ALLIANCE BALANCED SHARES
SEMI-ANNUAL REPORT
JANUARY 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
March 27, 1998
Dear Shareholder:
This semi-annual report contains an update of Alliance Balanced Shares
investment results and market activity for the period ended January 31, 1998.
INVESTMENT RESULTS
As you can see from the following chart, Alliance Balanced Shares Class A
shares outperformed its composite benchmark (comprised of 60% S&P 500 Stock
Index, 25% Lehman Brothers Government/Corporate Bond Index, 15% Salomon
Brothers 1-Year Treasury Index) for both the six month and 12 month periods
ended January 31, 1998. Your Fund's Class A shares achieved a total return of
6.06% at net asset value (NAV) for the six month period and 22.47% at NAV for
the 12 month period ended January 31, 1998. The composite benchmark posted
returns of 3.86% and 19.88% for the same six and 12 month time frames.
During 1997, a decline in inflation expectations, which benefits growth stocks
more than others, caused the largest and most expensive growth stocks to become
even more overvalued. In mid-year, as some large growth stocks had earnings
shortfalls, we continued to shy away from ownership of the more expensive
growth stocks and concentrated on their more modestly valued peers. Thus, in
the most recent six month period, we were able to exhibit higher returns than
such benchmarks as the S&P 500 Stock Index.
Significant positions that contributed to the Fund's outperformance of its peer
groups included ITT Corp., Cablevision Systems Corp., FPL Group, Inc. and an
overweighted position in oil service and drilling stocks. The bulk of this
outperformance occurred in the second half of the year.
INVESTMENT RESULTS*
Periods Ended January 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE BALANCED SHARES
Class A 6.06% 22.47%
Class B 5.74% 21.62%
Class C 5.72% 21.65%
S&P 500 STOCK INDEX 3.56% 26.90%
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX 5.12% 11.17%
SALOMON BROTHERS 1-YEAR
TREASURY BOND INDEX 2.97% 6.29%
COMPOSITE:
60% S&P 500/25% LB Gov.'t/
Corp. Bond Index/15% SB
1-Year Treasury Bond Index 3.86% 19.88%
* 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 JANUARY 31,
1998. ALL FEES AND EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN
DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN
SHARES ARE PURCHASED OR REDEEMED. TOTAL RETURN FOR ADVISOR CLASS SHARES WILL
DIFFER DUE TO DIFFERENT EXPENSES ASSOCIATED WITH THAT CLASS. RETURNS FOR THE
FUND AND ITS COMPARATIVE INDICES INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS
PAID DURING THE PERIOD. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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. ALL COMPARATIVE INDICES ARE UNMANAGED
AND REFLECT NO FEES OR EXPENSES. AN INVESTOR CANNOT INVEST DIRECTLY IN THE
INDICES.
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 January 31, 1998.
TOTAL RETURNS FOR THE PERIODS
ENDED JANUARY 31, 1998*
6 MONTHS 1 YEAR 5 YEARS 10 YEARS
-------- -------- -------- --------
ALLIANCE BALANCED SHARES
Class A Shares 6.06% 22.47% 12.27% 11.18%
LIPPER AVERAGE FOR BALANCED FUNDS 2.73% 16.52% 13.01% 12.60%
* 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 JANUARY 31, 1998. 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 TIME FRAME LISTED ABOVE ARE: 6 MONTHS, 380 FUNDS; 1
YEAR, 361 FUNDS; 5 YEARS, 110 FUNDS; AND 10 YEARS, 49 FUNDS. PAST PERFORMANCE
IS NOT INDICATIVE OF FUTURE RESULTS.
ECONOMIC OUTLOOK
The stock market continues to navigate between a very strong domestic economy,
with almost no inflation, and a weak situation in Asia. Equities continue to be
priced as if these forces will continue in balance and allow for decent
earnings growth with low interest rates. If this occurs, it would extend the
nearly perfect economic conditions of the last few years which have seen the
S&P 500 Stock Index increase by over 120% since the end of 1994.
PORTFOLIO STRATEGY
It would appear to us that the downside risks of the market reside with those
companies that are major exporters to third world and emerging nations.
