ALLIANCE INTERNATIONAL FUND
ANNUAL REPORT
JUNE 30, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
August 27, 1999
Dear Shareholder:
This annual report contains investment results and market activity for Alliance
International Fund (the "Fund") for the period ended June 30, 1999.
INVESTMENT RESULTS
We recently changed the Fund's benchmarks from the Morgan Stanley Capital
International (MSCI) World Index (minus the U.S.) to the MSCI Europe,
Australasia and Far East (EAFE) Index. In comparison to the MSCI World Index
(minus the U.S.), the MSCI EAFE Index has less emphasis on emerging market
countries. As the country allocations in the MSCI EAFE Index more closely match
those of the Fund, we have consequently determined that it is a more
appropriate and accurate gauge of the Fund's performance. As you can see, this
report shows your Fund's investment results as compared to both indices. The
Fund's next report (for the period ended December 31, 1999) will no longer show
the MSCI World Index (minus the U.S.).
For the six-month period ended June 30, 1999, the Alliance International Fund's
Class A shares provided a total return of 1.12%, underperforming the MSCI EAFE
Index, which returned 4.11%. Underweight positions in Japan/Asia, an overweight
position in the European Monetary Union (EMU), and a large capitalization
growth emphasis were the significant factors in the Fund's performance. For the
12-month period ended June 30, 1999, the Fund's Class A shares provided a total
return of -3.95%, while the MSCI EAFE Index returned 7.92%. An underweight
position in the Japanese stock market and stock selection in that market
depressed the Fund's performance. Additionally, the Fund's yen exposure was
hedged into dollars in the second half of 1998. During this time, the yen rose
versus the dollar. Thus, in terms of relative performance, the Fund did not
benefit from this rise in the yen while its benchmark index did benefit. Due to
the improving prospects for the Japanese economy, and hence the greater
likelihood of a stronger yen, we have removed the Fund's yen hedge.
INVESTMENT RESULTS*
Period Ended June 30, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- ------------
Alliance International Fund
Class A 1.12% -3.95%
Class B 0.73% -4.56%
Class C 0.73% -4.62%
MSCI World Index (minus the U.S.) 4.65% 7.68%
MSCI EAFE Index 4.11% 7.92%
Lipper International Funds Average 7.38% 4.84%
* TOTAL RETURNS ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS
OF JUNE 30, 1999. ALL FEES AND EXPENSES RELATED TO THE OPERATION OF THE FUND
HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY
APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. RETURNS FOR THE FUND AND ITS
COMPARATIVE BENCHMARK INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING
THE PERIOD. TOTAL RETURN FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT
EXPENSES ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS.
THE MSCI WORLD INDEX (MINUS THE U.S.) IS AN UNMANAGED, MARKET
CAPITALIZATION-WEIGHTED INDEX THAT MEASURES THE PERFORMANCE OF STOCK MARKETS IN
21 COUNTRIES OUTSIDE THE UNITED STATES. THE MSCI EAFE INDEX IS AN UNMANAGED,
MARKET CAPITALIZATION-WEIGHTED INDEX THAT MEASURES STOCK PERFORMANCE IN 20
COUNTRIES IN EUROPE, AUSTRALASIA, AND THE FAR EAST. THE BENCHMARKS ARE
UNMANAGED AND REFLECT NO FEES OR EXPENSES. THE LIPPER INTERNATIONAL FUNDS
AVERAGE FOR THE SIX- AND 12-MONTH PERIODS ENDED JUNE 30, 1999 REFLECTS THE
PERFORMANCE OF 620 AND 570 MUTUAL FUNDS, RESPECTIVELY. THESE FUNDS HAVE
GENERALLY SIMILAR INVESTMENT OBJECTIVES TO YOUR FUND, ALTHOUGH INVESTMENT
POLICIES FOR THE VARIOUS FUNDS MAY DIFFER. AN INVESTOR CANNOT INVEST DIRECTLY
IN THE INDICES OR AVERAGE.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
MARKET REVIEW
The second half of 1998 saw great volatility in equity and currency markets
around the world before a recovery late in the year which was centered (if not
exclusively located) in the United States. Equity market contractions of over
20% peppered the August to October period and led to a rapid series of interest
rate cuts by the Federal
1
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
Reserve. The U.S., in turn, fulfilled the role of importer of last resort. Thus
far, 1999 has seen economic growth spreading and now holds the prospect of a
period of global growth above potential rates.
Since the market correction last fall, U.S. growth has been surprising on the
upside and seems poised to remain strong as the manufacturing sector improves.
