ALLIANCE GROWTH FUND
ANNUAL REPORT
OCTOBER 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GROWTH FUND
_______________________________________________________________________________
December 28, 1999
Dear Shareholder:
We are pleased to provide you with the market commentary and investment results
for the Alliance Growth Fund (the "Fund") for the annual reporting period ended
October 31, 1999. The following table provides performance data for the Fund
and its two benchmarks, the Standard & Poor's 500 Stock Index (the "S&P 500")
and the Russell 1000 Stock Index, for the six- and 12-month periods ended
October 31, 1999. The S&P 500 is a measure of the broad U.S. stock market,
while the Russell 1000 Stock Index tracks U.S. large-cap stock performance.
INVESTMENT RESULTS
One year ago, the stock market was just beginning its recovery from the sharp
drop brought on by the collapse of the Asian markets. At that time, our view
was that the U. S. market decline was more in the nature of a financial panic
than the start of a bear market. Rather than taking defensive measures, we took
advantage of the opportunity to buy depressed stocks in our most favored
sectors, which were primarily technology and financial services. The stock
market recovered rapidly in the ensuing six months and, as a result, the
performance of the Fund was well ahead of its two benchmarks.
This past summer, upside momentum gave way to fears that the U.S. Federal
Reserve had decided to raise interest rates until there were clear signs that
the economy was decelerating. The Fed is determined to act preemptively to
ensure that an overheated economy does not lead to the return of inflation.
This reversal in the interest rate trend resulted in relatively poor
performance by the financial sector. Yet despite this, the Fund still
outperformed both of its benchmarks. We continue to think that the financial
sector offers an attractive combination of above-average long-term growth at
reasonable valuation and we have therefore maintained the Fund's emphasis on
this sector.
INVESTMENT RESULTS*
Periods ended October 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE GROWTH FUND
Class A 3.91% 28.69%
Class B 3.57% 27.79%
Class C 3.54% 27.78%
S&P 500 2.74% 25.66%
RUSSELL 1000 STOCK INDEX 2.49% 25.58%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF OCTOBER 31, 1999. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. RETURNS FOR
THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
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 S&P 500 IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES. THE UNMANAGED
RUSSELL 1000 STOCK INDEX CONSISTS OF 1000 OF THE LARGEST STOCKS REPRESENTING
APPROXIMATELY 87% OF THE U.S. EQUITY MARKET. AN INVESTOR CANNOT INVEST DIRECTLY
IN AN INDEX.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
INVESTMENT REVIEW AND OUTLOOK
The telecommunications sector continues to be our largest area of
concentration. Surging data traffic, the explosive growth of the Internet and
worldwide deregulation still make this, in our view, the most attractive area
of the market. Performance by this sector has been quite good, especially
subsequent to the end of the Fund's October 31, 1999 fiscal year.
At the close of the Fund's 1999 fiscal year, the market seemed to have shaken
off its interest rate jitters and appeared to have begun to move back up. We
are not prone to making market timing judgments, as we prefer to remain
invested in those stocks which, in our opinion, afford the best combination of
growth at a reasonable price. We do believe that it is likely that the benefit
of falling interest rates is probably behind us, at least on a cyclical basis.
In our view, further gains in the stock mar-
1
ALLIANCE GROWTH FUND
_______________________________________________________________________________
ket will have to be driven by earnings gains and not by continuing gains in
valuation. In other words, investors should remember that long-term growth in
the stock market has generally tracked earnings growth of perhaps 10% a year.
The more rapid rates of gain in recent years were above trend and we expect
that they are unlikely to persist.
Thank you for your continued interest in the Alliance Growth Fund. We look
forward to reporting to you on market activity and your Fund's investment
performance in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Tyler J. Smith
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
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE GROWTH FUND
_______________________________________________________________________________
Alliance Growth Fund seeks long-term growth of capital. The Fund invest
principally in a diversified portfolio of equity securities of companies with a
favorable outlook for earnings and whose rate of growth is expected to exceed
that of the United States economy over time.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF OCTOBER 31, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 28.69% 23.22%
Five Years 22.80% 21.74%
Since Inception* 22.87% 22.29%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 27.79% 23.79%
Five Years 21.94% 21.94%
Ten Years (a) 17.93% 17.93%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 27.78% 26.78%
Five Years 21.94% 21.94%
Since Inception* 19.03% 19.03%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (SEPTEMBER
30, 1999)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year 27.01% 27.74% 30.75%
5 Years 20.21% 20.41% 20.41%
10 Years N/A 18.11% N/A
Since Inception* 21.62% 20.65% 18.03%
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 return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 9/4/90, Class A; 10/23/87, Class B; 8/2/93, Class C.
N/A: not applicable
(a) Assumes conversion of Class B shares into Class A shares after 8 years.
3
ALLIANCE GROWTH FUND
_______________________________________________________________________________
ALLIANCE GROWTH FUND
GROWTH OF A $10,000 INVESTMENT
10/31/89 TO 10/31/99
$64,000
$56,000
$48,000
$40,000
$32,000
$24,000
$16,000
$10,000
$8,000
ALLIANCE GROWTH FUND CLASS B: $58,955
S&P 500 STOCK INDEX: $51,454
RUSSELL 1000 STOCK INDEX: $50,578
10/31/89 10/31/90 10/31/91 10/31/92 10/31/93 10/31/94 10/31/95
10/31/96 10/31/97 10/31/98 10/31/99
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Growth Fund Class B shares (from 10/31/89 to 10/31/99) as compared to
the performance of appropriate broad-based indices. The chart assumes the
reinvestment of dividends and capital gains. Performance for Class A, Class C
and Advisor Class shares will vary from the results shown above due to
differences in expenses charged to those classes. Past performance is not
indicative of future results, and is not representative of future gain or loss
in capital value or dividend income.
The unmanaged Standard & Poor's 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market.
The unmanaged Russell 1000 Stock Index is comprised of 1000 of the largest
capitalized companies that are traded in the United States.
When comparing Alliance Growth Fund to the indices shown above, you should
note that no charges or expenses are reflected in the performance of the index.
