ALLIANCE
SHORT-TERM
U.S. GOVERNMENT FUND
ANNUAL REPORT
AUGUST 31, 1995
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
LETTER TO SHAREHOLDERS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
October 10, 1995
Dear Shareholder:
The bond markets rebounded sharply in 1995, staging an impressive rally as the
economy slowed, inflationary pressures moderated and the Federal Reserve
shifted monetary policy. We are pleased to report that Alliance Short-Term U.S.
Government Fund benefited from this favorable investment environment.
INVESTMENT RESULTS
The following table compares Alliance Short-Term U.S. Government Fund's total
returns over the twelve- and six-month periods ended August 31, 1995, with that
of the short-term U.S. Government bond market, represented by the Lehman
Brothers (LB) 1-3 Year Government Bond Index, and with the shorter-term U.S.
Treasury market, represented by the LB 3-Month Treasury Bill Index. The Fund's
modest underperformance versus its benchmarks was due largely to its
conservative portfolio allocations with the objective of preserving capital.
Twelve Months Six Months
Through August 31, 1995
--------------------------
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
Class A +5.14% +3.22%
Class B +4.32% +2.81%
Class C +4.33% +2.82%
LB 1-3 YEAR GOV'T BOND INDEX +5.85% +3.05%
LB 3-MONTH TREASURY BILL +7.42% +4.78%
The Fund's total returns are based on the net asset values of each class of
shares as of August 31; additional investment results and complete descriptions
of the Fund's benchmarks, which are both unmanaged, appear on pages 3 and 4.
Previously we have compared your Fund's performance with the Lehman Brothers
Government Bond Index, which had returns of +13.14% and +9.25% over the twelve-
and six-month periods ended August 31. This index is composed of the Treasury
and Agency Bond Indices, and the 1-3 Year and 20+ Year Treasury Indices. Given
the relatively conservative objectives of the Fund, the 1-3 Government Bond
Index provides a better and more broad-based comparison for your Fund's
performance. The 3-Month Treasury Index has been determined an appropriate
narrow comparison because of the Fund's significant holdings in securities with
maturities of less than a year. (As you may know, under normal circumstances,
Alliance Short-Term U.S. Government Fund maintains an average portfolio
maturity of not more than three years.) Going forward we will compare your
Fund's performance with Lehman Brothers 1-3 Year Government Bond and 3-Month
Treasury Indices.
THE U.S. ECONOMIC ENVIRONMENT
The U.S. economy experienced a pronounced slowdown in the first six months of
1995. In the second quarter, Gross Domestic Product growth fell to 1.3%,
reflecting declines in industrial production and lower final sales growth. More
recent data, however, point to a modest reacceleration in economic growth. The
pickup in economic growth is largely the result of increased consumer spending,
particularly in the automobile and housing sectors. Excluding automobile sales,
third quarter retail sales data have been flat, as gains in personal income and
high consumer confidence have not translated into improved sales. The
manufacturing sector appears to be recovering, after slumping for much of the
year. Industrial production rose modestly in July, followed by a sharp increase
in August. Despite the recent increase in economic activity, concerns regarding
inflation have largely subsided. Broad price indices such as the Consumer Price
Index and Producer Price Index have risen very modestly and labor costs remain
under control. The favorable inflation outlook and the continued sluggishness
of the economy led the Federal Reserve to cut interest rates 0.25% in early
July.
BOND MARKET REVIEW
Over the past eight months, the U.S. bond market posted impressive gains across
nearly all fixed income sectors. The rally was sparked, in large part, by the
aforementioned economic developments. Investment grade and high yield corporate
securities were the best performing sectors. Treasury and mortgage obligations
also performed well, though mortgage returns were tempered by higher prepayment
activity. Across all major sectors of
1
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
the U.S. fixed income market, longer duration securities outperformed shorter
duration securities as interest rates for all maturities declined.
INVESTMENT OUTLOOK
It is our view that U.S. economic growth will reaccelerate modestly in the
second half of the year, to an annual growth rate of approximately 2.5%. This
projected rate of economic growth should not add significantly to inflationary
pressures, allowing the Federal Reserve to cut interest rates again. If our
forecast proves correct, the result should be further gains in U.S. bond prices.
On a note concerning your Fund's portfolio management, we are pleased to
announce that going forward, Alliance Short-Term U.S. Government Fund will be
managed by Patricia Young and Paul Ullman, who both joined Alliance in 1992.
Ms. Young, a senior vice president of Alliance, is a graduate of Indiana
University and received her M.B.A. from the Wharton School of Business. She has
15 years of investment experience. Mr. Ullman earned a B.S. in Business
Administration from the Washington University School of Business. He is a vice
president of Alliance and has 14 years of investment experience.
We appreciate your continued interest in Alliance Short-Term U.S. Government
Fund and look forward to reporting its progress to you early in 1996.
