ALLIANCE INTERNATIONAL FUND, 485BPOS, 1995-06-01

ALLIANCE INTERNATIONAL FUND
485BPOS, 1995-06-01

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<PAGE>

As filed with the Securities and Exchange
Commission on June 1, 1995

File No. 2-70428
811-3130

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
_______________________________________

FORM N-lA

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933 X

Pre-Effective Amendment No.

Post-Effective Amendment No. 24 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940 X

Amendment No. 22 X

_______________________________________

Alliance International Fund
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York l0105
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code: (800)221-5672
_______________________________________

EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York l0105
(Name and address of agent for service)

It is proposed that this filing will become effective (check
appropriate box)

X immediately upon filing pursuant to paragraph (b)
____ on (date) pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on (date) pursuant to paragraph (a)(ii) of rule 485.

<PAGE>

If appropriate, check the following box:

this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.

Registrant has registered an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed a notice pursuant to such
Rule for its fiscal year ended June 30, 1994 on August 18, 1994.

<PAGE>

CROSS REFERENCE SHEET
(as required by Rule 404(c))

N-LA ITEM NO. LOCATION IN
PROSPECTUS
_____________ ___________

PART A

Item l. Cover Page Cover Page

Item 2. Synopsis Financial Highlights

Item 3. Condensed Financial Information Financial Highlights

Item 4. General Description of Registrant Description of the
Fund

Item 5. Management of the Fund Management of the
Fund; General
Information

Item 5a. Management Discussion of Fund
Performance Not Applicable

Item 6. Capital Stock and Other Securities General Information;
Dividends,
Distributions and
Taxes

Item 7. Purchase of Securities Being
Offered Purchase and Sale of
Shares; General
Information

Item 8. Redemption or Repurchase Purchase and Sale of
Shares

Item 9. Pending Legal Proceedings Not Applicable

PART B LOCATION IN
STATEMENT OF
ADDITIONAL
INFORMATION

____________
Item l0. Cover Page Cover Page

Item ll. Table of Contents Cover Page

<PAGE>

CROSS REFERENCE SHEET
(as required by Rule 404(c))

N-1A ITEM NO. LOCATION IN
STATEMENT OF
_____________ ADDITIONAL
INFORMATION
(CAPTION)
____________

Item l2. General Information and History Management of the
Fund; General
Information

Item l3. Investment Objectives and Policies Investment Policies
and Restrictions

Item l4. Management of the Registrant Management of the
Fund

Item l5. Control Persons and Principal
Holders of Securities Management of the
Fund

Item l6. Investment Advisory and Other
Services Management of the
Fund

Item l7. Brokerage Allocation and Other
Practices Portfolio
Transactions

Item l8. Capital Stock and Other Securities
General Information

Item l9. Purchase, Redemption and Pricing
of Securities Being Offered Purchase and
Redemption of
Shares; Net Asset
Value

Item 20. Tax Status Dividends,
Distributions and
Taxes

Item 21. Underwriters General Information

Item 22. Calculation of Performance Data General Information

<PAGE>

Item 23. Financial Statements Financial
Statements;
Report of
Independent Auditors

<PAGE>

Alliance Capital [Logo] The Alliance Stock Funds
_________________________________________________________________

June [ ], 1995

Supplement to Prospectus dated February 1, 1995

This supplement sets forth unaudited per share income and
capital change information for the periods indicated for Alliance
All-Asia Investment Fund, Inc. ("All-Asia Fund"), pursuant to the
requirements of the Securities and Exchange Commission applicable
to registered investment companies in their first year of
operations and for Alliance International Fund ("International
Fund"), Alliance Worldwide Privatization Fund, Inc. ("Worldwide
Privatization Fund"), Alliance New Europe Fund, Inc. ("New Europe
Fund"), Alliance Global Small Cap Fund, Inc. ("Global Small Cap
Fund"), Strategic Balanced Fund and Alliance Balanced Shares,
Inc. ("Balanced Shares") (collectively, the "Funds"). Unaudited
financial statements and related notes as of the same dates for
the respective Funds have also been added to the Statement of
Additional Information for each Fund.

The following information supplements the information under
the heading "Financial Information" on pages 7 through 15 of the
Prospectus.

00250157.AT1

<PAGE>

Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ _____________ ___________ ____________ ___________ _____________

International Fund

Class A
Six months
ended 12/31/94.... $18.38 $(.05) $(.26) $(.31) $0.00 $(1.62)
Class B
Six months
ended 12/31/94.... $17.90 $(.06)(b) $(.31) $(.37) $0.00 $(1.62)
Class C
Six months
ended 12/31/94.... $17.91 $(.03) $(.34) $(.37) $0.00 $(1.62)

Worldwide
Privatization Fund

Class A
Six months
ended 12/31/94.... $9.75 $(.01) $.24 $.23 $0.00 $0.00
Class B
Six months
ended 12/31/94.... $9.74 $(.03) $.23 $.20 $0.00 $0.00

New Europe Fund

Class A
Six months
ended 1/31/95..... $12.66 $(.07) $.23 $.16 $(.09) $0.00
Class B
Six months
ended 1/31/95..... $12.41 $(.11) $.22 $.11 $(.09) $0.00
Class C
Six months
ended 1/31/95..... $12.42 $(.12) $.23 $.11 $(.09) $0.00

All Asia Fund

Class A
11/28/94**

<PAGE>

- 4/30/95......... $10.00 $.11(c) $.13 $.24 $0.00 $0.00
Class B
11/18/94**
- 4/30/95......... $10.00 $.09(c) $.13 $.22 $0.00 $0.00
Class C
11/28/94**
- 4/30/95......... $10.00 $.08(c) $.16 $.24 $0.00 $0.00

</TABLE>

<PAGE>

Total Net Assets Ratio of Net
Total Net Asset Investment At End of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End of On Net Asset (000's) To Average To Average Portfolio
Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
_____________ _________ _____________ ____________ ____________ ___________ _____________

$(1.62) $16.45 (1.57)% $176,845 1.77%* (.46)%* 57%

$(1.62) $15.91 (1.94)% $49,532 2.56%* (1.32)%* 57%

$(1.62) $15.92 (1.94)% $29,173 2.56%* (1.29)%* 57%

$0.00 $9.98 2.36% $14,226 2.30%* (.04)%* 16%

$0.00 $9.94 2.05% $81,181 2.99%* (.75)%* 16%

$(.09) $12.73 1.29% $76,095 2.04%* (.89)%* 39%

$(.09) $12.43 .91% $29,978 2.74%* (1.59)%* 39%

$(.09) $12.44 .91% $8,863 2.73%* (1.59)%* 39%

$0.00 $10.24 2.40% $1,917 .19%*(d) 3.44%* 51%

<PAGE>

$0.00 $10.22 2.20% $3,019 .90%*(d) 2.73%* 51%

$0.00 $10.24 2.40% $185 .71%*(d) 2.87%* 51%

</TABLE>

<PAGE>

Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ ____________ ____________ ____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>

Global Small
Cap Fund

Class A
Six months
ended 1/31/95..... $11.08 $(.04)(b) $(.23) $(.27) $(2.11) $0.00
Class B
Six months
ended 1/31/95..... $10.78 $(.02) $(.28) $(.30) $(2.11) $0.00
Class C
Six months
ended 1/31/95..... $10.79 $(.09) $(.22) $(.31) $(2.11) $0.00

Strategic
Balanced Fund

Class A
Six months
ended 1/31/95..... $16.26 $.18(c) $(.47) $(.29) $(.22) $(.04)
Class B
Six months
ended 1/31/95..... $14.10 $.11(c) $(.40) $(.29) $(.12) $(.04)
Class C
Six months
ended 1/31/95..... $14.11 $.10(c) $(.39) $(.29) $(.12) $(.04)

Balanced Shares

Class A
Six months
ended 1/31/95..... $13.38 $.23 $(.23) $0.00 $(.20) $(.02)
Class B
Six months
ended 1/31/95..... $13.23 $.16 $(.21) $(.05) $(.16) $(.02)
Class C
Six months
ended 1/31/95..... $13.24 $.16 $(.21) $(.05) $(.16) $(.02)

</TABLE>

<PAGE>

$(2.11) $8.70 (2.26)% $53,830 2.52%* (1.24)%* 65%

$(2.11) $8.37 (2.61)% $4,574 3.24%* (2.00)%* 65%

$(2.11) $8.37 (2.73)% $1,131 3.21%* (1.96)%* 65%

$(.26) $15.71 (1.79)% $9,102 1.40%*(d) 2.14%* 34%

$(.16) $13.65 (2.07)% $39,008 2.10%*(d) 1.44%* 34%

$(.16) $13.66 (2.07)% $4,119 2.10%*(d) 1.45%* 34%

$(.22) $13.16 .09% $146,840 1.26%* 3.36%* 61%

$(.18) $13.00 (.32)% $13,350 2.04%* 2.58%* 61%

$(.18) $13.01 (.32)% $4,690 2.03%* 2.56%* 61%

___________________________________________
* Annualized
** Commencement of operations

<PAGE>

(a) Total investment return is calculated assuming an initial investment made at the net asset value at
the beginning of the period, reinvestment of all dividends and distributions at the net asset value
during the period, and a redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of total investment return.
Total investment returns calculated for periods of less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waived and expenses reimbursed by Alliance
(d) Net of expenses waived/reimbursed. If All-Asia Fund had borne all expenses, the expense ratios
would have been, with respect to Class A shares 11.71% (annualized), with respect to Class B shares
12.35% (annualized) and with respect to Class C shares 11.80% (annualized). If Strategic Balanced
Fund had borne all expenses, the expense ratios would have been, with respect to Class A shares
1.59% (annualized) and with respect to Class B and Class C shares 2.29% (annualized).
</TABLE>

Additionally, as of May 1, 1995, the portfolio manager of
Strategic Balanced Fund is Bruce W. Calvert. Mr. Calvert is a
Vice Chairman and the Chief Investment Officer of Alliance
Capital Management Corporation, the sole general partner of
Alliance Capital Management L.P., with which he has been
associated since prior to 1990.

8
00250157.AT1

<PAGE>

Prospectus for Alliance International Fund - Incorporated by
reference to Alliance International Fund Prospectus in Post-
Effective Amendment No. 23 of Registration Statement on Form N-1A
(File Nos. 2-70428 and 811-3130), filed October 31, 1994.

00250157.AT1

<PAGE>

(LOGO)(R)

ALLIANCE INTERNATIONAL FUND

_________________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 221-5672
_________________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION

November 1, 1994 (amended June 1, 1995)

_________________________________________________________________

This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Fund's current Prospectus.
A copy of the Prospectus may be obtained by contacting Alliance
Fund Services, Inc. at the address or telephone numbers listed
above.

TABLE OF CONTENTS

PAGE

Description of the Fund.................................... 1

Management of the Fund..................................... 16

Expenses of the Fund....................................... 23

Purchase of Shares......................................... 27

Redemption and Repurchase of Shares........................ 42

Shareholder Services....................................... 46

Net Asset Value............................................ 51

Dividends, Distributions and Taxes......................... 53

Portfolio Transactions..................................... 58

General Information........................................ 60

Financial Statements....................................... 65

<PAGE>

Report of Independent Auditors............................. 75

Appendix A (Futures Contracts and Options on
Futures Contracts and Foreign Currencies)............... A-1

Appendix B: Japan.......................................... B-1
_________________________________________________________________

(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

___________________________________________________________

DESCRIPTION OF THE FUND

_________________________________________________________________

GENERAL

During the period since World War II, foreign securities have
generally offered a higher return than similar investments in the
United States. Moreover, there has normally been a wide
variation in performance between international equity markets
over that period. Although there can be no assurance that these
conditions will continue in the future or that Alliance Capital
Management L.P., the Fund's Adviser (the "Adviser"), will be able
to identify and invest in companies participating in the faster
growing foreign economies and markets, management of Alliance
International Fund (the "Fund") believes that investment in
foreign securities offers significant potential for prospective
long-term capital appreciation. The investment objective and
policies of the Fund have been developed in light of these
beliefs with the objective of providing investors with an
opportunity to participate in the ownership of a broad portfolio
of securities of foreign companies.

INVESTMENT OBJECTIVE AND POLICIES

The fundamental investment objective of the Fund is to seek
to obtain a total return on its assets from long-term growth of
capital and from income principally through a broad portfolio of
marketable securities of established non-United States companies
(e.g., incorporated outside the United States), companies
participating in foreign economies with prospects for growth, and
foreign government securities. The management of the Fund
considers it consistent with this objective to acquire securities
of companies incorporated in the United States and having their
principal activities and interests outside of the United States.
The Fund intends to be invested primarily in such issuers and
under normal circumstances more than 80% of its assets will be so
invested. The foregoing investment objective is a fundamental
policy of the Fund and cannot be changed without shareholder
approval.

In seeking its objective, the Fund expects to invest its
assets primarily in common stocks of established non-United
States companies which in the opinion of the Adviser have
potential for growth of capital or income or both. However,
there is no requirement that the Fund invest exclusively in
common stocks or other equity securities, and, if deemed
advisable, the Fund may invest in any other type of investment
grade security including, but not limited to, convertible

<PAGE>

securities, preferred stocks, bonds, notes and other debt
securities of foreign issuers (Euro-dollar securities), warrants,
or obligations of the United States or foreign governments and
their political subdivisions.

Investments may be made for capital appreciation or for
income or any combination of both for the purpose of achieving a
higher overall return than might otherwise be obtained solely
from investing for growth of capital or for income. There is no
limitation on the percent or amount of the Fund's assets which
may be invested for growth or income, and therefore, at any point
in time, the investment emphasis may be placed solely or
primarily on growth of capital or solely or primarily on income.
There can be no assurance, of course, that the Fund will achieve
its objective.

In determining whether the Fund will be invested for capital
appreciation or for income or any combination of both, the
Adviser regularly analyzes a broad range of international equity
and fixed income markets in order to assess the degree of risk
and level of return that can be expected from each market. Based
upon the current assessment of the Adviser, the Fund expects that
its objective will, over the long term, be met principally
through investing in the equity securities of established non-
United States companies which, in the opinion of the Adviser,
have potential for growth of capital. However, the Fund can be
expected during certain periods to place substantial emphasis on
income through investment in foreign debt securities when it
appears that the total return from such securities will equal or
exceed the return on equity securities.

When management believes that the total return on debt
securities will equal or exceed the return on common stocks, the
Fund may, in seeking its objective of total return, substantially
increase its holdings in such debt securities. The Fund may
establish and maintain temporary cash balances for defensive
purposes or to enable it to take advantage of buying
opportunities.

The Adviser believes a portfolio of investments solely in
issuers located in the United States or in any other single
country ties the performance of such a portfolio to the economic
and market swings of one country, and that diversification by
country, as well as by industry, can alleviate the impact of
downturns in any one country. The Fund intends to diversify
investments broadly among countries and normally to have
represented in the portfolio business activities of not less than
three different countries, excluding the United States. The Fund
may invest all or a substantial portion of its assets in one or
more of such countries. At July 31, 1994, approximately 50% of
the Fund's assets were invested in securities of Japanese

<PAGE>

issuers. For a description of Japan, see Appendix B. The Fund
may purchase securities of companies, wherever organized, which,
in the judgment of the Adviser, have their principal activities
and interests outside the United States determined on the basis
of such factors as location of the company's assets, or
personnel, or sales and earnings.

It is the present intention of the Adviser to invest in
companies based in (or governments of or within) the Far East
(Japan, Hong Kong, Singapore and Malaysia), Western Europe
(United Kingdom, Germany, Netherlands, France, Switzerland),
Australia, Canada, and such other areas and countries as the
Adviser may determine from time to time. However, investments
may be made from time to time in companies in, or governments of,
developing countries as well as developed countries. Although
there is no universally accepted definition, a developing country
is generally considered to be a country which is in the initial
stages of its industrialization cycle with a low per capita gross
national product. Historical experience indicates that the
markets of developing countries have been more volatile than the
markets of the more mature economies of developed countries;
however, such markets often have provided higher rates of return
to investors. Shareholders should be aware that investing in the
equity and fixed-income markets of developing countries involves
exposure to economic structures that are generally less diverse
and mature, and to political systems which can be expected to
have less stability than those of developed countries. Management
at present does not intend to invest more than 10% of the Fund's
total assets in companies in, or governments of, developing
countries.

The Adviser, in determining the composition of the Fund's
portfolio, will initially seek the appropriate distribution of
investments among various countries and geographic regions.
Accordingly, the Adviser will consider the following factors in
making investment decisions on this basis: prospects for
relative economic growth between foreign countries; expected
levels of inflation; government policies influencing business
conditions; the outlook for currency relationships; and the range
of individual investment opportunities available to the
international portfolio investor.

The Fund invests in the established companies located in many
countries. As of June 30, 1994, most of the Fund's investments
were in countries comprised by the Morgan Stanley Capital
International ("MSCI") EAFE Index, which includes stock markets
of Europe, Australia and East Asia, which markets comprise 59% of
of the world's stock market capitalization. (Source: MSCI:
world stock market capitalization as of December 31, 1993.) The
United States represents 38% of the world's stock market
capitalization. As of June 30, 1994, the investments of the Fund

<PAGE>

were in Europe (37%), East Asia (53%) and other regions (10%).
As of June 30, 1994, the top five countries in which the Fund was
invested were Japan (49%), the United Kingdom (12%), France (5%),
Germany (4%) and The Netherlands (3%). As of June 30, 1994, the
ten largest investments of the Fund were Nomura Securities, Daiwa
Securities, Sony Corp., Toshiba Corp., Sumitomo Bank, Shin-Etsu
Chemical Co., Tokyo Marine & Fire Insurance Co., Nippon Steel
Corp., Sumitomo Trust & Banking Co. and Bank of Tokyo. The
portfolio manager of the Fund, A. Rama Krishna of the Adviser's
Tokyo office, believes that stock selection will continue to be
extremely important for the remainder of 1994. In Japan, the
Adviser believes the Fund should emphasize steel, paper and
chemical stocks and should remain heavily exposed to technology
stocks. In Europe, the Fund has been establishing positions in
Scandanavian paper companies and select insurance stocks.
Overall, the Adviser believes the prospects for attractive
returns in the international equity markets are positive.

The Adviser will, in analyzing individual companies for the
investment, look for one or more of the following
characteristics: an above average earnings growth per share;
high return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product
development and marketing; efficient service; pricing
flexibility; strength of management; and general operating
characteristics which will enable the companies to compete
successfully in their marketplace. While current dividend income
is not a prerequisite in the selection of portfolio companies,
the companies in which the Fund invests normally will have a
record of paying dividends for at least one year, and will
generally be expected to increase the amounts of such dividends
in future years as earnings increase.

Foreign securities such as those purchased by the Fund may be
subject to foreign government taxes which could reduce the yield
on such securities, although a shareholder otherwise subject to
U.S. Federal income taxes may, subject to certain limitations, be
entitled to claim a credit or deduction for U.S. Federal income
tax purposes for his or her proportionate share of such foreign
taxes paid by the Fund.

Under exceptional economic or market conditions abroad, the
Fund may temporarily invest for defensive purposes all or a major
portion of its assets in U.S. government obligations or debt
obligations of companies incorporated in and having their
principal activities in the United States. The Fund may also
from time to time invest its temporary cash balances in United
States, as well as foreign, short-term, high-grade money market
instruments, including, but not limited to, government
obligations, certificates of deposit, bankers' acceptances,

<PAGE>

commercial paper, short-term corporate debt securities and
repurchase agreements.

The following investment policies and restrictions
supplement, and should be read in conjunction with, the
information set forth in the Fund's Prospectus under the heading
"Investment Objectives and Policies." While the Fund's
investment objective of total return for long-term growth of
capital and from income cannot be changed without shareholder
approval, the Fund's investment policies are not fundamental and
may be changed by the Trustees of the Fund without shareholder
approval. However, shareholders will be notified prior to a
material change in such policies.

DERIVATIVE INVESTMENT PRODUCTS

The Fund may use various derivative investment products to
reduce certain risks to the Fund of exposure to local market and
currency movements. These products include forward foreign
currency exchange contracts, futures contracts, including stock
index futures, and options thereon, put and call options and
combinations thereof. The Adviser will use such products as
market conditions warrant. The Fund's ability to use these
products may be limited by market conditions, regulatory limits
and tax considerations and there can be no assurance that any of
these products would succeed in reducing the risk to the Fund of
exposure to local market and currency movements. See "Investment
Policies and Restrictions" in the Statement of Additional
Information. New financial products and risk management
techniques continue to be developed and the Fund may use these
new investments and techniques to the extent consistent with its
investment objective and policies.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may
purchase or sell forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund
from adverse changes in the relationship between the U.S. Dollar
and other currencies. A forward contract is an obligation to
purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded
by currency traders and their customers. The Fund's dealings in
forward contracts will be limited to hedging involving either
specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of forward contracts with respect
to specific receivables or payables of the Fund accruing in
connection with the purchase and sale of its portfolio securities
or the payment of dividends and distributions by the Fund.
Position hedging is the sale of forward contracts with respect to
portfolio security positions denominated or quoted in such
foreign currency. The Fund will not speculate in forward
contracts and, therefore, the Adviser believes that the Fund will

<PAGE>

not be subject to the risks frequently associated with the
speculative use of such transactions. The Fund may not position
hedge with respect to the currency of a particular country to an
extent greater than the aggregate market value (at the time of
making such sale) of the securities held in its portfolio
denominated or quoted in that particular foreign currency. If
the Fund enters into a position hedging transaction, its
custodian bank will place cash or liquid securities in a separate
account of the Fund in an amount equal to the value of the Fund's
total assets committed to the consummation of such forward
contract. If the value of the securities placed in the separate
account declines, additional cash or securities will be placed in
the account so that the value of the account will equal the
amount of the Fund's commitment with respect to such contracts.
Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Such
transactions also preclude the opportunity for gain if the value
of the hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it
anticipates. The Fund will not enter into a forward contract
with a term of more than one year or if, as a result thereof,
more than 50% of the Fund's total assets would be committed to
such contracts.

While these contracts are not presently regulated by the
Commodity Futures Trading Commission ("CFTC"), the CFTC may in
the future assert authority to regulate forward contracts. In
such event the Fund's ability to utilize forward contracts in the
manner set forth in the Prospectus may be restricted. Forward
contracts will reduce the potential gain from a positive change
in the relationship between the U.S. Dollar and foreign
currencies. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund if it had not entered
into such contracts. The use of foreign currency forward
contracts will not eliminate fluctuations in the underlying U.S.
Dollar equivalent value of the prices of or rates of return on
the Fund's foreign currency-denominated portfolio securities and
the use of such techniques will subject the Fund to certain
risks.

The matching of the increase in value of a forward contract
and the decline in the U.S. Dollar equivalent value of the
foreign currency-denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Fund may
not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Fund's
ability to use such contracts to hedge or cross-hedge its assets.
Also, with regard to the Fund's use of cross-hedges, there can be

<PAGE>

no assurance that historical correlations between the movement of
certain foreign currencies relative to the U.S. Dollar will
continue. Thus, at any time poor correlation may exist between
movements in the exchange rates of the foreign currencies
underlying the Fund's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's
assets that are the subject of such cross-hedges are denominated.

OPTIONS. The Fund may write, sell and purchase put and call
options listed on one or more U.S. or foreign securities
exchanges, including options on market indices. A call option
gives the purchaser of the option, for paying the writer a
premium, the right to call upon the writer to deliver a specified
number of shares of a specified stock on or before a fixed date,
at a predetermined pr ice. A put option gives the buyer of the
option, for paying the writer a premium, the right to deliver a
specified number of shares of a stock to the writer of the option
on or before a fixed date, at a predetermined price.

Writing, purchasing and selling put and call options are
highly specialized activities and entail greater than ordinary
investment risks. When puts written by the Fund are exercised,
the Fund will be obligated to purchase stocks above their then
current market price. The Fund will not write a put option
unless at all times during the option period the Fund has
(a) sold short the optioned securities, or securities convertible
into or carrying rights to acquire the optioned securities, or
(b) purchased an offsetting put on the same securities. When
calls written by the Fund are exercised, the Fund will be
obligated to sell stocks below their then current market price.
The Fund will not write a call option unless the Fund at all
times during the option period owns either (a) the optioned
securities, or securities convertible into or carrying rights to
acquire the optioned securities, or (b) an offsetting call option
on the same securities.

OPTION ON MARKET INDICES. An option on a securities index is
similar to an option on a security except that, rather than the
right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right
to receive, upon exercise of the option, an amount of cash if the
closing level of the chosen index is greater than (in the case of
a call) or less than (in the case of a put) the exercise price of
the option.

FINANCIAL FUTURES CONTRACTS, INCLUDING STOCK INDEX FUTURES,
AND OPTIONS ON FUTURES CONTRACTS. The Fund may enter into
financial futures contracts, including contracts for the purchase
or sale for future delivery of foreign currencies and futures
contracts based on stock indices and may purchase and write put
and call options to buy or sell futures contracts ("options on

<PAGE>

futures contracts"). A sale of a futures contract entails the
acquisition of a contractual obligation to deliver the foreign
currency or other commodity called for by the contract at a
specified price on a specified date. A purchase of a futures
contract entails the incurring of a contractual obligation to
acquire the commodity called for by the contract at a specified
price on a specified date. The Fund's Custodian will place cash
not available for investment or U.S. Government Securities or
other liquid high-quality debt securities in a separate account
of the Fund having a value equal to the aggregate amount of the
Fund's commitments in futures contracts. The purchaser of a
futures contract on an index agrees to take or make delivery of
an amount of cash equal to the difference between a specified
dollar multiple of the value of the index on the expiration date
of the contract and the price at which the contract was
originally struck. No physical delivery of the securities
underlying the index is made. In connection with its purchase of
stock index futures contracts the Fund will deposit in a
segregated account with the Fund's Custodian an amount of cash or
U.S. Government Securities (as defined below) or other liquid
high-quality debt securities equal to the market value of the
futures contracts less any amounts maintained in a margin account
with the Fund's broker. Options on futures contracts to be
written or purchased by the Fund will be traded on U.S. or
foreign exchanges or over-the-counter.

With respect to futures contracts and options on futures
contracts that are purchased for purposes other than for "bona
fide hedging purposes" (as defined in Commodity Futures Trading
Commission Regulations promulgated under the Commodity Exchange
Act), the aggregate initial margin and premiums required to be
paid by the Fund to establish such positions will not exceed on
all outstanding futures contracts of the Fund and premiums paid
on outstanding options on futures contracts 5% of the liquidation
value of the total assets of the Fund, after taking into account
unrealized profits and unrealized losses on any such contracts
the Fund has entered into.

For additional information on the use, risks and costs of
futures contracts and options on futures contracts and foreign
currencies, see Appendix A.

OPTIONS ON FOREIGN CURRENCIES. The Fund may write, sell and
purchase put and call options on foreign currencies traded on
securities exchanges or boards of trade (foreign and domestic) or
over-the-counter. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a
partial hedge, up to the amount of the premium received, and the
Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an

<PAGE>

effective hedge against fluctuations in exchange rates although,
in the event of rate movements adverse to the Fund's position, it
may forfeit the entire amount of the premium plus related
transaction costs. There is no specific percentage limitation on
the Fund's investments in options on foreign currencies. See the
Fund's Statement of Additional Information for further discussion
of the use, risks and costs of options on foreign currencies.

GENERAL. The successful use of the foregoing derivative
investment products draws upon the Adviser's special skills and
substantial experience with respect to such products and depends
on the Adviser's ability to forecast currency exchange rate
movements correctly. Should exchange rates move in an unexpected
manner, the Fund may not necessarily achieve the anticipated
benefits of futures contracts, options or forward contracts or
may realize losses and thus be in a worse position than if such
products had not been used. Unlike many exchange-traded futures
contracts and options on futures contracts, there are no daily
price fluctuation limits with respect to options on currencies
and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of time.
In addition, the correlation between movements in the prices of
such instruments and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could
produce unanticipated losses.

