ALLIANCE SELECT INVESTOR SERIES PREMIER PORTFOLIO
SEMI-ANNUAL REPORT
APRIL 30, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
June 28, 1999
Dear Shareholder:
This report discusses investment results and market activity for Alliance
Select Investor Series Premier Portfolio for the semi-annual reporting period
ended April 30, 1999.
Your Fund's investment objective is to seek long-term growth of capital through
all market conditions. The Fund invests a majority of its assets in a core
portfolio of stocks of large, intensely researched, high quality companies that
we believe are likely to achieve superior earnings growth. The core portfolio
typically consists of the 25 companies that are the most highly regarded by our
research analysts at any point in time. The balance of the portfolio may be
invested in equity securities of other U.S. and non-U.S. companies that we
believe have exceptional growth potential. The Fund may invest without limit in
options.
INVESTMENT RESULTS
The following table shows how the Fund performed during the six month and since
inception periods ended April 30, 1999. For comparison, we have shown returns
for the overall U.S. stock market, represented by the unmanaged Standard &
Poor's (S&P) 500 Stock Index, and the Russell 1000 Growth Stock Index.
The Fund and its benchmarks all experienced positive performance over the six
month and since inception periods ended April 30, 1999, with the Fund
outperforming both the S&P 500 Stock Index and the Russell 1000 Growth Stock
Index over both periods. The Fund's strong performance during these periods
resulted from good stock selection in general, and strong stock selection
within the technology and consumer sectors, in particular.
INVESTMENT RESULTS*
Periods Ended April 30, 1999
TOTAL RETURNS
6 MONTHS SINCE INCEPTION
-------- ---------------
ALLIANCE SELECT INVESTOR
SERIES PREMIER PORTFOLIO
Class A 34.73% 28.40%
Class B 34.35% 27.50%
Class C 34.21% 27.50%
S&P 500 STOCK INDEX 22.31% 20.39%
RUSSELL 1000 GROWTH
STOCK INDEX 24.93% 23.52%
* THE FUND'S INVESTMENT RESULTS FOR THE SIX-MONTH PERIOD ARE TOTAL RETURNS
FOR THAT PERIOD, AND ARE BASED ON THE NET ASSET VALUE FROM THE FUND'S INCEPTION
DATE ON JULY 29, 1998 TO APRIL 30, 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.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
SINCE INCEPTION RETURNS FOR THE BENCHMARKS ARE FROM JULY 31, 1998, THE
MONTH-END NEAREST TO THE FUND'S INCEPTION DATE OF JULY 29, 1998. THE S&P 500
STOCK INDEX IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES AND IS A COMMON MEASURE
OF THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. THE RUSSELL 1000 GROWTH
STOCK INDEX CONSISTS OF 1000 OF THE LARGEST STOCKS REPRESENTING APPROXIMATELY
87% OF THE U.S. EQUITY MARKET. THE INDICES REFLECT NO FEES OR EXPENSES. AN
INVESTOR CANNOT INVEST DIRECTLY IN THE INDICES.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
SIX MONTHS IN REVIEW
The market experienced a strong recovery during the period under review after
enduring a 20% correction from July to October of 1998. Investors focused on
the strong underlying fundamentals of the U.S. market despite uncertainty in
several emerging markets. The focus on the U.S. market's strong underlying
fundamentals gave us conviction to take advantage of the weakness in several of
our favorite names during the correction last summer and fall. By adding to our
favorite names, we were able to benefit when the market recovered during the
review period. In essence, we used our "V-Factor" methodology to take advantage
of the volatility in the
1
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
market. The "V-Factor" is a portfolio management strategy whereby we add to the
Fund's core holdings when we think that they are an exceptional value, and sell
some of the Fund's positions when we believe that they have become overvalued
in the market. Thus, over the past six months we have added to our favorite
names as they have traded down the left hand side of the "V," and sold some of
the Fund's holdings as they traded up the right hand side of the "V."
Besides trading around the "V," the Fund's strong outperformance over the
previous six months can also be attributed to solid stock selection. Several of
the Fund's technology holdings have rebounded nicely since September 1998,
including its largest holding, Nokia Corp., as well as Cisco Systems, Inc., EMC
Corp., and Microsoft Corp. The Fund's large weighting in retail (Wal-Mart
Stores, Inc., Home Depot, Inc., and Dayton Hudson Corp.) helped performance as
the U.S. consumer continued to spend given the strong job market and stock
market. The Fund's large holding in AirTouch Communications, Inc. benefited
when that company was acquired (at a nice premium) by Vodafone. Despite the
rise in interest rates, financial stocks performed well (specifically, Merrill
Lynch & Co., Inc., Morgan Stanley, Dean Witter, Discover & Co., and Citigroup,
Inc.) as global financial markets and economies stabilized.
