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MID CAP BLEND
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[GRAPHIC OMITTED]
The Alliance Fund
Semi-Annual Report
May 31, 2000
[LOGO] AllianceCapital
The Investment Professional's Choice
<PAGE>
Investment Products Offered
-------------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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<PAGE>
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LETTER TO SHAREHOLDERS
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LETTER TO SHAREHOLDERS
July 17, 2000
Dear Shareholder:
This report provides information regarding the investment results and market
activity for The Alliance Fund (the "Fund") for the semi-annual reporting period
ended May 31, 2000.
Investment Objective and Policies
The Alliance Fund is an open-end, diversified investment company that seeks
long-term growth of capital and income primarily through investments in common
stocks that Alliance Capital believes will appreciate in value. The Fund may
invest in a variety of securities, including convertible bonds, U.S. government
securities and other high-quality short-term investments. The Fund has the
flexibility to invest without limits in foreign securities.
Investment Results
In the following table, the Fund's performance is compared with that of the
Standard & Poor's (S&P) MidCap 400 Index, which is a measure of mid-cap stock
performance, and the Russell 1000 Growth Stock Index, which tracks the
performance of large, growth-oriented companies.
While we are clearly disappointed in the past six and 12-month performance, the
Fund has continued to exercise its discipline of buying and holding stocks with
rapid growth rates, but at reasonable valuations. The booming market for high
price-to-earnings (P/E) technology stocks which persisted into March and our
relative lack of participation in these names certainly hurt performance.
However, with the sharp technology stock correction in the period of late March
through May, some of these stocks have declined sharply to more reasonable
valuations. Into this decline we have modestly increased our technology holdings
while remaining overweight in telecom shares. Seeking growth, but remaining
disciplined regarding price, continues to be the approach of the Fund.
The Fund's underperformance over the past six and 12 months has been largely due
to an underweighting in technology shares which we had believed to be
substantially overvalued. Our investment approach of seeking to identify and own
rapidly growing companies, while at the same time taking price into
consideration, has had difficulty relating with the more than 100 times
price-to-earnings (P/E) ratios that currently exist in many high tech issues.
The Fund instead has focused more on rapidly growing telecom issues, primarily
in the wireless industry where valuations were much more reasonable and expected
growth is still very substantial.
INVESTMENT RESULTS*
Periods Ended May 31, 2000
-------------------
Total Returns
-------------------
6 Months 12 Months
---------------------------------------
The Alliance Fund
Class A -4.89% 3.02%
---------------------------------------
Class B -5.42% 2.00%
---------------------------------------
Class C -5.43% 2.00%
---------------------------------------
S&P MidCap
400 Index 13.78% 21.45%
---------------------------------------
Russell 1000
Growth Stock
Index 6.97% 24.99%
---------------------------------------
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THE ALLIANCE FUND o 1
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LETTER TO SHAREHOLDERS
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* The Fund's investment results are total returns for the periods shown and
are based on the net asset value of each class of shares as of May 31,
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. Total return for Advisor Class
shares will differ due to different expenses associated with that class.
Past performance is no guarantee of future results.
The S&P MidCap 400 Index is an unmanaged index of 400 U.S. companies that
are chosen for their market size, liquidity and industry group
representation. It is a market-value weighted index representing
approximately 10% of the aggregate market value of U.S. domestic
companies. The unmanaged Russell 1000 Growth Stock Index contains those
securities in the Russell 1000 Stock Index with a greater-than-average
growth orientation. The unmanaged Russell 1000 Stock Index is comprised of
1000 of the largest capitalized companies that are traded in the U.S. An
investor cannot invest directly in an index, and its results are not
indicative of the performance for any specific investment, including The
Alliance Fund.
Additional investment results appear on pages 4-7.
Review Of Investment Strategy
The Fund has maintained a mid-cap focus. The Fund's current mean market
capitalization is approximately $5 to $6 billion, with the majority of holdings
in the $2 to $20 billion market cap range. Companies in this market cap range
often have significant growth opportunities and many are selling at very
attractive valuations. Within this mid-cap universe, we attempt to identify the
most rapidly growing companies and to buy and hold them at attractive valuation
levels.
Telecommunications remains the largest industry weighting in the Fund. Holdings
such as NTL Inc., the largest cable television company in the U.K., and Millicom
International Cellular are among the Fund's largest holdings. We used the sharp
sell-off in technology and telecommunications stocks that took place in the
early March through May period to increase some of the more attractive telecom
names and to initiate positions in some technology names where we had been very
underweighted.
Financial services are a second major area of concentration for the Fund. Legg
Mason, a rapidly growing regional broker and asset manager, has been an
excellent performer and is currently the Fund's largest holding. Additional
holdings in A.G. Edwards, AFLAC, Inc., ACE Limited, and Associates First Capital
provide strong earnings growth with attractive valuations.
Airline stocks are also important holdings. Load factors are at all-time highs,
fuel costs appear to be moderating, and earnings estimates are being increased
for most major air carriers. Continental Airlines, in particular, is an example
of a company with strong profit improvement, rapid growth, and a very low P/E
ratio.
Lastly, health care is featured in the Fund, as we have increased holdings
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2 o THE ALLIANCE FUND
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LETTER TO SHAREHOLDERS
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in the hospital management area and continued to invest in selected biotech
companies. The health care area is experiencing major technological changes, and
will likely be an area of increased focus for the Fund.
