Interim Results

ACM European Enhanced Inc.Fund PLC
31 August 2001

                                     ACM

                           European Enhanced Income

                                   Fund Plc




                                Interim Report

                           and Financial Statements

                                 30 June 2001

                                 (UNAUDITED)





ACM is a registered trademark in the United States used by permission from the
owner, Alliance Capital Management L.P.

ACM European Enhanced Income Fund Plc

General Information

The following information is derived from and should be read in conjunction
with the Prospectus dated 22 November 1999 (the 'Prospectus'). Capitalized
terms used but not defined herein have the meanings set out in the Prospectus.

ACM European Enhanced Income Fund Plc (the 'Company') was incorporated on 2
November 1999 under the laws of Ireland. Shares of the Company are listed on
the London Stock Exchange.

The Company is a closed-ended investment company with variable capital,
authorized by the Central Bank of Ireland (the 'Bank'), pursuant to the
provisions of Part XIII of the Companies Act, 1990 of Ireland.

Shareholders will be given the opportunity to vote on the continuation of the
life of the Company for a further five years at the annual general meeting
after the year ending 31 December 2004.

INVESTMENT OBJECTIVE

The investment objective of the Company is to provide a high level of income
from investment in European corporate and sovereign fixed income securities.
As a secondary objective, the Company will seek to provide capital growth
which is expected to arise principally through enhancement of the credit
rating of specific securities bought by the Company and also a general
re-rating of European high yield debt as the European high yield debt market
matures.

SHARE REPURCHASE AND REDEMPTIONS

As the Company is closed-ended, Shareholders are not entitled to have their
Shares redeemed or repurchased.

On 29 January 2001, 4,800,000 Shares of the Company were issued at the
prevailing Net Asset Value per Share, being £0.85.

MARKET PRICE

The Company is closed-ended and there is no assurance that the market price of
the Shares will reflect their underlying value. For the period from 1 January
2001 to 30 June 2001 the Company's market price per Share has been at a
premium to its underlying Net Asset Value per Share ranging from a premium of
1.45% to 14.62%. As at 30 June 2001, the premium was 10.00% (Source:
Bloomberg).

VALUATION

The Company has a Valuation Day on the last Business Day of each week and the
first Business Day of each calendar quarter, or such other Business Day as the
Board may deem appropriate for determining the Company's Net Asset Value per
Share. A Business Day is any day on which banks in Dublin, New York and London
are open for business.

Letter to Shareholders

20 August 2001

Dear Shareholder:

This report contains investment results and market activity for ACM European
Enhanced Income Fund Plc (the 'Company') for the reporting period ended 30
June 2001.

INVESTMENT OBJECTIVES AND POLICIES

The Company's investment objective is to provide a high level of income
through investment in European corporate and sovereign fixed-income
securities. As a secondary objective, the Company seeks to provide capital
growth, which is expected to arise principally through enhancement of the
credit rating of specific securities bought by the Company but also through a
general re-rating of European high-yield debt as that market matures. The
Company may borrow an amount of up to 25% of its net asset value at any time.

INVESTMENT RESULTS:

The following table provides performance data for the Company for the six- and
12-month periods ended 30 June 2001. For comparison, we have included a custom
blended benchmark consisting of 50% Merrill Lynch European Currency High Yield
Index hedged into euro and 50% Lehman Brothers European Corporate Bond Index.
This is then leveraged by 25% and converted into British pounds. This
benchmark represents an unmanaged measure of the markets and instruments in
which the Company is able to invest. The performance presented below is
reported in British pound sterling.

INVESTMENT RESULTS*

Periods Ended 30 June 2001
                                                           Total Returns
                                                        6 Months      12 Months
ACM European Enhanced Income Fund Plc                    -12.50%        -19.74%
Custom Benchmark**                                        -6.66%        -11.47%

* The Company's investment results are total returns for the periods shown and
are based on the net asset value (NAV) as of 30 June 2001. All fees and
expenses related to the operation of the Company have been deducted. Past
performance is no guarantee of future results.

** The custom benchmark is comprised of equal 50% weightings of two indices,
which are leveraged by 25% and converted into British pounds. The unmanaged
Merrill Lynch European Currency High Yield Index (hedged into euros) is
comprised of corporate bonds with maturities greater than or equal to one
year. The Lehman Brothers European Corporate Bond Index is a measure of
fixed-rate securities with at least one year remaining until maturity. An
investor cannot invest directly in an index, and its results are not
indicative of the performance for any particular investment, including the
Company.

The Company underperformed the custom benchmark during the six- and 12-month
periods ended 30 June 2001, primarily due to our overweighting of the European
high-yield corporate bond sector. This sector significantly underperformed
both European government and European investment-grade corporate bonds as
slowing global growth, equity market volatility and weakening sentiment toward
the technology sector increased investors' risk aversion. Default rates
increased as issuers found it difficult to fund ambitious growth plans
designed for a friendlier operating environment. Our decision to overweight
European high-yield was based on our belief that high-yield bond valuations
that have reached historical lows in similar circumstances were being priced
below attractive levels according to our analysis. In addition, we expected an
environment more favorable to high-yield investments as central banks began
easing monetary policy, improving liquidity conditions and equity valuations.
However, in hindsight, while liquidity did improve for higher quality
investment grade issuers, economic conditions deteriorated more than we
anticipated, creating hostile conditions for lower quality high-yield issuers.
The situation was particularly acute in the telecommunications sector where
debt levels and earnings expectations were particularly high. Four of the
Company's holdings in this sector defaulted during the reporting period as
earnings growth deteriorated and funding sources dried up - three long
distance providers, Viatel Inc., RSL Communications and Global Telesystems, as
well as one competitive local area network provider, Winstar Communications,
Inc. Within the Company's investment grade holdings, our security selection
contributed positively to performance. Most importantly, our decision to
overweight triple-B rated securities worked in the Company's favor, as these
securities outperformed during the period.