As of the end of April 1999, the short positions in the Fund consisted of
written calls against individual stocks and written calls and purchased puts
against market indices. Due to the higher valuation of the market and the fact
that time premiums have come down, we have added some puts to the Fund to
provide increased protection in case of a market correction.
MARKET ENVIRONMENT AND OUTLOOK
With the U.S. market near all-time highs and with the price-to-earnings (P/E)
multiples of our favorite companies going ever higher, where are we today,
given that our investment philosophy is that success stems from the correct
marriage of fundamentals and price? The fundamentals could hardly be better.
Low inflationary expectations continue to provide a healthy backdrop for equity
investments. The 1998 U.S. economic deflator was only 0.7%. The Consumer Price
Index (CPI) was up a modest 1.7% in 1998 despite the fact that labor costs,
which are about two-thirds of the CPI, rose about 4.1%. Remember as well that
energy is only a 6% weight in the CPI. Labor's productivity gains,
under-measured in our view at 2.8%, continue to keep inflation in check despite
healthy wage increases amidst a robust domestic economy with low unemployment.
In fact, in the first quarter of 1999, labor productivity was 3.5%.
The United States continues to demonstrate tremendous strength, both in
absolute and relative terms. The strength comes from our democratic-capitalist
base, our sound legal and accounting systems, excellent corporate balance
sheets, technological leadership, and name brand recognition to our centrist
fiscal, monetary, and political policies. With Japan just beginning to tackle
its fundamental problems, many European countries facing the need for major
structural reforms, and the early Euro euphoria waning, the U.S. equity market
has become the preferred fundamental investment arena.
Yet, in our view, there are concerns on the horizon. Through March, the market
advance had been very narrow; large cap growth stocks have accounted for most
of the gains in the S&P 500. Since March, the market growth has broadened as
the fear of recession has subsided and/or the valuation gap between value and
growth stocks reached record disparity. We believe this broadening of the
market is healthy but not sustainable given our continued moderate growth,
moderate inflation scenario. While the market is trading at a P/E multiple of
about 27x, the S&P 500 corporate profits are projected to grow a modest 6% in
1999. We recognize that the absolute P/E multiple to earnings growth rate is
very high by any historical measure, especially for earnings that are not
robust over 1998 levels. We expect that moderate growth will continue as
consumer spending, which has been carrying the U.S. economy, will slow. The
consumer, whose wages are increasing at 4% on average, cannot indefinitely
sustain the 6% gross domestic product (GDP) level witnessed in the fourth
quarter of 1998. Indications are that the GDP has cooled off from the fourth
quarter of 1998 (for instance, GDP in the first quarter was 4.1%) with a
continued, expected slowdown for the remainder of 1999. In Europe, our largest
export market, evidence of economic slowdowns in France and Germany has already
become the primary issue for the recently appointed European Central Banker.
2
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
PORTFOLIO STRATEGY
Our 1999 expectation for U.S. equity market returns is a modest 5% to 12% with
continued high volatility. We believe that we have structured the Fund to
perform well in this environment. On the long side of the portfolio, we believe
that we have mitigated the risk somewhat by trimming our positions in very high
P/E technology stocks. These include stocks such as Nokia Corp. and Cisco
Systems, Inc. In addition, we trimmed our positions in Microsoft Corp. and EMC
Corp., and subsequently bought back shares in these companies during a period
of price weakness.
In our view, we have also mitigated the risk by adding to our positions in more
moderate P/E sectors such as financial stocks and consumer stocks. These
include stocks and options such as Associates First Capital Corp., and Lowe's
Cos., Inc. As of the end of the quarter, the gross long position of the
portfolio had a weighted average P/E multiple of 35x for 26% projected 1999
earnings growth versus 27x for 6% earnings growth for the S&P 500.
Despite absolute valuation concerns, we anticipate that the best relative
investment opportunity is to stay with the companies that provide the strongest
earnings growth (four times the market's growth rate) for only a 25% premium to
the market's valuation. Our rigorous, bottom-up, company specific research
process is especially important in today's environment where companies with
disappointing fundamentals are treated harshly by the market.
