ALLIANCE
--------------------
UTILITY
--------------------
INCOME
--------------------
FUND
--------------------
Semi-Annual
Report
May 31, 1999
ALLIANCE CAPITAL [LOGO](R)
<PAGE>
LETTER TO SHAREHOLDERS Alliance Utility Income Fund
================================================================================
July 7, 1999
Dear Shareholder:
This semi-annual shareholder report reviews investment results and market
activity for Alliance Utility Income Fund (the "Fund") for the six- and
twelve-month periods ended May 31, 1999. Total returns for your Fund are
provided in the following table. For comparison, we have also supplied
performance data for the Fund's benchmark, the NYSE Utility Index, as well as
the S&P 500 Stock Index and the Lipper Utility Funds Average (the "Lipper
Average").
INVESTMENT RESULTS*
Periods Ended May 31, 1999
Total Returns
6 Months 12 Months
------------- -------------
Alliance Utility
Income Fund
Class A 17.77% 30.46%
Class B 17.42% 29.68%
Class C 17.32% 29.54%
NYSE Utility Index 13.05% 27.45%
S&P 500 12.60% 21.03%
Lipper Utility
Funds Average 11.89% 17.47%
* The Fund's investment results are total returns for the periods and are
based on the net asset value of each class of shares. 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 returns for Advisor Class shares will differ
due to different expenses associated with that class. Past performance is
no guarantee of future results.
The unmanaged NYSE Utility Index is comprised of 301 utility stocks and is
one of four subgroup indices of the NYSE Composite Index. The NYSE
Composite Index is a capitalization-weighted price only indicator that
measures the changes in aggregate market value of NYSE common stocks,
adjusted to eliminate the effects of capitalization changes, new listings
and delistings. 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 Lipper Utility Funds Average consists of funds with
similar investment objectives to the Alliance Utility Income Fund although
the investment policies of funds within the Lipper universe may differ.
For the six- and 12-month periods ended May 31, 1999, the Lipper Average
consisted of 97 funds and 96 funds, respectively. An investor cannot
invest directly in an index or an average.
Additional investment results appear on page 3.
PERFORMANCE REVIEW
For the six- and twelve-month periods ended May 31, 1999, your Fund outperformed
the NYSE Utility Index, the S&P 500 and its peer group, as represented by the
Lipper Average.
Utility stocks tend to perform well during times of market stress. In August of
1998, a severe bout of nervousness due to the Russian debt crisis and domestic
hedge fund problems caused the broad market to plummet, but the perceived
safe-haven nature of utilities bolstered the sector. For the month of August
alone, the S&P 500 dropped 14.5% while your Fund's decline was 5.2%. The
market's subsequent rebound caused the S&P 500 to outperform the utility sector
for the fourth quarter of 1998 and the first quarter of 1999. But in April of
1999, a market rotation out of growth stocks and into value stocks allowed
utilities to outperform the broad market once again, and consequently the NYSE
Utilities Index has posted stronger performance than the S&P 500.
Your Fund's strong outperformance versus both its benchmark and its utilities
peer group of funds for the six- and twelve-month periods ended May 31, 1999,
was primarily due to the Fund's overweighted positions in cable television
convertible securities. The cable sector has gained in value as large industry
leaders such as AT&T Corp. and Microsoft Corp. have invested in these companies
to take advantage of their data transmission infrastructures. A large position
in the convertible preferred of Qualcomm Incorporated, a wireless telephone
technology company, also aided performance.
INVESTMENT OUTLOOK
1998 witnessed a series of financial and political crises that caused investors
to reduce their tolerance for risk in their portfolios and engendered a flight
to safety. But the panic contained the seeds of its own remedy. The deep
recessions in the emerging markets removed capacity
1
<PAGE>
Alliance Utility Income Fund
================================================================================
from their economies, allowing commodity prices to firm. At the same time,
central banks around the globe began to stimulate their monetary systems. The
result has been a renewal of global growth and a return of confidence to the
marketplace.
