ALLIANCE BALANCED SHARES
SEMI-ANNUAL REPORT
JANUARY 31, 1996
LETTER TO SHAREHOLDERS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
March 8, 1996
Dear Shareholder:
It's been a period of strong gains in the financial markets, both domestically
and internationally, and Alliance Balanced Shares enjoyed solid returns in the
six months since we last reported. The following table shows how your Fund
performed during its fiscal half year ended January 31, 1996, and for
comparison we've shown performance for the S&P 500, a common measure of stock
market performance in the U.S.; the Lehman Brothers (LB) Government/Corporate
Bond Index, which represents the broad U.S. bond market; and-representing the
short-term bond market-with Salomon Brothers' (SB) 1-Year Treasury Index:
Total Return
Periods Ended January 31, 1996
Six Months Twelve Months
---------- -------------
ALLIANCE BALANCED SHARES
Class A +10.47% +28.02%
Class B +10.05% +27.04%
Class C +10.11% +27.10%
S&P 500 +14.49% +38.56%
L/B GOV'T/CORP. BOND INDEX +7.74% +17.72%
SB TREASURY INDEX +7.45% +16.78%
TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF EACH CLASS OF SHARES AS OF
JANUARY 31; ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 2. THE FUND'S
BENCHMARKS ARE UNMANAGED.
INVESTMENT COMMENTARY
During calendar year 1995, the broad U.S. market averages (e.g., the Dow Jones
Industrial Average and S&P 500) provided extraordinary returns; in fact, their
best returns since 1958. At the same time, the notable decline in intermediate
and long-term interest rates was reflected in very strong gains by fixed income
securities.
With the broad market approximately one-third higher than a year ago, our
analysis of the fundamental underpinning, allowing for changes in magnitude,
has changed little. The economy is restrained, inflation is repressed, the cost
of money reasonable, corporate profits have peaked, supply/demand for equities
is still reasonable and corporate profitability is at multi-decade highs.
In so far as we can forecast, it appears that positive returns-in both equity
and fixed income securities-will REQUIRE a continuation of the exceedingly
benign economic and monetary environment we've seen over the past several
quarters. The recent increase in long-term interest rates will likely cause
financial markets to reassess the benign investment environment.
PORTFOLIO POSITIONING
Our view is that long-term Treasury yields at about 6.75% offer good value,
particularly in the economic and inflation environment we've outlined. Implicit
in that judgment is a belief that over the medium term, the economy will show
quite moderate growth. The continuing challenge this year will be to identify
equities that will perform well in what may be a period of declining profits.
Growth at a reasonable price, at any capitalization level, is becoming ever
rarer. As we search for those situations, our expectation is that some smaller
or mid-sized companies may be added to the Fund's portfolio. At the same time,
importantly, the portfolio will remain very well diversified across industry
categories as we perceive no wide valuation differentials among industry
sectors.
NEW PORTFOLIO MANAGER
On a note concerning your Fund's portfolio management, we are pleased to
announce that Alliance Balanced Shares is now being managed by Kevin O'Brien.
Mr. O'Brien joined the firm in 1988 and is a senior vice president of Alliance.
He received his B.A. degree from Amherst College and an M.A. and Ph.D. from
Cornell University, and has 17 years of investment experience.
As always, we appreciate your investment in Alliance Balanced Shares and look
forward to reporting its progress to you in the coming period.
Sincerely,
John D. Carifa
Chairman and President
1
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
Alliance Balanced Shares seeks a high return through a combination of current
income and capital appreciation. It invests principally in a diversified
portfolio of equity and fixed income securities such as common and preferred
stocks, U.S. Government and agency obligations, bonds and senior debt
securities.
INVESTMENT RESULTS
AVERAGE ANNUAL TOTAL RETURN AS OF JANUARY 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +28.02% +22.62%
. Five Years +10.85% +9.89%
. Ten Years +10.37% +9.89%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +27.04% +23.04%
. Since Inception* +9.74% +9.74%
CLASS C SHARES
. One Year +27.10%
. Since Inception* +9.73%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares-with and without 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);
Class C shares are not subject to front-end or contingent deferred sales
charges. Past performance does not guarantee future results. Investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
* Inception: 2/4/91, Class B; 5/3/93, Class C.
