ALLIANCE NEW EUROPE FUND
SEMI-ANNUAL REPORT
JANUARY 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
March 10, 1997
Dear Shareholder:
Since our last report to you in August 1996, both European markets and your
Fund have continued to perform well, although strong local currency returns
have been dented by the strength of the dollar which has reduced the total
return on European securities to U.S. dollar-based investors. European policy
makers are seeking to boost growth to reduce unemployment and smooth the path
to economic and monetary union. This has created an environment of low interest
rates and currency weakness, which is good for the U.S. economy and corporate
profits, but not for dollar-based investors in foreign markets.
INVESTMENT RESULTS
The table to the right provides information on the Fund's performance and, for
comparison, that of relevant benchmarks for the 6 and 12 months ended January
31, 1997. The Fund lagged the unmanaged Morgan Stanley Capital International
(MSCI) Europe Index on a 6 month and 12 month basis, as well as the average
return of its Lipper universe over the same periods. These indices have
generally similar investment objectives, although they may pursue different
investment policies. The Fund's underperformance was particularly affected by
last summer's stalling of the European recovery, which badly impacted the
cyclical value stocks held by the Fund, and by weakness in the UK market versus
the rest of Europe, largely as the result of currency factors.
INVESTMENT RESULTS*
Period ended January 31, 1997
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- ---------
ALLIANCE NEW EUROPE FUND
Class A 11.62% 18.10%
Class B 11.18% 17.14%
Class C 11.10% 17.13%
MSCI EUROPE INDEX 15.53% 20.63%
LIPPER EUROPEAN REGION FUNDS AVERAGE 14.26% 22.95%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIODS
SHOWN AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF
JANUARY 31, 1997. TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO
DIFFERENT EXPENSES ASSOCIATED WITH THAT CLASS. ALL FEES AND EXPENSES RELATED TO
THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE
FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. RETURNS
FOR THE FUND AND ITS BENCHMARKS INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS
PAID DURING THE PERIOD.
THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EUROPE INDEX IS UNMANAGED
AND DOES NOT REFLECT FEES AND EXPENSES. THE INDEX MEASURES THE PERFORMANCE OF
STOCK MARKETS IN 14 EUROPEAN COUNTRIES. THE LIPPER EUROPEAN REGION FUNDS
AVERAGE IS BASED ON THE PERFORMANCE OF A UNIVERSE OF MUTUAL FUNDS WITH
GENERALLY SIMILAR INVESTMENT OBJECTIVES. SALES CHARGES ARE NOT DEDUCTED.
FOR ADDITIONAL PERFORMANCE INFORMATION, PLEASE TURN TO PAGE 4.
MARKET AND ECONOMIC OVERVIEW
The setback suffered by most European markets last July proved to be only
temporary. The perception that the German monetary authorities were pursuing an
easy money/weak currency strategy to boost growth and offset the fiscal
tightening associated with the requirements of the European project for
economic and monetary union (EMU) greatly encouraged European markets. In
particular, the belief that EMU was likely to go ahead, almost regardless of
failure to comply with the strict letter of the Maastricht treaty, produced a
strong rally amongst the peripheral bond markets of Italy, Spain and Sweden.
These rallies were rewarded with good performance by their respective equity
markets.
1
ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
After the disappointments of the second and third quarters, economic numbers
have improved and company statements have become more positive. As a result,
growth stocks, which had performed well earlier in the year, began to
underperform in the fourth quarter. Additionally, more cyclically sensitive
stocks performed better, especially those benefiting from improved currency
competitiveness and productivity improvements brought about by restructuring.
These broad sector moves benefited the Scandinavian and German markets at the
expense of the Dutch and Swiss markets. These recent developments also
benefited your Fund.
The likely uncertainty that the upcoming UK election will cause has resulted in
a shift toward continental Europe, where the pickup in activity and the
weakness of the currencies have yet to be fully reflected in stock prices. The
only areas of mainland Europe where we have become more cautious are Spain and
Italy. Here, bonds and currencies are fully discounting the success of EMU, and
allow no margin of error should the project be postponed or derailed for any
reason. Consequently, we have been reducing the Fund's exposure in these areas.
Despite some weather-related weakness in German economic data over the winter,
the European recovery seems to be on track. Order books are improving, thanks
to increased European competitiveness, and business expectations are picking
up. The recovery remains largely dependent on the export sector. There are
signs that increasing confidence, better capability utilization and cheap
financing are stimulating an upturn in investment spending, which should
sustain the recovery into next year. However, a continuing fiscal squeeze,
little real wage growth, and rising job insecurity in an atmosphere of
corporate cost cutting, means that consumer spending will be subdued.
