of this agreement, it shall supersede all previous agreements between us covering the subject matter hereof. This agreement may be terminated with respect to any portfolio at any time, without the payment of any penalty, by vote of a majority of the outstanding voting securities (as so defined) of such portfolio, 7 or by a vote of the Board of Directors on 60 days' written notice to you, or by you with respect to any portfolio on 60 days' written notice to us. 7. This agreement may not be transferred, assigned, sold or in any manner hypothecated or pledged by you and this agreement shall terminate automatically in the event of any such transfer, assignment, sale, hypothecation or pledge by you. The term "transfer", "assignment" and "sale" as used in this paragraph shall have the meanings ascribed thereto by governing law and any interpretation thereof contained in rules or regulations promulgated by the Securities and Exchange Commission thereunder. 8. (a) Except to the extent necessary to perform your obligations hereunder, nothing herein shall be deemed to limit or restrict your right, or the right of any of your employees, or any of the officers or directors of Alliance Capital Management Corporation, your general partner, who may also be a Director, officer or employee of ours, or persons otherwise affiliated with us (within the meaning of the Act) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other trust, corporation, firm, individual or association. 8 (b) You will notify us of any change in the general partners of your partnership within a reasonable time after such change. 9. If you cease to act as our investment adviser, or, in any event, if you so request in writing, we agree to take all necessary action to change our name to a name not including the term "Alliance." You may from time to time make available without charge to us for our use such marks or symbols owned by you, including marks or symbols containing the term "Alliance" or any variation thereof, as you may consider appropriate. Any such marks or symbols so made available will remain your property and you shall have the right, upon notice in writing, to require us to cease the use of such mark or symbol at any time. 10. This Agreement shall be construed in accordance with the laws of the State of New York, provided, however, that nothing herein shall be construed as being inconsistent with the Act. 9 If the foregoing is in accordance with your understanding, will you kindly so indicate by signing and returning to us the enclosed copy hereof. Very truly yours, ALLIANCE Premier Growth FUND, INC. By /s/ David H. Dievler _____________________________ Name: David H. Dievler Title: Chairman Agreed to and accepted as of the date first set forth above ALLIANCE CAPITAL MANAGEMENT L.P. By ALLIANCE CAPITAL MANAGEMENT CORPORATION, its general partner By /s/ John D. Carifa _______________________________ Name: John D. Carifa Title: Executive Vice President 10 00250118.AP9 EX-99.6A 6 DISTRIBUTION SERVICES AGREEMENT AGREEMENT made as of the 17th day of September, 1992, between ALLIANCE PREMIER GROWTH FUND, INC., a Maryland corporation (the "Fund"), and ALLIANCE FUND DISTRIBUTORS, INC., a Delaware corporation (the "Underwriter"). WITNESSETH WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"), as a non-diversified, open-end investment company and it is in the interest of the Fund to offer its shares for sale continuously; WHEREAS, the Underwriter is a securities firm engaged in the business of selling shares of investment companies either directly to purchasers or through other securities dealers; WHEREAS, the Fund and the Underwriter wish to enter into an agreement with each other with respect to the continuous offerings of the Fund's shares in order to promote the growth of the Fund and facilitate the distribution of its shares; NOW, THEREFORE, the parties agree as follows: SECTION 1. Appointment of the Underwriter. The Fund hereby appoints the Underwriter as the principal underwriter and distributor of the Fund to sell to the public shares of its Class A Common Stock (the "Class A Shares") and its Class B Common Stock (the "Class B Shares") (the Class A Shares and the Class B Shares being collectively referred to herein as the "shares") and hereby agrees during the term of this Agreement to sell shares of the Fund to the Underwriter upon the terms and conditions herein set forth. SECTION 2. Exclusive Nature of Duties. The Underwriter shall be the exclusive representative of the Fund to act as principal underwriter and distributor except that the rights given under this Agreement to the Underwriter shall not apply to shares issued in connection with (a) the merger or consolidation of any other investment company with the Fund, (b) the Fund's acquisition by purchase or otherwise of all or substantially all of the assets or stock of any other investment company or (c) the reinvestment in shares by the Fund's shareholders of dividends or other distributions. SECTION 3. Purchase of Shares from the Fund. (a) Prior to the continuous offering of the shares commencing on a date agreed upon by the Fund and the Underwriter, the Underwriter agrees to solicit subscriptions for shares during an initial offering period which shall last for such period as may be agreed upon by the parties hereto. The subscriptions will be payable within six business days after the termination of the initial offering period. (b) After a period of time following the termination of the initial offering period, which will be determined by the Fund, the Fund will commence a continuous offering of its shares and thereafter the Underwriter shall have the right to buy from the Fund the shares needed to fill unconditional orders for shares of the Fund placed with the Underwriter by investors or securities dealers or depository institutions acting as agent for their customers. The price which the Underwriter shall pay for the shares so purchased from the Fund shall be the net asset value, determined as set forth in Section 3(e) hereof, used in determining the public offering price on which such orders are based. (c) The shares are to be resold by the Underwriter to investors at a public offering price, as set forth in Section 3(d) hereof, or to securities dealers or depository institutions acting as agent for their customers having agreements with the Underwriter upon the terms and conditions set forth in Section 8 hereof. (d) The public offering price(s) of the shares, i.e., the price per share at which the Underwriter or selected dealers or agents may sell shares to the public, shall be the public offering price determined in accordance with the then current Prospectus of the Fund (the "Prospectus") under the Securities Act of 1933, as amended (the "Securities Act"), relating to such shares, but not to exceed the net asset value at which the Underwriter is to purchase such shares, plus, in the case of Class A Shares, a sales charge equal to a specified percentage or percentages of the public offering price of the Class A Shares as set forth in the current Prospectus of the Fund. Class A Shares may be sold without a sales charge to certain classes of persons as from time to time set forth in the current Prospectus and Statement of Additional Information of the Fund. All payments to the Fund hereunder shall be made in the manner set forth in Section 3(g) hereof. (e) The net asset value of shares of the Fund shall be determined by the Fund, or any agent of the Fund, as of the regular close of the New York Stock Exchange on each Fund business day in accordance with the method set forth in the 2 Prospectus and Statement of Additional Information and guidelines established by the Directors of the Fund. (f) The Fund reserves the right to suspend the offering of its shares at any time in the absolute discretion of its Directors. (g) The Fund, or any agent of the Fund designated in writing to the Underwriter by the Fund, shall be promptly advised by the Underwriter of all purchase orders for shares received by the Underwriter. Any order may be rejected by the Fund; provided, however, that the Fund will not arbitrarily or without reasonable cause refuse to accept or confirm orders for the purchase of shares. The Fund (or its agent) will confirm orders upon their receipt, will make appropriate book entries and upon receipt by the Fund (or its agent) of payment thereof, will deliver deposit receipts or certificates for such shares pursuant to the instructions of the Underwriter. Payment shall be made to the Fund in New York Clearing House funds. The Underwriter agrees to cause such payment and such instructions to be delivered promptly to the Fund (or its agent). SECTION 4. Repurchase or Redemption of Shares by the Fund. (a) Any of the outstanding shares may be tendered for redemption at any time, and the Fund agrees to redeem or repurchase the shares so tendered in accordance with its obligations as set forth in Section (8)(d) of ARTICLE FIFTH of its Articles of Incorporation and in accordance with the applicable provisions set forth in the Prospectus and Statement of Additional Information. The price to be paid to redeem or repurchase the shares shall be equal to the net asset value calculated in accordance with the provisions of Section 3(e) hereof less, in the case of Class B Shares, a deferred sales charge equal to a specified percentage or percentages of the net asset value of the Class B Shares or their cost, whichever is less. Class B Shares that have been outstanding for a specified period of time may be redeemed without payment of a deferred sales charge as from time to time set forth in the current Prospectus of the Fund. All payments by the Fund hereunder shall be made in the manner set forth below. The redemption or repurchase by the Fund of any of the Class A Shares purchased by or through the Underwriter will not affect the sales charge secured by the Underwriter, or any selected dealer (unless such selected dealer has otherwise agreed with the Underwriter), in the course of the original sale, regardless of the length of the time period between purchase by an investor and his tendering for redemption or repurchase. 3 The Fund (or its agent) shall pay the total amount of the redemption price and deferred sales charges, if any, as defined in the above paragraph pursuant to the instructions of the Underwriter in New York Clearing House funds on or before the seventh business day subsequent to its having received the notice of redemption in proper form. (b) Redemption of shares or payment may be suspended at times when the New York Stock Exchange is closed, when trading on said Exchange is closed, when trading on said Exchange is restricted, when an emergency exists as a result of which disposal by the Fund or securities owned by it is not reasonably practicable or it is not reasonably practicable for the Fund fairly to determine the value of its net assets, or during any other period when the Securities and Exchange Commission, by order, so permits. SECTION 5. Plan of Distribution. (a) It is understood that Sections 5, 12, and 16 hereof together constitute a plan of distribution (the "Plan") within the meaning of Rule 12b-1 adopted by the Securities and Exchange Commission under the Investment Company Act. (b) The Fund will pay to the Underwriter each month a distribution services fee which will not exceed, on an annualized basis, .50 of 1% of the aggregate average daily net assets of the Fund attributable to the shares that are not Class B Shares and 1.00% of the aggregate average daily net assets of the Fund attributable to the Class B Shares. With respect to each portfolio (the "Portfolio"), such distribution services fees will be used in their entirety by the Underwriter to make payments (i) to compensate broker-dealers or other persons for providing distribution assistance, (ii) to otherwise promote the sale of shares of each Portfolio, including payment for the preparation, printing and distribution of prospectuses and sales literature or other promotional activities, and (iii) to compensate banks and other institutions for providing administrative and accounting services with respect to each Portfolio's shareholders. (c) Alliance Capital Management L.P., the Fund's investment adviser (the "Adviser"), may make payments from time to time from its own resources for the purposes described in Section 5(b) hereof. (d) Payments for distribution assistance or administrative and accounting services are subject to the terms and conditions of the written agreements between each broker- dealer or other person and the Underwriter. Such agreements will be in a form satisfactory to the Directors of the Fund. 4 (e) The Treasurer of the Fund will prepare and furnish to the Fund's Directors, and the Directors will review, at least quarterly a written report complying with the requirements of Rule 12b-1 setting forth all amounts expended hereunder and the purposes for which such expenditures were made. (f) The Fund is not obligated to pay any distribution expense in excess of the distribution services fee described in sub-paragraph (b) hereof. Any expenses of distribution of the Fund's shares that are not Class B Shares accrued by the Underwriter in one fiscal year of the Fund may not be paid from distribution services fees received from the Fund in respect of such shares in another fiscal year. No portion of the distribution services fees received from the assets in respect of shares that are not Class B Shares may be used to pay any interest expense, carrying charges or other financing costs or allocation of overhead of the Underwriter. The distribution services fee of a particular class may not be used to subsidize the sale of shares of the other class. SECTION 6. Duties of the Fund. (a) The Fund shall furnish to the Underwriter copies of all information, financial statements and other papers which the Underwriter may reasonably request for use in connection with the distribution of shares of the Fund, and this shall include one certified copy, upon request by the Underwriter, of all financial statements prepared for the Fund by independent public accountants. The Fund shall make available to the Underwriter such number of copies of the Prospectus as the Underwriter shall reasonably request. (b) The Fund shall take, from time to time, but subject to the necessary approval of its shareholders, all necessary action to fix the number of authorized shares and such steps as may be necessary to register the same under the Securities Act, to the end that there will be available for sale such number of shares as the Underwriter reasonably may be expected to sell. (c) The Fund shall use its best efforts to qualify and maintain the qualification of an appropriate number of its shares under the securities laws of such states as the Underwriter and the Fund may approve. Any such qualification may be withheld, terminated or withdrawn by the Fund at any time in its discretion. As provided in Section 9(b) hereof, the expense of qualification and maintenance of qualification shall be borne by the Fund. The Underwriter shall furnish such information and other material relating to its affairs and activities as may be required by the Fund in connection with such qualification. 5 (d) The Fund will furnish, in reasonable quantities upon request by the Underwriter, copies of annual and interim reports of the Fund. SECTION 7. Duties of the Underwriter. (a) The Underwriter shall devote reasonable time and effort to effect sales of shares of the Fund, but shall not be obligated to sell any specific number of shares. The services of the Underwriter to the Fund hereunder are not to be deemed exclusive and nothing herein contained shall prevent the Underwriter from entering into like arrangements with other investment companies so long as the performance of its obligations hereunder is not impaired thereby. (b) In selling shares of the Fund, the Underwriter shall use its best efforts in all respects duly to conform with the requirements of all federal and state laws relating to the sale of such securities. Neither the Underwriter nor any selected dealer nor any other person is authorized by the Fund to give any information or to make any representations, other than those contained in the Fund's Registration Statement (the "Registration Statement"), as amended from time to time, under the Securities Act and the Investment Company Act or the Fund's Prospectus and Statement of Additional Information as from time to time in effect, or any sale literature specifically approved in writing by the Fund. (c) The Underwriter shall adopt and follow procedures, as approved by the officers of the Fund, for the confirmation of sales to investors and selected dealers, the collection of amounts payable by investors and selected dealers on such sales, and the cancellation of unsettled transactions, as may be necessary to comply with the requirements of the National Association of Securities Dealers, Inc. (the "NASD"), as such requirements may from time to time exist. SECTION 8. Selected Dealer Agreements. (a) The Underwriter shall have the right to enter into selected dealer agreements with securities dealers of its choice ("selected dealers") for the sale of shares and fix therein the portion of the sales charge which may be allocated to the selected dealers; provided, that the Fund shall approve the forms of agreements with dealers and the dealer compensation set forth therein and shall evidence such approval by filing said forms and amendments thereto as exhibits to its then currently effective Registration Statement. Shares sold to selected dealers shall be for resale by such dealers only at the public offering price(s) set forth in the Prospectus and Statement of Additional Information. 