ALLIANCE
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INTERNATIONAL
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FUND
Semi-Annual
Report
December 31, 1999
Alliance Capital [LOGO](R)
<PAGE>
Letter To Shareholders Alliance International Fund
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February 25, 2000
Dear Shareholder:
This semi-annual report contains investment results and market activity for
Alliance International Fund (the "Fund") for the period ended December 31, 1999.
INVESTMENT RESULTS
The following table shows the Fund's performance versus its benchmark, the
Morgan Stanley Capital International ("MSCI") Europe, Australasia and Far East
("EAFE") Index, as well as the Fund's peer group, the Lipper International Funds
Average, for the six- and 12-month periods ended December 31, 1999.
The Fund outperformed its benchmark, the MSCI EAFE Index, over both the six- and
12-month periods under review. During 1999, we moved the Fund's portfolio from a
below benchmark to an above benchmark position in Japanese equities in order to
take advantage of what we believed to be an environment of greater potential
profit. In doing this, we reduced our positions in European markets
approximately to benchmark level. This proved to be a prudent decision, as Japan
continued to perform well throughout the year. In addition, stock selection for
the Fund added value in both the European and Asian markets. The benefit of this
was particularly clear in Japan and Hong Kong where the Fund's holdings
outperformed local index returns by a large margin.
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INVESTMENT RESULTS*
Periods Ended December 31, 1999
Total Returns
6 months 12 months
--------------- ---------------
Alliance International
Fund
Class A 33.13% 34.62%
Class B 32.72% 33.69%
Class C 32.72% 33.69%
MSCI EAFE Index 22.27% 27.30%
Lipper International
Funds Average 30.84% 40.80%
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* Total returns are based on the net asset value of each class of shares
as of December 31, 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 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 December 31, 1999 reflects the performance of 653 and 618
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 an index or an
average.
Additional investment results appear on page 4.
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MARKET REVIEW
Taken as a single period of stock market returns, 1999 was an excellent year.
The MSCI World Index rose by just under 25% in U.S. dollar terms. However, when
viewed separately, many of the world's major markets endured a lengthy period in
which there was considerable volatility but little direction in the indices. The
Standard & Poor's 500 Stock Index was at almost the same level in late October
1999 as it had been in early April 1999. The same goes for the Dow Jones in
November and May 1999, for the Dow Jones Euro Stoxx 50 Index in October and
April 1999 and for the Financial Times Stock Exchange 100 Index in October and
February 1999. The year's advances in U.S. markets were made in the first and
final quarter. In Europe, a fourth quarter climb of 22.6% (as posted by the MSCI
EMU Index) was required to bring that region's annual return up to 18.8%. The
only major market that bucked this trend was also the year's best performer --
the MSCI Japan Index appreciated by 61.5% in a relatively uniform manner.
Driving equities higher in the U.S. and, by extension, in Europe (where local
currency markets showed a strong transatlantic correlation), was evidence and an
increasing belief that the economy was no longer as constrained as
1
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Alliance International Fund
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before by the threat of inflation. Many of the market leaders were stocks that
some argue have the most to do with this step-up in potential growth --
high-tech stocks in general, and Internet stocks in particular.
The "new paradigm" conviction of the bond markets was not so strong. As growth
returned to Japan, Asia and Europe, and accelerated further in the U.S.,
investors foresaw accelerating inflation and sold off. Most bond markets
therefore delivered negative returns. The yield on the U.S. 30-year Treasury
bill rose by over 100 basis points (bps) to approximately 6.5%. The U.K. 10-year
Treasury bill acted in a similar fashion and, by year's end, yielded 5.47%. The
German 10-year Treasury bill was even poorer, adding 170 bps. Again, it was
Japan, where headline inflation continues to be negative despite much progress
towards economic recovery, which proved the exception. The 10-year Japanese
government bond ended 1999 with its yield marginally lower for the year at
1.67%.
1999 saw significant changes in major exchange rates. The dollar rose against
the euro in the spring and the autumn and ended the year up approximately 17%.
This figure is perhaps slightly misleading given that the market valuation of
the euro appreciated sharply in the last days of 1998, prior to its official
launch. Nonetheless it was one of the remarkable features of currency markets in
1999 that the clear re-emergence of economic growth in Europe did not lead to a
sustained recovery in the single currency. Indeed, the fortunes of the euro seem
to have been much more closely tied to the performance of U.S. equities. Such a
relationship with the dollar/yen exchange rate, if it existed at all, broke down
during the course of the year. Having depreciated approximately 10%, the yen
bounced back on news of an unexpectedly strong economic performance in the first
and second quarters and faint signs of improved consumer sentiment. Concerns
that the nascent recovery would be damaged by currency strength were not
relieved in the final months of the year when the yen was little changed,
despite Wall Street's strong bull run.