Consequently, we have little exposure to retail stocks.
INVESTMENT ACTIVITY AND OUTLOOK
Given the short-term uncertainties in the UK, and our belief that the
continental European recovery will be stronger than is currently expected,
there has been a further shift in emphasis within the Fund. This shift is
toward continental European cyclical companies that are either most sensitive
to domestic economic conditions and/or whose earnings forecasts have yet to
reflect, we believe, the much improved operating environment and the impact of
a stronger U.S. dollar.
The UK continues to be well ahead of the rest of Europe in its economic
recovery, and policy has already begun to shift towards slowing. This has been
helped by the strength of sterling, but further moves will be delayed until
after the May elections. Sterling strength has resulted in a sector shift away
from companies that derive a large proportion of their earnings from exports
and towards domestic earnings. This has led us to reduce your Fund's holdings
in UK utilities and recently privatized companies where we believe the
political risks must be tightened by the proximity of an election.
Specifically, positions were reduced in Anglian Water, BAA, British Telecom and
National Grid Group. We also reduced your Fund's exposure to retailers,
including Sears and financials, including National Westminster Bank after
strong runs that resulted from the increased focus on their domestic earnings
profile. In addition, two food retailers, Tesco and Sainsbury were sold .
A portion of the money raised from these sales was invested in exporters that,
in our opinion, had started to trade at attractive valuations. We purchased two
engineering firms, TI Group and British Aerospace, the oil company, Shell
Transport & Trading, and two media groups, Reed International and Reuters
Holdings.
In continental Europe, we continue to focus on cyclical stocks in sectors where
the problems of overcapacity are least evident and, where companies have some
degree of pricing power. In addition, we see restructuring and more
shareholder-oriented management to be essential to above average returns. These
have proved to be key factors in the performance of utilities like Veba A.G. in
Germany and Generale des Eaux in France, and chemical and pharmaceutical
combines like Bayer A.G. in Germany and Novartis in Switzerland. It is a trend
that is spreading and we expect will produce good performance from stocks like
Pechiney S.A. and Alcatel in France, or Preussag in Germany.
2
ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
France has been slow to benefit from the turn in the economic cycle and slow to
embrace this restructuring trend. However, we have increased our exposure here
as we see signs that this may be changing.
Recently, we added Michelin to your Fund's portfolio. Michelin is, along with
Goodyear and Bridgestone, one of the world's leading tire manufacturers. All
three companies are competing in an industry which has undergone drastic
consolidation in the last five years, following poorly timed capacity
expansions at the end of the 1980s. The number of major tire manufacturers has
halved (Michelin acquired Uniroyal-Goodrich in the U.S.), and demand has caught
up with supply. The resulting better pricing environment, falling raw material
prices, de-leveraging, and lower financial costs, have all combined to restore
margins to previous peaks. This has not been fully reflected in the stock's
valuation, and we expect further good performance from Michelin as raw material
prices fall, a new manufacturing process reduces costs, and truck demand (where
Michelin is the leading player) recovers cyclically.
As always, we appreciate your investment in the New Europe Fund and look
forward to reporting its progress to you in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Greg Eckersley
Vice President
Nigel Hankin
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
Alliance New Europe Fund is a non-diversified investment company that seeks
long-term capital appreciation through investment primarily in the equity
securities of companies based in Europe.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURNS AS OF JANUARY 31, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 18.10% 13.12%
Five Years 14.10% 13.11%
Since Inception* 9.05% 8.35%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 17.14% 13.14%
Five Years 13.30% 13.30%
Since Inception* 10.75% 10.75%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 17.13% 16.13%
Since Inception* 15.80% 15.80%
Average annual total returns reflect reinvestment of dividends and/or capital
gain distributions in additional shares, with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1; 3% year 2; 2% year 3; 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 4/2/90, Class A; 3/5/91, Class B; 5/3/93, Class C.
