ALLIANCE INTERNATIONAL FUND
ANNUAL REPORT
JUNE 30, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
July 30, 1997
Dear Shareholder:
We are pleased to report investment results and market activity for Alliance
International Fund for the period ended June 30, 1997.
MARKET REVIEW
Most regions in which your funds assets are invested, primarily Japan and
Europe, in addition to some exposure in Pacific ex-Japan and Latin America,
showed positive returns for the six month period. MSCI Europe was up 13.2% in
U.S. dollar terms, while MSCI Japan was up about 8.7% during the same period.
While the U.S. market continued its ascent, U.S. dollar investors in the
international markets experienced mixed results during the second quarter of
1997. The Morgan Stanley Capital International Europe, Australia, Far East
Index (MSCI EAFE) was up 12.98% in dollar terms in the second quarter, with the
MSCI Europe Index up 8.94%, the MSCI Japan Index up 23.67%, the MSCI Pacific
Ex-Japan Index up 6.31% and the S&P 500 up 17.5%. Returns in Europe ranged from
a low of 0.03% for Austria (as measured by the MSCI Austria Index) to a high of
22.33% for Spain (as measured by the MSCI Spain Index). In the Pacific
Ex-Japan, returns ranged from a low of -25.02% in Thailand (as measured by the
MSCI Thailand Index) to a high of 20.34% for Hong Kong (as measured by the MSCI
Hong Kong Index), all in U.S. dollar terms. Latin American returns were
generally strong with the MSCI Emerging Markets Free Latin American Index up
22.08% in U.S. dollar terms.
Currency movements were also mixed as the dollar strengthened significantly
against the currencies on Continental Europe and many of the currencies in Asia
Ex-Japan, but weakened relative to the British pound and Japanese yen.
Volatility increased in the second quarter, and we expect more of the same in
the second half of the year. We maintain our focus on research driven stock
selection and are ever mindful of the strong relationship between fundamental
value and price. The increased volatility has created more opportunities to
adjust positions in our portfolios. As a consequence, our turnover went up a
bit over the quarter as we sold on strength and bought on weakness.
INVESTMENT RESULTS
For the six month period ended June 30, 1997, Alliance International Fund Class
A shares achieved a total return of 9.62% on a net asset value basis. The Fund
underperformed its benchmark, the unmanaged Lipper International Funds Average,
which posted a 12.53% return, and also underperformed its international equity
index, the unmanaged Morgan Stanley Capital International (MSCI) World Index
(excluding the U.S.) which had an 11.39% return.
INVESTMENT RESULTS*
Period Ended June 30, 1997
TOTAL RETURN
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE INTERNATIONAL FUND
Class A 9.62% 9.30%
Class B 9.12% 8.37%
Class C 9.11% 8.42%
MSCI WORLD INDEX
(MINUS THE U.S.) 11.39% 13.87%
LIPPER INTERNATIONAL
FUNDS AVERAGE 12.53% 16.54%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF JUNE 30,
1997. TOTAL RETURN FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT
EXPENSES ASSOCIATED WITH THAT CLASS. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. RETURNS FOR
THE FUND AND ITS COMPARATIVE INDICES INCLUDE THE REINVESTMENT OF ANY
DISTRIBUTIONS PAID DURING THE PERIOD.
ALL COMPARATIVE INDICES ARE UNMANAGED AND REFLECT NO FEES OR EXPENSES. THE
MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX (MINUS THE U.S.), TRACKS THE
PERFORMANCE OF STOCK MARKETS IN 21 FOREIGN COUNTRIES. THE LIPPER INTERNATIONAL
FUNDS AVERAGE IS BASED ON THE PERFORMANCE OF 417 MUTUAL FUNDS WITH GENERALLY
SIMILAR INVESTMENT OBJECTIVES, BUT WHICH MAY HAVE DIFFERENT INVESTMENT
POLICIES. ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
1
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
The relatively neutral regional allocation of your portfolio during the first
half of 1997 led to a disappointing total Fund performance relative to its peer
group benchmarks. Our philosophy is to remain approximately neutral relative to
the MSCI Index (minus the U.S.) as we seek to add value through stock
selection. Our peer group managers tend to underweight Japan relative to the
MSCI Index (minus the U.S.) and this is the main reason why our performance
lagged behind their results on average.
Our stock selection in Japan was effective and we significantly outperformed
the MSCI Japan index. Within the Japanese portion of the portfolio, we
purchased financial stocks during the early part of the second quarter and are
now overweight in that sector in addition to the technology sector. The strong
performance of technology stocks in Japan helped us outperform in that market
in the first six months of 1997. Within Europe, the hedge on the French franc
that we implemented in May added to our performance, while our positions in
French financials and sterling sensitive stocks in the United Kingdom detracted
from our performance. Latin American equity exposure which we built up in the
first quarter added to performance, while our Pacific ex-Japan weighting
detracted from performance relative to the benchmark.
INVESTMENT OUTLOOK AND PORTFOLIO STRATEGY
EUROPE
Europe continued to experience rising markets in the second quarter of 1997,
but the rising dollar caused these markets to generally underperform from a
U.S. dollar perspective. The MSCI Europe Index was up 11.4% in local currency
terms, but was only up 8.9% from a U.S. dollar point of view.
The dollar strengthened significantly against the Continental European
currencies, especially the deutschemark. To a large extent, this was a result
of the continuing movement toward convergence on the Continent. The French
elections rattled the convergence process in May, but since then the French
have made what appear to be sufficient concessions toward meeting the
convergence criteria. It now seems that European Monetary Union (EMU) will
start on time, but will include a fairly broad list of participants, and with a
weaker set of convergence criteria. We think that the new Euro will, as a
consequence, be a relatively weak currency. We implemented a hedge against the
French franc in May, as we expect the French franc to weaken with or without
EMU.
