ALLIANCE HIGH YIELD FUND
SEMI-ANNUAL REPORT
FEBRUARY 28, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
April 29, 1999
Dear Shareholder:
This report provides a review of the investment strategy, performance and
outlook for Alliance High Yield Fund (the "Fund"). The Fund's objective is to
provide investors with a high current income and, to the extent consistent with
that objective, capital appreciation. The Fund pursues this objective by
investing primarily in a diversified mix of high-yield, below investment-grade
fixed-income securities.
INVESTMENT RESULTS
The following table shows how your Fund performed during the six- and 12-month
periods ended February 28, 1999. For comparison, we have also included
performance for the Fund's benchmark, the First Boston High Yield Index, which
is representative of the aggregate high-yield debt market.
The Fund's Class A shares returned 0.44% and -4.91% at net asset value for the
six- and 12-month periods ended February 28, 1999, underperforming its
respective benchmark returns of 3.48% and -1.15%. Our focus on single B-rated
and zero coupon issues hurt performance, as these high-yield securities
dramatically underperformed other segments of the high-yield market during the
period under review.
INVESTMENT RESULTS*
Periods Ended February 28, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE HIGH YIELD FUND
Class A 0.44% -4.91%
Class B 0.10% -5.60%
Class C 0.10% -5.60%
FIRST BOSTON HIGH YIELD INDEX 3.48% -1.15%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF FEBRUARY 28, 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 INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID
DURING THE PERIOD. TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO
DIFFERENT EXPENSES ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
THE FIRST BOSTON HIGH YIELD INDEX IS AN UNMANAGED, TRADER PRICED PORTFOLIO
CONSTRUCTED TO MIRROR THE HIGH-YIELD DEBT MARKET. AN INVESTOR CANNOT INVEST
DIRECTLY IN AN INDEX.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
MARKET OVERVIEW
During the six months ended February 28, 1999, financial markets stabilized and
recovered from the turmoil experienced in the third quarter of 1998. Despite an
unprecedented wave of financial shocks both at home and abroad, overall U.S.
economic growth remained strong, while inflation, interest rates and
unemployment reached historic lows. Strong consumer demand and productivity
growth were the driving forces behind the continuing domestic expansion.
However, the manufacturing sector continued to be negatively affected by weak
export markets as economies outside the U.S. continued to slow. The Federal
Reserve lowered interest rates from 5.50% to 4.75% at the beginning of the
period when the risk of slowing economic growth outweighed the risk of rising
inflation.
The U.S. high-yield market posted moderate returns over the six-month period
ended February 28, 1999. The sector posted relatively strong returns in the
first half of 1998, however, investors' aversion to risk caused by financial
and economic turmoil and fear of global recession significantly dampened
performance. October was a particularly difficult month as high-yield credit
spreads (the difference in yield between Treasury securities and non-Treasury
securities) reached record levels not experienced since the recession of the
early 1990s. Within the high-yield segment, lower quality corporate bonds
suffered most. High-yield markets rebounded in November, but weakness persisted
throughout the rest of the period resulting in a modest overall return.
INVESTMENT STRATEGY
We continued to focus on single B- and double B-rated securities. After the
market turmoil of the third quarter, we selectively chose solid credits which
we believed to be undervalued. We were particularly interested in the
1
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
communications sector which benefited from strong earnings and merger activity
in 1998. The utility sector also provided some attractive investments as this
sector benefits from its "safe haven" status during times of market volatility.
OUTLOOK
Looking forward, we believe the risk of global recession has diminished after
the wave of official interest rate cuts around the world. However, we believe
global growth will continue to slow and inflation will remain subdued as the
consequences of excess productive capacity are felt around the world. U.S.
economic activity is expected to remain strong in the near term with moderation
later in the year. We expect growth to slow from the robust rate of the fourth
quarter of 1998 to an estimated 3.6% for 1999. With U.S. growth remaining
robust and inflation low, we do not expect any near-term changes in interest
rates by the Federal Reserve.
We continue to view the high-yield sector favorably. Currently, the average
high-yield index is yielding about 4.0% to 5.0% over Treasury securities. The
combination of moderate growth and low inflation will help high-yield spreads
to continue contracting throughout 1999. However, the importance of issuer
selection will increase as the domestic economy slows and turmoil in global
markets causes short-term price volatility. We will focus more on single
B-rated credits with hard assets, contributed equity from the sponsor, or a
large market capitalization. We are attempting to pare down the CCC-rated
securities as well as some of the deferred interest securities in the
portfolio. Credit selection will play a pivotal role in 1999, as default rates
should slowly rise to about 3.0%-3.5%. Although 1998 was extremely volatile and
most high-yield funds generated negative returns, we continue to find very
compelling reasons to invest in the high-yield market in 1999.
