ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
ANNUAL REPORT
NOVEMBER 30, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
January 27, 1999
Dear Shareholder:
This annual report for Alliance International Premier Growth Fund contains
investment results and market activity for the period since the inception of
the Fund on March 3, 1998 to November 30, 1998.
INVESTMENT RESULTS
The Fund's performance results for the last six months and since its inception
are shown in the following table, together with index performance for the
Fund's benchmark, the Morgan Stanley Capital International (MSCI) Europe,
Australasia, and Far East (EAFE) Index. As you can see from the table, your
Fund underperformed its benchmark due, in part, to the selection of some
industrial and cyclical stocks which performed poorly as the economic crisis
that began in Southeast Asia, and subsequently spread to other parts of the
globe, took hold. Since mid-October, as the worldwide financial markets began
their recovery, the Fund has increasingly focused on consistent growth stocks.
This repositioning has already begun to have a positive impact on the Fund.
INVESTMENT RESULTS*
Periods Ended November 30, 1998
TOTAL RETURNS
SINCE
6 MONTHS INCEPTION
-------- ---------
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
Class A -6.87% -3.70%
Class B -7.26% -4.20%
Class C -7.27% -4.30%
MSCI EAFE INDEX 0.48% 3.96%
* TOTAL RETURNS FOR THE FUND ARE CUMULATIVE AND ARE BASED ON THE NET ASSET
VALUE OF EACH CLASS OF SHARES AS OF NOVEMBER 30, 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 MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EUROPE, AUSTRALASIA, FAR
EAST (EAFE) INDEX MEASURES THE OVERALL PERFORMANCE OF STOCK MARKETS IN 21
COUNTRIES WITHIN EUROPE, AUSTRALIA AND THE FAR EAST. BENCHMARK RETURNS FOR THE
SINCE INCEPTION PERIOD ARE SINCE THE MONTH-END CLOSEST 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 4.
ECONOMIC REVIEW
During the third quarter of 1998, the economic crisis that began in Southeast
Asia spread to Russia, Eastern Europe and Latin America in a cascading effect.
Yield spreads widened between sovereign debt and corporate debt, between
developed markets and emerging markets, and between large cap stocks and small
cap stocks. Many analysts feared the risk of currency devaluations in a number
of countries. Interest rates in many Latin American countries skyrocketed and
currency controls were put in place to prevent capital from flooding into U.S.
dollars. The economic crisis even threatened to engulf and destabilize the
largest U.S. financial institutions due to their exposure to various large
hedge funds whose managers had incorrectly bet on yield spreads.
As a result of these events, stock markets around the world fell. The MSCI EAFE
Index declined nearly 24% from its peak on July 20, 1998 to the trough on
October 5, 1998. The U.S. market was not immune to the crisis--the S&P 500
Stock Index fell nearly 20% from its peak on July 17 before staging a strong
recovery in mid-October.
The finance ministers of the Group of Seven (G7) industrial countries
coordinated a global interest rate cut to try to stabilize the economic
situation. By cutting interest rates during a period of economic stress, the
world's financial system was reliquified. Yield spreads began to narrow to a
more healthy level, and capital flight from troubled economies significantly
slowed. Lower interest rates and a weaker U.S. dollar make it easier for debtor
nations to repay their borrowings and provide additional
1
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
time to reduce their fiscal deficits. Therefore, the recovery plan put in place
by the G7 nations helped to stem the tide of the declining markets.
Many raw materials are in global oversupply and commodity prices are showing
signs of disinflation, if not deflation. This helped persuade the finance
ministers of the G7 nations that there was little risk of inflation by cutting
interest rates. Until the supply of raw materials comes more into balance with
demand, we see little chance of a global reacceleration of growth.
The MSCI EAFE Index has recovered over 23% from its low on October 5, 1998. The
stocks of Japanese and Pacific Basin companies led the EAFE Index during
October. However, on a year-to-date basis, European stocks continue to dominate
the MSCI EAFE's performance, while Japan and the Pacific Basin are essentially
flat.
ECONOMIC OUTLOOK
Due to the strong financial market recovery in the U.S. and Europe since early
October, many people assume that the global financial crisis is over. While our
outlook is optimistic, a better description would be cautiously optimistic.
On the cautious side, our reasons for concern include: 1) the lack of economic
growth in Japan, 2) a slowing of economic growth in China, 3) restrictions to
free trade and the free movement of capital that may develop in Europe and in
various emerging markets, 4) capital spending glitches that may occur due to
European Monetary Union (EMU) consolidation or Year 2000 (Y2K) computer
malfunctions, and 5) war in the Middle East or some kind of large scale
terrorist attack.