4
TEN LARGEST HOLDINGS
JANUARY 31, 1997 (UNAUDITED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
Barclays Plc. $3,358,476 2.4%
Total, S.A. Cl. B 3,244,139 2.3
Novartis A.G. 2,905,449 2.1
International Nederlanden 2,902,184 2.1
Bayer A.G. 2,698,152 1.9
Veba A.G. 2,656,973 1.9
Akzo Nobel 2,643,135 1.9
British Petroleum Co. Plc. 2,498,324 1.8
Elf Aquitane, S.A. 2,419,707 1.7
Reed International Plc. 2,073,346 1.5
$27,399,885 19.6%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
_______________________________________________________________________________
SHARES*
HOLDINGS
PURCHASES COUNTRY BOUGHT 1/31/97
- -------------------------------------------------------------------------------
Barclays Plc. United Kingdom 180,000 180,000
British Petroleum Co. Plc. United Kingdom 212,000 212,000
Elf Aquitane, S.A. France 24,900 24,900
Eni S.p.A. (Ente Nazionale Idrocarburi) Italy 317,000 317,000
Rank Group Plc. United Kingdom 264,000 264,000
Reed International Plc. United Kingdom 119,100 119,100
Reuters Holdings Plc. United Kingdom 184,200 184,200
SmithKline Beecham Plc. United Kingdom 122,000 122,000
TI Group Plc. United Kingdom 209,000 209,000
Vendex International N.V. Netherlands 36,100 36,100
HOLDINGS
SALES COUNTRY SOLD 1/31/97
- -------------------------------------------------------------------------------
Banco Intercontinental Espanol Spain 11,385 -0-
B.A.T. Industries Plc. United Kingdom 270,000 71,000
Enterprise Oil Plc. United Kingdom 228,000 -0-
Hepworth Plc. United Kingdom 347,354 -0-
INA (Instituto Nationale delle
Assicurazioni) Italy 987,000 -0-
La Rinascente S.p.A. Italy 200,000 -0-
Peninsular & Oriental Steam Navigation United Kingdom 165,000 -0-
Peugeot, S.A. France 14,130 -0-
Sainsbury (J), Plc. United Kingdom 247,000 -0-
Tate & Lyle Plc. United Kingdom 231,500 -0-
* Adjusted for stock splits.
5
INDUSTRY DIVERSIFICATION
JANUARY 31, 1997 (UNAUDITED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Consumer Staples $ 14,071,408 10.1%
Energy 13,231,296 9.5
Utilities 12,086,119 8.7
Consumer Services 12,056,232 8.6
Banking 11,434,518 8.2
Multi-Industry 11,222,698 8.0
Healthcare 10,120,384 7.2
Consumer Manufacturing 8,946,231 6.4
Insurance 6,760,529 4.8
Capital Goods 6,725,713 4.8
Chemicals 5,969,433 4.3
Printing and Publishing 5,775,569 4.1
Retail 4,239,620 3.0
Basic Industries 3,793,945 2.7
Real Estate 3,198,835 2.3
Forest Products and Paper 2,280,063 1.6
Transportation 1,635,408 1.2
Communication Equipment 1,543,168 1.1
Other 177,724 0.1
Total Investments $135,268,893 96.7
Cash & Receivables, net of liabilities 4,568,280 3.3
Net Assets $139,837,173 100.0%
6
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997 (UNAUDITED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-92.8%
BELGIUM-1.0%
Delhaize-LeLion, S.A. 11,900 $ 693,050
Kredietbank, N.V. 2,210 771,273
------------
1,464,323
DENMARK-1.5%
BG Bank A. S. 11,100 510,120
ISS International Service System A. S. Ser. B 33,750 816,053
Sophus Berendsen A. S. Ser. B 5,700 766,693
------------
2,092,866
FINLAND-3.1%
Huhtamaki Group Ser. I 15,690 703,760
Kesko 47,600 638,566
Orion-yhtyma Oy Ser. B 39,600 1,448,553
UPM-Kymmene Corp. Oy (a) 43,400 846,222
Valmet Corp. Oy 40,200 765,714
------------
4,402,815
FRANCE-15.3%
Alcatel Alsthom (Cie Generale) 8,400 833,008
Assurances Generales de France 57,000 1,817,481
Bouygues, S.A. 14,978 1,471,780
Companie Bancaire, S.A. 5,800 699,023
Eaux (Cie Generale) 11,292 1,446,749
Elf Aquitane, S.A. 24,900 2,419,707
GTM Entrepose, S.A. 13,823 752,936
Legris Industries, S.A. 29,674 1,315,623
Michelin (CGDE) Ser. B 12,500 717,291
Pechiney, S.A. Ser.A 15,532 628,756
Salomon, S.A. 10,500 828,447
SEFIMEG 9,700 684,582
SGS - Thomson Microelectronics N.V. (a) 9,775 700,489
SIMCO 7,649 739,154
Societe de Immeubles De France, S.A. 9,664 615,586
Total, S.A. Cl.B 37,662 3,244,139
Unibail 11,720 1,081,650
Union Immobiliere de France 8,000 693,449
Usinor Sacilor 51,000 725,407
------------
21,415,257
GERMANY-8.6%
Adidas A.G. 3,000 283,183
Bayer A.G. 71,000 2,698,152
Deutsche Telekom A.G. 35,700 664,815