The Company's leverage was targeted to stay close to 25% during the period. As
the net asset value of the Company declined, we reduced the borrowing facility
to prevent leverage from exceeding 25%.

MARKET REVIEW

During the first half of 2001, European economic growth decelerated from 2.9%
(year-over-year) in the fourth quarter of 2000 to 2.5% in the first quarter of
2001, while inflation increased from 2.4% (year-over-year) in January to 3.4%
in May. Significantly slower U.S. economic growth began to affect
unambiguously Europe and Japan. The European Central Bank's (ECB) monetary
easing has been slow and modest due to upward pressure on headline inflation
figures and the inflation-phobia inherited by the ECB from the Bundesbank. In
Europe, the official interest rate was cut by 25 basis points to 4.5% in May,
led by the U.S. Federal Reserve's 275 basis point cut, year-to-date, to 3.75%.
The euro continued to fall against the British pound and most major currencies
as a result of capital flight and disappointment in the lack of central bank
action to encourage growth. However, in June the euro rebounded somewhat
against the pound as a victory by the Labour party in the U.K. propelled
speculation of an early referendum for the U.K. to adopt the euro.

Eurozone government bond markets produced positive returns in the first half
of 2001. At the beginning of the reporting period, government bond markets
were the beneficiaries of poor performance in European and global equity
markets, continued evidence of a slowdown in global economic activity and
central bank interest rate cuts.

European investment grade corporate bond markets produced positive returns and
outperformed government bond markets for the period. The credit curve '
flattened' as the best performance by credit quality was achieved by the
lowest rated triple-B sector. All industry sectors produced excess returns
relative to government bonds. The industrial sector produced the best returns
followed by utilities and financial institutions. Industrial issuers, which
include telecommunication issuers, performed well even in light of ongoing
downgrades in the sector and fears of additional supply. Industrials benefited
from the growing optimism of a recovery in the second half of this year for
the Eurozone and global economies. Telecommunication issuers included in the
industrial segment reacted favorably to the restructuring measures announced
by British Telecom. These announcements offered hope that other issuers might
follow a similar path laid down by the new management at British Telecom.
Other industrials benefited from the growing optimism of a recovery in the
second half of this year for the Eurozone and global economies. As for banks
and other financial institutions, valuations were supported by interest rate
cuts from the world's central banks.

The European high-yield market, as represented by the Merrill Lynch European
Currency High Yield Index, posted negative returns for the period. Individual
monthly performance was extremely volatile, reflecting similar performance in
equity markets. The European high-yield market rocketed up over 8.00% in
January, propelled by a rise in liquidity and equity prices when the U.S.
Federal Reserve cut interest rates. However, the high-yield market, in line
with the equity markets, began to adjust to mounting evidence of a more
serious economic slowdown. The telecommunication and cable sectors were
particularly sensitive where investors started to focus on high debt to cash
flow ratios, weak operating progress and liquidity concerns in an environment
of falling equity prices and slowing economic growth. The second quarter of
2001 was the worst quarterly performance for European high-yield securities
since the Russian crisis in 1998.

Defaults in the market picked up significantly, contributing to the Company's
poor performance. Of equal importance was the decision by some companies to go
into receivership earlier than they have historically. For example, Global
Telesystems, which had sufficient cash on hand to sustain business operations
through the end of 2001, decided to default on their bonds at the beginning of
June. This escalated fears that more companies would elect to declare
bankruptcy to force restructuring sooner than necessary. By credit quality,
double-B rated issuers generally outperformed, while single-B and triple-C
rated issuers underperformed. With respect to sector performance,
consumer-related and utility issuers were the best performers while
telecommunications and cable issuers underperformed.

INVESTMENT STRATEGY

During the six-month period under review, our key strategies were to maintain
an overweight position in the European high-yield sector and in triple-B rated
corporates. Our decision to overweight European high-yield was based on our
belief that high-yield bond valuations, having reached historical lows, were
being priced below what our analysis told us were attractive levels. Going
forward, we will continue to overweight lower rated triple-B and high-yield
securities within the Company's portfolio. Although this strategy worked
against us within high-yield during the recent months, we believe that
valuations remain attractive and that these securities will outperform over
the long-term. We have shifted the Company's portfolio to more defensive names
within the high-yield sector. For the more volatile telecommunication and
cable sectors, we will continue to reduce the Company's exposure to those
issuers whose access to liquidity has fallen into question. For industrials,
we believe better risk-adjusted opportunities present themselves in this less
volatile segment. We will take advantage of the new issue pipeline to increase
exposure while looking out for opportunities in the secondary market. The
Company remains 100% exposed to the euro.

OUTLOOK

We currently expect Eurozone growth to be 1.8% for 2001. The continued
downward trend in the leading indicators points to continued weakness for the
balance of this year. Since monetary policy acts with a lagged effect, we
expect that the benefits from the May ECB interest rate cut will not be felt
until later in the year. We expect the ECB to cut interest rates by 0.50% over
the next three-six months. Timing will depend on a moderation in inflation. We
expect inflation to peak this summer at 3.5%. Once inflation reverts to a
sustainable downward trend, we expect more dovish comments from ECB officials
with interest rate cuts to follow. We currently expect the Eurozone government
yield curve to steepen further allowing short and intermediate government
bonds to outperform.

Our outlook for high-grade European corporate bonds remains favorable.
Interest rate cuts from the ECB combined with a steeper yield curve will help
to attract ongoing investment in non-government bond markets. With respect to
sectors, we prefer subordinated bank paper and non-cyclical issuers for the
Company's portfolio. We believe the spate of profit warnings currently running
through the equity markets could negatively impact corporate bonds from
cyclical issuers in the near-term. We have delayed a rotation into the
cyclical sector, as the timing of ECB rate cuts is delaying a recovery in the
Eurozone economy. We will look for additional evidence of a trough in the
economic outlook prior to buying cyclical issuers.

