ALLIANCE BALANCED SHARES
SEMI-ANNUAL REPORT
JANUARY 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
March 26, 1999
Dear Shareholder:
We are pleased to report to you on our performance, investment strategy, and
outlook for Alliance Balanced Shares for the period ended January 31, 1999.
INVESTMENT RESULTS
Your Fund underperformed its unmanaged benchmark, a blend of 60% Standard &
Poor's 500 Stock Index, 25% Lehman Brothers Government/Corporate Bond Index,
and 15% Salomon Brothers 1-year Treasury Bond Index for the six-month period
ended January 31, 1999. The primary reason for this underperformance was that
the equity portion of the Fund did not perform as well as the S&P 500. The
performance of the S&P 500 continues to be dominated by several very large
companies with unusually high price/earnings ratios. Our stock selection
discipline is a valuation-based process that has led us to avoid these types of
securities that appear expensive and have become even more expensive over time.
We have been persuaded that these excesses tend to reverse themselves over a
full market cycle.
INVESTMENT RESULTS*
Periods Ended January 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE BALANCED SHARES
Class A 7.68% 16.75%
Class B 7.21% 15.72%
Class C 7.25% 15.75%
S&P 500 STOCK INDEX 15.02% 32.51%
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX 5.75% 8.72%
SALOMON BROTHERS 1-YEAR
TREASURY BOND INDEX 2.87% 5.60%
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
COMPOSITE:
60% S&P 500 Stock Index/
25% Lehman Brothers
Government/Corporate
Bond Index/
15% Salomon Brothers
1-year Treasury Bond
Index 10.88% 22.53%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE OF AS OF JANUARY 31, 1999. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. RETURNS FOR
THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE STANDARD AND POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX OF 500 U.S.
COMPANIES, AND IS A COMMON MEASURE OF THE PERFORMANCE OF THE OVERALL U.S. STOCK
MARKET. THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX IS A BROAD MEASURE
OF THE PERFORMANCE OF INTERMEDIATE (ONE TO TEN YEAR) GOVERNMENT AND CORPORATE
FIXED-RATE DEBT ISSUES. THE SALOMON BROTHERS 1-YEAR TREASURY BOND INDEX
REPRESENTS PERFORMANCE OF U.S. TREASURY BILLS WITH ONE-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 AN INDEX.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
1
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
Your Fund outperformed its peer group, the Lipper Balanced Funds Average, over
the past six- and 12-month periods, mainly due to good stock selection.
TOTAL RETURNS FOR THE PERIODS
ENDED JANUARY 31, 1999
----------------------------------------------
6 MONTHS 1 YEAR 5 YEARS 10 YEARS
-------- ------ ------- --------
ALLIANCE BALANCED SHARES
Class A Shares 7.68% 16.75% 13.67% 11.05%
LIPPER BALANCED
FUNDS AVERAGE 7.39% 14.62% 15.62% 13.63%
* THE SIX-MONTH RETURN IS A NON-ANNUALIZED TOTAL RETURN WHILE THE FIVE- AND
10-YEAR RETURNS ARE AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED JANUARY
31, 1999. THE LIPPER BALANCED FUNDS AVERAGE (LIPPER AVERAGE) REPRESENTS FUNDS
WITH GENERALLY SIMILAR INVESTMENT OBJECTIVES TO YOUR FUND, ALTHOUGH INVESTMENT
POLICIES FOR THE VARIOUS FUNDS MAY DIFFER. THE LIPPER AVERAGE RETURNS ARE BASED
ON TOTAL RETURNS AT NET ASSET VALUE, WITHOUT THE IMPOSITION OF SALES CHARGES,
WHICH WOULD REDUCE TOTAL RETURN FIGURES. THE TOTAL NUMBER OF FUNDS IN THE
LIPPER AVERAGE FOR EACH TIME FRAME LISTED ABOVE IS: SIX MONTHS, 434 FUNDS; ONE
YEAR, 418 FUNDS; FIVE YEARS, 171 FUNDS; AND 10 YEARS, 57 FUNDS. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
MARKET OVERVIEW
Despite global turmoil, the United States continued on a path of robust growth
driven by domestic consumer demand. Growth for all of 1998 matched the previous
year's growth at 3.9%. Manufacturing, however, remained weak as world export
markets declined. Inflation and unemployment remained historically low
throughout the period. The Federal Reserve, as a hedge against a slowing global
economy, lowered interest rates from 5.50% to 4.75%.
As a result of the financial crises in Japan and numerous emerging market
countries, the past 12 months have produced extremes in the performance of
various financial instruments. One such extreme has been the performance of
value stocks, in which price tends to be low relative to earnings or book
value. Growth stocks, on the other hand, show current business expectations
fostering higher prices for a given level of earnings. Over the past year, the
S&P 500 returned 32.51%, but if separated into growth and value components, the
growth segment's appreciation of 45.9% dwarfed the value portion's return of
18.5%.