The U.K. is likely to be a holdout from EMU. This perception, along with the
U.K.'s relatively strong economy and rising interest rates, has resulted in a
continued strengthening of the pound relative to the other European currencies.
As a result, we are continuing with most of our ongoing investment themes in
the U.K and throughout Europe. In the U.K. we are concentrating on stocks that
are benefiting from domestic growth and de-emphasizing stocks with export
oriented businesses. We have added to consumer stocks such as Bass Plc.
Restructurings continue to offer some of the best investment opportunities in
Europe for a broad range of companies. Therefore, we continue to favor such
companies, in particular, Novartis AG and Akzo Nobel NV.
JAPAN
Investors seem to have finally decided that Japan warrants consideration as
Japan was the strongest region in the second quarter posting a 23.76% return in
U.S. dollar terms. Underlying economic trends show signs of a pick-up in growth
in Japan, in spite of the recent weakness in retail and auto sales. We see this
weakness as a temporary result of the binge in consumer spending that preceded
the recent excise tax hike. Capital spending appears sound, and recent business
surveys and industrial production reports slightly exceeded expectations.
It also seems to us that real progress is being made in the financial sector.
The recent Tokai Kogyo bankruptcy was a positive step towards confronting the
financial sector crisis head-on, while the scandal at Nomura Securities Co.,
Ltd. clears the way toward better disclosure standards in the Japanese
financial industry.
Our investment strategy in Japan continues to focus on those companies that
have superior growth characteristics relative to the rest of Japan and that are
attractively valued. This leads us to a number of financial, pharmaceutical and
technology stocks.
In the financial sector, we like Nomura Securities Co., Ltd. and Daiwa
Securities Co., Ltd. among the brokerage stocks, and in the banks we favor
Sumitomo Bank and Bank of Tokyo-Mitsubishi. We see the pending big bang in the
financial sector as a plus for the stronger financial firms in Japan. It will,
by necessity, result in massive changes and concomitant unleashing of value.
2
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
In the pharmaceutical sector, we favor both Santen Pharmaceutical and
Yamanouchi Pharmaceutical Co., Ltd., both of which look cheap to us. In the
technology sector, growth in demand continues to be strong and Japanese
technology stocks continue to look attractive. As a result, stocks such as Rohm
Co., TDK Corp. and DDI Corp. are significant positions in our portfolios.
PACIFIC EX-JAPAN
The handover of Hong Kong back to China created ebullient enthusiasm for stocks
traded in Hong Kong. We expect little overall change in the business
environment and renewed opportunity for growth there.
Thailand suffered from a significant devaluation in the baht as Thai
authorities were forced to allow the baht to float. The baht effect spread
throughout Asia, resulting in downward pressure on both currencies and stock
markets in several countries, especially the Philippines, Indonesia and
Malaysia. Fortunately, we had pretty much eliminated our exposure to Thailand
prior to the devaluation and reduced exposure to the Philippines. Malaysia,
though, continues to be a significant holding. We think the markets have
overreacted in Malaysia, as many of the companies there are fundamentally
strong and now look attractively priced. Therefore, we have been adding to our
positions in Malaysia. Growth is slow in Australia and the economy is a bit
sluggish. We reduced our position in Woolworths Ltd., as we expect a temporary
slowdown and pressure on margins. We sold off our position in Telecom Corp. of
New Zealand, Ltd. on price strength, as we think increasing competition will
hurt results going forward.
LATIN AMERICA
The second quarter of 1997 saw a continuation of the strong performance of the
first quarter in Latin America. In fact, most Latin markets had even stronger
performance in the second quarter than they did in the first, particularly the
largest markets such as Argentina, Brazil and Mexico. The year-to-date return
for the MSCI Latin America Free Index was, consequently, an astonishing 40.79%
in U.S. dollars, easily surpassing the other regions of the world. In the first
quarter of 1997, we built up positions in a few Latin stocks that seemed
particularly attractive to us. We will probably add to these positions as
prices come down and may include additional names. We continue to find
interesting opportunities among privatization stories, particularly in the
telecom sector. Additionally, several of the larger banks seem well priced
especially in Mexico and Brazil.
We thank you for your continued interest and investment in Alliance
International Fund and look forward to reporting its progress to you in future
periods.
Sincerely,
John D. Carifa
Chairman and President
A. Rama Krishna
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
Alliance International Fund is a diversified investment company that seeks to
provide investors with a total return on its assets from long-term growth of
capital and income. The Fund invests principally in marketable securities of
established non-U.S. companies participating in foreign economies with
prospects of growth and foreign government securities.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 9.30% 4.67%
Five Years 10.27% 9.32%
Ten Years 7.30% 6.83%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 8.37% 4.37%
Five Years 9.35% 9.35%
Since Inception* 6.66% 6.66%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 8.42% 7.42%
Since Inception* 9.23% 9.23%
Average annual total returns reflect reinvestment of dividends and/or capital
gain distributions in additional shares, with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 9/17/90, Class B; 5/3/93, Class C.