Our commitment to European high-yield investments has been a difficult
position. Rising default rates has led to rising investor anxiety of an
acceleration in defaults further depressing prices in telecommunication and
cable issuers. On the other hand, the industrial sectors, a much smaller
component of the market, continue to attract substantial investor interest.

As for leverage, we expect to maintain the Company's overall leverage at 25%.
We will respond to market fluctuations, drawing down on the facility as the
net asset value increases and reducing the facility should the net asset value
decline, to maintain a stable leverage exposure.

We believe the euro will be a gauge for global economic sentiment. The
sustained weakness in the U.S. economy has been a windfall to valuations for
the euro. While the Eurozone is also struggling to regain positive growth
momentum, its fall has been less severe than in the U.S., and the trade
deficit in the U.S. remains a burden to which the euro is less exposed. With
regard to valuations against the British pound, the political landscape has
elevated the chance for a more constructive dialogue on joining the single
currency. Finally, as inflation pressures continue to ease throughout the
Eurozone, the ECB will be able to further reduce short-term interest rates,
improving the outlook for growth and increasing the opportunity for further
gains in the currency in the months ahead.



Sincerely,

Alliance Capital Management L.P.

Investment Manager

Portfolio Of Investments

30 June 2001 (unaudited)
                                                     Principal £ Value % of Net
                                                  Amount (000)           Assets
TRANSFERABLE SECURITIES QUOTED ON A STOCK
EXCHANGE OR DEALT IN ON ANOTHER REGULATED MARKET

EURO 12 REGION (EURO DENOMINATED) CORPORATE BONDS

AUSTRIA-1.22%
Head Holding GmbH
10.75%, 15/7/06 EUR                                        700 £435,578     1.22
                                                               

FINLAND-2.87%
Elisa Communications
6.38%, 31/1/06                                           1,500  905,842     2.54

Neste Chemicals International
12.25%, 15/8/10                                            250  118,604     0.33
                                                              1,024,446     2.87
FRANCE-6.59%
Eurotunnel
6.90%, 02/2/09                                             750  454,221     1.27
Go Outdoor System
10.50%, 15/7/09                                          1,200  832,995     2.34
Remy Cointreau
10.00%, 30/7/05                                          1,650 1,067,688    2.99
                                                               2,354,904    6.60
GERMANY-9.09%
Callahan Nordheim Westf
14.13%, 15/7/11                                            750   379,013    1.06
E-Kabel
14.50%, 01/9/10                                            500   236,261    0.66
Fresenius Med Cap
7.38%, 15/6/11 (a)                                         500   297,207    0.83
Grohe Holdings
11.50%, 15/11/10                                           650   418,648    1.17
Kamps
8.00%, 26/9/05                                           1,000   615,054    1.73
Messer Griesheim Holding
10.38%, 01/6/11                                            650   404,245    1.13
Prosiebensat 1 Media
5.88%, 28/3/06                                           1,500   900,650    2.53
                                                               3,251,078    9.11
GREECE-1.01%
Antenna TV
9.75%, 01/7/08                                             600   361,163    1.01

IRELAND-0.70%
Clondalkin Industries
10.63%, 15/1/10                                            400   251,129    0.70

ITALY-2.61%
Banca Popolare Di
Bergamo Varesino
8.36%, 15/2/11                                           1,500   931,575    2.61

LUXEMBOURG-4.78%
Carrier 1 International
13.25%, 15/2/09                                          1,004   217,863    0.61

Ispat Europe Group
11.88%, 01/2/11                                            500   289,723    0.81

PTC Intl Finance II
10.88%, 01/5/08                                            750   468,248    1.31

PTC Intl Finance Il
11.25%, 01/12/09                                           675   427,640    1.20

The Manitowoc Co
10.38%, 15/5/11                                            500   304,910    0.86
                                                               1,708,384    4.79
NETHERLANDS-13.26%
Completel Europe
14.00%, 15/4/10 EUR                                      1,550  £411,165    1.15
                                                               
Global Telesystems Europe
10.50% , 12/1/06                                           500    42,168    0.12
Jones Lang Lasalle Finance
9.00%, 15/6/07                                             500   322,025    0.90
Koninklijke Ahold
5.88%, 09/5/08                                           1,000   597,213    1.67
KPNQwest
7.13%, 01/6/09                                           2,204   798,524    2.24
Leica Geosystems Finance
9.88%, 15/12/08                                            585   382,065    1.07
RWE Finance
5.38%, 18/4/08                                           1,000   598,327    1.68
SWT Finance
12.50%, 01/6/10                                            250    75,383    0.21
Tele 1 Europe
12.38%, 01/2/08 (a)                                      1,000   359,453    1.01
TPSA Euro Finance
6.63%, 01/3/06                                             500   301,029    0.84
United Pan-Europe Communications
11.25%, 01/11/09                                         1,750   392,389    1.10
13.38%, 01/11/09                                         1,000   106,844    0.30

Versatel Telecom
4.00%, 30/3/05                                           1,000   175,134    0.50
11.25%, 30/3/10                                            750   169,295    0.47
                                                               4,731,014   13.26
Total Corporate Bonds                                         15,049,271   42.17
(cost £18,724,129)