The U.S. bond market posted solid returns in 1998. During the first half of the
year, interest rates remained relatively stable and investor demand for
yield-oriented securities, corporate bonds, as well as mortgage-backed
securities, was high. Despite strong U.S. economic growth, inflation remained
low, further increasing demand in the bond market. During the third quarter,
global markets suffered from heightened concerns about recession as the
financial and economic turmoil in Asia spread to Russia and Latin America. The
resulting flight to quality spurred a rally in the U.S. Treasury market and
other safe haven government bond markets outside the U.S., while negatively
impacting returns in the corporate, high yield, and mortgage bond sectors. In
the fourth quarter, the high yield sector rebounded along with equity markets
when the Federal Reserve cut interest rates.
INVESTMENT STRATEGY
Recognizing the high levels of equity valuations, we are currently slightly
underweighted in equities versus our benchmark of 60%. In the equities area, we
will maintain our focus on securities that have the most attractive valuations,
while also maintaining a well diversified portfolio with a high degree of
sector and industry diversification.
OUTLOOK
We are hopeful that the Federal Reserve's action in lowering U.S. interest
rates last fall is the catalyst for value stocks to improve their performance
in 1999, as confidence returns to the markets and demand for investments
broadens out beyond a small group of large-capitalization stocks.
We believe the risk of global recession has diminished after the recent wave of
official interest rate cuts around the world. However, we believe global growth
should continue to slow and inflation will remain subdued as the consequences
of excess productive capacity are felt around the world. U.S. economic activity
is expected to be moderate, with growth estimates centered around 2.9% for
1999. U.S. interest rates and inflation should remain low, allowing the U.S.
Treasury market to continue to provide a safe haven during times of volatility.
Thank you for your continued interest in Alliance Balanced Shares. We look
forward to reporting to you on
2
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
your Fund's investment results and portfolio strategy in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Paul Rissman
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
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
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF JANUARY 31, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 16.75% 11.79%
Five Years 13.67% 12.69%
10 Years 11.05% 10.57%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 15.72% 11.72%
Five Years 12.78% 12.78%
Since Inception* 11.84% 11.84%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 15.75% 14.75%
Five Years 12.80% 12.80%
Since Inception* 12.68% 12.68%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (DECEMBER
31, 1998)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year 10.84% 10.78% 13.89%
5 Years 12.95% 13.04% 13.08%
10 Years 11.25% 11.86** 12.76**
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 2/4/91, Class B; 5/3/93, Class C.
** Since Inception.
4
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 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*
1/31/98
U.S. GOVERNMENT & MORTGAGES: 25.0%
CORPORATE BONDS: 9.1%
CASH: 6.2%
FOREIGN GOVERNMENT: 1.6%
STOCKS: 58.1%
7/31/98
U.S. GOVERNMENT & MORTGAGES: 23.8%
CORPORATE BONDS: 9.6%
CASH: 13.0%
STOCKS: 53.6%
1/31/99
U.S. GOVERNMENT & AGENCY OBLIGATIONS: 24.1%
CORPORATE BONDS: 12%
CASH: 9.6%
STOCKS: 54.3%
* Based on total net assets.
5
TEN LARGEST HOLDINGS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 54,353,630 19.3%
U.S. Treasury Bonds 13,902,601 4.9
