ALLIANCE HIGH YIELD FUND
ANNUAL REPORT
AUGUST 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
October 3, 1997
Dear Shareholder:
We are pleased to provide the first report to shareholders for the Alliance
High Yield Fund. Since the Fund's inception on April 22, 1997, performance has
been excellent, returning just over 15% for the period from inception through
August 31, 1997. The Fund's performance was more than double that of the
unmanaged First Boston High Yield Index for the same period.
INVESTMENT RESULTS
For the period ended 8/31/97
SINCE INCEPTION
(4/22/97)
---------------
ALLIANCE HIGH YIELD FUND
Class A 15.33%
Class B 15.07
Class C 15.07
FIRST BOSTON HIGH YIELD INDEX 6.90
RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES.
MARKET REVIEW
High yield and emerging markets continue to outperform all other fixed income
asset classes. Issuance of new high yield debt should easily exceed $100
billion by the end of this year. This compares to $78 billion for all of 1996.
Mutual fund inflows should also set a new record with about $20 billion of
fresh cash for 1997. Interest rate spreads continue to narrow, driven primarily
by very strong demand for high yield bonds.
High yield assets have demonstrated surprising stability in the face of large
daily swings in the equity market. We have also seen a general trend toward the
globalization of capital markets and growing complexity and diversity of the
high yield market. We believe our experience, size and substantial research
capabilities provides us with an advantage in this kind of changing environment.
Overall, credit safety remains stable, with corporate profits generally
improving. Moody's trailing twelve month default rate for high yield bonds is
around 2%, well below the historical average of 3.5%. A healthy economy,
relatively low interest rates, and a low default environment should help to
maintain interest in high yield bonds.
INVESTMENT STRATEGY
The portfolio is currently well diversified, with about 15 industry sectors
represented. Current holdings include an emphasis on communications, media and
technology companies, which, in general, have experienced returns of 20 to 25%
this year.
SECTOR DIVERSIFICATION
as of 8/31/97
BANKING/FINANCIAL 2.7%
CASH AND SHORT-TERM DEPOSITS 6.8%
BUILDING/REAL ESTATE 2.7%
CABLE 10.2%
TRANSPORTATION 6.6%
TECHNOLOGY 1.8%
RETAIL 5.4%
PAPER/PACKAGING 6.1%
MEDIA 3.2%
LEISURE/ENTERTAINMENT 3.0%
INDUSTRIAL 4.9%
COMMUNICATIONS 28.4%
FOOD/BEVERAGES 5.3%
CONGLOMERATES 1.8%
ENERGY/NATURAL RESOURCES 5.8%
MANUFACTURING 4.4%
CHEMICALS 0.9%
1
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
We appreciate the trust you have placed in us, and look forward to reporting
future investment results in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Nelson Jantzen
Vice President
Wayne Tappe
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.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
Alliance High Yield Fund is a diversified, open-end fund which seeks high total
return by maximizing current income and, to the extent consistent with that
objective, capital appreciation. The Fund will pursue this objective by
investing primarily in a diversified mix of high yield, below investment-grade
fixed income securities involving greater volatility of price and risk of loss
of principal and income than higher-quality fixed income securities.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 15.33% 10.47%
SEC Yield** 8.31%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 15.07% 11.07%
SEC Yield** 8.01%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 15.07% 14.07%
SEC Yield** 8.01%
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 shares 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 returns for Advisor Class shares
will differ due to different expenses associated with that class.
Past performance does not guarantee future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 4/22/97.
** SEC Yields are based on SEC guidelines and are calculated on 30 days ended
August 31, 1997.
3
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
ALLIANCE HIGH YIELD FUND
GROWTH OF A $10,000 INVESTMENT
4/30/97* TO 8/31/97
$11,000
$10,500
$10,000
$9,500
HIGH YIELD FUND CLASS A:$11,022
FIRST BOSTON HIGH YIELD INDEX:$10,616
4/30/97 5/31/97 6/30/97 7/31/97 8/31/97
This chart illustrates the total value of an assumed $10,000 investment in
Alliance High Yield Fund Class A shares (from 4/30/97 to 8/31/97) as compared
to the performance of an appropriate broad-based index. The chart reflects the
deduction of the maximum 4.25% sales charge from the initial $10,000 investment
in the Fund and assumes the reinvestment of dividends and capital gains.
Performance for Class B, Class C and Advisor Class shares will vary from the
results shown above due to differences in expenses charged to those classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The First Boston High Yield Index includes 26 industry sectors and represents
the daily behavior of the high yield markets.