Current Outlook
It would appear that Federal Reserve Board rate increases are nearly finished,
with perhaps one more increase later in the year. With the Fed in a more neutral
mode, markets should be stronger and more broadly based--a situation that should
help our investment style of using more mid-cap names. Inflation remains low and
interest rates could therefore be flat to down slightly for the rest of the
year. Finally, it may be that the technology mania that propelled a number of
companies to extraordinarily high valuations has slowed. If so, this argues for
a broader, more rational market where our approach of aggressive growth, at a
reasonable price, should show substantial success.
Thank you for your continued interest in The Alliance Fund. We look forward to
reporting to you on market activity and your Fund's investment results in the
coming months.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Alden M. Stewart
Alden M. Stewart
Executive Vice President
[PHOTO]
John D. Carifa
[PHOTO]
Alden M. Stewart
Alden M. Stewart, Executive Vice President and Portfolio Manager, has over 29
years of investment experience.
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THE ALLIANCE FUND o 3
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PERFORMANCE UPDATE
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PERFORMANCE UPDATE
THE ALLIANCE FUND
GROWTH OF A $10,000 INVESTMENT
5/31/90 TO 5/31/00
o The Alliance Fund
o Russell 1000 Growth Index
o Standard & Poor's 400 Midcap Index
[LINE CHART OMITTED]
Russell 1000 Growth Index $58,707
S&P 400 Midcap Index: $51,904
The Alliance Fund Class A: $36,710
This chart illustrates the total value of an assumed $10,000 investment in The
Alliance Fund Class A shares (from 5/31/90 to 5/31/00) as compared to the
performance of appropriate broad-based indices. 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 these 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 unmanaged Standard & Poor's 400 Midcap Index is a market-value weighted
index which consists of 400 domestic stocks chosen for market size, liquidity
and industry group representation.
The unmanaged Russell 1000 Growth Index contains those securities in the Russell
1000 Stock Index with a greater-than-average growth orientation. The unmanaged
Russell 1000 Stock Index is comprised of 1000 of the largest capitalized
companies that are traded in the U.S.
When comparing The Alliance Fund to the indices shown above, you should note
that no charges or expenses are reflected in the performance of the indices. An
investor cannot invest directly in an index and its results are not indicative
of any specific investment, including The Alliance Fund.
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4 o THE ALLIANCE FUND
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PERFORMANCE UPDATE
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PERFORMANCE UPDATE
THE ALLIANCE FUND
HISTORY OF RETURNS
YEARLY PERIODS ENDED 5/31
[BAR CHART OMITTED]
The Alliance Fund-Yearly Periods Ended 5/31
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The S&P MidCap
Alliance Fund 400 Index
--------------------------------------------------------------------------------
5/31/91 11.70% 19.37%
5/31/92 9.75% 15.84%
5/31/93 19.55% 18.59%
5/31/94 5.57% 4.03%
5/31/95 14.32% 13.51%
5/31/96 28.78% 28.46%
5/31/97 19.78% 18.16%
5/31/98 28.06% 29.91%
5/31/99 6.58% 11.93%
5/31/00 3.02% 21.45%
Past performance is no guarantee of future results. The Fund's investment
results represent total returns for Class A shares and are based on the 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 S&P MidCap 400 Index is an unmanaged index of 400 U.S. companies that are
chosen for their market size, liquidity and industry group representation. It is
a market-value weighted index representing approximately 10% of the aggregate
market value of U.S. domestic companies. An investor cannot invest directly in
an index, and its results are not indicative of any specific investment,
including The Alliance Fund.
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THE ALLIANCE FUND o 5
<PAGE>
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PORTFOLIO SUMMARY
--------------------------------------------------------------------------------
PORTFOLIO SUMMARY
May 31, 2000 (unaudited)
PORTFOLIO STATISTICS
Assets ($mil): $1,210.8
Median Market Capitalization ($mil): $3,799
INCEPTION DATE
(Class A shares)
7/7/38
[BAR CHART OMITTED]
SECTOR BREAKDOWN
o 30.13% Consumer Services
o 20.40% Finance
o 18.47% Utilities
o 10.37% Technology
o 6.19% Health Care
o 2.73% Consumer Manufacturing
o 2.47% Energy
o 2.04% Consumer Staples
o 1.36% Multi Industry Companies
o 1.12% Capital Goods
o 1.02% Basic Industry
o 3.70% Short-Term
[BAR CHART OMITTED]
HOLDING TYPE
o 95.87% Equity
o 0.43% Fixed-Income
o 3.70% Short-Term Securities
All data as of May 31, 2000. The Fund's holdings and sector breakdowns may vary
over time. These breakdowns are expressed as a percentage of total investments.
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6 o THE ALLIANCE FUND
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INVESTMENT RESULTS
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INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF MAY 31, 2000
Class A Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
One Year 3.02% -1.36%
Five Years 16.75% 15.72%
Ten Years 14.39% 13.89%
Class B Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
One Year 2.00% -1.70%
Five Years 15.75% 15.75%
Since Inception*(a) 14.05% 14.05%
Class C Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
One Year 2.00% 1.08%
Five Years 15.70% 15.70%
Since Inception* 14.41% 14.41%
SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END (MARCH 31, 2000)
Class A Class B Class C
--------------------------------------------------------------------------------
One Year 19.56% 19.87% 22.91%
Five Years 19.31% 19.34% 19.30%
Ten Years 15.82% n/a n/a
Since Inception* 11.64% 15.50%(a) 16.39%
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 shares or applicable
contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2%
year 3, 1% year 4); and for Class C shares (1% year 1). Returns for Class A
shares do not reflect the imposition of the 1 year, 1% contingent deferred sales
charge for accounts over $1,000,000. Total return for Advisor Class shares will
differ due to different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Since inception: 7/7/38 Class A; 3/4/91 Class B; 5/3/93 Class C.
