HIGH YIELD FIXED INCOME
[GRAPHIC OMITTED]
Alliance High Yield
Fund
Semi-Annual Report
February 29, 2000 (unaudited)
AllianceCapital[LOGO](R)
The Investment Professional's Choice
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Investment Products Offered
-------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
-------------------------
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LETTER TO SHAREHOLDERS
LETTER TO SHAREHOLDERS
April 13, 2000
Dear Shareholder:
This report provides the performance, investment strategy and outlook for the
Alliance High Yield Fund (the "Fund") for the reporting period ended February
29, 2000.
Investment Performance
The following table provides performance for your Fund as well as its benchmark
index, as represented by the Credit Suisse First Boston High Yield Index, during
the six- and twelve-month periods ended February 29, 2000.
INVESTMENT RESULTS*
Periods Ended February 29, 2000
------------------------------
TOTAL RETURNS
------------------------------
6 months 12 months
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Alliance High
Yield Fund
Class A -1.86% -2.85%
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Class B -2.22% -3.55%
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Class C -2.32% -3.55%
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Credit Suisse
First Boston
High Yield
Index 1.52% 2.76%
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* The Fund's investment results represent total returns and are based on the
net asset value as of February 29, 2000. 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 Credit Suisse First Boston High Yield Index is an unmanaged index of
lower-rated, fixed-income, non-convertible, U.S. dollar-denominated
securities meeting certain criteria developed by Credit Suisse designed to
enable the index to reflect the high-yield market. An investor cannot
invest directly in an index.
Additional investment results appear on pages 4-8.
As shown, the Fund underperformed its benchmark for the six- and twelve-month
periods ended February 29, 2000. Our style of investing, which has emphasized
higher-yielding single-B-rated securities, negatively impacted performance
during the past six months as these securities underperfomed BB-rated securities
and lower-yielding, single-B-rated securities. Reduced liquidity in the
high-yield market has caused investors to focus on larger, more liquid issues.
Many small- to medium-size companies that the Fund owns have been overlooked and
are just beginning to again attract attention. Negative credit events have also
had an impact on the Fund's performance as a number of the companies within the
Fund's portfolio reported "down" or "poor" operating results. This caused the
prices of these securities to fall to default or near default levels.
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ALLIANCE HIGH YIELD FUND o 1
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LETTER TO SHAREHOLDERS
Market Review
The global economy continued its trend of improvement, led by the strength of
the U.S. economy. U.S. gross domestic product growth was 4.2% during 1999, and
it is expected to be at the same level in 2000. Unemployment was 4.1% in
February 2000, a near thirty-year low. U.S. consumer confidence remained high as
spending grew at a 5% rate during the fourth quarter. Higher commodity prices,
led by a spike in oil, began to flow through the U.S. economy. The consumer
price index moved to a recent high of 3.2% on a year-over-year basis in February
versus 2.5% on a year-over-year basis in the fourth quarter of 1999. These
developments, together with continuing economic strength, sparked inflation
concerns in the United States and prompted the U.S. Federal Reserve to further
tighten official interest rates.
During the six-month period ended February 29, 2000, the U.S. yield curve
inverted on expectations of rising interest rates, a Treasury buyback and supply
cuts of long-term government debt. The two-year U.S. Treasury yield thus rose
from 5.73% to 6.53%, while the yield on the thirty-year Treasury bond only rose
from 6.07% to 6.15%.
Also during the six-month period ended February 29, 2000, the high-yield market,
as represented by the Credit Suisse First Boston High Yield Index, posted a
modest return of 1.52%. Performance of fixed-income securities in general was
dampened during the period as central banks around the world increased official
interest rates in response to strengthening economic growth. Liquidity concerns,
rising default rates and mutual fund outflows all contributed to weakness in the
high-yield sector during the period.
During the six months ended February 29, 2000, the best performing industry
sectors within fixed income included paper and packaging, communications,
technology and cable, while health care, supermarket and drug, retail, consumer
and manufacturing were among the worst performing sectors. BB-rated securities
outperformed single-B-rated securities, as excess supply and reduced liquidity
caused investors to focus on larger, more liquid securities.
Investment Strategy
During the reporting period, we began focusing on larger, more liquid issues in
the telecom and media sectors. These two non-cyclical sectors, with a potential
for strong growth, have benefited from robust equity market valuations and a
disproportionate share of positive merger and acquisition activity. Also, with
the emergence of the New Economy, we continue to emphasize technology and
technology-related companies that are changing how business is being done today.
Additionally, we are selectively adding "brick and mortar" companies from the
Old Economy that have been heavily discounted and offer extraordinary yield
opportunities in a market where 80% of the issues are being ignored.
Outlook
In our view, the underlying fundamentals of a growing economy, low inflation and
relatively low (though trending upwards) interest rates remain conducive to high
yield investing. The Credit Suisse First Boston High Yield
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2 o ALLIANCE HIGH YIELD FUND
<PAGE>
LETTER TO SHAREHOLDERS
Index currently yields in excess of 12%, or a 6% premium to Treasuries, which is
generous by historical standards. Another strong year in the equity markets
could engender some re-balancing of portfolios in 2000 toward fixed-income
issues, and high-yield securities in particular, thereby improving demand.
We currently view the high-yield market to be relatively cheap compared to other
fixed-income sectors, and we expect that over the medium- to longer-term time
horizon the high-yield sector should perform well. High-yield structured
products such as collateralized debt obligations should continue to increase
their market share, and we can expect those cash inflows, as well as interest
from pension funds and insurance companies, to add strength to the market.
[PHOTO OMITTED] [PHOTO OMITTED]
John D. Carifa Nelson Jantzen
Portfolio Manager, Nelson Jantzen, is a senior vice president with over 28 years
of investment experience.
Despite offering "good value," the high-yield market lacks confidence after two
years of sub-par returns, and it is in need of an event to push the market back
in the right direction. In any event, we believe that the Fund is currently well
positioned to outperform the market.
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,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Nelson Jantzen
Nelson Jantzen
Senior Vice President
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ALLIANCE HIGH YIELD FUND o 3
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PERFORMANCE UPDATE
PERFORMANCE UPDATE
ALLIANCE HIGH YIELD FUND
GROWTH OF A $10,000 INVESTMENT
4/30/97* TO 2/29/00
[The following table was depicted as a mountain graph in the printed material]
o Alliance High Yield Fund
o CS First Boston High Yield Index
CS First Boston High Yield Index: $11,453
Alliance High Yield Fund Class A: $11,230
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 2/29/00) 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 CS First Boston High Yield Index is an unmanaged index of lower-rated,
fixed-income, non-convertible, U.S. dollar-denominated securities meeting
certain criteria developed by Credit Suisse designed to enable the index to
reflect the high yield market.