Historically high confidence has kept consumption racing and has ensured a huge
trade deficit, while the strength of the dollar in the first half of 1999 has
helped to hold back inflation. After negative or negligible growth in the
fourth quarter of 1998 and poor industrial confidence going into the second
quarter of 1999, we believe that confidence and growth are now set to return to
Europe. This is evidenced by the exporters who suffered in Asia and Russia in
1998 now starting to benefit from the weakness of the Euro against the dollar
and the pound. The Japanese economy gives hints of recovery and may contain
investment opportunities, but it still carries the burden of increasing
unemployment and, consequently, poor consumption. Finally, developing Asia has
bounced back on the impetus of currency devaluations and strong U.S. domestic
spending.
The U.S. bull market continued after the autumn dip, pushing the Dow Jones
Industrial Average first to the landmark figure of 10,000 points in late March
1999 and then beyond 11,000 in early May 1999. It also drove the
technology-heavy NASDAQ from under 1500 points in October of 1998 to 2700 at
the close of the first half of 1999. Asia (ex Japan) has performed even better
as confidence and funds have flooded back into that region from overseas
investors. Additionally, the Japanese Nikkei has performed very well in 1999,
and government spending and corporate restructuring seem to have inspired
investor confidence. In dollar terms, Euroland equities have seen little if any
appreciation, and the U.K. has performed only marginally better.
Low inflation kept bond yields down into 1999. The yield on 30-year U.S.
Treasury bills has since risen by 100 basis points (bps) as high growth, a
sharp rise in the price of oil, and the pronouncements and actions of the Fed
have suggested that the monetary loosening of last autumn may be reversed.
Japanese yields have been historically low as a result of severe interest rate
cuts made in attempts to boost its flagging economy. Signs that the U.K.
economy has achieved a soft landing and is now set fair for growth caused the
yield on the U.K. 10-year bond to rise by over 100 bps.
INVESTMENT OUTLOOK
The prospect of stronger economic growth in Europe, the possibility of a
bottoming of the Japanese recession, and the reality of fast and accelerating
growth in developing Asia all indicate that the global economy is improving and
that the synchro-cycle (a situation in which the majority of world economies
share similar growth trends) is returning. The most significant question which
this development will pose is whether or not the U.S. will continue to prosper
in a community of growth as it did in its magnificent isolation of world
leadership over the last year and more. If the U.S. can continue to grow
without suffering serious inflation in the absence of deflationary pressures
from abroad, then the thesis of a "new paradigm" of structurally enhanced
productivity will have been proved for all intents and purposes.
The high returns available on U.S. financial assets have attracted huge amounts
of funds from overseas investors. This influx has protected the dollar against
the depreciatory pressures of a gigantic trade deficit. The strength shown by
the dollar has meant that the benefit of both extremely low inflation in Europe
as well as deflation in Japan (which has persisted as a residue of the Asian
crisis) has been accentuated for the U.S.
We believe that improved economic performance outside the U.S. will increase
the attractions of non-U.S. equities and fixed income investments. We expect
that higher rates of growth in other regions will affect the U.S. primarily in
two ways. First, they will lead to higher import prices that will add to
inflation and hence lead to further interest rate hikes. Second, these higher
growth rates will drive the repatriation of some of the foreign investment
currently in U.S. stocks and bonds. Just as the dollar has risen in tandem with
U.S. financial assets, it may also fall as an ebb in the equity tide must
surely expose the U.S. trade deficit to market scrutiny. A weaker dollar would
only support the inflationary trend.
It would be incorrect to perceive a strict choice between a glorious "new
paradigm" and a ruinous downturn. As stated above, we expect that a degree of
compensation will be offered to a slowing U.S. economy by growth
2
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
elsewhere. We also believe that the cyclical upturn in U.S. manufacturing now
evident will not vanish in the face of a Wall Street correction. Likewise, we
expect that the extent of the upswing outside the U.S. will in its turn be
affected by the reaction it elicits in the U.S.
For the present, inflation appears to be in check in all regions. While
prospects are brighter in Europe, where export activity is returning and
consumer confidence remains strong, inflation has not risen from what is now
quite a long period of "trough." Germany and France maintain headline rates of
consumer price index (CPI) at or below 0.5%. The U.K. continues to undershoot
its target rate of 2.5% for the retail price index (RPIX). In Japan, gross
domestic product (GDP) exhibited surprising strength in the first quarter of
the year, and there are signs of increased public spending. However,
large-scale government spending through the rest of the year is discounted by
the market and deflation remains in the system. Tokyo area inflation ran at
- -0.4% in June year-on-year. Significantly, U.S. import prices fell in June for
the first time in four months. We see no sign of an immediate enactment of the
inflationary story set out above. We believe that the degree and timing of
inflationary developments will be important in determining prospects for the
world economy and the extent of divergence between different economic zones.
In our view, it is reasonable to speculate that in a scenario of U.S. market
correction, growth stocks would be at most risk. Industrials and other
cyclicals would benefit from increasing world growth and from the benign effect
of a weaker dollar on exports. Were this scenario to unfold, we would
anticipate that internet service stocks would be hit particularly hard. Around
90% of internet users are U.S. based, and therefore we believe that this sector
would suffer the full effect of any consumer spending reversal consequent on an
inflation-led market correction. Additionally, the American public currently
has a negative savings ratio.