The danger to the markets lies in a prolonged phase of Fed tightening. If this
occurs then utility stocks may underperform. We have therefore adopted a
conservative approach to managing the portfolio. We continue to seek the stocks
of companies with reasonable valuation combined with growth potential. Finally,
we rely on Alliance's internal research capabilities in selecting stocks that we
expect to deliver superior performance.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Paul Rissman
Paul Rissman
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.
- --------------------------------------------------------------------------------
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES Alliance Utility Income Fund
================================================================================
Alliance Utility Income Fund is an open-end, diversified investment portfolio
that seeks current income and capital appreciation primarily through investments
in the equity and fixed-income securities of companies in the utilities
industry.
INVESTMENT RESULTS
================================================================================
NAV and SEC Average Annual Total Returns as of May 31, 1999
------------------
CLASS A SHARES
------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year 30.46% 24.87%
Five Years 18.58% 17.55%
Since Inception* 15.23% 14.35%
------------------
CLASS B SHARES
------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year 29.68% 25.68%
Five Years 17.76% 17.76%
Since Inception* 14.43% 14.43%
------------------
CLASS C SHARES
------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year 29.54% 28.54%
Five Years 17.78% 17.78%
Since Inception* 14.53% 14.53%
SEC Average Annual Total Returns
as of the most recent quarter-end (March 31, 1999)
Class A Class B Class C
------- ------- -------
1 Year 7.77% 7.77% 10.75%
Five Years 14.72% 14.92% 14.94%
Since Inception* 12.72% 12.81% 12.88%
The Fund's investment results represent Average Annual Total Returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total returns for Advisor Class shares will differ due to
different expenses associated with that class.
SEC Average Annual Total Returns as of the most recent quarter-end reflect
reinvestment of all distributions and deduction of the maximum 4.25% front-end
sales charges and applicable contingent deferred sales charges.
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: 10/18/93 Class A, Class B; 10/27/93 Class C.
3
<PAGE>
TEN LARGEST HOLDINGS
May 31, 1999 (unaudited) Alliance Utility Income Fund
================================================================================
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
COMPANY COUNTRY VALUE PERCENT OF NET ASSETS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AT&T Corp. United States $ 4,419,076 4.8%
- ------------------------------------------------------------------------------------------------
NTL, Inc. 7.00%, 12/15/08 United States 3,380,000 3.7
- ------------------------------------------------------------------------------------------------
CMS Energy Corp. United States 3,357,300 3.7
- ------------------------------------------------------------------------------------------------
Pinnacle West Capital Corp. United States 3,136,437 3.4
- ------------------------------------------------------------------------------------------------
Consolidated Edison, Inc. United States 3,117,712 3.4
- ------------------------------------------------------------------------------------------------
Allegheny Energy, Inc. United States 2,929,500 3.2
- ------------------------------------------------------------------------------------------------
GPU, Inc. United States 2,788,000 3.0
- ------------------------------------------------------------------------------------------------
Unicom Corp. United States 2,750,312 3.0
- ------------------------------------------------------------------------------------------------
BellSouth Corp. United States 2,576,437 2.8
- ------------------------------------------------------------------------------------------------
SBC Communications, Inc. United States 2,556,250 2.8
- ------------------------------------------------------------------------------------------------
$31,011,024 33.8%
- ------------------------------------------------------------------------------------------------
</TABLE>
MAJOR PORTFOLIO CHANGES
Six Months Ended May 31, 1999 (unaudited)
================================================================================
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
SHARES*
- ---------------------------------------------------------------------------------------------
PURCHASES COUNTRY BOUGHT HOLDINGS 5/31/99
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allegheny Energy, Inc. United States 84,000 84,000
- ---------------------------------------------------------------------------------------------
BCE, Inc. Canada 46,000 46,000
- ---------------------------------------------------------------------------------------------
CMS Energy Corp. United States 34,700 72,200
- ---------------------------------------------------------------------------------------------
Consolidated Edison, Inc. United States 25,900 64,200
- ---------------------------------------------------------------------------------------------
Illinova Corp. United States 71,000 71,000
- ---------------------------------------------------------------------------------------------
Northern States Power Co. United States 60,000 60,000
- ---------------------------------------------------------------------------------------------
NTL, Inc. 7.00%, 12/15/08 United States 2,000,000 2,000,000
- ---------------------------------------------------------------------------------------------
Pinnacle West Capital Corp. United States 32,000 74,900
- ---------------------------------------------------------------------------------------------
Reliant Energy, Inc. United States 60,000 60,000
- ---------------------------------------------------------------------------------------------
Unicom Corp. United States 65,000 65,000
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
SALES SOLD HOLDINGS 5/31/99
- ---------------------------------------------------------------------------------------------
Qualcomm Financial Trust I 5.75% cv. pfd United States 11,000 11,000
- ---------------------------------------------------------------------------------------------
TCI Communications, Inc. Series A cv. pfd. United States 15,000 -0-
- ---------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
* Adjusted for a spin-off.