(a) Assumes conversion of Class B shares into Class A shares after 8 years.
n/a: not applicable
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THE ALLIANCE FUND o 7
<PAGE>
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TEN LARGEST HOLDINGS
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
Percent of
Company Value Net Assets
--------------------------------------------------------------------------------
Legg Mason, Inc. $ 71,703,125 5.9%
--------------------------------------------------------------------------------
Continental Airlines, Inc. 63,528,125 5.3
--------------------------------------------------------------------------------
Telephone & Data Systems, Inc. 54,802,000 4.5
--------------------------------------------------------------------------------
NTL, Inc. (Common stocks and bond) 53,911,312 4.5
--------------------------------------------------------------------------------
CNA Financial Corp. 51,746,875 4.3
--------------------------------------------------------------------------------
Millicom International Cellular, SA 51,000,000 4.2
--------------------------------------------------------------------------------
United States Cellular Corp. 49,800,000 4.1
--------------------------------------------------------------------------------
Royal Caribbean Cruises, Ltd. 35,706,250 3.0
--------------------------------------------------------------------------------
Associates First Capital Corp. Cl.A 32,925,000 2.7
--------------------------------------------------------------------------------
Health Management Associates, Inc. 30,712,500 2.5
--------------------------------------------------------------------------------
$495,835,187 41.0%
MAJOR PORTFOLIO CHANGES
Six Months Ended May 31,2000 (unaudited)
-----------------------------------
Shares*
-----------------------------------
Purchases Bought Holdings 5/31/00
--------------------------------------------------------------------------------
AFLAC, Inc. 350,000 350,000
--------------------------------------------------------------------------------
AMFM, Inc. 149,000 149,000
--------------------------------------------------------------------------------
Associates First Capital Corp. Cl.A 975,000 1,200,000
--------------------------------------------------------------------------------
Bed Bath & Beyond, Inc. 500,000 600,000
--------------------------------------------------------------------------------
Comcast Corp. Cl.A 400,000 400,000
--------------------------------------------------------------------------------
Family Dollar Stores, Inc. 600,000 600,000
--------------------------------------------------------------------------------
Foundry Networks, Inc. 300,000 300,000
--------------------------------------------------------------------------------
Northwest Airlines Corp. 625,000 625,000
--------------------------------------------------------------------------------
UnitedGlobalCom, Inc. Cl.A 226,300 250,000
--------------------------------------------------------------------------------
United Pan-Europe Communications
NV (ADR) 500,000 500,000
--------------------------------------------------------------------------------
Sales Sold Holdings 5/31/00
--------------------------------------------------------------------------------
Amdocs, Ltd. 275,000 250,000
--------------------------------------------------------------------------------
Carnival Corp. Cl.A 825,000 100,000
--------------------------------------------------------------------------------
Delta Airlines, Inc. 517,700 222,300
--------------------------------------------------------------------------------
Human Genome Sciences, Inc. 85,000 75,000
--------------------------------------------------------------------------------
Korn/Ferry International 672,000 -0-
--------------------------------------------------------------------------------
Millicom International Cellular, SA 274,000 1,200,000
--------------------------------------------------------------------------------
Noble Drilling Corp. 1,338,000 -0-
--------------------------------------------------------------------------------
Santa Fe International Corp. 920,000 -0-
--------------------------------------------------------------------------------
Tele Sudeste Celular Participacoes,
SA (ADR) 300,000 -0-
--------------------------------------------------------------------------------
Viatel, Inc. 292,400 -0-
--------------------------------------------------------------------------------
* Adjusted for a stock split.
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8 o THE ALLIANCE FUND
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PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
May 31, 2000 (unaudited)
Company Shares Value
--------------------------------------------------------------------------------
Common & Preferred Stocks-94.5%
Consumer Services-29.7%
Airlines-9.0%
Alaska Air Group, Inc.(a) .................... 450,000 $ 14,006,250
America West Holdings Corp. Cl.B(a) .......... 100,000 1,781,250
Continental Airlines, Inc.(a) ................ 1,450,000 63,528,125
Delta Air Lines, Inc. ........................ 222,300 11,434,556
Northwest Airlines Corp.(a) .................. 625,000 17,773,438
------------
108,523,619
------------
Broadcasting & Cable-6.5%
AMFM, Inc.(a) ................................ 149,000 10,094,750
Citadel Communications Corp.(a) .............. 25,000 1,001,563
Clear Channel Communications(a) .............. 100,000 7,487,500
Comcast Corp. Cl.A ........................... 400,000 15,150,000
Emmis Communications Corp. Cl.A(a) ........... 60,000 2,047,500
Entercom Communications Corp.(a) ............. 96,400 4,386,200
RCN Corp.(a) ................................. 400,000 9,225,000
United Pan-Europe Communications NV (ADR)
(Netherlands)(a) .......................... 500,000 12,812,500
UnitedGlobalCom, Inc. Cl.A(a) ................ 250,000 12,000,000
USA Networks, Inc.(a) ........................ 200,000 3,787,500
------------
77,992,513
------------
Entertainment & Leisure-4.1%
Carnival Corp. ............................... 100,000 2,712,500
Metro-Goldwyn-Mayer, Inc.(a) ................. 410,000 11,633,750
