ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
SEMI-ANNUAL REPORT
MAY 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
July 27, 1998
Dear Shareholder:
We are pleased to provide the first report to shareholders for the Alliance
International Premier Growth Fund. This semi-annual report contains investment
results and market activity for Alliance International Premier Growth Fund's
initial period of operations beginning March 3, 1998 and ending May 31, 1998.
INVESTMENT RESULTS
The Fund's performance results since its inception are shown in the following
table, together with index performance for the Fund's benchmark, the Morgan
Stanley Capital International (MSCI) EAFE Index. As you can see from the table,
your Fund performed in line with its benchmark during its initial period of
operations.
INVESTMENT RESULTS*
Period Ended May 31, 1998
TOTAL RETURNS
SINCE INCEPTION
---------------------
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
Class A 3.40%
Class B 3.30%
Class C 3.20%
MSCI EAFE INDEX 3.46%
* TOTAL RETURNS ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES
FROM THE FUND'S INCEPTION DATE ON MARCH 3, 1998 THROUGH MAY 31, 1998. ALL FEES
AND EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO
ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE
PURCHASED OR REDEEMED. RETURNS FOR THE FUND AND ITS COMPARATIVE BENCHMARK
INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD. TOTAL
RETURN FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE MSCI EAFE INDEX MEASURES THE OVERALL PERFORMANCE OF STOCK MARKETS IN
21 COUNTRIES WITHIN EUROPE, AUSTRALIA AND THE FAR EAST. BENCHMARK RETURNS ARE
SINCE THE MONTH-END NEAREST TO THE FUND'S INCEPTION DATE, IN THIS CASE FEBRUARY
28, 1998. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
ECONOMIC REVIEW
During the second quarter of 1998, the global economy continued to wrestle with
the effects of the Asian financial crisis. Final domestic demand in both the
United States and Europe remained strong, but demand in Japan continued to
decline. Growth in manufacturing output in most developed countries slowed.
Weakness in commodity prices, especially oil, and falling import prices kept
consumer price index (CPI) inflation rates on downward trajectories. The major
central banks held official interest rates steady. U.S. and European stock
prices spent most of the second quarter in a consolidating mode, ultimately
posting small gains, while Tokyo stocks struggled and were basically flat in
the quarter. The U.S. dollar appreciated slightly on a trade-weighted basis
during the past three months, while the German mark held steady and the
Japanese yen lost ground.
ECONOMIC OUTLOOK
Our outlook for global financial markets assumes that the strains created by
the Asian crisis, while persisting for several more months, will eventually be
unwound. However, many countries in East Asia, including Japan, will experience
negative growth in 1998. These reversals will be mitigated by a substantial
growth transfer from the United States, Europe and China totaling at least $100
billion. Low interest rates, lofty stock prices, and relatively strong
currencies will facilitate this growth "export."
Overall growth in the United States and Europe may temporarily slip below
2%--in China, below 7%--by this summer. However, this process should not go on
indefinitely, and a significant portion of the adjustment may have already
occurred. Wage and benefit increases have been slowly escalating in the United
States, and we expect that acceleration will show through during the remainder
of 1998 as CPI inflation rises above 2%. Inflation in Europe is likely to
remain subdued given the high levels of unemployment and wide output gaps,
while inflation is hardly a worry in Japan's recessionary environment.
Central bank policy remains in a reactive mode, although a modest upward
adjustment of official rates is possible later this year or in 1999, once the
Asian shock wave passes. The "mini-bubble" in stock prices in the United States
and Europe that occurred during the first quarter of 1998 appears to have
deflated. We believe that the fundamentals are in place for U.S. equities to
produce returns of 10%-12% over the next year, and for European equi-
1
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
ties to do even better thanks to the advent of monetary union. Only bold action
by the Japanese authorities in tackling their economic and banking problems can
turn the tide in their stock market.
FUND STRATEGY
In managing your Fund, our investment strategy will emphasize stock selection
and investment in a limited number of comparitively large, high-quality
companies. In following this strategy, we utilize the fundamental analysis and
research of Alliance's large global equity research team situated in numerous
locations around the world. The Fund's sector and geographic weightings will be
a by-product of our "bottom-up" stock selection approach rather than
predetermined allocation.