Thank you for your continued interest and investment in Alliance High Yield
Fund. We look forward to reporting its progress to you in the coming months.
Sincerely,
John D. Carifa
Chairman and President
Nelson Jantzen
Senior 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
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF FEBRUARY 28, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -4.91% -8.96%
Since Inception* 11.94% 9.37%
SEC Yield** 9.83%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -5.60% -9.00%
Since Inception* 11.19% 9.71%
SEC Yield** 9.55%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -5.60% -6.45%
Since Inception* 11.19% 11.19%
SEC Yield** 9.56%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(DECEMBER 31, 1998)
CLASS A CLASS B CLASS C
---------- ---------- ----------
1 Year -5.83% -5.80% -3.16%
Since Inception* 9.72% 10.21% 11.86%
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 (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: 4/22/97 for all share classes.
** SEC yields are based on SEC guidelines and are calculated on 30 days ended
February 28, 1999.
3
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1999 (UNAUDITED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-87.3%
AUTOMOTIVE-1.9%
Breed Technologies, Inc.
9.25%, 4/15/08 (a) $ 3,000 $ 1,515,000
Safelite Glass Corp.
9.875%, 12/15/06 (a) 3,000 2,850,000
Safelite Glass Corp. Series B
9.875%, 12/15/06 2,000 1,910,000
Special Devices, Inc.
11.375%, 12/15/08 (a) 5,000 5,075,000
------------
11,350,000
BUILDING/REAL ESTATE-2.1%
D.R. Horton, Inc.
8.00%, 2/01/09 5,500 5,472,500
Lennar Corp.
7.625%, 3/01/09 3,350 3,278,477
LNR Property Corp.
10.50%, 1/15/09 4,000 4,060,000
------------
12,810,977
BUSINESS SERVICES-5.1%
Coyne International Enterprises, Inc.
11.25%, 6/01/08 5,000 4,925,000
Dialog Corp. PLC Series A
11.00%, 11/15/07 5,000 4,725,000
Employee Solutions, Inc. Series B
10.00%, 10/15/04 2,000 1,400,000
Intertek Finance PLC Series B
10.25%, 11/01/06 2,500 2,325,000
IPC Information Systems, Inc.
10.875%, 5/01/08 (b) 8,000 5,160,000
NEFF Corp.
10.25%, 6/01/08 2,000 1,990,000
Primark Corp.
9.25%, 12/15/08 (a) 5,000 5,050,000
TM Group Holdings PLC
11.00%, 5/15/08 (a) 5,000 5,075,000
------------
30,650,000
CABLE-2.1%
Knology Holdings, Inc.
Warrants, expiring 10/15/02 (c) 1,500 3,750
NTL, Inc.
11.50%, 10/01/08 (a) 5,000 5,650,000
OpTel, Inc. Series B
11.50%, 7/01/08 3,500 3,447,500
13.00%, 2/15/05 (d) 2,000 2,010,049
United International Holdings, Inc.
Series B
10.75%, 2/15/08 (b) 2,000 1,330,000
------------
12,441,299
CHEMICALS-2.0%
Brunner Mond Group PLC
11.00%, 7/15/08 (a) 4,000 2,500,000
Climachem, Inc. Series B
10.75%, 12/01/07 3,000 2,985,000
Equistar Chemicals LP
8.75%, 2/15/09 (a) 5,000 5,131,250
Trans-Resources, Inc. Series B
10.75%, 3/15/08 1,500 1,462,500
------------
12,078,750
4
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
CONSUMER MANUFACTURING-8.8%
AAI. Fostergrant, Inc. Series B
10.75%, 7/15/06 $ 5,000 $ 4,525,000
Bell Sports, Inc. Series B
11.00%, 8/15/08 5,000 5,125,000
Derby Cycle Corp.
10.00%, 5/15/08 1,500 1,402,500
Dyersburg Corp. Series B
9.75%, 9/01/07 2,000 1,550,000
Generac Portable Products LLC
11.25%, 7/01/06 (a) 5,000 5,200,000
Hedstrom Corp.
10.00%, 6/01/07 5,000 4,225,000
Home Interiors & Gifts, Inc.