We have reduced the Fund's net long position from about 100% at the end of 1998
to 95% at the end of April 1999, with a bias toward going lower if the market
rises further. We will continue to pursue the rich premiums by selling
at-the-money calls on the S&P 500 and NASDAQ, while purchasing cheap S&P 500
puts for added protection. It is important, however, to remember that we can
curb--but not avoid--losses if the market should have a sustained decline.
Thank you for your continued interest in Alliance Select Investor Series
Premier Portfolio. We look forward to reporting to you again on market activity
and the Fund's investment results in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Alfred Harrison
Senior Vice President
Michael J. Reilly
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
INVESTMENT OBJECTIVE AND POLICIES
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
Alliance Select Investor Series Premier Portfolio seeks long-term capital
appreciation by investing in a non-diversified portfolio of equity securities
of large, intensively researched, high quality companies that are judged likely
to achieve superior earnings growth.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF APRIL 30, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 28.40% 22.99%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 27.50% 23.50%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 27.50% 26.50%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(MARCH 31, 1999)
CLASS A CLASS B CLASS C
------- ------- -------
Since Inception* 24.90% 25.60% 28.60%
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.
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 date: 7/29/98 for all share Classes.
4
TEN LARGEST HOLDINGS
APRIL 30, 1999 (UNAUDITED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Nokia Corp. ADR(a) $12,720,913 6.7%
Tyco International, Ltd.(a) 12,042,976 6.4
Dell Computer Corp. 9,843,813 5.2
AirTouch Communications, Inc.(a) 8,506,763 4.5
Cisco Systems, Inc. 8,183,984 4.3
Home Depot, Inc.(a) 7,679,631 4.1
AT&T Corp.-Liberty Media Group Cl.A 7,211,488 3.8
MCI WorldCom, Inc.(a) 7,007,625 3.7
Freddie Mac(a) 6,157,750 3.3
EMC Corp. 5,446,875 2.9
$84,801,818 44.9%
MAJOR PORTFOLIO CHANGES
SIX MONTH ENDED APRIL 30, 1999 (UNAUDITED)
SHARES#
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 4/30/99
- -------------------------------------------------------------------------------
Chancellor Media Corp. Cl.A 42,700 42,700
Dell Computer Corp. 43,500 239,000
Freddie Mac 33,000 81,000
Lowe's Cos., Inc. 30,800 50,800
MBNA Corp. 50,300 54,620
MCI WorldCom, Inc. 40,800 60,800
McKesson HBOC, Inc. 109,300 137,087
MediaOne Group, Inc. 38,200 38,200
Newcourt Credit Group, Inc. 58,600 58,600
The Gap, Inc. 38,100 38,100
HOLDINGS
SALES SOLD 4/30/99
- -------------------------------------------------------------------------------
America Online, Inc. 11,000 -0-
AT&T Corp.-Liberty Media Group Cl.A 35,000 112,900
Dayton Hudson Corp. 15,000 57,200
Household International, Inc. 23,600 -0-
Northwest Airlines Corp. 28,100 -0-
Rite Aid Corp. 14,000 -0-
Tyco International, Ltd. 37,500 91,122
UAL Corp. 17,200 -0-
U.S. Bancorp 35,300 -0-
Washington Mutual, Inc. 59,636 -0-
(a) Adjusted for market value of call options purchased
# Adjusted for stock splits
5
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-71.8%
TECHNOLOGY-25.5%
COMMUNICATION EQUIPMENT-8.8%
