ALLIANCE BALANCED SHARES
ANNUAL REPORT
JULY 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
September 5, 1997
Dear Shareholder:
This annual report contains an update of your Fund's performance and market
activity for the period ended July 31, 1997. We are pleased to inform you that
Paul Rissman is now managing Alliance Balanced Shares. Mr. Rissman, who joined
Alliance in 1989, also manages Alliance Growth and Income Fund and Alliance
Utility Income Fund. We have also added a new benchmark to this report which
more closely resembles the composition of your Fund. The new benchmark
representes a blended composite of the S&P 500 Stock Index (60%), the Lehman
Brothers Government/Corporate Bond Index (25%) and the Salomon Brothers 1-Year
Treasury Index (15%).
MARKET OVERVIEW
During the past six months, the investment environment continued to reflect a
"best of all worlds" situation: moderate economic growth, low inflation, a
relatively stable interest rate environment and expanding corporate earnings.
During the period under review, bond prices rose as interest rates fell
modestly, which led to good fixed income returns, and the stock market
continued to perform well, resulting in unusually strong equity returns.
INVESTMENT RESULTS
We are pleased to report that your Fund's Class A shares posted a 15.47% and
33.46% return at net asset value for the six and 12 month periods ended July
31, 1997. If you compare your Fund to the individual benchmarks below, you can
see that your Fund significantly outperformed both of its fixed income
benchmarks, however, underperformed its equity benchmark in both the six and 12
month periods ended July 31, 1997. However, if you compare your Fund's
performance to the blended index, which most closely resembles the composition
of your Fund, you can see that your Fund outperformed the composite for the six
month period and slightly underperformed the composite during the 12 month
period.
INVESTMENT RESULTS*
Period Ended July 31, 1997
TOTAL RETURN
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE BALANCED SHARES
Class A 15.47% 33.46%
Class B 15.02% 32.34%
Class C 15.07% 32.37%
S&P 500 STOCK INDEX 22.54% 52.11%
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX 5.76% 10.79%
SALOMON BROTHERS
1-YEAR TREASURY BOND INDEX 3.22% 6.64%
COMPOSITE:
60% S&P 500/25% LB Gov.'t/Corp.
Bond Index/15% SB Treasury
Bond Index 15.44% 34.97%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF JULY 31,
1997. 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 AND ITS COMPARATIVE
INDICES INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
ALL COMPARATIVE INDICES ARE UNMANAGED AND REFLECT NO FEES OR EXPENSES. AN
INVESTOR CANNOT INVEST DIRECTLY IN THE INDICES.
THE S&P 500 STOCK INDEX INCLUDES 500 U.S. STOCKS AND IS A COMMON MEASURE OF
THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. THE LEHMAN BROTHERS
GOVERNMENT/ CORPORATE BOND INDEX REPRESENTS A COMBINATION OF THE GOVERNMENT
BOND INDEX AND THE CORPORATE BOND INDEX. THE SALOMON BROTHERS TREASURY INDEX
REPRESENTS PERFORMANCE OF TREASURY BILLS WITH 1-YEAR MATURITIES. THE COMPOSITE
REPRESENTS A BLENDED INDEX AS INDICATED.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
1
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
Your Fund's Class A shares outperformed the Lipper Average for Balanced Funds
during the six and 12 month periods ended July 31, 1997.
TOTAL RETURNS FOR THE PERIODS
ENDED JULY 31, 1997*
6 MONTHS 1 YEAR 5 YEARS 10 YEARS
-------- ------- ------- --------
ALLIANCE BALANCED SHARES
Class A Shares 15.47% 33.46% 12.30% 9.66%
LIPPER AVERAGE FOR
BALANCED FUNDS 13.31% 29.47% 13.52% 11.34%
* THE 6 MONTH AND 1 YEAR RETURNS ARE BASED ON CUMULATIVE TOTAL RETURNS WHILE
THE 5 AND 10 YEAR RETURNS ARE BASED ON ANNUAL TOTAL RETURNS FOR THE PERIOD
ENDED JULY 31, 1997. LIPPER RETURNS ARE BASED ON TOTAL RETURNS AT NET ASSET
VALUE, WITHOUT THE IMPOSITION OF THE MAXIMUM 4.25% SALES CHARGE, WHICH WOULD
REDUCE TOTAL RETURN FIGURES. THE TOTAL NUMBER OF FUNDS IN THE LIPPER BALANCED
FUNDS CATEGORY FOR EACH TIMEFRAME LISTED ABOVE ARE: 6 MONTHS, 351 FUNDS; 1
YEAR, 319 FUNDS; 5 YEARS, 90 FUNDS; AND 10 YEARS, 41 FUNDS. PAST PERFORMANCE IS
NOT INDICATIVE OF FUTURE RESULTS.