Royal Caribbean Cruises, Ltd. ................ 1,450,000 35,706,250
------------
50,052,500
------------
Gaming-3.2%
MGM Grand, Inc.(b) ........................... 170,000 4,505,000
Park Place Entertainment Corp.(a) ............ 2,410,000 30,426,250
Sun International Hotels, Ltd.(a) ............ 217,600 3,930,400
------------
38,861,650
------------
Printing & Publishing-0.1%
Gannett Co., Inc. ............................ 25,000 1,618,750
------------
Restaurants & Lodging-1.0%
Extended Stay America, Inc. .................. 1,334,400 12,009,600
------------
Retail General Merchandise-4.5%
Abercrombie & Fitch Co. Cl.A ................. 45,000 441,562
Bed Bath & Beyond, Inc.(a) ................... 600,000 22,087,500
Family Dollar Stores, Inc. ................... 600,000 11,850,000
Industrie Natuzzi SpA (ADR) (Italy) .......... 566,400 6,088,800
TJX Cos., Inc. ............................... 660,000 14,272,500
Too, Inc.(a) ................................. 1 26
------------
54,740,388
------------
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THE ALLIANCE FUND o 9
<PAGE>
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PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
Company Shares Value
--------------------------------------------------------------------------------
Miscellaneous-1.3%
ChoicePoint, Inc.(a) ........................... 101,797 $ 4,116,416
Dollar Thrifty Automotive Group, Inc.(a) ....... 650,200 11,703,600
------------
15,820,016
------------
359,619,036
------------
Finance-20.1%
Banking Money Centers-0.2%
Bank of Tokyo-Mitsubishi, Ltd. (ADR) (Japan) ... 200,000 2,525,000
------------
Brokerage & Money Management-7.7%
Edwards (A.G.), Inc. ........................... 600,000 20,962,500
Legg Mason, Inc. ............................... 1,625,000 71,703,125
------------
92,665,625
------------
Insurance-9.2%
ACE, Ltd. ...................................... 850,000 22,790,625
AFLAC, Inc. .................................... 350,000 18,090,625
CNA Financial Corp.(a) ......................... 1,450,000 51,746,875
PMI Group, Inc. ................................ 375,000 19,031,250
------------
111,659,375
------------
Miscellaneous-3.0%
Associates First Capital Corp. Cl.A ............ 1,200,000 32,925,000
The CIT Group, Inc. Cl.A ....................... 200,000 3,662,500
------------
36,587,500
------------
243,437,500
------------
Utilities-18.2%
Telephone Utility-18.1%
Adelphia Business Solutions, Inc.(a) ........... 325,000 7,231,250
ALLTEL Corp. ................................... 10,000 654,375
CenturyTel, Inc. ............................... 200,000 5,400,000
Global Telesystems Group, Inc.(a) .............. 2,425,000 26,978,125
Millicom International Cellular, SA(a)
(Luxembourg) ................................ 1,200,000 51,000,000
PSINet, Inc.(a) ................................ 550,000 14,334,375
Telephone & Data Systems, Inc. ................. 517,000 54,802,000
Time Warner Telecom, Inc. Cl.A(a) .............. 143,000 8,008,000
United States Cellular Corp.(a) ................ 800,000 49,800,000
Western Wireless Corp. Cl.A(a) ................. 23,400 1,118,812
------------
219,326,937
------------
Miscellaneous-0.1%
Edison Schools, Inc.(a) ........................ 51,600 1,070,700
------------
220,397,637
------------
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10 o THE ALLIANCE FUND
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PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
Company Shares Value
--------------------------------------------------------------------------------
Technology-9.8%
Communication Equipment-5.8%
Amdocs, Ltd. 6.75% cv. preferred stock ........... 100,000 $ 5,462,500
Grupo Iusacell, SA de C.V. (ADR) (Mexico)(a) ..... 225,000 2,981,250
NTL, Inc.(a) ..................................... 825,000 48,726,562
Tele Celular Sul Participacoes, SA (ADR) (Brazil) 25,000 846,875
Tele Centro Oeste Celular Participacoes, SA
(ADR) (Brazil) ................................ 50,000 509,375
Tele Nordeste Celular Participacoes, SA (ADR)
(Brazil) ...................................... 12,300 651,900
Telemig Celular Participacoes, SA (ADR) (Brazil) . 80,000 4,645,000
Telesp Celular Participacoes, SA (ADR) (Brazil) .. 150,000 5,681,250
------------
69,504,712
------------
Computer Software-2.2%
Amdocs, Ltd.(a) .................................. 250,000 15,484,375
Informix Corp.(a) ................................ 1,600,000 11,600,000
------------
27,084,375
------------
Networking Software-1.8%
Foundry Networks, Inc.(a) ........................ 300,000 18,918,750
Infonet Services Corp. Cl.B ...................... 200,000 2,300,000
RADVision, Ltd. (Israel)(a) ...................... 45,000 815,625
------------
22,034,375
------------
118,623,462
------------
Health Care-6.1%
Biotechnology-0.9%
Human Genome Sciences, Inc. ...................... 75,000 6,581,250
Pe Corp-PE Biosystems Group ...................... 80,000 4,440,000
------------
11,021,250
------------
Medical Services-5.2%
Health Management Associates, Inc.(a) ............ 2,600,000 30,712,500
Healthsouth Corp.(a) ............................. 3,000,000 19,312,500
Tenet Healthcare Corp.(a) ........................ 500,000 12,812,500
------------
62,837,500
------------
73,858,750
------------
Consumer Manufacturing-2.7%
Auto & Related-0.4%
Budget Group, Inc.(a) ............................ 1,000,000 3,812,500
Monaco Coach Corp.(a) ............................ 100,000 1,437,500
------------
5,250,000
------------
Building & Related-0.6%
Masco Corp. ...................................... 350,000 6,890,625
------------
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THE ALLIANCE FUND o 11
<PAGE>
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PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
Shares or
Principal
Amount
Company (000) Value
--------------------------------------------------------------------------------
Textile Products-1.7%
Unifi, Inc.(a) ......................... 1,600,000 $ 20,400,000
--------------
32,540,625
--------------
Energy-2.4%
Domestic Integrated-1.0%
Kerr-McGee Corp. ....................... 200,000 11,937,500