EMC Corp. (a)(b) 50,000 $ 5,446,875
Lucent Technologies, Inc. 13,400 805,675
Nokia Corp. ADR (Finland) (a) 139,800 10,371,413
------------
16,623,963
COMPUTER HARDWARE-5.9%
Dell Computer Corp. (a)(b) 239,000 9,843,813
Sun Microsystems, Inc. (a) 21,000 1,256,062
------------
11,099,875
COMPUTER SOFTWARE-2.5%
Microsoft Corp. (a) 58,100 4,724,256
NETWORKING SOFTWARE-5.5%
Ascend Communications, Inc. (a) 22,000 2,125,750
Cisco Systems, Inc. (a)(b) 71,750 8,183,984
------------
10,309,734
SEMICONDUCTOR COMPONENTS-2.8%
Intel Corp. 86,400 5,286,600
------------
48,044,428
CONSUMER SERVICES-21.6%
BROADCASTING & CABLE-9.1%
AirTouch Communications, Inc. (a)(b) 49,000 4,575,375
AT&T Corp.-Liberty Media Group Cl. A (a)(b) 112,900 7,211,488
Chancelor Media Corp. Cl. A (a)(b) 42,700 2,343,162
MediaOne Group, Inc. (a) 38,200 3,115,688
------------
17,245,713
ENTERTAINMENT & LEASURE-1.4%
Carnival Corp. Cl. A (a) 22,200 915,750
Time Warner, Inc. (c) 24,600 1,722,000
------------
2,637,750
RETAIL - GENERAL MERCHANDISE-11.1%
Costco Cos., Inc. 17,400 1,408,312
Dayton Hudson Corp. (b) 57,200 3,850,275
Home Depot, Inc. (b) 83,900 5,028,756
Kohl's Corp. (a) 44,100 2,929,894
Lowe's Cos., Inc. 50,800 2,679,700
The Gap, Inc. 38,100 2,536,031
Wal-Mart Stores, Inc. 54,400 2,502,400
------------
20,935,368
------------
40,818,831
HEALTHCARE-10.4%
DRUGS-6.0%
Bristol-Myers Squibb Co. 26,600 1,690,762
Pfizer, Inc. (b) 32,800 3,774,050
Schering-Plough Corp. (b) 88,200 4,261,163
Warner-Lambert Co. 23,500 1,596,531
------------
11,322,506
MEDICAL PRODUCTS-1.0%
Medtronic, Inc. 27,000 1,942,313
MEDICAL SERVICES-3.4%
IMS Health, Inc. 53,600 1,608,000
McKesson HBOC, Inc. (b) 137,087 4,798,045
------------
6,406,045
------------
19,670,864
6
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
FINANCE-7.7%
BANKING - REGIONAL-0.9%
Bank of America Corp. 23,400 $ 1,684,800
BROKERAGE & MONEY MANAGEMENT-1.8%
Merrill Lynch & Co., Inc. 7,000 587,563
Morgan Stanley, Dean Witter,
Discover & Co. 29,000 2,876,437
------------
3,464,000
INSURANCE-0.6%
Citigroup, Inc. 15,250 1,147,562
MORTGAGE BANKING-2.7%
Freddie Mac (b) 81,000 5,082,750
MISCELLANEOUS-1.7%
MBNA Corp. 54,620 1,539,601
Newcourt Credit Group, Inc. 58,600 1,655,450
------------
3,195,051
------------
14,574,163
MULTI-INDUSTRY-3.9%
CAPITAL GOODS-3.9%
Tyco International, Ltd. (b) 91,122 7,403,663
UTILITY-2.7%
TELEPHONE UTILITY-2.7%
MCI WorldCom, Inc. (a) 60,800 4,997,000
Total Common Stocks
(cost $114,042,038) 135,508,949
CONVERTIBLE BONDS-1.8%
BROADCASTING & CABLE-1.8%
Tribune Co.
2.00%, 5/15/29
(cost $3,438,300) $2,190 3,438,300
COMPANY CONTRACTS(D) VALUE
- -------------------------------------------------------------------------
CALL OPTIONS PURCHASED-21.3% (A)
AirTouch Communications, Inc.
expiring Jul '99 @ $50 250 $ 1,101,563
expiring Jan '00 @ $30 346 2,231,700
expiring Jan '00 @ $35 100 598,125
AMP, Inc.
expiring May '99 @ $30 150 463,125
Associates First Capital Corp. Cl. A
expiring Jan '00 @ $22.50 650 1,482,812
expiring Jan '00 @ $25 200 407,500
AT&T Corp.
expiring May '99 @ $55 75 5,625
BankAmerica Corp.
expiring Jan '00 @ $40 175 577,500
Bristol-Myers Squibb Co.
expiring Jan '00 @ $30 70 240,625
expiring Jan '00 @ $35 100 296,250
expiring Jan '00 @ $40 100 250,000
expiring Jan '01 @ $35 450 1,411,875
Citigroup, Inc.
expiring Jan '00 @ $35 400 1,650,000
Freddie Mac
expiring Jan '00 @ $35 200 575,000
expiring Jan '00 @ $40 200 500,000
General Electric Co.