However, we can point to many data points that give cause for optimism: 1) the
expanding democratic capitalistic base of countries around the world, including
the expansion of free trade zones like the EMU, 2) the swiftness with which the
financial markets exerted discipline in this most recent financial market
crisis which caused all governments concerned to focus on, and deal with, their
economic woes, 3) the ready availability of capital for worthy projects, 4)
positive fund flows into the market which could continue to drive the market to
new highs, 5) the ever widening expansion of technology which allows global
price and value competition, and 6) the continued economic strength of the U.S.
and Europe which provides engines for economic growth to the rest of the world.
Consequently, we believe that U.S. Gross Domestic Product (GDP) growth should
slow to approximately 2%-2.5% in 1999. We expect European GDP growth to be a
little higher than the U.S. We are hopeful that Japan's economic growth will
stabilize near zero while China's growth will probably slow to approximately
6%. Inflation in each of the developed countries should remain quite subdued.
PORTFOLIO MANAGEMENT AND STRATEGY
Management of your Fund's investment portfolio has been transferred from
Alliance Capital's London office to the Large Capitalization Growth Group in
Minneapolis, Minnesota. As a result, your Fund is now being managed by Alfred
Harrison, Vice Chairman of Alliance Capital, and Thomas Kamp, a Senior Vice
President. Mr. Harrison has over 35 years of investment experience while Mr.
Kamp's investment experience spans 12 years. The Large Capitalization Growth
Group has been managing the Alliance Premier Growth Fund for over six years.
The Large Capitalization Growth Group is utilizing its many years of experience
and expertise to manage Alliance International Premier Growth Fund. The basic
strategy of the Fund will remain the same: to emphasize stock selection and
investment in a limited number of comparatively large, high-quality companies.
However, the Fund's portfolio will tend to be slightly larger in average
company size and somewhat more growth oriented than it was previously.
In following this strategy, we will continue to utilize the fundamental
analysis and research of Alliance Capital's large global equity research team
situated in numerous locations around the world. The Fund's industry sector and
geographic weightings will be a by-product of our "bottom-up" stock selection
approach rather than from a predetermined top-down allocation.
The Fund is a diversified fund in terms of industry sector and geographic
weightings as shown in the charts on the next page. As you can see, there is
particular emphasis on the finance and consumer staples sectors which com-
2
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
prise 22.02% and 21.46% of the Fund's holdings. Geographically, our focus is on
some of the key G7 nations, namely the United Kingdom, France and Spain which
have weightings of 24.20%, 14.03% and 13.39%, respectively.
INDUSTRIAL AND GEOGRAPHIC BREAKDOWNS AS OF NOVEMBER 30, 1998:*
22.0% FINANCE
21.5% CONSUMER STAPLES
11.8% UTILITIES
11.6% HEALTH CARE
9.5% CONSUMER MANUFACTURING
9.3% TECHNOLOGY
7.3% CONSUMER SERVICES
4.7% ENERGY
2.3% MULTI INDUSTRY COMPANIES
24.2% UNITED KINGDOM
14.0% FRANCE
13.4% SPAIN
12.5% JAPAN
9.7% SWITZERLAND
6.7% FINLAND
5.2% NETHERLANDS
5% GERMANY
4.5% CANADA
4.8% OTHER
* 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 new year.
Sincerely,
John D. Carifa
Chairman and President
Alfred Harrison
Executive Vice President
Thomas Kamp
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.
3
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 NOVEMBER 30, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* -3.70% -7.76%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* -4.20% -8.03%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* -4.30% -5.26%
SEC TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (SEPTEMBER 30, 1998)
CLASS A CLASS B CLASS C
------------ ------------ ------------
Since Inception* -20.88% -21.09% -18.62%
The Fund's investment results represent cumulative 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.
4
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
GROWTH OF A $10,000 INVESTMENT
3/31/98* TO 11/30/98
$11,000
$10,000
$9,000
$8,000
$7,000
3/31/98 4/30/98 5/31/98 6/30/98 7/31/98 8/31/98 9/30/98
10/31/98 11/30/98
MSCI EAFE INDEX: $10,083
INTERNATIONAL PREMIER GROWTH FUND CLASS A: $8,925
This chart illustrates the total value of an assumed $10,000 investment in
Alliance International Premier Growth Fund Class A shares (from 3/31/98 to
11/30/98) as compared to the performance of an appropriate broad-based index.
The chart reflects the deduction of the maximum 4.25% sales charge from the
initial $10,000 investment in the Fund and assumes the reinvestment of
dividends and capital gains. Performance for Class B, Class C and Advisor Class
shares will vary from the results shown above due to differences in expenses
charged to those classes. Past performance is not indicative of future results,
and is not representative of future gain or loss in capital value or dividend
income.