The Fund's ability to dispose of its positions in futures
contracts, options and forward contracts will depend on the
availability of liquid markets in such instruments. Markets in
options and futures with respect to a number of securities and
currencies are relatively new and still developing. It is
impossible to predict the amount of trading interest that may
exist in various types of futures contracts, options and forward
contracts. If a secondary market does not exist with respect to
an over-the-counter option purchased or written by the Fund, it
might not be possible to effect a closing transactions in the
option (i.e., dispose of the option), with the result that (i) an
option purchased by the Fund would have to be exercised in order
for the Fund to realize any profit and (ii) the Fund may not be
able to sell currencies or portfolio securities covering an
option written by the Fund until the option expires or it
delivers the underlying futures contract or currency upon
exercise. Therefore, no assurance can be given that the Fund
will be able to utilize these instruments effectively for the
purposes set forth above. Furthermore, the Fund's ability to
engage in options and futures transactions may be limited by tax
considerations. See "Dividends, Distributions and Taxes--U.S.
Federal Income Taxes."

<PAGE>

OTHER INVESTMENT PRACTICES

LENDING OF PORTFOLIO SECURITIES. Although it has no present
intention of doing so, the Fund may seek to increase income by
lending portfolio securities. Under present regulatory policies,
such loans may be made to member firms of the New York Stock
Exchange, Inc. (the "Exchange") and are required to be secured
continuously by collateral consisting of cash, cash equivalents
or United States Treasury Bills maintained in an amount at least
equal to the market value of the securities loaned. The value of
the securities loaned will not exceed 30% of the value of the
Fund's total assets.

The Fund may seek to increase income by lending portfolio
securities. The Fund will have the right to call a loan to
obtain the securities loaned at any time on five days' notice or
such shorter period as may be necessary to vote the securities.
During the existence of a loan the Fund will receive the income
earned on investment of the collateral. The Fund will not,
however, have the right to vote any securities having voting
rights during the existence of the loan, but the Fund will call
the loan in anticipation of an important vote to be taken among
holders of the securities or the giving or withholding of their
consent on a material matter affecting the investment. As with
other extensions of credit there are risks of delay in recovery
or even loss of rights in the collateral should the borrower of
the securities fail financially. However, the loans would be
made only to firms deemed by management of the Fund to be in good
standing, and when, in the judgment of management, the amount
which may be earned currently from securities loans of this type
justifies the attendant risk.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements, which are instruments through which an investor
(e.g., the Fund) purchases a security (the "underlying security")
from a bank or well-established securities dealer, with an
agreement by the seller to repurchase the security at the same
price, plus interest at a specified rate. The underlying
securities are limited to those which would otherwise qualify for
investment by the Fund. Repurchase agreements usually have a
short duration, often less than one week. The Fund will not
enter into a repurchase agreement of a duration of more than
seven business days if, as a result, more than 10% of the value
of the Fund's total assets would be so invested.

WARRANTS. The Fund may invest in warrants which entitle the
holder to buy equity securities at a specific price for a
specific period of time. Warrants may be considered more
speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with
respect to the securities which may be purchased nor do they

<PAGE>

represent any rights in the assets of the issuing company. Also,
the value of the warrant does not necessarily change with the
value of the underlying securities and a warrant ceases to have
value if it is not exercised prior to the expiration date.

It is expected that the Fund's investments will ordinarily be
traded on exchanges located in the respective countries in which
the various issuers of such securities are principally based and
in some case on other exchanges. As much as 25% of the value of
the Fund's total assets may be invested in the securities of
issuers having their principal business activities in the same
industry.

In connection with the qualification or registration of the
Fund's shares for sale under the securities laws of certain
states, the Fund has agreed that it will not invest in warrants
(other than warrants acquired by the Fund as a part of a unit or
attached to securities at the time of purchase) if as a result
such warrants valued at the lower of cost or market would exceed
10% of the value of the Fund's assets at the time of purchase.

PORTFOLIO TURNOVER. Generally, the Fund does not trade in
securities for short-term profits but, when circumstances
warrant, securities may be sold without regard to the length of
time held. Although the Fund cannot accurately predict its
annual portfolio turnover rate, management does not expect it to
exceed 100%. A 100% annual turnover rate would occur, for
example, if all the securities in the Fund's portfolio were
replaced in a period of one year. A 100% turnover rate is
greater than that of most other investment companies, including
those which emphasize capital appreciation as a basic policy, and
may result in correspondingly greater brokerage commissions being
paid by the Fund. The portfolio turnover rates for the years
ended June 30, 1994 and 1993 were 97% and 94%, respectively.

SPECIAL RISK CONSIDERATIONS

Investors should understand and consider carefully the
substantial risks involved in securities of foreign companies and
governments of foreign nations, some of which are referred to
below, and which are in addition to the usual risks inherent in
domestic investments. Investing in securities of non-United
States companies which are generally denominated in foreign
currencies, and utilization of derivative investment products
denominated in, or the value of which is dependent upon movements
in the relative value of, a foreign currency, involve certain
considerations comprising both risk and opportunity not typically
associated with investing in United States companies. These
considerations include changes in exchange rates and exchange
control regulations, political and social instability,
expropriation, imposition of foreign taxes, less liquid markets

<PAGE>

and less available information than are generally the case in the
United States, higher transaction costs, less government
supervision of exchanges, brokers and issuers, difficulty in
enforcing contractual obligations, lack of uniform accounting and
auditing standards and greater price volatility.

There is generally less publicly available information about
foreign companies comparable to reports and ratings that are
published about companies in the United States. Foreign
companies are also generally not subject to uniform accounting
and auditing and financial reporting standards, practices and
requirements comparable to those applicable to United States
companies.

It is contemplated that foreign securities will be purchased
in over-the-counter markets or on stock exchanges located in the
countries in which the respective principal offices of the
issuers of the various securities are located, if that is the
best available market. Foreign securities markets are generally
not as developed or efficient as those in the United States.
While growing in volume, they usually have substantially less
volume than the Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of
comparable United States companies. Similarly, volume and
liquidity in most foreign bond markets is less than in the United
States and, at times, volatility of price can be greater than in
the United States. Fixed commissions on foreign stock exchanges
are generally higher than negotiated commissions on United States
exchanges, although the Fund will endeavor to achieve the most
favorable net results on its portfolio transactions. There is
generally less government supervision and regulation of stock
exchanges, brokers and listed companies than in the United
States.

With respect to certain foreign countries, there is the
possibility of adverse changes in investment or exchange control
regulations and interest rates, expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of
the Fund, political or social instability, or diplomatic
developments which could affect United States investments in
those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the United States' economy
in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

The dividends and interest payable on certain of the Fund's
foreign portfolio securities may be subject to foreign
withholding taxes, thus reducing the net amount of income
available for distribution to the Fund's shareholders. A
shareholder otherwise subject to United States Federal income

<PAGE>

taxes may, subject to certain limitations, be entitled to claim a
credit or deduction for U.S. Federal income tax purposes for his
or her proportionate share of such foreign taxes paid by the
Fund. See "U.S. Federal Income Taxes".

Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. It will do so
from time to time, and investors should be aware of the costs of
currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on
the difference (commonly known as the "spread") between the price
at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Fund at
onerate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.

Investors should understand that the expense ratio of the
Fund can be expected to be higher than investment companies
investing in domestic securities since, among other things, the
cost of maintaining the custody of foreign securities is higher
and the purchase and sale of portfolio securities may be subject
to higher transaction charges, such as stamp duties and turnover
taxes.

Investors should further understand that all investments have
a risk factor. There can be no guarantee against loss resulting
from an investment in the Fund, and there can be no assurance
that the Fund's investment objective will be attained. The Fund
is designed for individual and institutional investors who wish
to diversify beyond the United States in an actively researched
and managed portfolio. The Fund may not be suitable for all
investors and is intended for long-term investors who can accept
the risks entailed in seeking long-term growth of capital through
investment in foreign securities as described above.

FUNDAMENTAL INVESTMENT POLICIES

In addition to the investment objective and policies
described above, the Fund has adopted certain fundamental
investment policies which may not be changed without shareholder
approval, which means the vote of (1) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares, whichever is less. Whenever any investment
restriction states a maximum percentage of the Fund's assets
which may be invested in any security or other asset, it is
intended that such maximum percentage limitation be determined
immediately after and as a result of the Fund's acquisition of
such securities or other assets. Accordingly, any later increase
or decrease in percentage beyond the specified limitation

<PAGE>

resulting from a change in values or net assets will not be
considered a violation.

Briefly, the policies provide that the Fund may not:

(i) invest more than 5% of the value of its total
assets in securities of a single issuer (including
repurchase agreements with any one entity), except
securities issued or guaranteed by the United
States Government, its agencies or
instrumentalities ("U.S. Government Securities") or
the government of any foreign country, its agencies
or instrumentalities ("Foreign Government
Securities"); provided, however, that the Fund may
not, with respect to 75% of the value of its total
assets, invest more than 5% of the value of its
total assets in securities of any one foreign
government issuer;

(ii) own more than 10% of the outstanding securities of
any class of any issuer (for this purpose, all
preferred stocks of an issuer shall be deemed a
single class, and all indebtedness of an issuer
shall be deemed a single class), except U.S.
Government Securities;

(iii) invest more than 25% of the value of its total
assets in securities of issuers having their
principal business activities in the same industry;
provided, that this limitation does not apply to
U.S. Government Securities or Foreign Government
Securities;

(iv) invest more than 5% of the value of its total
assets in the securities of any issuer that has a
record of less than three years of continuous
operation (including the operation of any
predecessor or unconditional guarantor), except
U.S. Government Securities or Foreign Government
Securities;

(v) invest more than 5% of the value of its total
assets in securities with legal or contractual
restrictions on resale ("restricted securities"),
other than repurchase agreements, or more than 10%
of the value of its total assets in securities that
are not readily marketable (including restricted
securities and repurchase agreements not terminable
within seven business days);

<PAGE>

(vi) borrow money, except as a temporary measure for
extraordinary or emergency purposes, and then only
from banks in amounts not exceeding 5% of its total
assets valued at market;

(vii) own, in contravention of the applicable laws or
regulations of Germany, any securities of another
investment company;

(viii) unless the securities are acquired pursuant to a
plan of reorganization or an offer of exchange, own
any securities of an open-end investment company or
more than 3% of the total outstanding voting stock
of any closed- end investment company or more than
10% of such value in closed-end investment
companies in general;

(ix) purchase or sell real property (including limited
partnership interests although it may purchase
readily marketable interests in real estate
investment trusts or readily marketable securities
of companies which invest in real estate);

(x) purchase or sell commodity contracts; provided,
however, that this policy does not prevent the Fund
from entering into (a) forward foreign currency
exchange contracts, (b) financial futures
contracts, including contracts for the purchase or
sale for future delivery of foreign currencies and
futures contracts based on stock indices,
(c) options or financial futures contracts, or
(d) other, similar contracts or transactions;

(xi) purchase participations or other direct interests
in oil, gas, or other mineral leases exploration or
development programs;

(xii) purchase securities on margin, except for use of
the short-term credit necessary for clearance of
purchases of portfolio securities;

(xiii) effect short sales of securities;

(xiv) make loans, except for use of the short-term credit
necessary for clearance of purchases of portfolio
securities, except that it may purchase debt
securities, enter into repurchase agreements and
lend its portfolio securities, as described in the
Fund's Prospectus;

<PAGE>

(xv) mortgage, pledge, hypothecate, or in any other
manner transfer as security for indebtedness any
security owned by the Fund, except as may be
necessary in connection with permissible
borrowings, and in the aggregate amount not to
exceed 10% of the Fund's total assets valued at
market at the time of such mortgaging, pledging or
hypothecating;

(xvi) act as an underwriter of securities, except insofar
as it might be deemed to be such for purposes of
the Securities Act of 1933, as amended, with
respect to the disposition of certain portfolio
securities acquired within the limitations of (v)
above;

(xvii) purchase or retain the securities of any issuer if,
to the knowledge of the Fund's management, those
officers and Trustees of the Fund, and of its
adviser, who each owns beneficially more than one-
half of 1% of the outstanding security of such
issuer, together own beneficially more than 5% of
the securities of such issuer;

(xviii) invest in companies for the purpose of exercising
management or control; and

(xix) issue senior securities except as permitted by the
Investment Company Act of 1940, as amended (the
"Act").

_________________________________________________________________

MANAGEMENT OF THE FUND

_________________________________________________________________

ADVISER

Alliance Capital Management L.P. (the "Adviser"), a Delaware
limited partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") as the
Fund's Adviser (see "Management of the Fund" in the Prospectus).

The Adviser is a leading international investment manager
supervising client accounts with assets as of December 31, 1994
of more than $121 billion (of which more than $36 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,

<PAGE>

public employee retirement systems, investment companies,
foundations and endowment funds and included, as of December 31,
1994, 29 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,450
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 51
registered investment companies comprising 103 separate
investment portfolios managed by the Adviser currently have more
than one million shareholders.

Alliance Capital Management Corporation, the sole general
partner of, and the owner of a 1% general partnership interest
in, the Adviser, is an indirect wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of December 31,
1994, ACMC, Inc. and Equitable Capital Management Corporation,
each a wholly-owned direct or indirect subsidiary of Equitable,
owned in the aggregate approximately 59% of the issued and
outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser
("Units"). As of December 31, 1994, approximately 32% and 9% of
the Units were owned by the public and employees of the Adviser
and its subsidiaries, respectively, including employees of the
Adviser who serve as Directors of the Fund.

AXA owns approximately 60% of the outstanding voting shares
of common stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations are comprised of
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities in France, the United States, the United Kingdom,
Canada and other countries, principally in Europe. AXA is also
engaged in asset management, investment banking and brokerage,
real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, as of
January 1, 1995, 42.3% of the issued shares (representing 54.7%
of the voting power) of AXA were owned by Midi Participations, a
French corporation that is a holding company. The voting shares
of Midi Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a
Belgian corporation, owned 34.1%). As of January 1, 1995, 62.1%
of the issued shares (representing 75.7% of the voting power) of
Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,

<PAGE>

owned 31.8% of the issued shares) (representing 39.0% of the
voting power), and 26.5% of the issued shares (representing 16.6%
of the voting power) of Finaxa were owned by Banque Paribas, a
French bank ("Paribas"). Including the shares owned by Midi
Participations, as of January 1, 1995, the Mutuelles AXA directly
or indirectly owned 51.3% of the issued shares (representing
65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA which are not
entitled to be voted. Acting as a group, the Mutuelles AXA
control AXA, Midi Participations and Finaxa.

The Advisory Agreement became effective on July 22, 1992.
The Advisory Agreement replaced an earlier, substantially
identical agreement (the "First Advisory Agreement") that
terminated because of its technical assignment as a result of
AXA's acquisition of control over Equitable. In anticipation of
the assignment of the First Advisory Agreement, the Advisory
Agreement was approved by the unanimous vote, cast in person, of
the Fund's Trustees (including the Trustees who are not parties
to the Advisory Agreement or interested persons as defined in the
Act of any such party) at a meeting called for the purpose held
on September 12, 1991. At a meeting held on June 8, 1992, a
majority of the outstanding voting securities of the Fund
approved the Advisory Agreement. Most recently, continuance of
the Advisory Agreement was approved for the period ending
June 30, 1995 by the Trustees of the Fund, including a majority
who are not "interested persons", as defined in the Act, at their
regular meeting held on May 31, 1994.

The Advisory Agreement remains in effect until June 30 of
each year if approved annually (a) by the Trustees of the Fund or
by the holders of a majority of the outstanding voting securities
of the Fund and (b) by a majority of the Trustees who are not
parties to the agreement, or "interested persons", as defined in
the Act, of any such party, at a meeting called for the purpose
of voting on such matter. The Advisory Agreement may be
terminated without penalty on 60 days' written notice at the
option of either party or by a vote of the shareholders; it will
automatically terminate in the event of assignment. The Adviser
is not liable for any action or inaction in regard to its
obligations under the Advisory Agreement as long as it does not
exhibit willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations.

Under the Advisory Agreement, the Adviser furnishes
investment advice and recommendations to the Fund and provides
office space in New York, order placement facilities and persons
satisfactory to the Fund's Board of Trustees to act as officers
of the Fund. Such officers, as well as certain Trustees of the
Fund, may be employees of the Adviser or directors, officers or

<PAGE>

employees of its affiliates. For the fiscal years ended June 30,
1992, 1993 and 1994, the Adviser received from the Fund advisory
fees of $2,066,991, $1,603,577 and $2,156,181, respectively.

The Advisory Agreement provides that the Adviser will
reimburse the Fund to the extent, if any, that its ordinary
operating expenses for the preceding year (exclusive of interest,
taxes, brokerage and other expenditures that are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses) exceed the limits prescribed by any state
in which the Fund's shares are qualified for sale. The Fund may
not qualify its shares for sale in every state. The Fund
believes that at present the most restrictive state expense ratio
limitation imposed by any state in which the Fund has qualified
its shares for sale is 2.5% of the first $30 million of the
mutual fund's average net assets, 2.0% of the next $70 million of
its average net assets and 1.5% of its average net assets in
excess of $100 million. For the fiscal years ended June 30,
1992, 1993 and 1994, no reimbursements were required to be made
pursuant to the most restrictive expense limitation.

The Fund has, under the Advisory Agreements assumed the
obligation for payment of all its other expenses. As to the
obtaining of services other than those specifically provided to
the Fund by the Adviser, the Fund may employ its own personnel.
For such services, it also may utilize personnel employed by the
Adviser or its affiliates and, in such event, the services will
be provided to the Fund at cost and the payments therefor must be
specifically approved by the Fund's Trustees.

Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The
Adviser may, from time to time, make recommendations which result
in the purchase or sale of a particular security by its other
clients simultaneously with the Fund. If transactions on behalf
of more than one client during the same period increase the
demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price. It is the
policy of the Adviser to allocate advisory recommendations and
the placing of orders in a manner which is deemed equitable by
the Adviser to the accounts involved, including the Fund. When
two or more of the clients of the Adviser (including the Fund)
are purchasing the same security on the given day from the same
broker-dealer, such transactions may be averaged as to price.

The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to the following: 1) ACM Institutional
Reserves, Inc., AFD Exchange Reserves, Alliance All-Asia
Investment Fund, Inc., The Alliance Fund, Inc., Alliance Balanced

<PAGE>

Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital
Reserves, Alliance Counterpoint Fund, Alliance Developing Markets
Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Government
Reserves, Alliance Growth and Income Fund, Inc., Alliance Income
Builder Fund, Inc., Alliance International Fund, Alliance Money
Market Fund, Alliance Mortgage Securities Income Fund, Inc.,
Alliance Mortgage Strategy Trust, Inc., Alliance Multi-Market
Strategy Trust, Inc., Alliance Municipal Income Fund, Inc.,
Alliance Municipal Income Fund II, Alliance Municipal Trust,
Alliance New Europe Fund, Inc., Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Short-Term Multi-
Market Trust, Inc., Alliance Technology Fund, Inc., Alliance
Utility Income Fund, Inc., Alliance Variable Products Series
Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., The Alliance Portfolios, Fiduciary
Management Associates and The Hudson River Trust, all registered
open-end investment companies; and 2) ACM Government Income Fund,
Inc., ACM Government Securities Fund, Inc., ACM Government
Spectrum Fund, Inc., ACM Government Opportunity Fund, Inc., ACM
Managed Dollar Income Fund, Inc., ACM Managed Income Fund, Inc.,
ACM Municipal Securities Income Fund, Inc., Alliance All-Market
Advantage Fund, Inc., Alliance Global Environment Fund, Inc.,
Alliance World Dollar Government Fund, Inc., Alliance World
Dollar Government Fund II, Inc., The Austria Fund, Inc., The
Global Privatization Fund, Inc., The Korean Investment Fund,
Inc., The Southern Africa Fund, Inc. and The Spain Fund, Inc.,
all registered closed-end investment companies.

TRUSTEES AND OFFICERS

The Trustees and officers of the Fund, their ages and their
primary occupations during the past five years are set forth
below. Each such trustee and officer is also a trustee, director
or officer of other registered investment companies sponsored by
the Adviser. Unless otherwise noted, the address of each of the
following persons is 1345 Avenue of the Americas, New York, New
York 10105.

TRUSTEES

JOHN D. CARIFA1 , [ ], Chairman, is the President and Chief
Operating Officer, the Chief Financial Officer and a Director of
ACMC with which he has been associated since prior to 1990.

DAVID H. DIEVLER, [ ], was formerly a Senior Vice President
of ACMC, with which he had been associated since prior to 1990.

_________________________

1An "interested person" of the Fund as defined in the Act.

<PAGE>

JOHN H. DOBKIN, [ ], has been the President of Historic
Hudson Valley (historic preservation) since 1990. From 1987 to
1992, he was a Director of ACMC. His address is 105 West 55th
Street, New York, New York 10019.

W.H. HENDERSON, [ ], has been an oil and gas consultant since
prior to 1990. He is also a Director of Nippon Peroxide Co.
Limited, Fidelity Japan OTC and Regional Markets Fund and a
consultant to Laporte Industries PLC and Reckitt and Colman PLC.
His address is Quarrey House, Charlton Horethorne, Sherborne,
Dorset, DT9 4NY, England.

STIG HOST, [ ], is the Chairman and Chief Executive Officer
of International Energy Corp. (oil and gas exploration) with
which he has been associated since prior to 1990. He is
also Chairman and Director of Kriti Exploration, Inc. (oil and
gas exploration and production), Managing Director of Kriti Oil
and Minerals, N.V., Chairman of Kriti Properties and Development
Corporation (real estate), Chairman of International Marine
Sales, Inc. (marine fuels), and a Director of Florida Fuels, Inc.
(marine fuels) and President of Alexander Host Foundation. He is
a Trustee of the Winthrop Focus Funds. His address is 36
Keofferam Road, Old Greenwich, Connecticut 06870.

RICHARD M. LILLY, [ ], was formerly President and Chief
Executive Officer of Esso Italiana, S.p.A, Esso Europe-Africa
Services and Esso North Europe A/S since prior to 1990. His
address is 70 Palace Gardens Terrace, London W8 4RR England.

ALAN STOGA, [ ], has been a Managing Director and a member of
the Board of Directors of Kissinger Associates, Inc. since prior
to 1990. His address is Kissinger Associates, Inc., 350 Park
Avenue, New York, New York 10022.

HON. JOHN C. WEST, [ ], has been an attorney in private
practice since prior to 1990. Prior thereto he was Governor of
South Carolina, United States Ambassador to Saudi Arabia and a
Distinguished Professor of Middle East Studies, University of
South Carolina. He is also a Director of Whittaker Corp.
(chemical and aero space) and BioWhittaker Corp. (technology).
His address is P.O. Drawer 13, Hilton Head, South Carolina 29938.

ROBERT C. WHITE, [ ], is a Vice President and the Chief
Financial Officer of the Howard Hughes Medical Institute with
which he has been associated since prior to 1990. He is a
Trustee of St. Clair Fixed Income Fund, St. Clair Tax-Free Fund
and St. Clair Equity Fund (registered investment companies) and a
Director of MEDSTAT Systems, Inc. (healthcare information
systems). Formerly he was Assistant Treasurer of Ford Motor

<PAGE>

Company. His address is 30835 River Crossing, Bingham Farms,
Michigan, 48025.

OFFICERS

A. RAMA KRISHNA, Senior Vice President, [ ], is a Vice
President of ACMC, with which he has been associated with since
1993. Previously he was Chief Investment Strategist and Director
- - Equity Research at First Boston Corporation since prior to
1990.

THOMAS J. BARDONG, Vice President, [ ],

MARK H. BREEDON, Vice President, [ ], has been a Vice
President of ACMC, since prior to 1990 and a Director and Vice
President of Alliance Capital Limited "ACL" since prior to 1990.

NICHOLAS E. CROSSLAND, Vice President, [ ],

KELLY A. MORGAN, Vice President, [ ], is a Senior Vice
President of ACMC, with which she has been associated with since
prior to 1990.

MARK D. GERSTEN, Treasurer and Chief Financial Officer, [ ],
is a Senior Vice President of Alliance Fund Services, Inc. with
which he has been associated since prior to 1990.

EDMUND P. BERGAN, JR., Secretary, [ ], is Senior Vice
President and General Counsel of AFD and Alliance Fund Services,
Inc. and Vice President and Assistant General Counsel of ACMC
with which he has been associated since prior to 1990.

ANDREW L. GANGOLF, Assistant Secretary, [ ],

EMILIE D. WRAPP, Assistant Secretary, [ ],

PATRICK J. FARRELL, Controller, [ ], is a Vice President of
Alliance Fund Services with which he has been associated since
prior to 1990.

JOSEPH J. MANTINEO, Assistant Controller, [ ], is a Vice
President of Alliance Fund Services with which he has been
associated since prior to 1990.

STEPHEN M. ATKINS, Assistant Controller, [ ], has been a
Manager of International Mutual Fund Accounting of AFS since
July, 1992. He was formerly Supervisor in International Mutual
Fund Accounting since prior to 1990.

The Fund does not pay any fees to, or reimburse expenses of,
its Trustees who are considered "interested persons" of the Fund.

<PAGE>

The aggregate compensation paid by the Fund to each of the
Trustees during its fiscal period ended June 30, 1994, the
aggregate compensation paid to each of the Trustees during
calendar year 1994 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of funds in the
Alliance Fund Complex with respect to which each of the Trustees
serves as a trustee or director, are set forth below. Neither
the Fund nor any other fund in the Alliance Fund Complex provides
compensation in the form of pension or retirement benefits to any
of its trustees or directors.

<TABLE>
<CAPTION>
Total Total Number of Funds in
Compensation the Alliance Fund Complex,
Aggregate From the Alliance Including the Fund, as to
Name of Trustee Compensation Fund Complex, which the Trustee is
of the Fund from the Fund Including the Fund a Trustee or Director
_______________ _____________ __________________ _________________________

<S> <C> <C> <C>
John D. Carifa $ 0 $ 0 42
David H. Dievler $ 0 $ 0 49
John H. Dobkin $5,250 $110,750 29
W.H. Henderson $4,000 $ 22,250 5
Stig Host $4,000 $ 22,250 5
Richard M. Lilly $4,000 $ 22,250 5
Alan Stoga $4,000 $ 21,500 5
Hon. John C. West $4,000 $ 22,250 5
Robert C. White $5,500 $133,500 36
</TABLE>

As of May 24, 1995, the Trustees and officers of the Fund as a
group owned less than 1% of the shares of the Fund.

_________________________________________________________________

EXPENSES OF THE FUND
_________________________________________________________________

The Fund has entered into, a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Fund directly or indirectly to pay
expenses associated with distribution of its shares in accordance
with a plan of distribution which is included in the Agreement
and has been duly adopted and approved in accordance with Rule
12b-1 adopted by the Securities and Exchange Commission (the
"Commission") under the 1940 Act (the "Plan").

<PAGE>

Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge, and, in the case of Class C shares, without
the assessment of a contingent deferred sales charge, and at the
same time to permit the Principal Underwriter to compensate
broker-dealers in connection with the sale of such shares. In
this regard the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the
Class B shares, and the distribution services fee on the Class C
shares, are the same as those of the initial sales charge and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and/or distribution services
fee provide for the financing of the distribution of the Fund's
shares.

Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Plan and the purposes for which
such expenditures were made to the Trustees of the Fund on a
quarterly basis. Also, the Agreement provides that the selection
and nomination of Trustees who are not "interested persons" of
the Fund, as defined in the 1940 Act, are committed to the
discretion of such disinterested Trustees then in office.

The Agreement became effective on July 22, 1992 and was
amended as of April 30, 1993 to permit the distribution of an
additional class of shares, Class C shares. The amendment to the
Agreement was approved by the unanimous vote, cast in person, of
the disinterested Trustees at a meeting called for that purpose
held on February 23, 1993, and by the initial holder of Class C
shares of the Fund on April 30, 1993.

The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the
Commission make payments for distribution services to the
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance.

During the Fund's fiscal year ended June 30, 1994, with
respect to Class A shares, the Fund paid distribution services
fees for expenditures under the Agreement, in the aggregate
amount of $330,264 which constituted approximately .18% of the
Fund's average daily net assets attributable to the Class A
shares during the period, and the Adviser made payments from its
own resources as described above, aggregating $88,967. Of the
$419,231 paid by the Fund and the Adviser under the Plan, with
respect to the Class A shares, $11,320 were spent on advertising,
$14,986 on the printing and mailing of prospectuses for persons

<PAGE>

other than current shareholders, $281,751 for compensation to
broker- dealers and other financial intermediaries (including,
$11,320 to the Fund's Principal Underwriter), $18,057 for
compensation to sales personnel and, $93,117 were spent on
printing of sales literature, travel, entertainment, due
diligence and other promotional expenses.