expiring Jan '00 @ $50 243 1,382,063
Home Depot, Inc.
expiring Jan '00 @ $27.50 520 1,735,500
expiring Jan '00 @ $32.50 200 572,500
expiring Jan '00 @ $35 130 342,875
IBM Corp.
expiring Jan '00 @ $90 125 1,525,000
Kroger Co.
expiring Jan '00 @ $30 325 824,688
7
PORTFOLIO OF INVESTMENTS
(CONTINUED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
CONTRACTS (D)
OR PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
Lowe's Cos., Inc.
expiring Jan '00 @ $30 200 $ 492,500
expiring Jan '00 @ $35 100 196,250
MBNA Corp.
expiring Jan '00
@ $13.375(e) 1,069 2,345,119
expiring Jan '00 @ $15 334 459,250
MCI WorldCom, Inc.
expiring Jan '00 @ $25 150 873,750
expiring Jan '00 @ $40 200 880,000
expiring Jan '00 @ $50 75 256,875
Medtronic, Inc.
expiring Jan '00 @ $50 30 74,625
Merck & Co., Inc.
expiring Jan '00 @ $40 100 315,000
Merrill Lynch & Co., Inc.
expiring Jan '00 @ $45 100 407,500
expiring Jan '00 @ $50 195 709,312
Morgan Stanley, Dean Witter & Co.
expiring Jan '00 @ $40 100 601,875
expiring Jan '00 @ $50 75 383,438
Nokia Corp. ADR (Finland)
expiring Jan '00 @ $30 240 1,089,000
expiring Jan '00 @ $35 168 682,500
expiring Jan '00 @ $40 160 578,000
Pfizer, Inc.
expiring Jan '00 @ $70 150 757,500
Philip Morris Cos., Inc.
expiring Jan '00 @ $30 410 307,500
expiring Jan '00 @ $35 250 115,625
Schering-Plough Corp.
expiring Jan '00 @ $30 540 1,046,250
Time Warner, Inc.
expiring Jan '00 @ $35 75 270,937
Tyco International, Ltd.
expiring Jan '00 @ $30 330 1,728,375
expiring Jan '00 @ $40 675 2,910,938
United Technologies Corp.
expiring Jan '00 @ $70 200 1,527,500
expiring Jan '00 @ $80 75 504,375
Wal-Mart Stores, Inc.
expiring Jan '00 @ $20 600 1,563,750
Warner-Lambert Co.
expiring Jan '00 @ $35 125 423,437
Waste Management
expiring Jan '00 @ $30 145 399,656
Total Call Options Purchased
(cost $34,864,898) 40,075,163
PUT OPTIONS PURCHASED-0.5%(A)
Standard & Poor's 500 Index
expiring May '99 @ 1400 75 502,500
expiring May '99 @ 1425 60 446,250
Total Put Options Purchased
(cost $1,163,113) 948,750
SHORT TERM INVESTMENT-2.9%
COMMERCIAL PAPER-2.9%
General Electric Capital Corp.
4.90%, 5/03/99
(amortized cost $5,480,000) $5,480 5,480,000
TOTAL INVESTMENTS-98.3%
(cost $158,988,349) 185,451,162
8
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
COMPANY CONTRACTS(D) VALUE
- -------------------------------------------------------------------------
CALL OPTIONS WRITTEN-(0.8%) (A)
NASDAQ 100 Index
expiring May '99 @ 2060 15 $ (207,188)
expiring May '99 @ 2080 15 (187,312)
expiring May '99 @ 2100 45 (468,000)
expiring May '99 @ 2120 15 (135,000)
expiring May '99 @ 2140 30 (219,000)
Standard & Poor's 100 Index
expiring May '99 @ 1320 15 (52,500)
expiring May '99 @ 1325 30 (97,500)
expiring May '99 @ 1345 30 (51,000)
expiring May '99 @ 1360 30 (51,000)
Total Call Options Written
(premiums received $1,467,213) (1,468,500)
TOTAL INVESTMENTS, NET OF OUTSTANDING
CALL OPTIONS WRITTEN-97.5%
(cost $157,521,136) $183,982,662
Other assets less liabilities-2.5% 4,704,150
NET ASSETS-100% $188,686,812
(a) Non-income producing security.
(b) Security, or a portion thereof, which has been segregated to collateralize
written call options has a total market value of approximately $4,810,835.