PORTFOLIO POSITIONING
During the six month period ended July 31, 1997, the Fund held little cash and
was fully invested in the equity and fixed income markets. As you can see from
the pie chart on page 5, the composition of your Fund's portfolio is currently
61.7% stocks, 21.3% U.S. governments and mortgages, 13.9% corporate bonds and
3.1% cash.
The U.S. stock market has continued to post solid returns. These returns have
been fueled by large capitalization stocks which comprise a majority of the
broader market averages such as the S&P 500. Many of these large public
companies have performed well fundamentally, the valuations placed on their
earnings have expanded, and their stock prices have increased, resulting in a
strong performance for the market. While we are always searching for large
companies with good risk/return potential, we will also seek small- and
medium-sized growth companies which represent attractively priced investment
opportunities.
MARKET OUTLOOK
We expect the U.S. economy to exhibit moderate growth of approximately 2.5% in
the next 12 months. While inflation may tick up in the near-term, prompting a
slight rise in bond yields, our overall secular view of inflation remains
optimistic.
With the U.S. position firm as the competitive leader of the global economy,
the fiscal deficit under control, and the Federal Reserve a credible
institution, we maintain a bullish long-term outlook on both stocks and bonds.
Therefore, we do not expect to alter our portfolio mix of 60%-65% equities and
35%-40% fixed income securities in the near-term.
As always, we appreciate your investment in Alliance Balanced Shares and look
forward to reporting its progress to you in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Paul Rissman
Portfolio Manager
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 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 RETURNS AS OF JULY 31, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 33.46% 27.80%
Five Years 12.30% 11.32%
Ten Years 9.66% 9.18%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 32.34% 28.34%
Five Years 11.42% 11.42%
Since Inception* 11.25% 11.25%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 32.37% 31.37%
Since Inception* 12.08% 12.08%
Average annual total returns reflect reinvestment of dividends and/or capital
gain 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);
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: 6/8/32, Class A; 2/4/91, Class B; 5/3/93, Class C.
3
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
ALLIANCE BALANCED SHARES
GROWTH OF A $10,000 INVESTMENT
7/31/87 TO 7/31/97
$40,000
$36,000
$32,000
$28,000
$24,000
$20,000
$16,000
$12,000
$10,000
$8,000
S&P 500: $40,248
BALANCED SHARES CLASS A: $24,071
LB GOVERNMENT/CORPORATE BOND INDEX: $23,831
SB 1-YEAR TREASURY INDEX: $18,809
7/31/87 7/31/88 7/31/89 7/31/90 7/31/91 7/31/92
7/31/93 7/31/94 7/31/95 7/31/96 7/31/97
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Balanced Shares Class A shares (from 7/31/87 to 7/31/97) as compared
to the performance of an appropriate broad-based index. The chart reflects the
deduction of the maximum 4.25% sales charge from the initial $10,000 investment
in the Fund and assumes the reinvestment of dividends and capital gains.
Performance for Class B, Class C and Advisor Class shares will vary from the
results shown above due to differences in expenses charged to 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 Lehman Brothers Government/Corporate Bond Index represents a
combination of the Government Bond Index and the Corporate Bond Index.
The Salomon Brothers 1-Year Treasury Index represents performance of Treasury
bills with 1-year maturities. Of course, Treasury bills are guaranteed as to
principal and interest if held to maturity whereas the net asset value of the
Fund will fluctuate.
When comparing Alliance Balanced Shares to the indices shown above, you should
note that no charges or expenses are reflected in the performance of the
indices.