2
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
ALLIANCE BALANCED SHARES...
SEEKING TO PROVIDE CURRENT INCOME FOR TODAY AND
GROWTH OF CAPITAL FOR THE FUTURE
Alliance Balanced Shares is a conservative investment that seeks to provide a
competitive total return.
For some investors, the Fund may be considered a comprehensive investment
vehicle. It strives to achieve higher returns and lower volatility than a
benchmark portfolio comprised of 60% stocks, 25% government and corporate
bonds, and 15% Treasury bills.
We do not focus on short-term performance, nor do we strive to outperform other
balanced funds, many of which are much more aggressively structured.
As the charts illustrate, Alliance Balanced Shares' asset allocation shifts
with changing market conditions. The changes, however, should be neither
dramatic nor frequent, and should not involve significant risk relative to the
benchmark noted above.
Stocks will now typically comprise about 60% of the portfolio. At times,
however, stocks may range from 50% to 70% of the portfolio.
Within the equity portion of the portfolio, we seek to outperform the stock
market without taking undue risk. Stock selection emphasizes investments with
attractive expected return-but always within the context of a diversified
portfolio. Further, a preponderance of the portfolio will always be invested in
high-quality, financially strong, dividend-paying companies.
The balance of the portfolio is comprised of U.S. Government and government
agency securities mixed with high-quality asset-backed and corporate bonds. Our
primary objectives in the fixed-income portfolio are to generate a high, steady
income stream and to provide stability for the net asset value.
We believe that this investment policy will serve the Fund's investors very
well over time.
SIX-MONTH SNAPSHOTS: THE COMPOSITION OF YOUR FUND'S PORTFOLIO
1/31/95 7/31/95 1/31/96
U.S. GOVERNMENTS &MORTGAGES: 22.5%
CORPORATE BONDS: 11.6%
CASH: 12.3%
STOCKS: 53.6%
U.S. GOVERNMENTS &MORTGAGES: 25.0%
CORPORATE
BONDS: 9.8%
CASH: 6.5%
STOCKS: 58.7%
U.S. GOVERNMENTS & MORTGAGES: 26.4%
CORPORATE BONDS: 13.5%
CASH: 1.2%
STOCKS: 58.9%
3
TEN LARGEST HOLDINGS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $30,373,829 21.3%
Federal National Mortgage Association 7,127,074 5.0
St. George Bank Ltd., 7.15%, 10/15/05 3,927,908 2.8
Philip Morris Cos., Inc. 3,720,000 2.6
Morgan Stanley Asia Pacific Fund, Inc. 3,705,000 2.6
AT & T Corp. 2,675,000 1.9
Travelers, Inc. 2,630,000 1.8
Kingdom of Spain, 12.25%, 03/25/00 2,518,669 1.8
Time Warner, Inc., 9.125%, 01/15/13 2,455,024 1.7
Kingdom of Denmark, 8.00%, 03/15/06 2,452,368 1.7
$61,584,872 43.2%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
_______________________________________________________________________________
SHARES OR PRINCIPAL
------------------------------
PURCHASES BOUGHT HOLDINGS 1/31/96
- -------------------------------------------------------------------------------