During the Fund's fiscal year ended June 30, 1994, with
respect to Class B shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $161,116, which constituted 1.00% of the Fund's average daily
net assets attributable to Class B shares during the period, and
the Adviser made payments from its own resources, as described
above, aggregating $669,061. Of the $830,177 paid by the Fund and
the Adviser under the Plan, with respect to Class B shares,
$19,781 was spent on advertising, $9,301 on the printing and
mailing of prospectuses for persons other than current
shareholders, $673,078 for compensation to broker-dealers and
other financial intermediaries (including, $94,503 to the Fund's
Principal Underwriter), $19,801 for compensation to sales
personnel, and $108,216 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.

During the Fund's fiscal year ended June 30, 1994, with
respect to Class C shares, the Fund paid distribution services
fees for expenditures under the Agreement, in the aggregate
amount of $74,494 which constituted approximately 1.00%,
annualized, of the Fund's average daily net assets attributable
to Class C shares during the period, and the Adviser made
payments from its own resources, as described above, aggregating
$241,415. Of the $315,909 paid by the Fund and the Adviser under
the Plan, with respect to Class C shares, $13,950 was spent on
advertising, $8,181 on the printing and mailing of prospectuses
for persons other than current shareholders, $163,485 for
compensation to broker- dealers and other financial
intermediaries (including, $90,420 to the Fund's Principal
Underwriter), $25,015 for compensation to sales personnel, and,
$105,278 were spent on printing of sales literature, travel,
entertainment, due diligence and other promotional expenses.

The Agreement will continue in effect for successive
twelve-month periods (computed from each July 1), provided,
however, that such continuance is specifically approved at least
annually by the Trustees of the Fund or by vote of the holders of
a majority of the outstanding voting securities (as defined in
the 1940 Act) of that class, and, in either case, by a majority
of the Trustees of the Fund who are not parties to the Agreement
or interested persons, as defined in the 1940 Act, of any such
party (other than as trustees of the Fund) and who have no direct
or indirect financial interest in the operation of the Plan or

<PAGE>

any agreement related thereto. Most recently the continuance of
the Agreement until June 30, 1995 was approved by a vote, cast in
person, of the Trustees, including a majority of the Trustees who
are not "interested persons", as defined in the 1940 Act, at
their meeting held on May 31, 1994.

In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares or
Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class, and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.

All material amendments to the Agreement must be
approved by a vote of the Trustees or the holders of the Fund's
outstanding voting securities, voting separately by class, and in
either case, by a majority of the disinterested Trustees, cast in
person at a meeting called for the purpose of voting on such
approval; and the Agreement may not be amended in order to
increase materially the costs that a particular class may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the class
affected. The Agreement may be terminated (a) by the Fund
without penalty at any time by a majority vote of the holders of
the outstanding voting securities of the Fund, voting separately
by class or by a majority vote of the Trustees who are not
"interested persons" as defined in the 1940 Act, or (b) by the
Principal Underwriter. To terminate the Agreement, any party
must give the other parties 60 days' written notice; to terminate
the Plan only, the Fund need give no notice to the Principal
Underwriter. The Agreement will terminate automatically in the
event of its assignment.

TRANSFER AGENCY AGREEMENT

Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, receives a transfer agency fee per
account holder of each of the Class A shares, Class B shares and
Class C shares of the Fund, plus reimbursement for out-of-pocket
expenses. The transfer agency fee with respect to the Class B
shares is higher than the transfer agency fee with respect to the
Class A shares or the Class C shares reflecting the additional
costs associated with the Class B contingent deferred sales
charge. For the fiscal year ended June 30, 1994, the Fund paid
Alliance Fund Services, Inc. $234,980 for transfer agency
services.

<PAGE>

_________________________________________________________________

PURCHASE OF SHARES
_________________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How To Buy Shares."

GENERAL

Shares of the Fund will be offered on a continuous basis
at a price equal to their net asset value plus an initial sales
charge at the time of purchase (the "initial sales charge
alternative"), with a contingent deferred sales charge (the
"deferred sales charge alternative"), or without any initial or
contingent deferred sales charge (the "asset- based sales charge
alternative"), as described below. Shares of the Fund are offered
on a continuous basis through (i) investment dealers that are
members of the National Association of Securities Dealers, Inc.
and have entered into selected dealer agreements with the
Principal Underwriter ("selected dealers"), (ii) depository
institutions and other financial intermediaries or their
affiliates, that have entered into selected agent agreements with
the Principal Underwriter ("selected agents"), or (iii) the
Principal Underwriter. The minimum for initial investments is
$250; subsequent investments (other than reinvestments of
dividends and capital gains distributions in shares) must be in
the minimum amount of $50. As described under "Shareholder
Services," the Fund offers an automatic investment program and a
403(b)(7) retirement plan which permit investments of $25 or
more. The subscriber may use the Subscription Application found
in the Prospectus for his or her initial investment. Sales
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B or Class C shares.

Investors may purchase shares of the Fund in the United
States either through selected dealers or agents or directly
through the Principal Underwriter. Shares may also be sold in
foreign countries where permissible. The Fund may refuse any
order for the purchase of shares. The Fund reserves the right to
suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.

The public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares,a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below. On each
Fund business day on which a purchase or redemption order is
received by the Fund and trading in the types of securities in

<PAGE>

which the Fund invests might materially affect the value of Fund
shares, the per share net asset value is computed in accordance
with the Fund's Agreement and Declaration of Trust and By-Laws as
of the next close of regular trading on the New York Stock
Exchange (the "Exchange") (currently 4:00 p.m. New York time) by
dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
The respective per share net asset values of the Class A, Class B
and Class C shares are expected to be substantially the same.
Under certain circumstances, however, the per share net asset
values of the Class B and Class C shares may be lower than the
per share net asset value of the Class A shares as a result of
the daily expense accruals of the distribution and transfer
agency fees applicable with respect to the Class B and Class C
shares. Even under those circumstances, the per share net asset
values of the three classes eventually will tend to converge
immediately after the payment of dividends, which will differ by
approximately the amount of the expense accrual differential
among the classes. A Fund business day is any weekday, exclusive
of national holidays on which the Exchange is closed and Good
Friday. For purposes of this computation, Exchange-listed
securities and over-the-counter securities admitted to trading on
the NASDAQ National List are valued at the last quoted sale or,
if no sale, at the mean of closing bid and asked prices and
portfolio bonds are presently valued by a recognized pricing
service. If accurate quotations are not available, securities
will be valued at fair value determined in good faith by the
Board of Trustees.

The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers or agents, the applicable public offering price
will be the net asset value as so determined, but only if the
selected dealer or agent receives the order prior to the close of
regular trading on the Exchange and transmits it to the Principal
Underwriter prior to its close of business that same day
(normally 5:00 p.m. New York time). The selected dealer or agent
is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to
that day's closing price must be settled between the investor and
the selected dealer or agent. If the selected dealer or agent
receives the order after the close of regular trading on the
Exchange, the price will be based on the net asset value

<PAGE>

determined as of the close of regular trading on the Exchange on
the next day it is open for trading.

Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "Literature" telephone number
shown on the cover of this Statement of Additional Information.
Payment for shares purchased by telephone can be made only by
Electronic Funds Transfer from a bank account maintained by the
shareholder at a bank that is a member of the National Automated
Clearing House Association ("NACHA"). If a shareholder's
telephone purchase request is received before 3:00 p.m. New York
time on a Fund business day, the order to purchase shares is
automatically placed the following Fund business day, and the
applicable public offering price will be the public offering
price determined as of the close of business on such following
business day. Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.

In addition to the discount or commission amount paid to
selected dealers or agents, the Principal Underwriter may from
time to time pay additional cash bonuses or other incentives to
selected dealers in connection with the sale of shares of the
Fund. On some occasions, such bonuses or incentives may be
conditioned upon the sale of a specified minimum dollar amount of
the shares of the Fund and/or other Alliance Mutual Funds, as
defined below, during a specific period of time. At the option
of the dealer such bonuses or other incentives may take the form
of payment for travel expenses, including lodging incurred in
connection with trips taken by persons associated with the dealer
and members of their families to places within or outside of the
United States.

ALTERNATIVE PURCHASES ARRANGEMENTS

The Fund issues three classes of shares: Class A shares
are sold to investors choosing the initial sales charge
alternative, Class B shares are sold to investors choosing the
deferred sales charge alternative, and Class C shares are sold to
investors choosing the asset-based sales charge alternative. The

<PAGE>

three classes of shares each represent an interest in the same
portfolio of investments of the Fund, have the same rights and
are identical in all respects, except that (i) Class A shares
bear the expense of the initial sales charge and Class B shares
bear the expense of the deferred sales charge, (ii) Class B
shares and Class C shares each bear the expense of a higher
distribution services fee and in the case of Class B shares
higher transfer agency costs, (iii) each class has exclusive
voting rights with respect to provisions of the Plan pursuant to
which its distribution services fee is paid which relates to a
specific class and other matters for which separate class voting
is appropriate under applicable law, provided that, if the Fund
submits to a vote of both the Class A shareholders and the
Class B shareholders an amendment to the Plan that would
materially increase the amount to be paid thereunder with respect
to the Class A shares, the Class A shareholders and the Class B
shareholders will vote separately by Class, and (iv) only the
Class B shares are subject to a conversion feature. Each class
has different exchange privileges and certain different
shareholder service options available.

The alternative purchase arrangements permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their
investment in the Fund, the accumulated distribution services fee
and contingent deferred sales charges on Class B shares prior to
conversion, or the accumulated distribution services fee on
Class C shares, would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on
Class A shares, as described below. In this regard, the
Principal Underwriter will reject any order (except orders from
certain retirement plans) for more than $250,000 for Class B
shares. Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at net asset
value. For this reason, the Principal Underwriter will reject any
order for more than $5,000,000 for Class C shares.

Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for

<PAGE>

an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.

Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
in the case of Class B shares, being subject to a contingent
deferred sales charge for a four-year period. For example, based
on current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares. This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.

Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.

The Trustees of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B and Class C shares. On an ongoing basis, the Trustees of
the Fund, pursuant to their fiduciary duties under the 1940 Act
and state laws, will seek to ensure that no such conflict arises.

INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES

The public offering price of Class A shares for
purchasers choosing the initial sales charge alternative is the
net asset value plus a sales charge, as set forth below.

<PAGE>

INITIAL SALES CHARGE

SALES DISCOUNT OR
SALES CHARGE COMMISSION
CHARGE AS % OF TO DEALERS
AS % OF THE OR AGENTS
NET PUBLIC AS % OF
AMOUNT OF AMOUNT OFFERING OFFERING
PURCHASE INVESTED PRICE PRICE
________ ________ ______ _______

Less than
$100,000. . . 4.44% 4.25% 4.00%
$100,000 but
less than
250,000. . . 3.36 3.25 3.00
250,000 but
less than
500,000. . . 2.30 2.25 2.00
500,000 but
less than
1,000,000. . . 1.78 1.75 1.50
1,000,000 but
less than
3,000,000. . . 1.27 1.25 1.00
3,000,000 but
less than
5,000,000. . . 0.76 0.75 0.50

____________________
There is no sales charge on transactions of $5,000,000 or more.

With respect to purchases of $5,000,000 or more made through
selected dealers or agents, the Adviser may, pursuant to the
Agreement described above, pay such dealers or agents from its
own resources a fee of up to .25 of 1% of the amount invested to
compensate such dealers or agents for their distribution
assistance in connection with such purchases.

Shares issued pursuant to the automatic reinvestment of
income dividends or capital gains distributions are not subject
to any sales charges. The Fund receives the entire net asset
value of its Class A shares sold to investors. The Principal
Underwriter's commission is the sales charge shown above less any
applicable discount or commission "reallowed" to selected dealers
and agents. The Principal Underwriter will reallow discounts to
selected dealers and agents in the amounts indicated in the table
above. In this regard, the Principal Underwriter may elect to
reallow the entire sales charge to selected dealers and agents
for all sales with respect to which orders are placed with the
Principal Underwriter. A selected dealer who receives

<PAGE>

reallowance in excess of 90% of such a sales charge may be deemed
to be an "underwriter" under the Securities Act of 1933, as
amended.

Set forth below is an example of the method of computing the
offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$50,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund at December 31, 1994.

Net Asset Value per Class A Share at $16.45
December 31, 1994

Class A Per Share Sales Charge
- 4.25% of offering price (4.44% of
net asset value per share) .73
______

Class A Per Share Offering Price to
the public $17.18
======

During the Fund's fiscal years ended June 30, 1994, 1993 and
1992, the aggregate amount of underwriting commission payable
with respect to shares of the Fund were $294,098, $143,041 and
$335,773, respectively. Of that amount, the Principal
Underwriter, Alliance Fund Distributors, Inc. ("AFD"), received
the amounts of $20,439, $21,218 and $46,407, respectively,
representing that portion of the sales charges paid on shares of
the Fund sold during the year which was not reallowed to selected
dealers (and was, accordingly, retained by the Principal
Underwriter). During the Fund's fiscal year ended June 30, 1994,
the Principal Underwriter received $22,362 in contingent deferred
sales charges.

Investors choosing the initial sales charge alternative may
under certain circumstances be entitled to pay reduced sales
charges. The circumstances under which such investors may pay
reduced sales charges are described below.

COMBINED PURCHASE PRIVILEGE. Certain persons may qualify for
the sales charge reductions indicated in the schedule of such
charges above by combining purchases of shares of the Fund into a
single "purchase," if the resulting "purchase" totals at least
$100,000. The term "purchase" refers to: (i) a single purchase
by an individual, or to concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of

<PAGE>

21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company," as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund." Currently,
the Alliance Mutual Funds include:

AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
The Alliance Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
-Ohio Portfolio

<PAGE>

-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Portfolios.
-The Alliance Growth Fund
-The Alliance Conservative Investors Fund
-The Alliance Growth Investors Fund
-The Alliance Balanced Fund
-The Alliance Short-Term U.S. Government Fund

Prospectuses for the Alliance Mutual Funds may be obtained
without charge by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the front
cover of this Statement of Additional Information.

CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:

(i) the investor's current purchase;

(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C
shares of the Fund held by the investor and (b) all
shares of any other Alliance Mutual Fund held by the
investor; and

(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder eligible
to combine his or her purchase with that of the
investor into a single "purchase" (see above).

For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the sales charge for the $100,000 purchase
would be at the 2.25% rate applicable to a single $300,000
purchase of shares of the Fund, rather than the 3.25% rate.

To qualify for the Combined Purchase Privilege or to obtain
the Cumulative Quantity Discount on a purchase through a selected
dealer or agent, the investor or selected dealer or agent must

<PAGE>

provide the Principal Underwriter with sufficient information to
verify that each purchase qualifies for the privilege or
discount.

STATEMENT OF INTENTION. Class A investors may also obtain
the reduced sales charges shown in the table above by means of a
written Statement of Intention, which expresses the investor's
intention to invest not less than $100,000 within a period of 13
months in Class A shares (or Class A, Class B and/or Class C
shares) of the Fund or any other Alliance Mutual Fund. Each
purchase of shares under a Statement of Intention will be made at
the public offering price or prices applicable at the time of
such purchase to a single transaction of the dollar amount
indicated in the Statement of Intention. At the investor's
option, a Statement of Intention may include purchases of shares
of the Fund or any other Alliance Mutual Fund made not more than
90 days prior to the date that the investor signs a Statement of
Intention; however, the 13-month period during which the
Statement of Intention is in effect will begin on the date of the
earliest purchase to be included.

Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to
invest a total of $60,000 during the following 13 months in
shares of the Fund or any other Alliance Mutual Fund, to qualify
for the 3.25% sales charge on the total amount being invested
(the sales charge applicable to an investment of $100,000).

The Statement of Intention is not a binding obligation upon
the investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount. Shares purchased with the first 5% of such amount will
be held in escrow (while remaining registered in the name of the
investor) to secure payment of the higher sales charge applicable
to the shares actually purchased if the full amount indicated is
not purchased, and such escrowed shares will be involuntarily
redeemed to pay the additional sales charge, if necessary.
Dividends on escrowed shares, whether paid in cash or reinvested
in additional Fund shares, are not subject to escrow. When the
full amount indicated has been purchased, the escrow will be
released. To the extent that an investor purchases more than the
dollar amount indicated on the Statement of Intention and
qualifies for a further reduced sales charge, the sales charge
will be adjusted for the entire amount purchased at the end of
the 13-month period. The difference in sales charge will be used
to purchase additional shares of the Fund subject to the rate of

<PAGE>

sales charge applicable to the actual amount of the aggregate
purchases.

Investors wishing to enter into a Statement of Intention in
conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.

CERTAIN RETIREMENT PLANS. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of sales charges set forth in this Statement
of Additional Information, to an investment 13 times larger than
such initial purchase. The sales charge applicable to each
succeeding monthly purchase will be that normally applicable,
under such schedule, to an investment equal to the sum of (i) the
total purchase previously made during the 13-month period, and
(ii) the current month's purchase multiplied by the number of
months (including the current month) remaining in the 13-month
period. Sales charges previously paid during such period will
not be retroactively adjusted on the basis of later purchases.

REINSTATEMENT PRIVILEGE. A Class A shareholder who has
caused any or all of his or her shares of the Fund to be redeemed
or repurchased may reinvest all or any portion of the redemption
or repurchase proceeds in Class A shares of the Fund at net asset
value without any sales charge, provided that such reinvestment
is made within 30 calendar days after the redemption or
repurchase date. Shares are sold to a reinvesting shareholder at
the net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except
that no loss will be recognized to the extent that the proceeds
are reinvested in shares of the Fund. The reinstatement
privilege may be used by the shareholder only once, irrespective
of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in the Fund to his or her individual retirement account
or other qualified retirement plan account. Investors may
exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of
Additional Information.

<PAGE>

SALES AT NET ASSET VALUE

The Fund may sell its Class A shares at net asset value,
i.e., without a sales charge, to certain categories of investors
including:

(i) investment management clients of the Adviser or its
affiliates;

(ii) officers and present or former Trustees of the Fund,
present or former directors and trustees of other
investment companies managed by the Adviser; present
or retired full-time employees of the Adviser;
officers, directors and present or retired full-time
employees of ACMC, the Principal Underwriter,
Alliance Fund Services, Inc. and their affiliates;
officers, directors and present full-time employees
of selected dealers or agents; or the spouse,
sibling, direct ancestor or direct descendent
(collectively, "relatives") of any such person; or
any trust, individual retirement account or
retirement plan account for the benefit of any such
person or relative; or the estate of any such person
or relative, if such sales are made for investment
purposes (such shares may not be resold except to the
Fund);

(iii) certain employee benefit plans for employees of the
Adviser, the Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; and

(iv) in exchange for securities valued in the same manner
as securities held by the Fund.

These provisions are intended to provide additional job-
related incentives to persons who serve the Fund or work for
companies associated with the Fund. Since these persons are in a
position to have a basic understanding of the nature of an
investment company as well as a general familiarity with the
Fund, sales to these persons, as compared to sales in the normal
channels of distribution, require substantially less sales
effort. Similarly, these provisions extend the privilege of
purchasing shares at net asset value to certain classes of
institutional investors who, because of their investment
sophistication, can be expected to require significantly less
than normal sales effort on the part of the Fund and the
Principal Underwriter.

<PAGE>

DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES

Investors choosing the deferred sales charge alternative
purchase Class B shares at the public offering price equal to the
net asset value per share of the Class B shares on the date of
purchase without the imposition of a sales charge at the time of
purchase. The Class B shares are sold without an initial sales
charge so that the Fund will receive the full amount of the
investor's purchase payment.

Proceeds from the contingent deferred sales charge are paid
to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the
payment of compensation to selected dealers and agents for
selling Class B shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class B shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class B shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares.

CONTINGENT DEFERRED SALES CHARGE. Class B shares which are
redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.

The amount of the contingent deferred sales charge, if any,
will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.

<PAGE>

CONTINGENT DEFERRED SALES CHARGE AS A %
OF DOLLAR AMOUNT SUBJECT TO CHARGE
_______________________________________

SHARES PURCHASED SHARES PURCHASED
BEFORE ON OR AFTER
YEAR SINCE PURCHASE NOVEMBER 19, 1993 NOVEMBER 19, 1993
___________________ _________________ _________________

First 5.50% 4.00%
Second 4.50% 3.00%
Third 3.50% 2.00%
Fourth 2.50% 1.00%
Fifth 1.50% None
Sixth 0.50% None

In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed, in the case of
Class B shares purchased on or after November 19, 1993, that the
redemption is first of any Class A shares or Class C shares in
the shareholder's Fund account, second of Class B shares held for
over four years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B
shares held longest during the four-year period. When Class B
shares acquired in an exchange are redeemed, the applicable
contingent deferred sales charge and conversion schedules will be
the schedules that applied to Class B shares of the Alliance
Mutual Fund originally purchased by the shareholder at the time
of their purchase. The charge will not be applied to dollar
amounts representing an increase in the net asset value since the
time of purchase.

To illustrate, assume that on or after November 19, 1993 an
investor purchased 100 Class B shares at $10 per share (at a cost
of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares upon dividend reinvestment.
If at such time the investor makes his or her first redemption of
50 Class B shares (proceeds of $600), 10 Class B shares will not
be subject to charge because of dividend reinvestment. With
respect to the remaining 40 Class B shares, the charge is applied
only to the original cost of $10 per share and not to the
increase in net asset value of $2 per share. Therefore, $400 of
the $600 redemption proceeds will be charged at a rate of 3.0%
(the applicable rate in the second year after purchase).

The contingent deferred sales charge is waived on redemptions
of shares (i) following the death or disability, as defined in
the Internal Revenue Code of 1986, as amended (the "Code"), of a
shareholder, (ii) to the extent that the redemption represents a
minimum required distribution from an individual retirement

<PAGE>

account or other retirement plan to a shareholder who has
attained the age of 70-1/2 or (iii) that had been purchased by
present or former Trustees of the Fund, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative, or by the estate of any such person or relative.

CONVERSION FEATURE. At the end of the period ending eight
years after the end of the calendar month in which the
shareholder's purchase order was accepted, Class B shares will
automatically convert to Class A shares and will no longer be
subject to a higher distribution services fee. Such conversion
will be on the basis of the relative net asset values of the two
classes, without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to reduce the
distribution services fee paid by holders of Class B shares that
have been outstanding long enough for the Principal Underwriter
to have been compensated for distribution expenses incurred in
the sale of such shares.

For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.

The conversion of Class B shares to Class A shares is subject
to the continuing availability of an opinion of counsel to the
effect that (i) the assessment of the higher distribution
services fee and transfer agency costs with respect to Class B
shares does not result in the Fund's dividends or distributions
constituting "preferential dividends" under the Code, and
(ii) the conversion of Class B shares to Class A shares does not
constitute a taxable event under federal income tax law. The
conversion of Class B shares to Class A shares may be suspended
if such an opinion is no longer available at the time such
conversion is to occur. In that event, no further conversions of
Class B shares would occur, and shares might continue to be
subject to the higher distribution services fee for an indefinite
period which may extend beyond the period ending eight years
after the end of the calendar month in which the shareholder's
purchase order was accepted.

ASSET-BASED SALES CHARGE ALTERNATIVE--CLASS C SHARES

Investors choosing the asset-based sales charge alternative
purchase Class C shares at the public offering price equal to the
net asset value per share of the Class C shares on the date of

<PAGE>

purchase without the imposition of a sales charge either at the
time of purchase or upon redemption. Class C shares are sold
without an initial sales charge so that the Fund will receive the
full amount of the investor's purchase payment and without a
contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
enables the Fund to sell Class C shares without either an initial
or contingent deferred sales charge. Class C shares do not
convert to any other class of shares of the Fund and incur higher
distribution services fees than Class A shares, and will thus
have a higher expense ratio and pay correspondingly lower
dividends than Class A shares.

_________________________________________________________________

REDEMPTION AND REPURCHASE OF SHARES
_________________________________________________________________

The following information supplements that set forth in the
Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How to Sell Shares."

REDEMPTION

Subject only to the limitations described below, the Fund's
Agreement and Declaration of Trust requires that the Fund redeem
the shares tendered to it, as described below, at a redemption
price equal to their net asset value as next computed following
the receipt of shares tendered for redemption in proper form.
Except for any contingent deferred sales charge which may be
applicable to Class B shares, there is no redemption charge.
Payment of the redemption price will be made within seven days
after the Fund's receipt of such tender for redemption.

The right of redemption may not be suspended or the date of
payment upon redemption postponed for more than seven days after
shares are tendered for redemption, except for any period during
which the New York Stock Exchange ("the Exchange") is closed
(other than customary weekend and holiday closings) or during
which the Commission determines that trading thereon is
restricted, or for any period during which an emergency (as
determined by the Commission) exists as a result of which
disposal by the Fund of securities owned by it is not reasonably
practicable or as a result of which it is not reasonably
practicable for the Fund fairly to determine the value of its net
assets, or for such other periods as the Commission may by order
permits for the protection of security holders of the Fund.

Payment of the redemption price may be made either in cash or
in portfolio securities (selected in the discretion of the

<PAGE>

Trustees of the Fund and taken at their value used in determining
the redemption price), or partly in cash and partly in portfolio
securities. However, payments will be made wholly in cash unless
the Trustees believe that economic conditions exist which would
make such a practice detrimental to the best interests of the
Fund. The Fund has filed a formal election with the Commission
pursuant to which the Fund will only effect a redemption in
portfolio securities where the particular shareholder of record
is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period. In the
opinion of the Fund's management, however, the amount of a
redemption request would have to be significantly greater than
$250,000 or 1% of total net assets before a redemption wholly or
partly in portfolio securities would be made. If payment for
shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the
securities to cash.

The value of a shareholder's shares on redemption or
repurchase may be more or less than the cost of such shares to
the shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class B shares will reflect
the deduction of the contingent deferred sales charge, if any.
Payment (either in cash or in portfolio securities) received by a
shareholder upon redemption or repurchase of his or her shares,
assuming the shares constitute capital assets in his, will result
in long-term or short-term capital gains (or loss) depending upon
the shareholder's holding period and basis in respect of the
shares redeemed.

To redeem shares of the Fund for which no stock certificates
have been issued, the registered owner or owners should forward a
letter to the Fund containing a request for redemption. The
signature or signatures on the letter must be guaranteed by an
institution that is an "eligible guarantor" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended.

TELEPHONE REDEMPTION BY ELECTRONIC FUNDS TRANSFER. Requests
for redemption of shares for which no stock certificates have
been issued can also be made by telephone at (800) 221-5672 by a
shareholder who has completed the appropriate portion of the
Subscription Application or, in the case of an existing
shareholder, an "Autosell" application obtained from Alliance
Fund Services, Inc. A telephone redemption request must be for at
least $500 and may not exceed $100,000, and must be made between
9:00 a.m. and 4:00 p.m. New York time on a Fund business day as
defined above. Proceeds of telephone redemptions will be sent by
Electronic Funds Transfer to a shareholder's designated bank
account at a bank selected by the shareholder that is a member of
the NACHA.

<PAGE>

TELEPHONE REDEMPTION BY CHECK. Except as noted below, each
Fund shareholder is eligible to request redemption, once in any
30-day period, of Fund shares by telephone at (800) 221-5672
before 4:00 p.m. New York time on a Fund business day in an
amount not exceeding $25,000. Proceeds of such redemptions are
remitted by check to the shareholder's address of record.
Telephone redemption by check is not available with respect to
shares (i) for which certificates have been issued, (ii) held in
nominee or "street name" accounts, (iii) purchased within 15
calendar days prior to the redemption request, (iv) held by a
shareholder who has changed his or her address of record within
the preceding 30 calendar days or (v) held in any retirement plan
account. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the Subscription Application found in the
Prospectus.

GENERAL. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown on the cover of
this Statement of Additional Information. The Fund reserves the
right to suspend or terminate its telephone redemption service at
any time without notice. Neither the Fund nor the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
redemptions that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that
telephone requests for redemptions are genuine, including, among
others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to
shareholders. If the Fund did not employ such procedures, it
could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Selected dealers or agents
may charge a commission for handling telephone requests for
redemptions.

To redeem shares of the Fund represented by stock
certificates, the investor should forward the appropriate stock
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,

<PAGE>

alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.