When comparing Alliance High Yield Fund to the index shown above, you should
note that no charges or expenses are reflected in the performance of the index.
* Closest month-end after Fund's Class A share inception date of 4/22/97.
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4 o ALLIANCE HIGH YIELD FUND
<PAGE>
PERFORMANCE UPDATE
PERFORMANCE UPDATE
ALLIANCE HIGH YIELD FUND
HISTORY OF RETURNS
YEARLY PERIODS ENDED 2/29
o Alliance High Yield Fund
o First Boston High Yield Index
[GRAPHIC OMITTED]
Past performance is no guarantee of future results. The Fund's investment
results represent total returns for Class A shares and are based on net asset
value. All fees and expenses related to the operation of the Fund have been
deducted. Returns for the Fund include the reinvestment of any distributions
paid during the period. The CS First Boston High Yield Index is an unmanaged
index of lower-rated, fixed-income, non-convertible, U.S. dollar-denominated
securities meeting certain criteria developed by Credit Suisse designed to
enable the index to reflect the high-yield market. The index is unmanaged and
reflects no fees or expenses. An investor cannot invest directly in an index,
and its results are not indicative of any specific investment, including the
Alliance High Yield Fund.
* Fund returns for the period ended 2/28/98 are from the Fund's inception
date of 4/22/97 through 2/28/98. Benchmark returns for the period ended
2/28/98 are from 4/30/97 through 2/28/98.
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ALLIANCE HIGH YIELD FUND o 5
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PORTFOLIO SUMMARY
PORTFOLIO SUMMARY
February 29, 2000 (unaudited)
INCEPTION DATE
4/22/97
PORTFOLIO STATISTICS
Assets ($mil): $655.2
[The following tables were depicted as pie charts in the printed material]
INDUSTRY/SECTOR BREAKDOWN
o 22.04% Fixed Communications
o 11.10% Technology
o 9.60% General Industrial
o 9.44% Other
o 6.01% Cable
o 5.41% Retail
o 5.06% Mobile Communications
o 5.02% Short Term
o 4.91% Energy
o 3.86% Services
o 3.50% Chemicals
o 3.18% Healthcare
o 2.84% Paper/Packaging
o 2.76% Media
o 2.64% Metals/Minerals
o 2.63% Supermarkets & Drugs
COUNTRY BREAKDOWN
o 91.03% United States
o 2.83% Netherlands
o 2.79% Great Britain
o 1.60% Luxembourg
o 1.15% Mexico
o 0.60% Canada
All data as of February 29, 2000. Industry/sector and country breakdowns may
vary over time. These breakdowns are expressed as a percentage of total
investments.
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6 o ALLIANCE HIGH YIELD FUND
<PAGE>
INVESTMENT OBJECTIVE & POLICIES
and INVESTMENT RESULTS
INVESTMENT OBJECTIVE & POLICIES
Alliance High Yield Fund is a diversified, open-end fund that 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 29, 2000
Class A Shares
- --------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year -2.85% -6.99%
Since Inception* 6.52% 4.93%
SEC Yield** 10.74%
Class B Shares
- --------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
One Year -3.55% -7.02%
Since Inception* 5.79% 5.23%
SEC Yield** 10.51%
Class C Shares
- --------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
One Year -3.55% -4.42%
Since Inception* 5.79% 5.79%
SEC Yield** 10.52%
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 returns 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 the 30 days
ended February 29, 2000.
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ALLIANCE HIGH YIELD FUND o 7
<PAGE>
INVESTMENT RESULTS
SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END
(MARCH 31, 2000)
Class A Class B Class C
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1 Year -9.03% -9.02% -6.47%
Since Inception* 3.99% 4.30% 4.83%
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 $1,000,000. Total returns for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 4/22/97 for all share classes.
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8 o ALLIANCE HIGH YIELD FUND
<PAGE>
PORTFOLIO OF INVESTMENTS
PORTFOLIO OF INVESTMENTS
February 29, 2000 (unaudited)
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Corporate Debt Obligations-87.5%
Automotive-2.0%
Safelite Glass Corp. .........................
Series B
9.875%, 12/15/06 .......................... $ 1,550 $ 69,750
Series D
9.875%, 12/15/06 .......................... 2,350 94,000
Tenneco Automotive, Inc.
11.625%, 10/15/09(a) ...................... 12,500 12,765,625
-----------
12,929,375
-----------
Cable-5.8%
Charter Commercial Holdings
10.25%, 1/15/10(a) ........................ 6,000 5,977,500
Classic Cable, Inc.
10.50%, 3/01/10(a) ........................ 2,400 2,415,000
Knology Holdings, Inc.
Warrants, expiring
10/15/07(a)(c) ............................ 1,500 15,000
Netia Holdings II BV
13.125%, 6/15/09(a) ....................... 7,000 7,472,500
NTL Communication Corp.
Series B
11.50%, 10/01/08 .......................... 8,000 8,480,000
United Pan-Europe Communications NV
10.875%, 11/01/07(a) ...................... 3,500 3,556,875
United Pan-Europe Communications
Series B
10.875%, 8/01/09 .......................... 10,000 9,950,000
-----------
37,866,875
-----------
Chemicals-3.4%
Avecia, Inc.
11.00%, 7/01/09 ........................... 11,000 11,385,000
Climachem, Inc.
Series B
10.75%, 12/01/07 .......................... 4,000 600,000
Lyondell Chemical Co.
Series A
9.625%, 5/01/07 ........................... 5,500 5,273,125
Series B
9.875%, 5/01/07 ........................... 5,000 4,800,000
-----------
22,058,125
-----------
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ALLIANCE HIGH YIELD FUND o 9
<PAGE>
PORTFOLIO OF INVESTMENTS
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Consumer Manufacturing-1.2%
Dyersburg Corp.
Series B
9.75%, 9/01/07 ............................ $ 2,000 $ 910,000
Generac Portable Products, LLC
11.25%, 7/01/06 ........................... 5,000 4,950,000
Hedstrom Corp.
10.00%, 6/01/07 ........................... 6,000 270,000
Outsourcing Services Group, Inc.
10.875%, 3/01/06 .......................... 2,000 1,730,000
------------
7,860,000
------------
Energy-4.7%
Belden & Blake Corp.
Series B
9.875%, 6/15/07 ........................... 15,000 7,200,000
Chesapeake Energy Corp.
Series B
9.625%, 5/01/05 ........................... 9,000 8,550,000
EOTT Energy Partners
11.00%, 10/01/09 .......................... 9,000 9,045,000
Gothic Energy Corp.
Warrants, expiring
1/31/01(c) ................................ 14,000 14,000
Port Arthur Finance Corp.