Household International, Inc. 7,236,506 2.6
Bristol-Myers Squibb Co. 6,614,475 2.3
Tenet Healthcare Corp. 6,328,750 2.2
BankAmerica Corp. 5,632,614 2.0
Citigroup, Inc. 5,246,609 1.9
Tyco International, Ltd. 4,962,825 1.7
MBNA Corp. 4,950,162 1.7
Tyson Foods, Inc. Cl.A 4,813,531 1.7
$ 114,041,703 40.3%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
SHARES OR PRINCIPAL
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 1/31/99
- -------------------------------------------------------------------------------
BankAmerica Corp. 84,226 84,226
Household International, Inc. 141,000 164,700
Tenet Healthcare Corp. 305,000 305,000
U.S. Treasury Bond, 5.25%, 11/15/28 $ 4,875,000 $ 4,875,000
U.S. Treasury Bond, 5.50%, 8/15/28 $ 3,725,000 $ 3,725,000
U.S. Treasury Bond, 6.25%, 8/15/23 $ 3,000,000 $ 3,000,000
U.S. Treasury Note, 5.75%, 8/15/03 $ 7,355,000 $ 7,355,000
U.S. Treasury Note, 6.25%, 4/30/01 $ 6,325,000 $15,250,000
U.S. Treasury Note, 6.50%, 8/31/01 $ 6,800,000 $10,450,000
U.S. Treasury Note, 6.875%, 5/15/06 $ 2,475,000 $ 2,475,000
HOLDINGS
SALES SOLD 1/31/99
- -------------------------------------------------------------------------------
Auburn Hills Trust, 12.00%, 5/01/20 $ 1,250,000 -0-
Australian Gas Light Co., 6.40%, 4/15/08 $ 2,000,000 -0-
Chase Manhattan Corp. 23,600 44,400
Federal Home Loan Bank, 7.00%, 9/01/11 $ 2,269,286 -0-
Federal National Mortgage Association 36,000 -0-
Federal National Mortgage Association,
7.00%, 5/01/28 $ 2,937,000 -0-
Government National Mortgage Association,
7.00%, 3/15/28 $ 2,849,000 -0-
U.S. Treasury Bond, 6.125%, 11/15/27 $ 7,125,000 $ 1,450,000
U.S. Treasury Bond, 6.375%, 8/15/27 $ 3,740,000 -0-
The Williams Cos., Inc., 6.125%, 2/01/01 $ 2,000,000 -0-
6
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-54.3%
FINANCE-11.6%
BANKING - MONEY CENTER-1.2%
Chase Manhattan Corp. 44,400 $ 3,416,025
BANKING - REGIONAL-3.1%
Bank One Corp. 59,100 3,095,362
BankAmerica Corp. 84,226 5,632,614
------------
8,727,976
INSURANCE-2.5%
Citigroup, Inc. 93,585 5,246,609
PMI Group, Inc. 16,000 686,000
Travelers Property Casualty Corp. C1.A 34,800 1,002,675
------------
6,935,284
MISCELLANEOUS-4.8%
Associates First Capital Corp. Cl.A 34,800 1,411,575
Household International, Inc. 164,700 7,236,506
MBNA Corp. 177,187 4,950,162
------------
13,598,243
------------
32,677,528
TECHNOLOGY-8.4%
COMMUNICATIONS EQUIPMENT-1.0%
Firstcom Corp. warrants, expiring
10/27/07 (a)(b) 14,000 7,882
Nokia Corp. (ADR) (Finland) 19,000 2,736,000
Optel, Inc. warrants, expiring
12/30/04 (a) 1,000 35
------------
2,743,917
COMPUTER HARDWARE-0.5%
Compaq Computer Corp. 28,600 1,362,075
COMPUTER SERVICES-2.9%
Electronic Data Systems Corp. 76,000 3,985,250
First Data Corp. 112,100 4,294,831
------------
8,280,081
COMPUTER SOFTWARE-0.6%
Oracle Corp. (a) 33,300 1,842,947
NETWORKING SOFTWARE-0.8%
Ascend Communications, Inc. (a) 19,200 1,679,400
FORE Systems, Inc. (a) 30,000 505,312
------------
2,184,712
SEMI-CONDUCTOR COMPONENTS-1.3%
Altera Corp. (a) 42,500 2,668,203
Atmel Corp. (a) 53,800 953,269
------------
3,621,472
MISCELLANEOUS-1.3%
CSC Holdings, Inc. 342 39,587
Sanmina Corp. (a) 18,600 1,231,087
Solectron Corp. (a) 26,800 2,386,875
------------
3,657,549
------------
23,692,753
CONSUMER STAPLES-8.1%
BEVERAGES-0.5%
Coca-Cola Enterprises, Inc. 40,000 1,415,000
COSMETICS-0.8%
Avon Products, Inc. 64,200 2,371,388
FOOD-3.0%
Campbell Soup Co. 49,900 2,342,181
Coca-Cola Co. 19,000 1,243,313
Tyson Foods, Inc. Cl.A 229,900 4,813,531
------------
8,399,025
HOUSEHOLD PRODUCTS-1.8%
Colgate-Palmolive Co. 21,200 1,705,275
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
Procter & Gamble Co. 20,500 $ 1,862,937
Viad Corp. 48,000 1,377,000
------------
4,945,212
TOBACCO-2.0%
Philip Morris Cos., Inc. 64,500 3,031,500
RJR Nabisco Holdings Corp. 97,000 2,619,000
------------
5,650,500