6 (b) Within the United States, the Underwriter shall offer and sell shares only to such selected dealers as are members in good standing of the NASD. SECTION 9. Payment of Expenses. (a) The Fund shall bear all costs and expenses of the Fund, including fees and disbursements of its counsel and auditors, in connection with the preparation and filing of its Registration Statement and Prospectus and Statement of Additional Information, and all amendments and supplements thereto, and preparing and mailing annual and interim reports and proxy materials to shareholders (including but not limited to the expense of setting in type any such registration statements, prospectuses, annual or interim reports or proxy materials). (b) The Fund shall bear the cost of expenses of qualification of shares for sale, and, if necessary or advisable in connection therewith, of qualifying the Fund as an issuer or as a broker or dealer, in such states of the United States or other jurisdiction as shall be selected by the Fund and the Underwriter pursuant to Section 6(c) hereof and the cost and expenses payable to each such state for continuing qualification therein until the Fund decides to discontinue such qualification pursuant to Section 6(c) hereof. SECTION 10. Indemnification. (a) The Fund agrees to indemnify, defend and hold the Underwriter, and any person who controls the Underwriter within the meaning of Section 15 of the Securities Act, free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) which the Underwriter or any such controlling person may incur, under the Securities Act, or under common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in the Fund's Registration Statement, Prospectus or Statement of Additional Information in effect from time to time under the Securities Act or arising out of or based upon any alleged omission to state a material fact required to be stated in any one thereof or necessary to make the statements in any one thereof not misleading; provided, however, that in no event shall anything herein contained be so construed as to protect the Underwriter against any liability to the Fund or its security holders to which the Underwriter would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of the Underwriter's reckless disregard of its obligations and duties under this agreement. The Fund's agreement to indemnify the Underwriter and 7 any such controlling person as aforesaid is expressly conditioned upon the Fund's being notified of the commencement of any action brought against the Underwriter or any such controlling person, such notification to be given by letter or by telegram addressed to the Fund at its principal office in New York, New York, and sent to the Fund by the person against whom such action is brought within ten days after the summons or other first legal process shall have been served. The failure to so notify the Fund of the commencement of any such action shall not relieve the Fund from any liability which it may have to the person against whom such action is brought by reason of any such alleged untrue statement or omission otherwise than on account of the indemnity agreement contained in this Section 10. The Fund will be entitled to assume the defense of any suit brought to enforce any such claim, and to retain counsel of good standing chosen by the Fund and approved by the Underwriter. In the event the Fund does not elect to assume the defense of any such suit and retain counsel of good standing approved by the Underwriter, the defendant or defendants in such suit shall bear the fees and expenses of any additional counsel retained by any of them; but in case the Fund does not elect to assume the defense of any such suit, or in case the Underwriter does not approve of counsel chosen by the Fund, the Fund will reimburse the Underwriter or the controlling person or persons named as defendant or defendants in such suit, for the fees and expenses of any counsel retained by the Underwriter or such persons. The indemnification agreement contained in this Section 10 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter or any controlling person and shall survive the sale of any of the Fund's shares made pursuant to subscriptions obtained by the Underwriter. This agreement of indemnity will inure exclusively to the benefit of the Underwriter, to the benefit of its successors and assigns, and to the benefit of any controlling persons and their successors and assigns. The Fund agrees promptly to notify the Underwriter of the commencement of any litigation or proceeding against the Fund in connection with the issue and sale of any of its shares. (b) The Underwriter agrees to indemnify, defend and hold the Fund, its several officers and directors, and any person who controls the Fund within the meaning of Section 15 of the Securities Act, free and harmless from and against any and all claims, demands, liabilities, and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) which the Fund, its officers or directors, or any such controlling person may incur under the Securities Act or under common law or otherwise, but only to the extent that such liability, or expense incurred by the Fund, its officers and or such controlling person resulting from such claims or demands shall arise out of or be based upon any alleged untrue statement of a material fact 8 contained in information furnished in writing by the Underwriter to the Fund for use in its Registration Statement, Prospectus or Statement of Additional Information in effect from time to time under the Securities Act, or shall arise out of or be based upon any alleged omission to state a material fact in connection with such information required to be stated in the Registration Statement, Prospectus or Statement of Additional Information or necessary to make such information not misleading. The Underwriter's agreement to indemnify the Fund, its officers and directors, and any such controlling person as aforesaid is expressly conditioned upon the Underwriter being notified of the commencement of any action brought against the Fund, its officers or directors or any such controlling person, such notification to be given by letter or telegram addressed to the Underwriter at its principal office in New York, and sent to the Underwriter by the person against whom such action is brought, within ten days after the summons or other first legal process shall have been served. The Underwriter shall have a right to control the defense of such action, with counsel of its own choosing, satisfactory to the Fund, if such action is based solely upon such alleged misstatement or omission on its part, and in any other event the Underwriter and the Fund, and their officers and directors or such controlling person, shall each have the right to participate in the defense or preparation of the defense of any such action. The failure so to notify the Underwriter of the commencement of any such action shall not relieve the Underwriter from any liability which it may have to the Fund, to its officers and trustees, or to such controlling person by reason of any such untrue statement or omission on the part of the Underwriter otherwise than on account of the indemnity agreement contained in this Section 10. SECTION 11. Notification by the Fund. The Fund agrees to advise the Underwriter immediately: (a) of any request by the Securities and Exchange Commission for amendments to the Fund's Registration Statement, Prospectus or Statement of Additional Information or for additional information, (b) in the event of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of the Fund's Registration Statement, Prospectus or Statement of Additional Information or the initiation of any proceeding for that purpose, (c) of the happening of any material event which makes untrue any statement made in the Fund's 9 Registration Statement, Prospectus or Statement of Additional Information or which requires the making of a change in any one thereof in order to make the statements therein not misleading, and (d) of all actions of the Securities and Exchange Commission with respect to any amendments to the Fund's Registration Statement, Prospectus or Statement of Additional Information which may from time to time be filed with the Securities and Exchange Commission under the Securities Act. SECTION 12. Term of Agreement. (a) This Agreement shall become effective on the date hereof and shall continue in effect until July 31, 1993 and thereafter for successive twelve-month periods (computed from each August 1) with respect to each class; provided, however, that such continuance is specifically approved at least annually by the Directors of the Fund or by vote of the holders of a majority of the outstanding voting securities (as defined in the Investment Company Act) of that class, and, in either case, by a majority of the Directors of the Fund who are not parties to this agreement or interested persons, as defined in the Investment Company 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 Plan or any agreement related thereto; provided further, however, that if the continuation of this agreement is not approved as to a class or a Portfolio, the Underwriter may continue to render to such class or Portfolio the services described herein in the manner and to the extent permitted by the Act and the rules and regulations thereunder. Upon effectiveness of this agreement, it shall supersede all previous agreements between the parties hereto covering the subject matter hereof. This agreement may be terminated (i) by the Fund with respect to any class or Portfolio at any time, without the payment of any penalty, by the vote of a majority of the outstanding voting securities (as so defined) of such class or Portfolio, or by a vote of a majority of the Directors of the Fund who are not interested persons, as defined in the Investment Company Act, of the Fund and have no direct or indirect financial interest in the operation of the Plan or any agreement related thereto, in any such event on sixty days' written notice to the Underwriter; provided, however, that no such notice shall be required if such termination is stated by the Fund to relate only to Sections 5 and 16 hereof (in which event Sections 5 and 16 shall be deemed to have been severed herefrom and all other provisions of this agreement shall continue in full force and effect), or (ii) by the Underwriter with respect to any Portfolio on sixty days' written notice to the Fund. 10 (b) This Agreement may be amended at any time with the approval of the Directors of the Fund, provided that (i) any material amendments of the terms hereof will become effective only upon approval as provided in the first proviso of Section 12(a) hereof, and (ii) any amendment to increase materially the amount to be expended for distribution assistance, administrative and accounting services and other activities designed to promote the sale of shares of the Fund hereunder will be effective only upon the additional approval by a vote of a majority of the outstanding voting securities of that class or Portfolio as defined in the Investment Company Act. SECTION 13. No Assignment. This agreement may not be transferred, assigned, sold or in any manner hypothecated or pledged by either party hereto and this agreement shall terminate automatically in the event of any such transfer, assignment, sale, hypothecation or pledge. The terms "transfer", "assignment", and "sale" as used in this paragraph shall have the meanings ascribed thereto by governing law and any interpretation thereof contained in rules or regulations promulgated by the Securities and Exchange Commission thereunder. SECTION 14. Notices. Any notice required or permitted to be given hereunder by either party to the other shall be deemed sufficiently given if sent by registered mail, postage prepaid, addressed by the party giving such notice to the other party at the last address furnished by such other party to the party given notice, and unless and until changed pursuant to the foregoing provisions hereof addressed to the Fund or the Underwriter. SECTION 15. Governing Law. The provisions of this agreement shall be, to the extent applicable, construed and interpreted in accordance with the laws of the State of New York. SECTION 16. Disinterested Directors of the Fund. While the Agreement is in effect, the selection and nomination of the Directors who are not "interested persons" of the Fund (as defined in the Investment Company Act) will be committed to the discretion of such disinterested Directors. 11 IN WITNESS WHEREOF, the parties hereto have executed this Agreement. ALLIANCE PREMIER GROWTH FUND, INC. By /s/ David H. Dievler _______________________ David H. Dievler Chairman and President ALLIANCE FUND DISTRIBUTORS, INC. By /s/ Robert L. Errico _______________________ Robert L. Errico President Accepted as to Sections 5, 12 and 16: ALLIANCE CAPITAL MANAGEMENT L.P. By Alliance Capital Management Corporation, General Partner By /s/ John D. Carifa _________________________ John D. Carifa Executive Vice President 12 00250118.AM3 EX-99.6C 7 (LOGO) ALLIANCE FUND DISTRIBUTORS, INC. 1345 AVENUE OF THE AMERICAS NEW YORK, N.Y. 10105 (800) 221-5672 , 1997 Selected Dealer Agreement For Broker/Dealers (other than Bank Subsidiaries) Dear Sirs: As the principal underwriter of shares of certain registered investment companies presently or hereafter managed by Alliance Capital Management LP, shares of which companies are distributed by us pursuant to our Distribution Services Agreements with such companies (the "Funds"), we invite you to participate as principal in the distribution of shares of any and all of the Funds upon the following terms and conditions: 1. You are to offer and sell such shares only at the public offering prices which shall be currently in effect, in accordance with the terms of the then current prospectuses and statements of additional information of the Funds. You agree to act only as principal in such transactions and shall not have authority to act as agent for the Funds, for us, or for any other dealer in any respect. All orders are subject to acceptance by us and become effective only upon confirmation by us. 2. On each purchase of shares by you from us, the total sales charges and discount to selected dealer, if any, shall be as stated in each Fund's then current prospectus. Such sales charges and discount to selected dealers are subject to reductions under a variety of circumstances as described in each Fund's then current prospectus and statement of additional information. To obtain these reductions, we must be notified when the sale takes place which would qualify for the reduced charge. There is no sales charge or discount to selected dealers on the reinvestment of dividends. 3. As a selected dealer, you are hereby authorized (i) to place orders directly with the Funds for their shares to be resold by us to you subject to the applicable terms and conditions governing the placement of orders by us set forth in the Distribution Services Agreement between each fund and us and subject to the applicable compensation provisions set forth in each Fund's then current prospectus and statement of additional information and (ii) to tender shares directly to the Funds or their agent for redemption subjected to the applicable terms and conditions set forth in the Distribution Services Agreement. 4. Repurchases of shares will be made at the net asset value of such shares in accordance with the then current prospectuses and statements of additional information of the Funds. 5. You represent that you are a member of the National Association of Securities Dealers, Inc. and that you agree to abide by the Rules of Fair Practice of such Association. 6. This Agreement is in all respects subject to Rule 26 of the Rules of Fair Practice of the National Association of Securities Dealer, Inc. which shall control any provision to the contrary in this Agreement. 7. You agree: (a) To purchase shares only from us or only from your customers. (b) To purchase shares from us only for the purpose of covering purchase orders already received or for your own bona fide investment. (c) That you will not purchase any shares from your customers at prices lower than the redemption or repurchase prices then quoted by the Fund. You shall, however, be permitted to sell shares for the account of their record owners to the Funds at the repurchase prices currently established for such shares and may charge to owner a fair commission for handling the transaction. (d) That you will not withhold placing customers' orders for shares so as to profit yourself as a result of such withholding. (e) That if any shares confirmed to you hereunder are redeemed or repurchased by any of the Funds within seven business days after such confirmation of your original order, you shall forth with refund to us the full discount allowed to you on such sales. We shall notify you of such redemption or repurchase within ten days from the date of delivery of the request 2 therefor or certificates to us or such fund. Termination or cancellation of this Agreement shall not relieve you or us from the requirements of this subparagraph. 8. We shall not accept from you conditional orders for shares. Delivery of certificates for shares purchased shall be made by the Funds only against receipt of the purchase price, subject to deduction for the discount reallowed to you and our portion of the sales charge on such sales. If payment for the shares purchased is not received within the time customary for such payments, the sale may be cancelled forthwith without any responsibility or liability on our part or on the part of the Funds (in which case we may hold you responsible for any loss, including loss of profit, suffered by the Funds resulting from your failure to make payment as aforesaid), or, at our option, we may sell the shares ordered back to the Funds (in which case we may hold you responsible for any loss, including loss of profit suffered by us resulting from your failure to make payments as aforesaid). 9. You will not offer or sell any of the shares except under circumstances that will result in compliance with the applicable Federal and State securities laws and in connection with sales and offers to sell shares you will furnish to each person to whom any such sale or offer is made a copy of the applicable then current prospectus. We shall be under no liability to you except for lack of good faith and for obligations expressly assumed by us herein. Nothing herein contained however, shall be deemed to be a condition, stipulation or provision binding any persons acquiring any security to waive compliance with any provision of the Securities Act of 1933, or of the Rules and Regulations of the Securities and Exchanges Commission, or to relieve the parties hereto from any liability arising under the Securities Act of 1933. 