4
<PAGE>
PORTFOLIO OF INVESTMENTS
May 31, 1999 (unaudited) Alliance Utility Income Fund
================================================================================
Company Shares Value
- --------------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-76.5%
UNITED STATES INVESTMENTS-70.4%
UTILITIES-57.2%
ELECTRIC & GAS UTILITY-36.3%
AGL Resources, Inc. ...................... 9,700 $ 183,088
Allegheny Energy, Inc. ................... 84,000 2,929,500
American Electric Power, Inc ............. 22,500 975,938
CINergy Corp. ............................ 28,200 962,325
CMS Energy Corp. ......................... 72,200 3,357,300
Consolidated Edison, Inc. ................ 64,200 3,117,712
DPL, Inc. ................................ 34,200 617,738
Energy East Corp. ........................ 74,000 2,053,500
FPL Group, Inc. .......................... 16,800 977,550
GPU, Inc. ................................ 64,000 2,788,000
Illinova Corp. ........................... 71,000 1,930,312
KeySpan Energy Corp. ..................... 14,800 399,600
MCN Energy Group, Inc. ................... 7,400 148,000
New Jersey Resources Corp ................ 7,000 264,250
NIPSCO Industries, Inc. .................. 15,000 767,813
Nisource, Inc. ........................... 59,000 1,648,312
Northern States Power Co. ................ 60,000 1,563,750
Northwest Natural Gas Co ................. 8,400 201,600
People's Energy Corp. .................... 5,700 219,450
Pinnacle West Capital Corp ............... 74,900 3,136,437
Questar Corp. ............................ 11,000 209,688
Reliant Energy, Inc. ..................... 60,000 1,830,000
Sempra Energy ............................ 9,774 210,141
Unicom Corp. ............................. 65,000 2,750,312
-----------
33,242,316
-----------
TELEPHONE UTILITY-18.8%
Ameritech Corp. .......................... 37,600 2,474,550
AT&T Corp. ............................... 79,623 4,419,076
Bell Atlantic Corp. ...................... 18,400 1,007,400
BellSouth Corp. .......................... 54,600 2,576,437
Frontier Corp. ........................... 10,000 526,250
GTE Corp. ................................ 27,000 1,702,688
SBC Communications, Inc .................. 50,000 2,556,250
U.S. West, Inc. .......................... 37,000 2,000,313
-----------
17,262,964
-----------
MISCELLANEOUS-2.1%
MCI Worldcom, Inc. (a) ................... 22,500 1,943,437
-----------
52,448,717
-----------
CONSUMER SERVICES-7.7%
BROADCASTING & CABLE-5.1%
MediaOne Group, Inc. ..................... 25,600 2,144,000
Merrill Lynch "Cox" STRYPES .............. 30,000 2,029,688
Omnipoint Corp. 7.00% cv. pfd (b) ........ 14,000 518,000
-----------
4,691,688
-----------
ENTERTAINMENT & LEISURE-2.6%
CSC Holdings, Inc. Series I 8.50% cv.pfd . 20,000 2,352,500
-----------
7,044,188
-----------
ENERGY-3.5%
DOMESTIC PRODUCERS-2.2%
Washington Gas Light Co. ................. 8,900 217,494
Williams Cos., Inc. 3.50% pfd ............ 7,500 1,812,187
-----------
2,029,681
-----------
MISCELLANEOUS-1.3%
AES Trust I Series A 5.375% cv. pfd ...... 16,000 1,163,000
-----------
3,192,681
-----------
TECHNOLOGY-1.7%
MISCELLANEOUS-1.7%
Qualcomm Financial Trust I 5.75% cv.pfd .. 11,000 1,520,750
-----------
5
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) Alliance Utility Income Fund
================================================================================
Company Shares Value
- --------------------------------------------------------------------------------
MULTI INDUSTRY COMPANY-0.3%
Southwest Gas Corp. ............................ 11,100 $ 313,575
-----------
Total United States Investments
(cost $47,817,316) .......................... 64,519,911
-----------
FOREIGN INVESTMENTS-6.1%
ARGENTINA-1.0%
Telecom Argentina, SA .......................... 15,000 427,500
Telefonica De Argentina ........................ 15,000 485,625
-----------
Total Argentina ................................ 913,125
-----------
AUSTRALIA-0.8%
Telstra Corp. Ltd. ............................. 150,000 742,291
-----------
CANADA-2.3%
BCE, Inc. ...................................... 46,000 2,118,875
-----------
MEXICO-1.4%
Telefonos de Mexico SA Series L (ADR) .......... 15,600 1,247,025
-----------
PHILIPPINES-0.4%
Philippine Long Distance Telephone Co.
3.50% cv. pfd. (GDS) ........................ 7,800 390,000
-----------
Shares or
Principal
Amount
Company (000) Value
- --------------------------------------------------------------------------------
SOUTH KOREA-0.2%
Korea Electric Power Corp. (a) ................... 6,890 $ 210,909
-----------
Total Foreign Investments
(cost $4,949,994) ............................. 5,622,225
-----------
Total Common & Preferred Stocks
(cost $52,767,310) ............................ 70,142,136
-----------
CONVERTIBLE BOND-3.7%
NTL, Inc.
7.00%, 12/15/08 (b)(cost $2,010,860) .......... $ 2,000 3,380,000