GG1B Funding Corp., 7.43%, 1/15/11 $1,773,584 $1,773,584
Kingdom of Denmark, 8.00%, 3/15/06 $13,300,000 $13,300,000
Kingdom of Spain, 12.25%, 3/25/00 $285,000,000 $285,000,000
Morgan Stanley Asia Pacific Fund, Inc. 260,000 260,000
Prudential Insurance Co., 8.30%, 7/01/25 $2,000,000 $2,000,000
Republic of Poland, 3.75%, 10/27/14 $2,250,000 $2,250,000
St. George Bank, Ltd., 7.15%, 10/15/05 $3,800,000 $3,800,000
U.S. Treasury Note, 5.625%, 6/30/97 $12,750,000 $12,750,000
U.S. Treasury Note, 5.75%, 8/15/03 $4,550,000 $4,550,000
U.S. Treasury Note, 6.375%, 8/15/02 $2,000,000 $2,000,000
SALES SOLD HOLDINGS 1/31/96
- -------------------------------------------------------------------------------
Borden, Inc., Zero Coupon, 5/22/97 $4,000,000 -0-
Colgate-Palmolive Co. 25,000 -0-
Comcast Corp. Cl.A (SPL) 80,000 -0-
General Electric Co. 30,000 10,000
Federal Home Loan Mortgage Corp., 7.00%, 7/01/25 $2,958,000 -0-
PT Alatief Freeport Finance, 9.75%, 4/15/01 $3,325,000 -0-
Republic of Italy, 6.875%, 9/27/23 $3,000,000 -0-
Rohm & Haas Co. 40,000 -0-
U.S. Treasury Note, 7.50%, 2/15/05 $5,255,000 -0-
U.S. Treasury Note, 7.875%, 4/15/98 $5,250,000 $5,500,000
4
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-58.9%
CONSUMER PRODUCTS, SERVICES & STAPLES-21.1%
BROADCASTING & CABLE-1.8%
Cox Communications, Inc. Cl.A* 32,500 $ 678,437
Tele-Communications, Inc.* 50,000 1,371,875
Cl.A* 25,000 526,563
2,576,875
COSMETICS-1.7%
Gillette Co. 45,000 2,413,125
DRUGS, HOSPITAL SUPPLIES, MEDICAL
SERVICES & PRODUCTS-8.4%
Centocor, Inc.* 24,600 841,012
Columbia HCA Healthcare Corp. 40,000 2,225,000
Guidant Corp. 15,000 688,125
Healthsource, Inc.* 34,000 1,139,000
Merck & Co., Inc. 30,000 2,107,500
Pfizer, Inc. 24,000 1,650,000
Schering-Plough Corp. 27,000 1,461,375
Summit Technology, Inc.* 19,000 650,750
United Healthcare Corp. 20,000 1,257,500
12,020,262
ENTERTAINMENT & LEISURE TIME-2.2%
Carnival Corp. 50,000 1,350,000
Walt Disney Co. 27,000 1,734,750
3,084,750
FOOD & BEVERAGES-3.1%
McDonald's Corp. 41,000 2,060,250
PepsiCo, Inc. 41,000 2,444,625
4,504,875
HOTELS & RESTAURANTS-0.4%
La Quinta Inns, Inc. 20,000 535,000
MULTI-INDUSTRY-0.4%
ITT Corp.* 10,000 555,000
RETAILING-0.5%
AutoZone, Inc.* 30,000 723,750
TOBACCO-2.6%
Philip Morris Cos., Inc. 40,000 3,720,000
30,133,637
SCIENCE & TECHNOLOGY-12.2%
BIOTECHNOLOGY-0.4%
Biogen, Inc.* 7,000 490,438
COMPUTER HARDWARE-1.4%
COMPAQ Computer Corp.* 42,000 1,979,250
COMPUTER SOFTWARE & SERVICES-3.9%
First Data Corp. 16,500 1,167,375
General Motors Corp. Cl.E 22,000 1,221,000
Microsoft Corp.* 19,000 1,756,312
Oracle System Corp.* 30,000 1,430,625
5,575,312
SEMI-CONDUCTORS & RELATED-3.9%
Altera Corp.* 27,000 1,776,937
Applied Materials, Inc.* 26,000 963,625
Atmel Corp.* 16,000 455,000
Intel Corp. 30,000 1,655,625
Lam Research Corp.* 16,000 682,000
5,533,187
TELECOMMUNICATION EQUIPMENT-2.6%
cisco Systems, Inc.* 29,000 2,412,438
Glenayre Technologies, Inc.* 17,500 695,625
