ALLIANCE INSTITUTIONAL FUNDS
SEMI-ANNUAL REPORT
APRIL 30, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
June 28, 1999
Dear Shareholder:
We are pleased to provide you with an update on the performance and investment
activity of the portfolios of Alliance Institutional Funds, Inc. for the
semi-annual reporting period ended April 30, 1999.
ALLIANCE PREMIER GROWTH INSTITUTIONAL FUND
Portfolio Manager: Al Harrison
The following table provides performance results for the Alliance Premier
Growth Institutional Fund (the "Fund") for the six- and 12-month periods ended
April 30, 1999. For comparison, we have also provided the returns for the
Standard & Poor's 500 Stock Index (the "S&P 500"), a common measure of the
broad stock market, and your Fund's benchmark, the Russell 1000 Growth Stock
Index, which measures the performance of large cap U.S. stocks.
INVESTMENT RESULTS
For both the six- and 12-month periods under review, your Fund significantly
outperformed both the S&P 500 and the Russell 1000 Growth Stock Index. The
Fund's strong performance can be credited to the significant appreciation of
specific technology stocks, high-growth retailers, and telecommunication
suppliers and service companies held in the Fund's portfolio. Many of these
positions reflect companies that were purchased in a greater concentration for
the portfolio during the period of price erosion in the early fall of 1998.
INVESTMENT RESULTS*
Periods ended April 30, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE PREMIER GROWTH INSTITUTIONAL FUND
Class I 29.81% 31.48%
Class II 29.57% 30.92%
S&P 500 STOCK INDEX 22.31% 21.83%
RUSSELL 1000 GROWTH STOCK INDEX 24.93% 26.52%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE OF EACH CLASS OF SHARES AS OF APRIL 30, 1999. ALL FEES AND
EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE S&P 500 STOCK INDEX IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES, AND
IS A COMMON MEASURE OF THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. THE
RUSSELL 1000 GROWTH STOCK INDEX CONSISTS OF 1000 OF THE LARGEST STOCKS
REPRESENTING APPROXIMATELY 87% OF THE U.S. EQUITY MARKET. AN INVESTOR CANNOT
INVEST DIRECTLY IN AN INDEX.
ECONOMIC REVIEW
Following the strong performance of large cap stocks for the past several
years, we have recently seen the market partially embrace a larger universe of
economically sensitive stocks where earnings have been extremely poor based on
adverse world economic conditions. Whether world economic growth will prove
sufficient to support the fundamental expectations of these companies is an
open-ended question. At the same time that the jury is out on these
economically sensitive stocks, many blue-chip growth stocks have declined by as
much as 30% and are now significantly more attractive in price, particularly
given what we believe to be their superior earnings certainty and visibility.
As always, our guide is to find the proper marriage between fundamentals and
price. Inflation remains benign, corporate profits continue to be strong,
monetary and fiscal policy continues to come from a centrist base, and
valuations of many of what we consider to be premier growth stocks have
moderated. In our view, the stage remains set for continued growth and
improvement in the large cap growth arena.
REVIEW OF INVESTMENT STRATEGY
Alliance Premier Growth Institutional Fund seeks long term growth by investing
in many of what we believe to be premier U.S. companies that demonstrate world
leadership positions in their sector. We are continuing to stay the course with
an optimistic bias, but remain extremely price conscious when looking at one
stock against another. The Fund's portfolio positions are adjusted as relative
price changes. We expect market volatility to continue--even increase--and as
such, we will hold to our strategy of taking profits during periods of market
euphoria, while adding to core holdings during periods of price weakness. In
our judgement, this strategy adds a
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ALLIANCE INSTITUTIONAL FUNDS
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layer of value above and beyond our key requirement of good stock selection
based on rigorous fundamental research.
ALLIANCE QUASAR INSTITUTIONAL FUND
Portfolio Manager: Randall Haase
The following table provides performance results for the Alliance Quasar
Institutional Fund (the "Fund") for the six- and 12-month periods ended April
30, 1999. For comparison, we have also included the returns for the Russell
2000 Growth Stock Index, which measures the performance of small-cap U.S.
stocks.
INVESTMENT RESULTS
The Fund underperformed its unmanaged small cap benchmark, the Russell 2000
Growth Stock Index, for both the six- and 12-month periods ended April 30,
1999. During these six- and 12-month periods, the Fund's Class I shares
returned 12.68% and -18.35%, respectively, while the Russell 2000 Growth Stock
Index returned 15.16% and -9.25%, respectively. As the performance of the
Standard & Poor's 500 Stock Index (the "S&P 500") has become dominated to an
unprecedented degree by its large cap stocks, we believe that it is no longer
an appropriate benchmark for the Fund, which, of course, focuses almost
entirely on small cap stocks. Accordingly, it is now more appropriate that the
Russell 2000 Growth Stock Index constitutes the Fund's only benchmark.
The Fund underperformed its benchmark during the periods under review primarily
due to the following three reasons. First, growth stocks with cyclical exposure
performed poorly during the third quarter of 1998. Secondly, our timing in both
selling and buying stocks in the Fund's portfolio was often too early. And
finally, we generally avoided investing in technology stocks in general, and
internet stocks in particular. These three factors and their effect on the
Fund's performance are explained in more detail in the "Market Commentary"
section of this report.
INVESTMENT RESULTS*
Periods ended April 30, 1999
TOTAL RETURN
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE QUASAR INSTITUTIONAL FUND
Class I 12.68% -18.35%
Class II 12.70% -18.56%
RUSSELL 2000 GROWTH STOCK INDEX 15.16% -9.25%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE OF EACH CLASS OF SHARES AS OF APRIL 30, 1999. ALL FEES AND
EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE RUSSELL 2000 GROWTH STOCK INDEX IS A CAPITALIZATION-WEIGHTED INDEX
THAT INCLUDES 2000 OF THE SMALLEST STOCKS REPRESENTING APPROXIMATELY 11% OF THE
U.S. EQUITY MARKET. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX.
MARKET COMMENTARY
Over the six- and 12-month periods under review, we believe that there were
three major reasons that led to the Fund's underperformance versus its
benchmark.
First, growth stocks with cyclical exposure did not do well during the third
quarter. In general, many investors felt at the time that there was a
possibility for a recession in 1999. If that were the case, their earnings
outlook would deteriorate. Specifically, the airline sector and the rental car
sector, two fundamentally strong industries showing tremendous profitability,
lost nearly two years' worth of stock performance during the third quarter
alone. The losses suffered by these industries were caused when investors
shifted out of these types of stocks and into groups of stocks that had more
positive momentum (price and volume trends).
Secondly, in retrospect we underestimated the amount of momentum that was
evident in investors' minds when they bought and sold stocks. In many cases, it
appears that we bought our new ideas too early, and when we sold our older
names based on valuation, this sell decision was also made too far in advance.
In other words,
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ALLIANCE INSTITUTIONAL FUNDS
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valuations took longer to be realized when the buy decision was made.
Conversely, the momentum investors carried our stocks to higher valuations
after we sold them, as the valuations they were willing to pay for these stocks
were simply higher than the valuations we thought they were worth.
Third, while we like to think of ourselves as leading edge investors looking
for that next great idea, we were unwilling to take a huge overweighting in the
technology sector and, more specifically, we essentially avoided investing in
internet stocks altogether. In most cases, these stocks have yet to demonstrate
the ability to earn a single penny in earnings and, in some cases, we believe
probably never will. Despite this, these stocks have performed exceptionally
well, defying all logical valuation criteria. In our opinion, these stocks were
overpriced a year ago when 1998 began, and they are even more overpriced now in
1999. We simply believe that when investors start looking at fundamentals and
valuations as opposed to hype and momentum, these stocks will come back to
reality.
As a result of these three factors and after a very strong first half in 1998,
the Fund underperformed substantially in the third quarter. Although the Fund's
relative performance improved considerably in the six months ended April 30,
1999, it still underperformed its benchmark for the entire year.
REVIEW OF INVESTMENT STRATEGY
Our basic investment strategy remains unchanged. We continue to adjust the
Fund's composition to reflect our perception of those smaller, highly
competitive companies that will, in our judgment, exhibit long-term price
appreciation through superior earnings growth.