REPURCHASE

The Fund may repurchase shares through the Principal
Underwriter or selected dealers or agents. The repurchase price
will be the net asset value next determined after the Principal
Underwriter receives the request (less the contingent deferred
sales charge, if any, with respect to the Class B shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. New York time). The selected dealer or agent is
responsible for transmitting the request to the Principal
Underwriter by 5:00 p.m. If the selected dealer or agent fails
to do so, the shareholder's right to receive that day's closing
price must be settled between the shareholder and the dealer or
agent. A shareholder may offer shares of the Fund to the
Principal Underwriter either directly or through a selected
dealer or agent. Neither the Fund nor the Principal Underwriter
charges a fee or commission in connection with the repurchase of
shares (except for the contingent deferred sales charge, if any,
with respect to Class B shares). Normally, if shares of the Fund
are offered through a selected dealer or agent, the repurchase is
settled by the shareholder as an ordinary transaction with or
through the selected dealer or agent, who may charge the
shareholder for this service. The repurchase of shares of the
Fund as described above is a voluntary service of the Fund and
the Fund may suspend or terminate this practice at any time.

GENERAL

The Fund reserves the right to close out an account that
through redemption has remained below $200 for at least 60 days
after at least 30 days' written notice to the shareholder
subsequent to such period. No contingent deferred sales charge
will be deducted from the proceeds of this redemption. In the
case of a redemption or repurchase of shares of the Fund recently
purchased by check, redemption proceeds will not be made
available until the Fund is reasonably assured that the check has
cleared, normally up to 15 calendar days following the purchase
date.

<PAGE>

________________________________________________________________

SHAREHOLDER SERVICES
_________________________________________________________________

The following information supplements that set forth in the
Fund's Prospectus under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to all three classes of shares of the
Fund.

AUTOMATIC INVESTMENT PROGRAM

Investors may purchase shares of the Fund through an
automatic investment program utilizing "pre-authorized check"
drafts drawn on the investor's own bank account. Under such a
program, pre- authorized monthly drafts for a fixed amount (at
least $25) are used to purchase shares through the selected
dealer or selected agent designated by the investor at the public
offering price next determined after the Principal Underwriter
receives the proceeds from the investor's bank. Drafts may be
made in paper form or, if the investor's bank is a member of the
NACHA, in electronic form. If made in paper form, the draft is
normally made on the 20th day of each month, or the next business
day thereafter. If made in electronic form, drafts can be made
on or about a date each month selected by the shareholder.
Investors wishing to establish an automatic investment program in
connection with their initial investment should complete the
appropriate portion of the Subscription Application found in the
Prospectus. Current shareholders should contact Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.

EXCHANGE PRIVILEGE

Class A shareholders of the Fund can exchange their Class A
shares for Class A shares of the Alliance Mutual Funds without
the payment of any sales or service charges. Class A
shareholders may also exchange their Class A shares for shares of
any of the ten Alliance Cash Management Funds: Alliance Capital
Reserves, Alliance Money Reserves, Alliance Government Reserves,
Alliance Treasury Reserves and the General, California,
Connecticut, New Jersey and New York Portfolios of Alliance
Municipal Trust, all of which are money market funds, and
Alliance World Income Trust, Inc., a short- term global income
fund. Prospectuses for each Alliance Mutual Fund and Alliance
Cash Management Fund (each an "Alliance Fund"), may be obtained
by contacting Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information or by
telephone at (800) 227-4618 or, in Illinois, (800) 227-4170.

<PAGE>

Class B shareholders of the Fund can exchange their Class B
shares ("original Class B shares") for Class B shares of any
other Alliance Mutual Fund that offers Class B shares ("new
Class B shares") without the payment of any contingent deferred
sales or service charges. For purposes of computing both the
time remaining before the new Class B shares convert to Class A
shares of that fund and the contingent deferred sales charge
payable upon disposition of the new Class B shares, the period of
time for which the original Class B shares have been held is
added to the period of time for which the new Class B shares have
been held, and the original fund's contingent deferred sales
charge schedule is applied.

Class C shareholders of the Fund can exchange their Class C
shares for Class C shares of the other Alliance Mutual Funds.

All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Fund whose shares are being acquired.
An exchange is effected through the redemption of the shares
tendered for exchange and the purchase of shares being acquired
at their respective net asset values as next determined following
receipt by the Alliance Fund whose shares are being exchanged of
(i) proper instructions and all necessary supporting documents as
described in such fund's Prospectus, or (ii) a telephone request
for such exchange in accordance with the procedures set forth in
the following paragraph. Exchanges involving the redemption of
shares recently purchased by check will be permitted only after
the Alliance Fund whose shares have been tendered for exchange is
reasonably assured that the check has cleared, normally up to 15
calendar days following the purchase date. Exchanges of shares
of Alliance Mutual Funds will generally result in the realization
of a capital gain or loss for Federal income tax purposes.

Each Fund shareholder, and the shareholder's selected dealer
or agent, are authorized to make telephone requests for exchanges
unless Alliance Fund Services, Inc., receives written instruction
to the contrary from the shareholder, or the shareholder declines
the privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.

Eligible shareholders desiring to make an exchange should
telephone Alliance Fund Services, Inc. with their account number
and other details of the exchange, at (800) 221-5672 between
9:00 a.m. and 4:00 p.m., New York time, on a Fund business day as
defined above. Telephone requests for exchange received before
4:00 p.m. New York time on a Fund business day will be processed

<PAGE>

as of the close of business on that day. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.

A shareholder may elect to initiate a monthly "Auto Exchange"
whereby a specified dollar amount's worth of his or her Fund
shares (minimum $25) is automatically exchanged for shares of
another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto. Auto Exchange is not currently
available between Alliance Cash Management Funds and Alliance
Mutual Funds.

Neither the Alliance Funds nor the Adviser, the Principal
Underwriter or Alliance Fund Services, Inc. will be responsible
for the authenticity of telephone requests for exchanges that the
Fund reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for exchanges are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for exchanges.

The exchange privilege is available only in states where
shares of the Alliance Mutual Funds being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.

RETIREMENT PLANS

The Fund may be a suitable investment vehicle for part or all
of the assets held in various types of retirement plans, such as
those listed below. The Fund has available forms of such plans
pursuant to which investments can be made in the Fund and other
Alliance Mutual Funds. Persons desiring information concerning
these plans should contact Alliance Fund Services, Inc. at the
"Literature" telephone number on the cover of this Statement of
Additional Information, or write to:

<PAGE>

Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520

INDIVIDUAL RETIREMENT ACCOUNT ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.

EMPLOYER-SPONSORED QUALIFIED RETIREMENT PLANS. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals.

If the aggregate net asset value of shares of the Alliance
Mutual Funds held by the qualified plan reaches $5 million on or
before December 15 in any year, all Class B or C shares of the
Fund held by such plan can be exchanged, at the Plan's request,
without any sales charge, for Class A shares of such Fund.

SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP"). Sole proprietors,
partnerships and corporations may sponsor a SEP under which they
make annual tax-deductible contributions to an IRA established by
each eligible employee within prescribed limits based on employee
compensation.

403(B)(7) RETIREMENT PLAN. Certain tax-exempt organizations
and public educational institutions may sponsor retirements plans
under which an employee may agree that monies deducted from his
or her compensation (minimum $25 per pay period) may be
contributed by the employer to a custodial account established
for the employee under the plan.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, which serves as custodian or trustee under the retirement
plan prototype forms available from the Fund, charges certain
nominal fees for establishing an account and for annual
maintenance. A portion of these fees is remitted to Alliance Fund

<PAGE>

Services, Inc. as compensation for its services to the retirement
plan accounts maintained with the Fund.

Distributions from retirement plans are subject to certain
Code requirements in addition to normal redemption procedures.
For additional information please contact Alliance Fund Services,
Inc.

DIVIDEND DIRECTION PLAN

A shareholder who already maintains, in addition to his or
her Class A, Class B or Class C Fund account, a Class A, Class B
or Class C account(s) with one or more other Alliance Mutual
Funds may direct that income dividends and/or capital gains paid
on his or her Class A, Class B or Class C Fund shares be
automatically reinvested, in any amount, without the payment of
any sales or service charges, in shares of the same class of such
other Alliance Mutual Fund(s). Further information can be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the cover
of this Statement of Additional Information. Investors wishing to
establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.

SYSTEMATIC WITHDRAWAL PLAN

Any shareholder who owns or purchases shares of the Fund
having a current net asset value of at least $4,000 (for
quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.

Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions. Shares acquired with
reinvested dividends and distributions will be liquidated first
to provide such withdrawal payments and thereafter other shares
will be liquidated to the extent necessary, and depending upon
the amount withdrawn, the investor's principal may be depleted.
A systematic withdrawal plan may be terminated at any time by the
shareholder or the Fund.

<PAGE>

Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to the Fund's involuntary redemption provisions. See
"Redemption and Repurchase of Shares -- General." Purchases of
additional shares concurrently with withdrawals are undesirable
because of sales charges when purchases are made. While an
occasional lump-sum investment may be made by a shareholder of
Class A shares who is maintaining a systematic withdrawal plan,
such investment should normally be an amount equivalent to three
times the annual withdrawal or $5,000, whichever is less.

For Class A shareholders, Class B shareholders that purchased
their Class B shares under a retirement plan and Class C
shareholders, payments under a systematic withdrawal plan may be
made by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "Literature" telephone number shown on the cover of this
Statement of Additional Information.

STATEMENTS AND REPORTS

Each shareholder of the Fund receives semi-annual and annual
reports which include a portfolio of investments, financial
statements and, in the case of the annual report, the report of
the Fund's independent auditors, Ernst & Young LLP, as well as a
confirmation of each purchase and redemption. By contacting his
or her broker or Alliance Fund Services, Inc., a shareholder can
arrange for copies of his or her account statements to be sent to
another person.

_________________________________________________________________

NET ASSET VALUE
_________________________________________________________________

The net asset value per share is computed in accordance with
the Fund's Agreement and Declaration of Trust and By-Laws as of
the next close of regular trading on the Exchange (currently
4:00 p.m. New York time) following receipt of a purchase or
redemption order (and on such other days as the Trustees of the
Fund deem necessary in order to comply with Rule 22c-1 under the
Act), by dividing the value of the Fund's total assets less its
liabilities, by the total number of the Fund's shares then
outstanding. For this purpose, a Fund's business day is any

<PAGE>

weekday exclusive of national holidays on which the Exchange is
closed and Good Friday.

Securities listed or traded on the Exchange or other United
States or foreign securities exchanges are valued at the last
quoted sales prices on such exchanges prior to the time when
assets are valued. Securities listed or traded on certain
foreign exchanges whose operations are similar to the United
States over-the-counter market are valued at the price within the
limits of the latest available current bid and asked prices
deemed best to reflect a fair value. A security which is listed
or traded on more than one exchange is valued at the quotations
on the exchange determined to be the primary market for such
security by the Trustees or their delegates. Listed securities
that are not traded on a particular day, and securities regularly
traded in the over-the-counter market, are valued at the price
within the limits of the latest available current bid and asked
prices deemed best to reflect a fair value. In instances where
the price of a security determined above is deemed not to be
representative, the security is valued in such a manner as
prescribed by the Trustees to reflect its fair value. All other
assets and securities are valued in a manner determined in good
faith by the Trustees to reflect their fair value. For purposes
of determining the Fund's net asset value per share, all assets
and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean of the bid and
asked prices of such currencies against the United States dollar
last quoted by any major bank. If such quotations are not
available as of the close of the Exchange, the rate of exchange
will be determined in accordance with policies established in
good faith by the Trustees. On an ongoing basis, the Trustees
monitor the Fund's method of valuation.

Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well
before the close of business of each business day in New York
(i.e., a day on which the Exchange is open). In addition,
European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all
business days in New York. Furthermore, trading takes place in
Japanese markets on certain Saturdays and in various foreign
markets on days which are not business days in New York and on
which the Fund's net asset value is not calculated. The Fund
calculates net asset value per share, and therefore effects
purchases and redemptions of its shares, as of the next close of
regular trading on the Exchange following receipt of a purchase
or redemption order (and on such other days as the Trustees of
the Fund deem necessary in order to comply with Rule 22c-1 under
the Act). Such calculation does not take place contemporaneously
with the determination of the prices of the majority of the
portfolio securities used in such calculation. Events affecting

<PAGE>

the values of portfolio securities that occur between the time
their prices are determined and the close of the Exchange will
not be reflected in the Fund's calculation of net asset value
unless the Fund's Trustees deem that the particular event would
materially affect net asset value, in which case an adjustment
will be made.

The Trustees may suspend the determination of the Fund's net
asset value (and the offering and sales of shares), subject to
the rules of the Commission and other governmental rules and
regulations, at time when: (1) the Exchange is closed, other
than customary weekend and holiday closing, (2) an emergency
exists as a result of which it is not reasonably practical for
the Fund to dispose of securities owned by it or to determine
fairly the value of its net assets, or (3) for the protection of
shareholders, the Commission by order permits a suspension of the
right of redemption or a postponement of the date of payment on
redemption.

_________________________________________________________________

DIVIDENDS, DISTRIBUTIONS AND TAXES
_________________________________________________________________

FOREIGN INCOME TAXES. Investment income received by the Fund
from sources within foreign countries may be subject to foreign
income taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of such taxes or exemption
from taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of the
Fund's assets to be invested within various countries is not
known.

U.S. FEDERAL INCOME TAXES. The Fund qualified for the fiscal
year ended June 30, 1994 and intends for each future year to
qualify for tax treatment as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code").
To the extent that the Fund distributes all of its taxable income
and net capital gain to its shareholders, qualification relieves
the Fund of Federal income and excise taxes. Investors should
consult their own counsel for a complete understanding of the
requirements the Fund must meet to qualify for such treatment.
The following discussion relates solely to U.S. Federal income
taxes on dividends and distributions by the Fund and assumes that
the Fund qualifies as a regulated investment company. Investors
should consult their own counsel for further details, including
their entitlement to foreign tax credits that might be "passed
through" to them under the rules described below, and the
application of state and local tax laws to his or her particular
situation.

<PAGE>

Income dividends and distributions of any realized short-
term capital gains are included in the income of U.S.
shareholders as ordinary income and distributions of net long-
term capital gains are included in the income of U.S.shareholders
as long-term capital gains irrespective of the length of time the
U.S. shareholder has held its shares in the Fund. The dividends-
received deduction for corporations should be applicable to some
portion of the Fund's dividends of net ordinary income and
distributions of net realized short-term capital gains. The
amount of such dividends and distributions eligible for the
dividends-received deduction is limited to the amount of
dividends received by the Fund during the fiscal year from
domestic corporations. Under provisions of the tax law a
corporation's dividend-received deduction will be disallowed
unless the corporation holds shares in the Fund at least 46 days.
Furthermore, the dividends-received deduction will be disallowed
to the extent a corporation's investment in shares of the Fund is
financed with indebtedness.

Under current Federal tax law, the amount of an income
dividend or capital gains distribution declared by the Fund
during October, November or December of a year to shareholders of
record as of a specified date during such a month that is paid
during January of the following year is includable in the prior
year's taxable income of shareholders that are calendar year
taxpayers.

In view of the Fund's investment policies it is expected that
dividends from domestic corporations will, at most, be a small
part of the Fund's gross income and that, accordingly, a small
part, at most, of such distributions by the Fund will be eligible
for the dividends-received deduction; however, this is largely
dependent on the Fund's investment activities and accordingly
cannot be predicted with certainty. The Fund will advise its
shareholders annually as to the Federal income tax status of
distributions made during the year.

There is no fixed dividend rate and there can be no assurance
that the Fund will pay any dividends or realize any gains. It is
the intention to distribute to its shareholders each fiscal year
substantially all of such year's net income and net realized
capital gains, if any. The amount and time of any such
distribution must necessarily depend upon the realization by the
Fund of income and capital gains from investments. Shareholders
will be advised annually as to the tax status of dividends and
capital gains distributions.

CURRENCY FLUCTUATIONS --"SECTION 988" GAINS OR LOSSES. Under
the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other

<PAGE>

liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, from the disposition of over-the-counter options with
respect to foreign currency, or from the disposition of a forward
contract denominated in a foreign currency (and from regulated
futures contracts and certain nonequity options if the Fund so
elects) which are attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the asset
and the date of disposition also are treated as ordinary gain or
loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, increase or decrease the amount of
the Fund's investment company taxable income available to be
distributed to its shareholders as ordinary income, rather than
increasing or decreasing the amount of the Fund's net capital
gain. Because section 988 losses reduce the amount of ordinary
dividends the Fund will be allowed to distribute for a taxable
year, such section 988 losses may result in all or a portion of
prior dividend distributions for such year being recharacterized
as a non-taxable return of capital to shareholders, rather than
as an ordinary dividend, reducing each shareholder's basis in his
Fund shares. To the extent that such distributions exceed such
shareholder's basis, each will be treated as a gain from the sale
of shares.

OPTIONS, FUTURES CONTRACTS, AND FORWARD FOREIGN CURRENCY
CONTRACTS. Certain listed options, forward foreign currency
contracts and regulated futures contracts are considered "section
1256 contracts" for Federal income tax purposes. Section 1256
contracts held by the Fund at the end of each taxable year will
be "marked to market" and treated for Federal income tax purposes
as though sold for fair market value on the last business day of
such taxable year. Gain or loss realized by the Fund on forward
foreign currency contracts will be treated as section 988 gain or
loss, as described above. In general, gain or loss realized by
the Fund on other types of section 1256 contracts will be
considered 60% long-term and 40% short-term capital gain or loss.
The Fund can elect to exempt its section 1256 contracts which are
part of a "mixed straddle" (as described below) from the
application of section 1256. These results could vary if the
Fund makes one or more elections available under sections 988 and
1256.

The Treasury Department has the authority to issue
regulations that would permit or require the Fund either to
integrate a foreign currency hedging transaction with the
investment that is hedged and treat the two as a single
transaction, or otherwise to treat the hedging transaction in a
manner that is consistent with the hedged investment. Regulations

<PAGE>

under this authority generally should not apply to the type of
hedging transactions in which the Fund intends to engage.

Gain or loss realized by the Fund upon the lapse or sale of
put and call equity options held by the Fund will be either
long-term or short-term capital gain or loss depending upon the
Fund's holding period with respect to such option. However, gain
or loss realized upon the lapse or closing out of such options
that are written by the Fund will be treated as short-term
capital gain or loss. In general, if the Fund exercises an
option, or if an option that the Fund has written is exercised,
gain or loss on the option will not be separately recognized but
the premium received or paid will be included in the calculation
of gain or loss upon disposition of the property underlying the
option.

Gain or loss realized by the Fund on the lapse or sale of put
and call options on foreign currencies which are traded over-
the-counter or on certain foreign exchanges will be treated as
section 988 gain or loss and will therefore be characterized as
ordinary income or loss and will increase or decrease the amount
of the Fund's net investment income available to be distributed
to shareholders as ordinary income, as described above. The
amount of such gain or loss shall be determined by subtracting
the amount paid, if any, for or with respect to the option
(including any amount paid by the Fund upon termination of an
option written by the Fund) from the amount received, if any, for
or with respect to the option (including any amount received by
the Fund upon termination of an option held by the Fund. In
general, if the Fund exercises such an option on a foreign
currency, or if such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option.

TAX STRADDLES. Any option, futures contract, or other
position entered into or held by the Fund in conjunction with any
other position held by the Fund may constitute a "straddle" for
federal income tax purposes. A straddle of which at least one,
but not all, the positions are section 1256 contracts may
constitute a "mixed straddle". In general, straddles are subject
to certain rules that may affect the character and timing of the
Fund's gains and losses with respect to straddle positions by
requiring, among other things, that (i) loss realized on
disposition of one position of a straddle not be recognized to
the extent that the Fund has unrealized gains with respect to the
other position in such straddle; (ii) the Fund's holding period
in straddle positions be suspended while the straddle exists
(possibly resulting in gain being treated as short-term capital

<PAGE>

gain rather than long-term capital gain); (iii) losses recognized
with respect to certain straddle positions which are part of a
mixed straddle and which are non-section 1256 positions be
treated as 60% long-term and 40% short-term capital loss;
(iv) losses recognized with respect to certain straddle positions
which would otherwise constitute short-term capital losses be
treated as long-term capital losses; and (v) the deduction of
interest and carrying charges attributable to certain straddle
positions may be deferred. Various elections are available to
the Fund which may mitigate the effects of the straddle rules,
particularly with respect to mixed straddles.

FOREIGN TAX CREDITS. Income received by the Fund from
sources within various foreign countries may be subject to
foreign income tax. If more than 50% of the value of the Fund's
total assets at the close of its taxable year consists of the
stock or securities of foreign corporations, the Fund may elect
to "pass through" to the Fund's stockholders the amount of
foreign income taxes paid by the Fund. Pursuant to such
election, stockholders would be required: (i) to include in
gross income their respective pro-rata shares of foreign taxes
paid by the Fund; (ii) treat his pro-rata share of such foreign
taxes as having been paid by him; and (ii) either to deduct their
pro-rata share of foreign taxes in computing their taxable
income, or to use it as a foreign tax credit against Federal
income taxes (but not both). No deduction for foreign taxes
could be claimed by a shareholder who does not itemize
deductions.

The Fund has met for each fiscal year to date, and intends to
meet for each future fiscal year, the requirements of the Code to
"pass through" to its shareholder foreign income taxes paid, but
there can be no assurance that the Fund will be able to do so.
Each shareholder will be notified within 60 days after the close
of each taxable year of the Fund whether the foreign taxes paid
by the Fund will "pass through" for that year, and, if so, the
amount of each shareholder's pro-rata share (by country) of
(i) the foreign taxes paid, and (ii) the Fund's gross income from
foreign sources. Of course, shareholders who are not liable for
Federal income taxes, such as retirement plans qualified under
Section 401 of the Code, will not be affected by any such "pass
through" of foreign tax credits.

BACKUP WITHHOLDING. The Fund may be required to withhold
United States federal income tax at the rate of 31% of all
taxable distributions payable to shareholders who fail to provide
the Fund with their correct taxpayer identification numbers or to
make required certifications, or who have been notified by the
Internal Revenue Service that they are subject to backup
withholding. Corporate shareholders and certain other
shareholders specified in the Code are exempt from such backup

<PAGE>

withholding. Backup withholding is not an additional tax; any
amounts so withheld may be credited against a shareholder's
United States federal income tax liability or refunded.

TAXATION OF FOREIGN STOCKHOLDERS. The foregoing discussion
relates only to U.S. Federal income tax law as it affects
shareholders who are U.S. residents or U.S. corporations. The
effects of Federal income tax law on shareholders who are
non-resident aliens or foreign corporations may be substantially
different. Foreign investors should consult their counsel for
further information as to the U.S. tax consequences of receipt of
income from the Fund.

_________________________________________________________________

PORTFOLIO TRANSACTIONS
_________________________________________________________________

Transactions on stock exchanges involve the payment of
brokerage commissions. In transactions on stock exchanges in the
United States, these commissions are negotiated, whereas on
foreign stock exchanges these commissions are generally fixed. In
the case of securities traded in the foreign and domestic over-
the-counter markets, there is generally no stated commission, but
the price usually includes an undisclosed commission or markup.
In underwritten offerings, the price includes a disclosed fixed
commission or discount.

Investment information provided to the Adviser is of the type
described in Section 28(e) of the Securities Exchange Act of
1934, as amended, and is designed to augment the Adviser's own
internal research and investment strategy capabilities. Research
services furnished by broker-dealers through which the Fund
effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its client accounts. There may be occasions where
the transaction cost charged by a broker-dealer may be greater
than that which another broker-dealer may charge if the Fund
determines in good faith that the amount of such transaction cost
is reasonable in relationship to the value of the brokerage and
research services provided by the executing broker-dealer.

The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
with or through whom the Fund places portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
as well as the Fund; but, on the other hand, certain research

<PAGE>

services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value
to it in serving the Fund. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
and subject to seeking best execution, the Fund may consider
sales of shares of the Fund or other investment companies managed
by the Adviser as a factor in the selection of brokers to execute
portfolio transactions for the Fund. During the fiscal year
ended June 30, 1994 transactions in portfolio securities of the
Fund amounting to $435,708,619, with associated brokerage
commissions of approximately 30%, were allocated to persons or
firms supplying investment information to the Adviser.

The Fund is permitted to place brokerage orders with
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), a
U.S. registered broker-dealer and an affiliate of the Adviser.
With respect to orders placed with DLJ for execution on a
national securities exchange, commissions received must conform
to Section 17(e)(2)(A) of the Act of 1940 and Rule 17e-1
thereunder, which permit an affiliated person of a registered
investment company (such as the Fund), or any affiliated person
of such person, to receive a brokerage commission from such
registered investment company provided that such commission is
reasonable and fair compared to the commissions received by other
brokers in connection with comparable transactions involving
similar securities during a comparable period of time.

During the fiscal years ended June 30, 1992, 1993 and 1994,
the Fund incurred brokerage commissions amounting in the
aggregate to $654,965, $540,303 and $342,290, respectively.
During the fiscal years ended June 30, 1992, 1993 and 1994,
brokerage commissions amounting in the aggregate to $0, $0 and
$0, respectively, were paid to DLJ and brokerage commissions
amounting in the aggregate to $13,078, $0 and $0, respectively,
were paid to brokers utilizing the Pershing Division of DLJ.
During the fiscal year ended June 30, 1994, the brokerage
commissions paid to DLJ constituted 0% of the Fund's aggregate
brokerage commissions and the brokerage commissions paid to
brokers utilizing the Pershing Division of DLJ constituted 0% of
the Fund's aggregate brokerage commissions. During the fiscal
year ended June 30, 1994, of the Fund's aggregate dollar amount
of brokerage transactions involving the payment of commissions,
0% were effected through DLJ and 0% were effected through brokers
utilizing the Pershing Division of DLJ.

<PAGE>

_________________________________________________________________

GENERAL INFORMATION
_________________________________________________________________

CAPITALIZATION. The Fund was organized as a Maryland
Corporation in 1980. In November 1985 the Fund was reorganized
under the laws of Massachusetts as a Massachusetts business
trust. The Fund has an unlimited number of authorized Class A,
Class B and Class C shares of beneficial interest, par value $.01
per share. All shares of the Fund, when issued, are fully paid
and nonassessable. The Trustees are authorized to reclassify and
issue any unissued shares to any number of additional classes or
series without shareholder approval. Accordingly, the Trustees
in the future, for reasons such as the desire to establish one or
more additional portfolios with different investment objectives,
policies or restrictions, may create additional classes or series
of shares. Any issuance of shares of another class would be
governed by the Act and the law of the Commonwealth of
Massachusetts. If shares of another class were issued in
connection with the creation of a second portfolio, each share of
either portfolio would normally be entitled to one vote for all
purposes. Generally, shares of both portfolios would vote as a
single series for the election of Trustees and on any other
matter that affected both portfolios in substantially the same
manner. As to matters affecting each portfolio differently, such
as approval of the Advisory Agreement and changes in investment
policy, shares of each portfolio would vote as separate classes.

The Fund's shares have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for
election of Trustees can elect 100% of the directors if they
choose to do so, and in such event the holders of the remaining
less than 50% of the shares voting for such election of Trustees
will not be able to elect any persons or persons as Trustees.

Procedures for calling a shareholders' meeting for the
removal of Trustees of the Fund, similar to those set forth in
Section 16(c) of the 1940 Act, are available to shareholders of
the Fund. Meetings of shareholders may be called by 10% of the
Fund's outstanding shareholders. The rights of the holders of
shares of a series may not be modified except by vote of a
majority of the outstanding shares of such series.

An order has been received from the Commission permitting the
issuance and sale of three classes of shares representing
interests in the Fund. The issuance and sale of any additional
classes will require an additional order from the Commission.
There is no assurance that such exemptive relief would be
granted.

<PAGE>

At May [ ], 1995, there were [ ] Class A shares,
[ ] Class B shares and [ ] Class C shares of
beneficial interest of the Fund outstanding. Set forth and
discussed below is certain information as to all persons who were
record holders or beneficial owners of 5% or more of any class of
the Fund's shares at May [ ], 1995.

NO. OF % OF
NAME AND ADDRESS SHARES CLASS
________________ ______ ______

Orth & Company Trust Dept. 2,585,857 22.7
Ford General Ret. Plan #112 Class A
PO Box 1319
Detroit, MI 48231

Murdoch & Co. 1,582,071 13.9
C/O The Bank of Bermuda Class A
6 Front Street
Hamilton HM-11, Bermuda

Merrill Lynch 534,172 22.7
4800 Deer Lake Drive East Class B
Jacksonville, FL

505,087 29.3
Class C

Some shareholders of the Fund are discretionary managed
accounts of the Adviser, which thereby exercised investment
discretion at May [ ], 1995 with respect to an aggregate of
[ ] Class A shares, representing [ ]% of all Class A
outstanding shares as of that date.