Therefore, we remain cautious about multinational firms whose stock prices do
not reflect the possibility of serious slowdowns in their overseas markets for
technology, capital goods and consumer products. We continue to seek out the
stocks of companies with primarily secular growth potential plus a reasonable
valuation. We rely on Alliance's substantial internal research capabilities in
helping us to select stocks that we expect to deliver superior performance.
As always, we appreciate your interest and 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 JANUARY 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 22.47% 17.25%
Five Years 12.27% 11.30%
Ten Years 11.18% 10.70%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 21.62% 17.62%
Five Years 11.41% 11.41%
Since Inception* 11.29% 11.29%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 21.65% 20.65%
Since Inception* 12.02% 12.02%
SEC AVERAGE ANNUAL TOTAL RETURNS (AT MAXIMUM OFFERING PRICE) AS OF THE MOST
RECENT QUARTER-END (DECEMBER 31, 1997)
CLASS A CLASS B CLASS C
-------- -------- --------
1 Year 21.69% 22.07% 25.09%
5 Year 11.79% 11.88% n/a
10 Year 11.31% n/a n/a
The average annual total returns reflect reinvestment 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);
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. SEC average annual total returns
for the period shown reflect reinvestment of all distributions and deduction of
the maximum 4.25% front-end 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: 6/8/32, Class A; 2/4/91, Class B; 5/3/93, Class C.
n/a: not applicable.
3
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
ALLIANCE BALANCED SHARES . . .
SEEKING TO PROVIDE CURRENT INCOME FOR TODAY AND
GROWTH OF CAPITAL FOR THE FUTURE
Alliance Balanced Shares seeks high total return through a combination of
current income and capital appreciation.
The Fund 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 generally comprise about 60% of the portfolio under normal market
conditions. At times, however, stocks may make up to 75% of the portfolio. At
least 25% of the portfolio will normally be comprised of fixed-income
securities.
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 generally 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. The Fund may
also invest up to 15% in foreign equity and fixed income securities.
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
1/31/97 7/31/97 1/31/98
U.S. GOVERNMENT & MORTGAGES: 23.3%
U.S. GOVERNMENT & MORTGAGES: 21.3%
U.S. GOVERNMENT & MORTGAGES: 26.6%
CORPORATE BONDS: 13.9%
CORPORATE BONDS: 15.6%
CORPORATE BONDS: 9.1%
CASH: 3.1%
CASH: 0.6%
CASH: 6.2%
STOCKS: 60.5%
STOCKS: 61.7%
STOCKS: 58.1%
4
TEN LARGEST HOLDINGS
JANUARY 31, 1998 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $28,037,843 18.1%
U.S. Treasury Bond, 6.125%, 11/15/27 8,128,007 5.2
MBNA Corp. 3,669,258 2.4
Chase Manhattan Corp. 3,644,375 2.4
MGIC Investment Corp. 3,313,625 2.1
RJR Nabisco Holdings Corp. 3,307,500 2.1
USX-Marathon Group 2,919,937 1.9
FPL Group, Inc. 2,868,750 1.9
WorldCom, Inc. 2,700,826 1.7
First Data Corp. 2,646,000 1.7
$61,236,121 39.5%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
_______________________________________________________________________________
SHARES* OR PRINCIPAL
-------------------------------
PURCHASES BOUGHT HOLDINGS 1/31/98
- -------------------------------------------------------------------------------
Chase Manhattan Corp. 34,000 34,000
Commonwealth of Australia, 10.00%, 10/15/07 $2,750,000 $2,750,000
First Data Corp. 86,400 86,400
FPL Group, Inc. 50,000 50,000
Railcar Leasing LLC, 7.125%, 1/15/13 $2,000,000 $2,000,000
Tele-Communications, Inc., 9.80%, 2/01/12 $1,650,000 $1,650,000
U.S. Treasury Bond, 6.125%, 11/15/27 $7,785,000 $7,785,000
U.S. Treasury Note, 6.25%, 4/30/01 $7,250,000 $11,700,000
U.S. Treasury Note, 6.50%, 8/31/01 $6,900,000 $6,900,000
U.S. Treasury Note, 6.50%, 5/31/02 $4,800,000 $8,550,000
SALES SOLD HOLDINGS 1/31/98
- -------------------------------------------------------------------------------
Baker Hughes, Inc. 48,000 -0-
Halliburton Co. 50,000 -0-
ITT Corp. 50,000 -0-
Life Re Corp. 39,500 -0-
Time Warner, Inc. 50,000 -0-
Travelers Group, Inc. 13,914 18,086
U.S. Treasury Bond, 6.625%, 2/15/27 $2,460,000 -0-
U.S. Treasury Note, 6.125%, 8/31/98 $11,575,000 -0-
U.S. Treasury Note, 6.875%, 5/15/06 $2,650,000 -0-
Warner-Lambert Co. 14,700,000 -0-
* Adjusted for stock splits.