12.50%, 1/15/09(a) ........................ 500 467,500
PSEG Energy Holdings
9.125%, 2/10/04(a) ........................ 1,500 1,502,399
10.00%, 2/10/04(a) ........................ 4,000 4,175,552
------------
30,954,451
------------
Financial-0.6%
Willis Corroon Corp.
9.00%, 2/01/09 ............................ 5,000 4,025,000
------------
Fixed Communications-19.6%
Alestra, SA
12.625%, 5/15/09 .......................... 7,000 7,245,000
Econophone, Inc.
13.50%, 7/15/07 ........................... 4,000 4,245,000
Global Crossing Holdings Ltd.
9.125%, 11/15/06(a) ....................... 7,500 7,275,000
Global Telesytems
11.00%, 12/01/09(a) ....................... EUR 6,000 5,626,872
Hyperion Telecommunications, Inc.
12.00%, 11/01/07 .......................... 3,000 3,120,000
KMC Telecommunications, Inc.
13.50%, 5/15/09 ........................... 5,000 5,050,000
Level 3 Communications
11.00%, 3/15/08(a) ........................ 9,000 9,022,500
12.875%, 3/15/10(a)(b) .................... 3,000 1,605,000
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10 o ALLIANCE HIGH YIELD FUND
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<PAGE>
PORTFOLIO OF INVESTMENTS
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Logix Communications, Inc.
12.25%, 6/15/08 ........................... $ 5,000 $ 3,625,000
Metromedia Fiber Network, Inc.
10.00%, 12/15/09 .......................... 10,000 9,900,000
Metronet Communications
Warrants, expiring
8/15/07(a)(c) ............................. 1,500 225,000
Northeast Optic Network, Inc.
12.75%, 8/15/08 ........................... 10,390 11,065,350
Primus Telecommunications Group, Inc.
12.75%, 10/15/09 .......................... 3,500 3,587,500
Warrants, expiring
8/01/04(c) ................................ 1,000 60,000
RSL Communications PLC
9.875%, 11/15/09 .......................... 7,000 5,880,000
Startec Global Communications Corp.
12.00%, 5/15/08 ........................... 6,000 4,920,000
Warrants, expiring
5/15/08(c) ................................ 6,000 108,000
US Xchange LLC
15.00%, 7/01/08 ........................... 4,000 2,400,000
Versatel Telecom BV
13.25%, 5/15/08 ........................... 7,000 7,425,000
Warrants, expiring
5/15/08(a)(c) ............................. 5,000 3,875,000
Viatel, Inc.
11.25%, 4/15/08 ........................... 5,000 4,700,000
11.50%, 3/15/09 ........................... 9,600 9,120,000
Williams Communication Group, Inc.
10.875%, 10/01/09 ......................... 5,000 5,125,000
Winstar Equipment Corp.
12.50%, 3/15/04 ........................... 8,500 9,095,000
Worldwide Fiber, Inc.
12.00%, 8/01/09(a) ........................ 3,900 4,075,500
------------
128,375,722
------------
Gaming-0.6%
Park Place Entertainment
9.375%, 2/15/07(a) ........................ 4,000 3,951,288
------------
General Industrial-9.2%
Amtrol, Inc.
10.625%, 12/31/06 ......................... 5,000 4,787,500
Anchor Lamina, Inc.
11.50%, 12/01/05 .......................... 5,000 3,737,500
Applied Power, Inc.
8.75%, 4/01/09 ............................ 6,000 6,180,000
Aqua Chemical, Inc.
11.25%, 7/01/08 ........................... 5,000 2,950,000
AXIA, Inc.
10.75%, 7/15/08 ........................... 5,000 4,275,000
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ALLIANCE HIGH YIELD FUND o 11
<PAGE>
PORTFOLIO OF INVESTMENTS
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Blount, Inc.
13.00%, 8/01/09(a) ........................ $ 4,000 $ 4,240,000
Gentek, Inc.
11.00%, 8/01/09 ........................... 6,000 6,180,000
Glasstech, Inc.
Warrants, expiring
6/30/04(c) ................................ 1 375
Moll Industries, Inc.
10.50%, 7/01/08 ........................... 5,000 2,025,000
Pacific Aerospace & Electronics, Inc.
11.25%, 8/01/05 ........................... 4,000 2,220,000
Pentacon, Inc.
Series B
12.25%, 4/01/09 ........................... 7,000 6,230,000
Russell-Stanley Holdings, Inc.
10.875%, 2/15/09 .......................... 8,000 7,000,000
Sequa Corp.
9.00%, 8/01/09 ............................ 7,000 6,510,000
WEC Co., Inc.
Series B
12.00%, 7/15/09 ........................... 4,500 4,117,500
-----------
60,452,875
-----------
Healthcare-2.9%
Concentra Operating Corp.
13.00%, 8/15/09(a) ........................ 13,000 11,115,000
Iasis Healthcare Corp.
13.00%, 10/15/09(a) ....................... 4,000 4,070,000
Knowles Electronics, Inc.
13.125%, 10/15/09(a) ...................... 4,000 3,760,000
-----------
18,945,000
-----------
Hotels/Lodging-1.3%
Lodgian Financing Corp.
12.25%, 7/15/09 ........................... 6,000 5,670,000
Intrawest Corp.
9.75%, 8/15/08 ............................ 1,000 967,500
10.50%, 2/01/10(a) ........................ 2,000 2,010,000
-----------
8,647,500
-----------
Leisure-0.1%
V2 Music Holdings PLC
14.00%, 4/15/08(a)(b)(f) .................. 2,500 775,000
Warrants, expiring
4/15/08(a)(c) ............................. 2,500 25
-----------
775,025
-----------
Media-2.7%
Entertainment
Series B
14.50%, 7/15/08(b) ........................ 8,000 5,240,000
Fox Family Worldwide, Inc.
9.25%, 11/01/07 ........................... 4,000 3,680,000
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12 o ALLIANCE HIGH YIELD FUND
<PAGE>
PORTFOLIO OF INVESTMENTS
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Goss Graphic Systems, Inc.
12.25%, 11/19/05 .......................... $ 3,750 $ 1,275,000
Marvel Enterprises, Inc.
12.00%, 6/15/09 ........................... 8,000 7,200,000
-----------
17,395,000
-----------
Metals/Minerals-2.5%
Continental Global Group
Series B
11.00%, 4/01/07 ........................... 5,000 2,475,000
Kaiser Aluminum & Chemical
Series B
10.875%, 10/15/06 ......................... 2,000 1,980,000
LTV Corp.
11.75%, 11/15/09(a) ....................... 3,000 3,052,500
Metal Management, Inc.
10.00%, 5/15/08 ........................... 5,000 3,775,000
Republic Technology, Inc.