Balanced Shares
S&P 500
LB Government/Corporate Bond Index
SB 1-Year Treasury Index
4
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
7/31/96
U.S. GOVERNMENT & MORTGAGES: 28.4%
STOCKS: 56.6%
CORPORATE BONDS: 12.0%
CASH: 3.0%
1/31/97
U.S. GOVERNMENT & MORTGAGES: 23.3%
STOCKS: 60.5%
CORPORATE BONDS: 15.6%
CASH: 0.6%
7/31/97
U.S. GOVERNMENT & MORTGAGES: 21.3%
STOCKS: 61.7%
CORPORATE BONDS: 13.9%
CASH: 3.1%
5
TEN LARGEST HOLDINGS
JULY 31, 1997 ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $23,801,974 16.2%
MBNA Corp. 3,543,750 2.4
RJR Nabisco Holdings Corp. 3,445,312 2.3
ITT Corp. 3,196,875 2.2
Federal Home Loan Bank, 7.00%, 9/01/11 2,785,718 1.9
Time Warner, Inc. 2,728,125 1.9
American International Group, Inc. 2,715,750 1.9
WorldCom, Inc. 2,634,895 1.8
MGIC Investment Corp. 2,575,562 1.8
U.S. Treasury Bond, 6.625%, 2/15/27 2,568,387 1.7
$49,996,348 34.1%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JULY 31, 1997
_______________________________________________________________________________
SHARES OR PRINCIPAL
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 7/31/97
- -------------------------------------------------------------------------------
Dao Heng Bank, Ltd., 7.75%, 1/24/07 $2,000,000 $2,000,000
RJR Nabisco Holdings Corp. 105,000 105,000
Turner Broadcasting Systems, Inc.,
8.375%, 7/01/13 $2,040,000 $2,040,000
Tyco International, Ltd. 28,000 28,000
U.S. Treasury Bond, 6.625%, 2/15/27 $2,460,000 $2,460,000
U.S. Treasury Note, 6.125%, 8/13/98 $11,575,000 $11,575,000
U.S. Treasury Note, 6.25%, 4/30/01 $4,450,000 $4,450,000
U.S. Treasury Note, 6.50%, 5/31/02 $3,750,000 $3,750,000
U.S. Treasury Note, 6.875%, 5/15/06 $2,650,000 $2,650,000
Zurich Capital Trust I, 8.376%, 6/01/37 $2,000,000 $2,000,000
HOLDINGS
SALES SOLD 7/31/97
- -------------------------------------------------------------------------------
Commonwealth of Australia, 7.50%, 9/15/09 3,300,000 -0-
Empresa Nacional de Electricidad, S.A.,
7.875%, 2/01/27 $2,000,000 -0-
Federal National Mortgage Association,
6.50%, 5/01/11 $5,760,200 -0-
Federal National Mortgage Association,
7.00%, 4/01/26 $2,908,198 -0-
First Tennessee Capital I, 8.07%, 1/06/27 $2,100,000 -0-
Goldman Sachs Group, 7.80%, 7/15/02 $2,500,000 -0-
Morgan Stanley Asia Pacific Fund, Inc. 260,000 -0-
U.S. Treasury Note, 6.375%, 5/15/99 $2,880,000 -0-
U.S. Treasury Note, 7.00%, 4/15/99 $4,900,000 -0-
U.S. Treasury Note, 7.875%, 4/15/98 $4,500,000 $1,000,000
6
PORTFOLIO OF INVESTMENTS
JULY 31, 1997 ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-61.7%
FINANCE-15.7%
BROKERAGE & MONEY MANAGEMENT-1.8%
Morgan Stanley, Dean Witter, Discover & Co. 26,000 $ 1,360,125
Salomon, Inc. 20,700 1,313,156
------------
2,673,281
INSURANCE-6.1%
American International Group, Inc. 25,500 2,715,750
Life Re Corp. 39,500 2,162,625
Providian Financial Corp. (a) 38,000 1,489,125
TIG Holdings, Inc. 7,800 255,450
Travelers Group, Inc. 32,000 2,302,000
------------
8,924,950
MISCELLANEOUS-7.8%
American Express Co. 20,000 1,675,000
Associates First Capital Corp. Cl.A 22,500 1,483,594
Beneficial Corp. 29,000 2,102,500
MBNA Corp. 78,750 3,543,750
MGIC Investment Corp. 49,000 2,575,562
------------
11,380,406
------------
22,978,637
ENERGY-12.4%
DOMESTIC PRODUCTS-2.5%
Apache Corp. 26,500 934,125
Gulf Canada Resources, Ltd. (a)(b) 147,600 1,143,900
Louis Dreyfus Natural Gas Corp. (a) 50,800 806,450
Murphy Oil Corp. 15,000 780,938
------------
3,665,413
OIL & GAS EXPLORATION-0.4%
Union Texas Petroleum, Inc. 23,900 497,419
OIL SERVICE-9.5%