5
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-58.1%
FINANCE-11.0%
BANKING - MONEY CENTER-3.4%
Chase Manhattan Corp. 34,000 $ 3,644,375
Citicorp 14,000 1,666,000
------------
5,310,375
BROKERAGE & MONEY MANAGEMENT-1.0%
Morgan Stanley, Dean Witter, Discover and Co. 26,000 1,517,750
INSURANCE-1.5%
American International Group, Inc. 8,600 948,687
Hartford Life, Inc. Cl.A 11,000 470,938
Travelers Group, Inc. 18,086 895,257
------------
2,314,882
MISCELLANEOUS-5.1%
Household International, Inc. 7,900 983,550
MBNA Corp. 118,125 3,669,258
MGIC Investment Corp. 49,000 3,313,625
------------
7,966,433
------------
17,109,440
CONSUMER SERVICES-7.6%
AIRLINES-0.8%
Northwest Airlines Corp. Cl.A (a) 21,000 1,189,125
BROADCASTING & CABLE-1.6%
A.H. Belo Corp. Series A 19,500 1,046,906
Cablevision Systems Corp. Cl.A (a) 17,000 1,502,375
------------
2,549,281
ENTERTAINMENT & LEISURE-0.6%
Harley-Davidson, Inc. 35,000 879,375
PRINTING & PUBLISHING-1.4%
Gannett Co., Inc. 19,000 1,149,500
Reuters Holdings Plc Cl.B (ADR) (b) 20,000 1,070,000
------------
2,219,500
RETAIL - GENERAL MERCHANDISE-3.2%
Dayton Hudson Corp. 20,350 1,463,928
Federated Department Stores, Inc. (a) 40,800 1,728,900
Home Depot, Inc. 27,900 1,682,719
------------
4,875,547
------------
11,712,828
HEALTH CARE-7.3%
BIOTECHNOLOGY-1.2%
Centocor, Inc. (a) 35,000 1,403,281
Genzyme Corp. (a) 15,000 400,781
------------
1,804,062
DRUGS-3.4%
American Home Products Corp. 13,000 1,240,688
Merck & Co., Inc. 20,800 2,438,800
Schering-Plough Corp. 22,900 1,657,387
------------
5,336,875
MEDICAL PRODUCTS-1.0%
Baxter International, Inc. 18,000 1,002,375
Becton, Dickinson & Co. 10,000 631,250
------------
1,633,625
MEDICAL SERVICES-1.7%
PacifiCare Health Systems, Inc. Cl.B (a) 28,000 1,624,875
United Healthcare Corp. 19,000 973,750
------------
2,598,625
------------
11,373,187
ENERGY-7.3%
DOMESTIC INTEGRATED-1.9%
USX-Marathon Group 87,000 2,919,937
6
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
DOMESTIC PRODUCERS-2.4%
Apache Corp. 39,500 $ 1,308,437
Enron Oil & Gas Co. 24,000 480,000
Gulf Canada Resources, Ltd. (a)(c) 147,600 793,350
Murphy Oil Corp. 15,000 749,063
Union Pacific Resources Group, Inc. 20,000 447,500
------------
3,778,350
OIL SERVICE-2.9%
Nabors Industries, Inc. (a) 33,900 811,481
Noble Drilling Corp. (a) 56,500 1,511,375
Santa Fe International Corp. 20,500 749,531
Schlumberger, Ltd. 13,500 994,782
Transocean Offshore, Inc. 9,800 389,550
------------
4,456,719
MISCELLANEOUS-0.1%
AES Corp. (a) 1,700 72,781
------------
11,227,787
TECHNOLOGY-7.3%
COMMUNICATIONS EQUIPMENT-0.8%
Nokia Corp. (ADR) (d) 16,000 1,216,000