Lufthansa 96,000 1,296,227
Preussag A.G. 2,700 644,173
Schmalbach Lubeca A.G. (a) 6,740 1,544,219
Sueddeutsche Zucker 2,833 1,346,616
Veba A.G. 48,000 2,656,973
Volkswagen A.G. 1,760 825,294
------------
11,959,652
ITALY-3.5%
Eni S.p.A. (Ente Nazionale Idrocarburi) 317,000 1,769,586
Instituto Mobiliare Italiano S.p.A. 48,500 472,818
Saipem S.p.A. 152,200 761,260
Telecom Italia S.p.A. (a) 675,700 1,953,109
------------
4,956,773
NETHERLANDS-7.5%
Akzo Nobel 18,800 2,643,135
Apothekers Cooperate O.P.G. 14,990 454,922
Fortis Amev N.V. 48,100 1,765,833
International Nederlanden 77,000 2,902,184
Philips Electronics N.V. 16,600 668,099
Thermo Eurotech N.V. (b) 160,000 522,122
Vendex International N.V. 36,100 1,566,791
------------
10,523,086
NORWAY-1.6%
Aker RGI A.S.A. 2,300 59,106
Bergesen Cl.A 44,700 1,010,735
Orkla A.S.A. Ser. A 11,800 939,775
Unitor A.S.A. 13,100 170,852
------------
2,180,468
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
PORTUGAL-0.2%
Telecel - Comunicacaoes Pessoais, S.A. (a) 3,300 $ 235,887
SPAIN-3.2%
Autopistas Concesionaria Espanola, S.A. 36,700 453,821
Banco Santander, S.A. 12,600 817,651
Repsol, S.A. 29,400 1,163,790
Tabacalera, S.A. Ser. A 24,500 1,105,848
Unidad Editorial, S.A. (b) 549,920 634,416
Viscofan Industria Navarra De Envolturas
Celulosicas, S.A. 15,800 279,112
------------
4,454,638
SWEDEN-2.6%
AB Astra Ser. B 32,500 1,518,597
Electrolux AB Ser. B 11,800 711,232
Sparbanken Sverige AB Ser. A 43,500 691,560
Stora Kopparbergs Ser. B 54,000 668,127
------------
3,589,516
SWITZERLAND-6.9%
Adecco, S.A. 2,550 716,756
Baloise Holdings 740 1,457,820
Nestle, S.A. 1,570 1,705,537
Novartis A.G. 2,535 2,905,449
Schindler Holding A.G. 665 699,483
S.M.H. A.G. (Societe Suisse pour la
Microelectronique et l'Horlogerie) 4,530 697,205
Swissair A.G. (a) 776 711,411
Zurich Versicherungsgesellschaft 2,600 733,554
------------
9,627,215
UNITED KINGDOM-37.7%
Anglian Water Plc. 123,300 1,251,526
BAA Plc. 195,900 1,669,846
Barclays Plc. 180,000 3,358,476
Bass Plc. 101,000 1,369,868
B.A.T. Industries Plc. 71,000 551,735
BPB Plc. 153,800 895,759
British Aerospace Plc. 89,000 1,808,884
British Petroleum Co. Plc. 212,000 2,498,324
British Sky Broadcasting Group Plc. 110,570 1,061,193
British Telecom Plc. 209,000 1,431,570
BTR Plc. 442,750 1,833,789
Cable & Wireless Plc. 82,200 613,745
Cadbury Schweppes Plc. 200,200 1,507,621
Compass Group Plc. 114,000 1,230,192
General Electric Co.Plc. 233,000 1,455,965
Glaxo Wellcome Plc. 127,900 2,048,253
Grand Metropolitan Plc. 202,000 1,503,375
Hanson Plc. 439,000 648,875
Holliday Chemical Holdings Plc. 324,000 628,146
Kingfisher Plc. 81,700 885,564
Ladbroke Group Plc. 340,500 1,249,347
National Grid Group Plc. 453,000 1,513,333
National Westminster Bank Plc. 98,000 1,211,413
Pearson Plc. 93,000 1,131,725
Rank Group Plc. 264,000 1,861,174
Reed International Plc. 119,100 2,073,346
Reuters Holdings Plc. 184,200 1,936,082
Rugby Group Plc. 498,000 833,827
RTZ Corp. Plc. 42,000 612,380
Sears Plc. 340,000 465,774
Shell Transport & Trading Co. Plc. 79,800 1,374,490
Siebe Plc. 85,700 1,438,352
SmithKline Beecham Plc. 122,000 1,744,610
TI Group Plc. 209,000 1,868,576
Tomkins Plc. 236,600 1,063,354
Unilever Plc. 24,300 543,528
United Assurance Group Plc. 121,000 985,841
Vodafone Group Plc. 270,000 1,168,040
Wimpey (George) Plc. 630,000 1,372,808
------------
52,700,706
8
ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
OTHER-0.1%
Asesores Bursatiles Capital Fund N.V. (a) (b) 800 $177,724
Total Common Stocks & Other Investments
(cost $109,833,509) 129,780,926
PREFERRED STOCKS-3.9%
FINLAND-0.9%
Nokia Corp. 19,700 1,307,281
GERMANY-3.0%
Henkel KGAA Vz 39,240 $1,994,665
Hornback Holding A.G. 18,100 1,321,491
Klein, Schanz & Beck 5,560 864,530
------------
4,180,686
Total Preferred Stocks
(cost $4,648,258) 5,487,967
TOTAL INVESTMENTS-96.7%
(cost $114,481,767) 135,268,893
Other assets less liabilities-3.3% 4,568,280
NET ASSETS-100% $139,837,173
(a) Non-income producing.
(b) Restricted and illiquid security, valued at fair value (see Notes A & F).