PRINCIPAL UNDERWRITER. Alliance Fund Distributors, Inc. is
the Principal Underwriter of shares of the Fund. Alliance Fund
Distributors, Inc. is not obligated to sell any specific amount
of shares and will purchase shares for resale only against orders
for shares. Under the Agreement between the Fund and the
Principal Underwriter, the Fund has agreed to indemnify the
Principal Underwriter, in the absence of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities,
including liabilities under the Securities Act of 1933, as
amended.

COUNSEL AND INDEPENDENT AUDITORS. Legal matters in
connection with the issuance of the Shares offered hereby are
passed upon by Seward & Kissel, One Battery Park Plaza, New York,

<PAGE>

New York. Seward & Kissel has relied upon the opinion of
Sullivan & Worcester, One Post Office Square, Boston,
Massachusetts, for matters relating to Massachusetts law.

Ernst & Young LLP, 787 Seventh Avenue, New York, New York,
have been appointed as independent auditors for the Fund.

CUSTODIAN. Portfolio securities purchased in the United
States are maintained in the custody of Brown Brothers & Harriman
Co. and may be entered into the Federal Reserve Book Entry
System, or the security depository system of the Depository Trust
Company. Brown Brothers & Harriman Co. has entered into sub-
custodian agreements with Morgan Guaranty & Trust Company of New
York and other United States banks, pursuant to which cash and
portfolio securities which are purchased outside the United
States are maintained in the custody of various foreign branches
of such United States banks.

TOTAL RETURN QUOTATIONS

From time to time the Fund advertises its "total return." The
Fund's "total return" is its average annual compounded total
return for its most recently completed one, five and ten years.
The Fund's total return for each such period is computed, through
the use of a formula prescribed by the Securities and Exchange
Commission, by finding the average annual compounded rate of
return over the period that would equate an assumed initial
amount invested to the value of such investment at the end of the
period. For purposes of computing total return, income dividends
and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when received and the maximum
sales charge applicable to purchases of Fund shares is assumed to
have been paid.

The Fund's average annual compounded total return for the
year ended December 31, 1994 was 1.19% for Class A shares, 1.05%
for Class B shares and 4.78% for Class C shares; for the five
years ended December 31, 1994 was .67% for Class A shares, from
September 17, 1990 (commencement of distribution) to December 31,
1994 was 4.81% for Class B shares and from May 3, 1993
(commencement of distribution) through December 31, 1994 was
8.19% for Class C shares; and for the ten year period ended
December 31, 1994 was 14.83% for Class A shares. The Fund will
compute total return figures separately for Class A shares,
Class B shares and Class C shares.

The Fund's total return is not fixed and will fluctuate in
response to prevailing market conditions or as a function of the
type and quality of the securities in the Fund's portfolio and

<PAGE>

the Fund's expenses. An investor's principal invested in the
Fund is not fixed and will fluctuate in response to prevailing
market conditions.

A $10,000 investment in the Class A Shares of the Fund would
have grown to $[ ] over the ten years ended [ ], giving
the investor a [ ]% cumulative total return. Total return for
Class B and Class C Shares would have been lower because of their
higher expenses. As of June 30, 1994, the SEC average annual
total returns (at maximum offering price) were, with respect to
Class A Shares, 13.64% for the past year, 9.64% for the past 3
years, 4.45% for the past 5 years and 15.49% for the past ten
years; with respect to Class B Shares, 13.65% for the past year,
9.72% for the past 3 years and 5.78% since inception; and with
respect to Class C Shares, 17.72% for the past year and 13.79%
since inception. As of June 30, 1994, cumulative total returns
(at net asset value) were, with respect to Class A Shares, 7.36%
for the year to date, 18.68% for the past year, 37.64% for the
past three years, 29.87% for the past five years and 340.91% for
the past ten years; with respect to Class B Shares, 6.93% for the
past three years and 24.75% since inception; and with respect to
Class C Shares, 6.86% for the year to date, 17.72% for the past
year and 16.31% since inception. The preceding information is not
an indication of future Fund composition or performance. SEC
average annual total returns for the periods shown reflect
deduction of the maximum front-end sales charge for Class A
Shares or applicable contingent deferred sales charge for Class B
Shares. The performance figures for cumulative total return do
not reflect sales charges which would reduce total return
figures. The investment return and principal value of the Fund
will fluctuate so that Shares, when redeemed, may be worth more
or less than their original cost.

Advertisements quoting performance rankings or ratings of the
Fund as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc., and
Morningstar, Inc. and advertisements presenting the historical
performance of the Fund may also from time to time be sent to
investors or placed in newspapers and magazines such as The New
York Times, The Wall Street Journal, Barrons, Investor's Daily,
Money Magazine, Changing Times, Business Week and Forbes or other
media on behalf of the Fund.

ADDITIONAL INFORMATION. Any shareholder inquiries may be
directed to the shareholder's broker or to Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
front cover of this Statement of Additional Information.

<PAGE>

This Statement of Additional Information does not contain all
the information set forth in the Registration Statement filed by
the Fund with the Commission under the Securities Act of 1933, as
amended. Copies of the Registration Statement may be obtained at
a reasonable charge from the Commission or may be examined,
without charge, at the offices of the Commission in Washington,
D.C.

<PAGE>

PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & OTHER
INVESTMENTS--94.5%
ARGENTINA--0.5%
Buenos Aires
Embotelladora, S.A............... 13,400 $ 432,150
YPF, S.A. Cl.D (ADR)............... 36,600 782,325
-----------
1,214,475
-----------
AUSTRALIA--1.9%
Australia & New Zealand
Bank Group, Ltd.................. 312,541 1,029,764
Boral, Ltd......................... 361,099 951,803
Broken Hill Proprietary
Co., Ltd......................... 67,278 1,022,283
Coca-Cola Amatil, Ltd.............. 152,178 967,403
Mayne Nickless, Ltd................ 165,154 845,036
-----------
4,816,289
-----------
BELGIUM--0.9%
Arbed, S.A.*....................... 3,800 570,480
Kredietbank, N.V................... 8,450 1,770,154
-----------
2,340,634
-----------
BRAZIL--0.5%
Panamerican Beverages,
Inc. Cl.A........................ 38,900 1,230,212
-----------
CANADA--0.9%
Alcan Aluminium, Ltd............... 23,200 589,200
American Barrick
Resources Corp................... 13,400 298,150
Finning, Ltd....................... 8,900 126,100
Hemlo Gold Mines, Inc.............. 10,700 109,651
Imasco, Ltd........................ 146 4,137
Noranda, Inc....................... 10,700 202,139
Northern Telecom, Ltd.............. 58 1,933
Placer Dome, Inc................... 5,300 115,275
Renaissance Energy, Ltd.*.......... 33,000 638,121
Rogers Communications,
Inc.*............................ 8,900 118,963
-----------
2,203,669
-----------
DENMARK--0.6%
Den Danske Bank
International, S.A............... 26,800 1,462,477
-----------
FINLAND--1.5%
Metsa-Serla Oy..................... 22,100 970,346
Nokia Corp. pfd.................... 19,230 2,833,386
-----------
3,803,732
-----------
FRANCE--6.2%
Assurance Generale
de France........................ 58,500 2,322,037
Banque Nationale de Paris.......... 20,500 942,286
Bouygues, S.A...................... 12,000 1,148,100
CIE Frananciere
de Paribas, S.A.................. 27,853 1,851,304
Generale des Eaux.................. 23,210 2,255,381
Gruope Danone...................... 5,500 771,297
Pechiney, S.A. .................... 15,200 1,024,527
Salomon, S.A....................... 3,300 1,319,135
Saint Gobain ...................... 19,200 2,207,227
Total, S.A. (ADR).................. 48,560 1,432,520
Cl. B............................ 5,300 307,819
Unibail............................ 4,040 369,129
-----------
15,950,762
-----------
GERMANY--6.5%
BASF A.G........................... 9,810 2,022,583
Bayer A.G.......................... 8,350 1,955,958
Bayer Motoren Werke
A.G.............................. 2,427 1,205,943
Deutsche Bank A.G.(c).............. 5,350 2,485,723
Deutsche Lufthansa
A.G.*(c)........................ 21,925 2,758,929
Klein, Schanz & Beck............... 520 125,835
Pfd. ............................ 610 127,932
Papierwerke Waldhof................ 9,800 1,505,114
Suedzucker A.G.(c)................. 4,101 2,050,963
Veba A.G.(c)....................... 6,780 2,362,598
-----------
16,601,578
-----------
GHANA--0.8%
Ashanti Goldfields Co.,
Ltd. (GDS)*................. 4,900 105,962
Ashanti Goldfields Co.,
Ltd. (ADR) (b)*............. 89,000 1,924,625
-----------
2,030,587
-----------
HONG KONG--1.4%
Hong Kong Land
Holdings, Ltd.............. 327,000 638,152
Hong Kong Aircraft &
Engineering Co., Ltd........ 200 667
Hutchinson Whampoa,
Ltd. ....................... 203,000 829,053
Jardine Strategic
Holdings, Ltd............... 233,000 764,872
</TABLE>

1
<PAGE>

PORTFOLIO OF INVESTMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Peregrine Investment
Holdings, Ltd................... 179,000 $ 210,520
Sun Hung Kai
Properties, Ltd................. 73,000 435,877
Television Broadcasts, Ltd........ 194,000 784,776
------------
3,663,917
------------
INDIA--0.1%
Baja Auto, Ltd. (GDR)............. 7,400 177,600
------------
INDONESIA--0.2%
PT Astra International............ 179,000 342,038
PT Indosat*....................... 62,500 223,925
------------
565,963
------------
ITALY--1.8%
Burgo (Cartiere) S.p.A.*.......... 215,900 1,431,160
La Rinascente S.p.A............... 232,100 1,305,260
Telecom Italia S.p.A.............. 309,600 805,639
Telecom Italia S.p.A.--
Di Risp*................... 570,000 1,137,042
------------
4,679,101
------------
JAPAN--40.2%
Asahi Bank, Ltd................... 299,000 3,480,582
Asahi Glass Co., Ltd. ............ 308,000 3,801,706
Bank of Tokyo, Ltd................ 219,000 3,384,445
Canon, Inc. ...................... 145,000 2,459,107
DDI Corp.......................... 206 1,777,822
Dai-Ichi Kangyo Bank.............. 191,000 3,603,412
Dai Nippon Printing Co.,
Ltd. ........................... 70,000 1,194,180
Daiwa Securities Co.,
Ltd. ........................... 121,000 1,748,520
East Japan Railway Co............. 259 1,294,350
Fuji Photo Film Co................ 127,000 2,944,004
Hankyu Department
Store........................... 170,000 2,183,643
Hitachi Metals, Ltd............... 279,000 3,415,755
Ito-Yokado Co., Ltd. ........... 29,000 1,551,129
Kajima Corp. ..................... 50,000 428,500
Kao Corp. ........................ 68,000 771,099
Komatsu Ltd....................... 124,000 1,119,920
Kuraray Co., Ltd.................. 187,000 2,214,350
Long Term Credit Bank Of
Japan, Ltd...................... 287,000 3,139,288
Matsushita Electric Works......... 241,000 2,466,834
Mitsubishi Chemical Corp.......... 630,500 3,467,275
Mitsubishi Electric Corp.......... 415,000 2,944,355
Mitsubishi Heavy
Industries, Ltd................. 158,000 $ 1,205,017
NEC Corp. ........................ 277,000 3,168,891
NTN Corp. ........................ 359,000 2,691,149
Nippon Denso ..................... 144,000 3,034,621
Nippon Electric Glass
Co., Ltd....................... 28,000 556,347
Nippon Express Co., Ltd........... 153,000 1,535,374
Nippon Paper Industries
Co.*............................ 212,000 1,557,291
Nippon Steel Co.*................. 490,000 1,843,954
Nippon Telegraph &
Telephone Corp.................. 241 2,130,667
Nomura Securities Co.,
Ltd. ........................... 86,000 1,786,453
Sakura Bank Ltd................... 250,000 3,361,766
Santen Pharmaceutical
Co.............................. 76,000 2,112,594
Sanyo Electric Co., Ltd........... 93,000 534,762
Seven-Eleven Japan Co.,
Ltd. ........................... 15,000 1,205,720
Sony Corp. ....................... 74,500 4,224,034
Sumitomo Bank, Ltd. (c)........... 220,000 4,194,681
Sumitomo Realty and
Development Co., Ltd............ 102,000 603,914
Taisho Pharmaceutical
Co., Ltd. ...................... 90,000 1,725,038
Takara Shuzo Co................... 224,000 1,778,063
Tokio Marine & Fire
Insurance Co., Ltd.............. 262,000 3,207,627
Tokyo Electric Power
Co., Ltd........................ 46,000 1,283,292
Tokyo Gas Co., Ltd................ 359,000 1,556,327
Toyota Motor Corp.*............... 170,000 3,582,539
UBE Industries, Ltd.*............. 425,000 1,641,997
Yamazaki Baking Co.,
Ltd. ...................... 143,000 2,870,045
------------
102,782,439
------------
MALAYSIA--1.4%
Aokam Perdana Berhad.............. 98,000 606,383
DCB Holdings Berhad............... 329,000 734,404
Resorts World Berhad.............. 33,000 781,281
Technology Resources
Industries Berhad*......... 256,000 817,074
TA Enterprise Berhad*............. 247,500 649,403
------------
3,588,545
------------
</TABLE>

2
<PAGE>

PORTFOLIO OF INVESTMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
MEXICO--0.9%
Grupo Financiero
Bancomer, S.A. de
C.V. Cl.C........................ 1,340,200 $ 643,835
Grupo Tribasa, S.A. de C.V.
(ADR)*........................... 44,700 743,137
Telefonos De Mexico, S.A.
(ADR) Cl.L....................... 19,700 807,700
-----------
2,194,672
-----------
NETHERLANDS--4.7%
D.S.M. N.V. ....................... 20,300 1,612,833
Elsevier N.V....................... 117,700 1,227,394
European Vinyls Corp............... 12,000 531,663
Fortis Amev N.V.................... 72,555 3,080,803
Heineken N.V....................... 15,500 2,337,924
Koninklijke PTT N.V.*.............. 36,500 1,230,206
Ver Ned Uitgevers.................. 16,600 1,723,423
-----------
11,744,246
-----------
NORWAY--0.4%
Transocean Drilling,
A.S.*............................ 136,300 1,138,535
-----------
PHILIPPINES--0.8%
JG Summit Holdings
Series B......................... 1,787,000 654,313
Manila Electric Co. Cl.B........... 107,000 1,458,299
-----------
2,112,612
-----------
SINGAPORE--1.0%
Development Bank
of Singapore, Ltd................ 84,000 864,494
Keppel Corp., Ltd.*................ 101,000 859,280
Singapore Press Hldgs.,
Ltd. ............................ 47,000 854,545
-----------
2,578,319
-----------
SPAIN--2.8%
Banco Intercontinental
Espanol.......................... 11,200 924,806
Centros Commerciales
Continente, S.A.................. 44,000 885,730
Iberdrola, S.A. ................... 141,700 874,035
Repsol, S.A........................ 64,000 1,735,606
Tabacalera, S.A. Series A.......... 38,365 1,022,929
Telefonica de Espana............... 114,800 1,356,049
Unidad Editorial, S.A.(a).......... 297,500 322,511
-----------
7,121,666
-----------
SWEDEN--3.4%
AB Astra Series A................. 145,600 $ 3,762,187
ASEA AB Series B................... 8,275 599,140
Hennes & Mauritz AB
Series B......................... 16,300 835,777
Marieberg Tidings
Series A......................... 35,400 800,369
SKF International AB
Series A*........................ 41,000 678,683
Series B*........................ 27,000 445,120
Stora Kopparbergs
Series B......................... 26,700 1,609,782
-----------
8,731,058
-----------
SWITZERLAND--1.4%
Electrowatt A.G.................... 2,780 734,820
Nestle, S.A........................ 2,933 2,794,080
Swiss Reinsurance Co.
(registered)
B warrants
expiring 6/30/95*................ 3,900 35,753
-----------
3,564,653
-----------
THAILAND--1.1%
Advanced Information
Services Plc..................... 72,000 986,576
Bangkok Bank Co., Ltd.............. 107,000 1,142,243
Securities One, Ltd................ 87,000 727,744
-----------
2,856,563
-----------
UNITED KINGDOM--12.1%
Allied Radio Plc.*................. 1,825,950 150,001
Argos Plc.......................... 263,300 1,450,235
B.A.T. Industries Plc.............. 369,100 2,489,236
Barclays Plc....................... 224,000 2,141,578
Barratt Development Plc............ 21,000 54,876
British Airways Plc................ 398,600 2,232,879
British Land Co. Plc............... 189,800 1,138,954
British Petroleum Co. Plc.......... 142,700 950,098
Dixons Group Plc................... 724,500 2,153,956
Forte Plc.......................... 786,900 2,967,436
General Electric Plc............... 287,000 1,239,469
Johnson Matthey Plc................ 205,100 1,752,278
Mowlen (John) & Co. Plc............ 690,700 1,080,772
News International Plc.
special div. shares.............. 279,600 936,258
Queens Moat
Houses Plc.* (a)................. 500,000 7,824
</TABLE>

3
<PAGE>

PAGE>

PORTFOLIO OF INVESTMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Royal Bank of Scotland
Group Plc. .................... 298,700 $ 1,841,519
SmithKline Beecham Cl.A.......... 165,000 1,170,863
Thorn EMI Plc. .................. 140,456 2,273,608
Vodafone Group Plc. ............. 778,000 2,580,835
Wimpey (George) Plc. ............ 1,159,100 2,339,674
------------
30,952,349
------------
OTHER--0.5%
Asesores Bursatiles Capital
Fund N.V.* (a)................. 25 639,863
CLM Insurance Fund Plc. ......... 123,000 184,766
Taiwan Fund, Inc. ............... 18,000 519,750
Touche Remnant Ecotec
Environmental Fund*(a)......... 1 -0-
------------
1,344,379
------------
</TABLE>

<TABLE>
<CAPTION>
Principal
Amount
Company (000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>

Total Common Stocks &
Other Investments
(cost $235,068,304)............ $241,451,032
------------
TIME DEPOSIT--5.6%
First National Bank
of Chicago
5.875%, 1/03/95
(cost $14,400,000)............. US$14,400 14,400,000
------------
TOTAL INVESTMENTS--100.1%
(cost $249,468,304).............. 255,851,032

Other assets less liabilities--(0.1%) (300,993)
------------

NET ASSETS--100% $255,550,039
============
- ------------------------------------------------------------------------------
</TABLE>

* Non-income producing security.
(a) Illiquid Security, valued at fair market value. (See Notes A and F.)
(b) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1994 this security amounted to $1,924,625 or 0.8% of net assets.
(c) Securities with an aggregate market value of $13,852,894 segregated to
collateralize forward exchange currency contracts.

Glossary of Terms:
ADR -- American depository receipt
GDR -- Global depository receipt
GDS -- Global depository security

See notes to financial statements.

4
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $249,468,304).................................. $255,851,032
Cash, at value (cost $1,609,106)......................................................... 1,620,139
Receivable for investment securities sold................................................ 24,867,430
Receivable for shares of beneficial interest sold........................................ 610,644
Dividends and interest receivable........................................................ 344,842
Foreign taxes receivable and other assets................................................ 250,720
------------
Total assets............................................................................. 283,544,807
------------

LIABILITIES
Payable for investment securities purchased.............................................. 24,634,016
Payable for shares of beneficial interest redeemed....................................... 1,920,882
Advisory fee payable..................................................................... 640,482
Distribution fee payable................................................................. 92,144
Unrealized depreciation of forward exchange currency contracts........................... 52,914
Accrued expenses......................................................................... 654,330
------------
Total liabilities........................................................................ 27,994,768
------------
NET ASSETS ................................................................................. $255,550,039
============

COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par.................................................... $ 156,977
Additional paid-in capital............................................................... 242,592,291
Accumulated net investment loss.......................................................... (2,014,811)
Accumulated net realized gain on investments and foreign currency transactions........... 8,476,527
Net unrealized appreciation of investments and foreign currency denominated assets
and liabilities.......................................................................... 6,339,055
------------
$255,550,039
============

CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($176,845,154/10,751,205 shares of beneficial interest issued and outstanding).......... $16.45
Sales charge--4.25% of public offering price............................................. .73
------
Maximum offering price................................................................... $17.18
======
CLASS B SHARES
Net asset value and offering price per share
($49,532,149/3,113,731 shares of beneficial interest issued and outstanding)............ $15.91
======

CLASS C SHARES
Net asset value, redemption and offering price per share
($29,172,736/1,832,760 shares of beneficial interest issued and outstanding)............ $15.92
======
</TABLE>

- --------------------------------------------------------------------------------
See notes to financial statements.

5
<PAGE>

STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $185,860)...................... $1,344,974
Interest................................................................... 423,180 $1,768,154
----------
EXPENSES
Advisory fee............................................................... 1,358,900
Distribution fee-Class A................................................... 184,665
Distribution fee-Class B................................................... 203,823
Distribution fee-Class C................................................... 133,406
Custodian.................................................................. 272,638
Transfer agency............................................................ 271,139
Administrative............................................................. 84,983
Audit and legal............................................................ 49,741
Printing................................................................... 45,815
Registration............................................................... 35,529
Trustees' fees............................................................. 19,225
Miscellaneous.............................................................. 20,084
----------
Total expenses............................................................. 2,679,948
-----------

Net investment loss........................................................ (911,794)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investment transactions............................... 19,612,564
Net realized loss on foreign currency transactions......................... (1,163,191)
Net change in unrealized appreciation (depreciation) of:
Investments................................................................ (22,733,208)
Foreign currency denominated assets and liabilities........................ 310,753
-----------
Net loss on investments and foreign currency transactions.................. (3,973,082)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS....................................... $(4,884,876)
===========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1994 JUNE 30,
(UNAUDITED) 1994
----------------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss............................................................. $ (911,794) $ (1,189,227)
Net realized gain on investments and foreign currency transactions.............. 18,449,373 25,178,246
Net change in unrealized appreciation (depreciation) of investments
and foreign currency denominated assets and liabilities........................ (22,422,455) 9,924,850
------------ ------------
Net increase (decrease) in net assets from operations........................... (4,884,876) 33,913,869
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments and foreign currency transactions
Class A........................................................................ (15,878,472) (5,633,699)
Class B........................................................................ (4,457,892) (427,595)
Class C........................................................................ (2,832,662) (193,466)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase ................................................................... 38,242,776 50,062,493
------------ ------------
Total increase ................................................................. 10,188,874 77,721,602
NET ASSETS
Beginning of year............................................................... 245,361,165 167,639,563
------------ ------------
End of period................................................................... $255,550,039 $245,361,165
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.

6
<PAGE>

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE A: SIGNIFICANT ACCOUNTING POLICIES

Alliance International Fund (the "Fund"), which is a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as a diversified,
open-end management investment company. The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge of up to
4.25%. Class B shares are sold with a contingent deferred sales charge which
declines from 4% to zero depending on the period of time the shares are held.
Class B shares will automatically convert to Class A shares eight years after
the end of the calendar month of purchase. Class C shares are sold without an
initial or contingent deferred sales charge. All three classes of shares have
identical voting, dividend, liquidation and other rights, except that each class
bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. The following is a summary of significant
accounting policies followed by the Fund.

1. SECURITY VALUATION

Portfolio securities traded on a United States or European stock exchange for
which market quotations are readily available are valued at the last quoted
sales price on that exchange prior to the time when assets are valued.
Securities listed or traded on certain foreign exchanges whose operations are
similar to the U.S. over-the-counter market are valued at the price within
the limits of the latest available current bid and asked price deemed best to
reflect fair value. Securities which mature in 60 days or less are valued at
amortized cost which approximates market value. Restricted securities are
valued at fair value as determined by the Board of Trustees. In determining
fair value, consideration is given to cost, operating and other financial
data.

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 at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated at rates of exchange prevailing when
accrued.

Net realized foreign exchange losses of $1,163,191 represent foreign exchange
gains and losses from sales and maturities of debt securities, holding of
foreign currencies, exchange gains or losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of dividends, interest and foreign taxes receivable recorded on the
Fund's books and the U.S. dollar equivalent of the 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.

3. TAXES

It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.

4. INVESTMENT INCOME AND SECURITY TRANSACTIONS

Dividend income is recorded on the ex-dividend date. Interest income is
accrued daily. Security transactions are accounted for on the date securities
are purchased or sold. Security gains and losses are determined on the
identified cost basis. The Fund accretes discounts on short-term securities
as adjustments to interest income.

5. DIVIDENDS AND DISTRIBUTIONS

Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.

6. CHANGES IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS

Effective June 30, 1994, the Fund adopted Statement of Position 93-2
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As
a result, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations.

7
<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Under an investment advisory agreement, the Fund pays its Adviser, Alliance
Capital Management, L.P., (the "Adviser"), a fee at a quarterly rate equal to
1/4 of 1% (approximately 1% on an annual basis) of quarter end net
assets up to $500 million and 3/16 of 1% (approximately .75% on an
annual basis) of quarter end net assets in excess of $500 million. The
Adviser has agreed, under the terms of the advisory agreement, to reimburse
the Fund to the extent that its aggregate expenses (exclusive of interest,
taxes, brokerage, distribution fee, extraordinary expenses and certain other
expenses) exceed the limits prescribed by any state in which the Fund's
shares are qualified for sale. The Fund believes that the most restrictive
expense ratio limitation currently imposed by any state is 2.5% of the first
$30 million of the Fund's average daily net assets, 2% of the next $70
million of its average daily net assets and 1.5% of its average daily net
assets in excess of $100 million. For the six months ended December 31, 1994,
no such reimbursement was required. Pursuant to the advisory agreement, the
Fund paid $84,983 to the Adviser representing the cost of certain legal and
accounting services provided to the Fund by the Adviser for the six months
ended December 31, 1994.

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 $162,170 for the six months ended December 31, 1994.

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 $8,601 from the sale of Class A shares and
$129,380 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B for the six months ended December 31, 1994. Brokerage
commissions paid on securities transactions for the six months ended December
31, 1994, amounted to $603,281, none of which was paid to brokers utilizing
the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.

- --------------------------------------------------------------------------------

NOTE C: DISTRIBUTION SERVICES AGREEMENT

The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to the
Class B and Class C shares. 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 $1,459,486 and $365,010, for Class B and C shares,
respectively; such costs may be recovered from the Fund in future periods so
long as the Agreement is in effect. In accordance with the Agreement, there is
no provision for recovery of unreimbursed distribution costs, incurred by the
Distributor, beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of the Fund's shares.

- --------------------------------------------------------------------------------

NOTE D: INVESTMENT TRANSACTIONS

Purchases and sales of investment securities (excluding short-term
investments) aggregated $154,865,107 and $145,931,194, respectively, for the
six months ended December 31, 1994. There were no purchases or sales of U.S.
Government and government agency obligations for the six months ended
December 31, 1994.

The Fund enters into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign

8
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

portfolio holdings. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gain
or loss 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 U.S. Government securities in a separate account of the Fund
having a value equal to the aggregate amount of the Fund's commitments under
forward exchange currency contracts entered into with respect to position
hedges.

Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. At December 31, 1994, the Fund
had outstanding forward exchange currency contracts, both to purchase and
sell foreign currencies against the U.S. dollar as follows:

<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY SALE CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------- -------- ----------- ------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks, expiring, 2/28/95 ............ 12,000 $7,676,561 $7,752,486 $(75,925)
Japanese Yen, expiring, 2/28/95 .............. 417,000 4,232,214 4,209,203 23,011
--------
$(52,914)
========
</TABLE>

At December 31, 1994, 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 $17,152,467 and gross unrealized
depreciation of investments was $10,769,739, resulting in net unrealized
appreciation of $6,382,728. At June 30, 1994, to the extent provided in the
regulations, the Fund had a capital loss carry forward of $169,387 which expires
in the year 1999.