INVESTMENT OUTLOOK
The chief macroeconomic development of 1999 was the re-emergence of global
growth. Last January, much of Asia still seemed within touching distance of
economic crisis, while Japan was mired in a deep recession. The newly created
`Euroland' economy was battered by a falloff in exports and turgid domestic
activity in Germany and Italy. On the bright side (in retrospect, at least),
inflation was low and monetary conditions were loose. The roaring U.S. economy,
fueled by a series of rate cuts late in 1998, continued to bring in imports at
an extravagant pace.
The relative attractions of U.S. financial assets for overseas investors meant
that far from being dragged down by an enormous external deficit, the U.S.
dollar actually appreciated against all of the major currencies in the first
half of the year, peaking in July. This enabled a rapid recovery in European
exports. By year's end, German export orders were up 21% year-on-year. With
inflation at its lowest for decades and unemployment falling through most of the
year, European consumer confidence remained high and combined with foreign trade
to drive European growth to an annualized rate of over 3%. While there is a
widespread belief that structural problems prevent European economies from
attaining the levels of growth seen in the United States in recent years, it is
clear that Europe now enjoys the best economic conditions it has seen for
several years. Headline inflation seems unlikely to break the European Central
Bank's ceiling of 2% for long as last year's commodity price rises push up the
baseline. An improving employment environment will tend to support a bright
consumer sentiment.
The biggest growth surprise of 1999 was in Japan. Massive government expenditure
and growing levels of corporate restructuring reaped a reward in gross domestic
product growth in the first half of the year. This brought surprised equity
investors from overseas. A fall off in the Japanese savings ratio and a steady
improvement in industrial confidence augur well for further economic
consolidation in 2000. However, the increase in the strength of the yen will
continue to affect exports while keeping inflation uncomfortably low. The state
of consumer sentiment remains unclear. Spending has yet to record a sustained
recovery and concerns over the labor market are unlikely to be placated very
quickly.
Growth in the U.S. itself has continued to increase and in doing so has added
ammunition for the advocates of the
2
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Alliance International Fund
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"new paradigm." Whether there has in fact been a step-up in productivity which
will allow the U.S. a higher rate of growth without stimulating serious
inflationary forces remains the most important question for global investors.
U.S. unemployment is the lowest it has been for three decades. The headline
inflation rate is growing as are import prices and employment costs, though all
by less than skeptics expected. U.S. stock valuations are at extreme historical
highs. Continued strength in earnings is essential if the markets are to avoid a
considerable correction.
The U.S. has continued to prosper amidst the beginnings of global growth as it
did during global desynchronization. But, in our view, the inflationary
pressures that come with global growth will continue. We are clearly not at the
end of the interest-rate tightening cycle. The U.S. labor market is extremely
tight. If the U.S. expansion is to continue to progress as serenely as it has
over the last number of years, it will have to be fuelled by the fruits of the
"new paradigm," for we believe there appears to be little left for the old
economy to give.
INDUSTRIAL AND GEOGRAPHIC BREAKDOWNS AS OF
DECEMBER 31, 1999*
[The following table was depicted as a pie chart in the printed material.]
Aerospace & Defense: 0.5%
Basic Industries: 4.6%
Capital Goods: 11.3%
Consumer Manufacturing: 5.4%
Consumer Services: 12.6%
Consumer Staples: 4.5%
Energy: 5.5%
Finance: 15.9%
Healthcare: 4.6%
Multi-Industry: 1.5%
Technology: 23.4%
Utilities: 10.2%
[The following table was depicted as a pie chart in the printed material.]
Australia: 1.5%
Finland: 6.0%
France: 5.7%
Germany: 4.8%
Hong Kong: 3.5%
Ireland: 0.4%
Japan: 36.7%
The Netherlands: 13.1%
Singapore: 1.6%
Spain: 2.5%
Sweden: 1.5%
Switzerland: 2.3%
United Kingdom: 20.4%
* Expressed as a percentage of total investments (excluding cash and
cash equivalents).
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,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Bruce W. Calvert
Bruce W. Calvert
Senior Vice President
/s/ Nicholas D.P. Carn
Nicholas D.P. Carn
Vice President
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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.
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3
<PAGE>
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, companies participating in foreign economies
with prospects of growth including U.S. companies having their principal
activities and interests outside the U.S., and foreign government securities.