13.75%, 7/15/09(a)(d) ..................... 15,000 5,325,000
-----------
16,607,500
-----------
Mobile Communications-2.9%
Iridium LLC Capital Corp.
Series B
14.00%, 7/15/05(e) .......................... 14,500 398,750
Nextel Communications, Inc.
9.375%, 11/15/09 ............................ 10,000 9,687,500
Orbital Imaging Corp.
Series D
11.625%, 3/01/05 ............................ 3,750 2,521,875
PTC International Finance
11.25%, 12/01/09(a) ......................... EUR 3,500 3,648,942
11.25%, 12/01/09(a) ......................... $ 3,000 3,045,000
------------
19,302,067
------------
Paper/Packaging-2.7%
Crown Paper Co.
11.00%, 9/01/05 ............................. 6,225 2,770,125
Doman Industries, Ltd.
12.00%, 7/01/04 ............................. 7,500 7,893,750
Plainwell, Inc.
Series B
11.00%, 3/01/08 ............................. 5,000 2,137,500
Riverwood International Corp.
10.625%, 8/01/07 ............................ 5,000 5,075,000
------------
17,876,375
------------
Restaurants-0.8%
Ne Restaurant Co., Inc.
10.75%, 7/15/08 ............................. 6,000 5,250,000
------------
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ALLIANCE HIGH YIELD FUND o 13
<PAGE>
PORTFOLIO OF INVESTMENTS
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Retail-5.2%
Buhrmann US, Inc.
12.25%, 11/01/09(a) ......................... $ 8,000 $ 8,260,000
Group 1 Automotive, Inc.
10.875%, 3/01/09 ............................ 2,250 2,137,500
St. John's Knits International, Inc.
12.50%, 7/01/09 ............................. 5,000 4,675,000
Sonic Automotive, Inc.
Series B
11.00%, 8/01/08 ............................. 4,000 3,880,000
TM Group Holdings PLC
11.00%, 5/15/08 ............................. 9,000 8,955,000
United Auto Group, Inc.
Series A
11.00%, 7/15/07 ............................. 6,500 6,207,500
------------
34,115,000
------------
Services-3.7%
Avis Rent a Car, Inc.
11.00%, 5/01/09 ............................. 6,500 6,565,000
Dialog Corp. PLC
Series A
11.00%, 11/15/07 ............................ 5,000 2,900,000
Employee Solutions, Inc.
Series B
10.00%, 10/15/04 ............................ 2,000 900,000
Premier Graphics, Inc.
11.50%, 12/01/05 ............................ 2,730 1,251,250
Primark Corp.
9.25%, 12/15/08 ............................. 5,000 4,762,500
United Rentals, Inc.
Series B
9.00%, 4/01/09 .............................. 3,500 3,246,250
URS Corp.
Series B
12.25%, 5/01/09 ............................. 4,500 4,725,000
------------
24,350,000
------------
Supermarkets & Drugs-2.6%
Pueblo Xtra International
9.50%, 8/01/03 .............................. 6,270 2,978,250
Series C
9.50%, 8/01/03 .............................. 1,730 821,750
RAB Enterprises, Inc.
10.50%, 5/01/05 ............................. 3,000 2,085,000
Richmont Marketing Specialists, Inc.
10.125%, 12/16/07 ........................... 7,000 3,640,000
Stater Brothers Holdings, Inc.
10.750%, 8/15/06 ............................ 7,000 7,052,500
------------
16,577,500
------------
- --------------------------------------------------------------------------------
14 o ALLIANCE HIGH YIELD FUND
<PAGE>
PORTFOLIO OF INVESTMENTS
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Technology-10.7%
Anteon Corp.
12.00%, 05/15/09 ............................ $ 6,500 $ 5,963,750
CHS Electronics, Inc.
9.875%, 4/15/05 ............................. 6,500 422,500
Concentric Network
Warrants, expiring
12/15/07(a)(c) .............................. 1,000 470,000
Earthwatch, Inc.
13.00%, 7/15/07(a)(b) ....................... 6,500 4,541,875
Elgar Holdings, Inc.
9.875%, 2/01/08 ............................. 2,000 1,210,000
Exodus Communications, Inc.
11.25%, 7/01/08 ............................. 7,000 7,297,500
10.75%, 12/15/09(a) ......................... 8,500 8,691,250
Integrated Circuit Systems, Inc.
11.50%, 5/15/09 ............................. 1,000 1,015,000
Phase Metrics, Inc.
10.75%, 2/01/05(e) .......................... 3,000 450,000
Psinet, Inc.
10.50%, 12/01/06(a) ......................... 4,000 3,950,000
11.00%, 8/01/09 ............................. 6,500 6,548,750
SCG Holdings, Inc.
12.00%, 8/01/09(a) .......................... 7,000 7,630,000
Splitrock Services, Inc.
Series B
11.75%, 7/15/08 ............................. 10,500 11,235,000
Warrants, expiring
7/15/08(c) .................................. 10,500 2,415,000
Verio, Inc.
10.625%, 11/15/09(a) ........................ 8,000 8,080,000
------------
69,920,625
------------
Transportation-0.6%
Aircraft Service International Group, Inc.
11.00%, 8/15/05 ............................. 2,500 2,187,500
Canadian Airlines Corp.
10.00%, 5/01/05 ............................. 2,200 1,771,000
------------
3,958,500
------------
Utility-1.7%
AES Corp.
9.50%, 6/01/09 .............................. 6,250 6,218,750
Cogentrix Energy, Inc.
8.75%, 10/15/08 ............................. 5,000 4,943,750
------------
11,162,500
------------
Total Corporate Debt Obligations
(cost $643,043,075) ......................... 573,356,303
------------
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 15
<PAGE>
PORTFOLIO OF INVESTMENTS
Shares or
Principal
Amount
Company (000) U.S.$ Value
- --------------------------------------------------------------------------------
Non-Convertible Preferred Stocks-3.7%
Dobson Communications Corp.
12.50%, 1/15/08(g)(h) ..................... -0- $ 409
Harborside Healthcare
13.50%, 8/01/10(g) ........................ 3,662 1,061,847
ICG Holdings, Inc.
14.00%, 3/15/08(g) ........................ 11,623 10,460,745
Nextel Communications, Inc.
Series E
11.125%, 2/15/10(g) ....................... 12,940 12,584,305
------------
Total Non-Convertible Preferred Stocks
(cost $29,242,328) ........................ 24,107,306
Common Stocks-0.1%
Firstcom Corp. ............................... 25,400 938,213
OpTel, Inc.(a) ............................... 1,635 16
------------
Total Common Stocks (cost $111,766) .......... 938,229
Time Deposit-4.8%
Bank of New York
5.25%, 3/01/00
(cost $31,599,000) ........................ $ 31,599 31,599,000
------------
Total Investments-96.1%
(cost $703,996,169) ....................... 630,000,838
Other assets less liabilities-3.9% ........... 25,167,587
------------
Net Assets-100% .............................. $655,168,425
============
(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 29,
2000, these securities amounted to $156,668,719 or 23.9% of net assets.