- --------------------------------------------------------------------------------

NOTE E: SHARES OF BENEFICIAL INTEREST

There is an unlimited number of $.01 par value shares of beneficial interest
authorized, divided into three classes, designated Class A, Class B and Class
C shares. Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
SHARES AMOUNT
------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1994 JUNE 30, DECEMBER 31, 1994 JUNE 30,
(UNAUDITED) 1994 (UNAUDITED) 1994
----------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................ 1,596,019 2,597,434 $ 29,418,851 $ 45,812,612
Shares issued in reinvestment of
dividends and distributions....... 926,429 328,484 15,032,351 5,442,987
Shares issued in connection with
the acquisition of the
Canadian Fund..................... -0- 747,660 -0- 12,699,508
Shares redeemed.................... (2,758,683) (2,744,645) (51,066,944) (48,609,413)
---------- ---------- ------------ ------------
Net increase (decrease)............ (236,235) 928,933 $ (6,615,742) $ 15,345,694
========== ========== ============ ============
</TABLE>

9
<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES AMOUNT
------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1994 JUNE 30, DECEMBER 31, 1994 JUNE 30,
(UNAUDITED) 1994 (UNAUDITED) 1994
----------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
CLASS B
Shares sold........................ 1,629,722 1,519,137 $ 28,975,071 $26,354,439
Shares issued in reinvestment of
distributions..................... 246,119 24,318 3,861,838 394,438
Shares redeemed.................... (434,685) (275,243) (7,533,977) (4,795,788)
--------- --------- ------------ -----------
Net increase....................... 1,441,156 1,268,212 $ 25,302,932 $21,953,089
========= ========= ============ ===========
CLASS C
Shares sold........................ 1,622,229 1,157,061 $ 29,077,802 $20,136,268
Shares issued in reinvestment of
distributions .................... 171,490 11,110 2,692,396 180,098
Shares redeemed.................... (714,807) (428,880) (12,214,612) (7,552,656)
--------- --------- ------------ -----------
Net increase....................... 1,078,912 739,291 $ 19,555,586 $12,763,710
========= ========= ============ ===========
</TABLE>

- --------------------------------------------------------------------------------

NOTE F: ILLIQUID SECURITIES

<TABLE>
<CAPTION>
DATE
SECURITY ACQUIRED U.S. $ COST
-------- -----------
<S> <C> <C>
Asesores Bursatiles Capital Fund N.V.......................................... 10/29/90 $1,113,819
Queens Moat Houses Plc........................................................ 9/22/92 275,315
Touche Remnant Ecotec Environmental Fund...................................... 6/28/90 260,066
Unidad Editorial, S.A. ....................................................... 1/20/92 369,591
</TABLE>

The securities shown are illiquid and have been valued at fair value in
accordance with procedures described in Note A. The value of these securities at
December 31, 1994 was $970,198 representing 0.4% of net assets. During the month
of March 1994, the Board of Trustees determined that Touche Remnant Ecotec
Environmental Fund ("T R Ecotec") should be valued at zero to reflect current
fair value. This decision was based on notification from the investment advisor
of T R Ecotec of the company's termination and future liquidation.

10
<PAGE>

FINANCIAL HIGHLIGHTS ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT
EACH PERIOD

<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1994 ----------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $18.38 $16.01 $14.98 $14.00 $17.99 $17.24
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)............ (.05) (.09) (.01) .01(b) .05 .03
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions........................... (.26) 3.02 1.17 1.04 (3.54) 2.87
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset
value from operations.................. (.31) 2.93 1.16 1.05 (3.49) 2.90
------ ------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment
income................................. -0- -0- (.04) (.07) (.03) (.04)
Distributions from net realized gains
on investments and foreign currency
transactions........................... (1.62) (.56) (.09) -0- (.47) (2.11)
------ ------ ------ ------ ------ ------
Total distributions..................... (1.62) (.56) (.13) (.07) (.50) (2.15)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $16.45 $18.38 $16.01 $14.98 $14.00 $17.99
====== ====== ====== ====== ====== ======

TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)........................ (1.57)% 18.68% 7.86% 7.52% (19.34)% 16.98%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of year (000's omitted). $176,845 $201,916 $161,048 $179,807 $214,442 $265,999
Ratio of expenses to average net assets 1.77%(d) 1.90% 1.88% 1.82% 1.73% 1.45%
Ratio of net investment income (loss)
to average net assets.................. (.46)%(d) (.50)% (.14)% .07% .37% .33%
Portfolio turnover rate................. 57% 97% 94% 72% 71% 37%

</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.

11
<PAGE>

FINANCIAL HIGHLIGHTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD

<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30, SEPTEMBER 17, 1990 (A)
DECEMBER 31, 1994 ------------------------------ TO
(UNAUDITED) 1994 1993 1992 JUNE 30, 1991
----------------- ------ ------ ------ ----------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.90 $15.74 $14.81 $13.93 $15.52
====== ====== ====== ====== ======
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)................. (.06)(b) (.19)(b) (.12) (.11)(b) .03
Net realized and unrealized gain (loss) on
investments and foreign
currency transactions....................... (.31) 2.91 1.14 1.02 (1.12)
------ ------ ------ ------ ------
Net increase (decrease) in net asset value
from operations............................ (.37) 2.72 1.02 .91 (1.09)
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment income......... -0- -0- -0- (.03) (.03)
Distributions from net realized gains on
investments and foreign currency
transactions................................ (1.62) (.56) (.09) -0- (.47)
------ ------ ------ ------ ------
Total distributions.......................... (1.62) (.56) (.09) (.03) (.50)
------ ------ ------ ------ ------
Net asset value, end of period............... $15.91 $17.90 $15.74 $14.81 $13.93
====== ====== ====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)............................. (1.94)% 17.65% 6.98% 6.54% (6.97)%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted).... $49,532 $29,943 $6,363 $5,585 $3,515
Ratio of expenses to average net assets...... 2.56%(d) 2.78% 2.70% 2.68% 3.39%(d)
Ratio of net investment income (loss)
to average net assets....................... (1.32)%(d) (1.15)% (.96)% (.70)% .84%(d)
Portfolio turnover rate...................... 57% 97% 94% 72% 71%
</TABLE>

- --------------------------------------------------------------------------------
See footnote summary on page 19.

12
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD

<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MAY 3, 1993(A)
DECEMBER 31, 1994 JUNE 30, TO
(UNAUDITED) 1994 JUNE 30, 1993
----------------- ---------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period.................. $17.91 $15.74 $15.93
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss).......................... (.03) (.11) -0-
Net realized and unrealized gain (loss) on
investments and foreign currency transactions........ (.34) 2.84 (.19)
------ ------ ------
Net increase (decrease) in net asset value
from operations...................................... (.37) 2.73 (.19)
------ ------ ------

LESS: DISTRIBUTIONS
- -------------------
Distributions from net realized gains on
investments and foreign currency transactions........ (1.62) (.56) -0-
------ ------ ------
Total distributions................................... (1.62) (.56) -0-
------ ------ ------
Net asset value, end of period........................ $15.92 $17.91 $15.74
====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)...................................... (1.94)% 17.72% (1.19)%
====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted)............. $29,173 $13,503 $229
Ratio of expenses to average net assets............... 2.56%(d) 2.78% 2.57%(d)
Ratio of net investment income (loss)
to average net assets................................ (1.29)%(d) (1.12)% .08%(d)
Portfolio turnover rate............................... 57% 97% 94%
</TABLE>

- --------------------------------------------------------------------------------
(a) Commencement of distribution.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment
made at the net asset value at the beginning of the period, reinvestment
of all dividends and distributions at net asset value during the period,
and redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment return for a period of less
than one year is not annualized.
(d) Annualized.

13
<PAGE>

PORTFOLIO OF INVESTMENTS
June 30 , 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & OTHER
INVESTMENTS--95.9%
ARGENTINA--0.5%
Buenos Aires
Embotelladora, S.A...................... 15,000 $ 463,125
YPF, S.A. (ADR) Cl.D..................... 26,000 620,750
-----------
1,083,875
-----------
AUSTRALIA--0.3%
Amcor, Ltd............................... 100,000 660,972
-----------
BELGIUM--0.8%
Delhaize-Le Lion, S.A.................... 11,000 447,654
Kredietbank N.V.......................... 8,250 1,633,194
-----------
2,080,848
-----------
BRAZIL--0.4%
Panamerican Beverages,
Inc. Cl.A............................... 43,500 1,049,438
-----------
CANADA--1.0%
Alcan Aluminum, Ltd...................... 26,000 587,725
American Barrick
Resources Corp.......................... 15,000 358,125
Finning, Ltd............................. 10,000 139,246
Hemlo Gold Mines, Inc.................... 12,000 103,078
Noranda, Inc............................. 12,000 205,071
Northern Telecom, Ltd.................... 58 1,615
Placer Dome, Inc......................... 6,000 129,000
Renaissance Energy,
Ltd.*................................... 37,000 772,813
Rogers Communications,
Inc.*................................... 10,000 143,767
-----------
2,440,440
-----------
CHILE--0.2%
Enersis, S.A. (ADR)...................... 27,000 570,375
-----------
DENMARK--0.4%
Tele Danmark A/S*
Series B................................. 19,000 958,775
-----------
FINLAND--1.7%
Enso-Gutzeit OY.......................... 200,000 1,516,178
Metsa-Serla OY........................... 22,500 869,907
Nokia Corp............................... 22,000 1,813,728
-----------
4,199,813
-----------
FRANCE--4.8%
Banque Nationale de
Paris*.................................. 20,000 855,487
Cetelem, S.A............................. 78 16,474
Compagnie de Saint
Gobain.................................. 15,000 $ 1,755,128
Compagnie Financiere
de Paribas, S.A.
Ord..................................... 24,444 1,552,400
new shares.............................. 2,444 155,215
Generale des Eaux........................ 4,285 1,730,397
Pechiney, S.A............................ 6,900 497,490
Peugeot, S.A............................. 12,000 1,704,351
Societe Centrale des
Assurances Generales
de France (AGF)......................... 24,000 2,084,077
Total, S.A. (ADR)........................ 51,166 1,471,023
-----------
11,822,042
-----------
GERMANY--4.2%
Bayer A.G................................ 6,400 1,391,260
Bayer Motoren Werke
A.G..................................... 3,272 1,610,450
Deutsche Bank A.G........................ 4,000 1,726,455
Deutsche Lufthansa
A.G.*................................... 10,000 1,161,066
Suedzucker
Aktiengesellschaft...................... 4,000 1,716,359
Veba A.G................................. 5,500 1,730,084
Volkswagen A.G........................... 3,000 890,677
-----------
10,226,351
-----------

HONG KONG--1.2%
HSBC Holdings Ord........................ 6,266 68,501
Hutchinson Whampoa,
Ltd. Ord................................ 400,000 1,655,993
Oriental Press Group..................... 670,000 502,749
Peregrine Investment
Holdings................................ 235,000 389,158
Television Broadcasts,
Ltd..................................... 71,000 280,160
-----------
2,896,561
-----------

INDONESIA--0.1%
PT Astra International................... 50,000 357,147
-----------

IRELAND--0.6%
Bank of Ireland.......................... 350,000 1,390,481
-----------

ITALY--2.0%
Banca Popolare Di
Bergamo................................. 44,000 581,422
Istituto Mobiliare
Italiano S.p.A.......................... 158,000 1,069,451

</TABLE>

14
<PAGE>

PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Rinascente............................... 300,000 $ 1,901,314
Sip Di Risp non-conv..................... 600,000 1,251,064
------------
4,803,251
------------

JAPAN--48.6%
Aoyama Trading........................... 9,000 352,708
Asahi Bank, Ltd.* (c).................... 80,000 1,015,280
Asahi Glass Co., Ltd..................... 180,000 2,229,555
Bank of Tokyo, Ltd. (c).................. 200,000 3,248,896
Canon, Inc............................... 50,000 878,217
Canon Sales Co., Inc..................... 36,000 1,228,083
Cosmo Oil Co., Ltd....................... 100,000 871,110
Credit Saison Co.,
Ltd. (c)................................ 109,000 2,567,440
Dai Nippon Printing Co.,
Ltd.*................................... 60,000 1,187,878
Daiwa Securities Co.,
Ltd. (c)................................ 359,000 6,305,599
Denny's Japan Co., Ltd................... 12,000 490,989
East Japan Railway Co.................... 348 1,784,253
Hankyu Department
Store................................... 144,000 1,856,744
Hitachi Metals, Ltd. (c)................. 210,000 2,537,185
Ito-Yokado Co., Ltd...................... 19,000 1,051,322
Japan Radio Co., Ltd. (c)................ 109,000 2,290,776
Kajima Corp.* (c)........................ 240,000 2,424,489
Komatsu, Ltd.*........................... 87,000 847,962
Lion Corp.*.............................. 190,000 1,388,903
Long Term Credit Bank
of Japan, Ltd. (c)...................... 207,000 2,521,955
Matsumotokiyoshi......................... 15,000 435,555
Matsushita Electric Industrial
Co., Ltd................................ 140,000 1,648,815
Mitsubishi Electric
Corp. (c)............................... 300,000 2,037,667
Mitsubishi Heavy
Industries, Ltd. (c).................... 330,000 2,643,484
Mitsubishi Petrochemical
Enterprise* (c)......................... 350,000 2,508,757
Mitsui Trust & Banking
Co., Ltd. (c)........................... 174,000 2,155,236
NEC Corp. (c)............................ 218,000 2,700,239
Nippon Denso (c)......................... 109,000 2,290,776
Nippon Express Co.,
Ltd. (c)................................ 272,000 2,899,640
Nippon Paper Industries
Co. (c)................................. 300,000 2,241,738
Nippon Shokubai
Co., Ltd. (c)........................... 218,000 $ 2,213,310
Nippon Steel Corp.* (c).................. 960,000 3,352,861
Nippon Telegraph &
Telephone Corp.......................... 100 888,370
Nomura Securities
Co., Ltd. (c)........................... 272,000 6,572,516
NTN Corp. (c)............................ 264,000 1,911,082
Oki Electric Industry
Co., Ltd* (c)........................... 320,000 2,579,623
Richo Co., Ltd........................... 120,000 1,159,856
Santen Pharmaceutical
Co.*.................................... 44,000 1,049,799
Seven-Eleven Japan
Co., Ltd................................ 13,000 1,036,093
Sharp Corp. (c).......................... 143,000 2,598,812
Shin-Etsu Chemical
Co., Ltd. (c)........................... 163,000 3,491,852
Sony Corp. (c)........................... 87,000 5,343,926
Sumitomo Bank, Ltd. (c).................. 196,000 4,318,189
Sumitomo Realty &
Development Co., Ltd.................... 270,000 1,842,124
Sumitomo Trust &
Banking Co., Ltd. (c)................... 200,000 3,309,813
Taisho
Pharmaceutical
Co., Ltd.* (c).......................... 100,000 2,000,102
Toho Co.................................. 3,300 680,136
Tokio Marine & Fire
Insurance Co., Ltd. (c)................. 270,000 3,481,395
Tokyo Electric Power
Co., Ltd................................ 49,000 1,591,959
Tokyo Electron, Ltd...................... 33,000 1,102,289
Tokyo Gas Co., Ltd. (c).................. 381,000 1,934,108
Toshiba Corp. (c)........................ 620,000 5,086,147
Toyota Motor Corp. (c)................... 142,000 3,186,152
------------
119,371,765
------------
MALAYSIA--1.8%
Aokam Perdana
Berhad.................................. 190,000 1,196,621
new shares.............................. 76,000 437,788
Resorts World Berhad..................... 340,000 1,958,525
TA Enterprise Berhad..................... 165,000 741,359
warrants expiring
12/31/99*............................... 82,500 140,035
------------
4,474,328
------------
</TABLE>

15
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
MEXICO--2.2%
Cifra, S.A. de C.V...................... 700,000 $ 1,630,547
Grupo Financiero
Bancomer, S.A. de C.V.
Cl.C................................... 1,500,000 1,260,504
Grupo Tribasa, S.A.
(ADR)*................................. 50,000 1,106,250
Telefonos de Mexico,
S.A. (ADR) Cl.L........................ 22,000 1,229,250
-----------
5,226,551
-----------

NETHERLANDS--3.2%
Amev N.V................................ 38,305 1,515,336
Elsevier N.V............................ 24,000 2,066,335
Heineken N.V............................ 8,000 970,142
Koninklijke KNP BT*..................... 70,000 1,693,810
Koninklijke KNP PIT*.................... 54,000 1,516,326
-----------
7,761,949
-----------

NEW ZEALAND--0.5%
Carter Holt Harvey, Ltd................. 405,111 902,478
Lion Nathan, Ltd........................ 200,000 366,920
-----------
1,269,398
-----------

NORWAY--0.1%
Transocean Drilling,
A.S.*.................................. 55,000 326,175
-----------

PHILIPPINES--0.9%
JG Summit Holdings
Series B............................... 2,000,000 686,055
Manila Electric Co.
Series B............................... 120,000 1,510,067
-----------
2,196,122
-----------

SINGAPORE--0.1%
QAF, Ltd.
warrants 11/14/98*..................... 400,000 208,545
-----------

SPAIN--1.9%
Banco Intercontinental
Espanol................................ 11,000 924,592
Centros Commerciales
Continente, S.A........................ 43,000 912,606
Iberdrola, S.A.*........................ 65,000 457,525
Repsol, S.A............................. 30,000 865,731
Telefonica de Espana.................... 112,000 1,513,427
-----------
4,673,881
-----------

SWEDEN--2.8%
AB Astra Series A....................... 142,000 $ 2,872,815
ASEA AB Series B........................ 8,075 606,035
Hennes & Mauritz AB
Series B............................... 30,000 1,495,796
SKF International AB
Series A............................... 40,000 699,604
Stora Kopparbergs
Series B............................... 26,000 1,306,537
-----------
6,980,787
-----------

SWITZERLAND--2.5%
Nestle, S.A............................. 600 505,666
Roche Holding, Ltd...................... 80 383,640
Sulzer Brothers, Ltd.................... 1,900 1,261,914
Swiss Bank Corp.
(registered)*.......................... 8,228 1,201,010
warrants expiring
6/30/95*............................... 228 2,267
Swiss Reinsurance Co.
(registered)........................... 4,000 1,681,051
A warrants
expiring 10/14/94*..................... 4,400 9,906
B warrants
expiring 6/30/95*...................... 4,400 13,208
Union Bank of
Switzerland............................ 1,200 1,046,454
-----------
6,105,116
-----------

THAILAND--1.1%
Advanced Information
Services Plc........................... 25,000 954,473
Bangkok Bank Co.,
Ltd.................................... 120,000 910,543
Securities One, Ltd.*................... 30,000 848,243
-----------
2,713,259
-----------

UNITED KINGDOM--11.4%
Abbey National Plc...................... 160,000 970,905
Allied Radio Ord........................ 1,825,950 155,461
Argos Plc............................... 150,000 792,963
Ashanti Goldfields Co.,
Ltd.*(b)............................... 100,000 2,084,375
Barclays Plc............................ 112,000 898,087
British Airways Plc..................... 200,000 1,154,808
British Petroleum Co.,
Plc.................................... 400,000 2,417,975
British Steel Plc....................... 800,000 1,755,432

</TABLE>

16
<PAGE>

PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
British Telecommunications
Plc.................................... 220,000 $ 1,251,558
Forte Plc............................... 400,000 1,405,584
General Electric Plc.................... 280,000 1,222,300
Glaxo Holdings Plc...................... 90,000 756,507
HSBC Holdings Plc....................... 121,235 1,286,490
Johnson Matthey Plc..................... 200,000 1,540,260
News International Plc.
special div. shares.................... 550,000 1,941,192
Queens Moat
Houses Plc.*(a)........................ 500,000 7,740
Royal Insurance Holdings
Plc.................................... 400,000 1,535,616
RTZ Corp. Plc........................... 150,000 1,911,005
Thorn EMI Plc........................... 110,956 1,722,751
Wimpey (George) Plc..................... 900,000 2,340,575
Zeneca Group Plc........................ 82,000 922,190
-----------
28,073,774
-----------
OTHER--0.6%
Asesores Bursatiles Capital
Fund N.V.* (a)......................... 25 648,600
CLM Insurance Fund
Plc.*.................................. 120,000 171,828
HCG Lloyds Investment
Trust*................................. 11,000 13,793
Taiwan Fund, Inc........................ 20,000 537,500
Touche Remnant Ecotec
Environmental
Fund* (a).............................. 1 -0-
-----------
1,371,721
-----------
</TABLE>

<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Total Common Stocks &
Other Investments
(cost $206,081,020)................... $235,293,740
------------

CONVERTIBLE BONDS--0.1%
MALAYSIA--0.0%
TA Enterprise Berhad
6.50%, 12/31/99........................ MYR 248 78,888
------------

SPAIN--0.1%
Unidesa
9.50%, 9/01/95 (a)..................... ESP 3 284,862
------------

Total Convertible Bonds
(cost $460,534)......................... 363,750
------------

TIME DEPOSIT--4.3%
Mitsubishi Bank-
Grand Cayman
4.4375%, 7/01/94
(cost $10,500,000)..................... US$ 10,500 10,500,000
------------

TOTAL INVESTMENTS--100.3%
(cost $217,041,554)..................... 246,157,490
Other assets less liabilities--(0.3%).... (796,325)
------------
NET ASSETS--100%......................... $245,361,165
============
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) Restricted Security, valued at fair market value. (See Notes A and F.)
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1994
this security amounted to $2,084,375 or 0.8% of net assets.
(c) Securities with an aggregate market value of $93,769,045 segregated
to collateralize forward exchange currency contracts.

Glossary of Terms:
ADR--American depository receipt.
ESP--Spanish peseta.
MYR--Malaysian ringgit.

See notes to financial statements.

17
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $217,041,554).......... $246,157,490
Cash, at value (cost $116,338)................................... 116,351
Receivable for investment securities sold........................ 3,753,640
Dividends and interest receivable................................ 818,206
Receivable for shares of beneficial interest sold................ 733,207
Foreign taxes receivable and other assets........................ 224,561
------------
Total assets..................................................... 251,803,455
------------

<CAPTION>
LIABILITIES
<S> <C>
Payable for investment securities purchased...................... 4,476,252
Advisory fee payable............................................. 613,431
Unrealized depreciation of forward exchange currency contracts... 377,754
Payable for shares of beneficial interest redeemed............... 337,388
Distribution fee payable......................................... 64,271
Accrued expenses................................................. 573,194
------------
Total liabilities................................................ 6,442,290
------------

NET ASSETS........................................................ $245,361,165
============

<CAPTION>
COMPOSITION OF NET ASSETS
<S> <C>
Shares of beneficial interest, at par............................ $ 134,139
Additional paid-in capital....................................... 204,372,353
Accumulated net investment loss.................................. (1,103,017)
Accumulated net realized gain on investments and foreign
currency transactions........................................... 13,196,180
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities..................... 28,761,510
------------
$245,361,165
============

<CAPTION>
CALCULATION OF MAXIMUM OFFERING PRICE
<S> <C>
CLASS A SHARES
Net asset value and redemption price per share
($201,915,548/10,987,440 shares of beneficial interest
issued and outstanding)......................................... $18.38
Sales charge--4.25% of public offering price..................... .82
------
Maximum offering price........................................... $19.20
======

CLASS B SHARES
Net asset value and offering price per share
($29,942,525/1,672,575 shares of beneficial interest
issued and outstanding)......................................... $17.90
======

CLASS C SHARES
Net asset value, redemption and offering price per share
($13,503,092/753,848 shares of beneficial interest issued
and outstanding)................................................ $17.91
======
- --------------------------------------------------------------------------------
</TABLE>

See notes to financial statements.

18
<PAGE>

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

INVESTMENT INCOME
<S> <C> <C>
Dividends (net of foreign taxes withheld of
$389,978)................................... $2,716,394
Interest..................................... 234,891 $ 2,951,285
----------

EXPENSES
Advisory fee................................. 2,156,181
Distribution fee-Class A..................... 330,264
Distribution fee-Class B..................... 161,116
Distribution fee-Class C..................... 74,494
Custodian.................................... 427,625
Transfer agency.............................. 302,059
Registration................................. 199,195
Audit and legal.............................. 163,645
Administrative............................... 133,005
Printing..................................... 99,621
Trustees' fees............................... 32,386
Miscellaneous................................ 60,921
----------
Total expenses............................... 4,140,512
-----------
Net investment loss.......................... (1,189,227)
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investment transactions. 25,708,659
Net realized loss on foreign currency
transactions................................ (530,413)
Net change in unrealized appreciation of:
Investments................................. 10,036,267
Foreign currency denominated assets and
liabilities................................ (111,417)
-----------
Net gain on investments and foreign
currency transactions....................... 35,103,096
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.... $33,913,869
===========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss............................. $ (1,189,227) $ (271,136)
Net realized gain (loss) on investments and
foreign currency transactions.................. 25,178,246 (4,763,521)
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities......................... 9,924,850 15,757,093
------------ ------------
Net increase in net assets from operations...... 33,913,869 10,722,436
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A........................................ -0- (413,364)
Net realized gain on investments and foreign
currency transactions
Class A........................................ (5,633,699) (971,539)
Class B........................................ (427,595) (37,430)
Class C........................................ (193,466) -0-
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease)......................... 50,062,493 (27,052,263)
------------ ------------
Total increase (decrease)....................... 77,721,602 (17,752,160)
NET ASSETS
Beginning of year............................... 167,639,563 185,391,723
------------ ------------
End of year (including accumulated net
investment loss of $1,103,017 and
accumulated net investment income of $86,210,
respectively).................................. $245,361,165 $167,639,563
============ ============
- --------------------------------------------------------------------------------
</TABLE>

See notes to financial statements.

19
<PAGE>

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE A: SIGNIFICANT ACCOUNTING POLICIES

Alliance International Fund (the "Fund"), which is a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as a
diversified, open-end management investment company. The Fund offers Class A,
Class B and Class C shares. Class A shares are sold with a front-end sales
charge of up to 4.25%. Class B shares are 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 sold without an initial or contingent deferred sales charge. All
three classes of shares have identical voting, dividend, liquidation and
other rights, except that each class bears different distribution expenses
and has exclusive voting rights with respect to its distribution plan. The
following is a summary of significant accounting policies followed by the
Fund.

1. SECURITY VALUATION

2. CURRENCY TRANSLATION

Net realized foreign exchange losses of $530,413 represent foreign exchange
gains and losses from sales and maturities of debt securities, holding of
foreign currencies, exchange gains or losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of dividends, interest and foreign taxes receivable recorded on the
Fund's books and the U.S. dollar equivalent of the 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.

3. TAXES

4. INVESTMENT INCOME AND SECURITY TRANSACTIONS

5. DIVIDENDS AND DISTRIBUTIONS

20
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Under an investment advisory agreement, the Fund pays its Adviser, Alliance
Capital Management, L.P., (the "Adviser"), a fee at a quarterly rate equal to
1/4 of 1% (approximately 1% on an annual basis) of quarter end net assets up
to $500 million and 3/16 of 1% (approximately .75% on an annual basis) of
quarter end net assets in excess of $500 million. The Adviser has agreed,
under the terms of the advisory agreement, to reimburse the Fund to the
extent that its aggregate expenses (exclusive of interest, taxes, brokerage,
distribution fee, extraordinary expenses and certain other expenses) exceed
the limits prescribed by any state in which the Fund's shares are qualified
for sale. The Fund believes that the most restrictive expense ratio
limitation currently imposed by any state is 2.5% of the first $30 million of
the Fund's average daily net assets, 2% of the next $70 million of its
average daily net assets and 1.5% of its average daily net assets in excess
of $100 million. For the year ended June 30, 1994, no such reimbursement was
required. Pursuant to the advisory agreement, the Fund paid $133,005 to the
Adviser representing the cost of certain legal and accounting services
provided to the Fund by the Adviser for the year ended June 30, 1994.

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 $20,439 from the sale of Class A shares and
$32,369 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B for the year ended June 30, 1994. Brokerage
commissions paid on securities transactions for the year ended June 30, 1994,
amounted to $342,290, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.

- --------------------------------------------------------------------------------

NOTE C: DISTRIBUTION SERVICES AGREEMENT

The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to the
Class B and Class C shares. 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 $1,043,557 and $251,661, for Class B and C shares, respectively;
such costs may be recovered from the Fund in future periods so long as the
Agreement is in effect. In accordance with the Agreement, there is no provision
for recovery of unreimbursed distribution costs, incurred by the Distributor,
beyond the current fiscal year for Class A shares. The Agreement also provides
that the Adviser may use its own resources to finance the distribution of the
Fund's shares.