GOVERNMENT BONDS
GERMANY-6.45%
Germany (Federal Republic)
8.00%, 21/1/02
(cost £2,389,345)                                        3,750 2,300,157    6.45
MORTGAGE RELATED
IRELAND-2.12%
Cygnus Finance Plc
7.89%, 15/10/08
(cost £789,070) (b)                                      1,250   754,680    2.12
Total Euro 12 Region
(Euro Denominated)
(cost £21,902,544)                                            18,104,108   50.74
EURO 12 REGION
(NON-EURO DENOMINATED)
CORPORATE BONDS
GERMANY-2.12%
Euronet Services, Inc.
12.38%, 01/7/06 (b) DEM                                  5,000   756,912    2.12
NETHERLANDS-1.69%
Impress Metal Packaging Holdings
9.88%, 29/5/07                                           2,000   603,037    1.69
Total Euro 12 Region
(Non-Euro Denominated)
(cost £1,457,929)                                              1,359,949    3.81
NON-EURO 12 REGION
(EURO DENOMINATED )
CORPORATE BONDS
BERMUDA-1.38%
Flag Telecom Holdings
11.63%, 30/3/10 EUR                                      1,250 £490,956    1.38
                                                               
NORWAY-0.00%
Enitel
Warrants, expiring 05/4/05                               1,000      602    0.00
POLAND-0.57%
Netia Holdings II Bv
13.50%, 15/6/09                                            750  202,497    0.57
SINGAPORE-0.83%)
Flextronics International
9. 75%, 01/7/10                                            500  295,702    0.83
SLOVAKIA-0.89%
Slovak Wireless Finance
11.25%, 30/3/07                                            500  316,018    0.88

SWEDEN-2.42%
Alfa Laval Speciality Finance
12.13%, 15/11/10                                           150   98,245    0.27
CB Bus AB
11.00%, 15/2/10                                            500  283,949    0.80
Preem Holdings
10.63%, 31/3/11                                            750  476,591    1.34
                                                                858,785    2.41
UNITED KINGDOM-20.61%
Atlantic Telecom Group
13.00%, 15/1/10                                            600   66,364    0.19
Warrants, expiring 02/3/10                                 600      361    0.00
BPB Plc
6.50%, 17/3/10                                           2,000 1,144,164   3.21
Colt Telecom Group
2.00%, 03/4/07 (a)                                         250   98,805    0.27
7.63%, 15/12/09                                            250  121,426    0.34
FKI
6.63%, 22/2/10                                           2,500 1,507,103   4.22
Ineos Acrylics Finance
10.25%, 15/5/10                                          1,500  899,431    2.52
J. Sainsbury
5.63%, 11/7/08                                           1,000  595,287    1.67
Jazztel
14.00%, 01/4/09                                          1,000  230,241    0.64
Lehman Brothers Holdings Plc
6.13%, 23/3/07                                             500  305,348    0.86
Marconi
6.38%, 30/3/10                                           1,000  547,944    1.54
Pearson
6.13%, 01/2/07 (a)                                       1,000  611,238    1.71
Royal Bank of Scotland
6.00%, 10/5/13                                           1,000  596,882    1.67
Royal Bank of Scotland
6.77%, 31/3/49                                           1,000  629,104    1.76
                                                              7,349,698   20.60
UNITED STATES-19.91%
Allied Domecq
Financial Services
5.50%, 18/4/06                                           1,500  895,397    2.51
Clear Channel Comm
6.50%, 07/7/05 (a)                                       1,500  918,528    2.57
Dura Operating
9.00%, 01/5/09 EUR                                         250 £136,555    0.38
                                                               
Enron
6.50%, 24/5/06                                           1,200  719,473    2.02
Exodus Communications Inc
10.75%, 15/12/09                                         2,250  420,476    1.18
Global Telesystems(Europe)
11.00%, 01/12/09                                         1,900  160,227    0.45
Huntsman ICI Chemicals
10.13% , 01/7/09                                         1,500  887,224    2.49

Lear
8.13%, 01/4/08                                             500  302,485    0.85
Level 3 Communications Inc
10.75%, 15/3/08                                          1,500  358,906    1.01
Metromedia Fiber Network Inc
10.00%, 15/12/09                                         1,000  229,151    0.64
NTL Communications Corp
11.50% , 15/11/09 (b)                                    3,000  579,540    1.62
Sola International
11.00%, 15/3/08                                            250  157,628    0.44
Standard Chartered Bank
8.16%, 23/3/10 (b)                                       1,500  926,504    2.60
Viatel Inc
11.50%, 15/3/09 (a)                                      1,400   58,990    0.17
Weightwatchers International Inc
13.00%, 01/10/09                                           500  344,248    0.96
Winstar Communication Inc.
12.34%, 15/1/10                                          1,000    5,417    0.01
                                                              7,100,749   19.90
Total Non-Euro 12 Region
(Euro Denominated)
(cost £23,032,594 )                                          16,615,007   46.57
NON-EURO 12 REGION
(NON-EURO DENOMINATED)
CORPORATE BONDS
UNITED KINGDOM-13.08%
Colt Telecom Group
7.63% , 31/7/08 DEM                                      2,500  597,801    1.68
Energis
9.13%, 15/3/10 GBP                                       1,000  893,750    2.50
Equitable Life Finance
8.00%, 06/8/07                                             250  153,087    0.43
Gala Group Holdings
12.00%, 01/6/10                                            325  356,590    1.00
HMV Media Group
10.88%, 15/5/08                                            650  456,235    1.28
Luxfer Holdings
10.13%, 01/5/09                                            750  774,578    2.17
NTL Communications Corp
9.75%, 15/4/09                                             250  105,475    0.30
RSL Communications
0.00%, 15/3/08 (b) DEM                                   6,074   16,823    0.05
Regional Independent Media
12.88%, 01/7/08 (b) GBP                                    400  317,069    0.89
Telewest Communications
9.87%, 15/4/09                                           1,000  472,500    1.32
United Biscuits Finance
10.75%, 15/4/11                                            500  519,067    1.45
                                                              4,662,975   13.07

UNITED STATES-1.50%
AES
8.38%, 01/3/11 GBP                                         250 £250,000    0.70
                                                               
HCA Healthcare
8.75% , 01/11/10                                           250  267,105    0.75
Viatel, Inc
0.00%, 15/4/08 (b) DEM                                   1,000   16,965    0.05
                                                                534,070    1.50
Total Non-Euro 12 Region
(Non-Euro Denominated)
(cost £7,097,344)                                             5,197,045   14.57
TOTAL INVESTMENTS                                            41,276,109  115.69
Net current liabilities                                     (5,599,358)  (15.69)
NET ASSETS                                                  £35,676,751  100.00%
                                                               


(a) Securities not admitted to an official stock exchange or dealt in on
    another regulated market.
(b) Coupon increases periodically based upon a predetermined schedule. Stated
    interest rate in effect at 30 June 2001.