As of May 31, 1998, we have placed some emphasis on companies in the Consumer
Services (15%), Healthcare (15%), Consumer Staples (14%) and Finance (13%)
industries. As illustrated in the following chart, the Fund is broadly
diversified by country with significant investments in France (19%), the
Netherlands (13%), Switzerland (13%), Japan (10%) and the United Kingdom (9%).
INDUSTRIAL AND GEOGRAPHIC BREAKDOWNS AS OF MAY 31, 1998:*
BRAZIL 3%
FINLAND 7%
FRANCE 19%
GERMANY 5%
ITALY 4%
JAPAN 10%
MEXICO 4%
NETHERLANDS 13%
OTHER (5 COUNTRIES) 7%
SPAIN 6%
SWITZERLAND 13%
UNITED KINGDOM 9%
BASIC INDUSTRY 8%
CAPITAL GOODS 2%
CONSUMER MANUFACTURING 7%
CONSUMER SERVICES 15%
CONSUMER STAPLES 14%
ENERGY 3%
FINANCE 13%
HEALTHCARE 15%
MULTI-INDUSTRY 5%
TECHNOLOGY 8%
UTILITIES 10%
* EXPRESSED AS A PERCENTAGE OF TOTAL INVESTMENTS.
We thank you for your interest and investment in the Alliance International
Premier Growth Fund and look forward to reporting our progress to you as we
enter the next year.
Sincerely,
John D. Carifa
Chairman and President
Bruce W. Calvert
Executive 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.
2
INVESTMENT OBJECTIVE AND POLICIES
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
Alliance International Premier Growth Fund is an open-end, diversified
investment company that seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of carefully
selected non-U.S. companies that are judged likely to achieve superior earnings
growth. Normally, about 60 companies will be represented in the portfolio, with
the 30 most highly regarded of these usually constituting 70% of the Fund's net
assets.
INVESTMENT RESULTS
_______________________________________________________________________________
NAV AND SEC TOTAL RETURNS AS OF MAY 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 3.40% -0.96%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 3.30% -0.70%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 3.20% 2.20%
SEC TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END (JUNE 30, 1998)
CLASS A CLASS B CLASS C
--------- --------- ---------
Since Inception* -2.11% -2.00% 1.00%
The Fund's investment results represent total returns. The NAV and SEC returns
reflect reinvestment of dividends and/or capital gains distributions in
additional shares, without (NAV) and with (SEC) the effect of the 4.25% maximum
front-end sales charge for Class A shares or applicable contingent deferred
sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1-year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 3/3/98 for all Share classes.
3
TEN LARGEST HOLDINGS
MAY 31, 1998 (UNAUDITED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Novartis AG--Manufactures healthcare products for
use in medical fields, as well as nutritional
and agricultural products. $ 592,268 4.8%
Internationale Nederlanden Groep NV--Provides a
variety of banking and financial services
worldwide. 549,361 4.4
Nokia Corp. Series A--Develops and manufactures
mobile phones, networks, and systems for
cellular and fixed networks. 526,600 4.2
Akzo Nobel NV--A worldwide operating company,
products include chemicals, man-made fibres,
paints, enamels and salts, ethical drugs,
veterinary products, hospital supplies and
diagnostics. 522,361 4.2
Telefonica de Espana, SA--Provides
telecommunications and audio-visual
communications services and products
throughout Spain 446,679 3.6
Adidas-Salomon AG--Manufactures and markets
"adidas" brand sport shoes, sportswear and a
variety of other sports merchandise worldwide. 441,069 3.6
Nestle, SA--A holding company whose subsidiaries
produce and sell a variety of food and consumer
products. 428,176 3.5
Sanofi, SA--Researches and manufactures health
care products and beauty aids. 351,496 2.8
Panamerican Beverages Cl. A--Bottles and
distributes "Coca-Cola" brand soft drinks and
other beverages throughout Mexico, Brazil,
Colombia, Venezuela, Costa Rica, and Nicaragua. 338,125 2.7
ASM Lithography Holdings NV--Develops, markets,
manufactures and services photolithography
systems worldwide. 327,787 2.6
$ 4,523,922 36.4%
4
INDUSTRY DIVERSIFICATION
MAY 31, 1998 (UNAUDITED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industry $ 807,092 6.5%
Capital Goods 190,049 1.5
Consumer Manufacturing 689,837 5.5
Consumer Services 1,575,878 12.7
Consumer Staples 1,443,677 11.6
Energy 308,695 2.5
Finance 1,374,474 11.0
Healthcare 1,512,459 12.2
Multi Industry 497,335 4.0
Technology 854,387 6.9
Utilities 993,152 8.0
Total Investments* 10,247,035 82.4
Cash and receivables, net of liabilities 2,188,171 17.6
Net Assets $ 12,435,206 100.0%
* Excludes short-term obligations.