- --------------------------------------------------------------------------------

NOTE D: INVESTMENT TRANSACTIONS

Purchases and sales of investment securities (excluding short-term
investments) aggregated $240,634,343 and $195,074,276, respectively, for the
year ended June 30, 1994. There were no purchases or sales of U.S. Government
and government agency obligations for the year ended June 30, 1994.

The Fund enters into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. 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

21
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
the original contracts and the closing of such contracts is included in net
realized gain or loss 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.

Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. At June 30, 1994, the Fund had
outstanding forward exchange currency contracts, both to purchase and sell
foreign currencies against the U.S. dollar as follows:

CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY BUY CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------ ------------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
British Pounds, expiring 7/12/94........ 2,659,000 $ 3,992,489 $ 4,114,888 $122,399
Deutsche Marks, expiring 7/12/94........ 9,767,500 5,759,818 6,161,190 401,372
Japanese Yen, expiring 8/26/94.......... 1,097,000,000 10,892,338 11,178,418 286,080

FOREIGN CURRENCY SALE CONTRACTS
- -------------------------------
<S> <C> <C> <C> <C>
British Pounds, expiring 7/12/94........ 2,659,000 3,906,071 4,114,553 (208,482)
Deutsche Marks, expiring 7/12/94........ 9,767,500 5,659,694 6,160,219 (500,525)
Japanese Yen, expiring 7/12/94-11/25/94. 1,567,674,000 15,457,855 15,936,453 (478,598)
---------
$(377,754)
=========
</TABLE>

At June 30, 1994, 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 $37,088,832 and gross unrealized
depreciation of investments was $7,972,896, resulting in net unrealized
appreciation of $29,115,936. At June 30, 1994, to the extent provided in the
regulations, the Fund had a capital loss carry forward of $169,387
which expires in the year 1999.

- --------------------------------------------------------------------------------

NOTE E: SHARES OF BENEFICIAL INTEREST

There is an unlimited number of $.01 par value shares of beneficial interest
authorized, divided into three classes, designated Class A, Class B and Class C
shares. Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
SHARES AMOUNT
---------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993 JUNE 30, 1994 JUNE 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................ 2,597,434 1,515,795 $ 45,812,612 $ 22,252,742
Shares issued in reinvestment of
dividends and distributions....... 328,484 90,871 5,442,987 1,264,353
Shares issued in connection with
the acquisition of the Canadian
Fund.............................. 747,660 -0- 12,699,508 -0-
Shares redeemed.................... (2,744,645) (3,551,900) (48,609,413) (51,287,518)
--------- --------- ------------ ------------
Net increase (decrease)............ 928,933 (1,945,234) $ 15,345,694 $(27,770,423)
========= ========= ============ ============
</TABLE>

22
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES AMOUNT
---------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993 JUNE 30, 1994 JUNE 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................ 2,597,434 1,515,795 $ 45,812,612 $ 22,252,742
--------- --------- ------------ ------------
CLASS B
Shares sold........................ 1,519,137 175,861 $ 26,354,439 $ 2,581,656
Shares issued in reinvestment of
distributions..................... 24,318 2,172 394,438 29,626
Shares redeemed.................... (275,243) (150,794) (4,795,788) (2,126,581)
--------- --------- ------------ ------------
Net increase....................... 1,268,212 27,239 $ 21,953,089 $ 484,701

CLASS C
Shares sold........................ 1,157,061 16,415 $ 20,136,268 $ 261,988

Shares issued in reinvestment of
distributions..................... 11,110 -0- 180,098 -0-
Shares redeemed.................... (428,880) (1,858) (7,552,656) (28,529)
--------- --------- ------------ ------------
Net increase....................... 739,291 14,557 $12,763,710 $ 233,459
========= ========= ============ ============

- --------------------------------------------------------------------------------
</TABLE>

NOTE F: ILLIQUID SECURITIES

<TABLE>
<CAPTION>
DATE
SECURITY ACQUIRED U.S. $ COST
-------- -----------
<S> <C> <C>
Asesores Bursatiles Capital Fund N.V................... 10/29/90 $1,113,819
Queens Moat Houses Plc................................. 9/22/92 275,315
Touche Remnant Ecotec Environmental Fund............... 6/28/90 260,066
Unidesa, conv. bond 9.50%, 9/01/95..................... 1/20/92 369,591
</TABLE>

The value of these securities at June 30, 1994 was $941,202 representing 0.4%
of net assets. During the month of March 1994, the Board of Trustees
determined that Touche Remnant Ecotec Environmental Fund ("T R Ecotec")
should be valued at zero to reflect current fair value. This decision was
based on notification from the investment advisor of T R Ecotec of the
company's termination and future liquidation.

- --------------------------------------------------------------------------------

NOTE G: ACQUISITION OF THE CANADIAN FUND

On March 25, 1994, the Fund acquired all the net assets of the Canadian Fund,
the sole series of Alliance Global Fund (the "Trust") pursuant to a plan of
reorganization approved by the Canadian Fund shareholders on March 18, 1994.
The acquisition was accomplished by a tax-free exchange of 747,660 shares of
the Fund for 2,321,131 shares of Canadian

Fund on March 25, 1994. The aggregate net assets of the Fund and Canadian
Fund immediately before the acquisition were $215,961,187 and $13,317,340
(including unrealized appreciation of $7,351,031), respectively. Immediately
after the acquisition the combined net assets of the fund amounted to
$229,278,527.

23
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE H: ADOPTION OF STATEMENT OF POSITION 93-2

During the year ended June 30, 1994, the Fund adopted Statement of Position
93-2: Determination, Disclosure, and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. Accordingly, dividends from net investment income and distributions
from realized gains from investment transactions have been determined in
accordance with income tax regulations. Such amounts may differ from investment
income and realized gains.

- --------------------------------------------------------------------------------

NOTE I: FOREIGN TAX CREDIT (UNAUDITED)

The Fund has elected to give the benefit to its shareholders of foreign taxes
that have been paid and/or withheld. For the fiscal year ended June 30,
1994, this amounted to $389,978. Although the Fund has made the election
required to make this credit available, the amount of allowable tax credit is
subject to limitations under the Internal Revenue Code.

A notification reflecting the per share amount to be used by taxpayers on
their federal income tax return will be mailed to shareholders in January
1995.

24
<PAGE>

FINANCIAL HIGHLIGHTS ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR

<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $16.01 $14.98 $14.00 $17.99 $17.24
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)...................... (.09) (.01) .01(b) .05 .03
Net realized and unrealized gain (loss) on
investments and foreign currency transactions.... 3.02 1.17 1.04 (3.54) 2.87
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from
operations....................................... 2.93 1.16 1.05 (3.49) 2.90
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment income.............. -0- (.04) (.07) (.03) (.04)
Distributions from net realized gains on
investments and foreign currency transactions.... (.56) (.09) -0- (.47) (2.11)
------ ------ ------ ------ ------
Total distributions............................... (.56) (.13) (.07) (.50) (2.15)
------ ------ ------ ------ ------
Net asset value, end of year...................... $18.38 $16.01 $14.98 $14.00 $17.99
====== ====== ====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c).................................. 18.68% 7.86% 7.52% (19.34)% 16.98%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of year (000's omitted)........... $201,916 $161,048 $179,807 $214,442 $265,999
Ratio of expenses to average net assets........... 1.90% 1.88% 1.82% 1.73% 1.45%
Ratio of net investment income
(loss) to average net assets..................... (.50)% (.14)% .07% .37% .33%
Portfolio turnover rate........................... 97% 94% 72% 71% 37%

- --------------------------------------------------------------------------------
</TABLE>

See footnote summary on page 19.

25
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>

CLASS B CLASS C
--------------------------------------------------- ---------------------------
SEPTEMBER 17, 1990 (a) YEAR ENDED MAY 3, 1993 (a)
YEAR ENDED JUNE 30, TO JUNE 30, TO
1994 1993 1992 JUNE 30, 1991 1994 JUNE 30, 1993
------ ------ ------ ---------------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $15.74 $14.81 $13.93 $15.52 $15.74 $15.93
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)..................... (.19)(b) (.12) (.11)(b) .03 (.11) -0-
Net realized and unrealized gain (loss) on
investments and foreign currency transactions... 2.91 1.14 1.02 (1.12) 2.84 (.19)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset value
from operations................................. 2.72 1.02 .91 (1.09) 2.73 (.19)
------ ------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment income............. -0- -0- (.03) (.03) -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions.................................... (.56) (.09) -0- (.47) (.56) -0-
------ ------ ------ ------ ------ ------
Total distributions.............................. (.56) (.09) (.03) (.50) (.56) -0-
------ ------ ------ ------ ------ ------
Net asset value, end of period................... $17.90 $15.74 $14.81 $13.93 $17.91 $15.74
====== ====== ====== ====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)................................. 17.65% 6.98% 6.54% (6.97)% 17.72% (1.19)%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted)........ $29,943 $6,363 $5,585 $3,515 $13,503 $ 229
Ratio of expenses to average net assets.......... 2.78% 2.70% 2.68% 3.39%(d) 2.78% 2.57%(d)
Ratio of net investment income (loss)
to average net assets........................... (1.15)% (.96)% (.70)% .84%(d) (1.12)% .08%(d)
Portfolio turnover rate.......................... 97% 94% 72% 71% 97% 94%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of distribution.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total
investment return. Total investment return for a period of less than one
year is not annualized.
(d) Annualized.

26
<PAGE>

REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

To the Shareholders and Board of Trustees
Alliance International Fund

We have audited the accompanying statement of assets and liabilities of
Alliance International Fund (the "Fund"), including the portfolio of
investments, as of June 30, 1994, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 1994, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance International Fund at June 30, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of the
indicated periods, in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

New York, New York
August 5, 1994

<PAGE>

APPENDIX A

Futures Contracts and Options on Futures
Contracts and Foreign Currencies

FUTURES CONTRACTS

The Fund may enter into financial futures contracts,
including contracts for the purchase or sale for future delivery
of foreign currencies and futures contracts based on stock
indices. U.S. futures contracts have been designed by exchanges
which have been designated "contracts markets" by the Commodity
Futures Trading Commission ("CFTC"), and must be executed through
a futures commission merchant, or brokerage firm, which is a
member of the relevant contract market. Futures contracts trade
on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.

At the same time a futures contract is purchased or sold, the
Fund must allocate cash or securities as a deposit payment
("initial deposit"). It is expected that the initial deposit
would be approximately 1 1/2%-5% of a contract's face value.
Daily thereafter, the futures contract is valued and the payment
of "variation margin" may be required, since each day the Fund
would provide or receive cash that reflects any decline or
increase in the contract's value.

At the time of delivery of securities pursuant to such a
contract, adjustments are made to recognize differences in value
arising from the delivery of securities with a different interest
rate from that specified in the contract. In some (but not many)
cases, securities called for by a futures contract may not have
been issued when the contract was written.

Although futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation
to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled
through a clearinghouse associated with the exchange on which the
contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.

A-1

<PAGE>

The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures
market are subject to initial deposit and variation margin
requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through
offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the
securities market. Therefore, increased participation by
speculators in the futures market may cause temporary price
distortions. Due to the possibility of distortion, a correct
forecast of general interest rate trends by the Adviser may still
not result in a successful transaction.

In addition, futures contracts entail risks. Although the
Fund believes that use of such contracts will benefit the Fund,
if the Adviser's investment judgment is incorrect about the
general direction of a stock market index for example, the Fund's
overall performance would be poorer than if it had not entered
into any such contract. For example, if the Fund has hedged
against the possibility of a bear market in equities in a
particular country in which would adversely affect the price of
equities held in its portfolio and there is a bull market
instead, the Fund will lose part or all of the benefit of the
increased value of the equities that it has hedged because it
will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash,
it may have to sell equities from its portfolio to meet daily
variation margin requirements. Such sales may be, but will not
necessarily be, at increased prices which reflect the rising
market. The Fund may have to sell securities at a time when it
may be disadvantageous to do so.

OPTIONS ON FUTURES CONTRACTS

The Fund intends to purchase and write options on futures
contracts. The purchase of a call option on a futures contract
is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which
it is based or the price of the underlying securities, it may or
may not be less risky than ownership of the futures contract or
underlying securities.

A-2

<PAGE>

The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the
security or foreign currency which is deliverable upon exercise
of the futures contract. If the futures price at expiration of
the option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's
portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of
the security or foreign currency which is deliverable upon
exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call
option the Fund has written is exercised, the Fund will incur a
loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes
in the value of its portfolio securities and changes in the value
of its futures positions, the Fund's losses from existing options
on futures may to some extent be reduced or increased by changes
in the value of portfolio securities.

The purchase of a put option on a futures contract is similar
in some respects to the purchase of protective put options on
portfolio securities. For example, the Fund may purchase a put
option on a futures contract to hedge the Fund's portfolio
against the risk of a general market decline.

The amount of risk the Fund assumes when it purchases an
option on a futures contract is the premium paid for the option
plus related transaction costs. In addition to the correlation
risks discussed above, the purchase of an option also entails the
risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the option purchased.

OPTIONS ON FOREIGN CURRENCIES

The Fund may purchase and write options on foreign currencies
in a manner similar to that in which futures contracts on foreign
currencies, or forward contracts, will be utilized. For example,
a decline in the dollar value of a foreign currency in which
portfolio securities are denominated will reduce the dollar value
of such securities, even if their value in the foreign currency
remains constant. In order to protect against such diminutions
in the value of portfolio securities, the Fund may purchase put
options on the foreign currency. If the value of the currency
does decline, the Fund will have the right to sell such currency
for a fixed amount in dollars and will thereby offset, in whole
or in part, the adverse effect on its portfolio which otherwise
would have resulted.

A-3

<PAGE>

Conversely, where a rise in the dollar value of a currency in
which securities to be acquired are denominated is projected,
thereby increasing the cost of such securities, the Fund may
purchase call options thereon. The purchase of such options
could offset, at least partially, the effects of the adverse
movements in exchange rates. As in the case of other types of
options, however, the benefit to the Fund deriving from purchases
of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, where
currency exchange rates do not move in the direction or to the
extent anticipated, the Fund could sustain losses on transactions
in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such
rates.

The Fund may also write options on foreign currencies for the
same purposes. For example, where the Fund anticipates a decline
in the dollar value of foreign currency denominated securities
due to adverse fluctuations in exchange rates it could, instead
of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised, and the diminution in value of portfolio
securities will be offset by the amount of the premium received.

Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the dollar cost of securities
to be acquired, the Fund could write a put option on the relevant
currency which, if rates move in the manner projected, will
expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. As in the case of other
types of options, however, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of
the premium, and only if rates move in the expected direction. If
this does not occur, the option may be exercised and the Fund
would be required to purchase or sell the underlying currency at
a loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, the Fund
also may be required to forego all or a portion of the benefits
which might otherwise have been obtained from favorable movements
in exchange rates.

The Fund intends to write covered call options on foreign
currencies. A call option written on a foreign currency by the
Fund is "covered" if the Fund owns the underlying foreign
currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a
segregated account by its Custodian) upon conversion or exchange
of other foreign currency held in its portfolio. A call option
is also covered if the Fund has a call on the same foreign
currency and in the same principal amount as the call written

A-4

<PAGE>

where the exercise price of the call held (a) is equal to or less
than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is
maintained by the Fund in cash, U.S. Government Securities or
other appropriate liquid securities in a segregated account with
its Custodian.

The Fund also intends to write call options on foreign
currencies that are not covered for cross-hedging purposes. A
call option on a foreign currency is for cross-hedging purposes
if it is not covered, but is designed to provide a hedge against
a decline in the U.S. dollar value of a security which the Fund
owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the
exchange rate. In such circumstances, the Fund collateralizes
the option by maintaining in a segregated account with the Fund's
Custodian, cash or U.S. government securities or other
appropriate liquid securities in an amount not less than the
value of the underlying foreign currency in U.S. dollars marked
to market daily.

ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS, FORWARD
CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES

Unlike transactions entered into by the Fund in futures
contracts, options on foreign currencies and forward contracts
are not traded on contract markets regulated by the CFTC or (with
the exception of certain foreign currency options) by the SEC. To
the contrary, such instruments are traded through financial
institutions acting as market-makers, although foreign currency
options are also traded on certain national securities exchanges,
such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to SEC regulation. Similarly, options
on currencies may be traded over-the-counter. In an over-the-
counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there
are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a
period of time. Although the purchaser of an option cannot lose
more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option
writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the
margin and collateral requirements associated with such
positions.

Options on foreign currencies traded on national securities
exchanges are within the jurisdiction of the SEC, as are other
securities traded on such exchanges. As a result, many of the
protections provided to traders on organized exchanges will be
available with respect to such transactions. In particular, all

A-5

<PAGE>

foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options
Clearing Corporation ("OCC"), thereby reducing the risk of
counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market,
potentially permitting the Fund to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the
event of adverse market movements.

The purchase and sale of exchange-traded foreign currency
options, however, is subject to the risks of the availability of
a liquid secondary market described above, as well as the risks
regarding adverse market movements, margining of options written,
the nature of the foreign currency market, possible intervention
by governmental authorities and the effects of other political
and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the
over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.

In addition, futures contracts, options on futures contracts,
forward contracts and options on foreign currencies may be traded
on foreign exchanges. Such transactions are subject to the risk
of governmental actions affecting trading in or the prices of
foreign currencies or securities. The value of such positions
also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in
the United States of data, on which to make trading decisions,
(iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during nonbusiness hours in the
United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in
the United States, and (v) lesser trading volume.

A-6
00250157.AT1

<PAGE>

APPENDIX B: JAPAN

Japan, located in eastern Asia, consists of four main
islands, Hokkaido, Honshu, Kyushu and Shikoku, and many small
islands. Its population is approximately 125 million.

The government of Japan is a representative democracy whose
principal executive is the Prime Minister. Japan's legislature
(known as the Diet) consists of two houses, the House of
Representatives (the lower house) and the House of Councillors
(the upper house).

POLITICS

From 1955 to 1993, Japan's government was controlled by the
Liberal Democratic Party (the "LDP"), the major conservative
party. In August 1993, after a main faction left the LDP over
the issue of political reform, a non-LDP coalition government was
formed consisting of centrist and leftist parties and was headed
by Prime Minister Morihiro Hosokawa. In April 1994, Mr. Hosokawa
resigned due to allegations of personal financial irregularities.
The coalition members thereafter agreed to choose as prime
minister the foreign minister, Tsutomu Hata. As a result of the
formation of a center-right voting bloc, however, the Social
Democratic Party of Japan (the "SDPJ"), a leftist party, withdrew
from the coalition. Consequently, Mr. Hata's government was a
minority coalition, the first since 1955, and was therefore
inherently unstable. In June 1994, Mr. Hata and his coalition
were replaced by a new coalition made up of the SDPJ, the LDP and
the New Party Harbinger. This coalition is led by the present
prime minister Tomiichi Murayama, the first Socialist prime
minister in 47 years. Various political parties within the
present coalition are calling for political reform that could
split the government and lead to new political alignments. Thus,
the stability of the current ruling coalition is not assured.

ECONOMY

The Japanese economy maintained an average annual growth rate
of 3.9% in real GDP terms from 1980 through 1992, compared with
2.1% for the United States during the same period. In 1992,
Japan's real GDP growth rate fell to 1.3% and there was little or
no growth in GDP in 1993. Inflation has remained low, estimated
at 1.5% for 1993. Consumer expenditures dropped 0.9% in 1993
from 1992 due to prevalent fears that have affected consumer and
business sentiment, such as the fear of corporate restructuring.
Recently, Japanese companies have taken steps designed to address
the economic downturn. These steps include reducing overtime and
bonus payments and initiating or accelerating early retirement
programs. Overall employment, however, increased in 1993.

B-1

<PAGE>

Employment growth has been shifting from the manufacturing to the
service industry, a trend expected to continue in 1994. Although
investment has declined from the high levels of the late 1980s
and the recent appreciation of the Japanese Yen against the U.S.
Dollar has curtailed business profits and weakened exports,
increases in housing and public investment and a decline in
imports in the early part of 1993 have provided some buffers to
the economy's recent downturn.

Japan's post World War II reliance on heavy industries has
shifted to higher technology products assembly and, most
recently, to automobile, electrical and electronic production.
Japan's success in exporting its products has generated sizeable
trade surpluses. Japan is in a difficult phase in its relations
with its trading partners that is partly due to the concentration
of Japanese exports ill products such as automobiles, machine
tools and semiconductors and the large trade surpluses ensuing
therefrom, recent large and visible Japanese real estate
investments in the U.S. and an overall trade imbalance as
indicated by Japan's balance of payments. Although probable that
the recent improvement of the U.S. economy, a significant
decrease in the U.S. trade deficit with Japan and an increased
competitiveness and success in manufacturing, such as with the
U.S. automobile industry, has had a negative effect on Japan's
growth, Japan's overall trade surplus for 1993 remained the
largest in its history, amounting to $120 billion. Exports
totaled $362 billion, up 6.2% from 1992, and imports were $242
billion, up 3.5% from 1992. The current account surplus in 1993
was a record $131 billion. Consequently, ,Japan has become the
largest creditor nation and a significant donor of foreign aid.
On October 1, 1994, the U.S. and Japan reached an agreement that
may lead to more open Japanese markets with respect to insurance,
glass and medical and telecommunications equipment. The two
countries failed to agree, however, with respect to Japanese
imports of American automobiles and automotive parts. In response
to this failure, the U.S has initiated the process of imposing
limited trade sanctions on Japan. The sanctions process takes
twelve to eighteen months and, therefore, it will be late 1995 at
the earliest before any trade sanctions are imposed upon Japanese
exports.

In response to pressures exerted by the slumping economy and
the growing trade surplus, the government, in April and September
1993, announced emergency economic packages which included
stimulus plans totaling 19.2 trillion yen for 1994 and numerous
legislative provisions. A significant amount of the expenditures
was allocated for improving infrastructure, public works
projects, low-interest loans used for housing, and low interest
loans used for housing, and low interest small business loans.
Most importantly, the September 1993 package includes an
elimination or relaxation of government regulations, a reduction

B-2

<PAGE>

of import costs, an extension of subsidies to companies for
sustaining excess workers in order to curb umemployment, and an
offer of tax breaks to middle-income taxpayers for educational
expenses and to companies for operational streamlining in order
to influence lower retail costs. In early 1994, the government
responded to the business and financial communities by providing
an immediate income-tax cut.

The Japanese Yen has been generally appreciating against the
U.S. Dollar for the past decade. In 1994, through September 30,
the Japanese Yen high against the U.S. Dollar was 96.81 Yen per
dollar and the low was 113.10 Yen per dollar. The average for
1994 through September 30 was 103.37 Yen per dollar. On October
19, 1994, the exchange rate was 97.36 Yen per dollar.

JAPANESE STOCK EXCHANGES

Currently, there are eight stock exchanges in Japan. The
Tokyo Stock Exchange (the "TSE"), the Osaka Securities Exchange
and the Nagoya Stock Exchange are the largest, together
accounting for approximately 99% of the share trading volume and
for about 98.9% of the overall market value of all shares traded
on Japanese stock exchanges during the year ended December 31,
1993. The other stock exchanges are located in Kyoto, Hiroshima,
Fukuoka, NiSgata and Sapporo. The chart below presents share
trading volume and overall market value information of each of
the three major Japanese stock exchanges for the years 1989
through 1993.

<TABLE>
<CAPTION>
ALL EXCHANGES TOKYO OSAKA NAGOYA
_____________ _____ _____
VOLUME VALUE VOLUME VALUE VOLUME VALUE VOLUME VALUE
_____ _____ ______ _____ ______ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1989 256,296 386,395 222,599 332,617 25,096 41,679 7,263 10,395
1990 145,837 231,837 123,099 186,667 17,187 35,813 4,323 7,301
1991 107,844 134,16() 93,606 110,897 10,998 18,723 2,479 3,586
1992 82,563 80,456 66,408 60,110 12,069 15,575 3,300 3,876
1993 101,173 106,123 86,935 86,889 10,440 14,635 2,780 3,459
</TABLE>

Sources: The Tokyo Stock Exchange 1994 Fact Book and 1993 Fact
Book. Trading volume and value of foreign stocks are not
included.

At end of the third quarter of 1994, the market
capitalization of the First Section of the TSE (described below)
was approximately 40% below its all-time high reached in 1989.

B-3

<PAGE>

Although the price/earnings ratios of individual companies vary
widely from company to company, absolute Japanese price/earnings
ratios are high in comparison with other major stock markets.
Other valuation measures, such as price-to-book value and price-
to-cash flow ratios, show that the Japanese market is near its
lowest level in the last 20 years relative to other world
markets.

THE TOKYO STOCK EXCHANGE

OVERVIEW OF THE TOKYO STOCK EXCHANGE. The TSE is the largest
of the Japanese stock exchanges and as such is widely regarded as
the PRINCIPAL securities exchange for all of Japan. In 1993, the
TSE accounted for 81.98 of the market value and 85.98 of the
share trading volume on all Japanese stock exchanges. A foreign
stock section on the TSE, consisting of shares of non-Japanese
companies, listed 110 non-Japanese companies at the end of 1993.
The market for stock of Japanese issuers on the TSE is divided
into a First Section and a Second Section. The First Section is
generally for larger, established companies (in existence for
five years or more) that meet stringent listing criteria relating
to the size and business condition of the issuing company, the
liquidity of its securities and other factors pertinent to
investor protection. The TSE's Second Section is for smaller
companies and newly listed issuers.

SECTOR ANALYSIS OF THE FIRST AND SECOND SECTIONS. The TSE's
domestic stocks include a broad cross-section of companies
involved in many different areas of the Japanese economy. At the
end of 1993, the four largest industry sectors, based on market
value, listed on the TSE were banking, with 101 companies
representing 23.8% of all domestic stocks listed on the TSE;
electric appliances, with 172 companies representing 10.28 of all
domestic stocks so listed; transportation equipment, with 82
companies representing 6.6% of all domestic stocks so listed; and
electric power and gas, with 16 companies representing 5.48 of
all domestic stocks so listed. No other industry sector
represented more than 5E of TSE listed domestic stocks.

Market Growth of the TSE. The First and Second Sections of
the TSE grew in terms of both average daily trading value and
aggregate year-end market value from 1982, when they were l28,320
million yen and 98,090 billion yen, respectively, through the end
of 1989, when they were 1,335,810 million yen and 6S1,152 billion
yen, respectively. Following the peak in 1989, both average daily
trading value and aggregate year-end market value declined
through 1992 when they were 243,362 million yen and 289,483
billion yen, respectively. In 1993, both average daily trading
value and aggregate year end market value increased and were
353,208 million yen and 324,357 billion yen, respectively.

B-4

<PAGE>

MARKET PERFORMANCE OF THE FIRST SECTION. As measured by the
TOPIX, a capitalization-weighted composite index of all common
stocks listed in the First Section, the performance of the First
Section reached a peak in 1989. Thereafter, the TOPIX declined
approximately 46E through the beginning of 1993. In 1993, the
TOPIX increased by approximately 9t from the end of ]992, and by
the end of the third quarter of 1994 increased by approximately
8% from the end of 1993.

JAPANESE FOREIGN EXCHANGE CONTROLS

Under Japan's Foreign Exchange and Foreign Trade Control Law
and cabinet orders and ministerial ordinances thereunder (the
"Foreign Exchange Controls"), prior notification to the Minister
of Finance of Japan (the "Minister of Finance") of the
acquisition of shares in a Japanese company from a resident of
Japan (including a corporation) by a non-resident of Japan
(including a corporation) is required unless the acquisition is
made from or through a securities company designated by the
Minister of Finance or if the yen equivalent of the aggregate
purchase price of shares is not more than Y100 million. Even in
these situations, if a foreign investor intends to acquire shares
of a Japanese corporation listed on a Japanese stock exchange or
traded on a Japanese over-the-counter market (regardless of the
person from or through whom the foreign investor acquires such
shares) and as a result of the acquisition the foreign investor
would directly or indirectly hold 108 or more of the total
outstanding shares of that corporation, the foreign investor must
file a report within 15 days from and including the day of such
acquisition with the Minister of Finance and any other minister
with proper jurisdiction. In instances where the acquisition
concerns national security or meets certain other conditions
specified in the Foreign Exchange Controls, the foreign investor
must file a prior notification with respect to the proposed
acquisition with the Minister of Finance and any other minister
with proper jurisdiction. The ministers may make a recommendation
to modify or prohibit the proposed acquisition if they consider
that the acquisition would impair the safety and maintenance of
public order in Japan or harmfully influence the smooth operation
of the Japanese economy. If the foreign investor does not accept
the recommendation, the ministers may issue an order modifying or
prohibiting the acquisition. In certain limited and exceptional
circumstances, the Foreign Exchange Controls give the Minister of
Finance the power to require prior approval for any acquisition
of shares in a Japanese company by a non-resident of Japan.