                                                 Significant Portfolio Changes

From 1 January 2001 to 30 June 2001
PURCHASES                                                   COST £

Germany (Federal Republic)
5.25%, 04/1/11                                              2,573,550
Germany (Federal Republic)
8.00%, 21/1/02                                              2,389,345
Germany (Federal Republic)
6.00%, 04/7/07                                              2,374,838
Clear Channel Communications
6.50%, 07/7/05                                              1,880,881
Daimlerchrysler Holdings
6.00%, 19/1/04                                              1,430,976
Germany (Federal Republic)
6.00%, 16/2/06                                              1,356,977
British Telecommunications
5.63%, 16/2/04                                              1,112,232
British Telecommunications
5.63%, 16/2/04                                              1,107,806
Germany (Federal Republic)
5.38%, 04/1/10                                                993,481
Germany (Federal Republic)
6.00%, 04/1/07                                                988,148
Elisa Communications
6.38%, 31/1/06                                                958,756
Banca Popolare Perpetual
8.35%, 15/2/11                                                956,755
Prosiebensat1 Media
5.88%, 28/3/06                                                939,861
Allied Domecq
5.50%, 18/4/06                                                938,871
Teleone Europe                                              
12.38%, 01/2/08                                               791,440
Hannover Finance
6.25%, 14/3/31                                                787,855
AES Corp
8.38%, 01/3/11                                                750,000
United Biscuits Finance                                       759,375
10.75%, 15/4/11
Enron Corp
6.50%, 24/5/06                                                735,962
Finland (Republic of)
5.75%, 23/2/11                                                679,222
MPS Capital Trust
7.99%, 29/12/49                                               637,064
TPSA Euro Finance
6.63 %, 01/3/06                                               627,011
RWE Finance
5. 38%, 18/4/08                                               625,100
Royal Bank of Scotland
6.00%, 10/5/13                                                621,428
Koninklijke Ahold
5.88%, 09/5/08                                                617,855
J Sainsbury
5.63%, 11/7/08                                                603,650
Marconi
6.38%, 30/3/10                                                587,955
E-Kabel
14.50%, 01/9/10                                               465,409

Aer Rianta Finance
6.15%, 16/2/11                                                478,393
Ono Finance
14.00%, 15/2/11                                               476,402
Eurotunnel
6.90%, 02/2/09                                                469,977
PTC International Finance
10.88%, 01/5/08                                               466,548
Sola International
11.00%, 15/3/08                                               466,389
Preem Holdings
10. 63%, 31/3/11                                              465,969
Callahan Nordrhein Westf
14.13% , 15/7/11                                              451,780

Significant Portfolio Changes

From 1 January 2001 to 30 June 2001
SALES                                                       PROCEEDS
                                                                   £
Daimlerchrysler Holdings
6.00%, 19/1/04                                              2,872,714
Germany (Federal Republic)
5.25%, 04/1/11                                              2,652,985
Germany (Federal Republic)
6.00%, 04/7/07                                              2,476,019
Germany (Federal Republic)
8.00%, 22/7/02                                              2,372,271
Germany (Federal Republic)
8.38%, 21/5/01                                              2,032,561
Birka Energi
6.38%, 03/11/06                                             1,990,530
Manpower Inc
5.63%, 26/7/06                                              1,858,904
SG Capital Trust
7.88%, 22/2/10                                              1,700,990
Germany (Federal Republic)
6.25%, 26/4/06                                              1,443,471
Lafarge
6.38% , 26/7/07                                             1,355,539
Germany (Federal Republic)
6.00%, 16/2/06                                              1,352,498
Lloyds TSB Capital
7.38%, 07/2/12                                              1,314,309
British Telecommunications                                  1,131,995
6.89%, 15/2/11
British Telecommunicaions
5.63%, 16/2/04                                              1,104,259
Germany (Federal Republic)
6.00%, 04/1/07                                              1,002,955
North West Water Finance
6.63%, 08/11/07                                               999,049
Germany (Federal Republic)
5.38%, 04/1/10                                                993,678
Clear Channel Communications
6.50%, 07/7/05                                              1,880,881
Hannover Finance
6.25%, 14/03/31                                               747,420
Finland (Republic of)
5.75%, 23/2/11                                                704,912
Halifax Group Euro Finance
7.63%, 09/12/11                                               677,408
Barclays Bank
7.50%, 29/4/ 49                                               676,750
TXU Europe Funding
7.00%, 30/11/05                                               658,363
Royal Bank of Scotland
6.77%, 31/3/05                                                655,556
MPS Capital Trust
7.99%, 29/12/49                                               644,157
Sealed Air Finance 2
5.63%, 19/7/06                                                569,917
AES Corp
8.38%, 01/3/11                                                514,479
Huntsman ICI Chemicals
10.13%, 01/7/09                                               505,952
Aer Rianta Finance
6.15%, 16/2/11                                                448,776
Ono Finance
14.00%, 15/2/11                                               423,455