On the growth side, the Fund's holdings continue to include several positions
in the retail and apparel sectors. Companies in these sectors have continued to
report earnings per share (EPS) gains of typically between 20% and 30%, with
price to earnings (P/E) ratios between 12 and 18 times earnings. After not
participating in the strong equity market in 1997, consumer stocks came back in
the second half of 1998 and into 1999. These included Tommy Hilfiger Corp.,
Tiffany & Co., and Men's Wearhouse Inc. In addition, we think that the jewelry
segment offers excellent opportunities. We believe the prospects for both Zale
Corp. and Movado Group, Inc. look quite promising.
We are always looking for companies that have market share leadership, strong
franchises, and dominant positions within their respective industry. Within the
leisure category, these would include Bally Total Fitness Holding Corp., which,
with over four million members, is the largest health club provider in the
U.S., and Premier Parks, Inc., the largest amusement park operator after The
Walt Disney Company. In the consumer manufacturing category, this would include
Monaco Coach Corp., one of the largest manufacturers of recreational vehicles
in the U.S.
In the turnaround category, we believe that the sports retailing industry has
seen its worst days and that both Venator Group, Inc. and Sports Authority,
Inc. should benefit. As the industry becomes more rational, the aggressive
expansion in square footage seen over the last five years has essentially come
to a halt. In addition, Nike, Inc. is seeing its business turning. These
factors, as well as the Olympics being only a year away, should help both of
these sports retailers see a turn in their business.
Within healthcare, the Fund's holdings continue to include positions in the
biotechnology sector as well as the service sector. Specifically, its holdings
include positions in GelTex Pharmaceuticals, Inc. and Human Genome Sciences,
Inc., two later-stage biotechnology companies, as well as Synetic, Inc., an
intranet healthcare provider, and Orthodontic Centers of America, Inc., the
leading operator of orthodontic centers in the U.S.
Within the real estate sector, we believe that real estate investment trust
(REIT) stocks have come under a lot of pressure as investors focus more on
momentum growth and less on yield. There are several well-run companies
yielding over 10% with internal growth of 10% to 12%. Therefore, about 6% of
the Fund is invested in REITs. The Fund currently holds positions in Chelsea
GCA Realty, Inc., Taubman Centers, Inc., and Glenborough Realty Trust, Inc.
On the cyclical side, we continue to favor the airline industry. We have been
bullish on this group since 1995. We believe that 1999 should mark the fifth
consecutive year of profitability for the industry after a period of
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ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
losses from 1990 to 1994. Furthermore, this industry is more fundamentally
sound than at any point since World War II, with load factors of over 70% for
four years in a row--levels never attained before by this industry.
During past good periods of business, carriers took their excess cash flow and
bought more planes. However, this only added to their existing capacity and
took away their pricing power. Today, the carriers are using their cash flow to
pay down debt, buy back stock, and restructure their balance sheets. As demand
outpaces capacity growth, pricing power should continue to increase, allowing
carriers to maximize both revenues and earnings. Thus, the Fund's holdings
continue to include positions in America West Holdings Corp., Alaska Air Group,
Inc., and Atlas Air, Inc.
In addition, we like the rental car industry and have positions in Budget
Group, Inc. and Dollar Thrifty Automotive Group, Inc. This industry has gone
through a major change in ownership from the auto manufacturers to financial
entrepreneurs. We are now seeing real pricing power, better yield management,
greater inventory efficiencies, and as a result, a higher level of
profitability. We believe these companies have strong fundamentals that are not
yet being recognized in the marketplace.
Within the technology sector, the Fund's holdings currently include positions
in CheckFree Corp., an online banking company, and DBT Online, Inc., a database
management company. The Fund is currently underweight in the technology sector
relative to the small cap benchmark for the sector.
INVESTMENT OUTLOOK
1998 marks the fifth consecutive year in which large cap stocks, as measured by
the S&P 500, outperformed small cap stocks, as measured by the Russell 2000
Index. During this five year period (on an annualized basis), the S&P 500 was
up 24.1%, considerably outperforming the Russell 2000 Index, which was up
11.9%. After underperforming large cap stocks in each consecutive year from
1994 to 1998, small cap stocks continued to underperform into 1999. In the
first quarter of 1999 alone, the Russell 2000 was down 1.68%, while the S&P 500
was up 4.98%, for a total difference of 6.66% between the two indexes. In our
view, it is obvious that the majority of the money coming into the equity
markets is going into the S&P 500 and other select large caps, while generally
avoiding the other 90% of stocks altogether. Regardless, the current valuations
for small cap stocks are extremely attractive and small cap stocks are now
trading at all-time low historical valuations relative to large cap stocks. All
we can say is that we are extremely excited about the Fund as 1999 progresses.
We firmly believe that when the turn for small cap stocks does occur, the Fund
will be extremely well positioned to fully participate.
ALLIANCE REAL ESTATE INVESTMENT
INSTITUTIONAL FUND
Portfolio Manager: Dan Pine
The following table provides performance results for the Alliance Real Estate
Investment Institutional Fund (the "Fund") for the six- and 12-month periods
ended April 30, 1999. For comparison, we have also included the returns for the
National Association of Real Estate Investment Trusts ("NAREIT") Equity Index,
and the Standard & Poor's 500 Stock Index (the "S&P 500").
INVESTMENT RESULTS
The Real Estate Investment Trust (REIT) sector has been through a tumultuous
six-month period. REITs began 1999 in much the same manner as they ended
1998--underperforming large blue-chip stocks and the technology sector. In
April, however, this changed dramatically when the REIT sector gained 9.2% as
measured by the NAREIT Equity Index. As a result, the NAREIT Equity Index
gained 2.01% over the six-month period under review.
As shown on the following table, your Fund outperformed the NAREIT Equity Index
over the six-month period under review primarily as a result of the strong
relative performance of the apartment, office, and hotel stocks held in the
Fund's portfolio. Despite this solid performance over the six-month period
under review, your Fund underperformed the NAREIT Equity Index during the
12-month period ended April 30, 1999. The Fund's underperformance versus the
NAREIT Equity Index during the 12-month period under review was due to its
overweighting in the full-service hotel sector, which was negatively impacted
earlier in this period.
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ALLIANCE INSTITUTIONAL FUNDS
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Your Fund underperformed the S&P 500 over both the six- and 12-month periods
under review. This underperformance was primarily due to the strong performance
of the large cap stocks (and technology stocks in particular) that have become
a very large segment of the S&P 500 in recent periods.
INVESTMENT RESULTS*
Periods ended April 30, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE REAL ESTATE INVESTMENT
INSTITUTIONAL FUND
Class I 4.63% -12.49%
Class II 4.48% -12.86%
S&P 500 STOCK INDEX 22.31% 21.83%
NAREIT EQUITY INDEX 2.01% -11.65%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE OF EACH CLASS OF SHARES AS OF APRIL 30, 1999. ALL FEES AND
EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE S&P 500 IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES, AND IS A COMMON
MEASURE OF THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. THE NAREIT EQUITY
INDEX IS A MARKET VALUE WEIGHTED INDEX BASED UPON THE LAST CLOSING PRICE OF THE
MONTH FOR TAX-QUALIFIED REITS LISTED ON THE NYSE, AMEX, AND NASDAQ. INDEX
RETURNS ARE NOT ADJUSTED FOR SALES CHARGES OR OPERATING EXPENSES. AN INVESTOR
CANNOT INVEST DIRECTLY IN AN INDEX.
MARKET OVERVIEW
In our last shareholder report for the period ended October 31, 1998, we stated
that the U.S. real estate markets were generally in very good condition. Low
interest rates, low to modest inflation, and continued economic growth allowed
real estate owners (REITs) to maintain high occupancies and increase rents
which in turn led to continued positive earnings growth. Nonetheless, early in
the year the REIT sector continued to be caught in a downdraft caused by
investors focusing on either larger blue-chip stocks or technology issues.
Indeed, in this period of narrow leadership and the lure of technology initial
public offerings (IPOs), REITs did not appear to be desirable investments
despite their appealing valuation, stable and increasing cash flows, and solid
income yields.