4
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
ALLIANCE INTERNATIONAL FUND
GROWTH OF A $10,000 INVESTMENT
6/30/87 TO 6/30/97
$25,000
$23,000
$21,000
$19,000
$17,000
$15,000
$13,000
$11,000
$10,000
$9,000
6/30/87 6/30/88 6/30/89 6/30/90 6/30/91 6/30/92
6/30/93 6/30/94 6/30/95 6/30/96 6/30/97
LIPPER INTERNATIONAL FUNDS AVERAGE: $23,649
MSCIWORLD INDEX (MINUS THE U.S.): $19,512
ALLIANCE INTERNATIONAL FUND CLASS A: $19,369
This chart illustrates the total value of an assumed $10,000 investment in
Alliance International Fund Class A shares (from 6/30/87 to 6/30/97) as
compared to the performance of an appropriate broad-based index. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains. Performance for Class B and Class C shares will vary from the
results shown above due to differences in expenses charged to those classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The Morgan Stanley Capital International World Index (minus the United States)
is an unmanaged, market-capitalization-weighted index that measures the
performance of stock markets in 21 countries outside the United States.
The Lipper International Funds Average reflects performance of 417 mutual
funds, only 29 of which have existed for the full 10-year period. These funds
have generally similar investment objectives to Alliance International Fund,
although the investment policies of some funds included in the average may vary.
When comparing Alliance International Fund to the index and average shown
above, you should note that no charges or expenses are reflected in the
performance of the index. Lipper results include fees and expenses.
Alliance International Fund
Lipper International Funds Average
MSCIWorld Index (minus the U.S)
5
TEN LARGEST HOLDINGS
JUNE 30, 1997 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Sumitomo Bank--Provides investment banking and
leasing services to clients worldwide $ 5,527,964 1.9%
TDK Corp.--Largest manufacturer of magnetic
tapes, floppy discs & electronic parts 4,916,412 1.7
Akzo Nobel NV--A worldwide operating company,
products include chemicals, man-made fibres,
paints, enamels and salts, ethical drugs,
veterinary products, hospital supplies and
diagnostics 4,905,697 1.6
Bank of Tokyo Mitsubishi--Provides commercial
banking services 4,615,653 1.5
Total, S.A.--Explores for, produces, refines,
transports and markets oil and natural gas. 4,025,876 1.3
Rohm Co.--Largest specialist maker of custom
linear integrated circuits 4,015,356 1.3
Novartis AG--Manufactures healthcare products
for use in medical fields, as well as
nutritional and agricultural products 3,993,609 1.3
DDI Corp.--Provider of long distance telephone
and mobile communication services 3,823,645 1.3
BPB Industries Plc.--Manufactures and sells
building materials, paper and packaging
materials 3,619,308 1.2
Yamanouchi Pharmaceutical Co., Ltd.--
Manufactures and markets pharmaceuticals for
both human and veterinary use 3,520,461 1.2
$ 42,963,981 14.3%
6
INDUSTRY DIVERSIFICATION
JUNE 30, 1997 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Aerospace & Defense $ 1,446,167 0.5%
Basic Industries 27,573,419 9.2
Capital Goods 10,977,328 3.7
Consumer Manufacturing 26,630,749 8.9
Consumer Services 26,728,491 8.9
Consumer Staples 27,941,447 9.3
Energy 9,413,789 3.1
Finance 69,220,090 23.1
Healthcare 18,238,550 6.1
Multi Industry 21,472,571 7.1
Mutual Funds 517,467 0.2
Technology 16,006,477 5.3
Transportation 4,326,312 1.4
Utilities 31,370,888 10.5
Total Investments* 291,863,745 97.3
Cash and receivables, net of liabilities 7,999,016 2.7
Net assets $299,862,761 100.0%
* Excludes short-term obligations.
7
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS AND OTHER INVESTMENTS-96.7%
ARGENTINA-0.5%
Telecom Argentina, S.A. (ADR) 29,000 $ 1,522,500
AUSTRALIA-2.0%
Coca-Cola Amatil, Ltd. 139,083 1,806,251
Mayne Nickless, Ltd. 86,000 501,293
Normandy Mining, Ltd. 1,020,000 1,147,525
Qantas Airways, Ltd. 135,697 317,620
WMC, Ltd. 186,623 1,176,596
Woolworths, Ltd. 309,048 1,015,058
------------
5,964,343
BELGIUM-0.5%
Barco NV 4,314 874,025
Delhaize Feres NV 11,500 604,054
------------
1,478,079
BRAZIL-0.7%
Dixie Toga, S.A. 85,928 46,294
Telebras (ADR) 13,000 1,972,750
------------
2,019,044
CANADA-0.0%
Imasco, Ltd. 4 116
DENMARK-0.4%
Den Danske Bank 12,700 1,235,656
FINLAND-3.0%
Huhtamaki Oy Series I 21,000 904,803
Nokia Corp. 27,000 2,040,361
Orion-Yhtymae OY Series B 80,700 3,041,427
Rauma OY 1,865 42,784
Rautaruukki Oy 126,079 1,324,635
UPM-Kymmene Oy (a) 33,000 776,123
Valmet Oy 45,000 779,883
------------
8,910,016
FRANCE-8.8%