ALLIANCE GROWTH FUND
STANDARD & POOR'S 500 STOCK INDEX
RUSSELL 1000S TOCK INDEX
4
TEN LARGEST HOLDINGS
OCTOBER 31, 1999 ALLIANCE GROWTH FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE(A) NET ASSETS
- -------------------------------------------------------------------------------
AT&T Corp.-Liberty Media Group Cl.A $ 411,338,951 5.3%
Sprint Corp. 349,488,329 4.5
Mannesmann AG 346,418,359 4.5
MCI WorldCom, Inc. 315,177,953 4.0
American International Group, Inc. 297,933,119 3.8
Citigroup, Inc. 283,756,914 3.6
International Business Machines Corp. 270,847,720 3.5
MBNA Corp. 217,876,967 2.8
Nextel Communications, Inc. Cl.A 214,278,040 2.8
Global Telesystems Group, Inc. 198,476,099 2.6
$ 2,905,592,451 37.4%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED OCTOBER 31, 1999
SHARES(B)
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 10/31/99
- -------------------------------------------------------------------------------
Adelphia Communications Corp. 731,700 728,300
Applied Materials, Inc. 1,250,000 1,242,000
Associates First Capital Corp. Cl.A 1,280,000 3,537,000
Boston Scientific Corp. 2,275,000 2,259,500
Cablevision Systems Corp. Cl.A 1,100,000 1,091,800
Kroger Co. 1,665,000 1,665,000
McKesson HBOC, Inc. 2,075,000 5,296,000
NTL, Inc. 1,951,925 1,951,925
Orange Plc (ADR) 1,415,700 1,415,700
Sprint Corp. 3,896,500 4,946,600
- -------------------------------------------------------------------------------
HOLDINGS
SALES SOLD 10/31/99
- -------------------------------------------------------------------------------
American Express Co. 268,000 -0-
AT&T Corp. 889,827 76,000
Atlantic Richfield Co. 700,000 1,719,800
American Bankers Insurance Group, Inc. 1,135,000 -0-
Delta Air Lines, Inc. 692,400 516,100
First Union Corp. 963,000 -0-
MediaOne Group, Inc. 1,076,000 556,000
Networks Associates, Inc. 2,750,000 272,400
Nextel Communications, Inc. Cl.A 1,470,000 49,500
Philip Morris Cos., Inc. 908,400 1,182,000
(a) Adjusted for market value of call options written.
(b) Adjusted for stock splits.
5
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1999 ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-100.8%
TECHNOLOGY-36.6%
COMPUTER HARDWARE-3.8%
Compaq Computer Corp. (a) 155,000 $ 2,945,000
Dell Computer Corp. (a)(b) 400,000 16,050,000
International Business
Machines Corp. (a) 2,796,000 275,056,500
------------
294,051,500
COMPUTER SOFTWARE & SERVICES-4.2%
Ceridian Corp. (b) 4,527,100 99,313,256
Ingram Micro, Inc. Cl.A (a)(b) 1,648,500 18,339,563
Sterling Commerce, Inc. (a)(b) 4,853,144 113,745,562
Sterling Software, Inc. (b) 4,551,000 99,837,563
------------
331,235,944
ELECTRONICS-2.9%
Flextronics International, Ltd. (b) 266,700 18,935,700
Micron Technology, Inc. (a)(b) 500,000 35,656,250
SCI Systems, Inc. (a)(b) 3,399,500 167,850,312
------------
222,442,262
NETWORKING PRODUCTS-0.1%
Networks Associates, Inc. (a)(b) 273,400 5,006,638
NETWORKING SOFTWARE-0.2%
Cisco Systems, Inc. (a)(b) 172,000 12,728,000
OFFICE EQUIPMENT & SERVICES-0.1%
Oracle Corp. (a)(b) 200,000 9,512,500
SEMI-CONDUCTOR COMPONENTS-2.5%
Altera Corp. (a) 454,518 22,100,938
Intel Corp. (a) 2,250,000 174,234,375
------------
196,335,313
TELECOMMUNICATIONS-20.1%
Applied Materials, Inc. (a)(b) 1,250,000 112,265,625
Colt Telecom Group Plc
(ADR) (b) (United Kingdom) 875,000 103,687,500
Global Telesystems Group, Inc. (b) 6,603,572 158,073,004
Globalstar Telecommunicatio 100,000 2,206,250
Intermedia Communications, Inc. (b) 8,339 216,814
Intermedia Communications,
Inc. pfd. Series D (b) 414,600 14,303,700
Loral Space & Communications (a)(b) 7,828,000 117,909,250
MCI WorldCom, Inc. (a)(b) 3,715,878 318,868,781
Millicom International
Cellular, SA (b) (Luxembourg) 1,160,800 39,177,000
Nextel Communications, Inc.