The month of April 1999 saw a significant change that led investors to take
note of the REIT sector once again for a number of reasons. First, cyclical and
value stocks (perhaps one and the same today--and a group in which REITs can
easily fit) became increasingly attractive to investors as an alternative to
the rich valuations afforded the S&P 500 and technology stocks. Secondly,
owning stocks with stable cash flows and solid dividends (rather than virtual
losses) became more appealing to a growing number of investors. Lastly, several
large institutional investors and one very well known value investor (namely
Warren Buffett) began purchasing positions in the REIT sector.
With the modest rebound in the sector, the appropriate question may be "what's
next?" We believe REITs are very reasonably valued at about 8.8 times 1999
funds from operations (the REIT equivalent of earnings per share), with an
average 7.4% dividend yield and expected earnings growth of about 10% in 1999
and 8% in 2000. These valuation metrics are compelling and are further
supported by the fact that most REITs trade at a discount to the private market
value of the real estate assets that they own.
Given the large diversified portfolios, professional management, and low levels
of leverage, REITs offer an attractive, lower risk alternative to owning
individual real estate assets. Furthermore, REIT cash flows and dividends offer
a defensive and stable investment, particularly in the face of broader equity
market volatility. In our opinion, both of these factors are not being
adequately reflected in REIT stock prices.
INVESTMENT STRATEGY
Your Fund was designed to identify and invest in strong, well-capitalized
companies that have exposure to property sectors and property markets that are
expected to outperform due to anticipated changes in rents and occupancy.
Each market has its own set of dynamics that make it either more or less
attractive than other markets at different points of the real estate and
economic cycle. In the past six months, we continued to reduce our exposure to
5
ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
hotels by approximately 20%. Hotels are more economically sensitive than most
other types of real estate due to the short-term nature of the tenant leases
(i.e., overnight guest stays). We reduced the Fund's exposure to hotels as
their stock prices rose dramatically from their very low levels of last summer.
We are now slightly underweighted versus the NAREIT Index's average weighting,
having profited from the rebound. We have also reduced our exposure to certain
suburban office markets by approximately 20%. Although we believe that the
suburban office markets (in the aggregate) will likely continue to perform
well, suburban markets such as Dallas are anticipating new supplies of office
space that may impede rent growth in the medium term. We have been redirecting
some of the hotel and suburban office weightings towards the central business
district ("CBD") office markets. We increased our holdings in CBD office
markets with barriers to new development (such as New York City, Boston, San
Francisco, and Seattle) by 15%. We believe these properties have the best
opportunity for continued growth in rents and occupancy.
With the emergence of the Internet as a provider of retail goods and services,
the retail property sector has been under increasing scrutiny by investors.
While it is clear that certain retail items will be efficiently marketed and
sold on the Internet, it is not clear if "virtual" real estate will replace
brick and mortar real estate as the selling ground for retail products. Your
Fund has consistently been underrepresented in retail properties for just this
reason. The Fund's portfolio has exposure to companies that own neighborhood
grocery anchored retail shopping centers that are based on the day-to-day needs
of families. These goods and services, in our view, are less likely to be
replaced by e-commerce. We have limited exposure to companies that own regional
malls and promotional or large box retail centers. We believe these retail
venues typically have more tenants who sell commodity products of which the
Internet may eventually take a large market share.
MARKET OUTLOOK AND CONCLUSION
Our outlook for the real estate market and REITs remains positive. Supply and
demand for space remain generally in balance in most markets and in most
property types. This balance has been primarily due to the stock market
allocating capital more efficiently to the real estate market and REITs. When
the stock market determined that the real estate sector was moving forward too
quickly and there were worries about excess supply and a possible recession,
REIT stock prices fell. Through this action, the market pre-empted an
overbuilding condition that may have otherwise occurred. Months later, we now
see that construction is down and prices have stabilized. We believe that this
is ultimately a good thing for the long-term health of the REIT market and has
greatly enhanced the long-term prospects for future performance from the sector.
In conclusion, we would like to thank you for the continued confidence you have
shown in the portfolios of Alliance Institutional Funds, Inc., and we look
forward to reporting their progress to you in the future.
Sincerely,
Alfred Harrison
Executive Vice President
Randall E. Haase
Senior Vice President
Daniel G. Pine
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
6
INVESTMENT OBJECTIVE AND POLICIES
ALLIANCE PREMIER GROWTH INSTITUTIONAL FUND
_______________________________________________________________________________
Alliance Premier Growth Institutional Fund is an open-end, diversified
investment company that seeks long-term growth of capital by investing in the
common stocks 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 portfolio, with the 25
most highly regarded of these usually constituting 70% of the Fund's net assets.
INVESTMENT RESULTS
AVERAGE ANNUAL TOTAL RETURNS
CLASS I SHARES
PERIOD ENDED
APRIL 30, 1999 MARCH 31, 1999
------------------------------
12 Months 31.48% 37.36%
Since Inception* 45.76% 51.45%
CLASS II SHARES
PERIOD ENDED
APRIL 30, 1999 MARCH 31, 1999
------------------------------
12 Months 30.92% 36.99%
Since Inception* 45.20% 50.92%
The Fund's investment results represent average annual total returns. The
returns reflect reinvestment of dividends and/or capital gains distributions in
additional shares.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 1/7/98 Class I & Class II.
7
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE QUASAR INSTITUTIONAL FUND
_______________________________________________________________________________
Alliance Quasar Institutional Fund seeks growth of capital by pursuing
aggressive investment policies. Alliance Quasar Institutional Fund invests
primarily 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.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURNS
CLASS I SHARES
PERIOD ENDED
APRIL 30, 1999 MARCH 31, 1999
------------------------------
12 Months -18.35% -23.21%
Since Inception* -14.77% -21.83%
CLASS II SHARES
PERIOD ENDED
APRIL 30, 1999 MARCH 31, 1999
------------------------------
12 Months -18.56% -23.51%
Since Inception* -14.96% -22.12%
The Fund's investment results represent average annual total returns. The
returns reflect reinvestment of dividends and/or capital gains distributions in
additional shares.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 3/17/98 Class I & Class II.
8
ALLIANCE REAL ESTATE INVESTMENT
INVESTMENT OBJECTIVE AND POLICIES INSTITUTIONAL FUND
_______________________________________________________________________________
Alliance Real Estate Institutional Fund 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.
INVESTMENT RESULTS
AVERAGE ANNUAL TOTAL RETURNS
CLASS I SHARES
PERIOD ENDED
APRIL 30, 1999 MARCH 31, 1999
------------------------------
12 Months -12.49% -23.46%
Since Inception* -10.92% -17.61%
CLASS II SHARES
PERIOD ENDED
APRIL 30, 1999 MARCH 31, 1999
------------------------------
12 Months -12.86% -23.86%
Since Inception* -11.33% -18.01%
The Fund's investment results represent average annual total returns. The
returns reflect reinvestment of dividends and/or capital gains distributions in
additional shares.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 12/9/97 Class I & Class II.
9
TEN LARGEST HOLDINGS
APRIL 30, 1999 (UNAUDITED) ALLIANCE PREMIER GROWTH INSTITUTIONAL FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Nokia Corp. (ADR) $ 6,840,088 5.0%
Tyco International, Ltd. 6,704,831 5.0
Dell Computer Corp. 6,680,612 5.0
MCI WorldCom, Inc. 6,081,875 4.5
Cisco Systems, Inc. 5,777,266 4.3
Federal Home Loan Mortgage Corp. 5,101,575 3.8
Pfizer, Inc. 4,729,069 3.5
Home Depot, Inc. 4,639,162 3.4
Morgan Stanley, Dean Witter & Co. 4,517,990 3.4
Philip Morris Cos., Inc. 4,456,444 3.3
$ 55,528,912 41.2%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
_______________________________________________________________________________
SHARES*
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 4/30/99
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 59,500 81,300
Gap, Inc. 57,100 57,100
Intel Corp. 52,150 70,000
Lowes Cos., Inc. 56,800 56,800
MCI WorldCom, Inc. 65,400 74,000
Mckesson Hboc, Inc. 100,260 100,260
MediaOne Group, Inc. 28,400 28,400
Morgan Stanley, Dean Witter & Co. 37,300 45,550
Philip Morris Cos., Inc. 102,700 127,100
Warner-Lambert Co. 41,000 51,400
HOLDINGS
SALES SOLD 4/30/99
- -------------------------------------------------------------------------------
AirTouch Communications, Inc. 11,900 47,400
America Online, Inc. 6,900 -0-
General Electric Co. 8,500 -0-
BankAmerica Corp. 12,618 2,500
Lucent Technologies, Inc. 1,400 18,400
May Department Stores Co. 10,800 -0-
Northwest Airlines Corp. 23,700 8,000
UAL Corp. 13,300 10,000
U.S. Bancorp 27,100 -0-
Washington Mutual, Inc. 24,832 -0-
* Adjusted for stock splits and spin-offs.