Recent appreciation of the Euro against the dollar has tended to confirm our
suspicion that a great deal of the Euro's slide was cyclical. We believe that
at this point it is the dollar that carries most of the downside risk. European
growth is set to improve in the second half of the year. The deutschemark is
currently trading close to its lowest level against the dollar since the late
1980s. If one accepts that a fall in U.S. equity prices would be accompanied by
a fall in the dollar, then it must follow that a return to the synchro-cycle
would give double benefits to non-dollar denominated investments.
INVESTMENT REVIEW
During the period under review, the Fund continued to maintain a relatively
stable weighting in technology. The Fund's total investments in areas such as
utilities, finance, energy, consumer services, and consumer manufacturing were
increased during the period under review, while the Fund's positions in sectors
such as basic industries, consumer staples, and healthcare were decreased.
The Fund currently has an overweight exposure to the Japanese market. This is
due to our expectations for economic stabilization, as well as an accelerated
rate of corporate restructuring.
INDUSTRIAL AND GEOGRAPHIC BREAKDOWNS AS OF JUNE 30, 1999*
Aerospace & Defense: 0.4%
Basic Industries: 2.0%
Capital Goods: 5.7%
Consumer Manufacturing: 13.4%
Consumer Services: 13.7%
Consumer Staples: 6.0%
Energy: 5.7%
Finance: 25.4%
Healthcare: 8.9%
Multi-Industry: 4.1%
Technology: 7.9%
Utilities: 6.8%
Australia: 4.5%
Finland: 3.6%
France: 10.3%
Germany: 6.4%
Hong Kong: 2.1%
Ireland: 0.5%
Italy: 2.7%
Japan: 25.6%
The Netherlands: 7.0%
Singapore: 0.2%
Spain: 1.8%
Sweden: 3.5%
Switzerland: 4.4%
United Kingdom: 23.6%
Other: 3.8%
* EXPRESSED AS A PERCENTAGE OF TOTAL INVESTMENTS.
3
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
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
Bruce W. Calvert
Senior Vice President
Nicholas D. Carn
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.
4
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
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -3.95% -8.02%
Five Years 5.49% 4.57%
Ten Years 5.43% 4.97%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -4.56% -8.05%
Five Years 4.65% 4.65%
Since Inception* (a) 5.30% 5.30%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -4.62% -5.49%
Five Years 4.64% 4.64%
Since Inception* 6.33% 6.33%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1%
year 4); and for Class C shares (1% year 1). Returns for Class A shares do not
reflect the imposition of the 1 year 1% contingent deferred sales charge for
accounts over $1,000,000. Total return for Advisor Class shares will differ due
to different expenses associated with that class.
SEC average annual total returns for the periods shown reflect reinvestment of
all distributions and deduction of the maximum 4.25% front-end sales charges
and applicable contingent deferred sales charges.
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.
(a) Assumes conversion of Class B shares into Class A shares after 8 years.
5
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
ALLIANCE INTERNATIONAL FUND
GROWTH OF A $10,000 INVESTMENT
6/30/89 TO 6/30/99
$25,000
$20,000
$15,000
$10,000
$5,000
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 6/30/98 6/30/99
Lipper International Funds Average: $24,590
MSCI World Index (minus the U.S.): $19,627
MSCI EAFE Index: $19,523
International Fund Class A: $16,239
This chart illustrates the total value of an assumed $10,000 investment in
Alliance International Fund Class A shares (from 6/30/89 to 6/30/99) as
compared to the performance of appropriate broad-based indices. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains. Performance for Class B, Class C and Advisor Class shares will
vary from the results shown above due to differences in expenses charged to
those classes. Past performance is not indicative of future results, and is not
representative of future gain or loss in capital value or dividend income.
The Morgan Stanley Capital International (MSCI) 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 Morgan Stanely Capital International (MSCI) Europe, Australasia and Far
East (EAFE) Index is an unmanaged, market-capitalization-weighted index that
measures stock performance in 20 countries in Europe, Australasia, and the Far
East.
The Lipper International Funds Average reflects performance of 38 funds (based
on the number of funds in the average from 6/30/89 to 6/30/99). These funds
have 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 indices and average shown
above, you should note that no charges or expenses are reflected in the
performance of the indices. Lipper results include fees and expenses.
Alliance International Fund
Lipper International Funds Average
MSCI World Index (minus the U.S.)