Cl.A (a)(b) 2,693,600 232,154,650
Nextel STRYPES Trust 360,000 25,650,000
Nextlink Communications, Inc. 80,000 11,220,000
Nokia Corp. (ADR) (Finland) (a) 539,600 62,357,525
NTL, Inc. (b) 1,951,925 147,126,347
Orange Plc (ADR)
(United Kingdom) (b) 1,415,700 176,254,650
Pacific Gateway Exchange, Inc. (b) 100,000 2,275,000
Qwest Communications
International, Inc. (a)(b) 450,000 16,200,000
Vodafone AirTouch Plc (a)
(ADR) (United Kingdom) 480,000 23,010,000
------------
1,562,956,096
MISCELLANEOUS-2.7%
Sanmina Corp. (b) 1,844,800 166,147,300
Solectron Corp. (a)(b) 615,700 46,331,425
------------
212,478,725
6
ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
FINANCE-16.6%
BANKING - MONEY CENTERS-6.0%
Chase Manhattan Corp. 2,006,604 $175,327,025
Citigroup, Inc. (a) 5,349,698 289,552,404
------------
464,879,429
BANKING - REGIONAL-2.2%
Bank of America Corp. (a) 2,705,200 174,147,250
INSURANCE-3.9%
American International
Group, Inc. (a) 2,924,483 301,038,969
MISCELLANEOUS-4.5%
Associates First Capital Corp. Cl.A 3,537,000 129,100,500
MBNA Corp. (a) 8,089,437 223,470,697
------------
352,571,197
------------
1,292,636,845
CONSUMER SERVICES-10.5%
BROADCASTING & CABLE-6.7%
AT&T Corp.-Liberty Media Group Cl.A (b) 10,364,446 411,338,951
Comcast Corp. Cl.A (a) 1,613,000 67,947,625
MediaOne Group, Inc. (b) 556,000 39,510,750
------------
518,797,326
ENTERTAINMENT & LEISURE-1.8%
Carnival Corp. Cl.A (a) 330,800 14,720,600
Cendant Corp. (a)(b) 6,415,504 105,855,816
Time Warner, Inc. (c) 261,000 18,188,437
Walt Disney Co. 150,000 3,956,250
------------
142,721,103
RETAIL- GENERAL MERCHANDISE-2.0%
Home Depot, Inc. (a) 1,865,000 140,807,500
Wal-Mart Stores, Inc. 238,000 13,491,625
------------
154,299,125
------------
815,817,554
FINANCIAL SERVICES-6.5%
BANKING & CREDIT-2.1%
Morgan Stanley Dean Witter & Co. 10,400 1,147,250
Newcourt Credit Group, Inc. (Canada) 5,887,500 96,775,781
Providian Financial Corp. (a) 300,000 32,700,000
The CIT Group, Inc. 1,209,928 28,887,031
------------
159,510,062
BANKING- MONEY CENTERS-0.8%
Bank of Tokyo-Mitsubishi,
Ltd. (ADR) (Japan) 3,952,400 65,214,600
BANKING- REGIONAL-0.4%
Bank One Corp. (a) 900,000 33,806,250
INSURANCE-1.2%
PMI Group, Inc. (a) 1,220,550 63,316,031
Progressive Corp. (a) 283,200 26,213,700
------------
89,529,731
REAL ESTATE-1.1%
Entertainment Properties Trust 239,400 3,366,563
JP Realty, Inc. 755,300 12,934,513
Koger Equity, Inc. 1,762,571 27,319,850
Macerich Co. 1,016,400 20,328,000
Spieker Properties, Inc. 207,200 7,239,050
Storage USA, Inc. 145,400 4,234,775
Summit Properties, Inc. 691,700 13,228,762
------------
88,651,513
MISCELLANEOUS-0.9%
Household International, Inc. 1,530,500 68,298,563
------------
505,010,719
CONSUMER NONCYCLICALS-5.4%
BEVERAGES-0.1%
Coca-Cola Enterprises, Inc. 330,000 8,435,625
DRUGS-1.8%
Merck & Co., Inc. 1,402,400 111,578,450
Pfizer, Inc. (a) 600,000 23,700,000
SICOR, Inc. 68,500 1,652,562
------------
136,931,012
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
HOSPITAL SUPPLIES & SERVICES-2.0%
Boston Scientific Corp. (a)(b) 2,275,000 $ 45,784,375
McKesson HBOC, Inc. (a) 5,304,000 106,411,500
------------
152,195,875
RETAIL- FOOD-0.5%
Kroger Co. 1,665,000 34,652,812
Safeway, Inc. (b) 161,800 5,713,563
------------
40,366,375
TOBACCO-1.0%
Loews Corp. 698,000 49,470,750
Philip Morris Cos., Inc. 1,182,000 29,771,625
------------
79,242,375
------------
417,171,262
UTILITY-5.3%
TELEPHONE-5.3%
AT&T Corp. (a) 100,000 4,675,000
Cable & Wireless Plc (United Kingdom) 3,220,000 37,566,816
Sprint Corp. (a) 4,963,600 368,857,525
------------
411,099,341
CAPITAL GOODS-4.5%
MACHINERY-4.5%
Mannesmann AG 1,798,000 282,738,302
(ADR) (Germany) 413,000 63,680,057
------------
346,418,359
BUSINESS SERVICES-3.9%
PRINTING, PUBLISHING & BROADCASTING-3.9%
Adelphia Communications Corp. (a)(b) 731,700 39,969,113
Cablevision Systems Corp.
Cl.A (a)(b) 1,100,000 74,318,750
CBS Corp. (a)(b) 2,731,700 133,341,106
News Corp., Ltd. (ADR) (Australia) 1,598,400 47,352,600
UnitedGlobalCom, Inc. Cl. A 16,100 1,400,700
Viacom, Inc. Cl.B (b) 214,000 9,576,500
------------
305,958,769
ENERGY-3.2%
OIL & GAS SERVICES-3.2%
Atlantic Richfield Co. 1,719,800 160,263,862
Gulf Canada Resources, Ltd.
(Canada) (b) 10,650,100 41,934,769
Total, SA (ADR) (France) 706,000 47,081,375
------------
249,280,006
HEALTH CARE-3.1%
DRUGS-2.9%
Bristol-Myers Squibb Co. 2,114,000 162,381,625
Schering-Plough Corp. 1,373,000 67,963,500
------------
230,345,125
MEDICAL PRODUCTS-0.2%
Medtronic, Inc. 425,600 14,736,400
------------
245,081,525
CONSUMER CYCLICALS-2.9%
AIRLINES-0.6%
Continental Airlines, Inc. Cl. 350,000 14,175,000
Delta Air Lines, Inc. 516,100 28,095,194
UAL Corp. (b) 106,100 7,221,431
------------
49,491,625
RETAIL-GENERAL-2.3%
Gap, Inc. (a) 750,000 27,843,750
Tandy Corp. (a) 1,070,400 67,368,300
The Limited, Inc. (a) 1,995,725 82,074,191
Too, Inc. (b) 28,576 457,216
------------
177,743,457
------------
227,235,082
MULTI-INDUSTRY COMPANIES-2.1%
Honeywell, Inc. (a) 305,100 32,168,981
Tyco International Ltd. (a) 3,230,224 129,007,071
------------
161,176,052
CONSUMER BASICS-0.2%
BEVERAGES-0.2%
Pepsi Bottling Group, Inc. 677,700 12,325,669
Total Common & Preferred Stocks
(cost $5,871,107,647) 7,835,958,161
8
ALLIANCE GROWTH FUND
_______________________________________________________________________________
PRINCIPAL AMOUNT
(000)
OR
COMPANY CONTRACTS (E) VALUE
- -------------------------------------------------------------------------
CONVERTIBLE BONDS-0.6%
COMMUNICATION EQUIPMENT-0.6%
Global Telesystems Group, Inc.