10
TEN LARGEST HOLDINGS
APRIL 30, 1999 (UNAUDITED) ALLIANCE QUASAR INSTITUTIONAL FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Legg Mason, Inc. $ 1,544,963 4.4%
Premier Parks, Inc. 1,531,119 4.3
Tiffany & Co. 1,302,000 3.7
Chelsea GCA Realty, Inc. 1,179,162 3.3
Mohawk Industries, Inc. 1,148,100 3.3
Alaska Air Group, Inc. 1,035,469 3.0
DBT Online, Inc. 875,875 2.5
Group 1 Automotive, Inc. 854,900 2.4
Venator Group, Inc. 844,750 2.4
Taubman Centers, Inc. 824,600 2.4
$ 11,140,938 31.7%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
_______________________________________________________________________________
SHARES*
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 4/30/99
- -------------------------------------------------------------------------------
Apex PC Solutions, Inc. 25,950 38,450
Chelsea GCA Realty, Inc. 19,500 35,800
Consolidated Freightways Corp. 28,400 56,800
Legg Mason, Inc. 29,000 44,300
Mohawk Industries, Inc. 20,000 35,600
Premier Parks, Inc. 19,600 44,300
SFX Entertainment, Inc. 11,700 11,700
Sunterra Corp. 36,200 63,400
Venator Group, Inc. 68,300 87,200
Zale Corp. 16,400 16,400
HOLDINGS
SALES SOLD 4/30/99
- -------------------------------------------------------------------------------
Centocor, Inc. 11,200 -0-
Comverse Technology, Inc. 4,600 -0-
Continental Airlines, Inc. Cl.B 5,700 -0-
Golf Trust of America, Inc. 7,700 -0-
MedImmune, Inc. 4,100 -0-
Tommy Hilfiger Corp. 5,500 4,500
Uniphase Corp. 3,200 -0-
Vitesse Semiconductor Corp. 4,700 -0-
Young Broadcasting, Inc. Cl.A 4,400 -0-
Xylan Corp. 8,025 -0-
* Adjusted for stock splits.
11
TEN LARGEST HOLDINGS ALLIANCE REAL ESTATE INVESTMENT
APRIL 30, 1999 (UNAUDITED) INSTITUTIONAL FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Equity Office Properties Trust $ 526,444 4.8%
Brookfield Properties Corp. 501,337 4.6
Pan Pacific Retail Properties, Inc. 441,000 4.1
Public Storage, Inc. 429,275 4.0
AvalonBay Communities, Inc. 420,000 3.9
Vornado Realty Trust 413,400 3.8
SL Green Realty Corp. 389,550 3.6
Arden Realty Group, Inc. 385,000 3.5
MeriStar Hospitality Corp. 379,500 3.5
ProLogis Trust 371,700 3.4
$ 4,257,206 39.2%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
_______________________________________________________________________________
SHARES*
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 4/30/99
- -------------------------------------------------------------------------------
Apartment Investment & Management Co. 6,100 6,100
Captec Net Lease Realty, Inc. 6,000 6,000
Prime Retail, Inc. 37,200 37,200
Ramco-Gershenson Properties Trust 10,500 10,500
Regency Realty Corp. 10,800 10,800
Sun Communities, Inc. 7,500 7,500
HOLDINGS
SALES SOLD 4/30/99
- -------------------------------------------------------------------------------
Arden Realty Group Inc. 14,300 15,400
AvalonBay Communities, Inc. 9,500 12,000
Boston Properties, Inc. 9,400 8,700
Crescent Real Estate Equities Co. 13,300 14,500
Equity Office Properties Trust 18,800 19,100
Essex Property Trust, Inc. 13,700 9,100
Mack-Cali Realty Corp. 14,000 -0-
New Plan Excel Realty Trust, Inc. 18,260 -0-
SL Green Realty Corp. 18,500 19,600
Vornado Realty Trust 8,000 10,600
* Adjusted for a spin-off.
12
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED) ALLIANCE PREMIER GROWTH INSTITUTIONAL FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-99.1%
TECHNOLOGY-27.3%
COMMUNICATION EQUIPMENT-9.0%
EMC Corp. (a) 38,000 $ 4,139,625
Lucent Technologies, Inc. 18,400 1,106,300
Nokia Corp. (ADR) (Finland) 92,200 6,840,088
------------
12,086,013
COMPUTER HARDWARE-7.0%
Dell Computer Corp. (a) 162,200 6,680,612
International Business
Machines Corp. 13,300 2,782,194
------------
9,462,806
COMPUTER SOFTWARE-1.7%
Microsoft Corp. (a) 28,000 2,276,750
NETWORKING SOFTWARE-5.5%
Ascend Communications,
Inc. (a) 16,400 1,584,650
Cisco Systems, Inc. (a) 50,650 5,777,266
------------
7,361,916
SEMI-CONDUCTOR COMPONENTS-4.1%
Applied Materials, Inc. (a) 7,200 386,100
Intel Corp. 70,000 4,283,125
Micron Technology, Inc. (a) 25,200 935,550
------------
5,604,775
------------
36,792,260
CONSUMER SERVICES-24.5%
AIRLINES-3.0%
Continental Airlines, Inc.
Cl.B (a) 19,800 855,113
Delta Air Lines, Inc. 13,500 856,406
KLM Royal Dutch Air 40,865 1,233,612
Northwest Airlines Corp. (a) 8,000 272,500
UAL Corp. (a) 10,000 807,500
------------
4,025,131
AUTO & RELATED-1.2%
Ford Motor Co. 25,200 1,611,225
BROADCASTING & CABLE-6.3%
AirTouch Communications,
Inc. (a) 47,400 4,425,975
Chancellor Media Corp. (a) 17,900 982,262
Clear Channel
Communications (a) 11,600 806,200
MediaOne Group, Inc. 28,400 2,316,375
------------
8,530,812
RESTAURANTS & LODGING-0.5%
Starbucks Corp. (a) 17,600 650,100
RETAIL - GENERAL MERCHANDISE-13.5%
Costco Cos, Inc. (a) 18,900 1,529,719
Dayton Hudson Corp. 13,200 888,525
Fred Meyer, Inc. (a) 9,300 503,363
Gap, Inc. 57,100 3,800,719
Home Depot, Inc. 77,400 4,639,162
Kohl's Corp. (a) 23,900 1,587,856
Lowes Cos., Inc. 56,800 2,996,200
Wal-Mart Stores, Inc. 48,200 2,217,200
------------
18,162,744
------------
32,980,012
FINANCE-15.5%
BANKING - REGIONAL-2.8%
BankAmerica Corp. 2,500 180,000
Chase Manhattan Corp. 16,300 1,348,825
Fifth Third Bancorp 8,700 623,681
Newcourt Credit Group, Inc. 34,600 977,450
The CIT Group, Inc. 19,300 627,250
------------
3,757,206
BROKERAGE & MONEY MANAGEMENT-4.1%
Merrill Lynch & Co., Inc. 12,900 1,082,794
Morgan Stanley, Dean
Witter & Co. 45,550 4,517,990
------------
5,600,784
INSURANCE-1.0%
American International
Group, Inc. 2,600 305,338
Citigroup, Inc. 14,300 1,076,075
------------
1,381,413
MORTGAGE BANKING-3.8%
Federal Home Loan Mortgage
Corp. 81,300 5,101,575
13
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE PREMIER GROWTH INSTITUTIONAL FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
MISCELLANEOUS-3.8%
Associates First Capital Corp.