--------------
Miscellaneous-1.4%
Stolt Offshore, SA ..................... 130,000 1,917,500
(ADR) (United Kingdom)(a) ........... 1,200,000 15,600,000
--------------
17,517,500
--------------
29,455,000
--------------
Consumer Staples-2.0%
Household Products-2.0%
Viad Corp. ............................. 925,000 24,339,063
--------------
Multi-Industry Companies-1.4%
U.S. Industries, Inc. .................. 1,200,000 16,200,000
--------------
Capital Goods-1.1%
Machinery-0.1%
United Rentals, Inc.(a) ................ 102,500 1,665,625
--------------
Miscellaneous-1.0%
Mohawk Industries, Inc.(a) ............. 493,100 11,741,944
--------------
13,407,569
--------------
Basic Industry-1.0%
Chemicals-1.0%
Lyondell Chemical Co. .................. 730,000 12,181,875
--------------
Total Common & Preferred Stocks
(cost $1,056,223,706) ............... 1,144,060,517
--------------
Convertible Bond-0.4%
Communication Equipment-0.4%
NTL, Inc.
7.00%, 12/15/08
(cost $5,373,389) ................... $3,100 5,184,750
--------------
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12 o THE ALLIANCE FUND
<PAGE>
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PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
--------------------------------------------------------------------------------
Short-Term Investment-3.7%
Time Deposit-3.7%
State Street Euro Dollar
6.00%, 6/01/00
(amortized cost $44,161,000) .......... $44,161 $ 44,161,000
--------------
Total Investments-98.6%
(cost $1,105,758,095) ................. 1,193,406,267
Other assets less liabilities-1.4% ....... 17,374,024
--------------
Net Assets-100% .......................... $1,210,780,291
==============
(a) Non-income producing security.
(b) Illiquid security, valued at fair market value (see Note A)
Glossary:
ADR American Depositary Receipt.
See notes to financial statements.
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THE ALLIANCE FUND o 13
<PAGE>
--------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
--------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
May 31, 2000 (unaudited)
Assets
Investments in securities, at value (cost $1,105,758,095) ... $ 1,193,406,267
CReceivable for investment securities sold .................. 11,658,671
Receivable for capital stock sold ........................... 9,353,185
Dividends and interest receivable ........................... 1,528,097
---------------
Total assets ................................................ 1,215,946,220
---------------
Liabilities
Payable for investment securities purchased ................. 2,621,742
Unclaimed dividends ......................................... 1,005,679
Management fee payable ...................................... 684,657
Distribution fee payable .................................... 298,049
Payable for capital stock redeemed .......................... 272,804
Accrued expenses ............................................ 282,998
---------------
Total liabilities ........................................... 5,165,929
---------------
Net Assets .................................................. $ 1,210,780,291
===============
Composition of Net Assets
Capital stock, at par ....................................... $ 1,862,456
Additional paid-in capital .................................. 970,220,717
Accumulated net investment loss ............................. (2,622,946)
Accumulated net realized gain on investments and
foreign currency transactions ............................ 153,671,893
Net unrealized appreciation of investments .................. 87,648,171
---------------
$ 1,210,780,291
===============
Calculation Of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($1,078,443,604 / 163,995,397 shares of capital stock
issued and outstanding) ................................. $6.58
Sales charge--4.25% of public offering price ............... .29
-----
Maximum offering price ..................................... $6.87
=====
Class B Shares
Net asset value and offering price per share
($96,805,035 / 16,398,033 shares of capital stock
issued and outstanding) ................................. $5.90
=====
Class C Shares
Net asset value and offering price per share
($25,641,010 / 4,355,309 shares of capital stock
issued and outstanding) ................................. $5.89
=====
Advisor Class Shares
Net asset value, redemption and offering price per share
($9,890,642 / 1,496,867 shares of capital stock
issued and outstanding) ................................. $6.61
=====
See notes to financial statements.
--------------------------------------------------------------------------------
14 o THE ALLIANCE FUND
<PAGE>
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended May 31, 2000 (unaudited)
Investment Income
Dividends (net of foreign taxes
withheld of $142,904) .................. $ 3,697,674
Interest .................................. 727,253 $ 4,424,927
-------------
Expenses
Management fee ............................ 4,230,701
Distribution fee - Class A ................ 1,174,959
Distribution fee - Class B ................ 516,095
Distribution fee - Class C ................ 164,756
Transfer agency ........................... 607,518
Custodian ................................. 118,203
Printing .................................. 78,870
Administrative ............................ 59,000
Audit and legal ........................... 52,960
Registration .............................. 21,023
Directors' fees ........................... 13,000
Miscellaneous ............................. 10,788
-------------
Total expenses ............................ 7,047,873
-------------
Net investment loss ....................... (2,622,946)
-------------
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on investment
transactions ........................... 154,800,666
Net change in unrealized
appreciation/depreciation
of investments ......................... (203,704,584)
-------------
Net loss on investments ................... (48,903,918)
-------------
Net Decrease in Net Assets
from Operations ........................ $ (51,526,864)
=============
See notes to financial statements.