Tellabs, Inc.* 15,000 658,125
3,766,188
17,344,375
FINANCIAL SERVICES-8.1%
BANKING & CREDIT-2.0%
MBNA Corp. 35,000 1,426,250
NationsBank Corp. 20,000 1,397,500
2,823,750
BROKERAGE-1.2%
Merrill Lynch & Co., Inc. 30,000 1,706,250
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
INSURANCE-4.9%
American International Group, Inc. 20,000 $ 1,937,500
General Re Corp. 5,000 765,000
MGIC Investment Corp. 12,000 774,000
PMI Group, Inc. 18,000 902,250
Travelers, Inc. 40,000 2,630,000
7,008,750
11,538,750
BASIC INDUSTRIES-6.4%
AIRLINES-0.4%
Northwest Airlines Corp. Cl.A* 13,000 585,000
CHEMICALS-2.5%
Monsanto Co. 15,000 1,953,750
Morton International, Inc.* 45,000 1,665,000
3,618,750
ELECTRICAL EQUIPMENT-1.3%
General Electric Co. 10,000 767,500
Solectron Corp.* 7,400 340,400
Ucar International, Inc.* 24,000 747,000
1,854,900
MACHINERY-0.2%
ITT Industries, Inc. 10,000 260,000
OTHER-2.0%
Alco Standard Corp. 27,000 1,059,750
Allied-Signal, Inc. 36,000 1,795,500
2,855,250
9,173,900
PUBLIC UTILITIES-3.7%
TELEPHONE-3.7%
AirTouch Communications, Inc.* 38,000 1,073,500
AT & T Corp. 40,000 2,675,000
MCI Communications Corp. 54,000 1,542,375
5,290,875
ENERGY-0.4%
PIPELINES-0.4%
Enron Corp. 17,000 629,000
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ------------------------------------------------------------------------
OTHER-7.0%
Europe Fund, Inc. 80,000 $ 1,090,000
G.T. Greater Europe Fund 150,000 2,062,500
Morgan Stanley Asia Pacific Fund, Inc. 260,000 3,705,000
Scudder New Asia Fund, Inc. 80,000 1,420,000
The France Growth Fund, Inc. 160,000 1,660,000
9,937,500
Total Common Stocks
(cost $65,793,882) 84,048,037
CORPORATE BONDS-13.5%
BANKING & CREDIT-2.8%
St. George Bank, Ltd.
7.15%, 10/15/05 US$ 3,800 3,927,908
COMMUNICATIONS-1.6%
TCI Communications, Inc.
8.75%, 8/01/15 2,000 2,213,280
INDUSTRIAL-1.7%
Time Warner, Inc.
9.125%, 1/15/13 2,200 2,455,024
INSURANCE-1.5%
Prudential Insurance Co.
8.30%, 7/01/25 2,000 2,143,612
UTILITY-1.2%
GG1B Funding Corp.
7.43%, 1/15/11 1,774 1,769,452
OTHER-4.7%
Kingdom of Denmark
8.00%, 3/15/06(a) DKK 13,300 2,452,368
Kingdom of Spain
12.25%, 3/25/00(a) ESP 285,000 2,518,669
Republic of Poland
3.75%, 10/27/14 US$ 2,250 1,763,550
6,734,587
Total Corporate Bonds
(cost $18,978,671) 19,243,863
6
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ------------------------------------------------------------------------
MORTGAGE-RELATED SECURITIES-5.0%
Federal National Mortgage Association
6.00%, 4/01/09 US$ 5,345 $ 5,303,506
6.00%, 6/01/09 1,838 1,823,568
Total Mortgage-Related Securities
(cost $6,961,015) 7,127,074
U.S. GOVERNMENT OBLIGATIONS-21.4%
U.S. Treasury Bonds
7.625%, 2/15/25 125 151,328
U.S. Treasury Notes
5.625%, 6/30/97 12,750 12,869,467
5.75%, 8/15/03 4,550 4,616,112
6.375%, 8/15/02 2,000 2,106,880
7.125%, 9/30/99 4,650 4,952,250
7.875%, 4/15/98(a) 5,500 5,829,120
Total U.S. Government Obligations
(cost $30,242,082) $30,525,157
COMMERCIAL PAPER-1.3%
Prudential Funding Corp.