10.125%, 6/01/08 7,000 7,070,000
Imperial Home Decorating Group Series B
11.00%, 3/15/08 5,000 4,325,000
Norton McNaughton, Inc.
12.50%, 6/01/05 2,000 1,690,000
Ntex, Inc.
11.50%, 6/01/06 3,000 2,805,000
Outsourcing Services Group, Inc.
10.875%, 3/01/06 (a) 2,000 1,930,000
Polaroid Corp.
11.50%, 2/15/06 4,000 4,130,000
Samsonite Corp.,
10.75%, 6/15/08 7,000 5,355,000
True Temper Sports, Inc.
10.875%,12/01/08 (a) 4,000 3,860,000
------------
53,192,500
ENERGY-1.3%
Bayard Drilling Technologies, Inc.
Series B
11.00%, 6/05/04 2,000 2,190,000
Chesapeake Energy Corp. Series B
9.625%, 5/01/05 4000 3,160,500
Eagle Geophysical, Inc. Series B
10.75%, 7/15/08 2,000 1,210,000
Gothic Energy Corp.
Warrants, expiring 9/01/04 (c) 14,000 14,000
Queen Sand Resources, Inc.
12.50%, 7/01/08 2,000 1,210,000
------------
7,784,500
FINANCIAL-2.0%
Metris Cos., Inc.
10.00%, 11/01/04 5,000 5,062,500
Willis Corroon Corp.
9.00%, 2/01/09 (a) 7,000 7,035,000
------------
12,097,500
FIXED COMMUNICATIONS-15.2%
Concentric Network
Warrants, expiring 12/15/07 (a)(c) 1,000 167,300
Econophone, Inc.
13.50%, 7/15/07 4,000 4,180,000
Exodus Communications, Inc.
11.25%, 7/01/08 4,500 4,725,000
GST Telecommunications, Inc.
10.50%, 5/01/08 (a)(b) 2,000 935,000
ICG Services, Inc.
9.875%, 5/01/08 (b) 10,000 5,800,000
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
Intermedia Communications, Inc.
9.50%, 3/01/09 (a) $ 500 $ 498,750
Logix Communications, Inc.
12.25%, 6/15/08 5,000 4,650,000
Long Distance International, Inc.
12.25%, 4/15/08 (a)(e) 2,000 1,600,000
Warrants, expiring 4/15/98 (c) 2,000 5,000
Metronet Communications
Warrants, expiring 8/15/07 (a)(c) 1,500 90,000
Nextlink Communications, Inc.
10.75%, 11/15/08 (a) 6,000 6,270,000
Northeast Optical Network, Inc.
12.75%, 8/15/08 5,000 5,125,000
Pac-West Telecommunications, Inc.
13.50%, 2/01/09 (a) 5,000 5,037,500
Primus Telecommunications Group, Inc.
11.25%, 1/15/09 (a) 5,000 5,100,000
Warrants, expiring 8/01/04 (c) 1,000 15,000
RSL Communications PLC
10.50%, 11/15/98 (a) 8,500 8,627,500
Splitrock Services, Inc. Series B
11.75%, 7/15/08 7,000 6,370,000
Warrants, expiring 7/15/08 (c) 35,000 105,000
Startec Global Communications Corp.
12.00%, 5/15/08 6,000 5,460,000
Warrants, expiring 5/15/08 (c) 6,000 6,000
US Xchange LLC
15.00%, 7/01/08 4,000 4,180,000
Verio, Inc.
11.25%, 12/01/08 (a) 7,500 8,100,000
Versatel Telecom BV
13.25%, 5/15/08 2,000 2,130,000
13.25%, 5/15/08 (a)(f) 3,000 3,090,000
Warrants, expiring 5/15/08 (c) 5,000 200,000
Viatel, Inc.
11.25%, 4/15/08 5,000 5,150,000
Winstar Communications, Inc.
10.00%, 3/15/08 5,000 3,825,000
------------
91,442,050
FOOD/BEVERAGES/TOBACCO-2.6%
Agrilink Foods, Inc.
11.875%, 11/01/08 (a) 4,000 4,300,000
Favorite Brands International, Inc.
10.75%, 5/15/06 (a) 5,000 3,075,000
Fresh Foods, Inc.
10.75%, 6/01/06 3,000 2,932,500
New World Pasta Co.
9.25%, 2/15/09 (a) 1,500 1,518,750
Richmont Marketing Specialists, Inc.
10.125%, 12/15/07 (a) 5,000 3,650,000
------------
15,476,250
GAMING-1.2%
Harrahs Operating Co., Inc.