INVESTMENT RESULTS
================================================================================
NAV and SEC Average Annual Total Returns as of December 31, 1999
------------------------------------------
CLASS A SHARES
------------------------------------------
Without With
Sales Charge Sales Charge
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One Year 34.62% 28.92%
Five Years 12.05% 11.09%
Ten Years 6.68% 6.21%
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CLASS B SHARES
------------------------------------------
Without With
Sales Charge Sales Charge
===============================
One Year 33.69% 29.69%
Five Years 11.19% 11.19%
Since Inception* (a) 8.30% 8.30%
------------------------------------------
CLASS C SHARES
------------------------------------------
Without With
Sales Charge Sales Charge
===============================
One Year 33.69% 32.69%
Five Years 11.17% 11.17%
Since Inception* 10.43% 10.43%
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.
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* 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.
4
<PAGE>
TEN LARGEST HOLDINGS
December 31, 1999 (unaudited) Alliance International Fund
================================================================================
<TABLE>
<CAPTION>
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COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
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<S> <C> <C>
Mannesmann AG -- Designs and manufactures a wide
range of industrial products, production machinery and
assembly systems as well as provides
telecommunications services. $ 9,329,916 4.2%
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Nokia Corp.-- Develops and manufactures
mobile phones, networks, and systems for cellular
and fixed networks. 8,876,007 4.0
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Sony Corp. -- Develops and manufactures consumer
and industrial electronic equipment. 7,711,433 3.5
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Tokyo Electron, Ltd. -- Produces, imports, and sells
electronic products. 6,851,997 3.1
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Canon, Inc.-- Manufactures office, camera, and video
equipment. 6,279,170 2.8
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Rohm Co., Ltd.-- Manufactures custom linear integrated
circuits and semiconductor devices such as diodes &
transistors which are used mainly for consumer electronics. 5,837,901 2.6
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St Microelectronics NV-- Designs, develops, manufactures
and markets semiconductor integrated circuits and
discreet devices. 5,666,435 2.6
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United Pan-Europe Communications NV Series A -- Owns
and operates broadband communications networks
in various countries in Europe and in Israel. 5,355,090 2.4
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China Telecom (Hong Kong), Ltd. (ADR)-- Provides
cellular telecommunications services in the Peoples'
Republic of China. 5,116,100 2.3
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British Sky Broadcasting Group Plc.-- A broadcasting
group that provides television programming and internet
services via digital satellite. 4,968,599 2.3
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$65,992,648 29.8%
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</TABLE>
5
<PAGE>
SECTOR DIVERSIFICATION
December 31, 1999 (unaudited) Alliance International Fund
================================================================================
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U.S. $ VALUE PERCENT OF NET ASSETS
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Aerospace & Defense $ 1,066,523 0.5%
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Basic Industries 9,969,037 4.5
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Capital Goods 24,866,394 11.2
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Consumer Manufacturing 11,956,129 5.4
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Consumer Services 27,703,489 12.5
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Consumer Staples 9,868,422 4.5
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Energy 11,975,924 5.4
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Finance 34,900,324 15.8
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Healthcare 9,925,639 4.5
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Multi Industry 3,382,354 1.5
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Technology 51,417,022 23.2
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Utilities 22,320,440 10.1
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Total Investments* 219,351,697 99.1
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Cash and receivables, net of liabilities 2,030,090 0.9
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Net Assets $221,381,787 100.0%
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* Excludes short-term obligations.
6
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1999 (unaudited) Alliance International Fund
================================================================================
Company Shares U.S. $ Value
- ----------------------------------------------------------
COMMON STOCKS &
OTHER INVESTMENTS -- 99.1%
AUSTRALIA -- 1.5%
Telstra Corp., Ltd. .......... 372,600 $ 2,026,929
Woodside Petroleum,
Ltd. ...................... 168,100 1,242,469
------------
3,269,398
------------
FINLAND -- 6.0%
Nokia Corp. .................. 49,000 8,876,007
Sonera Oyj.................... 30,900 2,116,098
UPM-Kymmene Oyj............... 55,800 2,246,173
------------
13,238,278
------------
FRANCE -- 5.7%
Banque Nationale
de Paris................... 31,720 2,924,002
France Telecom, SA............ 16,820 2,222,490
Sanofi-Synthelabo,
SA (a)..................... 58,730 2,443,315
Societe Generale Cl. A........ 4,299 999,375
Total Fina, SA Cl. B.......... 30,090 4,012,242
------------
12,601,424
------------
GERMANY -- 4.7%
Mannesmann AG................. 38,710 9,329,916
Siemens AG.................... 8,600 1,093,078
------------
10,422,994
------------
HONG KONG -- 3.4%
China Telecom
(Hong Kong), Ltd.