10. From time to time during the term of this Agreement we may make payments to you pursuant to one or more of the distribution plans adopted by certain of the Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") in consideration, with respect to each such Fund, of your furnishing distribution services hereunder and providing administrative, accounting and other services, including personal service and/or the maintenance of shareholder accounts. We have no obligation to make any such payments and you waive any such payment until we receive monies therefor from the Fund. Any such payments made pursuant to this Section 10 shall be subject to the following terms and conditions: (a) Any such payments shall be in such amounts as we may from time to time advise you in writing 3 but in any event not in excess of the amounts permitted by the plan in effect with respect to each particular Fund. Any such payments shall be in addition to the selling concession, if any, allowed to you pursuant to this Agreement. Such payments shall include a service fee in the amount of .25 of 1% per annum of the average daily net assets of certain Funds attributable to you clients. Any such service fee shall be paid to you solely for personal service and/or the maintenance of shareholder accounts. (b) The provisions of this Section 10 relate to the plan adopted by a particular Fund pursuant to Rule 12b-1. In accordance with Rule 12b-1, any person authorized to direct the disposition of monies paid or payable by a Fund pursuant to this Section 10 shall provide the Fund's Board of Directors, and the Directors shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. (c) The provisions of this Section 10 applicable to each Fund shall remain in effect for not more than a year and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually in conformity with Rule 12b-1 and the Act. The provisions of this Section 10 shall automatically terminate with respect to a particular Plan in the event of the assignment (as defined by the Act) of this Agreement, in the event such Plan terminates or is not continued or in the event this Agreement terminates or ceases to remain in effect. In addition, the provisions of this Section 10 may be terminated any any time, without penalty, by either party with respect to any particular Plan on not more than 60 days' nor less than 30 days' written notice delivered or mailed by registered mail, postage prepaid, to the other party. 11. No person is authorized to make any representations concerning shares of the Funds except hose contained in the current prospectus, statement of additional information, and printed information issued by each Fund or by us as information supplemental to each prospectus. We shall supple prospectuses and statements of additional information, reasonable quantities of 4 reports to shareholders, supplemental sales literature, sales bulletins, and additional information as issued. You agree to distribute prospectuses and reports to shareholders of the Funds to your customers in compliance with the applicable requirements, except to the extent that we expressly undertake to do so on your behalf. You agree not to use other advertising or sales material relating to the Funds, unless approved in writing by us in advance of such use. Any printed information furnished by us other than the then current prospectus and statement of additional information for each Fund, periodic reports and proxy solicitation materials are our sole responsibility and not the responsibility of the Funds, and you agree that the Funds shall have no liability or responsibility to you in these respects unless expressly assume in connection therewith. 12. In connection with your distribution of shares of a Fund, you shall conform to such written compliance standards as we have provided you in the past or may from time to time provide to you in the future. 13. We, our affiliates and the Funds shall not be liable for any loss, expense, damages, costs or other claim arising out of any redemption or exchange pursuant to telephone instructions from any person or our refusal to execute such instructions for any reason. 14. Either party to this Agreement may cancel this Agreement by giving written notice to the other. Such notice shall be deemed to have been given on the date on which it was either delivered personally to the other party or any officer or member thereof, or was mailed postpaid or delivered to a telegraph office for transmission to the other party at his or its address as shown below. This Agreement may be amended by us at any time and your placing of an order after the effective date of any such amendment shall constitute your acceptance thereof. 5 15. This Agreement shall be construed in accordance with the laws of the State of New York and shall be binding upon both parties thereto when signed by us and accepted by you in the space provided below. Very truly yours ALLIANCE FUND DISTRIBUTORS, INC. By:________________________________ (Authorized Signature) Firm Name_______________________________________________________ Address_________________________________________________________ City____________________________ State_________ Zip Code________ ACCEPTED BY (signature)__________________ Title_________________ Name(printed)____________________________ Title_________________ Date____________________________ 199_____ Phone #_______________ Please return two signed copies of this Agreement (one of which will be signed above by us and thereafter returned to you) in the accompanying return envelope to: Alliance Fund Distributors, Inc. 1345 Avenue of the Americas, 38th Floor New York, NY 10105 6 00250118.AL6 EX-99.6D 8 (LOGO) ALLIANCE FUND DISTRIBUTORS, INC. 1345 AVENUE OF THE AMERICAS NEW YORK, N.Y. 10105 (800) 221-5672 , 1997 Selected Agent Agreement For Depository Institutions and Their Subsidiaries Dear Sirs: As the principal underwriter of shares of certain registered investment companies presently or hereafter managed by Alliance Capital Management L.P., shares of which companies are distributed by us pursuant to our Distribution Services Agreements with such companies (the "Funds"), we invite you, acting as agent for your customers, to make available to your customers shares of any or all of the funds upon the following terms and conditions: 1. The customers in question will be for all purposes your customers. We all execute transactions in shares of the Funds for each of your customers only upon your authorization, if being understood in all causes that (a) you are acting as the agent for the customer; (b) each transaction is initiated solely upon the order of the customer; (c) each transaction is for the account of the customer and not for your account; (d) the transactions are without recourse against you by the customer; (e) except as we otherwise agree, each transaction is reflected on a fully disclosed basis; (f) as between you and the customer, the customer will have full beneficial ownership of the shares; (g) you shall provide no investment advice and exercise no investment discretion regarding the purchase, sale, or redemption of the shares; and (h) you shall make appropriate disclosure to your customer that any Fund's shares are not endorsed by you, do not constitute your obligation and are not entitled to federal deposit insurance. 2. You are to sell shares of the Funds only at the public offering prices which shall be currently in effect, in accordance with the terms of the then current prospectuses and statements of additional information of the Funds. You agree to act only as agent for your customers in such transactions and shall not have authority to act as agent for the Funds or for us in any respect. All orders are subject to acceptance by us and become effective only upon confirmation by us. 3. On each purchase of shares of a Fund authorized by you, the total sales charge and commission, if any, shall be as stated in the Fund's then current prospectus. Such sales charges and commissions are subject to reductions under a variety of circumstances as described in each Fund's then current prospectus and statement of additional information. To obtain such a reduction, you must provide us with such information as we may request to establish that a particular transaction qualifies for the reduction. There is no sales charge or commission to selected agents on the reinvestment of dividends. 4. As a selected agent, you are hereby authorized (i) to place orders directly with the Funds for their shares to be resold by us through you subject to the applicable terms and conditions governing the placement of orders by us set forth in the Distribution Services Agreement between each Fund and us and subject to the applicable compensation provisions set forth in each Fund's then current prospectus and statement of additional information, and (ii) to tender shares directly to the Funds or their agent for redemption or repurchase subject to the applicable terms and conditions set forth in the Distribution Services Agreement. 5. Redemptions and repurchases of shares will be made at the net asset value of such shares in accordance with the then current prospectuses and statements of additional information of the Funds. 6. You represent that you are either: (a) a bank as defined in Section 3(o)(6) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), duly authorized to engage in the transactions to be performed hereunder and not required to register as a broker-dealer pursuant to the 1934 Act; or (b) a bank (as so defined) or an affiliate of a bank, in either case registered as a broker-dealer pursuant to the 1934 Act and a member of the National Association of Securities Dealers, Inc., and that you agree to abide by the rules and regulations of the National Association of Securities Dealers, Inc., and that you agree to abide by the rules and regulations of the National Association of Securities Dealers, Inc. 2 7. You Agree: (a) to order shares of the Funds only from us and to act as agent only for your customers; (b) to order shares from us only for the purpose of covering purchase orders already received; (c) that you will not purchase any shares from your customers at prices lower than the redemption or repurchase prices then quoted by the Funds, provided, however, that you shall be permitted to sell shares for the accounts of their record owners to the Funds at the repurchase prices currently established for such shares and may charge the owner a fair commission for handling the transaction; repurchase prices currently established for such shares and may charge the owner a fair commission for handling the transaction; (d) that you will not withhold placing customers' orders for shares so as to profit yourself as a result of such withholding; and (e) that if any shares confirmed through you hereunder are redeemed or repurchased by any of the Funds within seven business days after such confirmation of your original order, you shall forthwith refund to us the full commission reallowed to you on such sales. We shall notify you of such redemption or repurchase within ten days from the date of delivery of the request therefor or certificates to us or such Fund. Termination or cancellation of this Agreement shall not relieve you or us from the requirements of this subparagraph. 8. We shall not accept from you any conditional orders for shares. Delivery of certificates for shares purchased shall be made by the Funds only against receipt of the purchase price, subject to deduction for the commission reallowed to you and our portion of the sales charge on such sale. If payment for the shares purchased is not received within the time customary for such payments, the sale may be cancelled forthwith without any responsibility or liability on our part or on the part of the Funds (in which case you will be responsible for any loss, including loss of profit, suffered by the Funds resulting from your failure to make payment as aforesaid). 3 9. You will not accept orders for shares of any of the Funds except under circumstances that will result in compliance with the applicable Federal and State securities laws and banking laws, and in connection with sale of shares to your customers you will furnish, unless we agree otherwise, to each customer who has ordered shares a copy of the applicable then current prospectus. We shall be under no liability to you except for lack of good faith and for obligations expressly assumed by us herein. Nothing herein contained, however, shall be deemed to be a condition, stipulation or provision binding any persons acquiring any security to waive compliance with any provision of the Securities Act of 1933 or of the rules and regulations of the Securities and Exchange Commission, or to relieve the parties hereto from any liability arising under the Securities Act of 1933. 10. From time to time during the term of this Agreement we may make payments to you pursuant to one or more of the distribution plans adopted by certain of the Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act"), to compensate you with respect to the shareholder accounts of your customers in such Funds for providing administrative, accounting and other services, including personal service and/or the maintenance of such accounts. We have no obligation to make any such payments and you waive any such payment until we receive monies therefor from the Fund. Any such payments made pursuant to this Section 10 shall be subject to the following terms and conditions. (a) Any such payments shall be in such amounts as we may from time to time advise you in writing but in any event not in excess of the amounts permitted by the plan in effect with respect to each particular Fund. Such payments shall include a service fee in the amount of .25% of 1% per annum of the average daily net assets of certain Funds attributable to your clients. Any such service fee shall be paid to you solely for personal service and/or the maintenance of shareholder accounts. (b) The provisions of this Section 10 relate to the plan adopted by a particular Fund pursuant to Rule 12b-1. In accordance with Rule 12b-1, any person authorized to direct the disposition of monies paid or payable by a Fund pursuant to this Section 10 shall provide the Fund's Board of Directors, and the Directors shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. 4 (c) The provisions of this Section 10 applicable to each fund remain in effect for not more than a year and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually in conformity with Rule 12~1 and the Act. The provisions of this Section 10 shall automatically terminate with respect to a particular Plan in the event of the assignment (as defined by the Act) of this Agreement, in the event such Plan terminates or in the event this Agreement terminates or ceases to remain in effect. In addition, the provisions of this Section 10 may be terminated at any time, without penalty, by either party with respect to any particular Plan on not more than 60 days' nor less than 30 days' written notice delivered or mailed by registered mail, postage prepaid, to the other party. 11. No person is authorized to make any representation concerning shares of the Fund except those contained in the current prospectus, statement of additional information, and printed information issued by each Fund or by us as information supplemental to each prospectus. We shall supply prospectuses and statements of additional information, reasonable quantities of reports to shareholders, supplemental sales literature, sales bulletins, and additional information as issued. You agree to distribute prospectuses and reports to shareholders of the Funds to your customers in compliance with applicable requirements, except to the extent that we expressly undertake to do so on your behalf. You agree to use other advertising or sales material relating to the Funds except in compliance with all laws and regulations applicable to you and unless approved in writing by us in advance of such use. Any printed information furnished by us other than the current prospectus and statement of additional information for each Fund, periodic reports and proxy solicitation material are our sole responsibility and not the responsibility of the Funds, and you agree that the Funds shall have no liability or responsibility to you in these respects unless expressly assumed in connection therewith. 12. In connection with your making shares of a Fund available to your customers, you shall conform to such written compliance standards as we have provided you in the past or may from time to time provide to you in the future. 13. We, our affiliates and the Funds shall not be liable for any loss, expense, damages, costs or other claim arising out of any redemption or exchange pursuant to telephone instruction 5 from any person or our refusal to execute such instruction for any reason. 