7.50%, 1/15/09 4,000 3,972,780
Hollywood Park, Inc.
9.25%, 2/15/07 (a) 3,200 3,228,000
------------
7,200,780
6
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
GENERAL INDUSTRIAL-9.9%
Amtrol, Inc.
10.625%, 12/31/06 $ 5,000 $ 4,925,000
Anchor Lamina, Inc.
9.875%, 2/01/08 5,000 4,750,000
Aqua Chemical, Inc.
11.25%, 7/01/08 5,000 4,350,000
AXIA, Inc.
10.75%, 7/15/08 5,000 5,050,000
Glasstech, Inc.
Warrants, expiring 6/30/04 (c) 750 375
Hexcel Corp.
9.75%, 1/15/09 (a) 5,000 5,150,000
Moll Industries, Inc.
10.50%, 7/01/08 5,000 5,000,000
Morris Materials Handling
9.50%, 4/01/08 2,000 1,180,000
MSX International, Inc.
11.375%, 1/15/08 2,000 1,950,000
MVE, Inc.
12.50%, 2/15/02 (g) 3,000 3,225,000
Neenah Corp. Series B
11.125%, 5/01/07 1,000 1,050,000
11.125%, 5/01/07 (a) 2,000 2,100,000
Pacific Aerospace & Electronics, Inc.
11.25%, 8/01/05 (a) 4,000 3,220,000
Penhall Acquisition Corp.
12.00%, 8/01/06 3,000 2,835,000
Russell-Stanley Holdings, Inc.
10.875%, 2/15/09 (a) 8,000 7,880,000
Scovill Fasteners, Inc. Series B
11.25%, 11/30/07 2,000 1,530,000
Tokheim Corp.
11.375%, 8/01/08 (a) 5,500 5,720,000
------------
59,915,375
HEALTHCARE-0.8%
Biovail Corp. International
10.875%, 11/15/05 (a) 5,000 5,125,000
HOTEL & LODGING-0.5%
ITT Corp.
6.75%, 11/15/03 3,000 2,753,493
LEISURE/ENTERTAINMENT-1.5%
Epic Resorts LLC Series B
13.00%, 6/15/05 2,500 2,400,000
Warrants, expiring 6/15/05 (c) 2,500 25
Fox Family Worldwide, Inc.
9.25%, 11/01/07 1,400 1,354,500
TVN Entertainment Corp.
14.00%, 8/01/08 (a)(h) 5,000 4,300,000
V2 Music Holdings PLC
14.00%, 4/15/08 (a)(b)(i) 2,500 1,162,500
Warrants, expiring 4/15/08 (c) 2,500 6,250
------------
9,223,275
MEDIA-3.6%
Goss Graphic Systems, Inc.
12.00%, 10/15/06 8,000 2,840,000
Jones International Networks, Ltd.
11.75%, 7/01/05 5,000 3,775,000
Marvel Enterprises, Inc.
12.00%, 6/15/09 (a) 6,000 6,090,000
Premier Graphics, Inc.
11.50%, 12/01/05 (a) 2,750 2,695,000
Regional Independent Media Group PLC
10.50%, 7/01/08 2,500 2,512,500
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
Source Media, Inc.
12.00%, 11/01/04 $ 2,000 $ 1,550,000
T/SF Communications Corp. Series B
10.375%, 11/01/07 2,000 2,070,000
------------
21,532,500
METALS/MINERALS-5.6%
Bulong Operations Property, Inc.
12.50%, 12/15/08 (a) 5,000 5,062,500
Centaur Mining & Exploration, Ltd.
11.00%, 12/01/07 5,000 4,800,000
Continental Global Group Series B
11.00%, 4/01/07 5,000 4,175,000
DOE Run Resources Corp. Series B
11.25%, 3/15/05 1,000 885,000
Golden Northwest Aluminium Co.
12.00%, 12/15/06 (a) 4,000 4,070,000
Metal Manegement, Inc.
10.00%, 5/15/08 5,000 3,200,000
Murrin Murrin Holdings
10.375%, 8/31/07 1,250 1,131,250
Ormet Corp.
11.00%, 8/15/08 (a) 3,000 2,835,000
P&L Coal Holdings Corp. Series B
9.625%, 5/15/08 2,000 2,045,000
Pen Holdings, Inc. Series B
9.875%, 6/15/08 3,000 3,030,000
Simcala, Inc. Series B
9.625%, 4/15/06 3,575 2,627,625
------------
33,861,375
MOBILE COMMUNICATIONS-4.1%
American Mobile Satellite
Warrants, expiring 4/01/08 (a)(c) 5,000 16,450
AMSC Acquisition Co. Inc. Series B
12.25%, 4/01/08 5,000 2,475,000
Cellco Finance NV
15.00%, 8/01/05 (a) 3,000 2,842,500
Firstcom Corp.