COMPUTER HARDWARE-1.4%
Compaq Computer Corp. 44,800 1,346,800
Hewlett-Packard Co. 14,000 840,000
------------
2,186,800
COMPUTER SERVICES-2.5%
Electronic Data Systems Corp. 27,700 1,153,012
First Data Corp. 86,400 2,646,000
------------
3,799,012
NETWORKING SOFTWARE-1.1%
CISCO Systems, Inc. (a) 27,000 1,703,531
SEMI-CONDUCTOR COMPONENTS-1.5%
Altera Corp. (a) 13,500 462,797
Atmel Corp. (a) 51,300 828,816
Xilinx, Inc. (a) 27,000 1,025,156
------------
2,316,769
------------
11,222,112
CONSUMER STAPLES-5.3%
COSMETICS-0.6%
Avon Products, Inc. 15,000 900,000
FOOD-1.3%
Campbell Soup Co. 23,200 1,241,200
Tyson Foods, Inc. Cl.A 46,000 830,875
------------
2,072,075
HOUSEHOLD PRODUCTS-0.6%
Viad Corp. 48,000 954,000
TOBACCO-2.8%
Loews Corp. 10,000 998,125
RJR Nabisco Holdings Corp. 105,000 3,307,500
------------
4,305,625
------------
8,231,700
UTILITIES-4.4%
ELECTRIC & GAS UTILITY-1.9%
FPL Group, Inc. 50,000 2,868,750
TELEPHONE UTILITY-2.5%
Teleport Communications Group, Inc. Cl.A (a) 21,100 1,177,644
WorldCom, Inc. (a) 75,350 2,700,826
------------
3,878,470
------------
6,747,220
BASIC INDUSTRIES-2.4%
CHEMICALS-1.7%
E.I. Du Pont de Nemours & Co. 29,100 1,647,787
Praxair, Inc. 21,600 895,050
------------
2,542,837
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
CONTAINERS-0.4%
Sealed Air Corp. (a) 10,400 $ 653,900
PAPER & FOREST PRODUCTS-0.3%
Jefferson Smurfit Corp. (a) 17,400 266,438
Stone Container Corp. (a) 20,000 255,000
------------
521,438
------------
3,718,175
MULTI INDUSTRY COMPANIES-2.2%
Tyco International, Ltd. 56,000 2,485,000
U.S. Industries, Inc. 33,000 926,063
------------
3,411,063
CAPITAL GOODS-2.0%
POLLUTION CONTROL-1.1%
USA Waste Services, Inc. (a) 24,000 882,000
Waste Management, Inc. 37,000 869,500
------------
1,751,500
MISCELLANEOUS-0.9%
United Technologies Corp. 17,300 1,412,113
------------
3,163,613
CONSUMER MANUFACTURING-0.7%
APPLIANCES-0.5%
Sunbeam Corp. 20,000 758,750
AUTO & RELATED-0.2%
Republic Industries, Inc. (a) 14,600 305,688
------------
1,064,438
AEROSPACE & DEFENSE-0.6%
AEROSPACE-0.6%
General Dynamics Corp. 11,000 948,750
Total Common Stocks
(cost $77,289,133) 89,930,313
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
DEBT OBLIGATIONS-35.7%
U.S. GOVERNMENT & AGENCY OBLIGATIONS-25.0%
Federal Home Loan Bank
7.00%, 9/01/11 $ 2,560 $ 2,619,459
U.S. Treasury Bond
6.125%, 11/15/27 7,785 8,128,007
U.S. Treasury Notes
6.25%, 4/30/01 11,700 11,996,127
6.50%, 8/31/01 6,900 7,140,396
6.50%, 5/31/02 8,550 8,901,320
------------
38,785,309
CORPORATE DEBT OBLIGATIONS-8.1%
ELECTRIC & GAS UTILITY-1.3%
Consolidated Edison Co.