Baker Hughes, Inc. 48,000 2,115,000
BJ Services Co. (a) 18,700 1,215,500
Halliburton Co. 50,000 2,300,000
Nabors Industries, Inc. (a) 33,900 1,059,375
Noble Drilling Corp. (a) 56,500 1,585,531
Parker Drilling Co. (a) 101,200 1,321,925
Santa Fe International Corp. (a) 20,500 845,625
Schlumberger, Ltd. 13,500 1,031,062
Transocean Offshore, Inc. 18,900 1,543,894
USX-Marathon Group 30,000 965,625
------------
13,983,537
------------
18,146,369
CONSUMER SERVICES-9.8%
BROADCASTING & CABLE-2.6%
Cablevision Systems Corp. Cl.A (a) 17,000 1,009,375
Nextel Communications, Inc. Cl.A (a) 46,100 1,110,722
Viacom, Inc. Cl.B (a) 8,000 247,000
Westinghouse Electric Corp. 60,000 1,443,750
------------
3,810,847
ENTERTAINMENT & LEISURE-1.9%
Time Warner, Inc. 50,000 2,728,125
HOTELS & RESTAURANTS-3.2%
Host Marriott Corp. (a) 77,000 1,535,187
ITT Corp. (a) 50,000 3,196,875
------------
4,732,062
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
RETAILING-2.1%
Dayton Hudson Corp. 13,750 $ 888,594
Federated Department Stores, Inc. (a) 40,800 1,787,550
Office Depot, Inc. (a) 22,500 390,937
------------
3,067,081
------------
14,338,115
HEALTH CARE-5.6%
BIOTECHNOLOGY-0.6%
Centocor, Inc. (a) 25,000 961,719
DRUGS-2.3%
Pfizer, Inc. 23,000 1,371,375
Warner-Lambert Co. 14,700 2,053,406
------------
3,424,781
MEDICAL PRODUCTS-0.6%
Steris Corp. (a) 22,400 863,100
MEDICAL SERVICES-2.1%
McKesson Corp. 12,000 1,040,250
Pacificare Health Systems Cl.B (a) 28,000 1,986,250
------------
3,026,500
------------
8,276,100
TECHNOLOGY-5.4%
COMPUTER HARDWARE-2.3%
Ceridian Corp. (a) 50,700 2,218,125
Storage Technology Corp. (a) 24,100 1,205,000
------------
3,423,125
COMPUTER PERIPHERALS-0.4%
Seagate Technology, Inc. (a) 15,250 626,203
SEMI-CONDUCTORS CAPITAL EQUIPMENT-0.2%
Teradyne, Inc. (a) 4,600 215,050
SEMI-CONDUCTORS & RELATED-1.6%
Micron Technology, Inc. 33,500 1,631,031
National Semiconductor Corp. (a) 20,000 630,000
------------
2,261,031
TELECOMMUNICATION EQUIPMENT-0.9%
Nokia Corp. (ADR)(c) 16,000 1,370,000
------------
7,895,409
CONSUMER STAPLES-4.0%
RETAIL/FOOD & DRUG-0.9%
Rite Aid Corp. 27,000 1,402,313
TOBACCO-3.1%
Loews Corp. 10,000 1,081,250
RJR Nabisco Holdings Corp. 105,000 3,445,312
------------
4,526,562
------------
5,928,875
UTILITY-2.7%
Teleport Communications Group, Inc. Cl.A. (a) 35,000 1,380,313
WorldCom, Inc. (a) 75,350 2,634,895
------------
4,015,208
BASIC INDUSTRIES-1.6%
CHEMICALS-1.2%
Cytec Industries, Inc. (a) 12,250 483,875
Monsanto Co. 24,500 1,220,406
------------
1,704,281
PAPER & FOREST PRODUCTS-0.4%
Jefferson Smurfit Corp. (a) 17,400 327,338
Stone Container Corp. (a) 20,000 332,500
------------
659,838
------------
2,364,119
MULTI INDUSTRY COMPANIES-1.6%
Tyco International, Ltd. 28,000 2,268,000
8
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
POLLUTION CONTROL-1.4%
WMX Technologies, Inc. 64,500 $ 2,064,000
TRANSPORTATION-1.3%
SHIPPING-1.3%
Knightsbridge Tankers, Ltd. 41,200 1,143,300
Omi Corp. (a) 73,900 822,138
------------
1,965,438
CONSUMER MANUFACTURING-0.2%
AUTO & RELATED-0.2%
Republic Industries, Inc. (a) 14,600 359,525
Total Common Stocks & Other Investments
(cost $66,152,902) 90,599,795
U.S. GOVERNMENT OBLIGATIONS-18.0%
U.S. Treasury Bond
6.625%, 2/15/27 $ 2,460 2,568,387
U.S. Treasury Notes
6.125%, 8/31/98 11,575 11,636,463
6.25%, 4/30/01 4,450 4,511,187
6.50%, 5/31/02 3,750 3,841,388
6.875%, 5/15/06 2,650 2,796,996
7.875%, 4/15/98 1,000 1,015,940
Total U.S. Government Obligations
(cost $25,783,727) 26,370,361
YANKEE BONDS-8.5%
Dao Heng Bank, Ltd.