Cl.A 31,176 $ 1,381,486
MBNA Corp. 131,150 3,696,791
------------
5,078,277
------------
20,919,255
HEALTH CARE-13.6%
DRUGS-10.1%
Bristol-Myers Squibb Co. 37,500 2,383,594
Pfizer, Inc. 41,100 4,729,069
Schering-Plough Corp. 63,700 3,077,506
Warner-Lambert Co. 51,400 3,491,987
------------
13,682,156
MEDICAL SERVICES-3.5%
IMS Health, Inc. 39,100 1,173,000
McKesson Hboc, Inc. 100,260 3,509,100
------------
4,682,100
------------
18,364,256
UTILITIES-5.7%
TELEPHONE UTILITY-5.7%
AT&T Corp. (a) 25,600 1,635,200
MCI WorldCom, Inc. (a) 74,000 6,081,875
------------
7,717,075
CONSUMER STAPLES-5.6%
HOUSEHOLD PRODUCTS-0.5%
Gillette Co. 12,600 657,563
RETAIL - FOOD-1.8%
Kroger Co. (a) 13,500 733,219
Safeway, Inc. (a) 32,900 1,774,543
------------
2,507,762
TOBACCO-3.3%
Philip Morris Cos., Inc. 127,100 4,456,444
------------
7,621,769
MULTI INDUSTRY COMPANY-5.0%
Tyco International, Ltd. 82,521 6,704,831
CAPITAL GOODS-1.4%
POLLUTION CONTROL-0.8%
Waste Management, Inc. 19,400 1,096,100
MISCELLANEOUS-0.6%
United Technologies Corp. 5,200 753,350
------------
1,849,450
ENERGY-0.5%
OIL & GAS SERVICES-0.5%
Atlantic Richfield Co. 7,400 621,138
Total Common Stocks
(cost $119,896,980) 133,570,046
SHORT-TERM INVESTMENT-0.7%
COMMERCIAL PAPER-0.7%
General Electric Capital Corp.
4.94%, 5/03/99
(amortized cost $953,738) $954 953,738
TOTAL INVESTMENTS-99.8%
(cost $120,850,718) 134,523,784
Other assets less
liabilities-0.2% 328,593
NET ASSETS-100% $ 134,852,377
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
14
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED) ALLIANCE QUASAR INSTITUTIONAL FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-99.8%
CONSUMER PRODUCTS & SERVICES-46.5%
ADVERTISING-0.3%
Merkert American Corp. (a) 10,100 $ 97,213
AIRLINES-5.7%
Alaska Air Group, Inc. (a) 23,500 1,035,469
America West Holdings Corp.
Cl.B (a) 32,200 672,175
Atlas Air, Inc. (a) 7,600 220,400
Mesa Air Group, Inc. (a) 11,600 78,300
------------
2,006,344
APPAREL-0.9%
Tommy Hilfiger Corp. (a) 4,500 314,437
BUSINESS SERVICES-5.2%
Carriage Services, Inc.
Cl.A (a) 16,400 314,675
Century Business Services,
Inc. (a) 38,400 460,800
FirstService Corp. (a) 13,700 198,650
Provant, Inc. (a) 200 3,600
Republic Services Inc. (a) 20,300 417,419
TeleSpectrum Worldwide,
Inc.(a) 68,100 446,906
------------
1,842,050
ENTERTAINMENT & LEISURE-10.9%
Bally Total Fitness Holding
Corp. (a) 23,100 560,175
Cinar Corp. (a) 14,000 292,250
Premier Parks, Inc. (a) 44,300 1,531,119
SFX Entertainment, Inc. 11,700 722,475
Sunterra Corp. (a) 63,400 681,550
Vistana, Inc. (a) 2,200 32,725
------------
3,820,294
RESTAURANTS & LODGING-1.7%
Florida Panthers Holdings,
Inc. Cl.A (a) 15,200 134,900
MeriStar Hospitality Corp. 20,300 466,900
------------
601,800
RETAILING GENERAL-21.0%
BJ'S Wholesale Club, Inc. (a) 15,400 409,063
Circuit City Stores, Inc. -
CarMax Group (a) 62,400 280,800
Furniture Brands International,
Inc. (a) 11,900 298,244
Industrie Natuzzi SpA
(ADR) (Italy) 23,700 453,262
Men's Wearhouse, Inc. (a) 20,100 550,237
Movado Group, Inc. 17,100 412,537
Sports Authority, Inc. (a) 67,700 469,669
Stage Stores, Inc. (a) 48,400 311,575
Tiffany & Co. 15,500 1,302,000
Trans World Entertainment
Corp. (a) 19,700 301,656
Tweeter Home Entertainment
Group, Inc. (a) 5,100 151,088
United Rentals, Inc. (a) 24,500 730,406
Venator Group, Inc. (a) 87,200 844,750
Whole Foods Market, Inc. (a) 6,600 257,400
Zale Corp. (a) 16,400 620,125
------------
7,392,812
MISCELLANEOUS-0.8%
Cash America International,
Inc. 14,100 179,775
Central Garden & Pet Co. (a) 5,900 82,600
------------
262,375
------------
16,337,325
TECHNOLOGY-15.6%
COMMUNICATION EQUIPMENT-2.6%
Com21, Inc. (a) 6,800 211,650
Pinnacle Holdings, Inc. (a) 23,900 489,950
Tekelec, Inc. (a) 21,900 197,784
------------
899,384
COMPUTER SOFTWARE & SERVICES-5.6%
AppliedTheory Corp. 200 4,100
Checkfree Corp. (a) 9,700 465,600
DBT Online, Inc. (a) 26,000 875,875
IMRglobal Corp. (a) 11,800 203,550
Insight Enterprises, Inc. (a) 10,100 272,700
Transaction Systems
Architects, Inc. Cl.A (a) 4,800 155,700
------------
1,977,525
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE QUASAR INSTITUTIONAL FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
NETWORKING SOFTWARE-1.9%
Apex PC Solutions, Inc. (a) 38,450 $ 639,231
Marimba Inc. (a) 200 12,150
------------
651,381
SEMI-CONDUCTOR EQUIPMENT-0.8%
Conexant Systems, Inc. (a) 3,400 138,550
MKS Instruments, Inc. (a) 11,800 160,775
------------
299,325
TELECOMMUNICATIONS-3.0%
GST Telecommunications,
Inc. (a) 20,600 260,075
ICG Communications,
Inc. (a) 10,700 236,069
Millicom International Cellular,
SA (Luxembourg) 16,200 558,900
------------
1,055,044
MISCELLANEOUS-1.7%
Engineering Animation, Inc. 1,800 26,775
Excalibur Technologies
Corp. (a) 16,900 261,950
Harman International
Industries, Inc. 6,800 312,375
------------
601,100
------------
5,483,759
FINANCIAL SERVICES-11.0%
BROKERAGE & MONEY MANAGEMENT-4.4%
Legg Mason, Inc. 44,300 1,544,963
INSURANCE-0.5%
Reinsurance Group of America,
Inc. 5,400 163,350
REAL ESTATE-6.1%
Chelsea GCA Realty, Inc. 35,800 1,179,162
Glenborough Realty Trust,
Inc. 9,200 158,125
Taubman Centers, Inc. 60,800 824,600
------------
2,161,887
------------
3,870,200
BASIC INDUSTRIES-9.5%
METAL HARDWARE-1.8%
Bethlehem Steel Corp. (a) 70,400 642,400
TEXTILE PRODUCTS-3.3%
Mohawk Industries, Inc. (a) 35,600 1,148,100
TRANSPORTATION & SHIPPING-4.4%
AMERCO (a) 100 2,250
Carey International, Inc. (a) 27,600 479,550
Consolidated Freightways
Corp. (a) 56,800 639,000
Teekay Shipping Corp. 24,700 419,900
------------
1,540,700
------------
3,331,200
CONSUMER MANUFACTURING-7.9%
AUTO & RELATED-7.1%
Budget Group, Inc. Cl.A (a) 41,700 518,644
Dollar Thrifty Automotive
Group, Inc. (a) 26,300 489,837
Group 1 Automotive, Inc. (a) 33,200 854,900
Monaco Coach Corp. (a) 23,025 638,944
------------
2,502,325
INDUSTRIAL MACHINERY-0.8%
Applied Power, Inc. Cl.A 8,500 268,281
------------
2,770,606
HEALTH CARE-6.9%
BIOTECHNOLOGY-3.0%
Aviron (a) 300 5,663
GelTex Pharmaceuticals,
Inc. (a) 24,800 424,700
Human Genome Sciences,
Inc. (a) 7,200 266,400
Novoste Corp. (a) 16,200 360,450
------------
1,057,213
16
ALLIANCE QUASAR INSTITUTIONAL FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
DRUGS, HOSPITAL
SUPPLIES & MEDICAL
SERVICES-3.9%
Aradigm Corp. (a) 13,300 $ 80,631
Orthodontic Centers of
America, Inc. (a) 20,800 257,400
St. Jude Medical, Inc. (a) 9,200 256,450
Synetic, Inc. (a) 8,000 755,500
------------
1,349,981