The indentures under which these securities are issued typically require
the issuers to exchange the securities for registered securities,
identical in all other respects to the Rule 144A securities, within 180
days of issuance.
(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) Security trades with warrants expiring August 15, 2009.
(e) Bond in default and non-income producing.
(f) Security trades with warrants expiring April 15, 2008.
(g) Paid-In-Kind (PIK) preferred, quarterly stock payments.
(h) Security held 0.4 shares at February 29, 2000.
See notes to financial statements.
- --------------------------------------------------------------------------------
16 o ALLIANCE HIGH YIELD FUND
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
STATEMENT OF ASSETS & LIABILITIES
February 29, 2000 (unaudited)
Assets
Investments in securities, at value
(cost $703,996,169) ...................................... $ 630,000,838
Cash ....................................................... 7,288,822
Receivable for investment securities sold .................. 47,414,811
Interest receivable ........................................ 19,456,396
Receivable for capital stock sold .......................... 1,793,995
Net unrealized appreciation of forward exchange
currency contracts ...................................... 605,380
Deferred organization expenses ............................. 122,214
-------------
Total assets ............................................... 706,682,456
-------------
Liabilities
Payable for investment securities purchased ................ 45,158,113
Payable for capital stock redeemed ......................... 3,401,810
Dividends payable .......................................... 1,901,777
Distribution fee payable ................................... 470,540
Advisory fee payable ....................................... 392,838
Accrued expenses ........................................... 188,953
-------------
Total liabilities .......................................... 51,514,031
-------------
Net Assets ................................................. $ 655,168,425
==============
Composition of Net Assets
Capital stock, at par ...................................... $ 74,686
Additional paid-in capital ................................. 810,351,819
Distributions in excess of net investment income ........... (5,501,991)
Accumulated net realized loss on investment
and foreign currency transactions ........................ (76,357,818)
Net unrealized depreciation of investments
and foreign currency denominated assets
and liabilities .......................................... (73,398,271)
-------------
$ 655,168,425
==============
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($91,425,774 /10,416,274 shares of capital stock
issued and outstanding) ................................. $ 8.78
Sales charge--4.25% of public offering price ............... 0.39
-------------
Maximum offering price ..................................... $ 9.17
=============
Class B Shares
Net asset value and offering price per share
($475,017,671/54,157,884 shares of capital stock
issued and outstanding) ................................. $ 8.77
=============
Class C Shares
Net asset value and offering price per share
($86,115,107/9,815,232 shares of capital stock
issued and outstanding) ................................. $ 8.77
=============
Advisor Class Shares
Net asset value, redemption and offering price
per share ($2,609,873/297,435 shares of
capital stock issued and outstanding) .................... $ 8.77
=============
See notes to financial statements.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 17
<PAGE>
STATEMENT OF OPERATIONS
STATEMENT OF OPERATIONS
Six Months Ended February 29, 2000 (unaudited)
Investment Income
Interest .................................. 40,039,525
Dividends ................................. 1,650,444 $ 41,689,969
------------
Expenses
Advisory fee .............................. 2,618,877
Distribution fee - Class A ................ 147,332
Distribution fee - Class B ................ 2,518,848
Distribution fee - Class C ................ 466,023
Transfer agency ........................... 432,068
Printing .................................. 82,446
Registration .............................. 78,078
Administrative ............................ 58,688
Custodian ................................. 44,590
Amortization of organization expenses ..... 28,483
Audit and legal ........................... 22,932
Directors' fees ........................... 14,294
Miscellaneous ............................. 10,920
------------
Total expenses ............................ 6,523,579
----------------
Net investment income ..................... 35,166,390
----------------
Realized and Unrealized Gain (Loss)
on Investments and Options Written
Net realized loss on investment
transactions ........................... (33,841,527)
Net realized gain on foreign currency
transactions ........................... 1,389,484
Net change in unrealized
appreciation/depreciation of:
Investments ............................ (19,343,535)
Foreign currency denominated assets
and liabilities ...................... 487,139
----------------
Net loss on investments and foreign
currency transactions .................. (51,308,439)
----------------
Net Decrease in Net Assets
from Operations ........................ $ (16,142,049)
=================
See notes to financial statements.
- --------------------------------------------------------------------------------
18 o ALLIANCE HIGH YIELD FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
STATEMENT OF CHANGES
IN NET ASSETS
Six Months
Ended
February 29, Year Ended
2000 August 31,
(unaudited) 1999
------------- ---------------
Decrease in Net Assets from Operations
Net investment income ........................ $ 35,166,390 $ 55,799,534
Net realized loss on investment and foreign
currency transactions ..................... (32,452,043) (44,259,213)
Net change in unrealized
appreciation/depreciation of investments
and foreign currency denominated
assets and liabilities .................... (18,856,396) (17,389,367)
------------- -------------
Net decrease in net assets from
operations ................................ (16,142,049) (5,849,046)
Dividends and Distributions to
Shareholders from:
Net investment income
Class A ................................... (5,604,667) (8,029,468)
Class B ................................... (26,917,926) (39,695,091)
Class C ................................... (4,981,048) (7,771,433)
Advisor Class ............................. (185,048) (303,542)
Distributions in excess of net investment
income
Class A ................................... -0- (328,804)
Class B ................................... -0- (1,625,500)
Class C ................................... -0- (318,237)
Advisor Class ............................. -0- (12,429)
Tax total return of capital
Class A ................................... -0- (104,053)
Class B ................................... -0- (514,406)
Class C ................................... -0- (100,710)
Advisor Class ............................. -0- (3,934)
Net realized gain on investments
Class A ................................... -0- (1,039,201)
Class B ................................... -0- (5,209,224)
Class C ................................... -0- (1,072,694)
Advisor Class ............................. -0- (43,662)
Capital Stock Transactions
Net increase (decrease) ...................... (24,228,931) 441,271,085
------------- -------------
Total increase (decrease) .................... (78,059,669) 369,249,651
Net Assets
Beginning of year ............................ 733,228,094 363,978,443
------------- -------------
End of period ................................ $ 655,168,425 $ 733,228,094
============= =============
See notes to financial statements.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
February 29, 2000 (unaudited)
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
distribu tion expenses. Advisor Class shares are offered principally to
investors partici pating in fee based programs and to certain retirement plan
accounts. All four classes of shares have identical voting, dividend, liqui
dation and other rights, except that each class bears different dis tribution
expenses and has ex clu sive voting rights with respect to its distribution
plan, if any. The financial statements have been prepared in conformity with
generally ac cepted accounting principles which require manage ment 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 sum ma ry of significant accoun ting policies followed by the
Fund.