5
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-82.4%
BRAZIL-2.6%
Telecomunicaoes Brasileiras, SA (ADR) 3,000 $ 319,875
CANADA-1.2%
Newcourt Credit Group, Inc. 3,100 152,112
DENMARK-2.4%
Ratin AS Cl. B 1,500 295,671
FINLAND-6.7%
Nokia Corp.
Series A 8,000 526,600
Orion-Yhtyma OY
Series B 10,000 301,837
------------
828,437
FRANCE-4.8%
Sanofi, SA 3,000 351,496
Total, SA Cl. B 2,000 248,370
------------
599,866
GERMANY-4.8%
Adidas-Salomon AG 2,500 441,069
Volkswagen AG 200 162,641
------------
603,710
HONG KONG-1.7%
Hutchison Whampoa 40,000 208,543
ITALY-3.6%
Credito Italiano 40,000 222,987
Telecom Italia SpA 30,000 226,597
------------
449,584
JAPAN-9.8%
Fuji Photo Film Co. 8,000 270,903
Honda Motor Co. 8,000 272,635
Nintendo Co. 3,000 280,506
Sony Corp. 1,500 126,715
Yamanouchi Pharmaceutical Co., Ltd. 12,000 266,859
------------
1,217,618
MEXICO-3.8%
Coca Cola Femsa (ADR) 8,000 136,000
Panamerican Beverages Cl. A 10,000 338,125
------------
474,125
NETHERLANDS-12.8%
Akzo Nobel NV 2,500 522,361
ASM Lithography Holdings NV (a) 8,000 327,787
Internationale Nederlanden Groep NV 8,000 549,361
Philips Electronics 2,000 190,049
------------
1,589,558
NORWAY-0.5%
Stolt Comex Seaway (a) 1,900 60,325
SPAIN-5.7%
Tabacalera, SA
Series A 12,000 258,507
Telefonica de Espana, SA 10,000 446,679
------------
705,186
SWEDEN-1.0%
Volvo AB Series B 4,000 127,846
SWITZERLAND-12.0%
Ciba Specialty Chemical Holding 2,000 284,731
Nestle, SA 200 428,176
Novartis AG 350 592,268
Zurich Vericher Namen 300 187,234
------------
1,492,409
UNITED KINGDOM-9.0%
Bank of Scotland 22,700 262,779
Diageo Plc. 25,000 282,869
Tomkins Plc. 50,000 288,792
United News & Media, Inc. 20,000 287,730
------------
1,122,170
Total Common Stocks
(cost $10,226,441) 10,247,035
6
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
TIME DEPOSIT-13.7%
Banque Nationale de Paris
5.625%, 6/01/98
(cost $1,700,000) $1,700 $ 1,700,000
TOTAL INVESTMENTS-96.1%
(cost $11,926,441) 11,947,035
Other assets less liabilities-3.9% 488,171
NET ASSETS-100% $ 12,435,206
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998 (UNAUDITED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $11,926,441) $ 11,947,035
Foreign cash, at value (cost $12,634) 12,562
Cash 7,291
Receivable for investment securities sold 2,151,837
Receivable for capital stock sold 541,052
Deferred organization expenses 264,460
Dividends and interest receivable 20,527
Receivable from Advisor 15,449
Total assets 14,960,213
LIABILITIES
Payable for investment securities purchased 2,183,599
Organizational expense payable 283,000
Distribution fee payable 6,301
Payable for capital stock redeemed 1,828
Accrued expenses 50,279
Total liabilities 2,525,007
NET ASSETS $ 12,435,206
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,204
Additional paid-in capital 12,393,146
Undistributed net investment income 29,179
Accumulated net realized loss on investments and foreign
currency transactions (2,759)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 14,436
$ 12,435,206
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($2,764,347/
267,289 shares of capital stock issued and outstanding) $10.34
Sales Charge--4.25% of public offering price .46
Maximum offering price $10.80
CLASS B SHARES
Net asset value and offering price per share ($7,042,108/
682,012 shares of capital stock issued and outstanding) $10.33
CLASS C SHARES
Net asset value and offering price per share ($1,016,642/
98,480 shares of capital stock issued and outstanding) $10.32
ADVISOR CLASS SHARES
Net asset value, redemption, and offering price per share
($1,612,109/155,834 shares of capital stock issued
and outstanding) $10.35
See notes to financial statements.