Statement Of Total Return

From 1 January 2001 to 30 June 2001 (unaudited)

                     Notes   Revenue         Capital          2001          2000
                                   £               £         Total         Total
                                                                 £             £

Net losses on 
investments during the   3        -0-    (7,248,502)   (5,254,006)   (1,979,680)
period
Other losses             4        -0-      (536,527)   (2,531,023)     (399,854)
Net investment losses 
for the period                    -0-    (7,785,029)   (7,785,029)   (2,379,534)

Gross income             5  2,301,138            -0-     2,301,138     3,192,921
Expenses                 6  (361,485)      (130,657)     (492,142)     (877,288)

Net income (loss) 
for the period              1,939,653      (130,657)     1,808,996     2,315,633

Return on ordinary 
activity                    1,939,653    (7,915,686)   (5,976,033)      (63,901)

Distributions from 
income earned            8(1,121,732)            -0-   (1,121,732)          -0-
previous year

Distributions 
from income earned      8 (2,459,463)            -0-   (2,459,463)  (1,493,349)
current period

Income equalization            96,000            -0-        96,000          -0-
Net decrease in 
Shareholders'
funds from investment 
activities                (1,545,542)    (7,915,686)   (9,461,228)  (1,557,250)

Statement Of Movements In Shareholders' Funds

From 1 January 2001 to 30 June 2001 (unaudited)
                                                      Notes      2001       2000
                                                                    £          £

Net assets at the start of the period                      41,121,568        -0-
Amounts received on sale of Shares                          3,984,000 49,854,743
Less: Issue costs                                      1(h)    32,411  (762,167)
Net proceeds on sale of Shares                              4,016,411 49,092,576
Net decrease in Shareholders' funds from investment       (9,461,228)(1,557,250)
activities
Net assets at the end of the period                        35,676,751 47,535,326

Balance Sheet

as at 30 June 2001 (unaudited)
                                     Notes              2001               2000
                                                           £                  £
Portfolio of investments             1 (e)        41,276,109         56,372,064
Net current assets
Debtors                                  9         1,679,660          1,503,579
Cash and bank balances                  10           566,136          2,349,829
                                                   2,245,796          3,853,408
Less
Bank overdraft                          10          (42,978)          (287,920)
Creditors (less than one year)          11       (7,802,176)       (12,402,226)
                                                 (7,845,154)       (12,690,146)
Net current liabilities                          (5,599,358)        (8,836,738)
Net assets                                        35,676,751         47,535,326
Shareholders' funds                               35,676,751         47,535,326
Number of Shares in issue                         54,654,743         49,854,743
Net Asset Value per Share                              £0.65              £0.95

Notes To Financial Statements

as at 30 June 2001 (unaudited)

1.      Accounting policies


a)    Basis of accounting
      The financial statements are prepared under the historical cost
      convention as modified by the inclusion of securities at valuation. The
      financial statements are prepared in sterling (£).

b)    Income recognition
      Income on interest bearing securities is accounted for on an accruals
      basis and bank deposit interest is accounted for on a receipts basis.
      Income is shown gross of any withholding tax. The Company accretes
      discounts and amortises premiums as adjustments to interest income.

c)    Realised gains and losses on investments
      Realised gains and losses on sales of investments are calculated on the
      FIFO basis of the investment in local currency. The associated foreign
      exchange movement between the date of purchase and the date of sale on
      the sale of investments is included in other gains or losses in the
      Statement of Total Return.

d)    Unrealised gains and losses on investments
      Unrealised gains and losses on investments arising during the period are
      reflected as a component of net gains or losses on investments in the
      Statement of Total Return.

e)    Valuation of securities
      Assets listed or traded on a regulated market are valued at the official
      close of business prices at the period end. If for specific assets the
      official close of business prices do not, in the opinion of the
      Administrator, reflect their fair value or if prices are unavailable, the
      values are calculated with care and in good faith by the Administrator,
      approved for that purpose by the Custodian, in consultation with the
      Investment Manager, on the basis of the probable realisation values for
      such assets as at the close of business as at the period end.

f)    Foreign exchange
      Foreign currency assets and liabilities, including investments, are
      translated into sterling at the exchange rate prevailing at the period
      end. The foreign exchange gain or loss based on the translation of the
      original cost of the investments, together with the gain or loss arising
      on the translation of other assets and liabilities, is included in other
      gains or losses in the Statement of Total Return.

      Foreign currency forward exchange contracts are revalued to a forward
      rate as at their close of business price at the period end. The resulting
      unrealised gain or loss between this rate and the contract rate is
      included in other gains or losses in the Statement of Total Return and is
      shown as a debtor or creditor in the Balance Sheet.

g)    Distribution policy
      It is intended that substantially all of the net income of the Company is
      distributed as dividends. Dividends will, if declared, be declared and
      paid quarterly in or about January, April, July and October of each year.

h)    Issue costs
      Issue costs incurred directly in connection with the issue of the Shares
      are deducted from the consideration received in the Statement of
      Movements in Shareholders' Funds. Shareholders who subscribed for Shares
      in the issue which took place during the period incurred a 3% commission
      on the Net Asset Value per Share, a portion of which remained in the
      Company.


2.    Taxation
      Under current law and practice, the Company qualifies as an investment
      undertaking as defined in Section 739B (1) of the Taxes Consolidation
      Act, 1997, as amended. It is not chargeable to Irish tax on its income or
      capital gains. However, a tax can arise on the happening of a 'chargeable
      event' in the Company. A chargeable event includes any distribution
      payments to Shareholders or any encashment, redemption or transfer of
      Shares. Any tax arising on a chargeable event is a liability of the
      Shareholder, albeit that it is paid by the Company (although if the
      Company fails to deduct the tax or the correct amount of tax, it becomes
      ultimately a liability of the Company). No tax will arise on a chargeable
      event in respect of a Shareholder who is an Exempt Irish Investor (as
      defined in Section 739D of the Taxes Consolidation Act, 1997, as amended)
      or who is neither Irish resident nor ordinarily resident in Ireland at
      the time of the chargeable event provided that the necessary signed
      declaration is in place.