5.75%, 7/01/10 $38,525 $ 40,403,094
Nextel Communications, Inc. Cl.A
4.75%, 7/01/07 (d) 3,500 6,763,750
NTL, Inc.
7.00%, 12/15/08 400 677,000
------------
47,843,844
Total Convertible Bonds
(cost $32,753,594) 47,843,844
SHORT-TERM INVESTMENT-1.3%
U.S. GOVERNMENT AGENCY-1.3%
Federal National Mortgage Assoc.
5.16%, 11/01/99
(amortized cost $96,400,000) 96,400 96,400,000
TOTAL INVESTMENTS-102.7%
(cost $6,000,261,241) 7,980,202,005
OUTSTANDING CALL OPTIONS WRITTEN-(1.9%)(B)
Adelphia Communications Corp.
expiring November 1999
@ $60.50 (500) (39,635)
@ $62.50 (1,000) (20,820)
@ $68.25 (1,000) (6,000)
expiring December 1999
@ $57.25 (900) (212,400)
Altera Corp.
expiring November 1999
@ $42.00 (1,500) (998,910)
@ $54.81 (1,000) (39,200)
American International Group, Inc.
expiring November 1999
@ $90.00 (1,000) (1,343,520)
expiring December 1999
@ $86.50 (1,000) (1,762,330)
Applied Materials, Inc.
expiring December 1999
@ $77.73 (1,500) (2,071,335)
@ $85.25 (1,500) (1,483,500)
expiring January 2000
@ $81.44 (1,500) (2,195,421)
@ $81.46 (1,500) (2,068,035)
@ $89.25 (2,000) (1,979,020)
AT&T Corp.
expiring November 1999
@ $35.27 (2,500) (1,190,625)
@ $35.75 (1,000) (402,140)
@ $36.05 (2,500) (1,056,200)
@ $36.47 (3,000) (1,144,650)
@ $36.50 (2,500) (864,175)
expiring December 1999
@ $36.52 (1,500) (669,000)
@ $36.76 (1,500) (652,155)
@ $37.00 (1,500) (616,500)
@ $37.31 (1,000) (369,910)
@ $37.75 (1,000) (308,840)
@ $38.25 (2,500) (757,500)
@ $38.45 (2,500) (740,000)
expiring January 2000
@ $37.00 (1,000) (428,780)
Bank One Corp.
expiring November 1999
@ $39.00 (1,000) (39,000)
@ $40.25 (1,000) (1,220)
Bank of America Corp.
expiring November 1999
@ $62.52 (500) (122,755)
expiring December 1999
@ $56.83 (1,000) (827,000)
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (E) VALUE
- -------------------------------------------------------------------------
Boston Scientific Corp.
expiring November 1999
@ $26.50 (1,500) $ (22,500)
@ $27.22 (1,500) (22,500)
@ $27.50 (1,000) (15,000)
@ $27.98 (1,500) (1,020)
expiring December 1999
@ $18.25 (1,500) (433,896)
@ $18.50 (1,500) (408,658)
@ $19.25 (1,000) (224,710)
@ $20.13 (1,500) (239,355)
@ $23.69 (1,500) (88,785)
@ $24.38 (1,500) (57,000)
@ $24.38 (1,500) (45,225)
Cablevision Systems Corp.
expiring November 1999
@ $71.50 (1,000) (147,000)
@ $72.13 (2,000) (18,860)
@ $74.50 (1,500) (63,000)
@ $75.29 (200) (6,468)
@ $75.88 (1,000) (9,000)
@ $76.00 (1,500) (9,000)
expiring December 1999
@ $72.50 (1,000) (193,390)
Carnival Corp.
expiring November 1999
@ $44.25 (1,000) (106,475)
CBS Corp.
expiring November 1999
@ $45.25 (1,500) (631,534)
@ $48.88 (1,500) (299,175)
@ $51.25 (1,400) (66,640)
expiring December 1999
@ $43.50 (1,000) (628,070)
@ $43.75 (2,000) (1,201,320)
@ $46.50 (1,000) (390,970)
@ $46.88 (500) (170,690)
@ $47.63 (1,500) (427,845)
@ $47.63 (1,000) (294,370)
expiring January 2000
@ $45.14 (625) (355,938)
@ $45.14 (375) (213,375)
@ $49.82 (2,000) (586,580)
Cendant Corp.
expiring November 1999
@ $17.25 (1,500) (46,260)
@ $17.56 (1,500) (54,000)
@ $17.63 (3,000) (81,000)
@ $17.88 (2,000) (6,640)
Cisco Systems, Inc.
expiring December 1999
@ $72.19 (1,000) (621,000)
Citigroup, Inc.
expiring November 1999
@ $42.65 (1,000) (1,065,610)
expiring December 1999
@ $42.75 (1,000) (1,162,000)
@ $45.75 (2,000) (1,812,000)
@ $45.78 (1,000) (893,000)
@ $46.20 (1,000) (862,880)
Comcast Corp.
expiring December 1999
@ $37.75 (1,000) (535,426)
@ $39.83 (1,000) (413,140)
@ $40.40 (1,500) (575,340)
Compaq Computer Corp.
expiring December 1999
@ $19.94 (500) (55,205)
expiring January 2000
@ $18.63 (1,000) (203,664)
Dell Computer Corp.
expiring November 1999
@ $48.11 (1,500) (24,000)
expiring December 1999
@ $45.94 (2,500) (257,500)
Gap, Inc.
expiring November 1999
@ $31.88 (1,000) (523,577)
@ $32.96 (1,500) (700,308)
@ $33.25 (1,000) (428,000)
@ $34.31 (1,500) (484,500)
expiring December 1999
@ $32.31 (1,500) (814,500)
Home Depot, Inc.