(ADR)...................... 820,000 5,116,100
TCL International
Holdings, Ltd. (a)......... 2,600,000 1,806,136
Television
Broadcasts, Ltd. .......... 98,000 668,167
------------
7,590,403
------------
IRELAND -- 0.4%
CRH Plc. ..................... 41,623 896,389
------------
ITALY -- 0.0%
Banca Commerciale
Italiana................... 1 5
Wts. 11/15/02 (a).......... 36,838 -0-
------------
5
------------
JAPAN -- 36.3%
Aiful Corp.................... 8,000 978,857
Bank Of Tokyo-Mitsubishi,
Ltd. ...................... 236,000 3,289,585
Banyu Pharmaceutical
Co., Ltd. ................. 57,000 884,348
Canon, Inc. .................. 158,000 6,279,170
Daiwa Securities Group,
Inc. ...................... 146,000 2,285,180
DDI Corporation............... 142 1,945,967
Fanuc, Ltd. .................. 22,000 2,801,684
Fuji Bank, Ltd. .............. 243,000 2,361,971
Hoya Corp. ................... 22,000 1,733,555
KAO Corp. .................... 70,000 1,997,357
Nippon Telegraph &
Telephone Corp. ........... 268 4,590,838
Nippon Television
Network Corp. ............. 2,990 3,512,138
NTT Mobile
Communications
Network, Inc. ............. 109 4,193,128
Omron Corp. .................. 117,000 2,697,093
Rohm Co., Ltd. ............... 14,200 5,837,901
Sankyo Co., Ltd. ............. 44,000 3,294,832
Shin-Etsu Chemical
Co., Ltd. ................. 25,000 1,076,742
Shohkoh Fund &
Co., Ltd. ................. 4,000 1,583,790
SMC Corp. .................... 9,500 2,102,535
Softbank Corp. ............... 4,700 4,499,413
Sony Corp. ................... 26,000 7,711,433
Sumitomo Trust &
Banking Co., Ltd. ......... 179,000 1,208,986
Takeda Chemical
Industries................. 28,000 1,384,103
7
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) Alliance International Fund
================================================================================
Company Shares U.S. $ Value
- ----------------------------------------------------------
TDK Corp. (a)................. 25,000 $ 3,452,917
Tokyo Electron, Ltd. ......... 50,000 6,851,997
Yamanouchi
Pharmaceutical Co.,
Ltd. ...................... 53,000 1,852,095
------------
80,407,615
------------
NETHERLANDS -- 13.0%
Akzo Nobel NV................. 38,400 1,924,463
Equant NV..................... 30,000 3,402,469
Getronics NV.................. 19,100 1,522,326
ING Groep NV.................. 51,645 3,115,259
Koninklijke Ahold NV.......... 99,179 2,933,380
Koninklijke Philips
Electronics NV............. 16,600 2,255,230
Royal Dutch
Petroleum Co. ............. 41,400 2,535,187
St Microelectronics NV........ 36,850 5,666,435
United Pan-Europe
Communications NV(a)....... 41,900 5,355,090
------------
28,709,839
------------
SINGAPORE -- 1.6%
DBS Group Holdings,
Ltd. (a)................... 157,300 2,578,379
DBS Land, Ltd. ............... 500,000 984,689
------------
3,563,068
------------
SPAIN -- 2.5%
Altadis, SA................... 53,000 757,379
Repsol, SA
New Shares................. 93,300 2,161,404
Telefonica, SA (a)............ 95,778 2,390,378
Unidad Editorial, SA
Series A (b)............... 135,229 272,176
------------
5,581,337
------------
SWEDEN -- 1.5%
Securitas AB Cl. B............ 182,900 3,312,549
------------
SWITZERLAND -- 2.3%
ABB, AG (a)................... 40,634 4,960,119
------------
UNITED KINGDOM -- 20.2%
Bank of Scotland Plc. ........ 351,400 4,082,173
Billiton Plc. ................ 426,400 2,516,333
BP Amoco Plc. ................ 201,300 2,024,622
British Aerospace Plc. ....... 161,000 1,066,524
British Airways Plc. ........ 329,100 2,148,177
British Sky Broadcasting
Group Plc. ................ 308,600 4,968,599
British Telecommunications
Plc. ...................... 78,200 1,911,641
Dixons Group Plc. ............ 99,100 2,384,125
HSBC Holdings Plc. .......... 226,858 3,163,192
Invensys Plc. ................ 227,500 1,238,717
Orange Plc. (a)............... 92,000 3,106,668
Rio Tinto Plc. ............... 91,300 2,205,325
Royal Bank of Scotland
Group Plc. ................ 104,511 1,854,065
SmithKline
Beecham Plc. .............. 263,379 3,361,777
Standard Chartered Plc. ...... 224,824 3,490,815
United News &
Media Plc. ................ 165,100 2,104,674
Vodafone AirTouch Plc. ....... 639,780 3,170,852
------------
44,798,279
------------
Total Common Stocks &
Other Investments
(cost $164,309,348)........ 219,351,697
------------
8
<PAGE>
Alliance International Fund
================================================================================
Principal
Amount
Company (000) U.S. $ Value
- ----------------------------------------------------------
TIME DEPOSIT -- 1.4%
UNITED KINGDOM -- 1.4%
BNP London
4.00%, 1/03/00
(cost $3,200,000).......... $3,200 $ 3,200,000
------------
TOTAL INVESTMENTS -- 100.5%
(cost $167,509,348)........ 222,551,697
Other assets less
liabilities-- (0.5)%....... (1,169,910)
------------
NET ASSETS - 100%............. $221,381,787
============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Restricted and illiquid securities valued at fair value (see Notes A & F).