7.75%, 1/24/07 (d) 2,000 2,064,800
Perez Companc, S.A.
8.125%, 7/15/07 (d) 1,500 1,515,000
Quebec Province Canada
7.125%, 2/09/24 2,000 2,016,400
RAS Laffan Liquefied Natural Gas
8.294%, 3/15/14 (d) 1,250 1,382,404
Reliance Industries, Ltd.
10.375%, 6/24/16 (d) 1,650 1,860,375
Russian Federation
10.00%, 6/26/07 (d) 1,500 1,539,375
Zurich Capital Trust I
8.376%, 6/01/37 (d) 2,000 2,171,874
Total Yankee Bonds
(cost $12,002,757) 12,550,228
CORPORATE DEBT OBLIGATIONS-5.4%
FINANCIAL-2.8%
Ford Motor Credit Co.
6.125%, 1/09/06 2,000 1,938,278
United Companies Financial Corp.
8.375%, 7/01/05 2,000 2,070,960
------------
4,009,238
INDUSTRIAL-1.5%
Turner Broadcasting Systems, Inc.
8.375%, 7/01/13 2,040 2,215,909
BANKING-1.1%
Dime Capital Trust I, Series A
9.33%, 5/06/27 1,500 1,651,353
Total Corporate Debt Obligations
(cost $7,534,649) 7,876,500
MORTGAGE-RELATED SECURITIES-3.3%
Federal Home Loan Bank
7.00%, 9/01/11 2,750 2,785,718
Government National Mortgage Association
7.50%, 3/15/27 1,007 1,024,237
7.50%, 4/15/27 994 1,010,578
Total Mortgage-Related Securities
(cost $4,686,591) 4,820,533
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
COMMERCIAL PAPER-2.9%
Prudential Funding Corp.
5.48%, 8/08/97 $ 3,430 $ 3,426,345
5.55%, 8/06/97 800 799,384
Total Commercial Paper
(amortized cost $4,225,729) 4,225,729
TOTAL INVESTMENTS-99.8%
(cost $120,386,355) $ 146,443,146
Other assets less liabilities-0.2% 323,612
NET ASSETS-100% $ 146,766,758
(a) Non-income producing security.
(b) Canadian holding.
(c) Country of origin--Finland.
(d) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to certain qualified buyers. At July 31, 1997, the
aggregate market value of these securities amounted to $10,533,828 representing
7.2% of net assets.
Glossary:
ADR - American Depository Receipt
See notes to financial statements.