14. Either party to this Agreement may cancel this Agreement by giving written notice to the other. Such notice shall be deemed to have been given as of the date on which it was either delivered personally to the other party or any officer or member thereof, or was mailed postpaid or delivered to a telegraph office for transmission to the other party at his or its address as show below. This Agreement may be amended by us at any time and your placing of an order after the effective date of any such amendment shall constitute your acceptance thereof. If you are a bank or an affiliate of a bank, this agreement will automatically terminate if you cease to be, or the bank of which you are an affiliate ceases to be, a bank as defined in the 1934 Act. 15. The Agreement shall be construed in accordance with the laws of the State of New York and shall be binding upon both parties hereto when signed by us and accepted by you in the space provided below. Very truly yours, ALLIANCE FUND DISTRIBUTORS, INC. By:_________________________________ (Authorized Signature) Bank or Firm Name_______________________________________________ Address_________________________________________________________ City____________________________ State_________ Zip Code________ ACCEPTED BY (signature) Name (print)____________________________ Title__________________ Date____________________________199_____ Phone #________________ Please return two signed copies of this Agreement (one of which will be signed by us and thereafter returned to you) in the accompanying return envelope to: Alliance Fund Distributors, Inc. 1345 Avenue of the Americas, 38th Floor New York, NY 10105 6 00250118.AL5 EX-99.8 9 CUSTODIAN CONTRACT Between ALLIANCE PREMIER GROWTH FUND, INC. and STATE STREET BANK AND TRUST COMPANY TABLE OF CONTENTS Page 1. Employment of Custodian and Property to be Held By It.........................................1 2. Duties of the Custodian with Respect to Property of the Fund Held by the Custodian in the United States..................................2 2.1 Holding Securities...........................2 2.2 Delivery of Securities.......................3 2.3 Registration of Securities...................7 2.4 Bank Accounts................................8 2.5 Availability of Federal Funds................9 2.6 Collection of Income.........................9 2.7 Payment of Fund Monies .....................10 2.8 Liability for Payment in Advance of Receipt of Securities Purchased.............13 2.9 Appointment of Agents.......................13 2.10 Deposit of Securities in Securities System......................................14 2.10A Fund Assets Held in the Custodian's Direct Paper System.........................17 2.11 Segregated Account..........................18 2.12 Ownership Certificates for Tax Purposes.....20 2.13 Proxies.....................................20 2.14 Communications Relating to Fund Portfolio Securities........................20 2.15 Reports to Fund by Independent Public Accountants.................................21 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States.....................................22 3.1 Appointment of Foreign Sub-Custodians.......22 3.2 Assets to be Held...........................22 3.3 Foreign Securities Depositories.............23 3.4 Segregation of Securities...................23 3.5 Agreements with Foreign Banking Institutions................................23 3.6 Access of Independent Accountants of the Fund........................................24 3.7 Reports by Custodian........................24 3.8 Transactions in Foreign Custody Account.....25 3.9 Liability of Foreign Sub-Custodians.........26 3.10 Liability of Custodian......................26 3.11 Reimbursement for Advances..................27 3.12 Monitoring Responsibilities.................28 3.13 Branches of U.S. Banks......................29 3.l4 Tax Law.....................................29 4. Payments for Repurchases or Redemptions and Sales of Shares of the Fund.......................30 5. Proper Instructions...............................31 6. Actions Permitted Without Express Authority.......32 7. Evidence of Authority.............................32 8. Duties of Custodian with Respect to the Books of Account and Calculations of Net Asset Value and Net Income....................................33 9. Records...........................................33 10. Opinion of Fund's Independent Accountant..........34 11. Compensation of Custodian.........................34 12. Responsibility of Custodian.......................34 13. Effective Period, Termination and Amendment.......36 14. Successor Custodian...............................38 15. Interpretive and Additional Provisions............39 16. Massachusetts Law to Apply........................40 17. Prior Contracts...................................40 CUSTODIAN CONTRACT This Contract between Alliance Premier Growth Fund, Inc., a corporation organized and existing under the laws of Maryland, having its principal place of business at 1345 Avenue of the Americas, New York, New York 10105, hereinafter called the "Fund", and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the "Custodian", WITNESSETH: That in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: 1. Employment of Custodian and Property to be Held by It The Fund hereby employs the Custodian as the custodian of its assets, including securities it desires to be held in places within the United States ("domestic securities") and securities it desires to be held outside the United States ("foreign securities") pursuant to the provisions of the Articles of Incorporation. The Fund agrees to deliver to the Custodian all securities and cash owned by it, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Fund from time to time, and the cash consideration received by it for such new or treasury shares of capital stock, $.001 par value, ("Shares") of the Fund as may be issued or sold from time to time. The Custodian shall not be responsible for any property of the Fund held or received by the Fund and not delivered to the Custodian. Upon receipt of "Proper Instructions" (within the meaning of Article 5), the Custodian shall from time to time employ one or more sub-custodians located in the United States, but only in accordance with an applicable vote by the Board of Directors of the Fund, and provided that the Custodian shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian so employed than any such sub-custodian has to the Custodian. The Custodian may employ as sub-custodians for the Fund's securities and other assets the foreign banking institutions and foreign securities depositories designated in Schedule "A" hereto but only in accordance with the provisions of Article 3. 2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States 2.1 Holding Securities. The Custodian shall hold and physically segregate for the account of the Fund all non- cash property, to be held by it in the United States, including all domestic securities owned by the Fund, other than (a) securities which are maintained pursuant to Section 2.10 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury, collectively referred to herein as "Securities System" 2 and (b) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian pursuant to Section 2.10A. 2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by the Fund held by the Custodian or in a Securities System account of the Custodian or in the Custodian's Direct Paper book-entry system account ("Direct Paper System Account") only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 1) Upon sale of such securities for the account of the Fund and receipt of payment therefor; 2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Fund; 3) In the case of a sale effected through a Securities System, in accordance with the provisions of Section 2.10 hereof; 4) To the depository agent in connection with tender or other similar offers for portfolio securities of the Fund; 3 5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian; 6) To the issuer thereof, or its agent, for transfer into the name of the Fund or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.9 or into the name or nominee name of any sub-custodian appointed pursuant to Article 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian; 7) Upon the sale of such securities for the account of the Fund, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss 4 arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian's own negligence or willful misconduct; 8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 10) For delivery in connection with any loans of securities made by the Fund, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the 5 Fund, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodian's account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Fund prior to the receipt of such collateral; 11) For delivery as security in connection with any borrowings by the Fund requiring a pledge of assets by the Fund, but only against receipt of amounts borrowed; 12) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow 6 or other arrangements in connection with transactions by the Fund; 13) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Fund; 14) Upon receipt of instructions from the transfer agent ("Transfer Agent.) for the Fund, for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from time to time in the Fund's currently effective prospectus and statement of additional information ("prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and 15) For any other proper corporate purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Board of Directors or of the Executive 7 Committee signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, specifying the securities to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such securities shall be made. 2.3 Registration of Securities. Domestic securities held by the Custodian (other than bearer securities) shall be registered in the name of the Fund or in the name of any nominee of the Fund or of any nominee of the Custodian which nominee shall be assigned exclusively to the Fund, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Fund, or in the name or nominee name of any agent appointed pursuant to Section 2.9 or in the name or nominee name of any sub-custodian appointed pursuant to Article 1. All securities accepted by the Custodian on behalf of the Fund under the terms of this Contract shall be in "street name" or other good delivery form. If, however, the Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the 8 Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers. 2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Fund, other than cash maintained by the Fund in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the Custodian for the Fund may be deposited by it to its credit as Custodian in the Banking Department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the Investment Company Act of 1940 and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall be approved by vote of a majority of the Board of Directors of the Fund. Such funds shall be deposited by the 9 Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity. 2.5 Availability of Federal Funds. Upon mutual agreement between the Fund and the Custodian, the Custodian shall, upon the receipt of Proper Instructions, make federal funds available to the Fund as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of the Fund which are deposited into the Fund's account. 2.6 Collection of Income. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to United States registered securities held hereunder to which the Fund shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to United States bearer securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and shall credit such income, as collected, to the Fund's custodian account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. 10 Income due the Fund on United States securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Fund is properly entitled. 2.7 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of the Fund in the following cases only: 1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Fund but only (a) against the delivery of such securities, or evidence of title to such options, futures contracts or options on futures contracts, to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the Investment Company Act of 1940, as amended, to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name 11 of the Fund or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a Securities System, in accordance with the conditions set forth in Section 2.10 hereof; (c)in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.10A; (d) in the case of repurchase agreements entered into between the Fund and the Custodian, or another bank, or a broker- dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Fund of securities owned by the Custodian along with written evidence of the agreement by the Custodian to repurchase such securities from the Fund or (e) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank 12 pursuant to Proper Instructions from the Fund as defined in Article 5; 2) In connection with conversion, exchange or surrender of securities owned by the Fund as set forth in Section 2.2 hereof; 3) For the redemption or repurchase of Shares issued by the Fund as set forth in Article 4 hereof; 4) For the payment of any expense or liability incurred by the Fund, including but not limited to the following payments for the account of the Fund: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 5) For the payment of any dividends declared pursuant to the governing documents of the Fund; 6) For payment of the amount of dividends received in respect of securities sold short; 7) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Board of Directors or of the Executive Committee of 13 the Fund signed by an officer of the Fund and certified by its Secretary or an Assistant Secretary, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made. 2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of domestic securities for the account of the Fund is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Fund to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the same extent as if the securities had been received by the Custodian. 2.9 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the Investment Company Act of 1940, as amended, to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may from time to time direct; provided, however, that the 14 appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder. 2.10 Deposit of Securities in Securities Systems. The Custodian may deposit and/or maintain domestic securities owned by the Fund in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies, collectively referred to herein as "Securities System" in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, if any, and subject to the following provisions: 1) The Custodian may keep domestic securities of the Fund in a Securities System provided that such securities are represented in an account ("Account") of the Custodian in the Securities System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 2) The records of the Custodian with respect to domestic securities of the Fund which are maintained in a Securities System shall 15 identify by book-entry those securities belonging to the Fund; 3) The Custodian shall pay for domestic securities purchased for the account of the Fund upon (i) receipt of advice from the Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Fund. The Custodian shall transfer domestic securities sold for the account of the Fund upon (i) receipt of advice from the Securities System that payment for such securities has been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Fund. Copies of all advices from the Securities System of transfers of domestic securities for the account of the Fund shall identify the Fund, be maintained for the Fund by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund in the form 16 of a written advice or notice and shall furnish to the Fund copies of daily transaction sheets reflecting each day's transactions in the Securities System for the account of the Fund. 4) The Custodian shall provide the Fund with any report obtained by the Custodian on the Securities System's accounting system, internal accounting control and procedures for safeguarding domestic securities deposited in the Securities System; 5) The Custodian shall have received the initial or annual certificate, as the case may be, required by Article 13 hereof; 6) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for any loss or damage to the Fund resulting from use of the Securities System by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian 17 with respect to any claim against the Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Fund has not been made whole for any such loss or damage. 2.10A Fund Assets Held in the Custodian's Direct Paper System The Custodian may deposit and/or maintain securities owned by the Fund in the Direct Paper System of the Custodian subject to the following provisions: 1) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions; 2) The Custodian may keep securities of the Fund in the Direct Paper System only if such securities are represented in an account ("Account") of the Custodian in the Direct Paper System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 3) The records of the Custodian with respect to securities of the Fund which are maintained in the Direct Paper System shall identify by book- entry those securities belonging to the Fund; 18 4) The Custodian shall pay for securities purchased for the account of the Fund upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Fund. The Custodian shall transfer securities sold for the account of the Fund upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Fund; 5) The Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund copies of daily transaction sheets reflecting each day's transaction in the Securities System for the account of the Fund; 6) The Custodian shall provide the Fund with any report on its system of internal accounting control as the Fund may reasonably request from time to time; 2.11 Segregated Account. The Custodian shall upon receipt of Proper Instructions establish and maintain a segregated account or accounts for and on behalf of the Fund, into 19 which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Fund or commodity futures contracts or options thereon purchased or sold by the Fund, (iii) for the purposes of compliance by the Fund with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the Securities and Exchange Commission relating to the maintenance of segregated accounts by registered investment companies and (iv) for other proper corporate purposes, but only, in the case of clause (iv), upon receipt of, in addition to Proper Instructions, a 20 certified copy of a resolution of the Board of Directors or of the Executive Committee signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, setting forth the purpose or purposes of such segregated account and declaring such purposes to be proper corporate purposes. 2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of the Fund held by it and in connection with transfers of such securities. 2.13 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Fund or a nominee of the Fund, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials and all notices relating to such securities. 2.14 Communications Relating to Fund Portfolio Securities Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund all written information (including, without limitation, pendency of 21 calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund and the maturity of futures contracts purchased or sold by the Fund) received by the Custodian from issuers of the domestic securities being held for the Fund. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund all written information received by the Custodian from issuers of the domestic securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Fund desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Fund shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action. 2.15 Reports to Fund by Independent Public Accountants The Custodian shall provide the Fund, at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including domestic securities deposited and/or maintained in a Securities System, relating to the services provided by the Custodian under this Contract; 22 such reports shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States 3.1 Appointment of Foreign Sub-Custodians The Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the Fund's securities and other assets maintained outside the United States the foreign banking institutions and foreign securities depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper Instructions", as defined in Section 5 of this Contract, together with a certified resolution of the Fund's Board of Directors, the Custodian and the Fund may agree to amend Schedule A hereto from time to time to designate additional foreign banking institutions and foreign securities depositories to act as sub-custodian. Upon receipt of Proper Instructions, the Fund may instruct the Custodian to cease the employment of any one or more such sub- custodians for maintaining custody of the Fund's assets. 