------------
22,781,125
HEALTH CARE-6.1%
BIOTECHNOLOGY-0.3%
Genzyme Corp. (a) 15,000 816,094
DRUGS-2.3%
Bristol-Myers Squibb Co. 51,600 6,614,475
MEDICAL SERVICES-3.5%
Columbia HCA/Healthcare Corp. 96,800 1,754,500
PacifiCare Health Systems, Inc. Cl.B (a) 25,300 1,794,718
Tenet Healthcare Corp. (a) 305,000 6,328,750
------------
9,877,968
------------
17,308,537
CONSUMER SERVICES-6.1%
AIRLINES-0.5%
AMR Corp. (a) 17,400 1,022,250
Northwest Airlines Corp. C1.A (a) 10,800 293,288
------------
1,315,538
APPAREL-0.2%
Nautica Enterprises, Inc. (a) 31,000 489,219
BROADCASTING & CABLE-1.1%
A.H. Belo Corp. Series A 73,100 1,375,194
Air-Touch Communications, Inc. (a) 19,000 1,834,687
------------
3,209,881
ENTERTAINMENT & LEISURE-1.6%
Carnival Corp. Cl.A 10,000 490,625
Harley-Davidson, Inc. 42,100 2,189,200
Mirage Resorts, Inc. (a) 20,000 286,250
Royal Caribbean Cruises, Ltd. 41,600 1,653,600
------------
4,619,675
PRINTING & PUBLISHING-0.4%
American Banknote Corp., warrants, expiring
12/01/02 (a)(b) 1,000 1,000
Donnelley (R.R.) & Sons Co. 5,500 207,281
Gannett Co., Inc. 13,200 868,725
------------
1,077,006
RETAIL - GENERAL MERCHANDISE-2.3%
Dayton Hudson Corp. 61,500 3,920,625
Federated Department Stores, Inc. (a) 40,800 1,705,950
Saks, Inc. (a) 23,600 868,775
------------
6,495,350
------------
17,206,669
ENERGY-4.5%
DOMESTIC INTEGRATED-0.9%
USX-Marathon Group 112,200 2,552,550
DOMESTIC PRODUCERS-0.8%
Apache Corp. 79,500 1,530,375
Murphy Oil Corp. 15,000 547,500
Union Pacific Resources Group, Inc. 20,000 161,250
------------
2,239,125
OIL SERVICE-2.6%
BJ Services Co. (a) 105,000 1,548,750
Halliburton Co. 74,100 2,199,844
Noble Drilling Corp. (a) 215,200 2,878,300
8
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
Santa Fe International Corp. 20,500 $ 281,875
Transocean Offshore, Inc. 24,800 633,950
------------
7,542,719
MISCELLANEOUS-0.2%
AES Corp. (a) 15,700 528,894
------------
12,863,288
UTILITIES-4.0%
ELECTRIC & GAS UTILITY-1.4%
CMS Energy Corp. 5,300 226,906
Consolidated Edison, Inc. 52,200 2,580,637
FPL Group, Inc. 23,900 1,311,513
------------
4,119,056
TELEPHONE UTILITY-2.6%
AT&T Corp. 39,897 3,620,653
MCI Worldcom, Inc. (a) 45,950 3,663,077
Viatel, Inc. warrants, expiring 4/15/03 (a) 527 68,510
------------
7,352,240
MISCELLANEOUS-0.0%
Long Distance International, Inc.
warrants, expiring 4/13/08 (a) 1,000 2,500
------------
11,473,796
CAPITAL GOODS-2.4%
MACHINERY-0.4%
Case Corp. 52,600 996,113
MISCELLANEOUS-2.0%
Allied-Signal, Inc. 34,000 1,326,000
United Technologies Corp. 36,400 4,347,525
------------
5,673,525
------------
6,669,638
MULTI INDUSTRY COMPANIES-2.2%
Honeywell, Inc. 2,600 169,488
Tyco International, Ltd. 64,400 4,962,825
U.S. Industries, Inc. 62,300 1,175,912
------------
6,308,225
BASIC INDUSTRIES-0.7%
CHEMICALS-0.7%
Dow Chemical Co. 11,000 968,688
Praxair, Inc. 32,200 1,040,462
------------
2,009,150
CONSUMER MANUFACTURING-0.2%
TEXTILE PRODUCTS-0.2%
Tommy Hilfiger Corp. (a) 9,000 634,500
Total Common Stocks & Other Investments
(cost $126,700,946) 153,625,209
DEBT OBLIGATIONS-36.1%
U.S. GOVERNMENT & AGENCY OBLIGATIONS-24.1%
U.S. Treasury Bonds
5.25%, 11/15/28 $ 4,875 4,994,584
5.50%, 8/15/28 3,725 3,905,998
6.125%, 11/15/27 1,450 1,631,699
6.25%, 8/15/23 3,000 3,370,320
U.S. Treasury Notes
4.25%, 11/15/03 1,375 1,358,459
5.25%, 8/15/03 2,050 2,105,412
5.625%, 2/28/01 2,000 2,039,060
5.75%, 8/15/03 7,355 7,690,535
6.25%, 4/30/01 15,250 15,767,127
6.50%, 8/31/01 10,450 10,915,339
6.50%, 5/31/02 11,050 11,680,181
6.875%, 5/15/06 2,475 2,797,517
------------
68,256,231
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-10.9%
AEROSPACE & DEFENSE-0.4%
Raytheon Co.
5.70%, 11/01/03 $ 1,000 $ 1,006,360
AUTOMOTIVE-0.5%
Federal Mogul Corp.
7.75%, 7/01/06 1,500 1,522,241
BANKING-0.9%
Bank One Texas
6.25%, 2/15/08 500 517,695
Chase Manhattan Corp.