(c) Security trades with preferred stock purchase rights expiring January 20,
2004.
(d) One contract relates to 100 shares unless indicated otherwise.
(e) One contract relates to 150 shares.
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $158,988,349) $185,451,162
Receivable for investment securities sold 9,199,604
Receivable for capital stock sold 2,663,600
Dividends receivable 19,086
Deferred offering costs 51,124
Total assets 197,384,576
LIABILITIES
Due to custodian 88,303
Outstanding call options written, at value
(premiums received $1,467,213) 1,468,500
Payable for investment securities purchased 5,588,144
Payable for capital stock redeemed 666,053
Advisory fee payable 521,566
Distribution fee payable 125,804
Accrued expenses 239,394
Total liabilities 8,697,764
NET ASSETS $188,686,812
COMPOSITION OF NET ASSETS
Capital stock, at par $ 14,761
Additional paid-in capital 158,106,818
Undistributed net investment loss (1,517,734)
Accumulated net realized gain on investment and
written option transactions 5,621,441
Net unrealized appreciation of investments and
options written 26,461,526
$188,686,812
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($61,903,533 / 4,820,865 shares of capital stock
issued and outstanding) $12.84
Sales charge--4.25% of public offering price .57
Maximum offering price $13.41
CLASS B SHARES
Net asset value and offering price per share
($81,918,562 / 6,422,550 shares of capital stock
issued and outstanding) $12.75
CLASS C SHARES
Net asset value and offering price per share
($44,864,717 / 3,517,821 shares of capital stock
issued and outstanding) $12.75
See notes to financial statements.
10
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $11,854) $255,762
Interest 98,178 $ 353,940
EXPENSES
Advisory fee 985,006
Distribution fee - Class A 67,865
Distribution fee - Class B 302,057
Distribution fee - Class C 161,736
Amortization of offering expenses 111,264
Custodian 81,881
Registration 43,879
Audit and legal 35,461
Administrative fee 22,000
Transfer agency 21,475
Printing 20,184
Directors' fees 13,165
Miscellaneous 5,701
Total expenses 1,871,674
Net investment loss (1,517,734)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND OPTIONS WRITTEN
Net realized gain on investment transactions 10,589,912
Net realized loss on written option
transactions (413,346)
Net change in unrealized appreciation of
investments and options written 23,515,510
Net gain on investments 33,692,076
NET INCREASE IN NET ASSETS FROM OPERATIONS $32,174,342
See notes to financial statements.
11
STATEMENT OF CHANGES
IN NET ASSETS
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
SIX MONTHS ENDED JULY 29,
1998(A)
APRIL 30, 1999 TO
(UNAUDITED) OCT. 31, 1998
--------------- --------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (1,517,734) $ (295,432)
Net realized gain (loss) on investments
and written option transactions 10,176,566 (4,555,125)
Net change in unrealized appreciation
of investments and options written 23,515,510 2,946,016
Net increase (decrease) in net assets
from operations 32,174,342 (1,904,541)
COMMON STOCK TRANSACTIONS
Net increase 70,886,351 87,430,460
Total increase 103,060,693 85,525,919
NET ASSETS
Beginning of year 85,626,119 100,200
End of period $ 188,686,812 $ 85,626,119
(a) Commencement of operations.
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Premier Portfolio (the "Fund"), the initial portfolio of Alliance Select
Investor Series, Inc. (the "Company") was incorporated in the state of Maryland
on May 21, 1998 and is registered under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company. The Fund offers Class
A, Class B and Class C shares. Prior to commencement of operations on July 29,
1998, the Fund had no operations other than the sale to Alliance Capital
Management L.P. (the "Adviser") of 10,000 shares of Class A and 10 shares of
each of Class B and Class C for the aggregate amount of $100,000 on Class A
shares and $100 on each of Class B and Class C shares on June 25, 1998. 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. All three classes
of shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have
been prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or, if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair market value of such securities. Listed put or call options purchased
by the Fund are valued at the last sale price. If there has been no sale on
that day, such securities will be valued at the closing bid prices on that day.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
Net realized foreign exchange gains or losses represent foreign exchange gains
and losses from sales of investments and forward currency exchange contracts,
holding of foreign currencies, currency gains or losses realized between the
trade and settlement dates on foreign 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 period end exchange rates would be
reflected as a component of net unrealized appreciation (depreciation) of
investments and foreign currency denominated assets and liabilities.