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (unaudited) Alliance International Fund
================================================================================
<TABLE>
ASSETS
<S> <C>
Investments in securities, at value (cost $167,509,348) ...................... $ 222,551,697
Foreign cash, at value (cost $40,239) ..................................... 40,387
Receivable for investment securities sold .................................... 7,300,811
Receivable for shares of beneficial interest sold ............................ 844,851
Foreign taxes receivable ..................................................... 195,230
Dividends and interest receivable ............................................ 95,032
-------------
Total assets ................................................................. 231,028,008
-------------
LIABILITIES
Due to custodian ............................................................. 874,288
Payable for shares of beneficial interest redeemed ........................... 4,660,472
Payable for investment securities purchased .................................. 3,200,000
Advisory fee payable ......................................................... 470,436
Distribution fee payable ..................................................... 91,512
Accrued expenses ............................................................. 349,513
-------------
Total liabilities ............................................................ 9,646,221
-------------
NET ASSETS ...................................................................... $ 221,381,787
=============
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par ........................................ $ 112,694
Additional paid-in capital ................................................... 156,266,941
Distributions in excess of net investment income ............................. (4,606,547)
Accumulated net realized gain on investments and foreign currency transactions 14,576,866
Net unrealized appreciation of investments and foreign currency denominated
assets and liabilities .................................................... 55,031,833
-------------
$ 221,381,787
=============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($102,958,534 / 5,085,259 shares of beneficial interest issued and outstanding) $20.25
Sales Charge -- 4.25% of public offering price ................................... .90
------
Maximum offering price ........................................................... $21.15
======
Class B Shares
Net asset value and offering price per share
($68,065,309 / 3,622,725 shares of beneficial interest issued and outstanding) $18.79
======
Class C Shares
Net asset value and offering price per share
($20,258,081 / 1,078,373 shares of beneficial interest issued and outstanding) $18.79
======
Advisor Class Shares
Net asset value, redemption, and offering price per share
($30,099,863 / 1,483,015 shares of beneficial interest issued and outstanding) $20.30
======
</TABLE>
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See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1999 (unaudited) Alliance International Fund
================================================================================
<TABLE>
INVESTMENT INCOME
<S> <C> <C>
Dividends (net of foreign taxes withheld of $93,772) .... $1,712,418
Interest ................................................ 66,485 $ 1,778,903
----------
EXPENSES
Advisory fee ............................................ 988,643
Distribution fee - Class A .............................. 109,758
Distribution fee - Class B .............................. 291,841
Distribution fee - Class C .............................. 87,203
Transfer agency ......................................... 328,303
Custodian ............................................... 164,922
Administrative .......................................... 65,000
Audit and legal ......................................... 46,697
Printing ................................................ 35,898
Registration ............................................ 29,981
Trustees' fees .......................................... 20,517
Miscellaneous ........................................... 27,692
----------
Total expenses .......................................... 2,196,455
Less: expenses waived by the Adviser (See Note B) ....... (148,296)
Less: expenses offset arrangement (See Note B) .......... (14,180)
----------
Net expenses ............................................ 2,033,979
-----------
Net investment loss ........................................ (255,076)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions ............ 16,441,646
Net realized loss on foreign currency transactions ...... (63,589)
Net change in unrealized appreciation / depreciation of:
Investments .......................................... 40,781,999
Foreign currency denominated assets and liabilities .. 23,110
-----------
Net gain on investments and foreign currency transactions 57,183,166
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................. $56,928,090
===========
</TABLE>
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See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS Alliance International Fund
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1999 June 30,
(unaudited) 1999
----------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss ............................................... $ (255,076) $ (1,013,873)
Net realized gain on investments and foreign currency transactions 16,378,057 13,325,110
Net change in unrealized appreciation / depreciation of investments
and foreign currency denominated assets and liabilities ........... 40,805,109 (21,711,910)
------------- -------------
Net increase (decrease) in net assets from operations ............. 56,928,090 (9,400,673)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Advisor Class .................................................. -0- (12,533)
Distributions in excess of net investment income
Class A ........................................................ -0- (2,466,071)
Class B ........................................................ -0- (1,292,716)
Class C ........................................................ -0- (380,642)
Advisor Class .................................................. -0- (1,004,112)
Net realized gain on investments and foreign currency transactions
Class A ........................................................ (6,103,573) (5,415,223)
Class B ........................................................ (4,123,311) (4,025,046)
Class C ........................................................ (1,251,908) (1,185,184)
Advisor Class .................................................. (1,631,168) (2,031,445)
CAPITAL STOCK TRANSACTIONS
Net decrease ...................................................... (7,288,366) (58,451,640)
------------- -------------
Total increase (decrease) ......................................... 36,529,764 (85,665,285)
NET ASSETS
Beginning of year ................................................. 184,852,023 270,517,308
------------- -------------
End of period ..................................................... $ 221,381,787 $ 184,852,023
============= =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 (unaudited) Alliance International Fund
================================================================================
NOTE A: Significant Accounting Policies
Alliance International Fund (the "Fund"), which is a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as a diversified,
open-end management investment company. The Fund offers Class A, Class B, 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 (but excluding securities traded on The Nasdaq
Stock Market, Inc.), 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
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance International Fund
================================================================================
company taxable income and net realized gains, if any, 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. 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.