6.375%, 4/01/08 1,555 1,616,530
Citicorp
6.375%, 11/15/08 500 515,265
------------
2,649,490
ELECTRIC & GAS UTILITY-1.3%
CMS Energy Corp.
7.50%, 1/15/09 500 516,548
Connecticut Light & Power Co.
6.125%, 2/01/04 1,000 976,160
Niagara Mohawk Power Corp.
7.75%, 10/01/08 1,000 1,105,069
Public Service Co.
7.10%, 8/01/05 1,000 1,009,373
------------
3,607,150
ELECTRONICS-0.4%
Motorola, Inc.
6.50%, 11/15/28 1,000 1,027,540
FINANCIAL-0.9%
Advanta Capital Trust I
8.99%, 12/17/26 1,000 406,155
Household Finance Corp.
6.50%, 11/15/08 1,000 1,044,250
Merrill Lynch & Co., Inc.
6.375%, 10/15/08 1,000 1,042,001
------------
2,492,406
INDUSTRIAL-2.7%
Aramark Services, Inc.
7.00%, 7/15/06 575 593,917
CBS Corp.
7.15%, 5/20/05 1,000 1,057,360
Comcast Cable Communications
6.20%, 11/15/08 2,500 2,570,873
Harrahs Operating, Inc.
7.50%, 1/15/09 1,000 1,009,525
Qwest Communications
International, Inc.
7.25%, 11/01/08 1,465 1,547,406
Seagate Technology, Inc.
7.45%, 3/01/37 1,000 968,710
------------
7,747,791
INSURANCE-1.6%
Arkwright CSN Trust
9.625%, 8/15/26 (b) 1,000 1,160,610
Frank Russell & Co.
5.625%, 1/15/09 1,000 1,002,664
Prudential Insurance Co.
8.30%, 7/01/25 (b) 2,000 2,427,454
------------
4,590,728
RETAIL-0.4%
Rite Aid Corp.
6.125%, 12/15/08 (b) 1,000 1,010,810
SURFACE TRANSPORTATION-0.4%
Union Pacific Corp.
6.625%, 2/01/08 1,100 1,149,293
TELEPHONE UTILITIES-1.4%
Long Distance International, Inc.
12.25%, 4/15/08 (b) 1,000 800,000
MCI Worldcom, Inc.
6.95%, 8/15/28 1,000 1,084,858
Sprint Capital Corp.
6.125%, 11/15/08 1,000 1,026,319
10
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
TPSA Finance BV
7.75%, 12/10/08 (b) $ 500 $ 497,573
Viatel, Inc.
0.00%, 4/15/08 (b)(c) 1,000 595,000
------------
4,003,750
------------
30,807,559
YANKEE BOND-1.1%
Empresa Electrica Del Norte, SA
7.75%, 3/15/06 (b) 1,685 758,250
Fuji LLC Pfd
9.87%, 12/31/49 (b)(c) 1,200 907,479
Province of Quebec
7.00%, 1/30/07 1,000 1,084,320
Tenaga Nasional Berhad
7.625%, 4/29/07 500 394,600
------------
3,144,649
Total Debt Obligations
(cost $103,307,099) 102,208,439
SHORT-TERM INVESTMENTS-8.7%
COMMERCIAL PAPER-8.7%
American Express Co.
4.84%, 2/05/99 6,475 6,471,518
Ford Motor Credit Corp.
4.80%, 2/04/99 1,600 1,599,360
4.80%, 2/05/99 2,900 2,898,453
General Electric Capital Corp.
4.82%, 2/12/99 11,400 11,383,210
Prudential Funding Corp.
4.84%, 2/10/99 2,160 2,157,387
Total Short-Term Investments
(cost $24,509,928) 24,509,928
TOTAL INVESTMENTS-99.1%
(cost $254,517,973) 280,343,576
Other assets less liabilities-0.9% 2,502,112
NET ASSETS-100% $282,845,688
(a) Non-income producing security.
(b) 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, 1999, the
aggregate market value of these securities amounted to $8,166,058 representing
2.9% of net assets.
(c) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at January 31, 1999.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
11
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $254,517,973) $ 280,343,576
Cash 158,139
Dividends and interest receivable 1,971,427
Receivable for capital stock sold 1,176,334
Receivable for investment securities sold 510,000
Prepaid expenses 7,712
Total assets 284,167,188
LIABILITIES
Payable for investment securities purchased 627,021
Payable for capital stock redeemed 166,742
Distribution fee payable 141,163
Advisory fee payable 121,619
Unclaimed dividends 90,989
Accrued expenses 173,966
Total liabilities 1,321,500
NET ASSETS $ 282,845,688
COMPOSITION OF NET ASSETS
Capital stock, at par $ 188,193
Additional paid-in capital 252,091,004
Undistributed net investment income 245,846
Accumulated net realized gain on investments and
foreign currency transactions 4,495,042
Net unrealized appreciation of investments 25,825,603
$ 282,845,688
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($146,253,492 / 9,586,516 shares of capital stock
issued and outstanding) $15.26
Sales charge--4.25% of public offering price .68
Maximum offering price $15.94
CLASS B SHARES
Net asset value and offering price per share
($79,805,293 / 5,403,508 shares of capital stock
issued and outstanding) $14.77
CLASS C SHARES
Net asset value and offering price per share
($54,295,754 / 3,666,045 shares of capital stock
issued and outstanding) $14.81
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($2,491,149 / 163,211 shares of capital stock
issued and outstanding) $15.26
See notes to financial statements.