------------
2,407,194
ENERGY-2.0%
OIL & GAS SERVICES-2.0%
Southern Union Co. 31,810 707,773
CONSUMER NONCYCLICALS-0.4%
HOUSEHOLD PRODUCTS-0.4%
Softnet Systems, Inc. (a) 4,800 156,600
Total Common Stocks
(cost $34,122,581) 35,064,657
TOTAL INVESTMENTS-99.8%
(cost $34,122,581) 35,064,657
Other assets less
liabilities-0.2% 83,087
NET ASSETS-100% $ 35,147,744
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
17
PORTFOLIO OF INVESTMENTS ALLIANCE REAL ESTATE INVESTMENT
APRIL 30, 1999 (UNAUDITED) INSTITUTIONAL FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-97.3%
REAL ESTATE INVESTMENT TRUSTS-97.3%
APARTMENTS-8.8%
Apartment Investment &
Management Co. 6,100 $ 244,381
AvalonBay Communities, Inc. 12,000 420,000
Essex Property Trust, Inc. 9,100 287,219
------------
951,600
DIVERSIFIED & OTHERS-15.6%
Captec Net Lease Realty, Inc. 6,000 78,563
Correctional Properties Trust 17,100 296,044
Entertainment Properties Trust 17,100 314,212
Glenborough Realty Trust,
Inc. 21,400 367,812
Golf Trust of America, Inc. 10,100 224,094
Vornado Realty Trust 10,600 413,400
------------
1,694,125
HOTELS & RESTAURANTS-5.6%
Innkeepers USA Trust 21,500 221,719
MeriStar Hospitality Corp. 16,500 379,500
Patriot American Hospitality,
Inc. 786 3,979
------------
605,198
MANUFACTURED HOME COMMUNITIES-2.4%
Sun Communities, Inc. 7,500 262,500
OFFICE-23.0%
Arden Realty Group, Inc. 15,400 385,000
Boston Properties, Inc. 8,700 315,919
Brookfield Properties
Corp. (Canada) 34,400 501,337
Crescent Real Estate Equities
Co. 14,500 324,438
Equity Office Properties Trust 19,100 526,444
Great Lakes REIT, Inc. 3,900 60,206
SL Green Realty Corp. 19,600 389,550
------------
2,502,894
OFFICE - INDUSTRIAL MIX-12.9%
Brandywine Realty Trust 16,700 315,212
Duke Realty Investments, Inc. 5,700 133,950
Highwoods Properties, Inc. 10,900 280,675
Reckson Associates Realty
Corp. 15,300 344,250
Spieker Properties, Inc. 8,400 329,700
------------
1,403,787
REGIONAL MALLS-6.1%
Macerich Co. 13,400 342,537
Mills Corp. 16,300 318,869
------------
661,406
SHOPPING CENTERS-12.8%
Burnham Pacific Properties,
Inc. 20,400 234,600
Pan Pacific Retail Properties,
Inc. 24,500 441,000
Prime Retail, Inc. 37,200 320,850
Ramco-Gershenson Properties
Trust 10,500 165,375
Regency Realty Corp. 10,800 233,550
------------
1,395,375
STORAGE-3.9%
Public Storage, Inc. 15,400 429,275
WAREHOUSE & INDUSTRIAL-6.2%
Cabot Industrial Trust 14,600 297,475
ProLogis Trust 17,700 371,700
------------
669,175
Total Common Stocks
(cost $11,306,089) 10,575,335
SHORT-TERM INVESTMENT-2.3%
TIME DEPOSIT-2.3%
State Street Cayman Islands
4.50%, 5/03/99
(amortized cost $250,000) $250 250,000
TOTAL INVESTMENTS-99.6%
(cost $11,556,089) 10,825,335
Other assets less
liabilities-0.4% 38,708
NET ASSETS-100% $ 10,864,043
See notes to financial statements.
18
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED) ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
<TABLE>
<CAPTION>
REAL ESTATE
PREMIER GROWTH QUASAR INVESTMENT
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
FUND FUND FUND
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $120,850,718, $34,122,581 and
$11,556,089, respectively) $ 134,523,784 $ 35,064,657 $ 10,825,335
Cash 236 111,631 1,245
Receivable for investment securities sold 737,018 615,207 60,339
Deferred organization expenses 53,978 56,698 52,858
Interest and dividends receivable 30,229 1,565 18,980
Receivable for capital stock sold 24,306 5,657 10,774
Receivable due from adviser -0- -0- 6,596
Total assets 135,369,551 35,855,415 10,976,127
LIABILITIES
Payable for investment securities purchased 216,110 595,469 3,085
Advisory fee payable 75,402 15,658 -0-
Payable for capital stock redeemed 66,641 -0- -0-
Distribution fee payable 1,378 755 -0-
Accrued expenses 157,643 95,789 108,999
Total liabilities 517,174 707,671 112,084
NET ASSETS $ 134,852,377 $ 35,147,744 $ 10,864,043
COMPOSITION OF NET ASSETS
Capital stock, at par $8,238 $4,211 $1,378
Additional paid-in capital 112,525,139 38,258,271 15,313,604
Undistributed net investment income (111,596) (86,244) 31,483
Accumulated net realized gain (loss) on
investments and foreign currency
transactions 8,757,530 (3,970,570) (3,751,668)
Net unrealized appreciation (depreciation)
of investments 13,673,066 942,076 (730,754)
$ 134,852,377 $ 35,147,744 $ 10,864,043
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS I SHARES
Net asset value, redemption and offering
price per share ($129,380,277/7,902,642,
$17,332,180/2,074,666 and $10,863,609/
1,378,148 shares of capital stock issued
and outstanding, respectively) $16.37 $ 8.35 $ 7.88
CLASS II SHARES
Net asset value, redemption and offering
price per share ($5,472,100/335,636,
$17,815,564/2,136,220 and $434/55.1
shares of capital stock issued and
outstanding, respectively) $16.30 $ 8.34 $ 7.88
</TABLE>
See notes to financial statements.
19
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED) ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
<TABLE>
<CAPTION>
REAL ESTATE
PREMIER GROWTH QUASAR INVESTMENT
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
FUND FUND FUND
--------------- --------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends (Net of foreign taxes withheld
of $7,355, $0, and $755, respectively) $ 239,614 $ 86,206 $ 506,124
Interest 86,994 65,041 7,386
Total income 326,608 151,247 513,510
EXPENSES
Advisory fee 399,480 163,925 66,306
Distribution fee - Class II 6,347 3,581 -0-
Custodian 63,644 53,363 48,083
Administrative 61,500 61,500 61,500
Audit and legal 23,299 18,012 18,779
Printing 19,005 10,826 11,757
Transfer agency 18,101 16,513 8,395
Registration 15,471 5,513 5,438
Amortization of organization expenses 7,240 7,240 7,240
Directors' fees 4,500 4,500 4,500
Miscellaneous 2,071 1,600 1,884
Total expenses 620,658 346,573 233,882
Less: expenses waived and reimbursed by
adviser (See Note B) (212,715) (133,122) (160,208)
Net expenses 407,943 213,451 73,674
Net investment income (loss) (81,335) (62,204) 439,836
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on investment
transactions 9,645,021 (2,683,456) (3,429,278)
Net realized gain on foreign currency
transactions -0- -0- 1,299
Net unrealized appreciation (depreciation)
of investments 8,465,771 4,392,285 3,296,491
Net gain (loss) on investments and foreign
currency transactions 18,110,792 1,708,829 (131,488)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 18,029,457 $ 1,646,625 $ 308,348
</TABLE>
See notes to financial statements.