expiring December 1999
@ $71.50 (1,000) (634,010)
10
ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (E) VALUE
- -------------------------------------------------------------------------
Honeywell, Inc.
expiring November 1999
@ $119.12 (350) $ (3,150)
@ $119.18 (650) (5,850)
Ingram Micro, Inc.
expiring November 1999
@ $13.38 (1,500) (11,409)
@ $14.88 (1,500) (9,000)
@ $15.44 (1,000) (81)
@ $25.38 (1,200) -0-
Intel Corp.
expiring November 1999
@ $79.50 (2,000) (480,000)
@ $80.75 (1,500) (302,040)
expiring December 1999
@ $74.88 (2,000) (1,087,860)
expiring January 2000
@ $71.44 (1,000) (999,892)
@ $77.00 (2,500) (1,731,000)
International Business Machines Corp.
expiring November 1999
@ $117.33 (3,000) (174,000)
@ $125.00 (1,000) (9,360)
@ $133.04 (1,000) (1,000)
expiring December 1999
@ $105.98 (1,000) (261,000)
@ $106.65 (1,500) (447,150)
@ $107.38 (1,000) (214,000)
@ $112.00 (1,000) (89,370)
@ $114.44 (1,000) (84,000)
@ $115.75 (1,000) (60,570)
expiring January 2000
@ $92.81 (1,000) (1,012,730)
@ $94.75 (1,000) (926,000)
@ $95.50 (1,000) (929,600)
The Limited, Inc.
expiring November 1999
@ $37.75 (1,000) (357,820)
@ $38.88 (1,000) (330,300)
@ $39.63 (1,500) (341,250)
expiring December 1999
@ $38.13 (1,000) (359,000)
@ $40.40 (1,500) (409,500)
@ $42.25 (1,000) (178,263)
expiring January 2000
@ $41.63 (1,000) (283,180)
Loral Space & Communications
expiring November 1999
@ $17.60 (800) (38,960)
@ $17.94 (700) (8,323)
@ $18.13 (1,000) (46,540)
@ $19.00 (500) (19,750)
MBNA Corp.
expiring November 1999
@ $22.88 (2,500) (1,213,425)
@ $23.13 (1,000) (467,000)
@ $23.65 (2,000) (823,820)
@ $24.85 (3,000) (972,060)
expiring December 1999
@ $22.63 (2,500) (1,332,500)
@ $25.88 (2,500) (784,925)
MCI WorldCom, Inc.
expiring November 1999
@ $78.06 (1,000) (808,828)
expiring December 1999
@ $77.38 (1,000) (1,066,000)
@ $79.28 (2,000) (1,816,000)
McKesson HBOC, Inc.
expiring November 1999
@ $31.73 (2,000) -0-
@ $32.19 (2,000) -0-
expiring December 1999
@ $25.75 (1,000) (15,000)
expiring January 2000
@ $20.25 (3,000) (681,000)
Micron Technology, Inc.
expiring December 1999
@ $64.85 (1,000) (1,166,840)
expiring January 2000
@ $62.63 (1,500) (2,229,000)
@ $72.13 (1,500) (1,491,000)
Networks Associates, Inc.
expiring November 1999
@ $18.19 (1,000) (95,902)
News Corp., Ltd.
expiring November 1999
@ $29.63 (1,000) (107,000)
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (E) VALUE
- -------------------------------------------------------------------------
Nextel Communications, Inc. Cl.A
expiring November 1999
@ $71.38 (1,000) $(1,501,380)
@ $72.00 (1,500) (2,131,770)
expiring December 1999
@ $73.74 (2,000) (2,856,000)
@ $74.75 (2,000) (2,811,800)
@ $75.84 (2,000) (2,546,300)
@ $80.38 (250) (254,810)
@ $80.50 (2,000) (2,111,220)
@ $82.75 (1,500) (1,272,330)
@ $84.13 (1,000) (767,000)
@ $84.38 (2,000) (1,624,000)
Nokia Corp. (ADR) (Finland)
expiring November 1999
@ $88.93 (1,000) (2,701,000)
@ $89.13 (1,000) (2,685,810)
expiring January 2000
@ $116.34 (1,000) (1,016,000)
Oracle Corp.
expiring November 1999
@ $42.00 (2,000) (1,212,856)
Pfizer, Inc.
expiring January 2000
@ $39.75 (6,000) (1,610,820)
PMI Group, Inc.
expiring January 2000
@ $49.52 (3,000) (1,452,870)
@ $52.50 (250) (104,710)
Progressive Corp.
expiring November 1999
@ $97.22 (400) (53,508)
@ $99.00 (500) (12,770)
@ $99.42 (500) (10,795)
@ $100.50 (500) (620)
@ $101.63 (500) (195)
Providian Financial Corp.
expiring November 1999
@ $77.44 (1,000) (3,176,000)
@ $82.06 (1,000) (2,700,630)
@ $86.31 (1,000) (2,354,000)
Qwest Communications International, Inc.
expiring December 1999
@ $32.13 (1,500) $(819,720)
SCI Systems, Inc.
expiring December 1999
@ $43.00 (2,000) (1,678,000)
@ $43.60 (340) (256,492)
@ $43.95 (250) (182,403)
@ $45.22 (660) (425,786)
@ $45.45 (750) (472,905)
Solectron Corp.
expiring November 1999
@ $76.00 (1,000) (135,000)
expiring January 2000
@ $74.75 (1,000) (680,160)
Sprint Corp.
expiring December 1999
@ $54.50 (2,500) (5,022,650)
@ $63.75 (1,000) (1,071,671)
@ $64.00 (2,500) (2,732,650)
@ $64.75 (2,500) (2,648,025)
@ $66.38 (1,000) (905,910)
@ $66.63 (2,000) (1,743,260)
@ $67.00 (2,000) (1,689,960)
expiring January 2000
@ $65.88 (2,000) (2,017,840)
@ $66.03 (1,500) (1,537,230)
Sterling Commerce, Inc.
expiring December 1999
@ $22.00 (2,000) (562,000)
Tandy Corp.