When comparing Alliance High Yield Fund to the index shown above, you should
note that the Fund's performance reflects the maximum sales charge of 4.25%
while no such charges are reflected in the performance of the index.
Alliance High Yield Fund
First Boston High Yield Index
* Month-end nearest to Fund's inception date of 4/22/97.
4
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1997 ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-88.0%
BANKING-0.9%
Bay View Capital Corp.
9.125%, 8/15/07 $ 500 $ 505,000
BUILDING / REAL ESTATE-2.7%
Falcon Building Products, Inc.
9.50%, 6/15/07 (a) 500 511,250
Reliant Building Products
10.875%, 5/01/04 (a) 1,000 1,027,500
------------
1,538,750
CABLE-10.2%
Digital Television Services LLC
12.50%, 8/01/07 (a) 1,000 1,000,000
Echostar DBS Corp.
12.50%, 7/01/02 (a) 750 766,875
General Communications, Inc.
9.75%, 8/01/07 1,000 1,030,000
Innova S de R.L.
12.875%, 4/01/07 (a) 1,000 1,057,500
James Cable Partners - LP
10.75%, 8/15/04 (a) 1,000 1,020,000
OpTel, Inc., Series B
13.00%, 2/15/05 (b) 1,000 970,000
------------
5,844,375
CHEMICALS-0.9%
Harris Chemical North America, Inc.
10.75%, 10/15/03 500 516,250
COMMUNICATIONS-23.2%
American Communications Services, Inc.
13.75%, 7/15/07 (a) 1,500 1,593,750
Econophone, Inc.
13.50%, 7/15/07 (a)(c) 750 783,750
GST Equipment Funding
13.25%, 5/01/07 (a) 750 825,000
Globalstar LP/Globalstar Capital
11.25%, 6/15/04 750 748,125
Hyperion Telecommunications
12.25%, 9/01/04 (a) 1,000 1,030,000
Iridium LLC/Capital Corp.
14.00%, 7/15/05 (a) 1,500 1,590,000
ITC Deltacom, Inc.
11.00%, 6/01/07 (a) 500 531,250
Metronet Communications
12.00%, 8/15/07 (a)(d) 1,500 1,612,500
Microcell Telecommunications
14.00%, 6/01/06 (e) 1,000 640,000
Price Communications Wireless, Inc.
11.75%, 7/15/07 (a) 1,250 1,309,375
Primus Telecommunications Group, Inc.
11.75%, 8/01/04 (f) 1,000 1,037,500
Talton Holdings, Inc.
11.00%, 6/30/07 (a) 500 525,000
WinStar Equipment
12.50%, 3/15/04 (a) 1,000 1,015,000
------------
13,241,250
CONGLOMERATES-1.8%
Insilco Corp.
10.25%, 8/15/07 (a) 1,000 1,016,250
CONSUMER MANUFACTURING-4.4%
Drypers Corp.
10.25%, 6/15/07 (a) 500 501,250
Hedstrom Corp.
10.00%, 6/01/07 (a) 1,000 1,017,500
Sweetheart Cup
9.625%, 9/01/00 1,000 1,005,000
------------
2,523,750
ENERGY-4.0%
ICO, Inc.
10.375%, 6/01/07 (a) 600 625,500
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
Transamerican Energy
11.50%, 6/15/02 (a) $ 500 $ 488,750
13.00%, 6/15/02 (a)(e) 1,500 1,151,250
------------
2,265,500
FINANCIAL-1.8%
Wilshire Financial Services Group, Inc.
13.00%, 8/15/04 (a) 1,000 1,006,250
FOOD / BEVERAGES / TOBACCO-5.3%
Colorado Prime Corp.
12.50%, 5/01/04 (a)(g) 500 502,500
North Atlantic Trading Co.
11.00%, 6/15/04 (a) 500 517,500
SC International Services, Inc.
9.25%, 9/01/07 (a) 500 503,125
Southern Foods Group
9.875%, 9/01/07 (a) 1,000 1,006,250
Specialty Foods Corp.
Series B 11.125%, 10/01/02 500 502,500
------------
3,031,875
INDUSTRIAL-4.9%
Glasstech, Inc.
12.75%, 7/01/04 (a) 750 795,000
High Voltage Engineering Corp.
10.50%, 8/15/04 (a) 500 506,250
Nortek, Inc.