12
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $2,973,170
Dividends 827,308 $ 3,800,478
EXPENSES
Advisory fee 667,743
Distribution fee - Class A 157,741
Distribution fee - Class B 296,512
Distribution fee - Class C 145,400
Transfer agency 154,759
Administrative 81,234
Custodian 54,560
Audit and legal 40,067
Registration 29,203
Printing 21,241
Directors' fees 14,674
Miscellaneous 20,671
Total expenses 1,683,805
Less: expense offset arrangement (see Note B) (13,614)
Net expenses 1,670,191
Net investment income 2,130,287
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 7,216,464
Net realized loss on foreign currency
transactions (38,551)
Net change in unrealized appreciation
(depreciation) of:
Investments 10,596,150
Foreign currency denominated assets
and liabilities (33,701)
Net gain on investments and foreign
currency transactions 17,740,362
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 19,870,649
See notes to financial statements.
13
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,130,287 $ 3,053,339
Net realized gain on investments and foreign
currency transactions 7,177,913 29,332,189
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 10,562,449 (10,793,637)
Net increase in net assets from operations 19,870,649 21,591,891
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,470,770) (2,363,867)
Class B (566,087) (490,313)
Class C (313,995) (113,289)
Advisor Class (26,472) (39,763)
Net realized gain on investments
Class A (12,913,255) (14,565,359)
Class B (6,056,631) (3,474,566)
Class C (1,923,365) (778,193)
Advisor Class (212,403) (200,006)
CAPITAL STOCK TRANSACTIONS
Net increase 102,172,177 37,952,547
Total increase 98,559,848 37,519,082
NET ASSETS
Beginning of year 184,285,840 146,766,758
End of period (including undistributed net
investment income of $245,846 and $492,883,
respectively) $282,845,688 $184,285,840
See notes to financial statements.
14
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 (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 may be subject to a contingent
deferred sales charge of 1%. Class B shares are currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. 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 sale price or if no sale occurred, at the
mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. Fixed income securities which
mature in 60 days or less are valued at amortized cost, unless this method does
not represent fair value. Securities for which current market quotations are
not readily available are valued at their fair value as determined in good
faith by, or in accordance with procedures adopted by, the Board of 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 market 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, and foreign exchange
currency contracts and currency gains and losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of foreign currency denominated dividends and interest recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
The Fund does not isolate the effect of fluctuations in foreign currency
exchange rates when determining the gain or loss upon the sale of equity
securities. Net currency gains and losses from valuing foreign currency
denominated assets and liabilities at year end exchange rates are reflected as
a component of net unrealized appreciation of 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.
15
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 trade date securities
are purchased or sold. The Fund accretes discounts and amortizes premiums as
adjustments to interest income. Investment gains and losses are determined on
the identified cost basis.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisor Class shares have no distribution fees.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences, do
not require such reclassification.
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 1% of the first $200 million, .50 of 1% of the next $200 million and
.45 of 1% 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 $81,234 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, 1999.
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 $141,145 for the six months ended January 31, 1999.
In addition, for the six months ended January 31, 1999, the Fund's expenses
were reduced by $13,614 under an expense offset arrangement with Alliance Fund
Services, Inc. Transfer agency fees reported in the statement of operations
exclude these credits.
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 $16,147 from the sales of Class
A shares and $53,275, and $5,955 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, 1999.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 1999 amounted to $132,267, of which $4,500 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 1% 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
$3,462,993 and $704,671, for Class B and Class C
16
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
shares, respectively; such costs may be recovered from the Fund in future
periods as 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.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $120,005,066 and $62,265,261,
respectively, for the six months ended January 31, 1999. There were purchases
of $89,954,043 and sales of $69,891,401 of U.S. government and government
agency obligations for the six months ended January 31, 1999.
At January 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes. Gross
unrealized appreciation of investments was $37,015,509 and gross unrealized
depreciation of investments was $11,189,906 resulting in net unrealized
appreciation of $25,825,603 excluding foreign currency transactions.
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 contracts is included in net realized gain or
loss on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. 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, 1999, the Fund had no outstanding forward exchange currency
contracts, to sell foreign currencies against the U.S. dollar.
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 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
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE BALANCED SHARES
_______________________________________________________________________________
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, 1999, the Fund did not engage in any
option transactions.