MSCI EAFE Index
6
TEN LARGEST HOLDINGS
JUNE 30, 1999 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
NTT Mobile Communications Network, Inc.--
Provides various telecommunication services
including cellular phones and pagers. $5,438,174 2.9%
Yamanouchi Pharmaceutical Co., Ltd.--
Markets and manufactures pharmaceuticals
for both human and veterinary use. 5,014,924 2.7
Nokia Oyj Corp. Series A--Develops and
manufactures mobile phones, networks, and
systems for cellular and fixed networks. 4,975,978 2.7
Vodafone AirTouch Plc.--Provides mobile
telecommunications services, including
paging, digital and cellular telephones. 4,386,333 2.4
UBS AG--Attracts deposits and offers retail,
corporate and private banking services. 4,347,444 2.4
Bank of Tokyo-Mitsubishi, Ltd.--Provides a
broad range of financial services to
businesses, government, and private
individuals. 4,174,121 2.3
Honda Motor Co., Ltd.--Develops, manufactures,
distributes and finances motorcycles,
automobiles and power products worldwide. 4,156,765 2.2
SmithKline Beecham Plc.--Discovers, develops,
manufactures and markets pharmaceuticals,
vaccines, and health related consumer
products. 3,949,915 2.1
HSBC Holdings Plc.--Holding company for the
HSBC Group which provides a broad range of
financial services to retail and corporate
clients. 3,715,560 2.0
BP Amoco Plc.--Explores for and produces oil
and and natural gas; refines, markets, and
supplies petroleum products and
manufactures chemicals. 3,500,493 1.9
$43,659,707 23.6%
7
SECTOR DIVERSIFICATION
JUNE 30, 1999 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Aerospace & Defense $ 690,851 0.4%
Basic Industries 3,486,759 1.9
Capital Goods 9,725,439 5.3
Consumer Manufacturing 22,948,875 12.4
Consumer Services 23,366,214 12.6
Consumer Staples 10,246,155 5.6
Energy 9,661,959 5.2
Finance 43,265,610 23.4
Healthcare 15,139,982 8.2
Multi Industry 6,975,200 3.8
Technology 13,382,589 7.2
Utilities 11,639,395 6.3
Total Investments* 170,529,028 92.3
Cash and receivables, net of liabilities 14,322,995 7.7
Net Assets $184,852,023 100.0%
* Excludes short-term obligations.
8
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-92.3%
AUSTRALIA-4.3%
Broken Hill Proprietary
Co., Ltd. 30,268 $ 350,152
Coles Myer, Ltd. 105,482 612,917
Lend Lease Corp., Ltd. 46,418 636,491
National Australia Bank,
Ltd. 132,500 2,189,728
The News Corp., Ltd. 89,309 760,996
Telstra Corp., Ltd. 603,800 3,455,372
------------
8,005,656
FINLAND-3.5%
Nokia Oyj Corp. Series A 56,800 4,975,978
UPM-Kymmene Oyj 51,500 1,475,582
------------
6,451,560
FRANCE-9.9%
Accor, SA 2,850 715,245
Alcatel 3,610 507,868
Alstrom (a) 37,440 1,176,920
Banque Nationale de Paris 10,720 892,724
Carrefour, SA 6,200 910,579
Castorama Dubois
Investisse 3,340 791,745
Compagnie de Saint
Gobain 10,550 1,679,934
Compagnie Francaise
d'Etudes et de
Construction
(Technip S.A.) 11,610 1,301,884
France Telecom, SA 11,480 866,684
Lafarge, SA 8,030 763,058
Sanofi-Synthelabo, SA (a) 56,950 2,415,321
Schneider Electric, SA 14,330 804,184
Societe Generale Cl. A 15,110 2,661,447
Total Fina, SA 8,950 1,153,962
Usinor, SA (a) 41,080 611,800
Valeo, SA ADR 11,630 959,491
------------
18,212,846
GERMANY-6.1%
Bayer AG 30,940 1,288,288
DaimlerChrysler AG 34,610 2,996,347
Deutsche Bank AG 23,250 1,417,389
Deutsche Lufthansa AG 40,210 728,558
Deutsche Telekom AG 30,670 1,286,528
HypoVereinsbank 9,130 592,820
Mannesmann AG (a) 15,550 2,319,050
Volkswagen AG 10,490 671,395
------------
11,300,375
HONG KONG-2.0%
Cathay Pacific Airways 298,000 457,067
Cheung Kong (Holdings),
Ltd. 50,000 444,668
Citic Pacific, Ltd. 280,000 893,202