--------------------------------------------------------------------------------
THE ALLIANCE FUND o 15
<PAGE>
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
Six Months Ended Year Ended
May 31, 2000 November 30,
(unaudited) 1999
---------------- ---------------
Increase (Decrease) in Net Assets
from Operations
Net investment loss ...................... $ (2,622,946) $ (5,690,446)
Net realized gain on investments
and foreign currency transactions ..... 154,800,666 115,329,294
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities .... (203,704,584) 239,978,038
--------------- ---------------
Net increase (decrease) in net assets
from operations ....................... (51,526,864) 349,616,886
Distributions to Shareholders from:
Net realized gain on investments
Class A ............................... (94,535,666) (60,710,238)
Class B ............................... (9,448,892) (5,904,101)
Class C ............................... (2,609,183) (1,431,253)
Advisor Class ......................... (842,449) (728,071)
Capital Stock Transactions
Net increase (decrease) .................. 101,723,339 (83,996,950)
--------------- ---------------
Total increase (decrease) ................ (57,239,715) 196,846,273
Net Assets
Beginning of period ...................... 1,268,020,006 1,071,173,733
--------------- ---------------
End of period ............................ $ 1,210,780,291 $ 1,268,020,006
=============== ===============
See notes to financial statements.
--------------------------------------------------------------------------------
16 o THE ALLIANCE FUND
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
May 31, 2000 (unaudited)
NOTE A
Significant Accounting Policies
The Alliance Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company. 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 Cshares are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. Advisor Class shares are sold without an initial
or contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in
fee-based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States, 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, on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) or on The
Nasdaq Stock Market, Inc. 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 (but
excluding securities traded on The Nasdaq Stock Market, Inc.), are valued at the
mean of the current bid and asked price. 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.
--------------------------------------------------------------------------------
THE ALLIANCE FUND o 17
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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 prices 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 currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities and foreign exchange
currency contracts, currency gains and losses realized between the trade and
settlement dates on security transactions and the difference between the amounts
of dividends and interest recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. The Fund does not isolate the
effect of fluctuations in foreign currency exchange rates when determining the
gain or loss upon the sale of equity securities. Net currency gains and losses
from valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net unrealized appreciation of
investments and foreign currency denominated assets and liabilities.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. 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. The Fund accretes discounts as adjustments to interest
income. Investment gains and losses are determined on the identified cost basis.
5. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees than
Class A shares and the Advisor Class shares have no distribution fees.
6. 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 accounting principles generally accepted in the United States. To the
extent these differences are permanent, such amounts are reclassified
--------------------------------------------------------------------------------
18 o THE ALLIANCE FUND
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
within the capital accounts based on their federal tax basis treatment;
temporary differences, do not require such reclassification.
NOTE B
Management Fee and Other Transactions With Affiliates
Under the terms of the management agreement, the Fund pays Alliance Capital
Management L.P. (the "Manager"), a fee at an annual rate of .75% on the first
$500 million of average daily net assets, .65% on the next $500 million of
average daily net assets and .55% on average daily net assets in excess of $1
billion. The fee is accrued daily and paid monthly.
Pursuant to the management agreement, the Fund paid $59,000 to the Manager
representing the cost of certain legal and accounting services provided to the
Fund by the Manager for the six months ended May 31, 2000.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Manager, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $484,524 for the six months ended May 31, 2000.
For the six months ended May 31, 2000, the Fund's expenses were reduced by
$40,071 under an expense offset arrangement with Alliance Fund Services, Inc.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned subsidiary
of the Manager, serves as the Distributor of the Fund's shares. The Distributor
has advised the Fund that it has received $86,773 and $7,298 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class B and
Class C shares, respectively, for the six months ended May 31, 2000.
Brokerage commissions paid on investment transactions for the six months ended
May 31, 2000 amounted to $1,789,765, none of which was paid to brokers utilizing
the services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the adviser, and of which $104,800 was paid to
DLJ directly.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .30% 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. There are no distribution and servicing fees the
Advisor Class shares. The fees are accrued daily and paid monthly. The Agreement
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities. The Distributor has advised
the Fund that it has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $6,780,532 and $1,641,442, for Class B
and Class C
--------------------------------------------------------------------------------
THE ALLIANCE FUND o 19
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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 Manager 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 $576,873,734 and $663,796,305,
respectively, for the six months ended May 31, 2000. There were no purchases or
sales of U.S. government or government agency obligations for the six months
ended May 31, 2000. At May 31, 2000, the cost of investments for federal income
tax purposes was substantially the same as the cost for financial reporting
purposes. Gross unrealized appreciation of investments was $191,809,520 and
gross unrealized depreciation of investments was $104,161,349, resulting in net
unrealized appreciation of $87,648,171.