23 3.2 Assets to be Held. The Custodian shall limit the securities and other assets maintained in the custody of the foreign sub-custodians to: (a) "foreign securities", as defined in paragraph (c)(l) of Rule 17f-5 under the Investment Company Act of 1940, and (b) cash and cash equivalents in such amounts as the Custodian or the Fund may determine to be reasonably necessary to effect the Fund's foreign securities transactions. 3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon in writing by the Custodian and the Fund, assets of the Fund shall be maintained in foreign securities depositories only through arrangements implemented by the foreign banking institutions serving as sub-custodians pursuant to the terms hereof. Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 3.5 hereof. 3.4 Segregation of Securities The Custodian shall identify on its books as belonging to the Fund, the foreign securities of the Fund held by each foreign sub-custodian. Each agreement pursuant to which the Custodian employs a foreign banking institution shall require that such institution establish a custody account for the Custodian on behalf of the Fund and physically segregate in that account, securities and other assets of 24 the Fund, and, in the event that such institution deposits the Fund's securities in a foreign securities depository, that it shall identify on its books as belonging to the Custodian, as agent for the Fund, the securities so deposited. 3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign banking institution shall be substantially in the form set forth in Exhibit 1 hereto and shall provide that: (a) the Fund's assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the foreign banking institution or its creditors or agent, except a claim of payment for their safe custody or administration; (b) beneficial ownership of the Fund's assets will be freely transferable without the payment of money or value other than for custody or administration; (c) adequate records will be maintained identifying the assets as belonging to the Fund; (d) officers of or auditors employed by, or other representatives of the Custodian, including to the extent permitted under applicable law the independent public accountants for the Fund, will be given access to the books and records of the foreign banking institution relating to its actions under its agreement with the Custodian; and (e) assets of the Fund 25 held by the foreign sub-custodian will be subject only to the instructions of the Custodian or its agents. 3.6 Access of Independent Accountants of the Fund. Upon request of the Fund, the Custodian will use its best efforts to arrange for the independent accountants of the Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign sub-custodian insofar as such books and records relate to the performance of such foreign banking institution under its agreement with the Custodian. 3.7 Reports by Custodian. The Custodian will supply to the Fund from time to time, as mutually agreed upon, statements in respect of the securities and other assets of the Fund held by foreign sub-custodians, including but not limited to an identification of entities having possession of the Fund's securities and other assets and advices or notifications of any transfers of securities to or from each custodial account maintained by a foreign banking institution for the Custodian on behalf of the Fund indicating, as to securities acquired for the Fund, the identity of the entity having physical possession of such securities. 26 3.8 Transactions in Foreign Custody Account (a) Except as otherwise provided in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to the foreign securities of the Fund held outside the United States by foreign sub-custodians. (b) Notwithstanding any provision of this Contract to the contrary, settlement and payment for securities received for the account of the Fund and delivery of securities maintained for the account of the Fund may be effected in accordance with the customary established securities trading or securities processing practices and procedures in the jurisdiction or market in which the transaction occurs, including, without limitation, delivering securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such securities from such purchaser or dealer. (c) securities maintained in the custody of a foreign sub-custodian may be maintained in the name of such entity's nominee to the same extent as set forth in Section 2.3 of this Contract, and the Fund agrees to hold any such nominee harmless from any liability as a holder of record of such securities. 27 3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the Custodian employs a foreign banking institution as a foreign sub-custodian shall require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian and each Fund from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations. At the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a foreign banking institution as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Fund has not been made whole for any such loss, damage, cost, expense, liability or claim. 3.10 Liability of Custodian. The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, 28 expropriation, currency restrictions, or acts of war or terrorism or any loss where the sub-custodian has otherwise exercised reasonable care. Notwithstanding the foregoing provisions of this paragraph 3.10, in delegating custody duties to State Street London Ltd., the Custodian shall not be relieved of any responsibility to the Fund for any loss due to such delegation, except such loss as may result from (a) political risk (including, but not limited to, exchange control restrictions, confiscation, expropriation, nationalization, insurrection, civil strife or armed hostilities) or (b) other losses (excluding a bankruptcy or insolvency of State Street London Ltd. not caused by political risk) due to Acts of God, nuclear incident or other losses under circumstances where the Custodian and State Street London Ltd. have exercised reasonable care. 3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance cash or securities for any purpose including the purchase or sale of foreign exchange or of contracts for foreign exchange, or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act 29 or willful misconduct, any property at any time held for the account of the Fund shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of the Fund assets to the extent necessary to obtain reimbursement. 3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the Fund, during the month of June, information concerning the foreign sub-custodians employed by the Custodian. Such information shall be similar in kind and scope to that furnished to the Fund in connection with the initial approval of this Contract. In addition, the Custodian will promptly inform the Fund in the event that the Custodian learns of a material adverse change in the financial condition of a foreign sub-custodian or any material loss of the assets of the Fund or in the case of any foreign sub-custodian not the subject of an exemptive order from the Securities and Exchange Commission is notified by such foreign sub- custodian that there appears to be a substantial likelihood that its shareholders' equity will decline below $200 million (U.S. dollars or the equivalent thereof) or that its shareholders' equity has declined below $200 million (in each case computed in accordance with generally accepted U.S. accounting principles). 30 3.13 Branches of U.S. Banks a) Except as otherwise set forth in this Contract, the provisions hereof shall not apply where the custody of the Fund assets are maintained in a foreign branch of a banking institution which is a "bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940 meeting the qualification set forth in Section 26(a) of said Act. The appointment of any such branch as a sub- custodian shall be governed by paragraph 1 of this Contract. (b) Cash held for the Fund in the United Kingdom shall be maintained in an interest bearing account established for the Fund with the Custodian's London branch, which account shall be subject to the direction of the Custodian, State Street London Ltd. or both. 3.14 Tax Law The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund or the Custodian as custodian of the Fund by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund or the Custodian as custodian of the Fund by the tax law of jurisdictions other than those mentioned in the above sentence, including responsibility 31 for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Fund with respect to any claim for exemption or refund under the tax law of jurisdictions for which the Fund has provided such information. 4. Payments for Repurchases or Redemptions and Sales of Shares of the Fund From such funds as may be available for the purpose but subject to the limitations of the Articles of Incorporation and any applicable votes of the Board of Directors of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares of the Fund, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to the Custodian in accordance with such 32 procedures and controls as are mutually agreed upon from time to time between the Fund and the Custodian. The Custodian shall receive from the distributor for the Fund's Shares or from the Transfer Agent of the Fund and deposit into the Fund's account such payments as are received for Shares of the Fund issued or sold from time to time by the Fund. The Custodian will provide timely notification to the Fund and the Transfer Agent of any receipt by it of payments for Shares of the Fund. 5. Proper Instructions Proper Instructions as used herein means a writing signed or initialled by one or more person or persons as the Board of Directors shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirmed in writing. Upon receipt of a certificate of the Secretary or an Assistant Secretary as to the authorization by the Board of Directors of the Fund accompanied by a detailed description of procedures approved by the Board of Directors, Proper Instructions may include communications effected directly between electro-mechanical or 33 electronic devices provided that the Board of Directors and the Custodian are satisfied that such procedures afford adequate safeguards for the Fund's assets. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any three-party agreement which requires a segregated asset account in accordance with Section 2.11. 6. Actions Permitted without Express Authority The Custodian may in its discretion, without express authority from the Fund: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the Fund; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Fund except as otherwise directed by the Board of Directors of the Fund. 34 7. Evidence of Authority The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a certified copy of a vote of the Board of Directors of the Fund as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board of Directors pursuant to the Articles of Incorporation as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary. 8. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board of Directors of the Fund to keep the books of account of the Fund and/or compute the net asset value per share of the outstanding shares of the Fund or, if directed in writing to do so by the Fund, shall itself keep such books of account and/or compute such net asset value per share. If so directed, the Custodian shall also calculate daily the net income of the Fund as described in the Fund's currently effective prospectus and shall advise the Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of the Fund to 35 do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of the Fund shall be made at the time or times described from time to time in the Fund's currently effective prospectus. 9. Records The Custodian shall create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the Fund under the Investment Company Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. A11 such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the Securities and Exchange Commission. The Custodian shall, at the Fund's request, supply the Fund with a tabulation of securities owned by the Fund and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. 10. Opinion of Fund's Independent Accountant The Custodian shall take all reasonable action, as the Fund may from time to time request, to obtain from year to year favorable opinions from the Fund's independent accountants with 36 respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 11. Compensation of Custodian The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between the Fund and the Custodian. 12. Responsibility of Custodian So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all 37 matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. The Custodian shall be liable for the acts or omissions of a foreign banking institution appointed pursuant to the provisions of Article 3 to the same extent as set forth in Article 1 hereof with respect to sub-custodians located in the United States and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 3.11 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from, or caused by, the direction of or authorization by the Fund to maintain custody or any securities or cash of the Fund in a foreign country including, but not limited to, losses resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism. If the Fund requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund being liable for the payment of money or incurring liability of some other form, the Fund, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. 38 If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the Fund shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of the Fund assets to the extent necessary to obtain reimbursement. 13. Effective Period, Termination and Amendment This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided, however that the Custodian shall not act under Section 2.10 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the 39 Board of Directors of the Fund has approved the initial use of a particular Securities System and the receipt of an annual certificate of the Secretary or an Assistant Secretary that the Board of Directors has reviewed the use by the Fund of such Securities System, as required in each case by Rule 17f-4 under the Investment Company Act of 1940, as amended and that the Custodian shall not act under Section 2.10A hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors has approved the initial use of the Direct Paper System and the receipt of an annual certificate of the Secretary or an Assistant Secretary that the Board of Directors has reviewed the use by the Fund of the Direct Paper System; provided further, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Articles of Incorporation, and further provided, that the Fund may at any time by action of its Board of Directors (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Contract, the Fund shall pay to the Custodian such compensation as may be due as of the date of 40 such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements. 14. Successor Custodian If a successor custodian shall be appointed by the Board of Directors of the Fund, the Custodian shall, upon termination, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities then held by it hereunder and shall transfer to an account of the successor custodian all of the Fund's securities held in a Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Board of Directors of the Fund, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or certified copy of a vote of the Board of Directors shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the Investment Company Act of 1940, doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by 41 the Custodian and all instruments held by the Custodian relative thereto and all other property held by it under this Contract and to transfer to an account of such successor custodian all of the Fund's securities held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract. In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the certified copy of the vote referred to or of the Board of Directors to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect. 15. Interpretive and Additional Provisions In connection with the operation of this Contract, the Custodian and the Fund may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or 42 state regulations or any provision of the Articles of Incorporation of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract. 16. Massachusetts Law to Apply This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of the Commonwealth of Massachusetts. 17. Prior Contracts This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Fund and the Custodian relating to the custody of the Fund's assets. 