Hang Seng Bank, Ltd. 46,000 514,333
Hong Kong
Telecommunications 172,800 447,668
Hutchison Whampoa,
Ltd. 53,000 479,887
Sun Hung Kai Properties,
Ltd. 57,000 519,778
------------
3,756,603
IRELAND-0.5%
CRH Plc. 48,200 854,450
ITALY-2.6%
Banca Commerciale
Italiana 206,000 1,503,183
ENI SpA (a) 391,000 2,333,278
Unicredito Italiano SpA 201,000 882,504
------------
4,718,965
JAPAN-24.6%
Alps Electric Co., Ltd. 29,000 679,772
Bank of Tokyo-Mitsubishi,
Ltd. 293,000 4,174,121
Bridgestone Corp. 110,000 3,328,786
Canon, Inc. 114,000 3,280,169
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Denso Corp. 56,000 $ 1,139,030
Fuji Bank, Ltd. 288,000 2,009,773
Honda Motor Co.,
Ltd. 98,000 4,156,765
KAO Corp. 94,000 2,642,523
NTT Mobile
Communications
Network, Inc. 81 1,098,350
New Shares (a) 324 4,339,824
Orix Corp. 15,000 1,339,452
Rohm Co., Ltd. 14,000 2,193,559
Sankyo Co., Ltd. 40,000 1,914,920
Sony Corp. 28,000 3,021,208
Takeda Chemical
Industries 47,000 2,180,082
Tokyo Electron, Ltd. 18,000 1,221,878
Toyota Motor Corp. 53,000 1,678,366
Yamanouchi
Pharmaceutical Co.,
Ltd. 131,000 5,014,924
------------
45,413,502
NETHERLANDS-6.7%
ABN AMRO Holdings
NV 84,900 1,837,546
Aegon NV 8,300 601,802
Akzo Nobel NV 17,000 714,859
ING Groep NV 57,845 3,129,942
Koninklijke Ahold NV 75,232 2,589,765
Royal Dutch Petroleum
Co. 39,700 2,324,074
Wolters Kluwer NV 30,900 1,229,297
------------
12,427,285
SINGAPORE-0.2%
Singapore Telecomm 229,000 392,879
SPAIN-1.7%
Banco Bilbao Vizcaya,
SA 77,200 1,114,722
Telefonica, SA 36,400 1,752,356
Unidad Editorial, SA
Series A (b) 135,229 278,748
------------
3,145,826
SWEDEN-3.4%
ABB, Ltd. Zurich 21,734 2,035,906
Atlas Copco AB Cl. A 22,600 616,468
Electrolux AB Series B 71,100 1,491,216
Nordbanken Holding AB 270,600 1,584,656
Telefonaktiebolaget LM
Ericsson Series B 16,300 523,365
------------
6,251,611
SWITZERLAND-4.2%
Nestle AG 424 764,089
Novartis AG 75 109,535
Roche Holdings AG 143 1,470,205
Swisscom AG 1,405 528,807
UBS AG 14,563 4,347,444
Zurich Allied AG 1,028 584,670
------------
7,804,750
UNITED KINGDOM-22.6%
Blue Circle Industries
Plc. 52,000 345,925
BOC Group Plc. 44,600 871,812
BP Amoco Plc. 195,300 3,500,493
British Aerospace Plc. 106,435 690,851
British Airways Plc. 157,700 1,088,239
British Sky Broadcasting
Group Plc. 98,600 914,723
British Telecommunications
Plc. 148,600 2,490,110
Cable & Wireless Plc. 63,700 811,869
Diageo Plc. 178,445 1,863,617
Dixons Group Plc. 41,000 765,894
Hanson Plc. 165,600 1,471,027
HSBC Holdings Plc. 104,895 3,715,560
Invensys Plc. 155,800 737,424
Lloyds TSB Group Plc. 173,568 2,353,068
Next Plc. 60,800 738,487
Orange Plc. (a) 150,000 2,199,078
Rentokil Initial Plc. 120,100 468,581
Reuters Group Plc. 60,200 791,935
Royal & Sun Alliance
Insurance Group Plc. 92,809 832,470
Royal Bank of Scotland
Group Plc. 121,511 2,474,825
10
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
SmithKline Beecham
Plc. 303,900 $ 3,949,915
Standard Chartered Plc. 92,600 1,512,297
TI Group Plc 88,100 590,244
Vodafone AirTouch Plc. 222,600 4,386,333
Williams Plc. 228,700 1,510,590
Wolseley Plc. 95,300 717,353
------------
41,792,720
Total Common Stocks
(cost $156,268,678) 170,529,028
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
TIME DEPOSIT-3.6%
Bank of Scotland
5.75%, 7/01/99
(cost $6,700,000) $6,700 $ 6,700,000
TOTAL INVESTMENTS-95.9%
(cost $162,968,678) 177,229,028
Other assets less
liabilities-4.1% 7,622,995
NET ASSETS-100% $ 184,852,023
(a) Non-income producing security.
(b) Restricted and illiquid security valued at fair value (See Notes A & F).
Glossary:
ADR-American Depositary Receipt.
See notes to financial statements.