expiring November 1999
@ $45.25 (1,000) (1,772,260)
@ $47.27 (400) (626,464)
@ $47.48 (1,100) (1,699,863)
expiring December 1999
@ $50.52 (1,000) (1,284,410)
@ $52.90 (1,500) (1,647,000)
@ $57.74 (1,000) (699,080)
@ $58.31 (1,000) (675,260)
expiring January 2000
@ $64.38 (1,500) (772,500)
12
ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (E) VALUE
- -------------------------------------------------------------------------
Tyco International Ltd.
expiring November 1999
@ $50.13 (3,000) $ (99,210)
expiring December 1999
@ $44.00 (4,000) (1,218,880)
@ $52.00 (750) (17,250)
Vodafone AirTouch Plc (ADR) (United Kingdom)
expiring December 1999
@ $42.75 (1,000) (614,660)
@ $44.63 (1,000) (516,430)
@ $52.13 (1,500) (303,000)
Total Outstanding Call Options Written
(premiums received $103,671,026) (143,821,856)
TOTAL INVESTMENTS NET OF OUTSTANDING CALL
OPTIONS WRITTEN-100.8%
(cost $5,896,590,215) 7,836,380,149
Other assets less liabilities-(0.8%) (63,062,190)
NET ASSETS-100% $7,773,317,959
(a) Security on which options are written (shares subject to call have an
aggregate market value of $4,438,771,998).
(b) Non-income producing security.
(c) Security trades with preferred stock purchase rights expiring January 20,
2004.
(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At October 31, 1999, this security
amounted to $6,763,750 or 0.09% of net assets.
(e) One contract relates to 100 shares.
Glossary of Terms:
ADR-American Depositary Receipt
STRYPES-Structured yield product exchangeable for common stock
See notes to financial statements.
13
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999 ALLIANCE GROWTH FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value
(cost $6,000,261,241) $ 7,980,202,005
Cash 256,544
Receivable for investment securities sold 39,764,666
Receivable for shares of beneficial interest sold 23,161,684
Receivable for foreign exchange contracts 14,174,440
Dividends and interest receivable 4,720,717
Total assets 8,062,280,056
LIABILITIES
Outstanding call options written, at value
(premiums received $103,671,026) 143,821,856
Payable for investment securities purchased 100,392,741
Payable for shares of beneficial interest redeemed 21,288,902
Payable for foreign exchange contracts 14,216,890
Advisory fee payable 4,260,686
Distribution fee payable 1,898,698
Accrued expenses 3,082,324
Total liabilities 288,962,097
NET ASSETS $ 7,773,317,959
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 1,675
Additional paid-in capital 4,642,454,704
Accumulated net investment loss (53,379)
Accumulated net realized gain on investment
transactions 1,191,248,850
Net unrealized appreciation of investments, options and
foreign currency denominated assets
and liabilities 1,939,666,109
---------------
$ 7,773,317,959
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($1,441,961,562 / 25,601,286 shares of
beneficial interest issued and outstanding) $56.32
Sales charge--4.25% of public offering price 2.50
Maximum offering price $58.82
CLASS B SHARES
Net asset value and offering price per share
($5,265,152,693 / 118,597,192 shares of
beneficial interest issued and outstanding) $44.40
CLASS C SHARES
Net asset value and offering price per share
($923,483,305 / 20,788,562 shares of
beneficial interest issued and outstanding) $44.42
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($142,720,399 / 2,509,309 shares of
beneficial interest issued and outstanding) $56.88
14
See notes to financial statements.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999 ALLIANCE GROWTH FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $571,844) $ 53,756,427
Interest 11,839,315 $65,595,742
EXPENSES
Advisory fee 49,826,571
Distribution fee - Class A 3,769,689
Distribution fee - Class B 50,063,382
Distribution fee - Class C 8,575,256
Transfer agency 11,712,395
Printing 2,625,233
Custodian 645,755
Registration 330,709
Audit and legal 200,092
Trustees' fees 18,000
Miscellaneous 175,006
Total expenses 127,942,088
Net investment loss (62,346,346)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on investment
transactions 1,246,464,451
Net realized gain on written options
transactions 31,031,840
Net realized loss on foreign currency
transactions (59,122)
Net change in unrealized appreciation/
depreciation of:
Investments 533,144,696
Written options (36,503,326)
Foreign currency denominated assets
and liabilities (56,066)
Net gain on investments and foreign
currency transactions 1,774,022,473
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,711,676,127
See notes to financial statements.
15
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GROWTH FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1999 1998
----------------- ----------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment loss $ (62,346,346) $ (39,676,467)
Net realized gain on investments,
options and foreign currency
transactions 1,277,437,169 601,623,658
Net change in unrealized appreciation/
depreciation of investments,
options, and foreign currency
denominated assets and liabilities 496,585,304 138,250,143
Net increase in net assets from
operations 1,711,676,127 700,197,334
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (78,504,438) (52,161,970)
Class B (410,079,547) (288,101,646)
Class C (69,316,205) (48,125,286)
Advisor Class (13,813,033) (7,005,557)
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Net increase 501,072,018 764,910,528
Total increase 1,641,034,922 1,069,713,403
NET ASSETS
Beginning of year 6,132,283,037 5,062,569,634
End of year $7,773,317,959 $6,132,283,037
See notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 ALLIANCE GROWTH FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Growth Fund (the "Fund"), a series of The Alliance Portfolios (the
"Trust"), is registered under the Investment Company Act of 1940 as a
diversified, open-end 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.
Shares purchased before August 2, 1993 and redeemed within six years of
purchase are subject to different rates than shares purchased after that date.
Class B shares purchased on or after August 2, 1993 and held for a period
ending eight years after the end of the calendar month of purchase will convert
to Class A shares. 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 any 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 sale price or if no sale occurred, at the
mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Trustees. Fixed income securities may be valued on the basis of prices
obtained from a pricing service when such prices are believed to reflect the
fair market value of such securities. Listed put and call options purchased by
the Fund are valued at the last sale price. If there has been no sale on that
day, such securities will be valued at the closing bid prices on that day.
Over-the-counter written options are valued using prices provided by brokers.