43 IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the 21st day of July, 1992. ATTEST ALLIANCE PREMIER GROWTH FUND, INC. /s/ Edmund P. Bergan. Jr. By /s/ Daniel V. Panker __________________________ ________________________ Edmund P. Bergan. Jr. Daniel V. Panker ATTEST STATE STREET BANK AND TRUST COMPANY /s/ Claire E. Rodowicz By /s/ Ronald E. Logue __________________________ _________________________ Assistant Secretary Senior Vice President Claire E. Rodowicz Ronald E. Logue 44 00250118.AI2 EX-99.9 10 ALLIANCE FUND SERVICES, INC. TRANSFER AGENCY AGREEMENT AGREEMENT, dated as of July 21, 1992, between ALLIANCE WEALTH BUILDER FUND, INC., a Maryland corporation and an open-end investment company registered with the Securities and Exchange Commission (the "SEC") under the Investment Company Act of 1940 (the "Investment Company Act"), having its principal place of business at 1345 Avenue of Americas, New York, New York 10105 (the "Fund"), and ALLIANCE FUND SERVICES, INC., a Delaware corporation registered with the SEC as a transfer agent under the Securities Exchange Act of 1934, having its principal place of business at 500 Plaza Drive, Secaucus, New Jersey 07094 ("Fund Services"), provides as follows: WHEREAS, Fund Services has agreed to act as transfer agent to the Fund for the purpose of recording the transfer, issuance and redemption of shares of each series of the common stock or shares of beneficial interest, as applicable, of the Fund ("Shares" or "Shares of a Series"), transferring the Shares, disbursing dividends and other distributions to shareholders of the Fund, and performing such other services as may be agreed to pursuant hereto; NOW THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, the parties do hereby agree as follows: SECTION 1. The Fund hereby appoints Fund Services as its transfer agent, dividend disbursing agent and shareholder servicing agent for the Shares, and Fund Services agrees to act in such capacities upon the terms set forth in this Agreement. Capitalized terms used in this Agreement and not otherwise defined shall have the meanings assigned to them in SECTION 30. SECTION 2. (a) The Fund shall provide Fund Services with copies of the following documents: (1) Specimens of all forms of certificates for Shares; (2) Specimens of all account application forms and other documents relating to Shareholders' accounts; (3) Copies of each Prospectus; (4) Specimens of all documents relating to withdrawal plans instituted by the Fund, as described in SECTION 16; and (5) Specimens of all amendments to any of the foregoing documents. (b) The Fund shall furnish to Fund Services a supply of blank Share Certificates for the Shares and, from time to time, will renew such supply upon Fund Services' request. Blank Share Certificates shall be signed manually 2 or by facsimile signatures of officers of the Fund authorized to sign by law or pursuant to the by-laws of the Fund and, if required by Fund Services, shall bear the Fund's seal or a facsimile thereof. SECTION 3. Fund Services shall make original issues of Shares in accordance with SECTIONS 13 and 14 and the Prospectus upon receipt of (i) Written Instructions requesting the issuance, (ii) a certified copy of a resolution of the Fund's Board of Directors or Trustees authorizing the issuance, (iii) necessary funds for the payment of any original issue tax applicable to such Shares, and (iv) an opinion of the Fund's counsel as to the legality and validity of the issuance, which opinion may provide that it is contingent upon the filing by the Fund of an appropriate notice with the SEC, as required by Rule 24f-2 of the Investment Company Act, as amended from time to time. SECTION 4. Transfers of Shares shall be registered and, subject to the provisions of SECTION 10 in the case of Shares evidenced by Share Certificates, new Share Certificates shall be issued by Fund Services upon surrender of outstanding Share Certificates in the form deemed by Fund Services to be properly endorsed for transfer, which form shall include (i) all necessary endorsers' signatures guaranteed by a member firm of a national securities exchange or a domestic commercial bank or through other 3 procedures mutually agreed to between the Fund and Fund Services, (ii) such assurances as Fund Services may deem necessary to evidence the genuineness and effectiveness of each endorsement and (iii) satisfactory evidence of compliance with all applicable laws relating to the payment or collection of taxes. SECTION 5. Fund Services shall forward Share Certificates in "non-negotiable" form by first-class or registered mail, or by whatever means Fund Services deems equally reliable and expeditious. While in transit to the addressee, all deliveries of Share Certificates shall be insured by Fund Services as it deems appropriate. Fund Services shall not mail Share Certificates in "negotiable" form, unless requested in writing by the Fund and fully indemnified by the Fund to Fund Services' satisfaction. SECTION 6. In registering transfers of Shares, Fund Services may rely upon the Uniform Commercial Code as in effect from time to time in the State in which the Fund is incorporated or organized or, if appropriate, in the State of New Jersey; provided, that Fund Services may rely in addition or alternatively on any other statutes in effect in the State of New Jersey or in the state under the laws of which the Fund is incorporated or organized that, in the opinion of Fund Services' counsel, protect Fund Services and the Fund from liability arising from (i) not requiring 4 complete documentation in connection with an issuance or transfer, (ii) registering a transfer without an adverse claim inquiry, (iii) delaying registration for purposes of an adverse claim inquiry or (iv) refusing registration in connection with an adverse claim. SECTION 7. Fund Services may issue new Share Certificates in place of those lost, destroyed or stolen, upon receiving indemnity satisfactory to Fund Services; and may issue new Share Certificates in exchange for, and upon surrender of, mutilated Share Certificates as Fund Services deems appropriate. SECTION 8. Unless otherwise directed by the Fund, Fund Services may issue or register Share Certificates reflecting the signature, or facsimile thereof, of an officer who has died, resigned or been removed by the Fund. The Fund shall file promptly with Fund Services' approval, adoption or ratification of such action as may be required by law or by Fund Services. SECTION 9. Fund Services shall maintain customary stock registry records for Shares of each Series noting the issuance, transfer or redemption of Shares and the issuance and transfer of Share Certificates. Fund Services may also maintain for Shares of each Series an account entitled "Unissued Certificate Account," in which Fund Services will record the Shares, and fractions thereof, issued and 5 outstanding from time to time for which issuance of Share Certificates has not been requested. Fund Services is authorized to keep records for Shares of each Series containing the names and addresses of record of Shareholders, and the number of Shares, and fractions thereof, from time to time owned by them for which no Share Certificates are outstanding. Each Shareholder will be assigned a single account number for Shares of each Series, even though Shares for which Certificates have been issued will be accounted for separately. SECTION 10. Fund Services shall issue Share Certificates for Shares only upon receipt of a written request from a Shareholder and as authorized by the Fund. If Shares are purchased or transferred without a request for the issuance of a Share Certificate, Fund Services shall merely note on its stock registry records the issuance or transfer of the Shares and fractions thereof and credit or debit, as appropriate, the Unissued Certificate Account and the respective Shareholders' accounts with the Shares. Whenever Shares, and fractions thereof, owned by Shareholders are surrendered for redemption, Fund Services may process the transactions by making appropriate entries in the stock transfer records, and debiting the Unissued Certificate Account and the record of issued Shares 6 outstanding; it shall be unnecessary for Fund Services to reissue Share Certificates in the name of the Fund. SECTION 11. Fund Services shall also perform the usual duties and function required of a stock transfer agent for a corporation, including but not limited to (i) issuing Share Certificates as treasury Shares, as directed by Written Instructions, and (ii) transferring Share Certificates from one Shareholder to another in the usual manner. Fund Services may rely conclusively and act without further investigation upon any list, instruction, certification, authorization, Share Certificate or other instrument or paper reasonably believed by it in good faith to be genuine and unaltered, and to have been signed, countersigned or executed or authorized by a duly-authorized person or persons, or by the Fund, or upon the advice of counsel for the Fund or for Fund Services. Fund Services may record any transfer of Share Certificates which it reasonably believes in good faith to have been duly authorized, or may refuse to record any transfer of Share Certificates if, in good faith, it reasonably deems such refusal necessary in order to avoid any liability on the part of either the Fund or Fund Services. SECTION 12. Fund Services shall notify the Fund of any request or demand for the inspection of the Fund's share records. Fund Services shall abide by the Fund's 7 instructions for granting or denying the inspection; provided, however, Fund Services may grant the inspection without such instructions if it is advised by its counsel that failure to do so will result in liability to Fund Services. SECTION 13. Fund Services shall observe the following procedures in handling funds received: (a) Upon receipt at the office designated by the Fund of any check or other order drawn or endorsed to the Fund or otherwise identified as being for the account of the Fund, and, in the case of a new account, accompanied by a new account application or sufficient information to establish an account as provided in the Prospectus, Fund Services shall stamp the transmittal document accompanying such check or other order with the name of the Fund and the time and date of receipt and shall forthwith deposit the proceeds thereof in the custodial account of the Fund. (b) In the event that any check or other order for the purchase of Shares is returned unpaid for any reason, Fund Services shall, in the absence of other instructions from the Fund, advise the Fund of the returned check and prepare such documents and information as may be necessary to cancel promptly any Shares purchased on the basis of such returned check and any accumulated income dividends and capital gains distributions paid on such Shares. 8 (c) As soon as possible after 4:00 p.m., Eastern time or at such other times as the Fund may specify in Written or Oral Instructions for any Series (the "Valuation Time") on each Business Day Fund Services shall obtain from the Fund's Adviser a quotation (on which it may conclusively rely) of the net asset value, determined as of the Valuation Time on that day. On each Business Day Fund Services shall use the net asset value(s) determined by the Fund's Adviser to compute the number of Shares and fractional Shares to be purchased and the aggregate purchase proceeds to be deposited with the Custodian. As necessary but no more frequently than daily (unless a more frequent basis is agreed to by Fund Services), Fund Services shall place a purchase order with the Custodian for the proper number of Shares and fractional Shares to be purchased and promptly thereafter shall send written confirmation of such purchase to the Custodian and the Fund. SECTION 14. Having made the calculations required by SECTION 13, Fund Services shall thereupon pay the Custodian the aggregate net asset value of the Shares purchased. The aggregate number of Shares and fractional Shares purchased shall then be issued daily and credited by Fund Services to the Unissued Certificate Account. Fund Services shall also credit each Shareholder's separate account with the number of Shares purchased by such 9 Shareholder. Fund Services shall mail written confirmation of the purchase to each Shareholder or the Shareholder's representative and to the Fund if requested. Each confirmation shall indicate the prior Share balance, the new Share balance, the Shares for which Stock Certificates are outstanding (if any), the amount invested and the price paid for the newly-purchased Shares. SECTION 15. Prior to the Valuation Time on each Business Day, as specified in accordance with SECTION 13, Fund Services shall process all requests to redeem Shares and, with respect to each Series, shall advise the Custodian of (i) the total number of Shares available for redemption and (ii) the number of Shares and fractional Shares requested to be redeemed. Upon confirmation of the net asset value by the Fund's Adviser, Fund Services shall notify the Fund and the Custodian of the redemption, apply the redemption proceeds in accordance with SECTION 16 and the Prospectus, record the redemption in the stock registry books, and debit the redeemed Shares from the Unissued Certificates Account and the individual account of the Shareholder. In lieu of carrying out the redemption procedures described in the preceding paragraph, Fund Services may, at the request of the Fund, sell Shares to the Fund as repurchases from Shareholders, provided that the sale price 10 is not less than the applicable redemption price. The redemption procedures shall then be appropriately modified. SECTION 16. Fund Services will carry out the following procedures with respect to Share redemptions: (a) As to each request received by the Fund from or on behalf of a Shareholder for the redemption of Shares, and unless the right of redemption has been suspended as contemplated by the Prospectus, Fund Services shall, within seven days after receipt of such redemption request, either (i) mail a check in the amount of the proceeds of such redemption to the person designated by the Shareholder or other person to receive such proceeds or, (ii) in the event redemption proceeds are to be wired through the Federal Reserve Wire System or by bank wire pursuant to procedures described in the Prospectus, cause such proceeds to be wired in Federal funds to the bank or trust company account designated by the Shareholder to receive such proceeds. Funds Services shall also prepare and send a confirmation of such redemption to the Shareholder. Redemptions in kind shall be made only in accordance with such Written Instructions as Fund Services may receive from the Fund. The requirements as to instruments of transfer and other documentation, the determination of the appropriate redemption price and the time of payment shall be as provided in the Prospectus, subject to such additional 11 requirements consistent therewith as may be established by mutual agreement between the Fund and Fund Services. In the case of a request for redemption that does not comply in all respects with the requirements for redemption, Fund Services shall promptly so notify the Shareholder and shall effect such redemption at the price in effect at the time of receipt of documents complying with such requirements. Fund Services shall notify the Fund's Custodian and the Fund on each Business Day of the amount of cash required to meet payments made pursuant to the provisions of this paragraph and thereupon the Fund shall instruct the Custodian to make available to Fund Services in timely fashion sufficient funds therefor. (b) Procedures and standards for effecting and accepting redemption orders from Shareholders by telephone or by such check writing service as the Fund may institute may be established by mutual agreement between Fund Services and the Fund consistent with the Prospectus. (c) For purposes of redemption of Shares that have been purchased by check within fifteen (15) days prior to receipt of the redemption request, the Fund shall provide Fund Services with Written Instructions concerning the time within which such requests may be honored. (d) Fund Services shall process withdrawal orders duly executed by Shareholders in accordance with the terms 12 of any withdrawal plan instituted by the Fund and described in the Prospectus. Payments upon such withdrawal orders and redemptions of Shares held in withdrawal plan accounts in connection with such payments shall be made at such times as the Fund may determine in accordance with the Prospectus. (e) The authority of Fund Services to perform its responsibilities under SECTIONS 15 and 16 with respect to the Shares of any Series shall be suspended if Fund Services receives notice of the suspension of the determination of the net asset value of the Series. SECTION 17. Upon the declaration of each dividend and each capital gains distribution by the Fund's Board of Directors or Trustees, the Fund shall notify Fund Services of the date of such declaration, the amount payable per Share, the record date for determining the Shareholders entitled to payment, the payment and the reinvestment date price. SECTION 18. Upon being advised by the Fund of the declaration of any income dividend or capital gains distribution on account of its Shares, Fund Services shall compute and prepare for the Fund records crediting such distributions to Shareholders. Fund Services shall, on or before the payment date of any dividend or distribution, notify the Fund and the Custodian of the estimated amount required to pay any portion of a dividend or distribution 13 which is payable in cash, and thereupon the Fund shall, on or before the payment date of such dividend or distribution, instruct the Custodian to make available to Fund Services sufficient funds for the payment of such cash amount. Fund Services will, on the designated payment date, reinvest all dividends in additional shares and promptly mail to each Shareholder at his address of record a statement showing the number of full and fractional Shares (rounded to three decimal places) then owned by the Shareholder and the net asset value of such Shares; provided, however, that if a Shareholder elects to receive dividends in cash, Fund Services shall prepare a check in the appropriate amount and mail it to the Shareholder at his address of record within five (5) business days after the designated payment date, or transmit the appropriate amount in Federal funds in accordance with the Shareholder's agreement with the Fund. SECTION 19. Fund Services shall prepare and maintain for the Fund records showing for each Shareholder's account the following: A. The name, address and tax identification number of the Shareholder; B. The number of Shares of each Series held by the Shareholder; C. Historical information including dividends paid and date and price for all transactions; 14 D. Any stop or restraining order placed against such account; E. Information with respect to the withholding of any portion of income dividends or capital gains distributions as are required to be withheld under applicable law; F. Any dividend or distribution reinvestment election, withdrawal plan application, and correspondence relating to the current maintenance of the account; G. The certificate numbers and denominations of any Share Certificates issued to the Shareholder; and H. Any additional information required by Fund Services to perform the services contemplated by this Agreement. Fund Services agrees to make available upon request by the Fund or the Fund's Adviser and to preserve for the periods prescribed in Rule 31a-2 of the Investment Company Act any records related to services provided under this Agreement