1. Security Valuation
Portfolio securities traded on a national securities ex change 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
- --------------------------------------------------------------------------------
20 o ALLIANCE HIGH YIELD FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 or losses
realized between the trade and settlement dates on security transactions, and
the dif ference 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 un realized 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 invest
ment company taxable income and net realized gains, if any, to shareholders.
Therefore, no provi sions 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.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts, based
on their federal tax basis treatment; temporary differences do not require such
reclassification.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under 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 $325,094 for the six months ended February 29, 2000.
For the six months ended February 29, 2000, the Fund's expenses were reduced by
$17,435 under an expense offset arrangement with Alliance Fund Ser vices, Inc.
Alliance Fund Distrib u tors, Inc. (the "Distributor"), a wholly-owned sub sid
iary of the Adviser, serves as the Distributor of the Fund's shares. The
Distributor has advised the Fund that it received front-end sales charges of
$3,356 from the sale of Class A shares, and $14,420, $1,109,519 and $47,308 in
contingent de ferred sales charges imposed upon redemp tions by shareholders of
Class A, Class B and Class C shares, respectively, for the six months ended
February 29, 2000.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agree ment (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .30 of 1% of the 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 are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribu-
- --------------------------------------------------------------------------------
22 o ALLIANCE HIGH YIELD FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
tion assistance and promotional activities. The Distributor has advised the Fund
that it has incurred expens es in excess of the distribution costs reimbursed by
the Fund in the amount of $24,678,293 and $1,023,003, 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 in vestments
and U.S. government obli gations) aggregated $385,277,185 and $395,832,811,
respectively, for the six months ended February 29, 2000. There were no
purchases or sales of U.S. government or government agency obligations for the
six months ended February 29, 2000.
At February 29, 2000, the cost of investments for federal in come tax purposes
was substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $16,515,651 and
gross unrealized depreciation of investments was $90,510,982, resulting in net
unrealized depreciation of $73,995,331 (excluding foreign currency
transactions).
At August 31, 1999, the Fund had a capital loss carryforward of $7,232,173 which
expires in the year 2007.
Capital losses and foreign currency losses incurred after October 31
("post-October" losses) within the taxable year are deemed to arise on the first
business day of the Fund's next taxable year. The Fund incurred and will elect
to defer net capital losses of $35,946,686 and foreign currency losses of
$227,421 during the fiscal year 1999. To the extent that the carryover losses
are used to offset future capital gains and ordinary income, it is probable that
gain and ordinary income to offset will not be distributed to shareholders.
1. Forward Exchange Currency Contracts
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings, to hedge certain firm purchase and sale commitments denominated in
foreign currencies and for investment purposes. A forward 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 contracts is included in
realized gains or losses on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Fund's custodian will place and maintain liquid assets in a separate account
of the Fund having a value at least equal to the aggregate amount of the Fund's
commitments under forward exchange currency contracts entered into with respect
to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of foreign
currencies relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At February 29, 2000, the Fund had outstanding forward exchange currency
contracts as follows:
U.S. $
Contract Value on U.S. $ Unrealized
Amount Origination Current Appreciation
(000) Date Value (Depreciation)
- --------------------------------------------------------------------------------
Forward Exchange
Currency Purchase
Contracts
Euro,
settling 03/16/00 727 $ 740,814 $ 705,049 $ (35,765)
settling 03/27/00 4,300 4,199,315 4,157,187 (42,128)
Forward Exchange
Currency Sale
Contracts
Euro,
settling 03/27/00 17,600 $17,698,736 $17,015,463 683,273
-----------
$ 605,380
===========
- --------------------------------------------------------------------------------
24 o ALLIANCE HIGH YIELD FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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:
<TABLE>
<CAPTION>
------------------------------- -------------------------------
Shares Amount
------------------------------- -------------------------------
Six Months Six Months
Ended Year Ended Year
February 29, Ended February 29, Ended
2000 August 31, 2000 August 31,
(unaudited) 1999 (unaudited) 1999
<S> <C> <C> <C> <C>
Class A
Shares sold 3,195,945 10,555,070 $ 28,996,426 $ 106,803,184
- ------------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 224,289 455,320 2,026,146 4,581,315
- ------------------------------------------------------------------------------------
Shares converted
from Class B 277,826 231,040 2,505,225 2,289,928
- ------------------------------------------------------------------------------------
Shares redeemed (4,091,169) (4,519,290) (36,889,874) (45,604,870)
- ------------------------------------------------------------------------------------
Net increase
(decrease) (393,109) 6,722,140 $ (3,362,077) $ 68,069,557
====================================================================================
Class B
Shares sold 9,263,176 41,215,176 $ 84,303,955 $ 416,263,494
- ------------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 798,039 1,531,585 7,204,862 15,388,928
- ------------------------------------------------------------------------------------
Shares converted
to Class A (278,050) (231,040) (2,505,225) (2,289,928)
- ------------------------------------------------------------------------------------
Shares redeemed (11,343,008) (11,863,281) (102,532,780) (119,335,325))
- ------------------------------------------------------------------------------------
Net increase
(decrease) (1,559,843) 30,652,440 $(13,529,188) $310,027,169
====================================================================================
Class C
Shares sold 2,151,639 10,424,117 $ 19,581,457 $ 105,419,483
- ------------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 191,745 396,483 1,730,367 3,984,952
- ------------------------------------------------------------------------------------
Shares redeemed (3,084,074) (4,761,437) (27,942,891) (47,903,120)
- ------------------------------------------------------------------------------------
Net increase
(decrease) (740,690) 6,059,163 $ (6,631,067) $ 61,501,315
====================================================================================
</TABLE>
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
------------------------------- -------------------------------
Shares Amount
------------------------------- -------------------------------
Six Months Six Months
Ended Year Ended Year
February 29, Ended February 29, Ended
2000 August 31, 2000 August 31,
(unaudited) 1999 (unaudited) 1999
<S> <C> <C> <C> <C>
Advisor Class
Shares sold 139,805 364,823 $ 1,279,975 $ 3,671,823
- ------------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 7,391 17,942 67,080 181,290
- ------------------------------------------------------------------------------------
Shares redeemed (226,013) (216,242) (2,053,654) (2,180,069)
- ------------------------------------------------------------------------------------
Net increase
(decrease) (78,817) 166,523 $ (706,599) $ 1,673,044
====================================================================================
</TABLE>
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")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the six months ended February 29, 2000.