5.65%, 2/01/96
(amortized cost $1,793,000) US$ 1,793 1,793,000
TOTAL INVESTMENTS-100.1%
(cost $123,768,650) 142,737,131
Other assets less liabilities-(0.1%) (87,144)
NET ASSETS-100% $142,649,987
* Non-income producing security.
(a) Securities with an aggregate market value of $10,800,157, segregated to
collateralize forward exchange currency contracts.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $123,768,650) $142,737,131
Cash 304,350
Dividends and interest receivable 1,193,161
Receivable for investment securities sold 786,279
Receivable for capital stock sold 77,815
Net unrealized appreciation of forward exchange currency contracts 38,081
Prepaid expenses 7,762
Total assets 145,144,579
LIABILITIES
Payable for investment securities purchased 2,158,471
Advisory fee payable 73,791
Distribution fee payable 43,750
Payable for capital stock redeemed 24,028
Accrued expenses 194,552
Total liabilities 2,494,592
NET ASSETS $142,649,987
COMPOSITION OF NET ASSETS
Capital stock, at par $ 96,182
Additional paid-in capital 120,072,576
Undistributed net investment income 720,264
Accumulated net realized gain on investments and foreign
currency transactions 2,759,588
Net unrealized appreciation of investments and foreign
currency transactions 19,001,377
$142,649,987
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($117,685,814/
7,914,785 shares of capital stock issued and outstanding) $14.87
Sales charge-4.25% of public offering price .66
Maximum offering price $15.53
CLASS B SHARES
Net asset value and offering price per share ($18,579,356/
1,268,141 shares of capital stock issued and outstanding) $14.65
CLASS C SHARES
Net asset value, redemption and offering price per share($6,384,817
/435,327 shares of capital stock issued and outstanding) $14.67
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1996 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $2,304,242
Dividends (net of foreign taxes withheld of $540) 670,881 $ 2,975,123
EXPENSES
Advisory fee 453,305
Distribution fee - Class A 147,307
Distribution fee - Class B 82,821
Distribution fee - Class C 28,689
Transfer agency 125,565
Administrative 73,500
Registration 51,884
Custodian 44,251
Audit and legal 24,291
Printing 11,761
Directors' fees 11,578
Taxes 4,538
Miscellaneous 7,004
Total expenses 1,066,494
Net investment income 1,908,629
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 7,156,243
Net realized gain on foreign currency transactions 26,126
Net change in unrealized appreciation on securities 5,171,709
Net change in unrealized appreciation on foreign
currency denominated assets and liabilities 32,896
Net gain on investments and foreign currency transactions 12,386,974
NET INCREASE IN NET ASSETS FROM OPERATIONS $14,295,603
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JANUARY 31,1996 JULY 31,
(UNAUDITED) 1995
--------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,908,629 $ 5,049,968
Net realized gain on investments and foreign
currency transactions 7,182,369 9,974,984
Net change in unrealized appreciation of
investments and foreign currency
denominated assets and liabilities 5,204,605 9,246,257
Net increase in net assets from operations 14,295,603 24,271,209
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,941,073) (4,018,825)
Class B (200,435) (288,412)
Class C (69,518) (105,151)
Net realized gain on investments
Class A (11,691,852) (264,146)
Class B (1,628,196) (24,685)
Class C (577,846) (8,478)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 2,243,331 (55,580,660)
Total increase (decrease) 430,014 (36,019,148)
NET ASSETS
Beginning of period 142,219,973 178,239,121
End of period (including undistributed net
investment income of $720,264 and
$1,022,661, respectively) $142,649,987 $142,219,973
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Balanced Shares, Inc. (the 'Fund') is registered under the Investment
Company Act of 1940, as a diversified, open end management investment company.