and required to be maintained by Rule 31a-1 of that Act, including: (i) Copies of the daily transaction register for each Business Day of the Fund; (ii) Copies of all dividend, distribution and reinvestment blotters; 15 (iii) Schedules of the quantities of Shares of each Series distributed in each state for purposes of any state's laws or regulations as specified in Oral or Written Instructions given to Fund Services from time to time by the Fund or its agents; and (iv) Such other information, including Shareholder lists, and statistical information as may be agreed upon from time to time by the Fund and Fund Services. SECTION 20. Fund Services shall maintain those records necessary to enable the Fund to file, in a timely manner, form N-SAR (Semi-Annual Report) or any successor report required by the Investment Company Act or rules and regulations thereunder. SECTION 21. Fund Services shall cooperate with the Fund's independent public accountants and shall take reasonable action to make all necessary information available to such accountants for the performance of their duties. SECTION 22. In addition to the services described above, Fund Services will perform other services for the Fund as may be mutually agreed upon in writing from time to time, which may include preparing and filing Federal tax forms with the Internal Revenue Service, and, subject to 16 supervisory oversight by the Fund's Adviser, mailing Federal tax information to Shareholders, mailing semi-annual Shareholder reports, preparing the annual list of Shareholders, mailing notices of Shareholders' meetings, proxies and proxy statements and tabulating proxies. Fund Services shall answer the inquiries of certain Shareholders related to their share accounts and other correspondence requiring an answer from the Fund. Fund Services shall maintain dated copies of written communications from Shareholders, and replies thereto. SECTION 23. Nothing contained in this Agreement is intended to or shall require Fund Services, in any capacity hereunder, to perform any functions or duties on any day other than a Business Day. Functions or duties normally scheduled to be performed on any day which is not a Business Day shall be performed on, and as of, the next Business Day, unless otherwise required by law. SECTION 24. For the services rendered by Fund Services as described above, the Fund shall pay to Fund Services an annualized fee at a rate to be mutually agreed upon from time to time. Such fee shall be prorated for the months in which this Agreement becomes effective or is terminated. In addition, the Fund shall pay, or Fund Services shall be reimbursed for, all out-of-pocket expenses incurred in the performance of this Agreement, including but 17 not limited to the cost of stationery, forms, supplies, blank checks, stock certificates, proxies and proxy solicitation and tabulation costs, all forms and statements used by Fund Services in communicating with Shareholders of the Fund or especially prepared for use in connection with its services hereunder, specific software enhancements as requested by the Fund, costs associated with maintaining withholding accounts (including non-resident alien, Federal government and state), postage, telephone, telegraph (or similar electronic media) used in communicating with Shareholders or their representatives, outside mailing services, microfiche/microfilm, freight charges and off-site record storage. It is agreed in this regard that Fund Services, prior to ordering any form in such supply as it estimates will be adequate for more than two years' use, shall obtain the written consent of the Fund. All forms for which Fund Services has received reimbursement from the Fund shall be the property of the Fund. SECTION 25. Fund Services shall not be liable for any taxes, assessments or governmental charges that may be levied or assessed on any basis whatsoever in connection with the Fund or any Shareholder, excluding taxes assessed against Fund Services for compensation received by it hereunder. 18 SECTION 26. (a) Fund Services shall at all times act in good faith and with reasonable care in performing the services to be provided by it under this Agreement, but shall not be liable for any loss or damage unless such loss or damage is caused by the negligence, bad faith or willful misconduct of Fund Services or its employees or agents. (b) The Fund shall indemnify and hold Fund Services harmless from all loss, cost, damage and expense, including reasonable expenses for counsel, incurred by it resulting from any claim, demand, action or suit in connection with the performance of its duties hereunder, or as a result of acting upon any instruction reasonably believed by it to have been properly given by a duly authorized officer of the Fund, or upon any information, data, records or documents provided to Fund Services or its agents by computer tape, telex, CRT data entry or other similar means authorized by the Fund; provided that this indemnification shall not apply to actions or omissions of Fund Services in cases of its own bad faith, willful misconduct or negligence, and provided further that if in any case the Fund may be asked to indemnify or hold Fund Services harmless pursuant to this Section, the Fund shall have been fully and promptly advised by Fund Services of all material facts concerning the situation in question. The 19 Fund shall have the option to defend Fund Services against any claim which may be the subject of this indemnification, and in the event that the Fund so elects it will so notify Fund Services, and thereupon the Fund shall retain competent counsel to undertake defense of the claim, and Fund Services shall in such situations incur no further legal or other expenses for which it may seek indemnification under this paragraph. Fund Services shall in no case confess any claim or make any compromise in any case in which the Fund may be asked to indemnify Fund Services except with the Fund's prior written consent. Without limiting the foregoing: (i) Fund Services may rely upon the advice of the Fund or counsel to the Fund or Fund Services, and upon statements of accountants, brokers and other persons believed by Fund Services in good faith to be expert in the matters upon which they are consulted. Fund Services shall not be liable for any action taken in good faith reliance upon such advice or statements; (ii) Fund Services shall not be liable for any action reasonably taken in good faith reliance upon any Written Instructions or certified copy of any resolution of the Fund's Board of Directors or Trustees, including a Written Instruction authorizing Fund Services to make payment upon redemption of Shares without a signature guarantee; provided, however, that upon receipt of a Written Instruction countermanding a prior 20 Instruction that has not been fully executed by Fund Services, Fund Services shall verify the content of the second Instruction and honor it, to the extent possible. Fund Services may rely upon the genuineness of any such document, or copy thereof, reasonably believed by Fund Services in good faith to have been validly executed; (iii) Fund Services may rely, and shall be protected by the Fund in acting, upon any signature, instruction, request, letter of transmittal, certificate, opinion of counsel, statement, instrument, report, notice, consent, order, or other paper or document reasonably believed by it in good faith to be genuine and to have been signed or presented by the purchaser, the Fund or other proper party or parties; and (d) Fund Services may, with the consent of the Fund, subcontract the performance of any portion of any service to be provided hereunder, including with respect to any Shareholder or group of Shareholders, to any agent of Fund Services and may reimburse the agent for the services it performs at such rates as Fund Services may determine; provided that no such reimbursement will increase the amount payable by the Fund pursuant to this Agreement; and provided further, that Fund Services shall remain ultimately responsible as transfer agent to the Fund. SECTION 27. The Fund shall deliver or cause to be delivered over to Fund Services (i) an accurate list of 21 Shareholders, showing each Shareholder's address of record, number of Shares of each Series owned and whether such Shares are represented by outstanding Share Certificates or by non-certificated Share accounts and (ii) all Shareholder records, files, and other materials necessary or appropriate for proper performance of the functions assumed by the under this Agreement (collectively referred to as the "Materials"). The Fund shall indemnify Fund Services and hold it harmless from any and all expenses, damages, claims, suits, liabilities, actions, demands and losses arising out of or in connection with any error, omission, inaccuracy or other deficiency of such Materials, or out of the failure of the Fund to provide any portion of the Materials or to provide any information in the Fund's possession needed by Fund Services to knowledgeably perform its functions; provided the Fund shall have no obligation to indemnify Fund Services or hold it harmless with respect to any expenses, damages, claims, suits, liabilities, actions, demands or losses caused directly or indirectly by acts or omissions of Fund Services or the Fund's Adviser. SECTION 28. This Agreement may be amended from time to time by a written supplemental agreement executed by the Fund and Fund Services and without notice to or approval of the Shareholders; provided this Agreement may not be amended in any manner which would substantially increase the 22 Fund's obligations hereunder unless the amendment is first approved by the Fund's Board of Directors or Trustees, including a majority of the Directors or Trustees who are not a party to this Agreement or interested persons of any such party, at a meeting called for such purpose, and thereafter is approved by the Fund's Shareholders if such approval is required under the Investment Company Act or the rules and regulations thereunder. The parties hereto may adopt procedures as may be appropriate or practical under the circumstances, and Fund Services may conclusively rely on the determination of the Fund that any procedure that has been approved by the Fund does not conflict with or violate any requirement of its Articles of Incorporation or Declaration of Trust, By-Laws or Prospectus, or any rule, regulation or requirement of any regulatory body. SECTION 29. The Fund shall file with Fund Services a certified copy of each operative resolution of its Board of Directors or Trustees authorizing the execution of Written Instructions or the transmittal of Oral Instructions and setting forth authentic signatures of all signatories authorized to sign on behalf of the Fund and specifying the person or persons authorized to give Oral Instructions on behalf of the Fund. Such resolution shall constitute conclusive evidence of the authority of the person or persons designated therein to act and shall be considered in 23 full force and effect, with Fund Services fully protected in acting in reliance therein, until Fund Services receives a certified copy of a replacement resolution adding or deleting a person or persons authorized to give Written or Oral Instructions. If the officer certifying the resolution is authorized to give Oral Instructions, the certification shall also be signed by a second officer of the Fund. SECTION 30. The terms, as defined in this Section, whenever used in this Agreement or in any amendment or supplement hereto, shall have the meanings specified below, insofar as the context will allow. (a) Business Day: Any day on which the Fund is open for business as described in the Prospectus. (b) Custodian: The term Custodian shall mean the Fund's current custodian or any successor custodian acting as such for the Fund. (c) Fund's Adviser: The term Fund's Adviser shall mean Alliance Capital Management L.P. or any successor thereto who acts as the investment adviser or manager of the Fund. (d) Oral Instructions: The term Oral Instructions shall mean an authorization, instruction, approval, item or set of data, or information of any kind transmitted to Fund Services in person or by telephone, vocal telegram or other electronic means, by a person or persons reasonably believed 24 in good faith by Fund Services to be a person or persons authorized by a resolution of the Board of Directors or Trustees of the Fund to give Oral Instructions on behalf of the Fund. Each Oral Instruction shall specify whether it is applicable to the entire Fund or a specific Series of the Fund. (e) Prospectus: The term Prospectus shall mean a prospectus and related statement of additional information forming part of a currently effective registration statement under the Investment Company Act and, as used with the respect to Shares or Shares of a Series, shall mean the prospectuses and related statements of additional information covering the Shares or Shares of the Series. (f) Securities: The term Securities shall mean bonds, debentures, notes, stocks, shares, evidences of indebtedness, and other securities and investments from time to time owned by the Fund. (g) Series: The term Series shall mean any series of Shares of the common stock of the Fund that the Fund may establish from time to time. (h) Share Certificates: The term Share Certificates shall mean the stock certificates or certificates representing shares of beneficial interest for the Shares. 25 (i) Shareholders: The term Shareholders shall mean the registered owners from time to time of the Shares, as reflected on the stock registry records of the Fund. (j) Written Instructions: The term Written Instructions shall mean an authorization, instruction, approval, item or set of data, or information of any kind transmitted to Fund Services in original writing containing original signatures, or a copy of such document transmitted by telecopy, including transmission of such signature, or other mechanical or documentary means, at the request of a person or persons reasonably believed in good faith by Fund Services to be a person or persons authorized by a resolution of the Board of Directors or Trustees of the Fund to give Written Instruction shall specify whether it is applicable to the entire Fund or a specific Series of the Fund. SECTION 31. Fund Services shall not be liable for the loss of all or part of any record maintained or preserved by it pursuant to this Agreement or for any delays or errors occurring by reason of circumstances beyond its control, including but not limited to acts of civil or military authorities, national emergencies, fire, flood or catastrophe, acts of God, insurrection, war, riot, or failure of transportation, communication or power supply, except to the extent that Fund Services shall have failed to 26 use its best efforts to minimize the likelihood of occurrence of such circumstances or to mitigate any loss or damage to the Fund caused by such circumstances. SECTION 32. The Fund may give Fund Services sixty (60) days and Fund Services may give the Fund (90) days written notice of the termination of this Agreement, such termination to take effect at the time specified in the notice. Upon notice of termination, the Fund shall use its best efforts to obtain a successor transfer agent. If a successor transfer agent is not appointed within ninety (90) days after the date of the notice of termination, the Board of Directors or Trustees of the Fund shall, by resolution, designate the Fund as its own transfer agent. Upon receipt of written notice from the Fund of the appointment of the successor transfer agent and upon receipt of Oral or Written Instructions Fund Services shall, upon request of the Fund and the successor transfer agent and upon payment of Fund Services reasonable charges and disbursements, promptly transfer to the successor transfer agent the original or copies of all books and records maintained by Fund Services hereunder and cooperate with, and provide reasonable assistance to, the successor transfer agent in the establishment of the books and records necessary to carry out its responsibilities hereunder. 27 SECTION 33. Any notice or other communication required by or permitted to be given in connection with this Agreement shall be in writing, and shall be delivered in person or sent by first-class mail, postage prepaid, to the respective parties. Notice to the Fund shall be given as follows until further notice: 1345 Avenue of the Americas New York, New York 10105 Attention: Secretary Notice to Fund Services shall be given as follows until further notice: Alliance Fund Services, Inc. 500 Plaza Drive Secaucus, New Jersey 07094 SECTION 34. The Fund represents and warrants to Fund Services that the execution and delivery of this Agreement by the undersigned officer of the Fund has been duly and validly authorized by resolution of the Fund's Board of Directors or Trustees. Fund Services represents and warrants to the Fund that the execution and delivery of this Agreement by the undersigned officer of Fund Services has also been duly and validly authorized. SECTION 35. This Agreement may be executed in more than one counterpart, each of which shall be deemed to be an original, and shall become effective on the last date of signature below unless otherwise agreed by the parties. 28 Unless sooner terminated pursuant to SECTION 32, this Agreement will continue until and will continue in effect thereafter for successive 12 month periods only if such continuance is specifically approved at least annually by the Board of Directors or Trustees or by a vote of the stockholders of the Fund and in either case by a majority of the Directors or Trustees who are not parties to this Agreement or interested persons of any such party, at a meeting called for the purpose of voting on this Agreement. SECTION 36. This Agreement shall extend to and shall bind the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of Fund Services or by Fund Services without the written consent of the Fund, authorized or approved by a resolution of the Fund's Board of Directors or Trustees. Notwithstanding the foregoing, either party may assign this Agreement without the consent of the other party so long as the assignee is an affiliate, parent or subsidiary of the assigning party and is qualified to act under the Investment Company Act, as amended from time to time. SECTION 38. This Agreement shall be governed by the laws of the State of New Jersey. 