The Morgan Stanley Capital International Europe, Australasia, Far
East(MSCIEAFE) Index is an unmanaged, market capitalization-weighted index that
measures stock performance in 21 countries within Europe, Australia, and the
Far East.
When comparing Alliance International Premier Growth Fund to the index shown
above, you should note that no charges or expenses are reflected in the
performance of the index.
International Premier Growth Fund
MSCI EAFE Index
* Month-end nearest to Fund's Class A share inception date of 3/3/98.
5
TEN LARGEST HOLDINGS
NOVEMBER 30, 1998 ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Nokia Corp. Series A--Develops and manufactures
mobile phones, networks, and systems for
cellular and fixed networks. $1,470,145 6.3%
Tabacalera, SA Series A--Manufactures, sells,
imports and exports tobacco products. 1,236,861 5.3
Newcourt Credit Group, Inc.--Originates,
manages and sells asset-based loans. 980,725 4.2
Telefonica de Espana, SA-Provides
telecommunications and audio-visual
communications services and products
throughout Spain. 939,599 4.0
Bank of Scotland--Attracts deposits and offers
banking services to large and small
businesses and individuals. 938,073 4.0
Sanofi, SA--Researches and manufactures
healthcare products and beauty aids. 892,151 3.8
Seita--Manufactures cigarettes including
Gauloises and Gitanes brands as well as pipe
and loose tobacco. 870,177 3.7
Zurich Allied AG--Core businesses are non-life
and life insurance, reinsurance and asset
management. 856,959 3.6
Banco Bilbao Vizcaya, SA--The Bank serves
customers in Spain and, through its network
of leading domestic banks, Latin America. 750,432 3.2
Vodafone Group Plc.--Provides telecommunications
services and operates the Vodafone network.
The Company's services include cellular radio,
wide area paging, distribution, packet
radio and value added network services. 738,218 3.1
$9,673,340 41.2%
6
INDUSTRY DIVERSIFICATION
NOVEMBER 30, 1998 ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Consumer Manufacturing $ 2,063,167 8.8%
Consumer Services 1,603,604 6.8
Consumer Staples 4,689,629 20.0
Energy 1,036,492 4.4
Finance 4,811,245 20.5
Healthcare 2,532,916 10.8
Multi Industry 509,907 2.2
Technology 2,030,035 8.6
Utilities 2,575,455 11.0
Total Investments 21,852,450 93.1
Cash and receivables, net of liabilities 1,617,893 6.9
Net Assets $23,470,343 100.0%
Excludes short-term obligations.
7
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1998 ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-93.1%
AUSTRALIA-1.1%
Coca-Cola Amatil, Ltd. 80,000 $ 268,833
BELGIUM-1.9%
Petrofina, SA 1,100 448,007
CANADA-4.2%
Newcourt Credit Group, Inc. 27,500 980,725
FINLAND-6.3%
Nokia Corp.
Series A 15,000 1,470,145
FRANCE-13.1%
Cap Gemini, SA 1,500 219,390
Carrefour, SA 700 495,297
Sanofi, SA 5,000 892,151
Seita 15,000 870,177
Total, SA (ADR) 7,600 464,550
Class B 1,000 123,934
------------
3,065,499
GERMANY-4.7%
Volkswagen AG 7,000 569,525
Wella AG 600 530,613
------------
1,100,138
JAPAN-11.6%
Credit Saison Co., Ltd. 25,000 570,558
Fuji Photo Film Co. 5,000 186,802
Honda Motor Co. 15,000 538,477
NTT Mobile Communications Network, Inc. 8 305,381
Sony Corp. (a) 7,000 512,244
Takeda Chemical Industries 12,000 404,467
Yamanouchi Pharmaceutical Co., Ltd. (a) 7,000 204,670
------------
2,722,599
NETHERLANDS-4.8%
Internationale Nederlanden Groep NV 12,000 687,130
Philips Electronics 7,000 442,921
------------
1,130,051
SPAIN-12.5%
Banco Bilbao Vizcaya, SA (b) 47,500 750,432
Tabacalera, SA
Series A 50,000 1,236,861
Telefonica de Espana, SA 20,000 939,599
------------
2,926,892
SWITZERLAND-9.0%
Nestle, SA 300 623,165
Novartis AG 336 630,557
Zurich Allied AG 1,200 856,959
------------
2,110,681
TAIWAN-1.4%
Taiwan Semiconductor
Manufacturing Co., Ltd. (ADR) (b) 22,700 340,500
UNITED KINGDOM-22.5%
Bank of Scotland 85,000 938,073
Diageo Plc. 58,100 664,683
Garban Plc. (b) 7,000 27,368
Glaxo Wellcome Plc. 12,500 401,071
Granada Group Plc. 20,000 312,114
Orange Plc. (b) 58,000 592,257
Rentokil Initial Plc. 64,000 417,032
8
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Tomkins Plc. 110,000 $ 509,907
United News & Media, Inc. 70,000 687,657
Vodafone Group Plc. 50,000 738,218
------------
5,288,380
Total Common Stocks
(cost $20,648,167) 21,852,450
TOTAL INVESTMENTS-93.1%
(cost $20,648,167) 21,852,450
Other assets less liabilities-6.9% 1,617,893
NET ASSETS-100% $23,470,343
(a) Securities, or a portion thereof, with an aggregate market value of
$716,914 have been segregated to collateralize forward exchange currency
contracts.