11
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $162,968,678) $ 177,229,028
Cash 52,493
Foreign cash (cost $2,612,780) 2,611,842
Receivable for shares of beneficial interest sold 4,484,099
Receivable for investment securities sold 1,588,526
Dividends and interest receivable 339,519
Foreign taxes receivable 202,362
Total assets 186,507,869
LIABILITIES
Payable for shares of beneficial interest redeemed 852,696
Advisory fee payable 385,751
Distribution fee payable 74,791
Accrued expenses 342,608
Total liabilities 1,655,846
NET ASSETS $ 184,852,023
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 116,917
Additional paid-in capital 163,551,084
Distributions in excess of net investment income (4,351,471)
Accumulated net realized gain on investments and foreign
currency transactions 11,308,769
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 14,226,724
$ 184,852,023
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($78,303,071/4,820,642 shares of beneficial interest
issued and outstanding) $16.24
Sales Charge--4.25% of public offering price .72
Maximum offering price $16.96
CLASS B SHARES
Net asset value and offering price per share
($55,724,390/3,669,013 shares of beneficial interest
issued and outstanding) $15.19
CLASS C SHARES
Net asset value and offering price per share
($16,875,547/1,111,247 shares of beneficial interest
issued and outstanding) $15.19
ADVISOR CLASS SHARES
Net asset value, redemption, and offering price per share
($33,949,015/2,090,761 shares of beneficial interest
issued and outstanding) $16.24
See notes to financial statements.
12
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1999 ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $235,033) $ 2,742,190
Interest 404,487 $ 3,146,677
EXPENSES
Advisory fee 1,921,758
Distribution fee - Class A 203,936
Distribution fee - Class B 605,982
Distribution fee - Class C 176,452
Transfer agency 643,540
Custodian 492,090
Administrative 128,000
Audit and legal 86,859
Printing 83,844
Registration 64,896
Trustees' fees 34,000
Miscellaneous 48,228
Total expenses 4,489,585
Less: expenses waived by adviser (See Note B) (288,263)
Less: expense offset arrangement (See Note B) (40,772)
Net expenses 4,160,550
Net investment loss (1,013,873)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 15,742,526
Net realized loss on foreign currency
transactions (2,417,416)
Net change in unrealized appreciation of:
Investments (21,675,247)
Foreign currency denominated assets and
liabilities (36,663)
Net loss on investments and foreign currency
transactions (8,386,800)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(9,400,673)
See notes to financial statements.
13
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1999 1998
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (1,013,873) $ (858,571)
Net realized gain on investments and
foreign currency transactions 13,325,110 22,105,436
Net change in unrealized appreciation of
investments and foreign currency
denominated assets and liabilities (21,711,910) (1,039,493)
Net increase (decrease) in net assets
from operations (9,400,673) 20,207,372
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Advisor Class (12,533) (58,965)
Distributions in excess of net
investment income
Class A (2,466,071) (340,015)
Class B (1,292,716) -0-
Class C (380,642) -0-
Advisor Class (1,004,112) (106,007)
Net realized gain on investments and
foreign currency transactions
Class A (5,415,223) (8,564,124)
Class B (4,025,046) (5,015,932)
Class C (1,185,184) (1,492,502)
Advisor Class (2,031,445) (2,849,305)
CAPITAL STOCK TRANSACTIONS
Net decrease (58,451,640) (31,125,975)
Total decrease (85,665,285) (29,345,453)
NET ASSETS
Beginning of year 270,517,308 299,862,761
End of year $ 184,852,023 $ 270,517,308
See notes to financial statements.
14
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 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 may 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 financial statements have
been prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked price on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked price. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Trustees. Fixed income securities may be valued on the basis of prices
obtained from a pricing service when such prices are believed to reflect the
fair market value of such securities.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated 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 gains and 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 any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
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. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisor Class shares have no distribution fees.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to foreign currency transactions and passive foreign investment
company securities, resulted in a net increase in accumulated net realized gain
on investments and foreign currency transactions and a corresponding decrease
in undistributed net investment income. This reclassification had no effect 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. The Adviser has agreed to waive that
portion of its advisory fee on the first $500 million of the quarter end net
assets in excess of the annualized rate of .85 of 1%. For the year ended June
30, 1999, such waiver amounted to $288,263. Pursuant to the advisory agreement,
the Fund paid $128,000 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, 1999.
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 $437,153 for the year ended June 30, 1999.
For the year ended June 30, 1999, the Fund's expenses were reduced by $40,772
under an expense offset arrangement with Alliance Fund Services.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Fund's shares. The Distributor
has advised the Fund that it has received front-end sales charges of $24,411
from the sale of Class A shares and $1,787, $117,118 and $3,102 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class A,
Class B and Class C shares, respectively, for the year ended June 30, 1999.