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997 (UNAUDITED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $114,481,767) $135,268,893
Cash, at value (cost $6,532,928) 6,515,719
Receivable for investment securities sold 3,259,839
Receivable for capital stock sold 1,101,480
Dividends receivable 829,269
Other assets 4,295
Total assets 146,979,495
LIABILITIES
Payable for investment securities purchased 6,517,658
Payable for capital stock redeemed 170,595
Advisory fee payable 132,323
Dividends payable 90,297
Distribution fee payable 76,466
Administrative fee payable 17,812
Accrued expenses and other liabilities 137,171
Total liabilities 7,142,322
NET ASSETS $139,837,173
COMPOSITION OF NET ASSETS
Capital stock, at par $ 88,211
Additional paid-in capital 116,925,736
Distributions in excess of net investment income (1,444,905)
Accumulated net realized gain on investments and foreign
currency transactions 3,490,879
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 20,777,252
$139,837,173
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($68,749,760/
4,261,395 shares of capital stock issued and outstanding) $16.13
Sales charge--4.25% of public offering price .72
Maximum offering price $16.85
CLASS B SHARES
Net asset value and offering price per share ($52,191,818/
3,356,689 shares of capital stock issued and outstanding) $15.55
CLASS C SHARES
Net asset value and offering price per share ($13,432,966/
863,510 shares of capital stock issued and outstanding) $15.56
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share($5,462,629
/339,546 shares of capital stock issued and outstanding $16.09
See notes to financial statements.
10
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $161,809) $ 910,729
EXPENSES
Advisory fee $716,910
Distribution fee - Class A 109,830
Distribution fee - Class B 237,429
Distribution fee - Class C 60,680
Transfer agency 123,050
Custodian 115,308
Administrative 82,770
Audit and legal 65,655
Printing 38,974
Registration 25,006
Directors' fees 17,500
Miscellaneous 17,036
Total expenses 1,610,148
Net investment loss (699,419)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 3,845,459
Net realized loss on foreign currency transactions (509,997)
Net change in unrealized appreciation of investments 11,190,672
Net change in unrealized depreciation of foreign currency
denominated assets and liabilities 408,379
Net gain on investments and foreign currency transactions 14,934,513
NET INCREASE IN NET ASSETS FROM OPERATIONS $14,235,094
See notes to financial statements.
11
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1997 JULY 31,
(UNAUDITED) 1996
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income (loss) $ (699,419) $ 1,112,997
Net realized gain on investments and foreign
currency transactions 3,335,462 11,244,256
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 11,599,051 (3,136,809)
Net increase in net assets from operations 14,235,094 9,220,444
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (687,499) -0-
Class B (294,871) -0-
Class C (77,561) -0-
Advisor Class (72,002) -0-
Net realized gain on investments
Class A (5,185,709) (2,403,847)
Class B (3,892,291) (1,133,126)
Class C (1,023,804) (271,554)
Advisor Class (413,229) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 10,420,743 (7,025,006)
Total increase (decrease) 13,008,871 (1,613,089)
NET ASSETS
Beginning of year 126,828,302 128,441,391
End of period (including undistributed net
investment income of $386,447 at
July 31, 1996) $139,837,173 $126,828,302
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997 (UNAUDITED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance New Europe Fund (the "Fund"), which is a Maryland corporation, is
registered under the Investment Company Act of 1940, as a non-diversified,
open-end management investment company. On April 15, 1996 the Board of
Directors approved the creation of a fourth class of shares, Advisor Class
Shares. The Fund offers Class A, Class B, Class C and Advisor Class shares.