- --------------------------------------------------------------------------------
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 six months ended
December 31, 1999, such waiver amounted to $148,296. Pursuant to the advisory
agreement, the Fund paid $65,000 to the Adviser representing the cost of certain
legal and accounting services provided to the Fund by the Adviser for the six
months ended December 31, 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 $196,234 for the six months ended December 31, 1999.
For the six months ended December 31, 1999, the Fund's expenses were reduced by
$14,180 under an expense offset arrangement with Alliance Fund Services, Inc.
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 $37,107 and $1,671 in contingent deferred sales
charges imposed upon redemptions by shareholders of Class B and Class C shares,
respectively, for the six months ended December 31, 1999.
Brokerage commissions paid on investment transactions for the six months ended
December 31, 1999, amounted to $407,136, 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 distribution and servicing fees 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 are no distribution and servicing fees 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 advised
the Fund that it has
14
<PAGE>
Alliance International Fund
================================================================================
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $2,485,271 and $911,708 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 $144,682,239 and $154,195,304, respectively,
for the six months ended December 31, 1999. There were no purchases or sales of
U.S. government or government agency obligations for the six months ended
December 31, 1999.
At December 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $57,639,749 and
gross unrealized depreciation of investments was $2,597,400 resulting in net
unrealized appreciation of $55,042,349 excluding foreign currency transactions.
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 December 31, 1999, the Fund had no outstanding forward foreign exchange
currency contracts.
15
<PAGE>
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:
<TABLE>
<CAPTION>
----------------------------------------- -----------------------------------------
SHARES AMOUNT
----------------------------------------- -----------------------------------------
Six Months Ended Six Months Ended
December 31, 1999 Year Ended December 31, 1999 Year Ended
(unaudited) June 30, 1999 (unaudited) June 30, 1999
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............................. 7,057,229 8,095,562 $ 125,338,723 $ 133,167,300
Shares issued in reinvestment of
dividends and distributions.......... 306,141 379,772 5,394,204 5,935,837
Shares converted from Class B........... 91,119 154,134 1,535,123 2,508,206
Shares redeemed......................... (7,189,872) (10,902,963) (128,103,902) (184,030,407)
----------------- ----------------- ----------------- -----------------
Net increase (decrease)................. 264,617 (2,273,495) $ 4,164,148 $ (42,419,064)
================= ================= ================= =================
Class B
Shares sold............................. 1,471,392 3,108,211 $ 23,853,751 $ 47,482,116
Shares issued in reinvestment of
distributions........................ 238,108 292,363 3,890,683 4,291,892
Shares converted to Class A............. (84,806) (164,485) (1,535,123) (2,508,206)
Shares redeemed......................... (1,670,982) (3,665,527) (27,059,484) (55,976,156)
----------------- ----------------- ----------------- -----------------
Net decrease............................ (46,288) (429,438) $ (850,173) $ (6,710,354)
================= ================= ================= =================
Class C
Shares sold............................. 1,195,562 1,169,171 $ 19,462,938 $ 17,757,212
Shares issued in reinvestment of
distributions........................ 69,174 70,803 1,130,306 1,039,382
Shares redeemed......................... (1,297,610) (1,301,270) (21,189,154) (19,773,912)
----------------- ----------------- ----------------- -----------------
Net decrease............................ (32,874) (61,296) $ (595,910) $ (977,318)
================= ================= ================= =================
Advisor Class
Shares sold............................. 151,601 1,362,048 $ 2,592,122 $ 21,447,816
Shares issued in reinvestment of
dividends and distributions.......... 92,424 194,675 1,629,442 3,036,923
Shares redeemed......................... (851,771) (2,009,157) (14,227,995) (32,829,643)
----------------- ----------------- ----------------- -----------------
Net decrease............................ (607,746) (452,434) $ (10,006,431) $ (8,344,904)
================= ================= ================= =================
</TABLE>
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 December 31, 1999 was $272,176 representing 0.1% of net assets.