(b) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $20,648,167) $21,852,450
Foreign cash, at value (cost $492,601) 494,870
Cash 216,231
Receivable for investment securities and foreign currency sold 1,683,300
Receivable for capital stock sold 1,166,366
Deferred organization expenses 226,762
Dividends receivable 38,557
Receivable from advisor 21,540
Total assets 25,700,076
LIABILITIES
Payable for investment securities and foreign currency purchased 1,705,516
Organizational expense payable 283,000
Unrealized depreciation of forward exchange currency contract 45,551
Payable for capital stock redeemed 26,404
Distribution fee payable 13,322
Accrued expenses 155,940
Total liabilities 2,229,733
NET ASSETS $23,470,343
COMPOSITION OF NET ASSETS
Capital stock, at par $ 2,446
Additional paid-in capital 24,582,343
Accumulated net investment loss (26,502)
Accumulated net realized loss on investments and foreign
currency transactions (2,250,109)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 1,162,165
$23,470,343
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($7,254,962/
753,644 shares of capital stock issued and outstanding) $ 9.63
Sales Charge--4.25% of public offering price .43
Maximum offering price $10.06
CLASS B SHARES
Net asset value and offering price per share ($11,709,714/
1,222,946 shares of capital stock issued and outstanding) $ 9.58
CLASS C SHARES
Net asset value and offering price per share ($3,119,842/
325,934 shares of capital stock issued and outstanding) $ 9.57
ADVISOR CLASS SHARES
Net asset value, redemption, and offering per share ($1,385,825
/143,789 shares of capital stock issued and outstanding) $ 9.64
See notes to financial statements.
10
STATEMENT OF OPERATIONS
MARCH 3, 1998* TO NOVEMBER 30, 1998
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $14,409) $138,242
Interest 53,657 $ 191,899
EXPENSES
Advisory fee 109,041
Distribution fee - Class A 8,581
Distribution fee - Class B 58,090
Distribution fee - Class C 11,742
Custodian 141,403
Administrative 94,900
Audit and legal 56,688
Amortization of organization expense 56,238
Transfer agency 43,237
Printing 25,097
Directors' fees 20,820
Registration 10,891
Miscellaneous 5,302
Total expenses 642,030
Less: expenses waived by the Adviser (see Note B) (323,725)
Net expenses 318,305
Net investment loss (126,406)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (2,250,109)
Net realized loss on foreign currency transactions (47,237)
Net unrealized appreciation (depreciation) of:
Investments 1,204,283
Foreign currency denominated assets and liabilities (42,118)
Net loss on investments and foreign currency transactions (1,135,181)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(1,261,587)
* Commencment of operations.
See notes to financial statements.
11
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
MARCH 3, 1998*
TO
NOVEMBER 30, 1998
-----------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (126,406)
Net realized loss on investments and foreign
currency transactions (2,297,346)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 1,162,165
Net decrease in net assets from operations (1,261,587)
CAPITAL STOCK TRANSACTIONS
Net increase 24,631,630
Total increase 23,370,043
NET ASSETS
Beginning of period 100,300
End of period $23,470,343
* Commencement of operations.
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance International Premier Growth Fund (the "Fund") was incorporated as a
Maryland Corporation on November 24, 1997 and is registered under the
Investment Company Act of 1940, as a diversified, open-end management
investment company. Prior to commencement of operations on March 3, 1998, the
Fund had no operations other than the sale to Alliance Capital Management L.P.
(the "Adviser") of 10 shares each of Class A, Class B and Class C and 10,000
shares of Advisor Class for the aggregate amount of $100 each on Class A,
Class B and Class C shares and $100,000 on the Advisor Class shares on
February 27, 1998. 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 dividends, interest and
foreign withholding tax reclaims 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.