- --------------------------------------------------------------------------------
26 o ALLIANCE HIGH YIELD FUND
<PAGE>
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-----------------------------------------------------------
CLASS A
-----------------------------------------------------------
Six Months
Ended April 22,
February 29, Year Ended August 31, 1997(a) to
2000 ------------------------- August 31,
(unaudited) 1999 1998 1997
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 9.47 $ 10.76 $ 11.17 $ 10.00
-----------------------------------------------------------
Income From Investment Operations
Net investment income(b) .............. .50 1.02 1.03 .37
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ........................ (.67) (1.08) (.27) 1.15
-----------------------------------------------------------
Net increase (decrease) in net
asset value from operations ......... (.17) (.06) .76 1.52
-----------------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income .. (.52) (1.02) (1.02) (.35)
Distributions in excess of net
investment income ................... -0- (.05) (.01) -0-
Tax return of capital ................. -0- (.01) -0- -0-
Distributions from net realized gains . -0- (.15) (.14) -0-
-----------------------------------------------------------
Total dividends and distributions ..... (.52) (1.23) (1.17) (.35)
-----------------------------------------------------------
Net asset value, end of period ........ $ 8.78 $ 9.47 $ 10.76 $ 11.17
===========================================================
Total Return
Total investment return based on
net asset value(c) .................. (1.86)% (.58) 6.42% 15.33%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ..................... $ 91,426 $ 102,400 $ 43,960 $ 5,889
Ratio to average net assets:
Expenses, net of waivers/
reimbursements .................... 1.26%(d) 1.31% 1.43% 1.70%(d)
Expenses, before waivers/
reimbursements .................... 1.26%(d) 1.31% 1.46% 3.11%(d)
Net investment income, net of
waivers/reimbursements ............ 5.70%(d) 10.21% 8.89% 8.04%(d)
Portfolio turnover rate ............... 60% 182% 311% 73%
</TABLE>
See footnote summary on page 30.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 27
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-----------------------------------------------------------
CLASS B
-----------------------------------------------------------
Six Months
Ended April 22,
February 29, Year Ended August 31, 1997(a) to
2000 --------------------------- August 31,
(unaudited) 1999 1998 1997
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 9.46 $ 10.75 $ 11.17 $ 10.00
-----------------------------------------------------------
Income From Investment Operations
Net investment income(b) .............. .47 .95 .96 .31
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ........................ (.67) (1.08) (.28) 1.19
-----------------------------------------------------------
Net increase (decrease) in net
asset value from operations ......... (.20) (.13) .68 1.50
-----------------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income .. (.49) (.95) (.95) (.33)
Distributions in excess of net
investment income ................... -0- (.05) (.01) -0-
Tax return of capital ................. -0- (.01) -0- -0-
Distributions from net realized gains . -0- (.15) (.14) -0-
-----------------------------------------------------------
Total dividends and distributions ..... (.49) (1.16) (1.10) (.33)
-----------------------------------------------------------
Net asset value, end of period ........ $ 8.77 $ 9.46 $ 10.75 $ 11.17
===========================================================
Total Return
Total investment return based on
net asset value(c) .................. (2.22)% (1.26) 5.69% 15.07%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ..................... $ 475,018 $ 527,337 $ 269,426 $ 43,297
Ratio to average net assets:
Expenses, net of waivers/
reimbursements .................... 1.97%(d) 2.03% 2.13% 2.40%(d)
Expenses, before waivers/
reimbursements .................... 1.97%(d) 2.03% 2.16% 3.85%(d)
Net investment income, net
of waivers/reimbursements ......... 5.35%(d) 9.52% 8.18% 7.19%(d)
Portfolio turnover rate ............... 60% 182% 311% 73%
</TABLE>
See footnote summary on page 30.
- --------------------------------------------------------------------------------
28 o ALLIANCE HIGH YIELD FUN
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-----------------------------------------------------------
CLASS C
-----------------------------------------------------------
Six Months
Ended April 22,
February 29, Year Ended August 31, 1997(a) to
2000 --------------------------- August 31,
(unaudited) 1999 1998 1997
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 9.47 $ 10.75 $ 11.17 $ 10.00
-----------------------------------------------------------
Income From Investment Operations
Net investment income(b) .............. .47 .95 .96 .32
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ........................ (.68) (1.07) (.28) 1.18
-----------------------------------------------------------
Net increase (decrease) in net
asset value from operations ......... (.21) (.12) .68 1.50
-----------------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income .. (.49) (.95) (.95) (.33)
Distributions in excess of net
investment income ................... -0- (.05) (.01) -0-
Tax return of capital ................. -0- (.01) -0- -0-
Distributions from net realized gains . -0- (.15) (.14) -0-
-----------------------------------------------------------
Total dividends and distributions ..... (.49) (1.16) (1.10) (.33)
-----------------------------------------------------------
Net asset value, end of period ........ $ 8.77 $ 9.47 $ 10.75 $ 11.17
===========================================================
Total Return
Total investment return based on
net asset value(c) .................. (2.32)% (1.16) 5.69% 15.07%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ..................... $ 86,115 $ 99,927 $ 48,337 $ 7,575
Ratio to average net assets:
Expenses, net of waivers/
reimbursements .................... 1.96%(d) 2.02% 2.13% 2.40%(d)
Expenses, before waivers/
reimbursements .................... 1.96%(d) 2.02% 2.16% 3.84%(d)
Net investment income, net of
waivers/reimbursements ............ 5.36%(d) 9.54% 8.17% 7.24%(d)
Portfolio turnover rate ............... 60% 182% 311% 73%
</TABLE>
See footnote summary on page 30.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 29
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period.
<TABLE>
<CAPTION>
-----------------------------------------------------------
ADVISOR CLASS
-----------------------------------------------------------
Six Months
Ended April 22,
February 29, Year Ended August 31, 1997(a) to
2000 --------------------------- August 31,
(unaudited) 1999 1998 1997
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .... $ 9.47 $ 10.76 $ 11.17 $ 10.00
-----------------------------------------------------------
Income From Investment Operations
Net investment income(b) ................ .52 1.06 1.11 .40
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .......................... (.68) (1.09) (.32) 1.13
-----------------------------------------------------------
Net increase (decrease) in net
asset value from operations ........... (.16) (.03) .79 1.53
-----------------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income .... (.54) (1.06) (1.05) (.36)
Distributions in excess of net investment
income ................................ -0- (.04) (.01) -0-
Tax return of capital ................... -0- (.01) -0- -0-
Distributions from net realized gains ... -0- (.15) (.14) -0-
-----------------------------------------------------------
Total dividends and distributions ....... (.54) (1.26) (1.20) (.36)
-----------------------------------------------------------
Net asset value, end of period .......... $ 8.77 $ 9.47 $ 10.76 $ 11.17
===========================================================
Total Return
Total investment return based on
net asset value(c) .................... (1.82)% (.28) 6.68% 15.44%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ....................... $ 2,610 $ 3,564 $ 2,256 $ 321
Ratio to average net assets:
Expenses, net of waivers/
reimbursements ...................... .96%(d) 1.03% 1.14% 1.40%(d)
Expenses, before waivers/
reimbursements ...................... .96%(d) 1.03% 1.16% 2.82%(d)
Net investment income, net of
waivers/reimbursements .............. 5.81%(d) 10.58% 9.25% 8.20%(d)
Portfolio turnover rate ................. 60% 182% 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.