13
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
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 provision for federal income or excise taxes is
required.
4. ORGANIZATION AND OFFERING EXPENSES
Organization expenses of $62,500 were charged to the Fund as incurred prior to
commencement of operations and reimbursed by the Adviser. Offering expenses of
$216,500 have been deferred and are being amortized on a straight-line basis
over a one year period.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments 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 outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares.
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. To the extent these differences are
permanent, such amounts are reclassified with 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") a monthly fee at an annualized rate of
1.10% of the Fund's average daily net assets (the "Basic Fee") and an
adjustment to the Basic Fee based upon the investment performance of the Class
A shares of the Fund in relation to the investment record of the Russell 1000
Growth Index. For the period from August 1, 1998 through July 31, 1999, the
Adviser will receive a minimum fee payable monthly equal to .80% annualized of
the average net assets of the Fund for each day included in such annual period.
The fee paid to the Adviser for this period may be increased to 1.40%, based on
the investment performance of the Class A shares of the Fund in relation to the
investment record of the Russell 1000 Growth Index. During the six months ended
April 30, 1999, the effective advisory fee was at the annualized rate of 1.36%
of the Fund's average daily net assets.
The Fund and the Adviser have entered into an Expense Limitation Agreement (the
"Agreement"), dated June 29, 1998, under which the Adviser has agreed to waive
its fees and, if necessary, reimburse expenses for the period from May 21, 1998
(date of organization of the Fund) to July 31, 1999, exceeding the annual rate
of 2.50% of average daily net assets for Class A shares and 3.20% of average
daily net assets for Class B shares and Class C shares, respectively. Under the
Agreement, any waivers or reimbursements made by the Adviser during this period
are subject to repayment by the Fund in subsequent periods, but no later than
July 31, 2001, provided that repayment does not result in the Fund's aggregate
expenses in those subsequent periods exceeding the foregoing expense
limitations. Further, the aggregate repayment to the Adviser will not exceed
the sum of the Fund's organization costs and initial offering expenses. At
October 31, 1998, the total amount of expenses waived and reimbursed by the
Adviser that are subject to repayment amounted to $112,035.
Pursuant to the advisory agreement, the Adviser provides certain legal and
accounting services for the Fund. For the six months ended April 30, 1999, such
fees amounted to $22,000.
14
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
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 $19,477 for the six months ended April 30, 1999.
For the six months ended April 30, 1999, the Fund's expenses were reduced by
$1,752 under an expense offset arrangement with Alliance Fund Services.
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 charge of $19,222 from the sale of Class A shares and $100,213
and $7,728 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the six months
ended April 30, 1999.
Brokerage commissions paid for the six months ended April 30, 1999 on
investment transactions amounted to $147,935, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ") nor to DLJ directly, an affiliate of the Adviser.
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 average daily net assets attributable to both
Class B and Class C shares. Such fee is accrued daily and paid monthly. The
Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $1,763,564 and $277,452, for Class B
and C shares, respectively. Such costs may be recovered from the Fund in future
periods so long as the Agreement is in effect. In accordance with the Agreement
there is no provision for recovery of unreimbursed distribution costs incurred
by the Distributor, beyond the current fiscal year for Class A shares. The
Agreement also provides that the Adviser may use its own resources to finance
the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments,
and U.S. government securities) aggregated $129,571,867 and $65,403,616,
respectively, for the six months ended April 30, 1999. There were no purchases
or sales of U.S. government or government agency obligations for the six months
ended April 30, 1999.
At April 30, 1999, the cost of investments for federal income tax purposes was
$159,011,364. Gross unrealized appreciation of investments was $34,107,739 and
gross unrealized depreciation of investments was $7,667,941 resulting in net
unrealized appreciation of $26,439,798 (excluding written call options).
The Fund had a capital loss carryover of $4,455,022 which expires October 31,
2006. To the extent that any net capital loss carryover is used to offset
future capital gains, it is probable that these gains will not be distributed
to shareholders.
1. OPTIONS TRANSACTIONS
For hedging purposes, the Fund purchases and writes (sells) options on market
indices and covered put and call options on U.S. securities that are traded on
U.S. securities exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of the premium and any change in market value should the counterparty
not perform under the contract. Put and call options purchased are accounted
for in the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by pre-
15
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
miums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written.