-----------
SHORT-TERM INVESTMENT-18.8%
TIME DEPOSIT-18.8%
State Street Cayman Islands 4.50%, 6/01/99
(amortized cost $17,294,000) .................. 17,294 17,294,000
-----------
TOTAL INVESTMENTS-99.0%
(cost $72,072,170) ............................ 90,816,136
Other assets less liabilities-1.0% ............... 893,979
-----------
NET ASSETS-100% .................................. $91,710,115
===========
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 1999,
these securities amounted to $3,898,000 or 4.3% of net assets.
Glossary of Terms:
ADR - American Depositary Receipt.
GDS - Global Depositary Shares.
STRYPES - Structured yield product exchangeable for stock.
See notes to financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1999 (unaudited) Alliance Utility Income Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $72,072,170) ................................ $90,816,136
Cash .................................................................................. 182
Receivable for capital stock sold ..................................................... 964,421
Dividends and interest receivable ..................................................... 214,400
-----------
Total assets .......................................................................... 91,995,139
-----------
LIABILITIES
Payable for capital stock redeemed .................................................... 68,528
Distribution fee payable .............................................................. 63,364
Advisory fee payable .................................................................. 43,604
Accrued expenses ...................................................................... 109,528
-----------
Total liabilities ..................................................................... 285,024
-----------
NET ASSETS ............................................................................... $91,710,115
===========
COMPOSITION OF NET ASSETS
Capital stock, at par ................................................................. $ 5,505
Additional paid-in capital ............................................................ 71,358,800
Undistributed net investment income ................................................... 113,127
Accumulated net realized gain on investment and foreign currency transactions ......... 1,488,717
Net unrealized appreciation of investments ............................................ 18,743,966
-----------
$91,710,115
===========
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($17,414,002 / 1,041,271 shares of capital stock issued and outstanding) ............ $16.72
Sales charge--4.25% of public offering price .......................................... .74
------
Maximum offering price ................................................................ $17.46
======
Class B Shares
Net asset value and offering price per share
($59,338,572 / 3,567,043 shares of capital stock issued and outstanding) ............ $16.64
======
Class C Shares
Net asset value and offering price per share
($13,630,729 / 818,350 shares of capital stock issued and outstanding) .............. $16.66
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($1,326,812 / 79,208 shares of capital stock issued and outstanding) ................ $16.75
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements
7
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1999 (unaudited) Alliance Utility Income Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $3,419).................. $999,809
Interest............................................................. 308,004 $ 1,307,813
--------
EXPENSES
Advisory fee......................................................... 262,661
Distribution fee - Class A........................................... 18,904
Distribution fee - Class B........................................... 232,654
Distribution fee - Class C........................................... 50,305
Administrative....................................................... 62,500
Transfer agency...................................................... 55,874
Custodian............................................................ 50,144
Audit and legal...................................................... 31,236
Registration......................................................... 28,836
Printing............................................................. 15,985
Directors' fees...................................................... 14,000
Miscellaneous........................................................ 1,964
--------
Total expenses....................................................... 825,063
Less: expenses waived and reimbursed by the Adviser (see Note B)..... (99,713)
Less: expense offset arrangement (see Note B)........................ (3,529)
--------