NOTE E: CAPITAL STOCK
There are 12,000,000,000 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 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 1,609,149 783,081 $ 24,264,393 $ 12,635,293
Shares issued in
reinvestment of
dividends and
distributions 795,514 944,535 11,629,100 13,941,229
Shares converted
from Class B 47,895 50,090 738,277 801,099
Shares redeemed (606,172) (1,181,568) (9,077,742) (18,857,650)
Net increase 1,846,386 596,138 $ 27,554,028 $ 8,519,971
CLASS B
Shares sold 2,490,162 1,722,326 $ 36,534,437 $ 26,664,861
Shares issued in
reinvestment of
dividends and
distributions 376,336 257,589 5,331,787 3,707,795
Shares converted
to Class A (49,289) (51,381) (738,277) (801,099)
Shares redeemed (484,379) (385,826) (6,957,416) (5,962,038)
Net increase 2,332,830 1,542,708 $ 34,170,531 $ 23,609,519
CLASS C
Shares sold 3,160,546 444,670 $ 42,536,929 $ 6,856,999
Shares issued in
reinvestment of
dividends and
distributions 118,261 55,815 1,681,499 805,036
Shares redeemed (309,860) (150,879) (4,218,351) (2,339,536)
Net increase 2,968,947 349,606 $ 40,000,077 $ 5,322,499
ADVISOR CLASS
Shares sold 26,214 28,502 $ 348,900 $ 441,571
Shares issued in
reinvestment of
dividends and
distributions 16,195 16,203 236,802 239,736
Shares redeemed (9,349) (11,315) (138,161) (180,749)
Net increase 33,060 33,390 $ 447,541 $ 500,558
18
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
NOTEF: ACQUISITION OF ALLIANCE INCOME BUILDER
On November 13, 1998 the Fund acquired all of the assets of Alliance Income
Builder pursuant to the plan of reorganization approved by Alliance Income
Builder shareholders on November 2, 1998. The acquisition was accomplished by a
tax-free exchange of 3,540,562 shares of the Fund for 4,942,481 shares of
Alliance Income Builder on November 13, 1998. The aggregate net assets of the
Fund and Alliance Income Builder immediately before the acquisition were
$191,606,941 and $48,749,196. Immediately after the acquisition the combined
net assets of the Fund amounted to $240,356,137.
NOTE G: SUBSEQUENT EVENT
On February 1, 1999 the Fund acquired all of the assets of Alliance Strategic
Balanced Fund pursuant to the plan of reorganization approved by Alliance
Strategic Balanced Fund shareholders on December 18, 1998. The acquisition was
accomplished by a tax-free exchange of 2,394,940 shares of the Fund for
3,232,951 shares of Alliance Strategic Balanced Fund on February 1, 1999. The
aggregate net assets of the Fund and Alliance Strategic Balanced Fund
immediately before the acquisition were $281,968,797 and $56,818,236.
Immediately after the acquisition the combined net assets of the Fund amounted
to $338,787,033.
NOTE H: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
the miscellaneous expenses in the statement of operations. The Fund did not
utilize the Facility during the six months ended January 31, 1999.
19
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
1999 -------------------------------------------------- JULY 31, SEPTEMBER 30,
(UNAUDITED) 1998 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.97 $16.17 $14.01 $15.08 $13.38 $14.40 $13.20
INCOME FROM INVESTMENT OPERATIONS
Net investment income .17(b) .33(b) .31(b) .37 .46 .29 .34
Net realized and unrealized gain (loss)
on investment transactions .95 1.86 3.97 .45 1.62 (.74) 1.29
Net increase (decrease) in net asset
value from operations 1.12 2.19 4.28 .82 2.08 (.45) 1.63
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.18) (.32) (.32) (.41) (.36) (.28) (.43)
Distributions from net realized gains (1.65) (2.07) (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (1.83) (2.39) (2.12) (1.89) (.38) (.57) (.43)
Net asset value, end of period $15.26 $15.97 $16.17 $14.01 $15.08 $13.38 $14.40
TOTAL RETURN
Total investment return based on net
asset value (c) 7.68% 14.99% 33.46% 5.23% 15.99% (3.21)% 12.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $146,253 $123,623 $115,500 $102,567 $122,033 $157,637 $172,484
Ratio of expenses to average net assets 1.25%(d)(e) 1.30%(e) 1.47%(e) 1.38% 1.32% 1.27%(d) 1.35%
Ratio of net investment income to
average net assets 2.27%(d) 2.07% 2.11% 2.41% 3.12% 2.50%(d) 2.50%
Portfolio turnover rate 67% 145% 207% 227% 179% 116% 1.88%
</TABLE>
See footnote summary on page 23.