16
<PAGE>
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 six months ended December 31, 1999.
17
<PAGE>
FINANCIAL HIGHLIGHTS Alliance International Fund
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
1999 -----------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------- ------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 16.24 $ 18.55 $ 18.69 $ 18.32 $16.81 $ 18.38
------- ------- ------- ------- ------ -------
Income From Investment Operations
Net investment income (loss)............ -0-(a)(b) (.04)(a)(b) (.01)(a)(b) .06(a) .05(a) .04
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... 5.20 (.75) 1.13 1.51 2.51 .01
------- ------- ------- ------- ------ -------
Net increase (decrease) in net asset
value from operations................ 5.20 (.79) 1.12 1.57 2.56 .05
------- ------- ------- ------- ------ -------
Less: Dividends and Distributions
Dividends from net investment income.... -0- -0- -0- (.12) -0- -0-
Distributions in excess of net
investment income.................... -0- (.48) (.05) -0- -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions......................... (1.19) (1.04) (1.21) (1.08) (1.05) (1.62)
------- ------- ------- ------- ------ -------
Total dividends and distributions....... (1.19) (1.52) (1.26) (1.20) (1.05) (1.62)
------- ------- ------- ------- ------ -------
Net asset value, end of period.......... $ 20.25 $ 16.24 $ 18.55 $ 18.69 $18.32 $ 16.81
======= ======= ======= ======= ====== =======
Total Return
Total investment return based on
net asset value (c).................. 33.13% (3.95)% 6.79% 9.30% 15.83% .59%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted)...................... $102,959 $78,303 $131,565 $190,173 $196,261 $165,584
Ratio to average net assets of:
Expenses, net of waivers............. 1.91%(d)(e) 1.80%(e) 1.65% 1.74%(e) 1.72% 1.73%
Expenses, before waivers............. 2.07%(d) 1.91% 1.80% 1.74% 1.72% 1.73%
Ratio of net investment income (loss)
to average net assets................ .01%(d) (.25)%(b) (.05)%(b) .31% .31% .26%
Portfolio turnover rate................. 157% 178% 121% 94% 78% 119%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 21.
18
<PAGE>
Alliance International Fund
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
CLASS B
--------------------------------------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
1999 -----------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------- ------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 15.19 $ 17.41 $ 17.71 $ 17.45 $16.19 $ 17.90
------- ------- ------- ------- ------ -------
Income From Investment Operations
Net investment loss..................... (.06)(a)(b) (.16)(a)(b) (.16)(a)(b) (.09)(a) (.07)(a) (.01)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... 4.85 (.68) 1.07 1.43 2.38 (.08)
------- ------- ------- ------- ------ -------
Net increase (decrease) in net asset
value from operations................ 4.79 (.84) .91 1.34 2.31 (.09)
------- ------- ------- ------- ------ -------
Less: Dividends and Distributions
Dividends from net investment income.... -0- (.34) -0- -0- -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions......................... (1.19) (1.04) (1.21) (1.08) (1.05) (1.62)
------- ------- ------- ------- ------ -------
Total dividends and distributions....... (1.19) (1.38) (1.21) (1.08) (1.05) (1.62)
------- ------- ------- ------- ------ -------
Net asset value, end of period.......... $ 18.79 $ 15.19 $ 17.41 $ 17.71 $17.45 $ 16.19
======= ======= ======= ======= ====== =======
Total Return
Total investment return based on
net asset value (c).................. 32.72% (4.56)% 5.92% 8.37% 14.87% (.22)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted)...................... $68,065 $55,724 $71,370 $77,725 $72,470 $48,998
Ratio to average net assets of:
Expenses, net of waivers............. 2.71%(d)(e) 2.61%(e) 2.49% 2.58%(e) 2.55% 2.57%
Expenses, before waivers............. 2.87%(d) 2.74% 2.64% 2.58% 2.55% 2.57%
Ratio of net investment loss
to average net assets................ (.76)%(d) (1.02)%(b) (.90)%(b) (.51)% (.46)% (.62)%
Portfolio turnover rate................. 157% 178% 121% 94% 78% 119%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 21.