9.125%, 9/01/07 (a) 500 499,375
Safety Components International, Inc.
10.125%, 7/15/07 (a) 1,000 1,015,000
------------
2,815,625
LEISURE / ENTERTAINMENT-3.0%
Coleman Escrow Corp.
11.94%, 5/15/01 (a) 1,000 660,000
Hollywood Theaters, Inc.
10.625%, 8/01/07 (a) $ 500 $518,750
Riddell Sports, Inc.
10.50%, 7/15/07 (a) 500 522,500
------------
1,701,250
MEDIA-3.2%
Azteca Holdings SA
11.00%, 6/15/02 (a) 500 525,000
Central European Media Enterprises, Ltd.
9.375%, 8/15/04 500 500,000
Citadel Broadcasting Co.
10.25%, 7/01/07 (a) 750 791,250
------------
1,816,250
METALS / MINERALS-1.8%
Murrin Murrin Holdings Property
9.375%, 8/31/07 (a) 1,000 1,010,000
PAPER / PACKAGING-6.1%
Burke Industries, Inc.
10.00%, 8/15/07 (a) 500 507,500
Gaylord Container Corp.
9.75%, 6/15/07 (a) 500 510,000
Precise Technology, Inc.
11.125%, 6/15/07 (a) 750 735,000
Riverwood International Corp.
10.625%, 8/01/07 (a) 1,000 1,017,500
10.875%, 4/01/08 750 720,000
------------
3,490,000
RETAIL-3.6%
Discovery Zone, Inc.
13.50%, 8/01/02 (a) 500 517,500
Leslie's Poolmart
10.375%, 7/15/04 (a) 500 518,750
United Auto Group, Inc.
11.00%, 7/15/07 (a) 1,000 1,015,000
------------
2,051,250
6
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SUPERMARKETS-1.8%
Fleming Companies, Inc.
10.50%, 12/01/04 (a) $ 500 $ 507,500
Shoppers Food Warehouse Corp.
9.75%, 6/15/04 (a) 500 515,000
------------
1,022,500
TECHNOLOGY-1.8%
Federal Data Corp.
10.125%, 8/01/05 (a) 500 512,500
Viasystems, Inc.
9.75%, 6/01/07 (a) 500 512,500
------------
1,025,000
TRANSPORTATION-6.6%
Atlas Air, Inc.
10.75%, 8/01/05 (a) 1,000 1,025,000
Chemical Leaman Corp.
10.375%, 6/15/05 (a) 750 775,313
GS Superhighway Holdings
10.25%, 8/15/07 (a) 1,000 980,000
Navigator Gas Transport PLC
10.50%, 6/30/07 (a) 500 512,500
12.00%, 6/30/07 (a) 500 513,750
------------
3,806,563
Total Corporate Debt Obligations
(cost $48,870,151) 50,227,688
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
PREFERRED STOCK-5.2%
Adelphia Communications Corp.
13.00% (a) 7,500 $ 808,125
IXC Communications, Inc.
12.50% (a)(h) 1,000 1,056,250
Nextel Communications, Inc.
13.00% (a)(h) 1,000 1,082,500
Total Preferred Stock
(cost $2,781,250) 2,946,875
TIME DEPOSIT-6.2%
Bank of New York
5.25%, 9/02/97 (cost $3,553,216) $ 3,553 3,553,216
TOTAL INVESTMENTS-99.4%
(cost $55,204,617) 56,727,779
Other assets less liabilities-0.6% 354,254
NET ASSETS-100% $ 57,082,033
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31, 1997,
these securities amounted to $45,000,188 or 78.8% of net assets.
(b) Consists of $1,000,000 senior notes and 1,000 shares of common stock.
(c) Security trades with warrants expiring July 1, 2007.
(d) Security trades with warrants expiring August 15, 2007.
(e) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective until
final maturity.
(f) Security trades with warrants expiring August 1, 2004.
(g) Security trades with warrants expiring May 1, 2004.