Assurance Generale de France (b) 46,702 1,492,442
Banque Nationale de Paris 37,490 1,545,098
Bouygues (b) 15,955 1,312,683
Compagnie Generale des Eaux (b) 11,152 1,428,941
warrants expiring 5/02/01(a) 11,152 6,680
Elf Aquitaine, S.A. (b) 25,800 2,783,399
Legrand (b) 8,500 1,497,014
Legris Industries, S.A. 28,720 1,353,726
Promodes (b) 4,470 1,741,084
SEITA (b) 43,000 1,360,968
SGS-Thomson Microelectronics (a) 9,750 769,820
Societe de Immeubles de France (a) 10,812 625,535
Societe Francaise d'Investissemeants
Immobiliers et de Gestion 9,700 618,970
Societe Generale (b) 21,880 2,442,405
Societe Generale
Temporary Non Tradable Certificates 237 26,456
Technip Compagnie Francaise, S.A. (b) 13,400 1,555,090
Total, S.A. (ADR) (b) 38,298 1,938,836
Cl. B (b) 20,648 2,087,040
Usinor Sacilor (b) 67,000 1,208,501
Worms Et Compagnie (b) 10,224 605,433
------------
26,400,121
GERMANY-2.7%
Adidas AG 9,230 1,021,498
Bayer AG 35,100 1,348,932
Henkel KGaA-Vorzug, pfd. 22,100 1,254,602
Hornbach Holding AG, pfd. 10,400 882,619
Merck KG 27,300 1,204,619
Schmalbach-Lubeca AG (a) 10,880 2,439,406
------------
8,151,676
8
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
HONG KONG-3.8%
Asia Satellite Telecommunications
Holdings, Ltd. (a) 32,000 $ 98,099
Cheung Kong Holdings 183,000 1,807,017
Citic Pacific, Ltd. 218,000 1,364,734
Dao Heng Bank Group, Ltd. 86,000 470,667
Dickson Concept International, Ltd. 329,000 1,206,046
First Pacific Co., Ltd. 739,383 944,831
Guangshen Railway Co., Ltd. (ADR) (a) 37,600 822,500
Hang Seng Bank 72,000 1,026,938
Hong Kong & China Gas Co., Ltd. 238,752 477,670
warrants expiring 9/30/97 (a) 19,580 20,977
HSBC Holdings Plc. 29,000 872,175
Hysan Development Co., Ltd.
warrants expiring 4/30/98 (a) 4,700 1,820
Swire Pacific, Ltd. Cl. A 101,000 912,576
Television Broadcasting, Ltd. 265,000 1,190,350
------------
11,216,400
INDIA-0.6%
Bajaj Auto, Ltd. (GDR) (c) 20,900 717,915
Industrial Credit & Investment Corp
(GDR) (a) 4,000 57,500
(GDR) (a)(c) 33,300 478,688
State Bank of India (GDR) (a)(c) 14,100 373,650
Videsh Sanchar Nigam (GDR) (c) 11,600 240,700
------------
1,868,453
INDONESIA-0.6%
PT Indosat 334,000 999,116
PT Telekomunikasi Indostat Series B 160,000 261,513
PT Telekomunikasi Indonesia (ADR) 13,000 422,500
------------
1,683,129
IRELAND-1.0%
Allied Irish Banks Plc. 310,000 2,363,541
Smurfit /Jefferson/ Group 265,000 763,182
------------
3,126,723
ITALY-2.5%
Credito Italiano 1,000,000 1,828,805
Istituto Mobilaire Italiano 376,000 3,382,877
Telecom Italia S.p.A. 708,700 2,283,757
------------
7,495,439
JAPAN-28.4%
Advantest Corp. 24,400 1,873,484
Amano Corp. 77,000 873,397
Asahi Glass Co., Ltd. 149,000 1,482,070
Bank of Tokyo-Mitsubishi 230,000 4,615,653
Bridgestone Corp. 65,000 1,508,594
Canon, Inc. 72,000 1,960,038
Dai Nippon Printing Co., Ltd. 39,000 881,337
Daifuku Co., Ltd. 67,000 882,733
Daito Trust Construction Co., Ltd. 174,800 2,058,983
Daiwa Securities Co., Ltd. 251,000 1,979,792
DDI Corp. 518 3,823,645
East Japan Railway Co. 181 928,610
Fuji Bank 180,000 2,701,335
Fuji Heavy Industries 295,000 1,539,220
Fuji Photo Film, Co. 21,000 844,691
Hirose Electric Co. 14,000 960,126
Honda Motor Co. 95,000 2,859,698
Japan Securities Finance 103,000 1,015,531
Japan Tobacco, Inc. 333 2,629,483
Kokuyo 43,000 1,163,075
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Mitsubishi Heavy Industries, Ltd. 117,000 $ 897,330
Mitsui Marine & Fire Insurance Co. 254,000 1,835,023
Mitsui Trust & Banking Co., Ltd. 405,000 3,056,670
National House Industrial Co. 68,000 895,908
Nintendo Co. 13,400 1,122,415
Nippon Express Co., Ltd. 110,000 878,196
Nippon Steel Co. 299,000 954,838
Nisshin Steel Co., Ltd. 348,000 910,915
Nomura Securities Co., Ltd. 227,000 3,129,395
Rohm Co. 39,000 4,015,356
Santen Pharmaceutical 88,000 1,773,667
Shimano Industrial Co. 55,000 1,151,732
Shiseido Co., Ltd. 61,000 1,005,933
Sony Corp. 34,000 2,963,616
Sumitomo Bank 337,000 5,527,964
Sumitomo Electric Industries 118,000 1,976,791
Sumitomo Marine & Fire Insurance Co. 120,000 984,207
Sumitomo Realty and Development Co., Ltd. 234,000 2,062,124
Taisho Pharmaceutical Co. 35,000 943,635
Takeda Chemical Industries 18,000 505,715
TDK Corp. 67,000 4,916,412
Tokai Bank 118,000 1,214,903
UBE Industries, Ltd. 74,000 215,007
Yakult Honsha Co. 59,000 648,635
Yamanouchi Pharmaceutical Co., Ltd. 131,000 3,520,461
Yamatake Honeywell 48,000 913,009
Yamazaki Baking Co., Ltd. 39,000 687,375
------------
85,288,727
MALAYSIA-2.6%
AMMB Holdings Berhad 200,000 1,244,057
warrants expiring 12/31/02 (a) 10,000 13,471
Berjaya Group Berhad 973,000 1,195,048