19
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance International Fund
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
CLASS C
--------------------------------------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
1999 -----------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------- ------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 15.19 $ 17.42 $ 17.73 $ 17.46 $16.20 $ 17.91
------- ------- ------- ------- ------ -------
Income From Investment Operations
Net investment loss..................... (.06)(a)(b) (.16)(a)(b) (.15)(a)(b) (.09)(a) (.07)(a) (.14)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... 4.85 (.69) 1.05 1.44 2.38 .05
------- ------- ------- ------- ------ -------
Net increase (decrease) in net asset
value from operations................ 4.79 (.85) .90 1.35 2.31 (.09)
------- ------- ------- ------- ------ -------
Less: Dividends and Distributions
Dividends from net investment income.... -0- (.34) -0- -0- -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions ........................ (1.19) (1.04) (1.21) (1.08) (1.05) (1.62)
------- ------- ------- ------- ------ -------
Total dividends and distributions....... (1.19) (1.38) (1.21) (1.08) (1.05) (1.62)
------- ------- ------- ------- ------ -------
Net asset value, end of period.......... $ 18.79 $ 15.19 $ 17.42 $ 17.73 $17.46 $ 16.20
======= ======= ======= ======= ====== =======
Total Return
Total investment return based on
net asset value (c).................. 32.72% (4.62)% 5.85 % 8.42% 14.85 % (.22)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted)...................... $20,258 $16,876 $20,428 $23,268 $26,965 $19,395
Ratio to average net assets of:
Expenses, net of waivers............. 2.67%(d)(e) 2.61%(e) 2.48% 2.56%(e) 2.53% 2.54%
Expenses, before waivers............. 2.83%(d) 2.75% 2.63% 2.56% 2.53% 2.54%
Ratio of net investment loss
to average net assets................ (.75)%(d) (1.02)%(b) (.90)%(b) (.51)% (.47)% (.88)%
Portfolio turnover rate................. 157% 178% 121% 94% 78% 119%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 21.
20
<PAGE>
Alliance International Fund
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
--------------------------------------------------------
ADVISOR CLASS
--------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30, October 2, 1996(f)
1999 ---------------------------- to
(unaudited) 1999 1998 June 30, 1997
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.24 $18.54 $18.67 $17.96
------- ------- ------ -------
Income From Investment Operations
Net investment income (a).................................... .02(b) .01(b) .02(b) .16
Net realized and unrealized gain (loss) on investments and
foreign currency transactions............................. 5.23 (.75) 1.13 1.78
------- ------- ------ -------
Net increase (decrease) in net asset value from operations 5.25 (.74) 1.15 1.94
------- ------- ------ -------
Less: Dividends and Distributions
Dividends from net investment income ........................ -0- (.01) (.02) (.15)
Distributions in excess of net investment income............. -0- (.51) (.05) -0-
Distributions from net realized gains on investments and
foreign currency transactions............................. (1.19) (1.04) (1.21) (1.08)
------- ------- ------ -------
Total dividends and distributions............................ (1.19) (1.56) (1.28) (1.23)
------- ------- ------ -------
Net asset value, end of period .............................. $20.30 $16.24 $18.54 $18.67
======= ======= ====== =======
Total Return
Total investment return based on net asset value(c).......... 33.45% (3.62)% 6.98% 11.57%
Ratios/Supplemental Data
Net assets, end of period (000's omitted).................... $30,100 $33,949 $47,154 $8,697
Ratio to average net assets of:
Expenses, net of waivers.................................. 1.64%(d)(e) 1.57%(e) 1.47% 1.69%(d)(e)
Expenses, before waivers.................................. 1.80%(d) 1.70% 1.62% 1.69%(d)
Ratio of net investment income to average net assets......... .21%(d) .04%(b) .13%(b) 1.47%(d)
Portfolio turnover rate...................................... 157% 178% 121% 94%
</TABLE>
- --------------------------------------------------------------------------------
(a) Based on average shares outstanding.
(b) Net of fees waived by Adviser.
(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) Annualized.
(e) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the periods shown below, the net expense ratios were
as follows:
Six Months
Ended
December 31, Year Ended Period Ended
1999 June 30, June 30,
(unaudited) 1999 1997
------------- ------------- ------------
Class A....................... 1.90% 1.78% 1.73%
Class B....................... 2.70% 2.59% 2.58%
Class C....................... 2.66% 2.59% 2.56%
Advisor Class ................ 1.63% 1.55% 1.69%
(f) Commencement of distribution.
21
<PAGE>
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.
22
<PAGE>
(This page left intentionally blank.)
<PAGE>
---------------
Alliance International Fund BULK RATE
1345 Avenue of the Americas U.S. POSTAGE
New York, NY 10105 PAID
(800) 221-5672 New York, NY
Permit No. 7131
---------------
Alliance Capital [LOGO](R)
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.
INTSR1299