10
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997 ALLIANCE BALANCED SHARES
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $120,386,355) $ 146,443,146
Cash 27,993
Receivable for investment securities sold 2,127,113
Dividends and interest receivable 871,896
Receivable for capital stock sold 83,879
Total assets 149,554,027
LIABILITIES
Payable for investment securities purchased 2,059,514
Payable for capital stock redeemed 334,796
Advisory fee payable 75,330
Distribution fee payable 47,322
Accrued expenses 270,307
Total liabilities 2,787,269
NET ASSETS $ 146,766,758
COMPOSITION OF NET ASSETS
Capital stock, at par $ 91,162
Additional paid-in capital 112,063,341
Undistributed net investment income 384,796
Accumulated net realized gain on investments and
foreign currency transactions 8,170,668
Net unrealized appreciation of investments 26,056,791
$ 146,766,758
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($115,499,920 / 7,143,992 shares of capital stock
issued and outstanding) $16.17
Sales charge--4.25% of public offering price .72
Maximum offering price $16.89
CLASS B SHARES
Net asset value and offering price per share
($24,191,887 / 1,527,970 shares of capital stock
issued and outstanding) $15.83
CLASS C SHARES
Net asset value and offering price per share
($5,510,171 / 347,492 shares of capital stock
issued and outstanding) $15.86
ADVISOR CLASS SHARES
Net asset value, redemption and offering price
per share ($1,564,780 / 96,761 shares of capital
stock issued and outstanding) $16.17
See notes to financial statements.
11
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1997 ALLIANCE BALANCED SHARES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 3,836,283
Dividends (net of foreign taxes withheld of $5,211) 899,694 $ 4,735,977
EXPENSES
Advisory fee 828,903
Distribution fee - Class A 253,527
Distribution fee - Class B 204,078
Distribution fee - Class C 60,441
Transfer agency 222,239
Administrative 133,561
Custodian 122,132
Audit and Legal 99,331
Registration 97,085
Printing 60,821
Directors' fees 33,500
Miscellaneous 41,347
Total expenses 2,156,965
Less: expense offset arrangement (see Note B) (16,623)
Net expense 2,140,342
Net investment income 2,595,635
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investment transactions 8,453,794
Net realized gain on foreign currency transactions 27,713
Net change in unrealized appreciation (depreciation) of:
Investments 27,538,594
Foreign currency (2,283)
Net gain on investments and foreign currency transactions 36,017,818
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 38,613,453
See notes to financial statements.
12
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 1996
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,595,635 $ 3,133,713
Net realized gain on investments and
foreign currency transactions 8,481,507 19,958,567
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency denominated assets
and liabilities 27,536,311 (15,276,292)
Net increase in net assets from operations 38,613,453 7,815,988
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,308,924) (3,160,459)
Class B (341,037) (358,703)
Class C (102,618) (123,287)
Advisor Class (10,350) -0-
Net realized gain on investments
Class A (12,582,512) (11,691,852)
Class B (2,409,113) (1,628,196)
Class C (793,084) (577,846)
Advisor Class (19,832) -0-
CAPITAL STOCK TRANSACTIONS
Net decrease (335,371) (5,439,472)
Total increase (decrease) 19,710,612 (15,163,827)
NET ASSETS
Beginning of year 127,056,146 142,219,973
End of year (including undistributed net
investment income of $384,796 and
$200,802, respectively) $146,766,758 $127,056,146
See notes to financial statements.
13
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997 ALLIANCE BALANCED SHARES
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Balanced Shares (the "Fund") is registered under the Investment
Company Act of 1940, as a diversified, open end management investment company.
The Fund offers Class A, Class B, Class C and Advisor Class shares. Class A
shares are sold with a front-end sales charge of up to 4.25% for purchases not
exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a contingent
deferred sales charge of 1%. Class B shares are currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares purchased on or after July 1, 1996, are subject to a
contingent deferred sales charge of 1% on redemptions made within the first
year after purchase. Advisor Class shares are sold without an initial or
contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in fee
based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The 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 that 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 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 foreign currency gains represent foreign exchange gains from sales and
maturities of securities, currency gains and losses realized between the trade
and settlement dates on security transactions and the difference between the
amounts of interest recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net currency gains and losses from valuing
foreign currency denominated assets and liabilities at year end exchange rates
are reflected as a component of net unrealized appreciation on investments and
foreign currency denominated assets and liabilities.
3. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax
14
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
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 foreign exchange gains, resulted in a net decrease in
accumulated net realized gain on investments and foreign currency transactions
and a corresponding increase in undistributed net investment income. 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 its Adviser,
Alliance Capital Management L.P. (the "Adviser") 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.
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 year ended July 31, 1997, such reimbursement amounted to
$133,561.
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 $151,926 for the year ended July 31, 1997.
In addition, for the year ended July 31, 1997, the Fund's expenses were reduced
by $16,623 under an expense offset arrangement with Alliance Fund Services.
Transfer Agency fees reported in the statement of operations exclude these
credits.