Net expenses......................................................... 721,821
-----------
Net investment income................................................ 585,992
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions......................... 1,366,751
Net realized loss on foreign currency transactions................... (2,792)
Net change in unrealized appreciation of investments................. 9,250,536
-----------
Net gain on investments and foreign currency transactions............ 10,614,495
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.............................. $11,200,487
===========
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS Alliance Utility Income Fund
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1999 November 30,
(unaudited) 1998
---------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income ....................................................... $ 585,992 $ 560,091
Net realized gain on investments and foreign currency transactions .......... 1,363,959 1,421,608
Net change in unrealized appreciation of investments ........................ 9,250,536 5,059,359
------------ ------------
Net increase in net assets from operations .................................. 11,200,487 7,041,058
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ................................................................... (119,571) (145,708)
Class B ................................................................... (351,009) (362,844)
Class C ................................................................... (72,443) (78,247)
Advisor Class ............................................................. (8,003) (1,520)
Net realized gain on investments
Class A ................................................................... (233,506) (157,473)
Class B ................................................................... (872,536) (561,587)
Class C ................................................................... (174,312) (128,179)
Advisor Class ............................................................. (12,855) (1,582)
CAPITAL STOCK TRANSACTIONS
Net increase ................................................................ 29,189,574 25,206,430
------------ ------------
Total increase .............................................................. 38,545,826 30,810,348
NET ASSETS
Beginning of year ........................................................... 53,164,289 22,353,941
------------ ------------
End of period (including undistributed net investment income of
$113,127 and $78,086, respectively) ....................................... $ 91,710,115 $ 53,164,289
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
May 31, 1999 (unaudited) Alliance Utility Income Fund
================================================================================
NOTE A: Significant Accounting Policies
Alliance Utility Income Fund, Inc. (the "Fund") organized as a Maryland
corporation on July 28, 1993, 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 C shares are subject to a
contingent deferred sales charge of 1% on redemptions made within the first year
after purchase. Advisor Class shares are sold without an initial or contingent
deferred sales charge and are not subject to ongoing distribution expenses.
Advisor Class shares are offered to investors participating in fee-based
programs and to certain retirement plan accounts. All four classes of shares
have identical voting, dividend, liquidation and other rights, except that each
class bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. The 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 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.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when accrued.
Net realized foreign 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 would be 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
10
<PAGE>
Alliance Utility Income Fund
================================================================================
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 generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences, do not require such
reclassification.
- --------------------------------------------------------------------------------
NOTE B: Advisory Fee and Other Transactions With Affiliates
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of
.75% of the Fund's average daily net assets. The fee is accrued daily and paid
monthly. The Adviser has agreed to waive its fees and bear certain expenses to
the extent necessary to limit total operating expenses on an annual basis to
1.50%, 2.20%, 2.20% and 1.20% of the daily average net assets for the Class A,
Class B, Class C and Advisor Class shares, respectively. For the six months
ended May 31, 1999, such reimbursement amounted to $99,713. The Adviser may
terminate the voluntary waiver at any time.