Berjaya Sports Toto 221,000 1,041,957
Magnum Corp. Berhad 97,000 146,038
Malakoff Berhad 213,000 928,288
Malayan Banking Berhad 73,000 766,442
Resorts World Berhad 233,000 701,585
RHB Capital Berhad
warrants expiring 12/27/99 (a) 82,250 91,570
Telekom Malaysia 366,000 1,711,093
------------
7,839,549
MEXICO-1.2%
Fomento Ecomo, S.A. 304,000 1,809,615
Panamerican Beverages Cl. A 52,000 1,709,500
------------
3,519,115
NETHERLANDS-6.3%
Akzo Nobel NV 35,800 4,905,697
Fortis Amev NV 70,304 3,130,090
Hoogovens & Staalf Cva 34,137 1,902,427
Hunter Douglas NV 16,250 1,382,405
International Nederlanden Groep NV 73,903 3,407,031
Koninklijke KNP BT NV 69,200 1,575,720
Stork NV 34,000 1,385,588
Vendex International NV 23,860 1,306,605
------------
18,995,563
NEW ZEALAND-0.3%
Fletcher Challenge, Ltd.-Forestry Division 197,017 286,383
Lion Nathan, Ltd. 245,000 620,733
------------
907,116
NORWAY-1.2%
Bergesen D.Y. AS Cl. A 71,400 1,697,006
Den Norske Bank Series A 271,000 1,062,398
Orkla AS Cl. A 12,400 916,336
------------
3,675,740
10
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
PHILIPPINES-0.2%
Manila Electric Co. Cl. B 110,300 $ 543,638
Philippine Commerce International Bank 10,070 97,356
------------
640,994
PORTUGAL-0.7%
Electricidade de Portugal 114,080 2,072,427
SINGAPORE-1.5%
Development Bank Of Singapore 24,000 302,161
Overseas-Chinese Banking Corp., Ltd. 127,200 1,316,752
Overseas Union Bank 171,600 1,068,224
Singapore Airlines, Ltd. 20,000 179,059
Singapore Press Holdings., Ltd. 87,000 1,752,535
------------
4,618,731
SOUTH KOREA-0.9%
Korea Electric Power Corp. (common) 15,290 456,289
(ADR) 6,400 119,600
Pohang Iron & Steel Co. (ADR) 20,000 640,000
SK Telecom Co. Ltd., (ADR) 158,923 1,599,163
------------
2,815,052
SPAIN-2.4%
Banco de Santander 39,000 1,201,409
Banco Bilboa Vizcaya 24,000 1,949,287
Tabacalera, S.A. Series A 28,800 1,545,750
Telefonica de Espana 74,000 2,139,004
Unidad Editorial, S.A. (a)(d) 297,500 322,981
------------
7,158,431
SWEDEN-1.1%
Astra AB Series A 54,133 1,009,360
Sparbanken Sverige AB Series A 61,700 1,374,154
Trygg-Hansa Holdings AB Series B 49,500 990,274
------------
3,373,788
SWITZERLAND-5.1%
Baloise Holdings, Ltd. 830 1,977,679
Ciba Specialty Chemical Holding (a) 24,299 2,246,056
Holderbank Financiere Glarus-B 1,810 1,708,997
Nestle, S.A. 1,530 2,017,651
Novartis AG (a) 2,499 3,993,609
Schindler Holdings AG 970 1,212,085
REGD 700 898,665
Zurich Vericher Namen 2,860 1,137,734
------------
15,192,476
THAILAND-0.0%
The Thai Farmers Bank
warrants expiring 9/15/02 (a) 5,625 2,443
UNITED KINGDOM-16.8%
Anglian Water Plc. 168,000 1,822,047
BAA Plc. 216,400 1,993,934
Bass Plc. 238,000 2,904,136
Beazer Holmes Plc. 500,000 1,365,054
Bg Plc. 246,000 900,936
Boots Co. Plc. 98,300 1,151,207
BPB Industries Plc. 670,000 3,619,308
British Aerospace Plc. 65,000 1,446,167
British Petroleum Plc. 63,242 786,434
British Telecommunications Plc. 250,000 1,856,140
BTR Plc. 273,000 933,922
Cable & Wireless 2,229 20,408
Carlton Communications 171,000 1,444,668
Compass Group Plc. 186,400 2,085,217
General Accident Plc. 58,000 844,835
Guinness Plc. 156,000 1,526,996
Holliday Chemical Holdings Plc. 903,800 2,136,469
Kingfisher Plc. 100,193 1,137,517
Ladbroke Group Plc. 727,389 2,857,687
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Powergen Plc. 147,805 $ 1,756,804
Royal & Sun Alliance Insurance 123,980 916,369
Rugby Group Plc. 712,870 1,424,058
Scottish & Newcastle Plc. 132,000 1,419,523
Scottish Power Plc. 290,000 1,882,776
Shell Transport & Trading Plc. 266,700 1,818,080
Siebe Plc. 90,000 1,525,198
TI Group Plc. 159,000 1,385,638
Tomkins Plc. 546,000 2,363,208
United Assurance Group Plc. 94,000 668,960
United News & Media, Inc. 130,714 1,515,581
Vodafone Group Plc. 254,000 1,238,903
Whitbread A Plc. 120,000 1,515,210
------------
50,263,390
VENEZUELA-0.7%
Cia Anonima Tel De Venezuela (ADR) 46,000 1,983,750
OTHER-0.2%
Asesores Bursatiles Capital
Fund N.V. (a)(d) 25 517,467
Total Common Stocks and Other Investments
(cost $253,444,079) 289,936,454
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-0.6%
JAPAN-0.6%
Sumitomo Bank International
.75%, 5/31/01 JPY 166,000 $ 1,857,560
MALAYSIA-0.0%
AMMB Holdings Berhad
5.00%, 12/31/02 MYR 100 33,875
7.50%, 12/31/02 100 35,856
------------
69,731
Total Corporate Debt Obligations
(cost $1,601,468) 1,927,291
TIME DEPOSIT-4.0%
Sumitomo Bank
6.38%, 7/01/97
(cost $12,000,000) $12,000 12,000,000
TOTAL INVESTMENTS-101.3%
(cost $267,045,547) 303,863,745
Other assets less liabilities-(1.3%) (4,000,984)
NET ASSETS-100% $299,862,761
(a) Non-income producing security.