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 $5,903 from the sales of Class A shares and $521,
$34,203 and $1,445 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C, respectively, for
the year ended July 31, 1997.
Brokerage commissions paid on securities transactions for the year ended July
31, 1997 amounted to $225,475, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30% of the Fund's average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to both
Class B shares and Class C shares. There is no distribution fee on the Advisor
Class 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 $1,533,382 and $463,860, 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.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short term investments
and U.S. government securities) aggregated $152,574,432 and $163,494,792,
respectively, for the year ended July 31, 1997. There were purchases of
$113,603,802 and sales of $118,754,328 of U.S. government and government agency
obligations for the year ended July 31, 1997.
At July 31, 1997, the cost of securities for federal income tax purposes was
$120,416,909. Accordingly gross unrealized appreciation of investments was
$26,475,557 and gross unrealized depreciation of investments was $449,320
resulting in net unrealized appreciation of $26,026,237 excluding foreign
currency.
The Fund incurred and elected to defer post October currency losses of $15,159
for the year ended July 31, 1997.
1. 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 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. 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 July 31, 1997, the Fund had no outstanding forward exchange currency
contracts.
2. 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 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. There were no transactions in
written options for the year ended July 31, 1997.
16
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 180,000,000 shares of $.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 30,000,000 authorized shares. Transactions
in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 308,965 448,058 $ 4,417,304 $ 6,746,741
Shares issued in
reinvestment of
dividends and
distributions 872,819 836,417 12,031,921 12,060,428
Shares converted
from Class B 37,939 6,918 545,801 99,012
Shares redeemed (1,394,620) (2,066,376) (19,984,934) (30,463,433)
Net decrease (174,897) (774,983) $ (2,989,908) $ (11,557,252)
CLASS B
Shares sold 414,263 430,446 $ 5,850,511 $ 6,327,512
Shares issued in
reinvestment of
dividends and
distributions 168,175 113,453 2,274,998 1,612,145
Shares converted
to Class A (38,679) (6,961) (545,801) (99,012)
Shares redeemed (349,522) (216,587) (4,922,989) (3,180,587)
Net increase 194,237 320,351 $ 2,656,719 $ 4,660,058
CLASS C
Shares sold 116,909 157,902 $ 1,671,934 $ 2,334,144
Shares issued in
reinvestment of
dividends and
distributions 50,995 37,104 690,495 527,785
Shares redeemed (261,860) (96,534) (3,718,421) (1,404,207)
Net increase
(decrease) (93,956) 98,472 $ (1,355,992) $ 1,457,722
OCT. 2, 1996* OCT. 2, 1996*
TO TO
JULY 31, 1997 JULY 31, 1997
------------ --------------
ADVISOR CLASS
Shares sold 99,609 $ 1,393,347
Shares issued in
reinvestment of
dividends and
distributions 2,157 30,179
Shares redeemed (5,005) (69,716)
Net increase 96,761 $ 1,353,810
* Commencement of distribution.
17
FINANCIAL HIGHLIGHTS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
OCT. 1,
1993 YEAR
YEAR ENDED JULY 31, THROUGH ENDED
-------------------------------------- JULY 31, SEPT. 30,
1997 1996 1995 1994(A) 1993
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.01 $15.08 $13.38 $14.40 $13.20
INCOME FROM INVESTMENT OPERATIONS
Net investment income .31(b) .37 .46 .29 .34
Net realized and unrealized gain (loss)
on investments 3.97 .45 1.62 (.74) 1.29
Net increase (decrease) in net asset
value from operations 4.28 .82 2.08 (.45) 1.63
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.32) (.41) (.36) (.28) (.43)
Distributions from net realized gains (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (2.12) (1.89) (.38) (.57) (.43)
Net asset value, end of period $16.17 $14.01 $15.08 $13.38 $14.40
TOTAL RETURN
Total investment return based on net
asset value (c) 33.46% 5.23% 15.99% (3.21)% 12.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $115,500 $102,567 $122,033 $157,637 $172,484
Ratio of expenses to average net assets 1.47%(d) 1.38% 1.32% 1.27%(e) 1.35%
Ratio of net investment income to average
net assets 2.11% 2.41% 3.12% 2.50%(e) 2.50%
Portfolio turnover rate 207% 227% 179% 116% 188%
Average commission rate (f) $.0552 -- -- -- --
</TABLE>
See footnote summary on page 21.