6.45%, 12/01/07 2,000 2,036,490
FINANCIAL-2.7%
Railcar Leasing LLC
7.125%, 1/15/13 (e) 2,000 2,150,038
United Companies Financial Corp.
8.375%, 7/01/05 2,000 1,983,840
------------
4,133,878
INDUSTRIAL-4.1%
Tele-Communications, Inc.
9.80%, 2/01/12 1,650 2,054,811
The Williams Cos., Inc.
6.125%, 2/01/01 2,000 2,004,760
Turner Broadcasting Systems, Inc.
8.375%, 7/01/13 2,040 2,313,829
------------
6,373,400
------------
12,543,768
8
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
GOVERNMENT OBLIGATION-1.6%
AUSTRALIA-1.6%
Commonwealth of Australia
10.00%, 10/15/07 (f) $2,750 $ 2,424,470
YANKEE BOND-1.0%
Reliance Industries, Ltd.
10.375%, 6/24/16 (e) 1,650 1,595,976
Total Debt Obligations
(cost $54,376,604) 55,349,523
SHORT-TERM INVESTMENTS-6.2%
COMMERCIAL PAPER-4.9%
Ford Motor Credit Corp.
5.50%, 2/09/98 1,685 1,682,940
5.59%, 2/02/98 2,500 2,499,612
Prudential Funding Corp.
5.45%, 2/05/98 3,480 3,477,893
-------------
7,660,445
TIME DEPOSIT-1.3%
State Street Cayman Islands
5.25%, 2/02/98 $2,000 2,000,000
Total Short-Term Investments
(amortized cost $9,660,445) 9,660,445
TOTAL INVESTMENTS-100.0%
(cost $141,326,182) 154,940,281
Other assets less liabilities-0.0% 15,676
NET ASSETS-100% $154,955,957
(a) Non-income producing security.
(b) Country of origin--United Kingdom.
(c) Canadian holding.
(d) Country of origin--Finland.
(e) 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 January 31, 1998, the
aggregate market value of these securities amounted to $3,746,014 representing
2.4% of net assets.
(f) Security, or portion thereof, with aggregate market value of $2,424,470
has been segregated to collateralize forward exchange currency contracts.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $141,326,182) $154,940,281
Cash 20,805
Receivable for investment securities sold 1,742,948
Dividends and interest receivable 822,198
Receivable for capital stock sold 277,313
Prepaid expenses 5,872
Total assets 157,809,417
LIABILITIES
Payable for investment securities purchased 2,106,249
Unrealized depreciation of forward exchange currency contracts 203,662
Unclaimed dividends 90,989
Advisory fee payable 81,066
Distribution fee payable 53,490
Payable for capital stock redeemed 23,239
Accrued expenses 294,765
Total liabilities 2,853,460
NET ASSETS $154,955,957
COMPOSITION OF NET ASSETS
Capital stock, at par $ 104,746
Additional paid-in capital 131,951,823
Undistributed net investment income 264,796
Accumulated net realized gain on investments and foreign
currency transactions 9,222,663
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 13,411,929
$154,955,957
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($116,396,091/
7,820,492 shares of capital stock issued and outstanding) $14.88
Sales charge--4.25% of public offering price .66
Maximum offering price $15.54
CLASS B SHARES
Net asset value and offering price per share ($29,827,438/
2,056,248 shares of capital stock issued and outstanding) $14.51
CLASS C SHARES
Net asset value and offering price per share ($6,930,490/
476,792 shares of capital stock issued and outstanding) $14.54
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($1,801,938/121,033 shares of capital stock issued and
outstanding) $14.89
See notes to financial statements.
10
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $1,968,767
Dividends 461,427 $ 2,430,194
EXPENSES
Advisory fee 469,582
Distribution fee - Class A 139,649
Distribution fee - Class B 131,685
Distribution fee - Class C 29,543
Transfer agency 100,914
Custodian 64,997
Administrative 59,675
Registration 58,445
Audit and legal 51,460
Printing 46,869
Directors' fees 13,472
Miscellaneous 8,535
Total expenses 1,174,826
Net investment income 1,255,368
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investment transactions 19,896,047
Net realized gain on foreign currency transactions 174,072
Net change in unrealized appreciation (depreciation) of:
Investments (12,442,692)
Foreign currency denominated assets and liabilities (202,170)
Net gain on investments and foreign currency transactions 7,425,257
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 8,680,625
See notes to financial statements.