13
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if 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 shares and Advisor Class shares (Advisor Class shares also 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.
During the current fiscal year, permanent differences, primarily due to net
operating losses, resulted in a increase in accumulated net investment loss
and accumulated net realized loss on investment and foreign currency
transactions and a corresponding decrease in additional paid-in-capital. This
reclassification had no effect on net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") an advisory fee at an annual rate of 1%
of the average daily net assets of the Fund. Such fee is accrued daily and paid
monthly. 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 November 30, 1998, such
waiver of management fees, amounted to $228,825 and the waiver of the cost of
certain legal and accounting services provided to the Fund by the Adviser
amounted to $94,900.
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 $18,095 for the period ended November 30, 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 $11,361 from the sales of Class A shares and $18,256
and $691 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the year ended
November 30, 1998.
Brokerage commissions paid on investment transactions for the period ended
November 30, 1998, amounted to $120,638, 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 DLJ
directly.
14
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
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
$709,440 and $85,953, for Class B and Class C shares, respectively; such costs
may be recovered from the Fund in future periods so long as the Agreement is
in effect. In accordance with the Agreement, there is no provision for
recovery of unreimbursed distribution costs, incurred by the Distributor,
beyond the current fiscal year for Class A shares. The Agreement also provides
that the 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 $41,692,946 and $18,794,670, respectively,
for the period ended November 30, 1998. There were no purchases or sales of
U.S. government or government agency obligations for the period ended November
30, 1998.
At November 30, 1998, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $1,876,908 and
gross unrealized depreciation of investments was $672,625, resulting in net
unrealized appreciation of $1,204,283, 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. At November 30, 1998, the Fund had one
outstanding forward exchange currency contracts as follows:
U.S. $
CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE DEPRECIATION
--------- ----------- ----------- ------------
FORWARD EXCHANGE CURRENCY
SALE CONTRACT
Japanese Yen,
settling 12/17/98 70,205 $526,000 $571,551 $(45,551)
15
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
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
NOVEMBER 30, 1998 NOVEMBER 30, 1998
----------------- -----------------
CLASS A
Shares sold 843,613 $8,485,886
Shares redeemed (89,979) (841,014)
Net increase 753,634 $7,644,872
CLASS B
Shares sold 1,350,496 $13,632,672
Shares redeemed (127,560) (1,182,495)
Net increase 1,222,936 $12,450,177
CLASS C
Shares sold 345,438 $3,357,877
Shares redeemed (19,514) (174,357)
Net increase 325,924 $3,183,520
ADVISOR CLASS
Shares sold 151,569 $1,523,326
Shares redeemed (17,780) (170,265)
Net increase 133,789 $1,353,061
NOTE F: CONCENTRATION OF RISK
Investing in securities of foreign companies involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies and their markets may be less liquid and their prices
more volatile than those of United States companies. Consequently, the Fund's
investment portfolio may experience greater price volatility and significanty
lower liquidity than a portfolio invested in equity securities of U.S.
companies. These markets may be subject to greater influence by adverse events
generally affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States.
NOTE G: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
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 the miscellaneous expenses in the statement of operations. The Fund did
not utilize the Facility during the period ended November 30, 1998.
* Commencement of operations.
16
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
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1998 1998 1998 1998
------------ ------------ ------------ ------------
<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 (loss) (b)(c) (.08) (.13) (.15) .01
Net realized and unrealized loss on
investments and foreign currency
transactions. (.29) (.29) (.28) (.37)
Net decrease in net asset value from
operations (.37) (.42) (.43) (.36)
Net asset value, end of period $9.63 $9.58 $9.57 $9.64
TOTAL RETURN
Total investment return based on net
asset value (d) (3.70)% (4.20)% (4.30)% (3.60)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,255 $11,710 $3,120 $1,386
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) 5.19% 6.14% 6.00% 6.28%
Net investment income (loss) (e) (.90)% (1.41)% (1.69)% .13%
Portfolio turnover rate 1.51% 1.51% 1.51% 1.51%
</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.
17
REPORT OF INDEPENDENT
ACCOUNTANTS ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE INTERNATIONAL PREMIER
GROWTH FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance International Premier
Growth Fund (the "Fund") at November 30, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
period March 3, 1998 (commencement of operations) through November 30, 1998,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
securities at November 30, 1998 by correspondence with the custodian and
brokers, provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
January 8, 1999
18
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
ALFRED HARRISON, 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
THOMAS KAMP, 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
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
19
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.
IPGAR