18
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
OCT. 1,
1993 YEAR
YEAR ENDED JULY 31, THROUGH ENDED
------------------------------------- JULY 31, SEPT. 30,
1997 1996 1995 1994(A) 1993
------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.79 $14.88 $13.23 $14.27 $13.13
INCOME FROM INVESTMENT OPERATIONS
Net investment income .19(b) .28 .30 .22 .29
Net realized and unrealized gain (loss)
on investments 3.89 .42 1.65 (.75) 1.22
Net increase (decrease) in net asset
value from operations 4.08 .70 1.95 (.53) 1.51
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.31) (.28) (.22) (.37)
Distribution from net realized gains (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (2.04) (1.79) (.30) (.51) (.37)
Net asset value, end of period $15.83 $13.79 $14.88 $13.23 $14.27
TOTAL RETURN
Total investment return based on net
asset value (c) 32.34% 4.45% 15.07% (3.80)% 11.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $24,192 $18,393 $15,080 $14,347 $12,789
Ratio of expenses to average net assets 2.25%(d) 2.16% 2.11% 2.05%(e) 2.13%
Ratio of net investment income to
average net assets 1.32% 1.61% 2.30% 1.73%(e) 1.72%
Portfolio turnover rate 207% 227% 179% 116% 188%
Average commission rate (f) $.0552 -- -- -- --
</TABLE>
See footnote summary on page 21.
19
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------
OCT. 1,
1993 YEAR
YEAR ENDED JULY 31, THROUGH ENDED
------------------------------------- JULY 31, SEPT. 30,
1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.81 $14.89 $13.24 $14.28 $13.63
INCOME FROM INVESTMENT OPERATIONS
Net investment income .20(b) .26 .30 .24 .11
Net realized and unrealized gain (loss)
on investments 3.89 .45 1.65 (.77) .71
Net increase (decrease) in net asset
value from operations 4.09 .71 1.95 (.53) .82
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.31) (.28) (.22) (.17)
Distributions from net realized gains (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (2.04) (1.79) (.30) (.51) (.17)
Net asset value, end of period $15.86 $13.81 $14.89 $13.24 $14.28
TOTAL RETURN
Total investment return based on net
asset value (c) 32.37% 4.52% 15.06% (3.80)% 6.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,510 $6,096 $5,108 $6,254 $1,487
Ratios of expenses to average net assets 2.23%(d) 2.15% 2.09% 2.03%(e) 2.29%(e)
Ratios of net investment income to
average net assets 1.37% 1.63% 2.32% 1.81%(e) 1.47%(e)
Portfolio turnover rate 207% 227% 179% 116% 188%
Average commission rate (f) $.0552 -- -- -- --
</TABLE>
See footnote summary on page 21.
20
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
ADVISOR CLASS
OCTOBER 2, 1996(G)
TO
JULY 31, 1997
------------------
Net asset value, beginning of period $14.79
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .23
Net realized and unrealized gain on investments 3.22
Net increase in net asset value from operations 3.45
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27)
Distributions from net realized gains (1.80)
Total dividends and distributions (2.07)
Net asset value, end of period $16.17
TOTAL RETURN
Total investment return based on net asset value (c) 25.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,565
Ratio of expenses to average net assets (d)(e) 1.30%
Ratio of net investment income to average net assets (e) 2.15%
Portfolio turnover rate 207%
Average commission rate (f) $.0552
(a) The Fund changed its fiscal year end from September 30 to July 31.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment returns calculated for periods of less than one year
are not annualized.
(d) Ratio reflects expenses grossed up for expense offset arrangement with the
transfer agent. For the year ended July 31, 1997, the net expense ratio was
1.46%, 2.24%, 2.22% and 1.29% for Class A, B, C and Advisor Class shares,
respectively.
(e) Annualized.
(f) For fiscal year beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
(g) Commencement of distribution.
21
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE BALANCED SHARES, INC.
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 Balanced Shares, Inc. at
July 31, 1997, 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 July 31, 1997 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
September 17, 1997
22
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)
DONALD J. ROBINSON (1)
OFFICERS
BRUCE W. CALVERT, EXECUTIVE VICE PRESIDENT
KATHLEEN CORBET, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
MATTHEW D. BLOOM, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
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
(1) Member of the Audit Committee.
23
ALLIANCE BALANCED SHARES
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.
BALAR