11
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JAN. 31, 1998 JULY 31,
(UNAUDITED) 1997
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,255,368 $ 2,595,635
Net realized gain on investments and foreign
currency transactions 20,070,119 8,481,507
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities (12,644,862) 27,536,311
Net increase in net assets from operations 8,680,625 38,613,453
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,121,437) (2,308,924)
Class B (193,415) (341,037)
Class C (43,197) (102,618)
Advisor Class (17,319) (10,350)
Net realized gain on investments
Class A (14,565,359) (12,582,512)
Class B (3,474,566) (2,409,113)
Class C (778,193) (793,084)
Advisor Class (200,006) (19,832)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 19,902,066 (335,371)
Total increase 8,189,199 19,710,612
NET ASSETS
Beginning of year 146,766,758 127,056,146
End of period (including undistributed net
investment income of $264,796 and $384,796,
respectively) $154,955,957 $146,766,758
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 (UNAUDITED) 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 are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
to investors participating in fee-based programs and to certain retirement plan
accounts. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price, or, if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Fund's Board of Directors. Fixed income securities may be valued on the basis
of prices obtained from a pricing service when such prices are believed to
reflect the fair value of such securities.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities, 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. The Fund does
not isolate the effect of fluctuations in foreign currency exchange rates when
determining the gain or loss upon the sale of equity securities. Net currency
gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates 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.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. The Fund accretes discounts and amortizes premiums as
adjustments to interest income. Investment gains and losses are determined on
the identified cost basis.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and Advisory Class shares (Advisor Class shares have no
distribution fees).
6. 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 regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of
.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 paid $59,675 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended January 31, 1998.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $76,066 for the six months ended January 31, 1998.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The
Distributor received front-end sales charges of $5,530 from the sales of Class
A shares, $16,867 and $1,087 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class B and Class C shares, respectively, for
the six months ended January 31, 1998.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 1998 amounted to $137,367, of which $625 was paid to Donaldson,
Lufkin & Jenrette Securities Corp., an affiliate of the Adviser.
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 and Class C shares. There is no distribution fee on the Advisor Class
shares. The fees are accrued daily and paid monthly. The Agreement provides
that the Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amount of
$234,383 and $2,533, for Class B and Class C shares, respectively; such costs
may be recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs incurred by the Distributor beyond the current
fiscal year for Class A shares. The Agreement also provides that the Adviser
may use its own resources to finance the distribution of the Fund's shares.
14
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $74,969,476 and $85,993,019,
respectively, for the six months ended January 31, 1998. There were purchases
of $56,347,566 and sales of $49,519,869 of U.S. government and government
agency obligations for the six months ended January 31, 1998.
At January 31, 1998, the cost of investments for federal income tax purposes
was $141,326,182. Accordingly, gross unrealized appreciation of investments was
$16,861,061 and gross unrealized depreciation of investments was $3,246,962
resulting in net unrealized appreciation of $13,614,099 excluding foreign
currency transactions.
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 foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contract is included in net realized gain or
loss on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. 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, 1998, the Fund had outstanding forward exchange currency
contracts, to buy 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
- ------------------------
Swedish Krona,
settling 4/20/98 20,085 $2,540,520 $2,481,100 $ (59,420)
FOREIGN CURRENCY SALE
CONTRACTS
- ------------------------
Australian Dollar,
settling 2/12/98 3,552 2,261,900 2,435,397 (173,497)
Swedish Krona,
settling 4/20/98 20,085 2,510,355 2,481,100 29,255
------------
$(203,662)
2. OPTION TRANSACTIONS
For hedging and investment 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
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
purchased are accounted for in the same manner as portfolio securities. The
cost of securities acquired through the exercise of call options is increased
by premiums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions,
is also treated as a realized gain, or if the premium is less than the amount
paid for the closing purchase transaction, as a realized loss. If a call option
is exercised, the premium received is added to the proceeds from the sale of
the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium received
reduces the cost basis of the security or currency purchased by the Fund. The
risk involved in writing an option is that, if the option was exercised the
underlying security could then be purchased or sold by the Fund at a
disadvantageous price.