Class A shares are sold with a front-end sales charge of up to 4.25% for
purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or
more, Class A shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge of 1%. Class B shares are sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares purchased on or after July 1, 1996, 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 solely to investors participating in
fee based programs. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a United States or European stock exchange for
which market quotations are readily available are valued at the last quoted
sales price on that exchange on the day of valuation or, if no such closing
price is available, at the last bid price quoted on such day. Other securities,
including securities of issuers within Eastern European countries, for which
market quotations are readily available are valued in a like manner. Readily
marketable fixed income securities are valued on the basis of prices provided
by a pricing service when such prices are believed by the Adviser to reflect
the fair market value of such securities. Securities, including securities of
issuers within Eastern European countries, and assets for which market
quotations are not readily available, including investments that are subject to
limitations as to their sale (restricted securities), are valued at fair value
as determined in good faith by the Fund's Board of Directors. In determining
fair value, consideration is given to cost, operating and other financial data.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
Net foreign exchange gains represent foreign exchange gains and losses from
sales and maturities of debt securities, holding of foreign currencies,
exchange gains or losses realized between the trade and settlement dates on
security transactions, and the difference between the amounts of dividends,
interest and foreign taxes receivable recorded on the Fund's books and the U.S.
dollar equivalent of the amounts actually received or paid. Net currency gains
and losses from valuing foreign currency denominated assets and liabilities at
period end exchange rates are reflected as a component of net unrealized
appreciation of foreign currency denominated assets and liabilities.
3. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts on short-term securities as adjustments
to interest income.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
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 monthly fee equal to the annualized rate of
1.10% of the Fund's average daily net assets up to $100 million, .95% of the
next $100 million of the Fund's average daily net assets and .80% of the Fund's
average daily net assets over $200 million. Pursuant to the advisory agreement,
the Fund paid $82,770 to the Adviser representing the cost of certain legal and
accounting services provided to the Fund by the Adviser for the six months
ended January 31, 1997.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $82,419 for the six months ended January 31, 1997.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $6,469 from the sale of Class A shares and $50,459,
and $7,827 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the six months
ended January 31, 1997.
Brokerage commissions paid on securities transactions for the six months ended
January 31, 1997, amounted to $1,264,082, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to the Class
B and Class C shares. There is no distribution fee on the Advisor Class shares.
The fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amount of
$2,314,300 and $463,680 for Class B and C shares, respectively; such costs may
be recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs, incurred by the Distributor, beyond the
current fiscal year for Class A shares. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of the Fund's
shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $66,065,629 and $67,908,458,
respectively, for the six months ended January 31, 1997. There were no
purchases or sales of U.S. Government and government agency obligations for the
six months ended January 31, 1997.
At January 31, 1997, the cost of investments for federal income tax purposes
was $115,003,744. Accordingly, gross unrealized appreciation of investments was
$22,034,878 and gross unrealized depreciation of investments was $1,769,729,
resulting in net unrealized appreciation of $20,265,149.
14
ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
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 contracts and the closing of such contract is included in net
realized gain or loss from foreign currency transactions.
Fluctuations in the value of 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 securities in a separate account of the Fund 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 the counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, reflects the total exposure the Fund has in that particular currency
contract. At January 31, 1997, the Fund did not have any foreign exchange
currency contracts outstanding.