3.    Net gains/(losses) on investments

      The net gains/(losses) on investments during the period comprise:


                                                   Notes       2001        2000
                                                                  £           £
Proceeds from sales of investments during the            43,253,290  159,051,359
period
Original cost of investments sold during the period    (43,955,209)(159,980,857)
Net gains/(losses) realised on investments sold    1(c)   (701,919)    (929,498)
during the period
Net unrealised depreciation at the end of the      1(d) (6,546,583)  (1,050,182)
period
Net losses on investments during the period             (7,248,502)  (1,979,680)







4.      Other gains/(losses)


                                                               2001        2000
                                                                  £           £
Net realised and unrealised foreign exchange losses       (536,527)   (399,854)



5.          Gross income


                                    Notes               2001               2000
                                                           £                  £
Interest on securities               1(b)          2,281,451          3,165,662
Bank interest                        1(b)             19,687             27,259
                                                   2,301,138          3,192,921


6.    Expenses
      The Company charges 25% of the investment management fees, operational
      expenses and borrowing expenses in each year to capital (such expenses
      amounted to £130,657 for the six months ended 30 June 2001 and £158,506,
      for the period ended 30 June 2000) and 75% of such fees and expenses to
      its income account. Thus, on realisation of Shares, Shareholders may not
      receive back the full amount invested. In addition, the formation and
      organisation expenses of the Company, other than those defined as issue
      costs, were written off as incurred.


                                       2001       2001       2001       2000
                                     Revenue    Capital       £          £
                                        £          £        Total      Total
Payable to the Administrator
Administration fee                    (21,045)    (7,044)   (28,089)   (37,055)
Payable to the Custodian
Custody fee                            (7,453)    (2,843)   (10,296)   (16,857)
Payable to the Investment Manager
Investment management fee            (131,716)   (44,120)  (175,836)  (207,566)

Other expenses
Audit fee                              (5,266)    (1,742)    (7,008)    (9,307)
Loan interest                        (154,147)   (60,958)  (215,105)  (244,664)
Legal fees                            (16,875)    (5,625)   (22,500)   (48,949)
Directors' remuneration               (10,500)    (3,500)   (14,000)   (16,677)
Stock exchange fees                        -0-        -0-        -0-      (750)
Printing & postage                     (8,667)    (2,886)   (11,553)    (1,861)
Formation and organisation expenses        -0-        -0-        -0-  (289,189)
Miscellaneous                          (5,816)    (1,939)    (7,755)    (4,413)
                                     (201,271)   (76,650)  (277,921)  (615,810)
Total expenses                       (361,485)  (130,657)  (492,142)  (877,288)


7.    Related party transactions

      Investment Manager
      The Investment Manager (Alliance Capital Management L.P.) is entitled to
      an annual investment management fee of 0.65% of the Company's average
      weekly Net Asset Value (having added back the amount borrowed at any time
      under the Company's borrowing facility with Deutsche Bank AG London). The
      Investment Manager is entitled, subject to approval of the Directors, to
      receive from the Company an amount not to exceed $45,000 annually
      exclusive of VAT, if any, thereon, to cover certain ancillary expenses
      incurred by the Investment Manager in connection with its provision of
      investment management services to the Company. Such compensation amounted
      to £15,986 (or $22,482) for the period ended 30 June 2001. The Investment
      Management Agreement may be terminated by the Investment Manager or the
      Company giving not less than 90 days' notice in writing.

      Alliance Capital Management L.P. has not entered into transactions in
      relation to a placing and/or a new issue in which a connected person with
      the Investment Manager has a material interest as a member of the
      underwriting syndicate.

      Administrator
      Deutsche International Fund Services (Ireland) Limited has been appointed
      to act as Administrator pursuant to the Administration Agreement. For
      this service, the Company pays to the Administrator an annual fee,
      accrued daily based on the average weekly Net Asset Value and payable
      monthly in arrears at the following rates:


          Rate                                     NAV
       0.15% p.a.                             0-£30 million
       0.10% p.a.                        £30 million-£60 million
       0.075% p.a.                            £60 million +


      The Administrator receives a minimum fee of £4,500 per month. The
      Administrator is also entitled to an annual fee of £20 per Shareholder
      for registrar maintenance, £15 for each share registry entry, £10 for
      each dividend payment, £15 for each statement issued and £7 for each
      payment by telegraphic transfer. The Administrator is also reimbursed by
      the Company, as appropriate, for all reasonable costs, expenses and
      disbursements incurred by it in the performance of its duties for the
      Company.

      Custodian
      Deutsche International Custodial Services (Ireland) Limited has been
      appointed Custodian to the Company pursuant to the Custodian Agreement.
      For this service, the Company pays to the Custodian a fee of 0.025% per
      annum of the average weekly Net Asset Value of the Company. The
      Custodian's fee will be paid monthly in arrears and shall be accrued
      daily based on the average weekly Net Asset Value of the Company. In
      addition, the Custodian is entitled to a transaction charge of £20 per
      transaction. The Custodian is also reimbursed by the Company for all
      reasonable out-of-pocket expenses, including sub-custody fees and
      expenses which are charged at normal commercial rates.

8.    Distributions
      It is intended that substantially all of the net income of the Company is
      distributed as dividends. Dividends will, if declared, be declared and
      paid quarterly in January, April, July and October of each year. The
      following dividends were paid during the period:


    Ex Date         Paid Date           Amount £             £ Per Share
   *12-01-01        29-01-01           1,121,732                0.0225
   23-03-01         10-04-01           1,229,731                0.0225
   22-06-01         10-07-01           1,229,732                0.0225

*Based on income for the quarter ended 31 December 2000.