- --------------------------------------------------------------------------------
30 o ALLIANCE HIGH YIELD FUND
<PAGE>
GLOSSARY OF INVESTMENT TERMS
GLOSSARY OF INVESTMENT TERMS
asset-backed securities
A security backed by notes or accounts receivable against assets other than real
estate. Asset-backed securities are originated by banks, credit card companies,
or other providers of credit.
Brady bonds
U.S.-dollar-denominated bonds that are issued by emerging markets, particularly
markets in Latin America, and collateralized by U.S. Treasury zero-coupon bonds.
collateralized bond obligation (CBO)
An investment-grade bond backed by a large, diversified pool of
non-investment-grade bonds. CBOs have varying degrees of risk and varying
interest rates.
collateralized mortgage obligation (CMO)
A bond secured by mortgages and/or mortgage-backed securities with at least two
bond classes, where the payments of principal on the underlying collateral are
allocated according to maturity classes, called tranches.
Consumer Price Index (CPI)
An index that measures the cost of living. The CPI is published by the U. S.
Bureau of Labor Statistics.
credit rating
A bond rating that measures of the quality and safety of a bond, based on the
issuer's financial condition. In particular, an evaluation from a rating service
indicating the probability that a debt issuer will be able to meet scheduled
interest and principal repayments. Ratings typically range from AAA which is the
highest rating, to D, which is the lowest rating.
Federal Reserve Board
The seven-member board that oversees Federal Reserve Banks, establishes monetary
policy and monitors the country's economic state.
investment-grade bond
A bond that is considered safe, having a relatively high bond rating.
mortgage-backed security
A security backed by a pool of mortgages.
spread
The price above a benchmark fixed-income yield that an issuer pays to borrow
money.
Treasuries
Negotiable U.S. government debt obligations, backed by the full faith and credit
of the U.S. government. Treasuries are issued either as bills, notes or bonds
depending on the maturity. Treasuries are exempt from state and local taxes.
U.S. government agency securities
Securities issued by U.S. government-related agencies, such as Government
National Mortgage Association, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association that are exempt from state and local
taxes. also called agency securities.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 31
<PAGE>
ALLIANCE CAPTIAL
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $368
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 31 of the FORTUNE 100 companies and public retirement funds in 31
states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management ex perience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 277
investment professionals in 21 investment offices worldwide. Our commitment to
this process means that our mutual fund shareholders have their portfolios
managed by the same experienced analysts and portfolio managers who manage the
pension funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 12/31/99.
- --------------------------------------------------------------------------------
32 o ALLIANCE HIGH YIELD FUND
<PAGE>
ALLIANCE CAPITAL AT YOUR SERVICE
ALLIANCE CAPITAL AT YOUR SERVICE
At Alliance Capital, shareholder satisfaction is among our top priorities.
That's why we provide our shareholders with a wide variety of products and
time-saving services to meet their needs.
o Low Minimum Investments
You can begin investing in Alliance Capital funds with as little as $250
(except for Alliance Select Investor Series Premier Portfolio and Alliance
Select Investor Series Technology Portfolio, which generally have a
$10,000 minimum initial investment) and may make subsequent investments of
$50 or more.
o Automatic Reinvestment
You may choose to reinvest fund dividend and capital-gains distributions
automatically at no charge.
o Automatic Investment Program
Build your investment account by having money automatically transferred
from your bank account on a regular basis.
o Dividend Direction Plans
You may cross-invest dividends from one fund into the same class of shares
in any other fund without incurring a sales charge. This can be a good way
to diversify your assets.
o The Alliance Advance
A quarterly newsletter discussing investment strategies, economic news and
other matters that could affect your mutual fund investment.
o Auto Exchange
You may choose to automatically exchange money from one Alliance Capital
fund to another on a regular basis. This can be a good way to dollar cost
average*, helping you to invest with discipline.
o Systematic Withdrawals
Regular checks for specified amounts can be sent to you or to your
brokerage or bank account.
o A Choice of Purchase Plans
Most funds are available in A, B, and C Class shares. Many funds are also
available in Advisor Class shares.
o Telephone Transaction
Purchases, transfers and redemptions can be made by calling (800)
221-5672. Our knowledgeable representatives are available to assist you
Monday through Friday from 8:30 a.m. to 8:00 p.m. Eastern Standard Time.
o Alliance Answer: 24-Hour Information
For your convenience, our computerized audio response system is available
to you 24-hours a day by calling (800) 251-0539. Using any touch tone
phone, you can hear share prices, get account balances, review details of
your last transaction, obtain dividend information, order
statements/checkbooks, review fund objectives, literature and Watchlist
information, order additional copies of statements and request additional
year-end tax forms (available from February 1 to May 31).
o Alliance Capital on the World Wide Web at www.alliancecapital.com. Here,
you can access updated account information, make additional investments,
request more information, exchange between Alliance funds and view fund
performance, press releases and articles.
* Dollar cost averaging does not assure a profit nor protect against loss in
a declining market. Since this strategy involves continuous investments in
securities, regardless of fluctuating prices, investors should consider
their financial ability to invest during periods of low price levels.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 33
<PAGE>
BOARD OF DIRECTORS
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
Gregory Dube, Senior 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 (800) 221-5672
(1) Member of the Audit Committee.
- --------------------------------------------------------------------------------
34 o ALLIANCE HIGH YIELD FUND
<PAGE>
ALLIANCE CAPITAL FAMILY OF FUNDS
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Balanced Shares
Conservative Investors Fund
Disciplined Value Fund
Growth & Income Fund
Growth Fund
Growth Investors Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Real Estate Investment Fund
Technology Fund
The Alliance Fund
Utility Income Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Limited Maturity Government Fund
Mortgage Securities Income Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND o 35
<PAGE>
NOTES
- --------------------------------------------------------------------------------
36 o ALLIANCE HIGH YIELD FUND
<PAGE>
---------------
Alliance High Yield Fund BULK RATE
1345 Avenue of the Americas U.S. POSTAGE
New York, NY 10105 PAID
(800) 221-5672 New York, NY
Permit No. 7131
---------------
AllianceCapital[LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
HIYSR0200