(b) Securities or portion thereof, with an aggregate market value of
$21,453,836 have been segregated to collateralize forward exchange currency
contracts.
(c) Securities are exempt from Registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1997,
these securities amounted to $1,810,953 or .60% of net assets.
(d) Restricted and illiquid securities valued at fair value (See Notes A & F).
Glossary of Terms:
ADR - American depository receipt.
GDR - Global depository receipt.
See notes to financial statements.
12
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $267,045,547) $303,863,745
Cash, at value (cost $4,196,146) 4,190,702
Receivable for shares of beneficial interest sold 856,976
Dividends and interest receivable 722,794
Foreign taxes receivable 475,579
Unrealized appreciation of forward exchange
currency contract 189,483
Receivable for investment securities sold 3,151
Total assets 310,302,430
LIABILITIES
Payable for investment securities purchased 7,363,013
Payable for shares of beneficial interest redeemed 1,948,350
Advisory fee payable 751,221
Distribution fee payable 108,401
Accrued expenses 268,684
Total liabilities 10,439,669
NET ASSETS $299,862,761
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 163,430
Additional paid-in capital 253,135,854
Undistributed net investment income 91,546
Accumulated net realized gain on investments and foreign
currency transactions 9,493,804
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 36,978,127
$299,862,761
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($190,173,505/10,177,198 shares of beneficial interest
issued and outstanding) $18.69
Sales charge--4.25% of public offering price .83
Maximum offering price $19.52
CLASS B SHARES
Net asset value and offering price per share
($77,724,738/4,387,957 shares of beneficial interest
issued and outstanding) $17.71
CLASS C SHARES
Net asset value and offering price per share
($23,267,990 / 1,312,100 shares of beneficial interest
issued and outstanding) $17.73
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($8,696,528 / 465,787 shares of beneficial interest issued
and outstanding) $18.67
See notes to financial statements.
13
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $724,747) $5,488,691
Interest 376,390 $ 5,865,081
EXPENSES
Advisory fee 2,891,923
Distribution fee - Class A 317,907
Distribution fee - Class B 718,023
Distribution fee - Class C 236,671
Custodian 571,404
Transfer agency 536,696
Administrative 132,740
Audit and legal 119,568
Printing 92,132
Registration 74,759
Trustees' fees 32,000
Miscellaneous 40,413
Total expenses 5,764,236
Less: expense offset arrangement (see Note B) (35,913)
Net expenses 5,728,323
Net investment income 136,758
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 12,024,059
Net realized loss on foreign currency transactions (921,021)
Net change in unrealized appreciation of:
Investments 13,238,295
Foreign currency denominated assets and liabilities 450,403
Net gain on investments and foreign currency transactions 24,791,736
NET INCREASE IN NET ASSETS FROM OPERATIONS $24,928,494
See notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1997 JUNE 30, 1996
------------- --------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 136,758 $ 178,791
Net realized gain on investments and
foreign currency transactions 11,103,038 21,749,149
Net change in unrealized appreciation
of investments and foreign currency
denominated assets and liabilities 13,688,698 15,186,325
Net increase in net assets from operations 24,928,494 37,114,265
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,212,031) -0-
Advisor Class (6,456) -0-
Net realized gain on investments and
foreign currency transactions
Class A (11,329,853) (10,091,198)
Class B (4,543,388) (3,210,459)
Class C (1,515,641) (1,293,154)
Advisor Class (47,863) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (2,106,765) 39,204,333
Total increase 4,166,497 61,723,787
NET ASSETS
Beginning of year 295,696,264 233,972,477
End of year (including undistributed net
investment income of $91,546 and $178,791,
respectively) $299,862,761 $295,696,264
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 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, Class C, and Advisor Class shares. Class A shares are sold with a
front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000.
With respect to purchases of $1,000,000 or more, Class A shares redeemed within
one year of purchase will be subject to a contingent deferred sales charge of
1%. Class B shares are 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 subject to a
contingent deferred sales charge of 1% on redemptions made within the first
year after purchase. Advisor Class shares are sold without an initial or
contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in fee
based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a 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 unless this method does not
reflect fair value. Restricted and illiquid securities are valued at fair value
as determined by the Board of Trustees. In determining fair value,
consideration is given to cost, operations 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 represent gains and losses from sales and
maturities of debt securities, holding of foreign currency contracts, foreign
currencies, exchange gains and 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 INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts on short-term securities as adjustments
to interest income.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
16
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to foreign currency losses offset by gains on passive foreign
investment companies, resulted in a net increase in undistributed net
investment income, a decrease in accumulated net realized gain on investments
and foreign currency transactions and a decrease in additional paid-in capital.