9.                Debtors


                                                            2001           2000
                                                               £              £
Accrued income                                         1,064,905      1,441,285
Sales awaiting settlement                                614,755            -0-
Unrealised gain on forward contracts                         -0-         62,294
                                                       1,679,660      1,503,579


10.    Analysis of cash on the Balance Sheet


                                                                  2001     2000
                                                                     £        £
Cash and bank balances                                         566,136 2,349,829
Bank overdraft                                                (42,978) (287,920)
                                                               523,158 2,061,909
All cash and bank balances are held with Deutsche Bank AG,
London.


11.   Creditors
      All settlements are scheduled for less than one year. The loan of EUR
      9,000,000 is repayable to Deutsche Bank AG London at a rate of 4.90%,
      with the repayment date being 3 September 2001. The facility will be open
      for a period of five years renewable on such terms as may be mutually
      agreed between the Company and such banks and financial institutions as
      may be parties to the Facility Agreement at such time, although the
      Facility is repayable earlier under certain circumstances.


                                                             2001          2000
                                                                £             £
Purchase of securities awaiting settlement              (597,364)     (946,107)
Accrued expenses                                        (168,724)      (60,321)
Loan                                                  (5,417,445)  (11,395,798)
Unrealised loss on forward contracts                    (149,610)           -0-
Payable on Index Swap (notional value EUR 5,000,000)    (239,301)           -0-
Distribution payable                                  (1,229,732)           -0-
                                                      (7,802,176)  (12,402,226)


12.   Exchange rate
      The following sterling exchange rates as at 30 June 2001 have been used
      in this report:
      EUR     1.6613
      DEM     3.2492
      USD     1.4064

13.   Soft commission arrangements
      There were no soft commission arrangements during the period under
      review.

14.   Efficient Portfolio Management
      The Company enters into forward exchange currency contracts to hedge its
      exposure to changes in non-Euro currency exchange rates on its non-Euro
      portfolio holdings and to hedge certain firm purchase and sale
      commitments denominated in non-Euro currencies. A forward exchange
      currency contract is a commitment to purchase or sell a non-Euro currency
      at a future date at a negotiated forward rate. The gain or loss arising
      from the difference between the original contract and the closing of such
      contract is included in net gains or losses on investments. Fluctuations
      in the value of open forward exchange currency contracts are reflected
      for financial reporting purposes as a component of debtors. Risks may
      arise from the potential inability of a counterparty to meet the terms of
      a contract and from unanticipated movements in the value of a foreign
      currency relative to the Euro. At 30 June 2001, the Company had
      outstanding forward exchange currency contracts as follows:


                                         £                          £
                                     Value on       £          Unrealised
                          Contract  Origination  Current  Current Appreciation/
                           Amount      Date       Value      (Depreciation)
Forward Exchange Currency
Buy Contract
Euro, settling 16/7/01    8,553,590 5,302,389   5,146,519     (155,870)
Sell Contract
Euro, settling 16/7/01    673,926   411,747     405,487       6,260


      The Company utilizes swap contracts for efficient portfolio management. A
      swap is an agreement that obligates two parties to exchange a series of
      cash flows at specified intervals based upon or calculated by reference
      to changes in specified prices or rates for a specified amount of an
      underlying asset or otherwise determined notional amount. The payment
      flows are usually netted against each other, with the difference being
      paid by one party to the other.

      Risks may arise as a result of the failure of the counterparty to the
      swap agreement. The loss incurred by the failure of a counterparty is
      generally limited to the net interest payment to be received by the
      Company, and/or the termination value at the end of the agreement.
      Therefore, the Company considers the creditworthiness of each
      counterparty to a swap agreement in evaluating potential credit risk.
      Additionally, risks may arise from unanticipated movements in interest
      rates or in the value of the underlying assets.


                                Notional                                £
                                 Value                 Termination  Unrealised
                                  EUR    Counterparty     Date     Depreciation

Swap Contract
Merrill Lynch European High     5,000,000 Merrill Lynch 19 January   (239,301)
Yield Index Swap                         International        2002
                                         


15.   Approval of interim unaudited report
      The interim unaudited report was approved by the Board of Directors on 20
      August 2001.

                                                             Other Information

30 June 2001 (unaudited)

Directors

Mr. Howard Flight (Chairman)

Mr. Michael K. Griffin

Mr. Geoffrey L. Hyde

Mr. Carl O'Sullivan

Investment Manager

Alliance Capital Management L.P.

1345 Avenue of the Americas

New York

New York 10105

United States of America

Administrator and Registrar

Deutsche International Fund Services (Ireland) Limited

Guild House

Guild Street

International Financial Services Centre

Dublin 1

Ireland

Custodian

Deutsche International Custodial Services (Ireland) Limited

Guild House

Guild Street

International Financial Services Centre

Dublin 1

Ireland

Legal Advisors

In Ireland

Arthur Cox

Earlsfort Centre

Earlsfort Terrace

Dublin 2

Ireland

In England

Linklaters & Alliance

One Silk Street

London EC2Y 8HQ

United Kingdom

Registered Office

Guild House

Guild Street

International Financial Services Centre

Dublin 1

Ireland

Secretary

Bradwell Limited

Earlsfort Centre

Earlsfort Terrace

Dublin 2

Ireland

Auditors

Ernst & Young

Registered Auditors

Ernst & Young Building

Harcourt Centre

Harcourt Street

Dublin 2

Ireland

Placing Agent and Sponsor

Deutsche Bank AG London

Winchester House

1 Great Winchester Street

London EC2N 2DB

United Kingdom