20
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
<TABLE>
<CAPTION>
PREMIER GROWTH QUASAR REAL ESTATE INVESTMENT
INSTITUTIONAL FUND INSTITUTIONAL FUND INSTITUTIONAL FUND
----------------------------- ----------------------------- ----------------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, 1999 OCTOBER 31, APRIL 30, 1999 OCTOBER 31, APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998 (A) (UNAUDITED) 1998 (B) (UNAUDITED) 1998 (C)
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (loss) $ (81,335) $ 16,136 $ (62,204) $ 2,356 $ 439,836 $ 697,160
Net realized gain (loss) on
investments and foreign
currency transactions 9,645,021 (887,491) (2,683,456) (1,287,114) (3,427,979) (324,943)
Net unrealized appreciation
(depreciation) of investments 8,465,771 5,207,295 4,392,285 (3,450,209) 3,296,491 (4,027,245)
Net increase (decrease) in net
assets from operations 18,029,457 4,335,940 1,646,625 (4,734,967) 308,348 (3,655,028)
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income
Class I (46,397) -0- (26,396) -0- (449,127) (655,108)
Class II -0- -0- -0- -0- (11) (13)
CAPITAL STOCK
TRANSACTIONS
Net increase (decrease) 56,961,007 55,539,040 13,014,487 25,214,665 (7,188,510) 22,470,152
Total increase (decrease) 74,944,067 59,874,980 14,634,716 20,479,698 (7,329,300) 18,160,003
NET ASSETS
Beginning of period 59,908,310 33,330 20,513,028 33,330 18,193,343 33,340
End of period (including
undistributed net investment
income of $0, $16,136 and
$0, $2,356 and $31,483,
$40,785, respectively.) $134,852,377 $ 59,908,310 $ 35,147,744 $ 20,513,028 $ 10,864,043 $ 18,193,343
</TABLE>
(a) Commencement of operations, January 7, 1998.
(b) Commencement of operations, March 17, 1998.
(c) Commencement of operations, December 9, 1997.
21
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED) ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Institutional Funds, Inc. (the "Company") was organized as a Maryland
corporation on October 3, 1997 and is registered under the Investment Company
Act of 1940 as an open-end series investment company. The Company is comprised
of three funds, Alliance Premier Growth Institutional Fund, Alliance Quasar
Institutional Fund and Alliance Real Estate Investment Institutional Fund (the
"Funds"). Each Fund has different investment objectives and policies. Prior to
the commencement of operations on January 7, 1998, March 17, 1998 and December
9, 1997, respectively, the Funds had no operations other than the sale to
Alliance Capital Management L.P. (the "Adviser") of 3,300 shares of Class I
common stock of each Fund for $33,000, and 33 shares of Class II common stock
of the Alliance Premier Growth Institutional Fund and the Alliance Quasar
Institutional Fund for $330 and 34 shares of Class II common stock of the
Alliance Real Estate Investment Institutional Fund for $340 in each case on
November 12, 1997. Each Fund offers Class I and Class II shares. Sales are made
without a sales charge, at each Fund's net asset value per share. Each class of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have
been prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies followed by the Funds.
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 sale price or if no sale occurred, at the
mean of the closing bid and asked price on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair market value of such securities.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of securities, closed forward exchange
currency contracts, holding of foreign currencies, options on foreign
currencies, exchange gains and losses realized between the trade and settlement
dates on security transactions, and the difference between the amounts of
interest and dividends recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net currency gains and losses
from valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net unrealized appreciation
(depreciation) of investments and foreign currency denominated assets and
liabilities.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $73,099 for the Real Estate Investment
Institutional Fund, $73,098 for the Premier Growth Institutional Fund and
$73,098 for the Quasar Institutional Fund have been deferred and are being
amortized on a straight-line basis through December 2002, January and March
2003, respectively.
22
ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
4. TAXES
It is each 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.
5. 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 securities
are purchased or sold. The Fund accretes discounts and amortizes premiums as
adjustments to interest income. Investment gains and losses are determined on
the identified cost basis.
6. 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 Class II
shares bear higher transfer agent fees. Expenses of the Trust are charged to
each Fund in proportion to net assets.
7. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences, do
not require such reclassification.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Funds pay Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of
.90% of the Real Estate Investment Institutional Fund's average daily net
assets and 1% of the Premier Growth Institutional Fund and Quasar Institutional
Fund's average daily net assets. Such fees are accrued daily and paid monthly.
The Adviser has agreed to waive its fees and bear certain expenses to the
extent necessary to limit total operating expenses on an annual basis to .90%
and 1.30% of average daily net assets for Class I and Class II of the Premier
Growth Institutional Fund; 1.20% and 1.35% of average daily net assets for
Class I and Class IIof the Quasar Institutional Fund and 1.00% and 1.40% of
average daily net assets for Class Iand Class II for the Real Estate Investment
Institutional Fund. For the six months ended April 30, 1999 such reimbursement
amounted to: Premier Growth Institutional Fund $151,215; Quasar Institutional
Fund $71,622 and Real Estate Investment Institutional Fund $98,708.
Pursuant to the advisory agreement, the Adviser provides to each Fund certain
legal and accounting services. For the six months ended April 30, 1999, the
Adviser agreed to waive its fees for such services. Such waiver amounted to:
Premier Growth Institutional Fund $61,500; Quasar Institutional Fund $61,500
and Real Estate Investment Institutional Fund $61,500.
The Funds compensate 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 Funds. Such compensation
amounted to $16,834, $15,427 and $3,684, respectively for the Premier Growth
Institutional Fund, the Quasar Institutional Fund and the Real Estate
Investment Institutional Fund for the six months ended April 30, 1999.
For the six months ended April 30, 1999, the Fund's expenses were reduced by
$131 for the Premier Growth Institutional Fund under an expense offset
arrangement with Alliance Fund Services.
Brokerage commissions paid on investment transactions for the six months ended
April 30, 1999, amounted to $110,669 for the Premier Growth Institutional Fund;
$123,337 for the Quasar Institutional Fund and $37,993 for the Real Estate
Investment Institutional Fund, 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.
23
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Funds have adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Funds pay a distribution fee to the Distributor at an annual
rate of up to .30% of average daily net assets attributable to Class II shares.
There is no distribution fee on Class I shares. The fees are accrued daily and
paid monthly. The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and promotional
activities. 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 II 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)
for the six months ended April 30, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------------- -------------------------------------
STOCKS AND U.S. GOVERNMENT STOCKS AND U.S. GOVERNMENT
FUND DEBT OBLIGATIONS AND AGENCIES DEBT OBLIGATIONS AND AGENCIES
- ----------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Premier Growth
Institutional $ 106,209,790 $ -0- $ 49,046,280 $ -0-
Quasar Institutional 42,122,711 -0- 26,684,728 -0-
Real Estate Investment
Institutional 2,288,972 -0- 9,310,995 -0-
</TABLE>
At April 30, 1999, the cost of investments for federal income tax purposes and
the tax basis gross unrealized appreciation, depreciation and net unrealized
appreciation (depreciation), excluding foreign currency transactions, were as
follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
------------------------------------- APPRECIATION
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ----------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Premier Growth
Institutional $ 120,935,378 $ 18,501,627 $ (4,913,221) $ 13,588,406
Quasar Institutional 34,665,585 3,138,411 (2,739,339) 399,072
Real Estate Investment
Institutional 11,878,252 345,561 (1,398,478) (1,052,917)
</TABLE>
For Federal income tax purposes at October 31, 1998, the Fund had capital loss
carryforwards for the Portfolios as follows: $598,855 expiring in 2006 for the
Premier Growth Institutional Fund $995,373 expiring 2006 for the Quasar
Institutional Fund, and $280,232 expiring in 2006 for the Real Estate
Investment Institutional Fund.