NOTE E
Capital Stock
There are 12,000,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
----------------------------------- ----------------------------------
Shares Amount
----------------------------------- ----------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
May 31, 2000 November 30, May 31, 2000 November 30,
(unaudited) 1999 (unaudited) 1999
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold 211,946,103 78,847,137 $ 1,461,493,247 $ 535,441,819
--------------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 10,654,877 8,843,508 74,477,617 48,374,343
--------------------------------------------------------------------------------------------
Shares converted
from Class B 254,842 432,073 1,770,220 2,915,800
--------------------------------------------------------------------------------------------
Shares redeemed (208,308,618) (98,265,614) (1,446,642,842) (661,975,638)
--------------------------------------------------------------------------------------------
Net increase
(decrease) 14,547,204 (10,142,896) $ 91,098,242 $ (75,243,676)
============================================================================================
</TABLE>
--------------------------------------------------------------------------------
20 o THE ALLIANCE FUND
<PAGE>
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------- -----------------------------------
Shares Amount
--------------------------------- -----------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
May 31, 2000 November 30, May 31, 2000 November 30,
(unaudited) 1999 (unaudited) 1999
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B
Shares sold 2,702,835 4,895,002 $ 17,236,364 $ 29,907,592
--------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 1,409,417 1,096,542 8,879,352 5,504,704
--------------------------------------------------------------------------------------
Shares converted
to Class A (283,360) (473,310) (1,770,220) (2,915,800)
--------------------------------------------------------------------------------------
Shares redeemed (2,256,197) (6,192,029) (14,410,301) (36,644,330)
--------------------------------------------------------------------------------------
Net increase
(decrease) 1,572,695 (673,795) $ 9,935,195 $ (4,147,834)
======================================================================================
Class C
Shares sold 52,094,092 63,782,370 $ 325,121,936 $ 386,287,376
--------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 399,720 276,384 2,514,322 1,384,760
--------------------------------------------------------------------------------------
Shares redeemed (52,221,705) (63,833,017) (328,231,153) (388,642,258)
--------------------------------------------------------------------------------------
Net increase
(decrease) 272,107 225,737 $ (594,895) $ (970,122)
======================================================================================
Advisor Class
Shares sold 216,922 357,391 $ 1,549,479 $ 2,395,697
--------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 119,848 131,889 841,331 722,752
--------------------------------------------------------------------------------------
Shares redeemed (155,571) (1,063,852) (1,106,013) (6,753,767)
--------------------------------------------------------------------------------------
Net increase
(decrease) 181,199 (574,572) $ 1,284,797 $ (3,635,318)
======================================================================================
</TABLE>
--------------------------------------------------------------------------------
THE ALLIANCE FUND o 21
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Class A
---------------------------------------------------------------------------------------
Six
Months
Ended
May 31, Year Ended November 30,
2000 ----------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .............. $ 7.55 $ 5.97 $ 8.70 $ 7.71 $ 7.72 $ 6.63
---------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income (loss) ....... (.01)(a) (.03)(a) (.02)(a) (.02)(a) .02 .02(a)
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ..................... (.32) 2.00 (.54) 2.09 1.06 2.08
---------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ....................... (.33) 1.97 (.56) 2.07 1.08 2.10
---------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ................ -0- -0- -0- (.02) (.02) (.01)
Distributions from net
realized gains ................... (.64) (.39) (2.17) (1.06) (1.07) (1.00)
---------------------------------------------------------------------------------------
Total dividends and
distributions .................... (.64) (.39) (2.17) (1.08) (1.09) (1.01)
---------------------------------------------------------------------------------------
Net asset value,
end of period .................... $ 6.58 $ 7.55 $ 5.97 $ 8.70 $ 7.71 $ 7.72
=======================================================================================
Total Return
Total investment return based on
net asset value(b) ............... (4.89)% 35.37% (8.48)% 31.82% 16.49% 37.87%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) .................. $1,078,444 $1,128,166 $953,181 $1,201,435 $999,067 $945,309
Ratio of expenses to
average net assets ............... 1.03%(c) 1.06% 1.03% 1.03% 1.04% 1.08%
Ratio of net investment income
(loss) to average net assets ..... (.33)%(c) (.41)% (.36)% (.29)% .30% .31%
Portfolio turnover rate ............ 46% 97% 106% 158% 80% 81%
</TABLE>
See footnote summary on page 25.
--------------------------------------------------------------------------------
22 o THE ALLIANCE FUND
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------------------
Six
Months
Ended
May 31, Year Ended November 30,
2000 --------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .............. $ 6.87 $ 5.51 $ 8.25 $ 7.40 $ 7.49 $ 6.50
----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss ................ (.04)(a) (.07)(a) (.07)(a) (.08)(a) (.01) (.03)(a)
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ..................... (.29) 1.82 (.50) 1.99 .99 2.02
----------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ....................... (.33) 1.75 (.57) 1.91 .98 1.99
----------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains ................... (.64) (.39) (2.17) (1.06) (1.07) (1.00)
----------------------------------------------------------------------------------------
Net asset value,
end of period .................... $ 5.90 $ 6.87 $ 5.51 $ 8.25 $ 7.40 $ 7.49
========================================================================================
Total Return
Total investment return based on
net asset value(b) ............... (5.42)% 34.24% (9.27)% 30.74% 15.47% 36.61%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) .................. $96,805 $101,858 $85,456 $70,461 $44,450 $31,738
Ratio of expenses to
average net assets ............... 1.86%(c) 1.89% 1.84% 1.85% 1.87% 1.90%
Ratio of net investment loss
to average net assets ............ (1.16)%(c) (1.23)% (1.17)% (1.12)% (.53)% (.53)%
Portfolio turnover rate ............ 46% 97% 106% 158% 80% 81%
</TABLE>
See footnote summary on page 25.