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front end sales charge of up to 4.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are sold without an initial or contingent deferred
sales charge. All three classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last sales price or, if no sale occurred, at the mean of the bid and asked
price at the regular close of the New York Stock Exchange. Securities traded on
the over the counter market are valued at the mean of the closing bid and asked
price. Securities for which current market quotations are not readily available
(including investments which are subject to limitations as to their sale) are
valued at their fair value as determined in good faith by the Board of
Directors. The Board of Directors has further determined that the value of
certain portfolio debt securities, other than temporary investments in short
term securities, be determined by reference to valuations obtained from a
pricing service. Securities which mature in 60 days or less are valued at
amortized cost, which approximates market value. The ability of issuers of debt
securities held by the Fund to meet their obligations may be affected by
economic developments in a specific industry or region.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the quoted bid and asked price of the respective
currency against the U.S. dollar on the valuation date. Purchases and sales of
portfolio securities are translated at the rates of exchange prevailing when
such securities were acquired or sold. Income and expenses are translated at
rates of exchange prevailing when earned or accrued.
Net realized gain on foreign currency transactions of $26,126 for the Fund,
represents net foreign exchange gains and losses from holdings of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on security transactions, and the difference between the amounts of
dividends and foreign taxes recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized currency gains and
losses from valuing foreign currency denominated assets and liabilities at six
months ended January 31, 1996 are reflected as a component of unrealized
appreciation on investments and foreign currency denominated assets and
liabilities.
3. OPTION TRANSACTIONS
For hedging purposes, the Fund purchases and writes (sells) put and call
options on U.S. securities that are traded on U.S. securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of 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 and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security or currency in
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
determining whether the Fund has realized a gain or loss. If a put option is
exercised, the premium reduces the cost basis of the security or currency
purchased by the Fund. In writing an option, the Fund bears the market risk of
an unfavorable change in the price of the security or currency underlying the
written option. Exercise of an option written by the Fund could result in the
Fund selling or buying a security or currency at a price different from the
current market value.
4. 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.
5. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays its Adviser,
Alliance Capital Management L.P., an advisory fee at an annual rate of .625% of
the first $200 million, .50% of the next $200 million and .45% of the excess
over $400 million of the average daily net assets of the Fund. Such fee is
accrued daily and paid monthly. The Adviser has agreed, under the terms of the
investment advisory agreement, to reimburse the Fund to the extent that its
aggregate expenses (exclusive of interest, taxes, brokerage, distribution fees
and extraordinary expenses) exceed the limits prescribed by any state in which
the Fund's shares are qualified for sale. The Adviser believes that the most
restrictive expense ratio limitation imposed by any state is 2.5% of the first
$30 million of its average daily net assets, 2% of the next $70 million of its
average daily net assets and 1.5% of its average daily net assets in excess of
$100 million. No reimbursement was required for the six months ended January
31, 1996.
Pursuant to the Advisory Agreement, the Fund reimburses the Adviser for the
cost of certain legal and accounting services provided to the Fund by the
Adviser. For the six months ended January 31, 1996, such reimbursement amounted
to $67,486.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) in accordance with a Services Agreement for providing personnel
and facilities to perform transfer agency services for the Fund. Such
compensation amounted to $82,149 for the six months ended January 31, 1996.
Alliance Fund Distributors, Inc. (a wholly owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received front
end sales charges of $2,638 from the sale of Class A shares and $24,533 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the six months ended January 31, 1996.
Brokerage commissions paid on securities transactions for the six months ended
January 31, 1996 amounted to $96,163, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ('DLJ'), an affiliate of the Adviser, nor to DLJ directly.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the 'Agreement')
pursuant to Rule 12b 1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30% of the Fund's average daily net
12
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
assets attributable to the Class A shares and 1% of the average daily net
assets attributable to both Class B shares and Class C shares. The Agreement
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities. The Distributor has
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $1,101,762 and $312,291, for Class B and C shares, respectively;
such costs may be recovered from the Fund in future periods. In accordance with
the Agreement, there is no provision for recovery of unreimbursed distribution
costs incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short term investments)
aggregated $123,634,765 and $126,732,352, respectively, for the six months
ended January 31, 1996. There were purchases of $49,007,676 and sales of
$51,527,765 of U.S. Government and government agency obligations for the six
months ended January 31, 1996.