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, 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
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
rates are reflected as a component of net unrealized appreciation
(depreciation) of investments, options and foreign currency denominated assets
and liabilities.
3. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. The Fund accretes discounts and amortizes premiums 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.
Expenses attributable to the Fund are charged to the Fund. Expenses of the
Trust are charged to the Fund in proportion to net assets.
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. During the current fiscal year, permanent
differences, primarily due to a net operating loss, resulted in a net decrease
in undistributed net investment loss and a corresponding decrease in
accumulated net realized gains. This reclassification had no effect on net
assets.
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 equal to the annualized
rate of .75% of the Fund's average daily net assets up to $3 billion, .70% of
the next $1 billion of the Fund's average daily net assets, .65% of the next $1
billion of the Fund's average daily net assets, and .60% of the Fund's average
daily net assets over $5 billion. Such fee is accrued daily and paid monthly.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $7,960,281 for the year ended October 31, 1999.
For the year ended October 31, 1999, the Fund's expenses were reduced by
$569,337 under an expense offset arrangement with Alliance Fund Services, Inc.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The
Distributor has advised the Fund that it has received front-end sales charges
of $653,006 from the sales of Class A shares and $6,310, $4,217,994, and
$141,286 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class A, Class B and Class C shares, respectively, for the year
ended October 31, 1999.
Brokerage commissions paid on investment transactions for the year ended
October 31, 1999 amounted to $6,965,756, of which $4,900 was paid to brokers
utilizing the services of the Pershing Division of Donaldson Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, and $57,400 of which was
paid to DLJ directly.
Accrued expenses includes $153,653 owed to a trustee and a former trustee under
the Trust's deferred compensation plan.
18
ALLIANCE GROWTH FUND
_______________________________________________________________________________
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .50% of the Fund's average daily net assets
attributable to Class A shares and 1% of the average daily net assets
attributable to both Class B and Class C shares. There are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Trustees currently limit payments under the Class A plan to .30%
of the Fund's average daily net assets attributable to Class A shares.
The Fund is not obligated under the Agreement to pay any distribution services
fee in excess of the amounts set forth above. The purpose of the payments to
the Distributor under the Agreement is to compensate the Distributor for its
distribution services with respect to the sale of the Fund's shares. Since the
Distributor's compensation is not directly tied to its expenses, the amount of
compensation received by it under the Agreement during any year may be more or
less than its actual expenses. For this reason, the Agreement is characterized
by the staff of the Commission as being of the "compensation" variety.
In the event that the Agreement is terminated or not continued, no distribution
services fees (other than current amounts accrued but not yet paid) would be
owed by the Fund to the Distributor with respect to the relevant class.
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 $4,767,871,014 and $4,432,051,698,
respectively, for the year ended October 31, 1999. There were no purchases and
sales in U.S. government and government agency obligations for the year ended
October 31, 1999.
At October 31, 1999, the cost of investments for federal income tax purposes
was $5,946,472,514. Gross unrealized appreciation of investments was
$2,482,554,578 and gross unrealized depreciation of investments was
$592,646,943 resulting in net unrealized appreciation of $1,889,907,635
excluding foreign currency transactions.
1. OPTION TRANSACTIONS
For hedging and investment purposes, the Fund purchases and writes (sells) put
and call options on U.S. and foreign securities and foreign currencies that are
traded on U.S. and foreign securities exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of the premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions,
is also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a call
option is exercised, the premium received is added to the proceeds from the
sale of the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium received
reduces the cost basis of the security or currency purchased by the Fund. The
risk involved in writing an option is that, if the option was exercised the
underlying security could then be purchased or sold by the Fund at a
disadvantageous price.
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
Transactions in options written for the year ended October 31, 1999 were as
follows:
NUMBER OF
CONTRACTS PREMIUMS
---------- -------------
Options outstanding at beginning of year 69,221 $ 28,740,532
Options written 1,410,409 522,855,874
Options terminated in closing purchase
transactions (323,820) (117,304,830)
Options expired (348,951) (125,543,812)
Options exercised (539,509) (205,076,738)
Options outstanding at October 31, 1999 267,350 $ 103,671,026
2. FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gain or
loss on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At October 31, 1999, the Fund had no outstanding forward exchange currency
contracts.
NOTE E: SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.00001 par value shares of beneficial
interest authorized, divided into four classes, designated Class A, Class B,
Class C and Advisor Class shares. Transactions in shares of beneficial interest
were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 25,063,582 14,313,089 $1,335,434,326 $659,034,500
Shares issued in
reinvestment of
distributions 1,502,656 1,103,597 71,692,245 47,609,915
Shares converted
from Class B 1,792,159 1,525,332 95,928,375 70,157,128
Shares redeemed (24,127,633) (13,387,711) (1,288,874,014) (615,070,017)
Net increase 4,230,764 3,554,307 $ 214,180,932 $161,731,526
20
ALLIANCE GROWTH FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998
------------ ------------ -------------- --------------
CLASS B
Shares sold 18,279,927 20,547,117 $ 768,132,374 $ 776,085,446
Shares issued in
reinvestment of
distributions 10,048,522 7,651,345 380,336,149 268,634,078
Shares converted
to Class A (2,264,146) (1,871,621) (95,928,375) (70,157,128)
Shares redeemed (18,356,515) (13,986,411) (773,148,238) (518,571,785)
Net increase 7,707,788 12,340,430 $ 279,391,910 $ 455,990,611
CLASS C
Shares sold 11,295,511 4,951,688 $ 477,555,736 $ 187,545,992
Shares issued in
reinvestment of
distributions 1,709,056 1,279,996 64,721,989 44,966,581
Shares redeemed (11,044,849) (3,903,263) (467,642,946) (145,672,105)
Net increase 1,959,718 2,328,421 $ 74,634,779 $ 86,840,468
ADVISOR CLASS
Shares sold 1,043,525 2,358,835 $ 55,591,771 $ 106,555,081
Shares issued in
reinvestment of
distributions 268,515 149,933 12,902,137 6,490,605
Shares redeemed (2,484,144) (1,123,061) (135,629,511) (52,697,763)
Net increase
(decrease) (1,172,104) 1,385,707 $ (67,135,603) $ 60,347,923
NOTE F: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended October 31, 1999.