NOTE E: CAPITAL STOCK
There are 200,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 50,000,000 authorized shares. Transactions
in shares of beneficial interest were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JAN. 31, 1997 JULY 31, JAN. 31, 1997 JULY 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 457,384 1,080,506 $ 7,411,535 $ 16,829,742
Shares issued in
reinvestment of
dividends and
distributions 254,664 87,353 3,984,275 1,262,243
Shares converted
from Class B 38,009 38,780 623,619 620,439
Shares redeemed (1,161,493) (2,233,336) (19,424,351) (33,970,313)
Net decrease (411,436) (1,026,697) $ (7,404,922) $(15,257,889)
CLASS B
Shares sold 762,486 1,396,359 $ 12,011,626 $ 20,526,104
Shares issued in
reinvestment of
dividends and
distributions 172,848 46,664 2,609,985 654,706
Shares converted
to Class A (39,380) (39,816) (623,619) (620,439)
Shares redeemed (325,002) (965,104) (5,155,240) (14,257,684)
Net increase 570,952 438,103 $ 8,842,752 $ 6,302,687
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JAN. 31, 1997 JULY 31, JAN. 31, 1997 JULY 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS C
Shares sold 855,687 818,362 $ 13,458,355 $ 12,075,167
Shares issued in
reinvestment of
dividends and
distributions 35,908 5,746 543,388 80,733
Shares redeemed (689,549) (692,655) (10,857,853) (10,225,704)
Net increase 202,046 131,453 $ 3,143,890 $ 1,930,196
OCOTBER 2, 1996* OCTOBER 2, 1996*
TO TO
JAN. 31, 1997 JAN. 31, 1997
(UNAUDITED) (UNAUDITED)
------------ --------------
ADVISOR CLASS
Shares sold 313,895 $ 5,439,885
Shares issued in
reinvestment of
distributions 26,029 405,263
Shares redeemed (378) (6,125)
Net increase 339,546 $ 5,839,023
NOTE F: RESTRICTED SECURITIES
DATE
SECURITY ACQUIRED U.S. $ COST
- -------- ---------- -----------
Asesores Bursatiles Capital Fund N.V. 10/29/90 $340,973
Thermo Eurotech N.V. 3/19/91 512,088
Unidad Editorial, S.A. 10/01/92 699,170
The securities shown above are restricted and illiquid and have been valued at
fair value in accordance with procedures described in Note A. The value of
these securities at January 31, 1997 was $1,334,262, representing 1.0% of net
assets.
NOTE G: CONCENTRATION OF RISK
The Fund has invested approximately 38% of its net assets in United Kingdom
equity securities. Political, social or economic changes in this market may
have a greater impact on the value of the Fund's portfolio due to this
concentration.
* Commencement of distribution.
16
FINANCIAL HIGHLIGHTS ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------------
SIX MONTHS MARCH 1,
ENDED 1994
JANUARY 31, YEAR ENDED JULY 31, TO YEAR ENDED FEBRUARY 28,
1997 --------------------- JULY 31, -----------------------------------
(UNAUDITED) 1996 1995 1994(A) 1994 1993 1992
------------- ---------- --------- ------------ ---------- --------- ------------
<S> <C. <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.84 $15.11 $12.66 $12.53 $ 9.37 $ 9.81 $ 9.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.05)(b) .18 .04 .09 .02(b) .04 .02(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 1.84 1.02 2.50 .04 3.14 (.33) .05
Net increase (decrease) in net asset
value from operations 1.79 1.20 2.54 .13 3.16 (.29) .07
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.18) -0- (.09) -0- -0- (.15) (.02)
Distributions from net realized gains
on investments and foreign
currency transactions (1.32) (.47) -0- -0- -0- -0- -0-
Total dividends and distributions (1.50) (.47) (.09) -0- -0- (.15) (.02)
Net asset value, end of period $16.13 $15.84 $15.11 $12.66 $12.53 $ 9.37 $ 9.81
TOTAL RETURN
Total investment return based on net
asset value (c) 11.62% 8.20% 20.22% 1.04% 33.73% (2.82)% .74%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $68,750 $74,026 $86,112 $86,739 $90,372 $79,285 $108,510
Ratio of expenses to average net assets 2.09%(d) 2.14% 2.09% 2.06%(d) 2.30% 2.25% 2.24%
Ratio of net investment income (loss)
to average net assets (.64)%(d) 1.10% .37% 1.85%(d) .17% .47% .16%
Portfolio turnover rate 52% 69% 74% 35% 94% 125% 34%
Average commission rate paid (e) $.0680 -- -- -- -- -- --
</TABLE>
See footnote summary on page 20.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------------------------
SIX MONTHS MARCH 1, MARCH 5,
ENDED 1994 1991(f)
JANUARY 31, YEAR ENDED JULY 31, TO YEAR ENDED FEB. 28, TO
1997 --------------------- JULY 31, --------------------- FEB. 29,
(UNAUDITED) 1996 1995 1994(A) 1994 1993 1992
------------- ---------- --------- ------------ ---------- --------- --------------