24
ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 18,000,000,000 shares of $.001 par value capital stock authorized,
6,000,000,000 shares each for Premier Growth Institutional Fund, Quasar
Institutional Fund and Real Estate Investment Institutional Fund. Each Fund
consists of two classes designated Class I and Class II, each with
3,000,000,000 authorized shares. Transactions in shares of capital stock were
as follows:
PREMIER GROWTH INSTITUTIONAL FUND
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS JAN. 7, SIX MONTHS JAN. 7,
ENDED 1998(A) ENDED 1998(A)
APRIL 30, 1999 TO APRIL 30, 1999 TO
(UNAUDITED) OCT. 31, 1998 (UNAUDITED) OCT. 31, 1998
------------ ------------ -------------- --------------
CLASS I
Shares sold 3,987,894 4,846,318 $ 64,654,051 $ 56,837,599
Shares issued in
reinvestment of
dividends 2,643 -0- 36,258 -0-
Shares redeemed (595,942) (341,571) (9,261,576) (4,198,789)
Net increase 3,394,595 4,504,747 $ 55,428,733 $ 52,638,810
CLASS II
Shares sold 149,591 307,955 $ 2,348,461 $ 3,782,004
Shares redeemed (53,494) (68,449) (816,187) (881,774)
Net increase 96,097 239,506 $ 1,532,274 $ 2,900,230
QUASAR INSTITUTIONAL FUND
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS MARCH 17, SIX MONTHS MARCH 17,
ENDED 1998(A) ENDED 1998(A)
APRIL 30, 1999 TO APRIL 30, 1999 TO
(UNAUDITED) OCT. 31, 1998 (UNAUDITED) OCT. 31, 1998
------------ ------------ -------------- --------------
CLASS I
Shares sold 604,023 3,009,763 $ 4,687,488 $ 27,395,135
Shares issued in
reinvestment of
dividends 3,508 -0- 26,172 -0-
Shares redeemed (1,298,594) (247,334) (10,192,988) (1,985,986)
Net increase
(decrease) (691,063) 2,762,429 $ (5,479,328) $ 25,409,149
CLASS II
Shares sold 3,868,960 785,381 $ 31,917,688 $ 5,617,297
Shares redeemed (1,732,778) (785,376) (13,423,873) (5,811,781)
Net increase
(decrease) 2,136,182 5 $ 18,493,815 $ (194,484)
(a) Commencement of operations.
25
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
REAL ESTATE INVESTMENT INSTITUTIONAL FUND
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS DECEMBER 9, SIX MONTHS DECEMBER 9,
ENDED 1997(A) ENDED 1997(A)
APRIL 30, 1999 TO APRIL 30, 1999 TO
(UNAUDITED) OCT. 31, 1998 (UNAUDITED) OCT. 31, 1998
------------ ------------ -------------- --------------
CLASS I
Shares sold 163,574 2,486,932 $ 1,249,324 $ 23,779,985
Shares issued in
reinvestment of
dividends 61,179 78,721 449,318 655,108
Shares redeemed (1,186,268) (229,290) (8,887,260) (1,965,003)
Net increase
(decrease) (961,515) 2,336,363 $ (7,188,618) $ 22,470,090
CLASS II
Shares sold 12.9 6 $ 100 $ 50
Shares issued in
reinvestment of
dividends 1 1 8 12
Net increase 13.9 7 $ 108 $ 62
NOTE F: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Funds,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expense in the Statement of Operations. The Funds did not utilize
the Facility during the six months ended April 30, 1999.
(a) Commencement of operations.
26
FINANCIAL HIGHLIGHTS ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
PREMIER GROWTH QUASAR REAL ESTATE INVESTMENT
INSTITUTIONAL FUND INSTITUTIONAL FUND INSTITUTIONAL FUND
------------------------ ------------------------ ------------------------
CLASS I CLASS I CLASS I
------------------------ ------------------------ ------------------------
SIX MONTHS JANUARY 7, SIX MONTHS MARCH 17, SIX MONTHS DECEMBER 9,
ENDED 1998(A) ENDED 1998(A) ENDED 1997(A)
APRIL 30, TO APRIL 30, TO APRIL 30, TO
1999 OCTOBER 31, 1999 OCTOBER 31, 1999 OCTOBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.62 $10.00 $ 7.42 $10.00 $ 7.78 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (b) (.01) .01 (.01) -0- .23 .43
Net realized and unrealized gain (loss)
on investment transactions 3.77 2.61 .95 (2.58) .11 (2.26)
Net increase (decrease) in net asset
value from operations 3.76 2.62 .94 (2.58) .34 (1.83)
LESS: DIVIDENDS
Dividends from net investment income (.01) -0- (.01) -0- (.24) (.39)
Net asset value, end of period $16.37 $12.62 $8.35 $7.42 $7.88 $7.78
TOTAL RETURN
Total investment return based on net
asset value (c) 29.81% 26.20% 12.68% (25.80)% 4.63% (18.61)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $129,380 $56,894 $17,332 $20,513 $10,864 $18,193
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements (d) .90% .90% 1.20% 1.20% 1.00% 1.00%
Expenses, before waivers/
reimbursements (d) 1.38% 2.29% 2.09% 3.82% 3.17% 3.09%
Net investment income (loss) (d) (.16)% .08% (.16)% .03% 5.97% 5.62%
Portfolio turnover rate 56% 86% 87% 61% 16% 11%
</TABLE>
See footnote summary on page 28.
27
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
PREMIER GROWTH QUASAR REAL ESTATE INVESTMENT
INSTITUTIONAL FUND INSTITUTIONAL FUND INSTITUTIONAL FUND
------------------------ ------------------------ ------------------------
CLASS II CLASS II CLASS II
------------------------ ------------------------ ------------------------
SIX MONTHS JANUARY 7, SIX MONTHS MARCH 17, SIX MONTHS DECEMBER 9,
ENDED 1998(A) ENDED 1998(A) ENDED 1997(A)
APRIL 30, TO APRIL 30, TO APRIL 30, TO
1999 OCTOBER 31, 1999 OCTOBER 31, 1999 OCTOBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.58 $10.00 $ 7.40 $10.00 $ 7.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (b) (.04) (.03) (.03) (5.89) .21 .41
Net realized and unrealized gain (loss)
on investment transactions 3.76 2.61 .97 3.29 .12 (2.28)
Net increase (decrease) in net asset
value from operations 3.72 2.58 .94 (2.60) .33 (1.87)
LESS: DIVIDENDS
Dividends from net investment income -0- -0- -0- -0- (.22) (.36)
Net asset value, end of period $16.30 $12.58 $8.34 $7.40 $7.88 $7.77
TOTAL RETURN
Total investment return based on net
asset value (c) 29.57% 25.80% 12.70% (26.00)% 4.48% (19.02)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $5,472(e) $3,014(e) $17,816(e) $283 $434 $320
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements (d) 1.30% 1.30% 1.35% 1.60% 1.40% 1.40%
Expenses, before waivers/
reimbursements (d) 1.78% 2.65% 1.99% 4.62% 3.69% 3.59%
Net investment income (loss) (d) (.57)% (.38)% (.65)% (.14)% 5.72% 5.04%
Portfolio turnover rate 56% 86% 87% 61% 16% 11%
</TABLE>
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Total investment return calculated
for a period of less than one year is not annualized.
(d) Annualized.
(e) 000's omitted.
28
ALLIANCE INSTITUTIONAL FUNDS
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
ALFRED HARRISON, EXECUTIVE VICE PRESIDENT
JANE MACK GOULD, EXECUTIVE VICE PRESIDENT
ALDEN M. STEWART, EXECUTIVE VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
RANDALL E. HAASE, SENIOR VICE PRESIDENT
DANIEL G. PINE, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
DAVID A. KRUTH, VICE PRESIDENT
DANIEL NORDBY, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02116
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL LLP
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
(1) Member of the Audit Committee.
29
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
TAX-FREE INCOME
Alliance Municipal Income Fund
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
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
General Municipal Portfolio
Government Portfolio
30
ALLIANCE INSTITUTIONAL FUNDS
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
AIFSR