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 its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A foreign 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 gains
or losses 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 securities 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. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At January 31, 1996, the Fund had outstanding forward exchange currency
contracts, both to purchase and sell foreign currencies against the U.S.
dollar, as follows:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
------- ---------- ---------- -------------
FOREIGN CURRENCY BUY CONTRACTS
Deutsche Mark,
expiring 2/08/96 3,097 $2,155,372 $2,081,587 $(73,785)
FOREIGN CURRENCY SALE CONTRACTS
Danish Krone,
expiring 3/08/96 15,234 2,659,020 2,645,156 13,864
Deutsche Mark,
expiring 2/08/96 3,097 2,130,243 2,081,587 48,656
Spanish Peseta,
expiring 2/08/96 338,720 2,746,198 2,696,852 49,346
---------
$38,081
At January 31, 1996, the cost of securities for federal income tax purposes was
$123,776,039. Accordingly gross unrealized appreciation of investments was
$19,672,561 and gross unrealized depreciation of investments was $711,468
resulting in net unrealized appreciation of $18,961,093.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 180,000,000 shares of $.01 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Each class consists of 60,000,000 authorized shares. Prior to February 23, 1993
there were 60,000,000 shares of $1.00 par value capital stock authorized,
divided into two classes designated Class A and Class B shares. Transactions in
capital stock were as follows:
SHARES AMOUNT
------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JAN. 31,1996 JULY 31, JAN. 31,1996 JULY 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
----------- ----------- ------------ -------------
CLASS A
Shares sold 288,725 833,994 $ 4,383,842 $ 11,355,969
Shares issued in
reinvestment of
dividends and
distributions 773,445 258,708 11,140,012 3,476,710
Shares redeemed (1,241,257) (4,776,892) (18,344,403) (67,754,957)
Net decrease (179,087) (3,684,190) $(2,820,549) $(52,922,278)
CLASS B
Shares sold 241,959 253,480 $ 3,594,818 $ 3,417,128
Shares issued in
reinvestment of
dividends and
distributions 104,649 19,426 1,485,371 257,488
Shares redeemed (91,849) (343,847) (1,378,178) (4,616,970)
Net increase (decrease) 254,759 (70,941) $ 3,702,011 $ (942,354)
CLASS C
Shares sold 94,753 100,113 $ 1,421,538 $ 1,340,570
Shares issued in
reinvestment of
dividends and
distributions 34,376 5,947 488,443 78,834
Shares redeemed (36,778) (235,619) (548,112) (3,135,432)
Net increase (decrease) 92,351 (129,559) $ 1,361,869 $ (1,716,028)
14
FINANCIAL HIGHLIGHTS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
SIX MONTHS
ENDED OCT. 1,1993
JANUARY 31, YEAR ENDED THROUGH YEAR ENDED SEPTEMBER 30,
1996 JULY 31, JULY 31, -------------------------------
(UNAUDITED) 1995 1994* 1993 1992 1991
------------ --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.08 $13.38 $14.40 $13.20 $12.64 $10.41
INCOME FROM INVESTMENT OPERATIONS
Net investment income .22(a) .46 .29 .34 .44 .46
Net realized and unrealized gain (loss)
on investments 1.30 1.62 (.74) 1.29 .57 2.17
Net increase (decrease) in net asset
value from operations 1.52 2.08 (.45) 1.63 1.01 2.63
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.25) (.36) (.28) (.43) (.45) (.40)
Distributions from net realized gains (1.48) (.02) (.29) -0- -0- -0-
Total dividends and distributions (1.73) (.38) (.57) (.43) (.45) (.40)
Net asset value, end of period $14.87 $15.08 $13.38 $14.40 $13.20 $12.64
TOTAL RETURN
Total investment return based on net