Brokerage commissions paid on investment transactions for the year ended June
30, 1999, amounted to $1,776,578, 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
16
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has advised the Fund that it has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $2,540,605 and
$897,069 for Class B and Class C shares, respectively; such costs may be
recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs, incurred by the Distributor, beyond the
current fiscal year for Class A shares. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of the Fund's
shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term and U.S.
government securities) aggregated $344,081,564 and $431,134,890, respectively,
for the year ended June 30, 1999. There were no purchases or sales of U.S.
government or government agency obligations for the year ended June 30, 1999.
At June 30, 1999, the cost of investments for federal income tax purposes was
$163,730,870. Accordingly, gross unrealized appreciation of investments was
$19,732,650 and gross unrealized depreciation of investments was $6,234,492
resulting in net unrealized appreciation of $13,498,158 excluding foreign
currency transactions.
The Fund incurred and elected to defer post October currency losses of
$3,325,636 for the year ended June 30, 1999.
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 by the Fund.
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, 1999, the Fund had no outstanding forward foreign exchange currency
contracts.
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
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, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
------------- ------------ ------------- --------------
CLASS A
Shares sold 8,095,562 24,484,292 $ 133,167,300 $ 429,262,692
Shares issued in
reinvestment of
dividends and
distributions 379,772 434,528 5,935,837 7,195,776
Shares converted
from Class B 154,134 135,142 2,508,206 2,418,317
Shares redeemed (10,902,963) (28,137,023) (184,030,407) (501,332,312)
Net decrease (2,273,495) (3,083,061) $ (42,419,064) $ (62,455,527)
CLASS B
Shares sold 3,108,211 5,858,963 $ 47,482,116 $ 98,173,143
Shares issued in
reinvestment of
distributions 292,363 253,584 4,291,892 3,960,979
Shares converted
to Class A (164,485) (143,173) (2,508,206) (2,422,365)
Shares redeemed (3,665,527) (6,258,880) (55,976,156) (105,349,658)
Net decrease (429,438) (289,506) $ (6,710,354) $ (5,637,901)
CLASS C
Shares sold 1,169,171 1,285,146 $ 17,757,212 $ 21,956,475
Shares issued in
reinvestment of
distributions 70,803 55,617 1,039,382 869,855
Shares redeemed (1,301,270) (1,480,320) (19,773,912) (25,121,032)
Net decrease (61,296) (139,557) $ (977,318) $ (2,294,702)
ADVISOR CLASS
Shares sold 1,362,048 2,988,364 $ 21,447,816 $ 56,300,890
Shares issued in
reinvestment of
dividends and
distributions 194,675 181,876 3,036,923 3,008,222
Shares redeemed (2,009,157) (1,092,832) (32,829,643) (20,046,957)
Net increase
(decrease) (452,434) 2,077,408 $ (8,344,904) $ 39,262,155
NOTE F: RESTRICTED SECURITY
DATE
SECURITY ACQUIRED U.S. $ COST
- -------------------------------------------------------------------------------
Unidad Editorial, SA Series A 1/20/92 $167,998
The security shown above is restricted as to sale and has been valued at fair
value in accordance with procedures described in Note A. The value of this
security at June 30, 1999 was $278,748 representing .2% of net assets.
18
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
NOTE G: CONCENTRATION OF RISK
Investing in securities of foreign companies involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies and their markets may be less liquid and their prices
more volatile than those of United States companies.
NOTE H: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended June 30, 1999.
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,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $18.55 $18.69 $18.32 $16.81 $18.38
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.04)(a)(b) (.01)(a)(b) .06(a) .05(a) .04
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.75) 1.13 1.51 2.51 .01
Net increase (decrease) in net asset
value from operations (.79) 1.12 1.57 2.56 .05
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- (.12) -0- -0-
Distributions in excess of net investment
income (.48) (.05) -0- -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions (1.04) (1.21) (1.08) (1.05) (1.62)
Total dividends and distributions (1.52) (1.26) (1.20) (1.05) (1.62)
Net asset value, end of year $16.24 $18.55 $18.69 $18.32 $16.81
TOTAL RETURN
Total investment return(c) (3.95)% 6.79% 9.30% 15.83% .59%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $78,303 $131,565 $190,173 $196,261 $165,584
Ratio to average net assets of:
Expenses, net of waivers 1.80%(d) 1.65% 1.74%(d) 1.72% 1.73%
Expenses, before waivers 1.91% 1.80% 1.74% 1.72% 1.73%
Ratio of net investment income (loss) to
average net assets (.25)%(b) (.05)%(b) .31% .31% .26%
Portfolio turnover rate 178% 121% 94% 78% 119%
</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,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $17.41 $17.71 $17.45 $16.19 $17.90
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.16)(a)(b) (.16)(a)(b) (.09)(a) (.07)(a) (.01)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.68) 1.07 1.43 2.38 (.08)
Net increase (decrease) in net asset
value from operations (.84) .91 1.34 2.31 (.09)