Pursuant to the advisory agreement, the Fund paid $62,500 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended May 31, 1999.
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 $34,344 for the six months ended May 31, 1999.
For the six months ended May 31, 1999, the Fund's expenses were reduced by
$3,529 under an expense offset arrangement with Alliance Fund Services.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Fund's shares. The Distributor
received front-end sales charges of $13,543 from the sale of Class A shares and
$59,277 and $2,465 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, 1999.
Brokerage commissions paid on investment transactions for the six months ended
May 31, 1999 amounted to $35,725, 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, nor 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 a distribution fee 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 is no distribution fee on the Advisor Class shares. The
fees are accrued daily and paid
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Utility Income Fund
================================================================================
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 $3,250,649 and $634,024 for Class B and Class C
shares, respectively; such costs may be recovered from the Fund in future
periods as 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 $22,415,130 and $2,574,643,
respectively, for the six months ended May 31, 1999. There were no purchases or
sales of U.S. government and government agency obligations for the six months
ended May 31, 1999.
At May 31, 1999, 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 $19,215,932 and gross unrealized
depreciation of investments was $471,966 resulting in net unrealized
appreciation of $18,743,966.
- --------------------------------------------------------------------------------
NOTE E: Capital Stock
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
----------------------------------- -----------------------------------
SHARES AMOUNT
----------------------------------- -----------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
May 31, 1999 November 30, May 31, 1999 November 30,
(unaudited) 1998 (unaudited) 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold .......................... 437,999 468,890 $ 6,888,123 $ 6,379,213
Shares issued in reinvestment of
dividends and distributions ....... 21,477 20,981 319,186 269,518
Shares converted from Class B ........ 14,920 40,217 235,291 545,405
Shares redeemed ...................... (100,077) (192,896) (1,550,209) (2,611,790)
------------ ------------ ------------ ------------
Net increase ......................... 374,319 337,192 $ 5,892,391 $ 4,582,346
============ ============ ============ ============
Class B
Shares sold .......................... 1,496,963 1,941,311 $ 23,263,442 $ 26,650,389
Shares issued in reinvestment of
dividends and distributions ....... 62,734 36,970 928,782 472,569
Shares converted to Class A .......... (14,987) (40,339) (235,291) (545,405)
Shares redeemed ...................... (408,654) (693,665) (6,330,052) (9,518,629)
------------ ------------ ------------ ------------
Net increase ......................... 1,136,056 1,244,277 $ 17,626,881 $ 17,058,924
============ ============ ============ ============
Class C
Shares sold .......................... 414,558 297,300 $ 6,473,677 $ 4,120,508
Shares issued in reinvestment of
dividends and distributions ....... 15,093 14,697 223,763 187,278
Shares redeemed ...................... (109,594) (87,264) (1,703,162) (1,199,168)
------------ ------------ ------------ ------------
Net increase ......................... 320,057 224,733 $ 4,994,278 $ 3,108,618
============ ============ ============ ============
</TABLE>
12
<PAGE>
Alliance Utility Income Fund
================================================================================
<TABLE>
<CAPTION>
----------------------------------- -----------------------------------
SHARES AMOUNT
----------------------------------- -----------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
May 31, 1999 November 30, May 31, 1999 November 30,
(unaudited) 1998 (unaudited) 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Advisor Class
Shares sold .......................... 56,809 34,635 $ 882,822 $ 491,497
Shares issued in reinvestment of
dividends and distributions ....... 1,029 228 15,343 2,921
Shares redeemed ...................... (14,241) (2,634) (222,141) (37,876)
------------ ------------ ------------ ------------
Net increase ......................... 43,597 32,229 $ 676,024 $ 456,542
============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
NOTE F: Concentration of Risk
Investing in securities of foreign companies involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies and their markets may be less liquid and their prices
more volatile than those of United States companies.
The investments in utility companies may be subject to a variety of risks
depending, in part, on such factors as the type of utility involved and its
geographic location. The revenues of domestic and foreign utilities companies
generally reflect the economic growth and development in the geographic areas in
which they do business.
- --------------------------------------------------------------------------------
NOTE G: 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 May 31, 1999.