(h) PIK preferred, quarterly stock payments.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1997 ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $55,204,617) $ 56,727,779
Receivable for capital stock sold 1,858,852
Interest receivable 728,881
Deferred organization expenses 264,942
Total assets 59,580,454
LIABILITIES
Payable for investment securities purchased 2,005,000
Dividends payable 130,366
Payable for capital stock redeemed 52,069
Distribution fee payable 39,477
Advisory fee payable 16,850
Accrued expenses 254,659
Total liabilities 2,498,421
NET ASSETS $ 57,082,033
COMPOSITION OF NET ASSETS
Capital stock, at par $ 5,112
Additional paid-in capital 55,325,341
Distributions in excess of net investment income (79,329)
Accumulated net realized gain on investment transactions 307,747
Net unrealized appreciation of investments 1,523,162
$ 57,082,033
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($5,888,806/
527,399 shares of capital stock issued and outstanding) $11.17
Sales charge--4.25% of public offering price .50
Maximum offering price $11.67
CLASS B SHARES
Net asset value and offering price per share ($43,297,235/
3,877,745 shares of capital stock issued and outstanding) $11.17
CLASS C SHARES
Net asset value and offering price per share ($7,575,413/
678,454 shares of capital stock issued and outstanding) $11.17
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($320,579 / 28,711 shares of capital stock issued and
outstanding $11.17
See notes to financial statements.
8
STATEMENT OF OPERATIONS
APRIL 22, 1997* TO AUGUST 31, 1997 ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 922,823
EXPENSES
Advisory fee $ 72,014
Distribution fee - Class A 3,447
Distribution fee - Class B 71,444
Distribution fee - Class C 12,098
Administrative 66,750
Audit and legal 51,845
Amortization of organization expenses 20,658
Directors' fees 18,565
Custodian 17,799
Registration 13,371
Transfer agency 11,428
Printing 3,005
Miscellaneous 1,068
Total expenses 363,492
Less: expenses waived and reimbursed by the
Adviser (see note B) (142,073)
Net expenses 221,419
Net investment income 701,404
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 307,747
Net unrealized appreciation of investments 1,523,162
Net gain on investments 1,830,909
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,532,313
* Commencement of operations.
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
APRIL 22, 1997*
TO
AUGUST 31, 1997
---------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 701,404
Net realized gain on investment transactions 307,747
Net unrealized appreciation of investments 1,523,162
Net increase in net assets from operations 2,532,313
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (100,429)
Class B (573,256)
Class C (97,883)
Advisor Class (9,165)
CAPITAL STOCK TRANSACTIONS
Net increase 55,230,153
Total increase 56,981,733
NET ASSETS
Beginning of period 100,300
End of period $ 57,082,033
* Commencement of operations.
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997 ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance High Yield Fund, Inc. (the "Fund") was incorporated in the state of
Maryland on December 19, 1996 as a diversified, open-end management investment
company. Prior to commencement of operations on April 22, 1997, the Fund had no
operations other than the sale to Alliance Capital Management L.P. (the
"Adviser") of 10 shares each of Class A, Class B and Class C and 10,000 shares
of Advisor Class for the aggregate amount of $100 each on Class A, Class B and
Class C shares and $100,000 on the Advisor Class shares on February 26, 1997.
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 currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
to investors participating in fee based programs and to certain retirement plan
accounts. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last reported sales price on such exchange. Listed securities not traded and
securities traded in the over-the-counter market, including listed debt
securities whose primary market is believed to be over-the-counter, are valued
at the mean of the closing bid and asked price as obtained from a recognized
pricing service and brokers. Securities which mature in 60 days or less are
valued at amortized cost, which approximates market value unless this method
does not represent fair value. Securities for which market quotations are not
readily available and restricted securities are valued in good faith at fair
value using methods determined by the Board of Directors. In determining fair
value, consideration is given to cost, operating and other financial data.
2. 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.
3. ORGANIZATION EXPENSES
Organization costs of $285,600 have been deferred and are being amortized on a
straight-line basis through April, 2002.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on ex-dividend
date. Investment transactions are accounted for on the date the securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discount as adjustment 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 shares 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 Advisory Class shares have no distribution fees.
Expenses of the Fund are charged to the Fund in proportion to net assets.
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
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
such reclassification. During the current fiscal year, permanent differences,
primarily due to short-term capital gains, resulted in a net decrease in
accumulated net realized gain on investment transactions and a corresponding
increase in undistributed net investment income. This reclassification had no
affect on net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of
.75% of 1% of the average daily net assets of the Fund. Such fee is accrued
daily and paid monthly.
The Investment Adviser has agreed to voluntarily waive its fees and bear
certain expenses so that total expenses do not exceed on an annual basis 1.70%,
2.40%, 2.40% and 1.40% of the daily average net assets for the Class A, Class
B, Class C and Adviser Class shares, respectively. For the period ended August
31, 1997, such reimbursement amounted to $3,309. In addition, the Adviser has
waived its fees in the amount of $72,014.