Warrants, expiring 10/27/07 (a)(c) 52,500 39,375
ICO Global Communications Holdings, Ltd.
15.00%, 8/01/05 (j) 5,000 3,600,000
Ionica Group PLC
13.50%, 8/15/06 2,000 720,000
Iridium LLC Capital Corp.
14.00%, 7/15/05 (k) 6,500 5,492,500
Nextel Communications, Inc.
12.00%, 11/01/08 (a) 2,410 2,723,300
Price Communications Cellular
Holdings, Inc.
11.25%, 8/15/08 (l) 5,305 5,039,453
TRICOM, SA
11.375%, 9/01/04 2,000 1,757,500
------------
24,706,078
PAPER/PACKAGING-3.8%
Doman Industries Ltd.
8.75%, 3/15/04 6,500 4,712,500
Plainwell, Inc. Series B
11.00%, 3/01/08 5,000 3,950,000
8
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
Riverwood International Corp.
10.625%, 8/01/07 $ 4,000 $ 4,090,000
Stone Container Corp.
9.875%, 2/01/01 5,612 5,745,285
10.75%, 10/01/02 2,500 2,618,750
Sweetheart Cup, Inc.
9.625%, 9/01/00 2,000 1,870,000
------------
22,986,535
RESTAURANTS-2.6%
CKE Restaurants, Inc.
9.125%, 5/01/09 (a) 5,000 5,000,000
Ne Restaurant Co., Inc.
10.75%, 7/15/08 6,000 5,820,000
Romacorp, Inc.
12.00%, 7/01/06 5,000 5,050,000
------------
15,870,000
RETAIL-2.1%
HMV Media Group PLC Series B
10.25%, 5/15/08 5,000 5,075,001
Sonic Automotive, Inc. Series B
11.00%, 8/01/08 5,200 5,226,000
United Auto Group, Inc. Series A
11.00%, 7/15/07 3,000 2,325,000
------------
12,626,001
SUPERMARKETS & DRUGS-1.2%
Di Giorgio Corp. Series B
10.00%, 6/15/07 5,000 4,800,000
RAB Enterprises, Inc.
10.50%, 5/01/05 (a) 3,000 2,235,000
------------
7,035,000
TECHNOLOGY-3.2%
CHS Electronics, Inc.
9.875%, 4/15/05 6,500 5,882,500
Elgar Holdings, Inc.
9.875%, 2/01/08 2,000 1,790,000
Filtronic PLC
10.00%, 12/01/05 (a) 6,000 6,180,000
Panolam Industries International, Inc.
11.50%, 2/10/09 (a) 3,500 3,570,000
Phase Metrics, Inc.
10.75%, 2/01/05 3,000 2,115,000
------------
19,537,500
TRANSPORTATION-3.2%
Aircraft Service International Group, Inc.
11.00%, 8/15/05 3,500 3,556,875
American Commercial Lines LLC/ACL
Series B
10.25%, 6/30/08 3,000 3,120,000
Canadian Airlines Corp.
10.00%, 5/01/05 2,200 1,771,000
Millenium Seacarriers, Inc.
12.00%, 7/15/05 3,000 2,355,000
Oglebay Norton Co.
10.00%, 2/01/09 (a) 6,700 6,532,500
Trans World Airlines, Inc.
11.375%, 3/01/06 2,000 1,115,000
11.50%, 12/15/04 1,000 755,000
------------
19,205,375
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
UTILITY-0.9%
Cogentrix Energy, Inc.
8.75%,10/15/08 (a) $ 5,000 $ 5,375,000
Total Corporate Debt Obligations
(cost $550,980,623) 526,277,113
NON-CONVERTIBLE PREFERRED STOCK-0.4%
Harborside Healthcare
13.50%, 8/01/10 (m)
(cost $3,181,240) 3,206 2,532,740
TIME DEPOSIT-9.0%
Bank of New York
4.375%, 3/01/99
(cost $54,295,000) 54,295 54,295,000
TOTAL INVESTMENTS-96.7%
(cost $608,456,863) 583,104,853
Other assets less liabilities-3.3% 20,106,705
NET ASSETS-100% $ 603,211,558
(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 February 28, 1999,
these securities amounted to $196,083,175 or 32.5% of net assets.