13
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Utility Income Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------
Six Months
Ended Year Ended November 30,
May 31, 1999 ---------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year .............. $14.68 $12.48 $10.59 $10.22 $8.97 $9.92
------- ------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a) ....................... .17(b) .30(b) .32(b) .18(b) .27(b) .42
Net realized and unrealized gain (loss)
on investment transactions ................... 2.37 2.69 2.04 .65 1.43 (.89)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset
value from operations ........................ 2.54 2.99 2.36 .83 1.70 (.47)
------- ------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ............ (.16) (.32) (.34) (.46) (.45) (.48)
Distributions from net realized gains ........... (.34) (.47) (.13) -0- -0- -0-
------- ------- ------- ------- ------- -------
Total dividends and distributions ............... (.50) (.79) (.47) (.46) (.45) (.48)
------- ------- ------- ------- ------- -------
Net asset value, end of period .................. $16.72 $14.68 $12.48 $10.59 $10.22 $8.97
======= ======= ======= ======= ======= =======
Total Return
Total investment return based on net
asset value (c) .............................. 17.77% 24.99% 23.10% 8.47% 19.58% (4.86)%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ....... $17,414 $9,793 $4,117 $3,294 $2,748 $1,068
Ratios to average net assets of:
Expenses, net of waivers/reimbursements ...... 1.51%(d)(e) 1.50% 1.50% 1.50% 1.50% 1.50%
Expenses, before waivers/reimbursements ...... 1.77%(d) 2.48% 3.55% 3.38% 4.86% 13.72%
Net investment income ........................ 2.23%(d) 2.23% 2.89% 1.67% 2.48% 4.13%
Portfolio turnover rate ......................... 4% 16% 37% 98% 162% 30%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 17.
14
<PAGE>
Alliance Utility Income Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
CLASS B
------------------------------------------------------------------------------
Six Months
Ended Year Ended November 30,
May 31, 1999 -------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........ $14.62 $12.46 $10.57 $10.20 $8.96 $9.91
------- ------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a) ................. .12(b) .21(b) .25(b) .10(b) .18(b) .37
Net realized and unrealized gain (loss)
on investment transactions ............. 2.36 2.67 2.04 .67 1.45 (.91)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset
value from operations .................. 2.48 2.88 2.29 .77 1.63 (.54)
------- ------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ...... (.12) (.25) (.27) (.40) (.39) (.41)
Distributions from net realized gains ..... (.34) (.47) (.13) -0- -0- -0-
------- ------- ------- ------- ------- -------
Total dividends and distributions ......... (.46) (.72) (.40) (.40) (.39) (.41)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............ $16.64 $14.62 $12.46 $10.57 $10.20 $8.96
======= ======= ======= ======= ======= =======
Total Return
Total investment return based on net
asset value (c) ........................ 17.42% 24.02% 22.35% 7.82% 18.66% (5.59)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ........................ $59,339 $35,550 $14,782 $13,561 $10,988 $2,353
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements ....................... 2.21%(d)(e) 2.20% 2.20% 2.20% 2.20% 2.20%
Expenses, before waivers/
reimbursements ....................... 2.49%(d) 3.21% 4.28% 4.08% 5.34% 14.42%
Net investment income .................. 1.53%(d) 1.56% 2.27% .95% 1.60% 3.53%
Portfolio turnover rate ................... 4% 16% 37% 98% 162% 30%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 17.