This reclassification had no affect on net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under an investment advisory agreement, the Fund pays 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. Effective July 1, 1997 the Adviser has
voluntarily agreed to waive unilaterally, for a minimum of two years, that
portion of the Fund's advisory fee on the first $500 million of net assets in
excess of the annualized rate of .85 of 1%. Pursuant to the advisory agreement,
the Fund paid $132,740 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, 1997.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $344,718 for the year ended June 30, 1997.
In addition, for the year ended June 30, 1997, the Fund's expenses were reduced
by $35,913 under an expense offset arrangement with Alliance Fund Services.
Transfer Agency fees reported in the statement of operations exclude these
credits.
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 $12,581 from the sale of Class A shares and $139,
$157,738, and $2,605 in contingent deferred sales charges from the redemptions
of Class A, Class B and Class C shares, respectively for the year ended June
30, 1997.
Brokerage commissions paid on investment transactions for the year ended June
30, 1997, amounted to $2,289,060, 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 Class A
shares and 1% of the average daily net assets attributable to the Class B and
Class C shares. There is no distribution fee on the Advisor Class shares. The
fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amount of
$2,548,113 and $798,577, for Class B and Class C shares, respectively; such
costs may be recovered from the Fund in future periods so long as the Agreement
is in effect. In accordance with the Agreement, there is no provision for
recovery of unreimbursed distribution costs, incurred by the Distributor,
beyond the current fiscal year for Class A shares. The Agreement also provides
that the Adviser may use its own resources to finance the distribution of the
Fund's shares.
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term and U.S.
government securities) aggregated $258,925,701 and $273,638,552, respectively,
for the year ended June 30, 1997. There were no purchases or sales of U.S.
government or government agency obligations for the year ended June 30, 1997.
At June 30, 1997, the cost of investments for federal income tax purposes was
$268,904,263. Accordingly, gross unrealized appreciation of investments was
$43,259,196 and gross unrealized depreciation of investments was $8,299,714,
resulting in net unrealized appreciation of $34,959,482, excluding foreign
currency.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward foreign exchange currency contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings and to hedge certain firm purchase and sale commitments
denominated in foreign currencies. A forward foreign 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 contract and the closing of such contract is included in net
realized gain or loss on foreign currency transactions. Fluctuations in the
value of open forward foreign exchange currency contracts are recorded for
financial reporting purposes as unrealized gains or losses.
The Fund's custodian will place and maintain cash not available for investment
or liquid assets having a value equal to the aggregate amount of the Fund's
commitments under forward foreign 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 June 30, 1997, the Fund had an outstanding forward foreign exchange currency
contract as follows:
CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
------------ ------------ ------------ ------------
FOREIGN CURRENCY
SALE CONTRACT
French Franc
maturing 9/05/97 123,500 $21,296,775 $21,107,292 $189,483
NOTE E: SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $.01 par value shares of beneficial interest
authorized, divided into four classes, designated Class A, Class B, Class C and
Advisor Class. Transactions in shares of beneficial interest were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 6,622,075 3,791,114 $114,715,975 $ 66,200,675
Shares issued in
reinvestment of
dividends and
distributions 663,141 532,927 11,054,555 8,899,875
Shares converted
from Class B 117,002 29,264 2,047,012 529,368
Shares redeemed (7,939,629) (3,488,059) (137,402,166) (60,868,130)
Net increase
(decrease) (537,411) 865,246 $ (9,584,624) $ 14,761,788
18
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS B
Shares sold 2,125,113 2,178,890 $ 5,155,961 $ 36,316,916
Shares issued in
reinvestment of
distributions 214,830 141,372 3,409,345 2,259,131
Shares converted
to Class A (123,261) (30,710) (2,047,012) (529,368)
Shares redeemed (1,982,904) (1,161,885) (32,750,197) (19,416,822)
Net increase 233,778 1,127,667 $ 3,768,097 $ 18,629,857
CLASS C
Shares sold 1,792,800 1,333,369 $ 29,797,881 $ 22,186,419
Shares issued in
reinvestment of
distributions 50,633 49,344 804,053 789,018
Shares redeemed (2,075,557) (1,035,865) (34,583,108) (17,162,749)
Net increase
(decrease) (232,124) 346,848 $ (3,981,174) $ 5,812,688
OCT. 2, 1996(A) OCT. 2, 1996(A)
TO JUNE 30, TO JUNE 30,
1997 1997
------------ --------------
ADVISOR CLASS
Shares sold 501,850 $ 8,317,799
Shares issued in
reinvestment of
dividends and
distributions 2,960 49,249
Shares redeemed (39,023) (676,112)
Net increase 465,787 $ 7,690,936
NOTE F: RESTRICTED AND ILLIQUID SECURITIES
DATE
SECURITY ACQUIRED U.S. $ COST
- -------- -------- -----------
Asesores Bursatiles Capital Fund NV 10/29/90 $1,066,499
Unidad Editorial, S.A 1/20/92 369,591
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with procedures described in Note A. The value of
these securities at June 30, 1997 was $840,448 representing 0.3% of net assets.
(a) Commencement of distribution.