8
STATEMENT OF OPERATIONS
MARCH 3, 1998* TO MAY 31, 1998 (UNAUDITED)
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $6,490) $ 52,120
Interest 16,097 $ 68,217
EXPENSES
Advisory fee 15,953
Distribution fee - Class A 824
Distribution fee - Class B 8,721
Distribution fee - Class C 885
Audit and legal 20,700
Amortization of organization expenses 18,540
Custodian 12,960
Directors' fees 10,800
Transfer agency 8,370
Printing 8,190
Registration 4,971
Miscellaneous 4,170
Total expenses 115,084
Less: expenses waived by the Adviser
(see Note B) (76,046)
Net expenses 39,038
Net investment income 29,179
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (2,464)
Net realized loss on foreign currency
transactions (295)
Net unrealized appreciation (depreciation) of:
Investments 20,594
Foreign currency denominated assets
and liabilities (6,158)
Net gain on investments and foreign
currency transactions 11,677
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 40,856
* Commencement of operations.
See notes to financial statements.
9
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
MARCH 3, 1998*
TO
MAY 31, 1998
(UNAUDITED)
-----------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 29,179
Net realized loss on investments and foreign currency
transactions (2,759)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 14,436
Net increase in net assets from operations 40,856
CAPITAL STOCK TRANSACTIONS
Net increase 12,394,350
Total increase 12,435,206
NET ASSETS
Beginning of period -0-
End of period (including undistributed net investment
income of $29,179) $ 12,435,206
* Commencement of operations
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance International Premier Growth Fund (the "Fund") was incorporated as a
Maryland Corportation on November 24, 1997 and 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
4.00% to zero depending on the period of time the shares are held. Class B
shares will automatically convert to Class A shares eight years after the end
of the calendar month of purchase. Class C shares are subject to a contingent
deferred sales charge of 1% on redemptions made within the first year after
purchase. Advisor Class shares are sold without an initial or contingent
deferred sales charge and are not subject to ongoing distribution expenses.
Advisor Class shares are offered to investors participating in fee based
programs and to certain retirement plan accounts. All four classes of shares
have identical voting, dividend, liquidation and other rights, except that each
class bears different distribution expenses and has exclusive voting rights
with respect to its distribution plan. The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked 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 price. 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. ORGANIZATION EXPENSES
Organization expenses of approximately $283,000 have been deferred and are
being amortized on a straight-line basis through February, 2003.
3. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities, currency gains and
losses realized between the trade and settlement dates on security
transactions, and the difference between the amounts of interest recorded on
the Fund's books and the U.S. dollar equivalent amounts actually received or
paid. 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 of investments and foreign currency
denominated assets and liabilities.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated invest-
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
ment 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 date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts on short-term securities as adjustments
to interest income.
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 shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A and the Advisor Class shares have no distribution fees.
7. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income 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 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. For the period ended May 31, 1998, the Adviser has agreed to
voluntarily waive its fees and bear certain expenses so that total expenses do
not exceed on an annual basis 2.50%, 3.20%, 3.20% and 2.20% of average net
assets, respectively, for the Class A, Class B, Class C and Advisor Class
shares. For the period ended May 31, 1998, such reimbursement amounted to
$76,046.
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 $1,800 for the period ended May 31, 1998.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $4,961 from the sale of Class A shares for the
period ended May 31, 1998.