LESS: DIVIDENDS AND DISTRIBUTIONS
Distributions in excess of net investment
income (.34) -0- -0- -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions (1.04) (1.21) (1.08) (1.05) (1.62)
Total dividends and distributions (1.38) (1.21) (1.08) (1.05) (1.62)
Net asset value, end of year $15.19 $17.41 $17.71 $17.45 $16.19
TOTAL RETURN
Total investment return(c) (4.56)% 5.92% 8.37% 14.87% (.22)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $55,724 $71,370 $77,725 $72,470 $48,998
Ratio to average net assets of:
Expenses, net of waivers 2.61%(d) 2.49% 2.58%(d) 2.55% 2.57%
Expenses, before waivers 2.74% 2.64% 2.58% 2.55% 2.57%
Ratio of net investment loss to
average net assets (1.02)%(b) (.90)%(b) (.51)% (.46)% (.62)%
Portfolio turnover rate 178% 121% 94% 78% 119%
</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
YEAR
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $17.42 $17.73 $17.46 $16.20 $17.91
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.16)(a)(b) (.15)(a)(b) (.09)(a) (.07)(a) (.14)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.69) 1.05 1.44 2.38 .05
Net increase (decrease) in net asset
value from operations (.85) .90 1.35 2.31 (.09)
LESS: DIVIDENDS AND DISTRIBUTIONS
Distributions in excess of net investment
income (.34) -0- -0- -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions (1.04) (1.21) (1.08) (1.05) (1.62)
Total dividends and distributions (1.38) (1.21) (1.08) (1.05) (1.62)
Net asset value, end of year $15.19 $17.42 $17.73 $17.46 $16.20
TOTAL RETURN
Total investment return(c) (4.62)% 5.85% 8.42% 14.85% (.22)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $16,876 $20,428 $23,268 $26,965 $19,395
Ratio to average net assets of:
Expenses, net of waivers 2.61%(d) 2.48% 2.56%(d) 2.53% 2.54%
Expenses, before waivers 2.75% 2.63% 2.56% 2.53% 2.54%
Ratio of net investment loss to
average net assets (1.02)%(b) (.90)%(b) (.51)% (.47)% (.88)%
Portfolio turnover rate 178% 121% 94% 78% 119%
</TABLE>
See footnote summary on page 23.
22
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
ADVISOR CLASS
------------------------------------
YEAR ENDED JUNE 30, OCTOBER 2,
------------------------ 1996(E) TO
1999 1998 JUNE 30, 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $18.54 $18.67 $17.96
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .01(b) .02(b) .16
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.75) 1.13 1.78
Net increase (decrease) in net asset
value from operations (.74) 1.15 1.94
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.01) (.02) (.15)
Distributions in excess of net investment
income (.51) (.05) -0-
Distributions from net realized gains on
investments and foreign currency
transactions (1.04) (1.21) (1.08)
Total dividends and distributions (1.56) (1.28) (1.23)
Net asset value, end of period $16.24 $18.54 $18.67
TOTAL RETURN
Total investment return based on net
asset value(c) (3.62)% 6.98% 11.57%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $33,949 $47,154 $8,697
Ratio to average net assets of:
Expenses, net of waivers 1.57%(d) 1.47% 1.69%(d)(f)
Expenses, before waivers 1.70% 1.62% 1.69%(f)
Ratio of net investment income to
average net assets .04%(b) .13%(b) 1.47%(f)
Portfolio turnover rate 178% 121% 94%
</TABLE>
(a) Based on average shares outstanding.
(b) Net of fees waived by Advisor.
(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 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.
(d) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the periods ended June 30, 1999 and June 30, 1997 the
ratios of expenses, net of waivers, were 1.78% and 1.73% for Class A shares,
2.59% and 2.58% for Class B shares, 2.59% and 2.56% for Class C shares and
1.55% and 1.69% for Advisor Class shares, respectively.
(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, 1999, 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 and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1999, by correspondence with the custodian and
others. 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, 1999, 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, 1999
TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $5,398,167 of the capital gain distributions paid by the Fund
during the fiscal year June 30, 1999 are subject to maximum tax rates of 20%.
In addition, the Fund intends to make an election under Internal Revenue Code
Section 853 to pass through foreign taxes paid by the Fund to its shareholders.
The total amount of foreign taxes that may be passed through to the
shareholders for the fiscal year ended June 30, 1999 is $234,537. The foreign
source of income for information reporting purposes is $234,537.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 2000.
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)
ALAN STOGA (1)
OFFICERS
BRUCE W. CALVERT, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
EDWARD BAKER, VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
STEPHEN M. BEINHACKER, VICE PRESIDENT
MARK H. BREEDON, VICE PRESIDENT
RUSSELL BRODY, VICE PRESIDENT
NICHOLAS D. P. CARN, 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 LLP
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
(1) Member of 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 U.S. Government Fund
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
General Municipal Portfolio
Government Portfolio
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.
INTAR699