29 WITNESS the following signatures: ALLIANCE WEALTH BUILDER FUND, INC. By: /s/ David H. Dievler ______________________________ Donald V. Panker Title: President ALLIANCE FUND SERVICES, INC. By: /s/ George R. Hrabovsky ______________________________ George R. Hrabvosky Title: President 30 00250118.AL7 EX-99.10A 11 August 18, 1992 Alliance Premier Growth Fund, Inc. 1345 Avenue of the Americas New York, New York 10105 Dear Sirs: We have acted as counsel for Alliance Premier Growth Fund, Inc., a Maryland corporation (the "Company"), in connection with the organization of the Company, the registration of the Company under the Investment Company Act of 1940, as amended, and the registration of an indefinite number of shares of its common stock, par value $.001 per share (the "Common Stock"), under the Securities Act of 1933, as amended. As counsel for the Company we have participated in the preparation of the Registration Statement on Form N-1A relating to such shares and have examined and relied upon such corporate records of the Company and such other documents and certificates as to factual matters as we have deemed to be necessary to render the opinion expressed herein. Based on such examination, we are of the opinion that: 1. The Company is duly organized and validly existing as a corporation in good standing under the laws of the State of Maryland. 2. The 10,000 shares of presently issued and outstanding Common Stock of the Company have been validly and legally issued and are fully paid and nonassessable shares of Common Stock of the Company. 3. The shares of Common Stock of the Company to be offered for sale pursuant to the Prospectus are, to the extent of the number of shares authorized to be issued by the Company in its Articles of Incorporation, duly authorized and, when sold, issued and paid for as contemplated by the Prospectus, will have been validly and legally issued and will be fully paid and nonassessable shares of Common Stock of the Company under the laws of the State of Maryland (assuming that the sale price of each share is not less then the par value thereof). As to matters of Maryland law contained in the foregoing opinion we have relied on the opinion of Venable, Baetjer and Howard of Baltimore, Maryland, dated August 18, 1992, a copy of which is attached hereto. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement and to the reference of our firm under the caption "General Information -- Counsel" in the related Statement of Additional Information included therein. Very truly yours, /s/ Seward & Kissel 2 00250118.AM1 EX-99.11 12 Consent of Independent Accountants We hereby consent to the use in the Statement of Additional Information constituting part of this Post-Effective No. 14 to the registration statement on Form N-1A (the "Registration Statement") of our report dated January 9, 1998, relating to the financial statements and financial highlights of Alliance Premier Growth Fund, Inc. ("the Fund"), which appears in such Statement of Additional Information, and to the incorporation by reference of our report into the Prospectus relating to Class A, Class B and Class C shares of the Fund (the "Retail Prospectus") and the Prospectus relating to the Advisor Class shares of the Fund (the "Advisor Class Prospectus") which constitute part of this Registration Statement. We also consent to the references to us under the headings "Shareholder Services- Statements and Reports," and "General Information-Independent Accountants" in such Statement of Additional Information and to the references to us under the headings "Financial Highlights" in the Retail Prospectus and "Conversion Feature-Description of Class A Shares" in the Advisor Class Prospectus. /s/ Price Waterhouse LLP Price Waterhouse LLP 1177 Avenue of the Americas New York, New York 10036 January 23, 1998 00250118.AP6 EX-99.16 13 Exhibit 16 ALLIANCE PREMIER GROWTH FUND, INC. COMPUTATION OF AVERAGE ANNUAL COMPOUNDED TOTAL RETURN ERV = P(1+T) Definitions: P=Initial investment by shareholder T=Average annual total return ERV=Ending redeemable value of shareholder investment n=Number of periods Formula to solve for "T" ERV For year one T= --- - 1 P *For subsequent years T= ERV - 1 --- P To solve for ERV: 1. Take an initial shareholder investment of $1,000 on September 28, 1992 at maximum offering price of $10.31. The result is 96.993 shares. 2. Assume that all dividends and distributions by the Fund are reinvested on reinvest date for the creation of additional shares. (-0- shares created). 3. Add initial share balance to additional shares created due to reinvestment and multiply by ending net asset value ($10.79) to obtain ending redeemable value (ERV). (96.993 x 10.79 = $1,046.55) 1,046.55 T = --------- - 1 1,000.00 T = 1.04655 - 1 T = 0.04655 T = 4.655% T=Average annual total return * For subsequent years repeat steps 1 through 3 for the required periods and apply to formula shown above. 2 00250118.AD3 EX-99.27.1 14 [ARTICLE] 6 [CIK] 0000889508 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [SERIES] [NUMBER] 001 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [PERIOD-TYPE] 12-M0S [FISCAL-YEAR-END] NOV-30-1997 [PERIOD-START] DEC-01-1996 [PERIOD-END] NOV-30-1997 [INVESTMENTS-AT-COST] 1,180,847,661 [INVESTMENTS-AT-VALUE] 1,455,280,293 [RECEIVABLES] 29,605,526 [ASSETS-OTHER] 518 [OTHER-ITEMS-ASSETS] 0 [TOTAL-ASSETS] 1,484,886,337 [PAYABLE-FOR-SECURITIES] 13,497,551 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 8,459,011 [TOTAL-LIABILITIES] 21,956,562 [SENIOR-EQUITY] 68,109 [PAID-IN-CAPITAL-COMMON] 1,095,121,183 [SHARES-COMMON-STOCK] 16,956,377 [SHARES-COMMON-PRIOR] 9,615,906 [ACCUMULATED-NII-CURRENT] 0 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 93,307,851 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 274,432,632 [NET-ASSETS] 1,462,929,775 [DIVIDEND-INCOME] 8,223,561 [INTEREST-INCOME] 1,885,055 [OTHER-INCOME] 0 [EXPENSES-NET] (19,876,045) [NET-INVESTMENT-INCOME] (9,767,429) [REALIZED-GAINS-CURRENT] 103,667,327 [APPREC-INCREASE-CURRENT] 130,879,567 [NET-CHANGE-FROM-OPS] 224,779,465 [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] (10,42G,403) [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 11,887,527 [NUMBER-OF-SHARES-REDEEMED] (5,085,060) [SHARES-REINVESTED] 538,004 [NET-CHANGE-IN-ASSETS] 823,806,805 [ACCUMULATED-NII-PRIOR] 0 [ACCUMULATED-GAINS-PRIOR] 38,693,744 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 9,721,000 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 19,876,000 [AVERAGE-NET-ASSETS] 244,070,997 [PER-SHARE-NAV-BEGIN] 17.98 [PER-SHARE-NII] (0.10) [PER-SHARE-GAIN-APPREC] 5.20 [PER-SHARE-DIVIDEND] 0 [PER-SHARE-DISTRIBUTIONS] (1.08) [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 22.00 [EXPENSE-RATIO] 1.57 [AVG-DEBT-OUTSTANDING] 0 [AVG-DEBT-PER-SHARE] 0
00250118.AQ3 EX-99.27.2 15 [ARTICLE] 6 [CIK] 0000889508 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [SERIES] [NUMBER] 002 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [PERIOD-TYPE] 12-MOS [FISCAL-YEAR-END] NOV-30-1997 [PERIOD-START] DEC-01-1996 [PERIOD-END] NOV-30-1997 [INVESTMENTS-AT-COST] 1,180,847,661 [INVESTMENTS-AT-VALUE] 1,455,280,293 [RECEIVABLES] 29,605,526 [ASSETS-OTHER] 518 [OTHER-ITEMS-ASSETS] 0 [TOTAL-ASSETS] 1,484,886,337 [PAYABLE-FOR-SECURITIES] 13,497,551 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 8,459,011 [TOTAL-LIABILITIES] 21,956,562 68,109 [PAID-IN-CAPITAL-COMMON] 1,095,121,183 [SHARES-COMMON-STOCK] 40,376,157 [SHARES-COMMON-PRIOR] 23,069,218 [ACCUMULATED-NII-CURRENT] 0 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 93,307,851 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 274,432,632 [NET-ASSETS] 1,462,929,775 [DIVIDEND-INCOME] 8,223,561 [INTEREST-INCOME] 1,885,055 [OTHER-INCOME] 0 [EXPENSES-NET] (19,876,045) [NET-INVESTMENT-INCOME] (9,767,429) [REALIZED-GAINS-CURRENT] 103,667,327 [APPREC-INCREASE-CURRENT] 130,879,567 [NET-CHANGE-FROM-OPS] 224,779,465 [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] (25,045,493) [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 22,054,486 [NUMBER-OF-SHARES-REDEEMED] (5,932,302) [SHARES-REINVESTED] 1,184,755 [NET-CHANGE-IN-ASSETS] 823,806,805 [ACCUMULATED-NII-PRIOR] 0 [ACCUMULATED-GAINS-PRIOR] 38,693,744 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 9,721,000 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 19,876,000 [AVERAGE-NET-ASSETS] 591,652,210 [PER-SHARE-NAV-BEGIN] 17.52 [PER-SHARE-NII] (0.23) [PER-SHARE-GAIN-APPREC] 5.05 [PER-SHARE-DIVIDEND] 0 [PER-SHARE-DISTRIBUTIONS] (1.08) [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 21.26 [EXPENSE-RATIO] 2.25 [AVG-DEBT-OUTSTANDING] 0 [AVG-DEBT-PER-SHARE] 0
00250118.AQ4 EX-99.27.3 16 [ARTICLE] 6 [CIK] 0000889508 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [SERIES] [NUMBER] 003 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [PERIOD-TYPE] 12-MOS [FISCAL-YEAR-END] NOV-30-1997 [PERIOD-START] DEC-01-1996 [PERIOD-END] NOV-30-1997 [INVESTMENTS-AT-COST] 1,180,847,661 [INVESTMENTS-AT-VALUE] 1,455,280,293 [RECEIVABLES] 29,605,526 [ASSETS-OTHER] 518 [OTHER-ITEMS-ASSETS] 0 [TOTAL-ASSETS] 1,484,886,337 [PAYABLE-FOR-SECURITIES] 13,497,551 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 8,459,011 [TOTAL-LIABILITIES] 21,956,562 [SENIOR-EQUITY] 68,109 [PAID-IN-CAPITAL-COMMON] 1,095,121,183 [SHARES-COMMON-STOCK] 8,357,140 [SHARES-COMMON-PRIOR] 3,432,207 [ACCUMULATED-NII-CURRENT] 0 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 93,307,851 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 274,432,632 [NET-ASSETS] 1,462,929,775 [DIVIDEND-INCOME] 8,223,561 [INTEREST-INCOME] 1,885,055 [OTHER-INCOME] 0 [EXPENSES-NET] (19,876,045) [NET-INVESTMENT-INCOME] (9,767,429) [REALIZED-GAINS-CURRENT] 103,667,327 [APPREC-INCREASE-CURRENT] 130,879,567 [NET-CHANGE-FROM-OPS] 224,779,465 [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] (3,698,398) [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 6,050,953 [NUMBER-OF-SHARES-REDEEMED] (1,266,415) [SHARES-REINVESTED] 140,395 [NET-CHANGE-IN-ASSETS] 823,806,805 [ACCUMULATED-NII-PRIOR] 0 [ACCUMULATED-GAINS-PRIOR] 38,693,744 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 9,721,000 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 19,876,000 [AVERAGE-NET-ASSETS] 104,254,044 [PER-SHARE-NAV-BEGIN] 17.54 [PER-SHARE-NII] (0.24) [PER-SHARE-GAIN-APPREC] 5.07 [PER-SHARE-DIVIDEND] 0 [PER-SHARE-DISTRIBUTIONS] (1.08) [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 21.29 [EXPENSE-RATIO] 2.24 [AVG-DEBT-OUTSTANDING] 0 [AVG-DEBT-PER-SHARE] 0
00250118.AQ5 EX-99.27.4 17 [ARTICLE] 6 [CIK] 0000889508 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [SERIES] [NUMBER] 004 [NAME] ALLIANCE PREMIER GROWTH FUND, INC. [PERIOD-TYPE] 12-MOS [FISCAL-YEAR-END] NOV-30-1997 [PERIOD-START] DEC-01-1996 [PERIOD-END] NOV-30-1997 [INVESTMENTS-AT-COST] 1,180,847,661 [INVESTMENTS-AT-VALUE] 1,455,280,293 [RECEIVABLES] 29,605,526 [ASSETS-OTHER] 518 [OTHER-ITEMS-ASSETS] 0 [TOTAL-ASSETS] 1,484,886,337 [PAYABLE-FOR-SECURITIES] 13,497,551 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 8,459,011 [TOTAL-LIABILITIES] 21,956,562 [SENIOR-EQUITY] 68,109 [PAID-IN-CAPITAL-COMMON] 1,095,121,183 [SHARES-COMMON-STOCK] 2,419,222 [SHARES-COMMON-PRIOR] 106,845 [ACCUMULATED-NII-CURRENT] 0 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 93,307,851 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 274,432,632 [NET-ASSETS] 1,462,929,775 [DIVIDEND-INCOME] 8,223,561 [INTEREST-INCOME] 1,885,055 [OTHER-INCOME] 0 [EXPENSES-NET] (19,876,045) [NET-INVESTMENT-INCOME] (9,767,429) [REALIZED-GAINS-CURRENT] 103,667,327 [APPREC-INCREASE-CURRENT] 130,879,567 [NET-CHANGE-FROM-OPS] 224,779,465 [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] 0 [DISTRIBUTIONS-OF-GAINS] (115,497) [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 2,430,024 [NUMBER-OF-SHARES-REDEEMED] (124,677) [SHARES-REINVESTED] 7,030 [NET-CHANGE-IN-ASSETS] 823,806,805 [ACCUMULATED-NII-PRIOR] 0 [ACCUMULATED-GAINS-PRIOR] 38,693,744 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 9,721,000 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 19,876,000 [AVERAGE-NET-ASSETS] 32,136,441 [PER-SHARE-NAV-BEGIN] 17.99 [PER-SHARE-NII] (0.06) [PER-SHARE-GAIN-APPREC] 5.25 [PER-SHARE-DIVIDEND] 0 [PER-SHARE-DISTRIBUTIONS] (1.08) [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 22.10 [EXPENSE-RATIO] 1.25 [AVG-DEBT-OUTSTANDING] 0 [AVG-DEBT-PER-SHARE] 0
00250118.AQ6 EX-99 18 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital Reserves, Alliance Developing Markets Fund, Inc. Alliance Global Dollar Government Fund, Inc., Alliance Global Environment Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Government Reserves, Alliance Greater China 97 Fund, Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder Fund, Inc., Alliance International Fund, Alliance Limited Maturity Government Fund, Inc., Alliance Money Market Fund, Alliance Mortgage Securities Income Fund, Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance Municipal Income Fund II, Alliance Municipal Trust, Alliance New Europe Fund, Inc., Alliance North American Government Income Trust, Inc., Alliance Premier Growth Fund, Inc., Alliance Quasar Fund, Inc., Alliance Real Estate Investment Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc., Alliance Short-Term Multi-Market Trust, Inc., Alliance Technology Fund, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates, The Alliance Fund, Inc., The Alliance Portfolios, and The Hudson River Trust, and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ John D. Carifa ___________________________ John D. Carifa Dated: September 9, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Global Dollar Government Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder 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., Alliance Municipal Income Fund II, 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 Short-Term Multi-Market Trust, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates, The Alliance Fund, Inc. and The Alliance Portfolios, and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ Ruth Block ___________________________ Ruth Block Dated: September 9, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Developing Markets Fund, Inc. Alliance Global Dollar Government Fund, Inc., Alliance Global Environment Fund, Inc., Alliance Global Small Cap 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 Income Builder Fund, Inc., Alliance International Fund, Alliance Limited Maturity Government Fund, Inc., Alliance Mortgage Securities Income Fund, Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance Municipal Income Fund II, 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 Short-Term Multi-Market Trust, Inc., Alliance Technology Fund, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates and The Alliance Fund, Inc. and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in- fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ David H. Dievler ___________________________ David H. Dievler Dated: September 9, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Developing Markets Fund, Inc., Alliance Global Dollar Government Fund, Inc., Alliance Global Environment Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder Fund, Inc., Alliance International Fund, Alliance Limited Maturity Government Fund, Inc., Alliance Mortgage Securites Incoem Fund, Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance Municipal Income Fund II, 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 Short-Term Multi-Market Trust, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates, The Alliance Fund, Inc., and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ John H. Dobkin ___________________________ John H. Dobkin Dated: September 9, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital Reserves, Alliance Global Dollar Government Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Government Reserves, Alliance Greater China 97 Fund, Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder 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 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 Short-Term Multi-Market Trust, Inc., Alliance Technology Fund, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates, The Alliance Fund, Inc., The Alliance Portfolios and the Hudson River Trust, and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ William H. Foulk, Jr. ___________________________ William H. Foulk, Jr. Dated: September 9, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Global Dollar Government Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder 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., Alliance Municipal Income Fund II, 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 Short-Term Multi-Market Trust, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates and The Alliance Fund, Inc., and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in- fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ Dr. James M. Hester ___________________________ Dr. James M. Hester Dated: September 9, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Global Dollar Government Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder 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 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 Short-Term Multi-Market Trust, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates, The Alliance Fund, Inc. and The Hudson River Trust, and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ Clifford L. Michel ___________________________ Clifford L. Michel Dated: September 9, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and each of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the respective Registration Statements, and any amendments thereto, on Form N-1A of ACM Institutional Reserves, Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital Reserves, Alliance Global Dollar Government Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global Strategic Income Trust, Inc., Alliance Government Reserves, Alliance Growth and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income Builder 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., Alliance Municipal Income Fund II, Alliance Municipal Trust, 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 Short-Term Multi-Market Trust, Inc., Alliance Utility Income Fund, Inc., Alliance Variable Products Series Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary Management Associates, The Alliance Fund, Inc., The Alliance Portfolios and The Hudson River Trust, and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in- fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. /s/ Donald J. Robinson ___________________________ Donald J. Robinson Dated: September 9, 1997 00250118.AP8 -----END PRIVACY-ENHANCED MESSAGE-----