20
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
1999 -------------------------------------------------- JULY 31, SEPTEMBER 30,
(UNAUDITED) 1998 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.54 $15.83 $13.79 $14.88 $13.23 $14.27 $13.13
INCOME FROM INVESTMENT OPERATIONS
Net investment income .11(b) .21(b) .19(b) .28 .30 .22 .29
Net realized and unrealized gain (loss)
on investment transactions .91 1.81 3.89 .42 1.65 (.75) 1.22
Net increase (decrease) in net asset
value from operations 1.02 2.02 4.08 .70 1.95 (.53) 1.51
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.14) (.24) (.24) (.31) (.28) (.22) (.37)
Distributions from net realized gains (1.65) (2.07) (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (1.79) (2.31) (2.04) (1.79) (.30) (.51) (.37)
Net asset value, end of period $14.77 $15.54 $15.83 $13.79 $14.88 $13.23 $14.27
TOTAL RETURN
Total investment return based on net
asset value (c) 7.21% 14.13% 32.34% 4.45% 15.07% (3.80)% 11.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $79,805 $47,728 $24,192 $18,393 $15,080 $14,347 $12,789
Ratio of expenses to average net assets 2.00%(d)(e) 2.06%(e) 2.25%(e) 2.16% 2.11% 2.05%(d) 2.13%
Ratio of net investment income to
average net assets 1.51%(d) 1.34% 1.32% 1.61% 2.30% 1.73%(d) 1.72%
Portfolio turnover rate 67% 145% 207% 227% 179% 116% 188%
</TABLE>
See footnote summary on page 23.
21
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(F)
JANUARY 31, YEAR ENDED JULY 31, THROUGH TO
1999 -------------------------------------------------- JULY 31, SEPTEMBER 30,
(UNAUDITED) 1998 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.57 $15.86 $13.81 $14.89 $13.24 $14.28 $13.63
INCOME FROM INVESTMENT OPERATIONS
Net investment income .11(b) .21(b) .20(b) .26 .30 .24 .11
Net realized and unrealized gain (loss)
on investment transactions .92 1.81 3.89 .45 1.65 (.77) .71
Net increase (decrease) in net asset
value from operations 1.03 2.02 4.09 .71 1.95 (.53) .82
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.14) (.24) (.24) (.31) (.28) (.22) (.17)
Distributions from net realized gains (1.65) (2.07) (1.80) (1.48) (.02) (.29) -0-
Total dividends and distributions (1.79) (2.31) (2.04) (1.79) (.30) (.51) (.17)
Net asset value, end of period $14.81 $15.57 $15.86 $13.81 $14.89 $13.24 $14.28
TOTAL RETURN
Total investment return based on net
asset value (c) 7.25% 14.09% 32.37% 4.52% 15.06% (3.80)% 6.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $54,296 $10,855 $5,510 $6,096 $5,108 $6,254 $1,487
Ratio of expenses to average net assets 1.98%(d)(e) 2.05%(e) 2.23%(e) 2.15% 2.09% 2.03%(d) 2.29%(d)
Ratio of net investment income to
average net assets 1.54%(d) 1.36% 1.37% 1.63% 2.32% 1.81%(d) 1.47%(d)
Portfolio turnover rate 67% 145% 207% 227% 179% 116% 188%
</TABLE>
See footnote summary on page 23.
22
ALLIANCE BALANCED SHARES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ADVISOR CLASS
------------------------------------
SIX MONTHS OCTOBER 2,
ENDED 1996(F)
JANUARY 31, YEAR ENDED TO
1999 JULY 31, JULY 31,
(UNAUDITED) 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $15.98 $16.17 $14.79
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .19 .37 .23
Net realized and unrealized gain
on investment transactions .93 1.87 3.22
Net increase in net asset
value from operations 1.12 2.24 3.45
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.19) (.36) (.27)
Distributions from net realized gains (1.65) (2.07) (1.80)
Total dividends and distributions (1.84) (2.43) (2.07)
Net asset value, end of period $15.26 $15.98 $16.17
TOTAL RETURN
Total investment return based on net
asset value (c) 7.75% 15.32% 25.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $2,491 $2,079 $1,565
Ratio of expenses to average net assets (e) 1.00%(d) 1.06% 1.30%(d)
Ratio of net investment income to
average net assets 2.51%(d) 2.33% 2.15%(d)
Portfolio turnover rate 67% 145% 207%
</TABLE>
(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 return calculated for a period of less than one year
is not annualized.
(d) Annualized.
(e) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the periods shown below, the net expense ratios were as
follows:
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, ------------------------
1999 1998 1997
----------- ----------- -----------
Class A 1.24% 1.29% 1.46%
Class B 1.99% 2.05% 2.24%
Class C 1.97% 2.04% 2.22%
Advisor Class .99% 1.05% 1.29%
(f) Commencement of distribution.
23
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
PAUL C. RISSMAN, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
CORIN MOLOF HILL, 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 LLP
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
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, NY 10036
(1) Member of the Audit Committee.
24
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 U.S. Government Fund
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 Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
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
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Trust Portfolio
Treasury Portfolio
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
25
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.
BALSR