asset value (b) 10.47% 15.99% (3.21)% 12.52% 8.14% 25.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $117,686 $122,033 $157,637 $172,484 $143,883 $154,230
Ratio of expenses to average net assets 1.35%(c) 1.32% 1.27%(c) 1.35% 1.40% 1.44%
Ratio of net investment income to
average net assets 2.75%(c) 3.12% 2.50%(c) 2.50% 3.26% 3.75%
Portfolio turnover rate 94% 179% 116% 188% 204% 70%
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------------
SIX MONTHS
ENDED OCT. 1,1993
JANUARY 31, YEAR ENDED THROUGH YEAR ENDED SEPTEMBER 30,
1996 JULY 31, JULY 31, ----------------------------------
(UNAUDITED) 1995 1994* 1993 1992 1991(d)
------------ --------- ------------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.88 $13.23 $14.27 $13.13 $12.61 $11.84
INCOME FROM INVESTMENT OPERATIONS
Net investment income .16(a) .30 .22 .29 .37 .25
Net realized and unrealized gain (loss)
on investments 1.28 1.65 (.75) 1.22 .54 .80
Net increase (decrease) in net asset
value from operations 1.44 1.95 (.53) 1.51 .91 1.05
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.19) (.28) (.22) (.37) (.39) (.28)
Distribution from net realized gains (1.48) (.02) (.29) -0- -0- -0-
Total dividends and distributions (1.67) (.30) (.51) (.37) (.39) (.28)
Net asset value, end of period $14.65 $14.88 $13.23 $14.27 $13.13 $12.61
TOTAL RETURN
Total investment return based on net
asset value (b) 10.05% 15.07% (3.80)% 11.65% 7.32% 8.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $18,579 $15,080 $14,347 $12,789 $6,499 $1,830
Ratio of expenses to average net assets 2.12%(c) 2.11% 2.05%(c) 2.13% 2.16% 2.13%(c)
Ratio of net investment income to
average net assets 1.98%(c) 2.30% 1.73%(c) 1.72% 2.46% 3.19%(c)
Portfolio turnover rate 94% 179% 116% 188% 204% 70%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------
SIX MONTHS
ENDED AUGUST 2,
JANUARY 31, YEAR ENDED OCT. 1,1993 1993(E) TO
1996 JULY 31, THROUGH APRIL 30,
(UNAUDITED) 1995 JULY 31,1994* 1994
----------- --------- ------------ -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.89 $13.24 $14.28 $13.63
INCOME FROM INVESTMENT OPERATIONS
Net investment income .16(a) .30 .24 .11
Net realized and unrealized gain (loss)
on investments 1.29 1.65 (.77) .71
Net increase (decrease) in net asset
value from operations 1.45 1.95 (.53) .82
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.19) (.28) (.22) (.17)
Distributions from net realized gains (1.48) (.02) (.29) -0-
Total dividends and distributions (1.67) (.30) (.51) (.17)
Net asset value, end of period $14.67 $14.89 $13.24 $14.28
TOTAL RETURN
Total investment return based on net
asset value (b) 10.11% 15.06% (3.80)% 6.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,385 $5,108 $6,254 $1,487
Ratios of expenses to average net assets 2.10%(c) 2.09% 2.03%(c) 2.29%(c)
Ratios of net investment income to
average net assets 2.00%(c) 2.32% 1.81%(c) 1.47%(c)
Portfolio turnover rate 94% 179% 116% .188%
</TABLE>
* The Fund changed its fiscal year end from September 30 to July 31.
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) Annualized.
(d) For the period February 4, 1991 (commencement of distribution) to September
30, 1991.
(e) Commencement of distribution.
17
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
BRUCE W. CALVERT, EXECUTIVE VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
MATTHEW D. BLOOM, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
The financial information included herein is taken from records of the Fund
without audit by independent accountants who do not express an opinion thereon.
(1) Member of the Audit Committee.
18
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
19
ALLIANCE BALANCED SHARES
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
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.
BALSR