19
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,
----------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $18.32 $16.81 $18.38 $16.01 $14.98
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) .06(a) .05(a) .04 (.09) (.01)
Net realized and unrealized gain on
investments and foreign currency
transactions 1.51 2.51 .01 3.02 1.17
Net increase in net asset value from
operations 1.57 2.56 .05 2.93 1.16
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.12) -0- -0- -0- (.04)
Distributions from net realized gains
on investments and foreign currency
transactions (1.08) (1.05) (1.62) (.56) (.09)
Total dividends and distributions (1.20) (1.05) (1.62) (.56) (.13)
Net asset value, end of year $18.69 $18.32 $16.81 $18.38 $16.01
TOTAL RETURN
Total investment return(b) 9.30% 15.83% .59% 18.68% 7.86%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $190,173 $196,261 $165,584 $201,916 $161,048
Ratio of expenses to average net assets 1.74%(c) 1.72% 1.73% 1.90% 1.88%
Ratio of net investment income (loss) to
average net assets .31% .31% .26% (.50)% (.14)%
Portfolio turnover rate 94% 78% 119% 97% 94%
Average commission rate paid(d) $.0363 -- -- -- --
</TABLE>
See footnote summary on page 23.
20
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $17.45 $16.19 $17.90 $15.74 $14.81
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.09)(a) (.07)(a) (.01) (.19)(a) (.12)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.43 2.38 (.08) 2.91 1.14
Net increase (decrease) in net asset
value from operations 1.34 2.31 (.09) 2.72 1.02
LESS: DISTRIBUTIONS
Distributions from net realized gains on
investments and foreign currency
transactions (1.08) (1.05) (1.62) (.56) (.09)
Net asset value, end of year $17.71 $17.45 $16.19 $17.90 $15.74
TOTAL RETURN
Total investment return(b) 8.37% 14.87% (.22)% 17.65% 6.98%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $77,725 $72,470 $48,998 $29,943 $6,363
Ratio of expenses to average net assets 2.59%(c) 2.55% 2.57% 2.78% 2.70%
Ratio of net investment loss to average
net assets (.51)% (.46)% (.62)% (1.15)% (.96)%
Portfolio turnover rate 94% 78% 119% 97% 94%
Average commission rate paid(d) $.0363 -- -- -- --
</TABLE>
See footnote summary on page 23.
21
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------
MAY 3, 1993(E)
YEAR ENDED JUNE 30, TO
---------------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.46 $16.20 $17.91 $15.74 $15.93
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.09)(a) (.07)(a) (.14) (.11) -0-
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.44 2.38 .05 2.84 (.19)
Net increase (decrease) in net asset
value from operations 1.35 2.31 (.09) 2.73 (.19)
LESS: DISTRIBUTIONS
Distributions from net realized gains on
investments and foreign currency
transactions (1.08) (1.05) (1.62) (.56) -0-
Net asset value, end of period $17.73 $17.46 $16.20 $17.91 $15.74
TOTAL RETURN
Total investment return(b) 8.42% 14.85% (.22)% 17.72% (1.19)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $23,268 $26,965 $19,395 $13,503 $229
Ratio of expenses to average net assets 2.58%(c) 2.53% 2.54% 2.78% 2.57%(f)
Ratio of net investment income (loss)
to average assets (.51)% (.47)% (.88)% (1.12)% .08%(f)
Portfolio turnover rate 94% 78% 119% 97% 94%
Average commission rate paid(d) $.0363 -- -- -- --
</TABLE>
See footnote summary on page 23.
22
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ADVISOR CLASS
OCTOBER 2, 1996(E)
TO
JUNE 30, 1997
-------------------
Net asset value, beginning of period $17.96
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .16
Net realized and unrealized gain on investments and
foreign currency transactions 1.78
Net increase in net asset value from operations 1.94
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.15)
Distributions from net realized gains on investments
and foreign currency transactions (1.08)
Total dividends and distributions (1.23)
Net asset value, end of period $18.67
TOTAL RETURN
Total investment return(b) 11.57%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $8,697
Ratio of expenses to average net assets(c)(f) 1.69%
Rate of net investment income to average net assets(f) 1.47%
Portfolio turnover rate 94%
Average commission rate paid $.0363
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) Ratio reflects expenses grossed up for expense offset arrangement with the
transfer agent. For the year ended June 30, 1997, the net expense ratio was
1.73%, 2.58%, 2.56% and 1.69% for Class A, B, C and Advisor Class shares,
respectively.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged. This amount includes commissions paid to foreign
brokers which may materially affect the rate shown. Amounts paid in foreign
currencies have been converted into US dollars using the prevailing exchange
rate on the date of the transaction.
(e) Commencement of distribution.
(f) Annualized.
23
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, including the portfolio of investments, as of June
30, 1997, 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 the
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, 1997, 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, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the indicated
periods, in conformity with generally accepted accounting principles.
New York, New York
August 6, 1997
FOREIGN TAX CREDIT (UNAUDITED)
The Fund paid foreign taxes during the fiscal year ended June 30, 1997, which
it intends to pass through pursuant to Section 853 of the Internal Revenue Code
to its shareholders.
24
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
W.H. HENDERSON (1)
STIG HOST (1)
RICHARD M. LILLY (1)
ALAN STOGA (1)
OFFICERS
A. RAMA KRISHNA, SENIOR VICE PRESIDENT
EDWARD BAKER, VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
STEPHEN M. BEINHACKER, VICE PRESIDENT
MARK H. BREEDON, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
FRANCIS P. REEVES, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
(1) Member of Audit Committee.
25
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
26
ALLIANCE INTERNATIONAL FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
INTAR