(b) 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.
(c) Non-income producing security.
(d) Consists of $2,000,000 senior notes and 1,635 shares of common stock.
(e) Security trades with warrants expiring April 13, 2008.
(f) Security trades with warrants expiring May 15, 2008.
(g) Security trades with warrants expiring February 15, 2002.
(h) Security trades with warrants expiring August 1, 2008.
(i) Security trades with warrants expiring April 15, 2008.
(j) Security trades with warrants expiring August 1, 2005.
(k) Security trades with warrants expiring July 15, 2005.
(l) Paid-in-kind (PIK) Bond.
(m) PIK preferred, quarterly stock payments.
See notes to financial statements.
10
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999 (UNAUDITED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $608,456,863) $ 583,104,853
Cash 707
Receivable for investment securities sold 65,995,625
Interest receivable 12,376,384
Receivable for capital stock sold 11,006,432
Deferred organization expenses 179,493
Total assets 672,663,494
LIABILITIES
Payable for investment securities purchased 62,936,087
Dividends payable 4,136,062
Payable for capital stock redeemed 1,359,585
Distribution fee payable 403,391
Advisory fee payable 336,149
Accrued expenses 280,662
Total liabilities 69,451,936
NET ASSETS $ 603,211,558
COMPOSITION OF NET ASSETS
Capital stock, at par $ 59,728
Additional paid-in capital 658,940,067
Distributions in excess of net investment income (647,684)
Accumulated net realized loss on investments and foreign
currency transactions (29,788,543)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (25,352,010)
$ 603,211,558
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($81,781,660/
8,091,815 shares of capital stock issued and outstanding) $10.11
Sales charge--4.25% of public offering price .45
Maximum offering price $10.56
CLASS B SHARES
Net asset value and offering price per share
($430,714,271/42,653,366 shares of capital stock issued and
outstanding) $10.10
CLASS C SHARES
Net asset value and offering price per share
($87,491,940/8,663,664 shares of capital stock issued and
outstanding) $10.10
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($3,223,687/318,968 shares of capital stock issued and
outstanding $10.11
See notes to financial statements.
11
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1999 (UNAUDITED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest (net of foreign withholding taxes
of $12,702) $ 26,986,262
Dividends 210,858 $ 27,197,120
EXPENSES
Advisory fee 1,736,526
Distribution fee - Class A 91,503
Distribution fee - Class B 1,670,421
Distribution fee - Class C 327,155
Transfer agency 294,162
Registration 162,186
Custodian 117,000
Administrative 67,844
Audit and legal 60,407
Printing 48,377
Amortization of organization expenses 28,327
Directors' fees 13,857
Miscellaneous 5,575
Total expenses 4,623,340
Net investment income 22,573,780
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (29,823,031)
Net realized gain on foreign currency
transactions 34,842
Net change in unrealized depreciation of:
Investments 11,801,502
Foreign currency denominated assets and
liabilities (1,004)
Net loss on investments and foreign currency
transactions (17,987,691)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,586,089
See notes to financial statements.
12
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31,
(UNAUDITED) 1998
------------- -------------
INCREASE (DECREASE)IN NET ASSETS FROM OPERATIONS
Net investment income $ 22,573,780 $ 15,116,912
Net realized gain (loss) on investments and
foreign currency transactions (29,788,189) 8,191,402
Net change in unrealized depreciation of
investments and foreign currency denominated
assets and liabilities 11,800,498 (38,675,670)
Net increase (decrease) in net assets from
operations 4,586,089 (15,367,356)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (3,178,981) (2,079,155)
Class B (16,357,015) (10,873,437)
Class C (3,206,387) (2,039,187)
Advisor Class (137,797) (125,133)
Distributions in excess of net investment
income
Class A -0- (4,665)
Class B -0- (171,932)
Class C -0- (38,955)
Advisor Class -0- (445)
Net realized gain on investments
Class A (1,039,201) (138,240)
Class B (5,209,050) (888,367)
Class C (1,072,900) (148,083)
Advisor Class (43,661) (5,959)
CAPITAL STOCK TRANSACTIONS
Net increase 264,892,018 338,777,324
Total increase 239,233,115 306,896,410
NET ASSETS
Beginning of year 363,978,443 57,082,033
End of period $ 603,211,558 $ 363,978,443
See notes to financial statements.