Brokerage commissions paid on investment transactions for the period ended May
31, 1998, amounted to $20,403, of which, $787 was paid to Donaldson, Lufkin &
Jenrette Securities Corp., an affiliate of the Adviser.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement the Fund pays a distribution fee to the Distributor at an annual rate
of up to .30% of the average daily net assets attributable to 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. 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. The Distributor has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $325,310 and
$15,653, for Class B and Class C shares, respectively; such costs may be
recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs, incurred by the Distributor, beyond the
12
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
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 and U.S.
government securities) aggregated $10,904,562 and $675,657, respectively, for
the period ended May 31, 1998. There were no purchases or sales of U.S.
government or government agency obligations for the period ended May 31, 1998.
At May 31, 1998, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $329,885 and gross unrealized
depreciation of investments was $309,291, resulting in net unrealized
appreciation of $20,594, excluding foreign currency.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio
holdings, to hedge certain firm purchase and sales commitments denominated in
foreign currencies and for investment purposes. A forward exchange currency
contract is a commitment to purchase or sell a foreign currency at a future
date at a negotiated forward rate. The gain or loss arising from the difference
between the original contracts and the closing of such contracts is included in
realized gains or losses from foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of the counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure of
the Fund in that particular currency contract.
At May 31, 1998, the Fund had no outstanding forward exchange currency
contracts.
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. Each class consists of 3,000,000,000 authorized shares. Transactions in
capital stock were as follows:
SHARES AMOUNT
---------------- ----------------
MARCH 3, 1998* MARCH 3, 1998*
TO TO
MAY 31, 1998 MAY 31, 1998
(UNAUDITED) (UNAUDITED)
---------------- ----------------
CLASS A
Shares sold 273,873 $ 2,827,545
Shares redeemed (6,584) (68,650)
Net increase 267,289 $ 2,758,895
* Commencement of operations.
13
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
SHARES AMOUNT
---------------- ----------------
MARCH 3, 1998* MARCH 3, 1998*
TO TO
MAY 31, 1998 MAY 31, 1998
(UNAUDITED) (UNAUDITED)
---------------- ----------------
CLASS B
Shares sold 690,062 $7,132,952
Shares redeemed (8,050) (83,586)
Net increase 682,012 $7,049,366
CLASS C
Shares sold 98,536 $1,020,790
Shares redeemed (56) (583)
Net increase 98,480 $1,020,207
ADVISOR CLASS
Shares sold 158,885 $1,596,743
Shares redeemed (3,051) (30,861)
Net increase 155,834 $1,565,882
NOTE F: CONCENTRATION OF RISK
Investment in the Fund's shares requires consideration of certain factors that
are not typically associated with investments in U.S. equity securities such as
currency fluctuations, potential price volatility, lower liquidity. The
possibility of political and economic instability of government supervision and
regulation of the markets may further affect the Fund's investments.
* Commencement of operations.
14
FINANCIAL HIGHLIGHTS ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS C CLASS
------------- ------------- ------------- -------------
MARCH 3, MARCH 3, MARCH 3, MARCH 3,
1998(A) 1998(A) 1998(A) 1998(A)
TO TO TO TO
MAY 31, 1998 MAY 31, 1998 MAY 31, 1998 MAY 31, 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .04 .03 .02 .06
Net realized and unrealized gain on
investments and foreign currency
transactions. .30 .30 .30 .29
Net increase in net asset value
from operations .34 .33 .32 .35
Net asset value, end of period $10.34 $10.33 $10.32 $10.35
TOTAL RETURN
Total investment return based on net
asset value (d) 3.40% 3.30% 3.20% 3.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,764 $7,042 $1,017 $1,612
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements (e) 2.50% 3.20% 3.20% 2.20%
Expenses, before waivers/
reimbursements (e) 6.40% 7.05% 6.70% 8.36%
Net investment income (e) 2.08% 1.59% 1.42% 2.31%
Portfolio turnover rate 26% 26% 26% 26%
</TABLE>
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Net of expenses waived/reimbursed by the Adviser.
(d) 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 charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(e) Annualized.
15
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
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
BRUCE W. CALVERT, EXECUTIVE VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
EDWARD BAKER, VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
STEPHEN H. BEINHACKER, VICE PRESIDENT
RUSSELL BRODY, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109-3661
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
16
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 Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
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
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder 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
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
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
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
Government Portfolio
General Municipal Portfolio
17
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
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.
IPGSR