In general, the acquisition of shares by non-resident
shareholders by way of stock splits, as well as the acquisition
of shares of a Japanese company listed on a Japanese stock
exchange by non-residents upon exercise of warrants or conversion
of convertible bonds, are not subject to any of the foregoing

B-5

<PAGE>

notification or reporting requirements. Under the Foreign
Exchange Controls, dividends paid on share, held by non-residents
of Japan and the proceeds of any sales of shares within Japan
may, in general, be converted into any foreign currency and
remitted abroad.

REGULATION OF THE JAPANESE EQUITIES MARKETS

The principal securities law in Japan is the Securities and
Exchange Law which provides overall regulation for the issuance
of securities in public offerings and private placements and for
secondary market trading. Inside, trading provisions are
applicable to debt and equity securities listed on a Japanese
stock exchange and to unlisted debt and equity securities issued
by a Japanese corporation that has securities listed on a
Japanese stock exchange or registered with the Japan Securities
Dealer's Association (the "JSDA"). In addition, each of the
eight stock exchanges in Japan has its own constitution,
regulations governing the sale and purchase of securities and
standing rules for exchange contracts for the purchase and sale
of securities on the exchange, as well as detained rules and
regulations covering a variety of matters, including rules and
standards for listing and delisting of securities.

The loss compensation incidents involving preferential
treatment of certain customers by certain .Japanese securities
companies, which came to light in 1991, provided the impetus for
amendments to the Securities and Exchange Law, which took effect
in 1992, as well as two reform bills passed by the Diet in 1992.
The amended Securities Exchange Law now prohibits securities
companies from the operation of discretionary accounts, loss
compensation or provision of artificial gains in securities
transactions, directly or indirectly, to their customers and
making offers or agreements with respect l:hereto To ensure that
securities are traded at their fair value, the JSDA and the TSE
have promulgated certain rules, effective in 1992, which, among
other things, explicitly prohibit any transaction undertaken with
the intent to provide loss compensation of illegal gains
regardless of whether the transaction otherwise technically
complies with the rules. The reform bill passed by the Diet,
which took effect in 1992 and 1993, provide for the establishment
of a new Japanese securities regulator and for a variety of
reforms designed to revitalize the Japanese financial and capital
markets by permitting banks and securities companies to compete
in each other's field of business, subject to various regulations
and restrictions.

B-6
00250157.AT1

<PAGE>

INTERNATIONAL
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JUN-30-1995
[PERIOD-END] DEC-31-1994
[INVESTMENTS-AT-COST] 249,468,304
[INVESTMENTS-AT-VALUE] 255,851,032
[RECEIVABLES] 26,073,131
[ASSETS-OTHER] 2,269,109
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 284,193,272
[PAYABLE-FOR-SECURITIES] 24,634,016
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 4,009,217
[TOTAL-LIABILITIES] 28,643,233
[SENIOR-EQUITY] 156,977
[PAID-IN-CAPITAL-COMMON] 242,592,291
[SHARES-COMMON-STOCK] 15,697,696
[SHARES-COMMON-PRIOR] 13,413,863
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 2,014,811
[ACCUMULATED-NET-GAINS] 8,476,527
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 6,339,055
[NET-ASSETS] 255,550,039
[DIVIDEND-INCOME] 1,344,974
[INTEREST-INCOME] 423,180
[OTHER-INCOME] 0
[EXPENSES-NET] 2,679,948
[NET-INVESTMENT-INCOME] (911,794)
[REALIZED-GAINS-CURRENT] 18,449,373
[APPREC-INCREASE-CURRENT] (22,422,455)
[NET-CHANGE-FROM-OPS] (4,884,876)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 23,169,026
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 87,471,724
[NUMBER-OF-SHARES-REDEEMED] 70,815,533
[SHARES-REINVESTED] 21,586,585
[NET-CHANGE-IN-ASSETS] 10,188,874
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 13,196,180
[OVERDISTRIB-NII-PRIOR] 1,103,017
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1,358,900
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,679,948
[AVERAGE-NET-ASSETS] 270,406,512

B-7
00250157.AT1

<PAGE>

[PER-SHARE-NAV-BEGIN] 0
[PER-SHARE-NII] 0
[PER-SHARE-GAIN-APPREC] 0

00250157.AT1

<PAGE>

PART C
OTHER INFORMATION

ITEM 24. Financial Statements and Exhibits

(a) FINANCIAL STATEMENTS

Included in the Prospectus:

Financial Highlights

Included in the Statement of Additional Information:

Portfolio of Investments, June 30, 1994
Statement of Assets and Liabilities, June 30, 1994
Statement of Operations for the year ended June 30,
1994
Statement of Changes in Net Assets, years ended
June 30, 1993 and June 30, 1994
Notes to Financial Statements, June 30, 1994
Condensed Financial Highlights
Report of Independent Auditors

Portfolio of Investments, December 31, 1994
(unaudited)
Statement of Assets and Liabilities, December 31,
1994 (unaudited)
Statement of Operations, December 31, 1994
(unaudited)
Statement of Changes in Net Assets, years ended
June 30, 1990 through June 30, 1994 and six
months ended December 31, 1994 (unaudited)
Notes to Financial Statements, December 31, 1994
(unaudited)
Financial Highlights, years ended June 30, 1990
through June 30, 1994 and six months ended
December 31, 1994 (unaudited)

All other schedules are either omitted because they are not
required under the related instructions, they are
inapplicable, or the required information is presented in the
financial statements or notes which are included in the
Statement of Additional Information of the Registration
Statement.

(b) EXHIBITS

(1) First Amended and Restated Agreement and
Declaration of Trust - Incorporated by reference to
Exhibit 1 to Post-Effective Amendment No. 15 of

C-1

<PAGE>

Registrant's Registration Statement on Form N-1A,
filed September 1, 1992.

(2) By-Laws - Incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 5 of Registrant's
Registration Statement on Form N-1A, filed
October 31, 1985.

(3) Not applicable.

(4) Specimen of Share Certificates - Class A
Incorporated by reference to Exhibit (4) to Post-
Effective Amendment No. 14 of Registrant's
Registration Statement on Form N-1A, filed August
30, 1991. Class B and Class C shares -
Incorporated by reference to Exhibit 4 to Post-
Effective Amendment No. 20 of Registrant's
Registration Statement on Form N-1A, filed
October 22, 1993.

(5) Investment Advisory Agreement between the
Registrant and Alliance Capital Management L.P. -
Incorporated by reference to Exhibit (5) to Post-
Effective Amendment No. 16 of Registrant's
Registration Statement on Form N-1A, filed
October 30, 1992.

(6) (a) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. -
Incorporated by reference to Exhibit 6 (a) to Post-
Effective Amendment No. 20 of Registrant's
Registration Statement on Form N-1A, filed
October 22, 1993.

(b) Selected Dealer Agreement between Alliance Fund
Distributors, Inc. and selected dealers offering
shares of Registrant - Incorporated by reference to
Exhibit (6)(b) to Post-Effective Amendment No. 17
of Registrant's Registration Statement on Form
N-1A, filed March 2, 1993.

(c) Selected Agent Agreement between Alliance Fund
Distributors, Inc. and selected agents making
available shares of Registrant - Incorporated by
reference to Exhibit (6)(c) to Post-Effective
Amendment No. 17 of Registrant's Registration
Statement on Form N-1A, filed March 2, 1993.

(7) Not applicable.

C-2

<PAGE>

(8) Custodian Contract between the Registrant and Brown
Brothers Harriman & Co. - Incorporated by reference
to Exhibit 8 to Post-Effective Amendment No. 8 of
Registrant's Registration Statement on Form N-1A,
filed October 28, 1988.

(9) Transfer Agency Agreement - Incorporated by
reference to Exhibit 9 to Post-Effective Amendment
No. 10 of Registrant's Registration Statement on
Form N-1A, filed October 27, 1989.

(10) Not applicable.

(11) Consent of Independent Auditors - filed herewith.

(12) Not applicable.

(13) Not applicable.

(14) Not applicable.

(15) Rule 12b-1 Plan - Incorporated by reference to
Exhibit 15 to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A,
filed October 31, 1994.

(16) Schedule for computation for each performance
quotation - Incorporated by reference to Exhibit
(16) to Post-Effective Amendment No. 14 of
Registrant's Registration Statement on Form N-1A,
filed August 30, 1991.

(27) Financial Data Schedule - Filed herewith.

ITEM 25. Persons Controlled by or under Common Control with
Registrant.

None.

ITEM 26. Number of Holders of Securities.

NUMBER OF RECORD HOLDERS
TITLE OF CLASS (AS OF MAY 24, 1995)
______________ _________________________

Shares of Beneficial Class A - 11,914
Interest Class B - 5,295
par value $.01 Class C - 1,696

ITEM 27. Indemnification

C-3

<PAGE>

It is the Registrant's policy to indemnify its trustees
and officers, employees and other agents as set forth in
Article VIII and Article III of Registrant's Agreement
and Declaration of Trust, filed as Exhibit 1 in response
to Item 24 and Section 6 of the Distribution Agreement
filed as Exhibit 6 in response to Item 24, all as set
forth below. The liability of the Registrant's trustees
and officers is dealt with in Article VIII of
Registrant's First Amended and Restated Agreement and
Declaration of Trust, as set forth below. The Adviser's
liability for loss suffered by the Registrant or its
shareholders is set forth in Section 4 of the Advisory
Agreement filed as Exhibit 5 in response to Item 24, as
set forth below.

Article VIII of Registrant's First Amended and Restated
Agreement and Declaration of Trust reads as follows:

SECTION 8.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY
LIABLE; NOTICE. The Trustees and officers of the Trust,
in incurring any debts, liabilities or obligations, or
in limiting or omitting any other actions for or in
connection with the Trust, are or shall be deemed to be
acting as Trustees or officers of the Trust and not in
their own capacities. No Shareholder shall be subject
to any personal liability whatsoever in tort, contract
or otherwise to any other Person or Persons in
connection with the assets or the affairs of the Trust
or of any Portfolio, and subject to Section 8.4 hereof,
no Trustee, officer, employee or agent of the Trust
shall be subject to any personal liability whatsoever in
tort, contract, or otherwise, to any other Person or
Persons in connection with the assets or affairs of the
Trust or of any Portfolio, save only that arising from
his own willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the
conduct of his office or the discharge of his functions.
The Trust (or if the matter relates only to a particular
Portfolio, that Portfolio) shall be solely liable for
any and all debts, claims, demands, judgments, decrees,
liabilities or obligations of any and every kind,
against or with respect to the Trust or such Portfolio
in tort, contract or otherwise in connection with the
assets or the affairs of the Trust or such Portfolio,
and all Persons dealing with the Trust or any Portfolio
shall be deemed to have agreed that resort shall be had
solely to the Trust Property of the Trust or the
Portfolio Assets of such Portfolio, as the case may be,
for the payment or performance thereof.

C-4

<PAGE>

The Trustees shall use their best efforts to ensure that
every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers
or officer shall give notice that this Declaration of Trust
is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that the same
was executed or made by or on behalf of the Trust or by them
as Trustees or Trustee or as officers or officer, and not
individually, and that the obligations of such instrument are
not binding upon any of them or the Shareholders individually
but are binding only upon the assets and property of the
Trust, or the particular Portfolio in question, as the case
may be, but the omission thereof shall not operate to bind
any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually, or to subject the
Portfolio Assets of any Portfolio to the obligations of any
other Portfolio.

SECTION 8.2 TRUSTEES' GOOD FAITH ACTION; EXPERT ADVICE; NO
BOND OR SURETY. The exercise by the Trustees of their powers
and discretions hereunder shall be binding upon everyone
interested. Subject to Section 8.4 hereof, a Trustee shall be
liable for his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of
fact or law. Subject to the foregoing, (i) the Trustees
shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee,
consultant, Adviser, Administrator, Distributor or Principal
Underwriter, Custodian or Transfer Agent, Dividend Disbursing
Agent, Shareholder Servicing Agent or Accounting Agent of the
Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee; (ii) the Trustees may take
advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any
act or omission in accordance with such advice or for failing
to follow such advice; and (iii) in discharging their duties,
the Trustees, when acting in good faith, shall be entitled to
rely upon the books of account of the Trust and upon written
reports made to the Trustees by any officer appointed by
them, any independent public accountant, and (with respect to
the subject matter of the contract involved) any officer,
partner or responsible employee of a Contracting Party
appointed by the Trustees pursuant to Section 5.2 hereof.
The Trustees as such shall not be required to give any bond
or surety or any other security for the performance of their
duties.

C-5

<PAGE>

SECTION 8.3 INDEMNIFICATION OF SHAREHOLDERS. If any
Shareholder (or former Shareholder) of the Trust shall be
charged or held to be personally liable for any obligation or
liability of the Trust solely by reason of being or having
been a Shareholder and not because of such Shareholder's acts
or omissions or for some other reason, the Trust (upon proper
and timely request by the Shareholder) shall assume the
defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or the heirs,
executors, administrators or other legal representatives
thereof, or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled (but
solely out of the assets of the Portfolio of which such
Shareholder or former Shareholder is or was the holder of
Shares) to be held harmless from and indemnified against all
loss and expense arising from such liability.

SECTION 8.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC.
Subject to the limitations set forth hereinafter in this
Section 8.4, the Trust shall indemnify (from the assets of
the Portfolio or Portfolios to which the conduct in question
relates) each of its Trustees and officers (including Persons
who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any
interest as a shareholder, creditor or otherwise
[hereinafter, together with such Person's heirs, executors,
administrators or personal representative, referred to as a
"Covered Person"]) against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such Covered
Person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee
or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to
the best interests of the Trust or (ii) had acted with
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
Covered Person's office (either and both of the conduct
described in (i) and (ii) being referred to hereafter as
"Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before
whom the proceeding was brought that the Covered Person to be

C-6

<PAGE>

indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by
(a) a vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as defined in
Section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees
so incurred by any such Covered Person (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines
or penalties), may be paid from time to time by the Portfolio
or Portfolios to which the conduct in question related in
advance of the final disposition of any such action, suit or
proceeding; provided, that the Covered Person shall have
undertaken to repay the amounts so paid to such Portfolio or
Portfolios if it is ultimately determined that
indemnification of such expenses is not authorized under this
Article VIII and (i) the Covered Person shall have provided
security for such undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the
disinterested Trustees, or an independent legal counsel in a
written opinion, shall have determined, based on a review of
readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification.

SECTION 8.5 COMPROMISE PAYMENT. As to any matter disposed
of by a compromise payment by any such Covered Person
referred to in Section 8.4 hereof, pursuant to a consent
decree or otherwise, no such indemnification either for said
payment or for any other expenses shall be provided unless
such indemnification shall be approved (i) by a majority of a
quorum of the disinterested Trustees or (ii) by an
independent legal counsel in a written opinion. Approval by
the Trustees pursuant to clause (i) or by independent legal
counsel pursuant to clause (ii) shall not prevent the
recovery from any Covered Person of any amount paid to such
Covered Person in accordance with either of such clauses as
indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such
Covered Person's action was in or not opposed to the best
interests of the Trust or to have been liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in the conduct of such Covered Person's office.

C-7

<PAGE>

SECTION 8.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right
of indemnification provided by this Article VIII shall not be
exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article
VIII, a "disinterested" Person is one against whom none of
the actions, suits or other proceedings in question, and no
other action, suit or other proceeding on the same or similar
grounds is then or has been pending or threatened. Nothing
contained in this Article VIII shall affect any rights to
indemnification to which personnel of the Trust, other than
Trustees and officers, and other Persons may be entitled by
contract or otherwise under law, nor the power of the Trust
to purchase and maintain liability insurance on behalf of any
such Person.

SECTION 8.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES.
No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made
or to be made by the Trustees or to see to the application of
any payments made or property transferred to the Trust or
upon its order.

Article III of Registrant's First Amended and Restated
Agreement and Declaration of Trust reads, in pertinent part,
as follows:

"Without limiting the foregoing and to the extent not
inconsistent with the 1940 Act or other applicable law, the
Trustees shall have power and authority:

(s) INDEMNIFICATION. In addition to the mandatory
indemnification provided for in Article VIII hereof and
to the extent permitted by law, to indemnify or enter
into agreements with respect to indemnification with any
Person with whom this Trust has dealings, including,
without limitation, any independent contractor, to such
extent as the Trustees shall determine."

The Advisory Agreement between Registrant and Alliance
Capital Management L.P. provides that Alliance Capital Management
L.P. will not be liable under such agreement for any mistake of
judgment or in any event whatsoever except for lack of good faith
and that nothing therein shall be deemed to protect, or purport
to protect, Alliance Capital Management L.P. against any
liability to Registrant or its security holders to which it would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties thereunder,
or by reason of reckless disregard of its obligations and duties
thereunder.

C-8

<PAGE>

The Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. provides that the
Registrant will indemnify, defend and hold Alliance Fund
Distributors, Inc., and any person who controls it within the
meaning of Section 15 of the Investment Company Act of 1940, free
and harmless from and against any and all claims, demands,
liabilities and expenses which Alliance Fund Distributors, Inc.
or any controlling person may incur arising out of or based upon
any alleged untrue statement of a material fact contained in
Registrant's Registration Statement or Prospectus and Statement
of Additional Information or arising out of, or based upon any
alleged omission to state a material fact required to be stated
in or necessary to make the statements in either thereof any one
of the foregoing not misleading, provided that nothing therein
shall be so construed as to protect Alliance Fund Distributors,
Inc. against any liability to Registrant or its security holders
to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties thereunder, or by reason of reckless disregard of its
obligations and duties thereunder.

The foregoing summaries are qualified by the entire text
of Registrant's First Amended and Restated Agreement and
Declaration of Trust, the Advisory Agreement between Registrant
and Alliance Capital Management L.P. and the Distribution
Services Agreement between Registrant and Alliance Fund
Distributors, Inc.

Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Securities Act") may be
permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

In accordance with Release No. IC-11330 (September 2,
1980), the Registrant will indemnify its trustees, officers,
investment adviser and principal underwriters only if (1) a final

C-9

<PAGE>

decision on the merits was issued by the court or other body
before whom the proceeding was brought that the person to be
indemnified (the "indemnitee") was not liable by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office
("disabling conduct") or (2) a reasonable determination is made,
based upon a review of the facts, that the indemnitee was not
liable by reason of disabling conduct, by (a) the vote of a
majority of a quorum of the trustees who are neither "interested
persons" of the Registrant as defined in section 2(a)(19) of the
Investment Company Act of 1940 nor parties to the proceeding
("disinterested, non-party trustees"), or (b) an independent
legal counsel in a written opinion. The Registrant will advance
attorneys fees or other expenses incurred by its trustees,
officers, investment adviser or principal underwriters in
defending a proceeding, upon the undertaking by or on behalf of
the indemnitee to repay the advance unless it is ultimately
determined that he is entitled to indemnification and, as a
condition to the advance, (1) the indemnitee shall provide a
security for his undertaking, (2) the Registrant shall be insured
against losses arising by reason of any lawful advances, or (3) a
majority of a quorum of disinterested, non-party trustees of the
Registrant, or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found entitled to
indemnification.

The Registrant participates in a joint trustees/
directors and officers liability insurance policy issued by the
ICI Mutual Insurance Company. Coverage under this policy has
been extended to directors, trustees and officers of the
investment companies managed by Alliance Capital Management L.P.
Under this policy, outside trustees and directors are covered up
to the limits specified for any claim against them for acts
committed in their capacities as trustee or director. A pro rata
share of the premium for this coverage is charged to each
investment company and to the Adviser.

ITEM 28. Business and Other Connections of Adviser.

The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Fund" in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively, of
this Registration Statement are incorporated by
reference herein.

The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set

C-10

<PAGE>

forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference.

ITEM 29. Principal Underwriters

(a) Alliance Fund Distributors, Inc. the Registrant's
Principal Underwriter in connection with the sale
of shares of the Registrant, also acts as Principal
Underwriter or Distributor for the following
investment companies:

ACM Institutional Reserves Inc.
AFD Exchange Reserves Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund, Inc. II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
The Hudson River Trust

(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal

C-11

<PAGE>

place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.

C-12

<PAGE>

POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT
____ ____________ ____________

Michael J. Laughlin Chairman

Robert L. Errico President

Kimberly A. Baumgardner Senior Vice President

Daniel J. Dart Senior Vice President

Byron M. Davis Senior Vice President

Geoffrey L. Hyde Senior Vice President

Barbara J. Krumsiek Senior Vice President

William F. O'Grady Senior Vice President

Dusty W. Paschall Senior Vice President

Antonios G. Poleonadkis Senior Vice President

Richard K. Saccullo Senior Vice President

Gregory K. Shannahan Senior Vice President

Peter J. Szabo Senior Vice President

Richard A. Winge Senior Vice President

Jim A. Yockey Senior Vice President

Edmund P. Bergan, Jr. Senior Vice President, Secretary
and General Counsel

Robert H. Joseph Vice President & Controller

Michael T. Anderson Vice President

Kenneth F. Barkoff Vice President

Kevin T. Cannon Vice President

Mark J. Dunbar Vice President

Deirdre E. Duffy Vice President

C-13

<PAGE>

Linda A. Finnerty Vice President

Sheila M. Flynn Vice President

Robert M. Frank Vice President

Gerard J. Friscia Vice President

Andrew L. Gangolf Vice President Assistant
Secretary

Mark D. Gersten Vice President Treasurer
and Chief
Financial
Officer

Troy L. Glawe Vice President

James E. Gunter Vice President

Alan Halfenger Vice President

Steven P. Hecht Vice President

George R. Hrabovsky Vice President

Valerie J. Hugo Vice President

Mark H. Huston Vice President

Marek E. Lakotko Vice President

Sheila F. Lamb Vice President

Stephen R. Laut Vice President

Thomas Leavitt, III Vice President

Christopher J. MacDonald Vice President

John A. McClain Vice President

Gregory T. McCombs Vice President

Daniel D. McGinley Vice President

Matthew P. Mintzer Vice President

Nicole M. Nolan Vice President

Robert T. Pigozzi Vice President

C-14

<PAGE>

Domenick Pugliese Vice President

Bruce W. Reitz Vice President

Joseph F. Sumanski Vice President

Nicholas K. Willett Vice President

Emilie D. Wrapp Vice President & Assistant
Special Counsel Secretary

Richard D. Allen Assistant Vice President

Warren W. Babcock III Assistant Vice President

Benji A. Baer Assistant Vice President

Casimir F. Bolanowski Assistant Vice President

Maria L. Carreras Assistant Vice President

Leo H. Cook Assistant Vice President

John W. Cronin Assistant Vice President

Richard W. Dabney Assistant Vice President

Gerard P. DiSalvo Assistant Vice President

Sohaila S. Farsheed Assistant Vice President

Leon M. Fern Assistant Vice President

William C. Fisher Assistant Vice President

Joseph W. Gibson Assistant Vice President

James E. Gunter Assistant Vice President

William B. Hanigan Assistant Vice President

Alan C. Hanson Assistant Vice President

Vicky M. Hayes Assistant Vice President

Daniel M. Hazard Assistant Vice President

John C. Hershock Assistant Vice President

Kenneth R. Hill Assistant Vice President

C-15

<PAGE>

William C. Howard Assistant Vice President

Thomas K. Intoccia Assistant Vice President

Edward W. Kelly Assistant Vice President

Donna M. Lamback Assistant Vice President

David P. Lambert Assistant Vice President

Nicholas J. Lapi Assistant Vice President

Michael F. Mahoney Assistant Vice President

Renate S. Mars Assistant Vice President

Daniel G. McCabe Assistant Vice President

Shawn P. McClain Assistant Vice President

Maura A. McGrath Assistant Vice President

Paul J. McIntyre Assistant Vice President

Kevin M. McLoughlin Assistant Vice President

Charles R. Mechler Assistant Vice President

Thomas F. Monnerat Assistant Vice President

Mark A. Moore Assistant Vice President

Joanna D. Murray Assistant Vice President

Jeanette M. Nardella Assistant Vice President

William E. Noe Assistant Vice President

Marilyn I. Noonan Assistant Vice President

Robert E. Powers Assistant Vice President

Patrick J. Pung Assistant Vice President

Carol H. Rappa Assistant Vice President

Karen C. Satterberg Assistant Vice President

Raymond S. Scalfani Assistant Vice President

Rodney J. Schull Assistant Vice President

C-16

<PAGE>

Robert M. Smith Assistant Vice President

William J. Strott Assistant Vice President

Joseph T. Tocyloski Assistant Vice President

Neil B. Wood Assistant Vice President

Mark R. Manley Assistant Secretary

ITEM 30. Location of Accounts and Records.

The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder
are maintained as follows: journals, ledgers,
securities records and other original records are
maintained principally at the offices of Alliance Fund
Services, Inc., 500 Plaza Drive, Secaucus, New Jersey
07094 and at the offices of Brown Brothers Harriman &
Company, the Registrant's Custodian, 40 Water Street,
Boston, Massachusetts 02109. All other records so
required to be maintained are maintained at the offices
of Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York, 10105.

ITEM 31. Management Services.

Not applicable.

ITEM 32. Undertakings

(c) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon
request and without charge.

C-17

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York
and the State of New York on the 1st day of June, 1995.

ALLIANCE INTERNATIONAL FUND

By /s/ John D. Carifa
___________________________
John D. Carifa
Chairman

Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities
and on the date indicated.

SIGNATURE TITLE DATE
_________ _____ ____

(1) Principal Executive
Officer

/s/ John D. Carifa Chairman June 1, 1995
_________________________
John D. Carifa

(2) Principal Financial and
Accounting Officer

/s/ Mark D. Gersten Treasurer and June 1, 1995
_________________________ Chief Financial
Mark D. Gersten Officer

C-18

<PAGE>

(3) A MAJORITY OF THE TRUSTEES
__________________________
David H. Dievler
John D. Carifa
John H. Dobkin
William H. Henderson
Alan Stoga
Stig Host
John C. West
Robert C. White

by /s/ Edmund P. Bergan, Jr. June 1, 1995
_______________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.

C-19

<PAGE>

INDEX TO EXHIBITS
_________________

Page
____
(11) Consent of Independent Auditors

(27) Financial Data Schedule

C-20
00250157.AT1

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

INTERNATIONAL
<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 249,468,304
<INVESTMENTS-AT-VALUE> 255,851,032
<RECEIVABLES> 26,073,131
<ASSETS-OTHER> 2,269,109
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 284,193,272
<PAYABLE-FOR-SECURITIES> 24,634,016
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,009,217
<TOTAL-LIABILITIES> 28,643,233
<SENIOR-EQUITY> 156,977
<PAID-IN-CAPITAL-COMMON> 242,592,291
<SHARES-COMMON-STOCK> 15,697,696
<SHARES-COMMON-PRIOR> 13,413,863
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,014,811
<ACCUMULATED-NET-GAINS> 8,476,527
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,339,055
<NET-ASSETS> 255,550,039
<DIVIDEND-INCOME> 1,344,974
<INTEREST-INCOME> 423,180
<OTHER-INCOME> 0
<EXPENSES-NET> 2,679,948
<NET-INVESTMENT-INCOME> (911,794)
<REALIZED-GAINS-CURRENT> 18,449,373
<APPREC-INCREASE-CURRENT> (22,422,455)
<NET-CHANGE-FROM-OPS> (4,884,876)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 23,169,026
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 87,471,724
<NUMBER-OF-SHARES-REDEEMED> 70,815,533
<SHARES-REINVESTED> 21,586,585
<NET-CHANGE-IN-ASSETS> 10,188,874
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 13,196,180
<OVERDISTRIB-NII-PRIOR> 1,103,017
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,358,900

<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,679,948
<AVERAGE-NET-ASSETS> 270,406,512
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0

00250157.AX5

</TABLE>

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions
"Financial Highlights" and "General Information - Independent
Auditors" and to the use of our report dated August 5, 1994, in
this Registration Statement (Form N-1A 2-70428) of Alliance
International Fund.

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

New York, New York
May 31, 1995

00250157.AY9