For the six months ended January 31, 1998, the Fund did not engage in any
option transactions.
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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JAN. 31,1998 JULY 31, JAN. 31,1998 JULY 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------- ----------- --------------- -------------
CLASS A
Shares sold 290,323 308,965 $ 4,782,584 $ 4,417,304
Shares issued in
reinvestment of
dividends and
distributions 884,666 872,819 12,998,847 12,031,921
Shares converted
from Class B 24,157 37,939 388,498 545,801
Shares redeemed (522,646) (1,394,620) (8,387,193) (19,984,934)
Net increase(decrease) 676,500 (174,897) $ 9,782,736 $ (2,989,908)
CLASS B
Shares sold 446,342 414,263 $ 6,864,148 $ 5,850,511
Shares issued in
reinvestment of
dividends and
distributions 239,830 168,175 3,435,475 2,274,998
Shares converted
to Class A (24,711) (38,679) (388,498) (545,801)
Shares redeemed (133,183) (349,522) (2,059,836) (4,922,989)
Net increase 528,278 194,237 $ 7,851,289 $ 2,656,719
CLASS C
Shares sold 124,603 116,909 $ 1,897,580 $ 1,671,934
Shares issued in
reinvestment of
dividends and
distributions 51,919 50,995 745,175 690,495
Shares redeemed (47,222) (261,860) (729,094) (3,718,421)
Net increase(decrease) 129,300 (93,956) $ 1,913,661 $ (1,355,992)
16
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS OCTOBER 2, SIX MONTHS OCTOBER 2,
ENDED 1996(A) ENDED 1996(A)
JAN. 31,1998 TO, JAN. 31,1998 TO
(UNAUDITED) JULY 31,1997 (UNAUDITED) JULY 31,1997
------------ ------------- ------------- --------------
ADVISOR CLASS
Shares sold 13,302 99,609 $ 199,621 $ 1,393,347
Shares issued in
reinvestment of
dividends and
distributions 14,779 2,157 217,320 30,179
Shares redeemed (3,809) (5,005) (62,561) (69,716)
Net increase 24,272 96,761 $ 354,380 $ 1,353,810
(a) 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
------------------------------------------------------------------------------
SIX MONTHS OCTOBER 1,
ENDED 1993
JANUARY 31, YEAR ENDED JULY 31, THROUGH YEAR ENDED
1998 ------------------------------------- JULY 31, SEP. 30,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
------------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.17 $14.01 $15.08 $13.38 $14.40 $13.20
INCOME FROM INVESTMENT OPERATIONS
Net investment income .15(b) .31(b) .37 .46 .29 .34
Net realized and unrealized gain (loss)
on investment transactions .79 3.97 .45 1.62 (.74) 1.29
Net increase (decrease) in net asset
value from operations .94 4.28 .82 2.08 (.45) 1.63
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.16) (.32) (.41) (.36) (.28) (.43)
Distributions from net realized gains (2.07) (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (2.23) (2.12) (1.89) (.38) (.57) (.43)
Net asset value, end of period $14.88 $16.17 $14.01 $15.08 $13.38 $14.40
TOTAL RETURN
Total investment return based on net
asset value (c) 6.06% 33.46% 5.23% 15.99% (3.21)% 12.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $116,396 $115,500 $102,567 $122,033 $157,637 $172,484
Ratio of expenses to average net assets 1.40%(d) 1.47%(e) 1.38% 1.32% 1.27%(d) 1.35%
Ratio of net investment income to
average net assets 1.83%(d) 2.11% 2.41% 3.12% 2.50%(d) 2.50%
Portfolio turnover rate 91% 207% 227% 179% 116% 188%
Average commission rate (f) $.0565 $.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
------------------------------------------------------------------------------
SIX MONTHS OCTOBER 1,
ENDED 1993
JANUARY 31, YEAR ENDED JULY 31, THROUGH YEAR ENDED
1998 ------------------------------------- JULY 31, SEP. 30,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
------------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.83 $13.79 $14.88 $13.23 $14.27 $13.13
INCOME FROM INVESTMENT OPERATIONS
Net investment income .08(b) .19(b) .28 .30 .22 .29
Net realized and unrealized gain (loss)
on investment transactions .79 3.89 .42 1.65 (.75) 1.22
Net increase (decrease) in net asset
value from operations .87 4.08 .70 1.95 (.53) 1.51
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.12) (.24) (.31) (.28) (.22) (.37)