13
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (UNAUDITED) 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 may 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
principally 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, if any. 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 sale price or, if there was no sale on
such day, the last bid price quoted on such day. If no bid prices are quoted,
then the security is valued at the mean of the bid and asked prices as obtained
on that day from one or more dealers regularly making a market in that
security. Securities traded on the over-the-counter market, securities listed
on a foreign securities exchange whose operations are similar to the United
States over-the-counter market and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter are valued at
the mean of the closing bid and asked prices provided by two or more dealers
regularly making a market in such securities. U.S. government securities and
other debt securities which mature in 60 days or less are valued at amortized
cost unless this method does not represent fair value. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by, or in accordance with procedures approved by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. Mortgage backed and asset backed
securities may be valued at prices obtained from a bond pricing service or at a
price obtained from one or more of the major broker/dealers in such securities.
In cases where broker/dealer quotes are obtained, the Adviser may establish
procedures whereby changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted bid price on a security.
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 into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign exchange gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities and forward currency
exchange contracts, holding of foreign currencies, exchange gains
14
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
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 amounts actually received or paid. Net currency gains and losses
from valuing foreign currency denominated assets and liabilities at year end
exchange rates are reflected as a component of net unrealized depreciation of
investments and foreign currency denominated assets and liabilities.
3. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. ORGANIZATION EXPENSES
Organization costs of $285,600 have been deferred and are being amortized on a
straight-line basis through April, 2002.
5. 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.
6. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the shares of such class, except that each class's
transfer agent fees and distribution fees, if any, are charged only against the
assets of that class.
7. 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. Based on the operations of the Fund
as of the semi-annual date, and its distribution policy, the Fund may have a
tax return of capital at year end. At this time, the amount of this tax return
of capital is not estimable.
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 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 $226,599 for the six months ended February 28, 1999.
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 $27,684 from the sale of Class A shares, and
$410,179 and $52,011 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class B and Class C shares, respectively, for
the six months ended February 28, 1999.
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
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
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 $17,899,190 and $839,021, 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 $544,800,791 and $304,605,160,
respectively, for the six months ended February 28, 1999. There were no
purchases or sales of U.S. government or government agency obligations for the
six months ended February 28, 1999.
At February 28, 1999, the cost of investments for federal income tax purposes
was $608,689,738. Accordingly, gross unrealized appreciation of investments was
$10,329,391 and gross unrealized depreciation of investments was $35,914,276,
resulting in net unrealized depreciation of $25,584,885 (excluding foreign
currency transactions).
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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, FEBRUARY 28, 1999 AUGUST 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 5,796,783 5,027,959 $ 59,478,566 $ 59,133,579
Shares issued in
reinvestment of
dividends and
distributions 227,868 112,980 2,335,329 1,324,915
Shares converted
from Class B 65,992 64,645 674,861 748,102
Shares redeemed (2,086,071) (1,645,740) (21,509,436) (19,212,486)
Net increase 4,004,572 3,559,844 $ 40,979,320 $ 41,994,110
CLASS B
Shares sold 21,915,779 24,230,640 $ 224,588,276 $ 284,787,774
Shares issued in
reinvestment of
dividends and
distributions 742,879 344,031 7,610,226 4,028,181
Shares converted
to Class A (65,992) (64,645) (674,861) (748,102)
Shares redeemed (5,004,587) (3,322,484) (51,381,426) (38,535,879)
Net increase 17,588,079 21,187,542 $ 180,142,215 $ 249,531,974
CLASS C
Shares sold 5,898,290 6,268,114 $ 60,429,389 $ 73,913,613
Shares issued in
reinvestment of
dividends and
distributions 193,823 74,074 1,985,731 868,654
Shares redeemed (1,925,208) (2,523,883) (19,763,865) (29,681,577)
Net increase 4,166,905 3,818,305 $ 42,651,255 $ 45,100,690
16
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, FEBRUARY 28, 1999 AUGUST 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
ADVISOR CLASS
Shares sold 198,419 224,696 $ 2,035,105 $ 2,660,506
Shares issued in
reinvestment of
dividends and
distributions 10,702 8,780 109,733 103,247
Shares redeemed (99,882) (52,458) (1,025,610) (613,203)
Net increase 109,239 181,018 $ 1,119,228 $ 2,150,550
NOTE F: 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") 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 the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the six months ended February 28, 1999.