21
FINANCIAL HIGHLIGHTS ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $47.17 $43.95 $34.91 $29.48 $25.08
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.15)(a) (.05)(a) (.10)(a) .05 .12
Net realized and unrealized gain on
investments, options and foreign
currency transactions 13.01 6.18 10.17 6.20 4.80
Net increase in net asset value from
operations 12.86 6.13 10.07 6.25 4.92
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- (.19) (.11)
Distributions from net realized gains (3.71) (2.91) (1.03) (.63) (.41)
Total dividends and distributions (3.71) (2.91) (1.03) (.82) (.52)
Net asset value, end of year $56.32 $47.17 $43.95 $34.91 $29.48
TOTAL RETURN
Total investment return based on net
asset value (b) 28.69% 14.56% 29.54% 21.65% 20.18%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $1,441,962 $1,008,093 $783,110 $499,459 $285,161
Ratios to average net assets of:
Expenses 1.18% 1.22%(c) 1.26%(c) 1.30% 1.35%
Net investment income (loss) (.28)% (.11)% (.25)% .15% .56%
Portfolio turnover rate 62% 61% 48% 46% 61%
</TABLE>
See footnote summary on page 25.
22
ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $38.15 $36.31 $29.21 $24.78 $21.21
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.42)(a) (.31)(a) (.31)(a) (.12) (.02)
Net realized and unrealized gain on
investments, options and foreign
currency transactions 10.38 5.06 8.44 5.18 4.01
Net increase in net asset value from
operations 9.96 4.75 8.13 5.06 3.99
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- -0- (.01)
Distributions from net realized gains (3.71) (2.91) (1.03) (.63) (.41)
Total dividends and distributions (3.71) (2.91) (1.03) (.63) (.42)
Net asset value, end of year $44.40 $38.15 $36.31 $29.21 $24.78
TOTAL RETURN
Total investment return based on net
asset value (b) 27.79% 13.78% 28.64% 20.82% 19.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $5,265,153 $4,230,756 $3,578,806 $2,498,097 $1,502,020
Ratios to average net assets of:
Expenses 1.90% 1.94%(c) 1.96%(c) 1.99% 2.05%
Net investment loss (1.00)% (.83)% (.94)% (.54)% (.15)%
Portfolio turnover rate 62% 61% 48% 46% 61%
</TABLE>
See footnote summary on page 25.
23
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $38.17 $36.33 $29.22 $24.79 $21.22
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.42)(a) (.31)(a) (.31)(a) (.12) (.03)
Net realized and unrealized gain on
investments, options and foreign
currency transactions 10.38 5.06 8.45 5.18 4.02
Net increase in net asset value from
operations 9.96 4.75 8.14 5.06 3.99
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- -0- (.01)
Distributions from net realized gains (3.71) (2.91) (1.03) (.63) (.41)
Total dividends and distributions (3.71) (2.91) (1.03) (.63) (.42)
Net asset value, end of year $44.42 $38.17 $36.33 $29.22 $24.79
TOTAL RETURN
Total investment return based on net
asset value (b) 27.78% 13.76% 28.66% 20.81% 19.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $923,483 $718,688 $599,449 $403,478 $226,662
Ratios to average net assets of:
Expenses 1.90% 1.93%(c) 1.97%(c) 2.00% 2.05%
Net investment loss (1.00)% (.83)% (.95)% (.55)% (.15)%
Portfolio turnover rate 62% 61% 48% 46% 61%
</TABLE>
See footnote summary on page 25.
24
ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
ADVISOR CLASS
----------------------------------------------------
OCTOBER 2,
YEAR ENDED OCTOBER 31, 1996(D) TO
------------------------------------- OCTOBER 31,
1999 1998 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $47.47 $44.08 $34.91 $34.14
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) .02(a) .08(a) (.05)(a) -0-
Net realized and unrealized gain on
investments, options and foreign
currency transactions 13.10 6.22 10.25 .77
Net increase in net asset value from
operations 13.12 6.30 10.20 .77
LESS: DISTRIBUTIONS
Distributions from net realized gains (3.71) (2.91) (1.03) -0-
Net asset value, end of period $56.88 $47.47 $44.08 $34.91
TOTAL RETURN
Total investment return based on net
asset value (b) 29.08% 14.92% 29.92% 2.26%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $142,720 $174,745 $101,205 $946
Ratios to average net assets of:
Expenses .88% .93%(c) .98%(c) 1.26%(e)
Net investment income (loss) .03% .17% (.12)% .50%(e)
Portfolio turnover rate 62% 61% 48% 46%
</TABLE>
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) Ratios reflect expenses grossed up for expense offset arrangement with the
transfer agent. For the years ended October 31, 1998 and 1997 the ratios of
expenses to average net assets were 1.21% and 1.25% for Class A shares, 1.93%
and 1.95% for Class B shares, 1.92% and 1.95% for Class C shares and .92% and
.96% for Advisor Class shares, respectively.
(d) Commencement of distribution.
(c) Annualized.
25
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE GROWTH FUND
_______________________________________________________________________________
TO THE TRUSTEES AND SHAREHOLDERS OF ALLIANCE GROWTH FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance Growth Fund (one of the
portfolios of The Alliance Portfolios, hereafter referred to as the "Fund") at
October 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the periods presented, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at October 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
December 16, 1999
TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In order to meet certain requirements of the Internal Revenue Code we are
advising you that the Fund paid $528,426,587 of the capial gain distributions
during the fiscal year ended October 31, 1999, which are subject to a maximum
tax rate of 20%.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 2000.
26
ALLIANCE GROWTH FUND
_______________________________________________________________________________
TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
BRENTON W. HARRIES (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
BRUCE CALVERT, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
TYLER J. SMITH, VICE PRESIDENT
EDMUND P. BERGAN, JR., CLERK
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER & CHIEF ACCOUNTING OFFICER
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
ROPES & GRAY
One International Place
Boston, MA 02110-2624
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 10036-2798
(1) Member of the Audit Committee.
27
ALLIANCE GROWTH FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
GROWTHAR1099