15
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Utility Income Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
CLASS C
------------------------------------------------------------------------------
Six Months
Ended Year Ended November 30,
May 31, 1999 -------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year ......... $14.65 $12.47 $10.59 $10.22 $8.97 $9.92
------- ------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a) .................. .12(b) .21(b) .25(b) .11(b) .18(b) .39
Net realized and unrealized gain (loss)
on investment transactions .............. 2.35 2.69 2.03 .66 1.46 (.93)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset
value from operations ................... 2.47 2.90 2.28 .77 1.64 (.54)
------- ------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ....... (.12) (.25) (.27) (.40) (.39) (.41)
Distributions from net realized gains ...... (.34) (.47) (.13) -0- -0- -0-
------- ------- ------- ------- ------- -------
Total dividends and distributions .......... (.46) (.72) (.40) (.40) (.39) (.41)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............. $16.66 $14.65 $12.47 $10.59 $10.22 $8.97
======= ======= ======= ======= ======= =======
Total Return
Total investment return based on net
asset value (c) ......................... 17.32% 24.16% 22.21% 7.81% 18.76% (5.58)%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .. $13,631 $7,298 $3,413 $3,376 $3,500 $2,651
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements ........................ 2.21%(d)(e) 2.20% 2.20% 2.20% 2.20% 2.20%
Expenses, before waivers/
reimbursements ........................ 2.49%(d) 3.22% 4.28% 4.07% 5.99% 14.42%
Net investment income ................... 1.55%(d) 1.54% 2.27% .94% 1.88% 3.60%
Portfolio turnover rate .................... 4% 16% 37% 98% 162% 30%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 17.
16
<PAGE>
Alliance Utility Income Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------
ADVISOR CLASS
------------------------------------------------------
October 2,
Six Months 1996(f)
Ended Year Ended November 30, to
May 31, 1999 ----------------------- November 30,
(unaudited) 1998 1997 1996
----------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ....... $14.70 $12.49 $10.59 $9.95
------ ------ ------ ------
Income From Investment Operations
Net investment income (a)(b) ............... .20 .37 .36 .03
Net realized and unrealized gain
on investment transactions .............. 2.36 2.66 2.04 .61
------ ------ ------ ------
Net increase in net asset
value from operations ................... 2.56 3.03 2.40 .64
------ ------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income ....... (.17) (.35) (.37) -0-
Distributions from net realized gains ...... (.34) (.47) (.13) -0-
------ ------ ------ ------
Total dividends and distributions .......... (.51) (.82) (.50) -0-
------ ------ ------ ------
Net asset value, end of period ............. $16.75 $14.70 $12.49 $10.59
====== ====== ====== ======
Total Return
Total investment return based on net
asset value (c) ......................... 17.94% 25.34% 23.57% 6.33%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .. $1,327 $523 $42 $33
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements ........................ 1.21%(d)(e) 1.20% 1.20% 1.20%(e)
Expenses, before waivers/
reimbursements ........................ 1.46%(d) 2.21% 3.29% 3.48%(e)
Net investment income ................... 2.55%(d) 2.83% 3.28% 4.02%(e)
Portfolio turnover rate .................... 4% 16% 37% 98%
</TABLE>
- --------------------------------------------------------------------------------
(a) Net of fees waived and expenses reimbursed by the Adviser.
(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 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.
(d) Annualized.
(e) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the six months ended May 31, 1999, the ratios of
expenses net of waivers/reimbursement were 1.50%, 2.20%, 2.20% and 1.20%
for Class A, B, C and Advisor Class shares, respectively.
(f) Commencement of distribution.
17
<PAGE>
Alliance Utility Income Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler (1)
John H. Dobkin (1)
William H. Foulk, Jr. (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Donald J. Robinson (1)
OFFICERS
Kathleen A. Corbet, Senior Vice President
Paul C. Rissman, Senior Vice President
Thomas J. Bardong, Vice President
Annie Tsao, 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
LEGAL COUNSEL
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
- --------------------------------------------------------------------------------
(1) Member of the Audit Committee.
18
<PAGE>
THE ALLIANCE FAMILY OF MUTUAL FUNDS
================================================================================
Fixed Income
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
Tax-Free Income
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Money Market
AFD Exchange Reserves
Growth
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Select Investors Series - Premier Portfolio
Growth & Income
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
Aggressive Growth
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
International
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
Institutional
Premier Growth
Quasar
Real Estate Investment
Closed-End Funds
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
Cash Management Services
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
General Municipal Portfolio
Government Portfolio
19
<PAGE>
ALLIANCE UTILITY INCOME FUND ----------------
1345 Avenue of the Americas BULK RATE
New York, NY 10105 U.S. POSTAGE
(800) 221-5672 PAID
New York, NY
Alliance Capital [LOGO](R) Permit No. 7131
----------------
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.
UIFSR599