Premiums received from writing options which expire unexercised are recorded by
the Fund on the expiration date as realized gains from option transactions. The
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as a
realized gain, or if the premium is less than the amount paid for the closing
purchase transaction, as a realized loss. If a written call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether the Fund has realized a gain or loss. If a
written put option is exercised, the premium reduces the costs basis of the
security purchased by the Fund. In writing covered options, the Fund bears the
market risk of an unfavorable change in the price of the security underlying
the written option. Exercise of an option written by the Fund could result in
the Fund selling or buying a security at a price different from the current
market value.
Transactions in options written for the six months ended April 30, 1999 were as
follows:
NUMBER PREMIUMS
OF CONTRACTS RECEIVED
------------ ----------
Options outstanding at
beginning of year 50 $ 26,099
Options written 1,775 4,284,683
Options terminated in closing
purchase transactions (1,600) (2,843,569)
Options outstanding at April 30, 1999 225 $ 1,467,213
NOTE E: CAPITAL STOCK
There are 9,000,000,000 shares of $.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C. Each
consists of 3,000,000,000 authorized shares. Transactions in capital stock were
as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS SIX MONTHS
ENDED JULY 29, 1998(A) ENDED JULY 29, 1998(A)
APRIL 30, 1999 TO APRIL 30, 1999 TO
(UNAUDITED) OCT. 31, 1998 (UNAUDITED) OCT. 31, 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 3,261,893 3,023,758 $ 39,638,570 $28,756,722
Shares redeemed (1,152,091) (322,695) (13,972,090) (2,854,007)
Net increase 2,109,802 2,701,063 $ 25,666,480 $25,902,715
CLASS B
Shares sold 2,755,414 4,396,418 $ 33,875,362 $42,449,402
Shares redeemed (428,402) (300,890) (5,150,996) (2,503,948)
Net increase 2,327,012 4,095,528 $ 28,724,366 $39,945,454
CLASS C
Shares sold 1,781,432 2,447,233 $ 22,054,704 $23,765,875
Shares redeemed (462,940) (247,914) (5,559,199) (2,183,584)
Net increase 1,318,492 2,199,319 $ 16,495,505 $21,582,291
(a) Commencement of operations.
16
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
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 April 30, 1999.
17
FINANCIAL HIGHLIGHTS
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------------------------------------------------------------
SIX MONTHS JULY 29, SIX MONTHS JULY 29, SIX MONTHS JULY 29,
ENDED 1998(A) ENDED 1998(A) ENDED 1998(A)
APRIL 30, TO APRIL 30, TO APRIL 30, TO
1999 OCT. 31, 1999 OCT. 31, 1999 OCT. 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.53 $10.00 $9.49 $10.00 $9.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.10) (.03) (.15) (.04) (.14) (.04)
Net realized and unrealized
gain (loss) on investments
and written option
transactions 3.41 (.44) 3.41 (.47) 3.39 (.46)
Net increase (decrease)
in net asset
value from operations 3.31 (.47) 3.26 (.51) 3.25 (.50)
Net asset value,
end of period $12.84 $9.53 $12.75 $9.49 $12.75 $9.50
TOTAL RETURN
Total investment return
based on net
asset value (c) 34.73% (4.70)% 34.35% (5.10)% 34.21% (5.00)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $61,904 $25,835 $81,919 $38,887 $44,865 $20,904
Ratio to average
net assets of:
Expenses net of waivers/
reimbursements (d) 2.24% 2.50% 2.95% 3.20% 2.94% 3.20%
Expenses before waivers/
reimbursements (d) 2.24% 2.70% 2.95% 3.39% 2.94% 3.39%
Net investment loss net
of waivers/
reimbursements (d) (1.72)% (1.19)% (2.43)% (1.87)% (2.43)% (1.85)%
Portfolio turnover rate 49% 29% 49% 29% 49% 29%
</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.
18
ALLIANCE SELECT INVESTOR SERIES
PREMIER PORTFOLIO
_______________________________________________________________________________
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 CORBET, SENIOR VICE PRESIDENT
ALFRED HARRISON, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
JOHN A. KOLTES, VICE PRESIDENT
DANIEL NORDBY, VICE PRESIDENT
MICHAEL J. REILLY, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, 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 ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, NY 10036-2798
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.
19
ALLIANCE SELECT INVESTOR SERIES PREMIER PORTFOLIO
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.
ASISR