17
FINANCIAL HIGHLIGHTS ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 22, 1997(A)
FEBRUARY 28, 1999 AUGUST 31, TO
(UNAUDITED) 1998 AUGUST 31, 1997
----------------- ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.76 $11.17 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .52 1.03 .37
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.48) (.27) 1.15
Net increase in net asset value from
operations .04 .76 1.52
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (1.02) (.35)
Distributions in excess of net
investment income -0- (.01) -0-
Distributions from net realized gains (.15) (.14) -0-
Total dividends and distributions (.69) (1.17) (.35)
Net asset value, end of period $10.11 $10.76 $11.17
TOTAL RETURN
Total investment return based on net
asset value (c) .44% 6.42% 15.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $81,782 $43,960 $5,889
Ratio to average net assets:
Expenses, net of waivers/reimbursements 1.38%(d) 1.43% 1.70%(d)
Expenses, before waivers/reimbursements 1.38%(d) 1.46% 3.11%(d)
Net investment income, net of
waivers/reimbursements 5.12%(d) 8.89% 8.04%(d)
Portfolio turnover rate 67% 311% 73%
</TABLE>
See footnote summary on page 21.
18
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 22, 1997(A)
FEBRUARY 28, 1999 AUGUST 31, TO
(UNAUDITED) 1998 AUGUST 31, 1997
----------------- ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.75 $11.17 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .49 .96 .31
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.48) (.28) 1.19
Net increase in net asset value from
operations .01 .68 1.50
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.95) (.33)
Distributions in excess of net
investment income -0- (.01) -0-
Distributions from net realized gains (.15) (.14) -0-
Total dividends and distributions (.66) (1.10) (.33)
Net asset value, end of period $10.10 $10.75 $11.17
TOTAL RETURN
Total investment return based on net
asset value (c) .10% 5.69% 15.07%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $430,714 $269,426 $43,297
Ratio to average net assets:
Expenses, net of waivers/reimbursements 2.10%(d) 2.13% 2.40%(d)
Expenses, before waivers/reimbursements 2.10%(d) 2.16% 3.85%(d)
Net investment income, net of
waivers/reimbursements 4.79%(d) 8.18% 7.19%(d)
Portfolio turnover rate 67% 311% 73%
</TABLE>
See footnote summary on page 21.
19
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 22, 1997(A)
FEBRUARY 28, 1999 AUGUST 31, TO
(UNAUDITED) 1998 AUGUST 31, 1997
----------------- ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.75 $11.17 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .49 .96 .32
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.48) (.28) 1.18
Net increase in net asset value from
operations .01 .68 1.50
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.95) (.33)
Distributions in excess of net
investment income -0- (.01) -0-
Distributions from net realized gains (.15) (.14) -0-
Total dividends and distributions (.66) (1.10) (.33)
Net asset value, end of period $10.10 $10.75 $11.17
TOTAL RETURN
Total investment return based on net
asset value (c) .10% 5.69% 15.07%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $87,492 $48,337 $7,575
Ratio to average net assets:
Expenses, net of waivers/reimbursements 2.09%(d) 2.13% 2.40%(d)
Expenses, before waivers/reimbursements 2.09%(d) 2.16% 3.84%(d)
Net investment income, net of
waivers/reimbursements 4.79%(d) 8.17% 7.24%(d)
Portfolio turnover rate 67% 311% 73%
</TABLE>
See footnote summary on page 21.
20
ALLIANCE HIGH YIELD FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ADVISOR CLASS
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 22, 1997(A)
FEBRUARY 28, 1999 AUGUST 31, TO
(UNAUDITED) 1998 AUGUST 31, 1997
----------------- ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.76 $11.17 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .54 1.11 .40
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.48) (.32) 1.13
Net increase in net asset value from
operations .06 .79 1.53
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.56) (1.05) (.36)
Distributions in excess of net
investment income -0- (.01) -0-
Distributions from net realized gains (.15) (.14) -0-
Total dividends and distributions (.71) (1.20) (.36)
Net asset value, end of period $10.11 $10.76 $11.17
TOTAL RETURN
Total investment return based on net
asset value (c) .58% 6.68% 15.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,224 $2,256 $321
Ratio to average net assets:
Expenses, net of waivers/reimbursements 1.10%(d) 1.14% 1.40%(d)
Expenses, before waivers/reimbursements 1.10%(d) 1.16% 2.82%(d)
Net investment income, net of
waivers/reimbursements 5.31%(d) 9.25% 8.20%(d)
Portfolio turnover rate 67% 311% 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.
21
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
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
NELSON JANTZEN, 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
One 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 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 the Audit Committee.
22
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Trust Portfolio
Treasury Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
23
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.
HYFSR