--------------------------------------------------------------------------------
THE ALLIANCE FUND o 23
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Class C
------------------------------------------------------------------------------------
Six
Months
Ended
May 31, Year Ended November 30,
2000 -----------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ................ $ 6.86 $ 5.50 $ 8.26 $ 7.41 $ 7.50 $ 6.50
------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss .................. (.04)(a) (.08)(a) (.07)(a) (.08)(a) (.02) (.03)(a)
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ....................... (.29) 1.83 (.52) 1.99 1.00 2.03
------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ......................... (.33) 1.75 (.59) 1.91 .98 2.00
------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains ..................... (.64) (.39) (2.17) (1.06) (1.07) (1.00)
------------------------------------------------------------------------------------
Net asset value,
end of period ...................... $ 5.89 $ 6.86 $ 5.50 $ 8.26 $ 7.41 $ 7.50
====================================================================================
Total Return
Total investment return based on
net asset value(b) ................. (5.43)% 34.31% (9.58)% 30.72% 15.48% 36.79%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) .................... $25,641 $28,025 $21,231 $18,871 $13,899 $10,078
Ratio of expenses to
average net assets ................. 1.85%(c) 1.86% 1.84% 1.83% 1.86% 1.89%
Ratio of net investment loss
to average net assets .............. (1.16)%(c) (1.22)% (1.18)% (1.10)% (.51)% (.51)%
Portfolio turnover rate .............. 46% 97% 106% 158% 80% 81%
</TABLE>
See footnote summary on page 25.
--------------------------------------------------------------------------------
24 o THE ALLIANCE FUND
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------------------
Advisor Class
------------------------------------------------------------------
Six
Months October 2,
Ended 1996(d) to
May 31, Year Ended November 30, November
2000 ---------------------------------- 30,
(unaudited) 1999 1998 1997 1996
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 7.58 $ 5.98 $ 8.69 $ 7.71 $ 6.99
------------------------------------------------------------------
Income From Investment Operations
Net investment loss ......................... -0-(a) (.01)(a) (.01)(a) (.02)(a) -0-
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .............................. (.33) 2.00 (.53) 2.10 .72
------------------------------------------------------------------
Net increase (decrease) in net asset value
from operations ........................... (.33) 1.99 (.54) 2.08 .72
------------------------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income ........ -0- -0- -0- (.04) -0-
Distributions from net realized gains ....... (.64) (.39) (2.17) (1.06) -0-
------------------------------------------------------------------
Total dividends and distributions ........... (.64) (.39) (2.17) (1.10) -0-
------------------------------------------------------------------
Net asset value, end of period .............. $ 6.61 $ 7.58 $ 5.98 $ 8.69 $ 7.71
==================================================================
Total Return
Total investment return based on net asset
value(b) .................................. (4.87)% 35.66% (8.19)% 32.00% 10.30%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ... $9,891 $9,970 $11,305 $10,275 $1,083
Ratio of expenses to average net assets ..... .82%(c) .85% .83% .83% .89%(c)
Ratio of net investment income (loss) to
average net assets ........................ (.13)%(c) (.20)% (.16)% (.21)% .38%(c)
Portfolio turnover rate ..................... 46% 97% 106% 158% 80%
</TABLE>
(a) Based on average shares outstanding.
(b) 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 charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return calculated for a period
of less than one year is not annualized.
(c) Annualized.
(d) Commencement of distribution.
--------------------------------------------------------------------------------
THE ALLIANCE FUND o 25
<PAGE>
--------------------------------------------------------------------------------
GLOSSARY OF INVESTMENT TERMS
--------------------------------------------------------------------------------
GLOSSARY OF INVESTMENT TERMS
basis point (bp)
One basis point equals 0.01%.
benchmark
A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.
bond
Bonds are issued by governments or corporations when they need to raise cash.
Bonds are sold, or issued, to investors and have a maturity date, which is the
date the issuer is obligated to repay the investor for the principal, or face
amount, of the bond. Bonds also pay interest until maturity. Bonds are also
called fixed-income securities.
equity
Another term for stock.
Federal Reserve Board
The seven-member board that oversees Federal Reserve Banks, establishes monetary
policy and monitors the country's economic state.
government bond
A bond that is issued by the U.S. government or its agencies.
index
A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
medium-capitalization or mid-cap company
Refers to a company with an average market capiitalization.
portfolio
The collection of securities that make up a Fund's or an investor's investments.
price-to-earnings (P/E) ratio
What an investor pays for a security versus a company's earnings per share of
outstanding stock.
yield
The rate of return on an asset, usually referring to dividend or interest
payments, expressed as a percentage of current market price.
--------------------------------------------------------------------------------
26 o THE ALLIANCE FUND
<PAGE>
--------------------------------------------------------------------------------
ALLIANCE CAPITAL
--------------------------------------------------------------------------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $394
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 28 of the FORTUNE 100 companies and public retirement funds in 33
states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience 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 276
investment professionals in 22 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 3/31/00.
--------------------------------------------------------------------------------
THE ALLIANCE FUND o 27
<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.
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28 o THE ALLIANCE FUND
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BOARD OF DIRECTORS
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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
Alden M. Stewart, Executive Vice President
Kathleen A. Corbet, Senior Vice President
Thomas J. Bardong, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Custodian
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
Transfer Agent
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free (800) 221-5672
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
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THE ALLIANCE FUND o 29
<PAGE>
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ALLIANCE CAPITAL FAMILY OF FUNDS
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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.
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30 o THE ALLIANCE FUND
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NOTES
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THE ALLIANCE FUND o 31
<PAGE>
NOTES
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32 o THE ALLIANCE FUND
<PAGE>
The Alliance Fund
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
---------------
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U.S. POSTAGE
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New York, NY
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AllianceCapital [LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
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