Pursuant to the advisory agreement, the Adviser provides certain legal and
accounting services for the Fund. For the period ended August 31, 1997, the
Adviser voluntarily agreed to waive its fees in the amount of $66,750 for such
services.
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 $3,060 for the period ended August 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 $7,095 from the sale of Class A shares, and $14,342
and $2,565 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the period ended
August 31, 1997.
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 Fund's average daily net assets attributable to
Class A shares and 1% of the Fund's average daily net assets attributable to
the Class B and Class C shares. There is no distribution fee on the Advisor
Class shares. Such fee is accrued daily and paid monthly. The Agreement
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities. The Distributor has
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $1,679,237 and $79,092, 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 investments
and U.S. government obligations) aggregated $67,120,953 and $15,818,608,
respectively, for the period ended August 31, 1997. There were no purchases or
sales of U.S. government or government agency obligations for the period ended
August 31, 1997.
At August 31, 1997, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $1,606,831 and gross unrealized
depreciation of investments was $83,669, resulting in net unrealized
appreciation of $1,523,162.
12
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------- ---------------
APRIL 22, 1997* APRIL 22, 1997*
TO TO
AUG. 31, 1997 AUG. 31, 1997
--------------- ---------------
CLASS A
Shares sold 662,265 $ 7,166,202
Shares issued in reinvestment of dividends 5,192 57,153
Shares converted from Class B 800 8,899
Shares redeemed (140,868) (1,561,101)
Net increase 527,389 $ 5,671,153
CLASS B
Shares sold 3,983,130 $ 43,164,351
Shares issued in reinvestment of dividends 13,930 153,591
Shares converted to Class A (800) (8,899)
Shares redeemed (118,525) (1,302,901)
Net increase 3,877,735 $ 42,006,142
CLASS C
Shares sold 708,988 $ 7,691,629
Shares issued in reinvestment of dividends 3,959 43,572
Shares redeemed (34,503) (378,081)
Net increase 678,444 $ 7,357,120
ADVISOR CLASS
Shares sold 18,485 $ 193,285
Shares issued in reinvestment of dividends 380 4,153
Shares redeemed (154) (1,700)
Net increase 18,711 $ 195,738
* Commencement of operations.
13
FINANCIAL HIGHLIGHTS ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS A CLASSB CLASS C ADVISOR CLASS
----------------- ----------------- ---------------- -----------------
APRIL 22, 1997(A) APRIL 22, 1997(A) APRIL 22, 1997(A) APRIL 22, 1997(A)
TO TO TO TO
AUGUST 31, 1997 AUGUST 31, 1997 AUGUST 31, 1997 AUGUST 31, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .37 .31 .32 .40
Net realized and unrealized
gain on investments 1.15 1.19 1.18 1.13
Net increase in net asset
value from operations 1.52 1.50 1.50 1.53
LESS: DIVIDENDS
Dividends from net investment income (.35) (.33) (.33) (.36)
Net asset value, end of period $11.17 $11.17 $11.17 $11.17
TOTAL RETURN
Total investment return based
on net asset value (c) 15.33% 15.07% 15.07% 15.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $5,889 $43,297 $7,575 $321
Ratio to average net assets:
Expenses, net of waivers/
reimbursements (d) 1.70% 2.40% 2.40% 1.40%
Expenses, before waivers/
reimbursements (d) 3.11% 3.85% 3.84% 2.82%
Net investment income, net
of waivers/reimbursements (d) 8.04% 7.19% 7.24% 8.20%
Portfolio turnover rate 73% 73% 73% 73%
</TABLE>
(a) Commencement of operations.
(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 calculated for a period of less than one year
is not annualized.
(d) Annualized.
14
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE HIGH YIELD FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance High Yield Fund, Inc. (the "Fund"), including the portfolio of
investments, as of August 31, 1997, and the related statements of operations
and changes in net assets and financial highlights for the period from April
22, 1997 (commencement of operations) to August 31, 1997. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance High Yield Fund, Inc. at August 31, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for the
period from April 22, 1997 to August 31, 1997, in conformity with generally
accepted accounting principles.
New York, New York
October 7, 1997
15
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
NELSON JANTZEN, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
WAYNE C. TAPPE, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JUAN J. RODRIGUEZ, CONTROLLER
CUSTODIAN
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.
16
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
17
ALLIANCE HIGH YIELD 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.
HYFAR