<S> <C. <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.31 $14.71 $12.41 $12.32 $ 9.28 $ 9.74 $ 9.84
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.12)(b) .08 (.05) .07 (.05)(b) (.02) (.04)(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 1.78 .99 2.44 .02 3.09 (.33) (.04)
Net increase (decrease) in net asset
value from operations 1.66 1.07 2.39 .09 3.04 (.35) (.08)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.10) -0- (.09) -0- -0- (.11) (.02)
Dividends from net realized gains
on investments and foreign
currency transactions (1.32) (.47) -0- -0- -0- -0- -0-
Total dividends and distributions (1.42) (.47) (.09) -0- -0- (.11) (.02)
Net asset value, end of period $15.55 $15.31 $14.71 $12.41 $12.32 $ 9.28 $ 9.74
TOTAL RETURN
Total investment return based on net
asset value (c) 11.18% 7.53% 19.42% .73% 32.76% (3.49)% .03%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $52,192 $42,662 $34,527 $31,404 $20,729 $1,732 $1,423
Ratio of expenses to average net assets 2.78%(d) 2.86% 2.79% 2.76%(d) 3.02% 3.00% 3.02%(d)
Ratio of net investment income (loss)
to average net assets (1.45)%(d) .59% (.33)% 1.15%(d) (.52)% (.50)% (.71)%(d)
Portfolio turnover rate 52% 69% 74% 35% 94% 125% 34%
Average commission rate paid (e) $.0680 -- -- -- -- -- --
</TABLE>
See footnote summary on page 20.
18
ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS MARCH 1, MAY 3,
ENDED 1994 1993(F)
JANUARY 31, YEAR ENDED JULY 31, TO TO
1997 ----------------------- JULY 31, FEB. 28,
(UNAUDITED) 1996 1995 1994(A) 1994
------------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.33 $14.72 $12.42 $12.33 $10.21
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.13)(b) .08 (.07) .06 (.04)(b)
Net realized and unrealized gain
on investments and foreign
currency transactions 1.78 1.00 2.46 .03 2.16
Net increase in net asset
value from operations 1.65 1.08 2.39 .09 2.12
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.10) -0- (.09) -0- -0-
Distributions from net realized gains
on investments and foreign
currency transactions (1.32) (.47) -0- -0- -0-
Total dividends and distributions (1.42) (.47) (.09) -0- -0-
Net asset value, end of period $15.56 $15.33 $14.72 $12.42 $12.33
TOTAL RETURN
Total investment return based on net
asset value (c) 11.10% 7.59% 19.40% .73% 20.77%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $13,433 $10,141 $7,802 $11,875 $10,886
Ratio of expenses to average net assets 2.78%(d) 2.87% 2.78% 2.76%(d) 3.00%(d)
Ratio of net investment income (loss)
to average net assets (1.64)%(d) .58% (.33)% 1.15%(d) (.52)%(d)
Portfolio turnover rate 52% 69% 74% 35% 94%
Average commission rate paid (e) $.0680 -- -- -- --
</TABLE>
See footnote summary on page 20.
19
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
------------------
OCTOBER 2, 1996(F)
TO
JANUARY 31, 1997
(UNAUDITED)
------------------
Net asset value, beginning of period $16.25
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.10)(b)
Net realized and unrealized gain on investments
and foreign currency transactions 1.49
Net increase in net asset value from operations 1.39
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.23)
Distributions from net realized gains on investments
and foreign currency transactions (1.32)
Total dividends and distributions (1.55)
Net asset value, end of period $16.09
TOTAL RETURN
Total investment return based on net asset value (c) 8.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,463
Ratio of expenses to average net assets 1.74%(d)
Ratio of net investment loss to average net assets (1.91)%(d)
Portfolio turnover rate 52%
Average commission rate paid (e) $.0680
(a) The Fund changed its year end from February 28 to July 31.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return for a period of less than one year is not
annualized.
(d) Annualized.
(e) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
(f) Commencement of distribution.
20
ALLIANCE NEW EUROPE FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
W.H. HENDERSON (1)
STIG HOST (1)
RICHARD M. LILLY (1)
ALAN J. STOGA (1)
OFFICERS
THOMAS J. BARDONG, VICE PRESIDENT
FRANCIS REEVES, VICE PRESIDENT
GREG ECKERSLEY, VICE PRESIDENT
NIGEL HANKIN, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
EDMUND P. BERGAN, JR., SECRETARY
VINCENT S. NOTO, CONTROLLER
CUSTODIAN AND ADMINISTRATOR
THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
(1) Member of the Audit Committee.
21
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 Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
22
ALLIANCE NEW EUROPE 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.
EURSR