Distributions from net realized gains (2.07) (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (2.19) (2.04) (1.79) (.30) (.51) (.37)
Net asset value, end of period $14.51 $15.83 $13.79 $14.88 $13.23 $14.27
TOTAL RETURN
Total investment return based on net
asset value (c) 5.74% 32.34% 4.45% 15.07% (3.80)% 11.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $29,827 $24,192 $18,393 $15,080 $14,347 $12,789
Ratio of expenses to average net assets 2.18%(d) 2.25%(e) 2.16% 2.11% 2.05%(d) 2.13%
Ratio of net investment income to
average net assets 1.06%(d) 1.32% 1.61% 2.30% 1.73%(d) 1.72%
Portfolio turnover rate 91% 207% 227% 179% 116% 188%
Average commission rate (f) $.0565 $.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
--------------------------------------------------------------------------------
SIX MONTHS OCTOBER 1, MAY 3,
ENDED 1993 1993(G)
JANUARY 31, YEAR ENDED JULY 31, THROUGH TO
1998 ------------------------------------- JULY 31, SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
------------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.86 $13.81 $14.89 $13.24 $14.28 $13.63
INCOME FROM INVESTMENT OPERATIONS
Net investment income .08(b) .20(b) .26 .30 .24 .11
Net realized and unrealized gain (loss)
on investment transactions .79 3.89 .45 1.65 (.77) .71
Net increase (decrease) in net asset
value from operations .87 4.09 .71 1.95 (.53) .82
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.12) (.24) (.31) (.28) (.22) (.17)
Distributions from net realized gains (2.07) (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (2.19) (2.04) (1.79) (.30) (.51) (.17)
Net asset value, end of period $14.54 $15.86 $13.81 $14.89 $13.24 $14.28
TOTAL RETURN
Total investment return based on net
asset value (c) 5.72% 32.37% 4.52% 15.06% (3.80)% 6.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,931 $5,510 $6,096 $5,108 $6,254 $1,487
Ratio of expenses to average net assets 2.16%(d) 2.23%(e) 2.15% 2.09% 2.03%(d) 2.29%(d)
Ratio of net investment income to
average net assets 1.08%(d) 1.37% 1.63% 2.32% 1.81%(d) 1.47%(d)
Portfolio turnover rate 91% 207% 227% 179% 116% 188%
Average commission rate (f) $.0565 $.0552 -- -- -- --
</TABLE>
See footnote summary on page 21.
20
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
---------------------------
SIX MONTHS OCTOBER 2,
ENDED 1996(G)
JANUARY 31, TO
1998 JULY 31,
(UNAUDITED) 1997
----------- -------------
Net asset value, beginning of period $16.17 $14.79
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .16 .23
Net realized and unrealized gain
on investment transactions .81 3.22
Net increase in net asset
value from operations .97 3.45
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.18) (.27)
Distributions from net realized gains (2.07) (1.80)
Total dividends and distributions (2.25) (2.07)
Net asset value, end of period $14.89 $16.17
TOTAL RETURN
Total investment return based on net asset value (c) 6.25% 25.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,802 $1,565
Ratio of expenses to average net assets (d) 1.16% 1.30%(e)
Ratio of net investment income to
average net assets (d) 2.07% 2.15%
Portfolio turnover rate 91% 207%
Average commission rate $.0565 $.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) Annualized.
(e) 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.
(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
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 A. 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.
22
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term 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 Environment Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity 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 Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
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
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
23
ALLIANCE BALANCED SHARES
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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.
BALSR