Sincerely,
John D. Carifa
Chairman and President
2
INVESTMENT RESULTS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF AUGUST 31, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +5.14% +0.66%
. Since Inception* +4.28 +2.94
SEC Yield 4.22%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +4.32% +1.32%
. Since Inception* +3.52 +3.52
SEC Yield 3.64%
CLASS C SHARES
. One Year +4.33%
. Since Inception* +1.42
SEC Yield 3.63%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares-with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
Class C shares are not subject to front-end or contingent deferred sales
charges. Past performance does not guarantee future results. Investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Yields are for the 30 days
ended August 31, 1995.
* Inception: 5/4/92, Class A and Class B; 8/2/93, Class C.
3
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
GROWTH OF A $10,000 INVESTMENT:
5/31/92 TO 8/31/95
This chart illustrates the total value of an assumed investment in Alliance
Short-Term U.S. Government Fund Class A shares (since inception) after
deducting the maximum 4.25% sales charge, and with dividends and capital gains
reinvested. Performance for Class B and Class C shares will vary from the
results shown above due to differences in expenses charged to those classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The unmanaged Lehman Brothers Government Index is composed of the Treasury
Bond and Agency Bond Indexes, the 1-3 Year Government Index and the 20+ Year
Treasury Index.
The unmanaged Lehman Brothers 1-3 Year Government Index is composed of U.S.
government agency and Treasury securities with maturities of one to three years.
The unmanaged Lehman Brothers 3-Month Treasury Index measures performance of
3-month U.S. Treasury bills.
When comparing Alliance Short-Term U.S. Government Fund to the indices shown
above, you should note that the Fund's performance reflects the maximum sales
charge of 4.25%, while no such charges are reflected in the performance of the
indices.
4
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1995 ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
Principal
Amount
(000) Value
- ----------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-82.8%
U.S. TREASURY NOTES-80.7%
7.875%, 2/15/96-7/15/96
(cost $11,722,712) $11,550 $11,745,961
FEDERAL AGENCY-2.1%
Federal Home Loan Bank
15.00%, 9/01/95 (cost $300,000) 300 300,000
Total U.S. Government and Agency Obligations
(cost $12,022,712) 12,045,961
COLLATERALIZED MORTGAGE OBLIGATIONS-5.3%
FIXED RATE-4.5%
Federal Home Loan Mortgage Corp. Series 1163 N
7.50%, 12/15/19 (cost $657,121) 652 656,613
ADJUSTABLE RATE-0.8%
Federal National Mortgage Association REMIC
Series 1993-89 F 6.49375%, 9/25/21
(cost $123,391) 123 123,308
Total Collateralized Mortgage Obligations
(cost $780,512) 779,921
REPURCHASE AGREEMENT-9.4%
Mortgage Repo (UBS)
5.85%, dated 8/31/95, due 9/01/95
collateralized by $1,428,000 FNMA FNR
93-168 Series P, 6.25%, 1/25/20, value:
$1,387,838; proceeds $1,361,221
(cost $1,361,000) 1,361 1,361,000
TOTAL INVESTMENTS-97.5%
(cost $14,164,224) 14,186,882
Other assets less liabilities-2.5% 370,070
NET ASSETS-100% $14,556,952
Glossary:
REMIC - Real Estate Mortgage Investment Conduit
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995 ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $14,164,224) $14,186,882
Cash 388
Receivable due from adviser 229,782
Receivable for shares of beneficial interest sold 176,221
Interest receivable 137,624
Deferred organization expense 15,710
Prepaid expenses and other assets 11,133
Total assets 14,757,740
LIABILITIES
Payable for shares of beneficial interest redeemed 92,107
Dividend payable 14,906
Distribution fee payable 10,247
Accrued expenses 83,528
Total liabilities 200,788
NET ASSETS $14,556,952
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 15
Additional paid-in capital 15,223,789
Distributions in excess of net investment income (44,525)
Accumulated net realized loss (645,627)
Net unrealized appreciation of investments and other assets 23,300
$14,556,952
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($2,997,333/308,945
shares of beneficial interest issued and outstanding) $ 9.70
Sales charge-4.25% of public offering price .43
Maximum offering price $10.13
CLASS B SHARES
Net asset value and offering price per share ($6,379,995/650,583
shares of beneficial interest issued and outstanding) $ 9.81
CLASS C SHARES
Net asset value, redemption and offering price per share($5,179,624/
528,730 shares of beneficial interest issued and outstanding) $ 9.80
See notes to financial statements.
6
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1995 ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $819,775
EXPENSES
Advisory fee $ 76,173
Distribution fee - Class A 8,086
Distribution fee - Class B 57,770
Distribution fee - Class C 53,773
Audit and legal 99,773
Registration 77,061
Printing 53,359
Transfer agency 51,719
Custodian 47,318
Trustees' fees 28,543
Amortization of organization expenses 11,008
Miscellaneous 13,347
Total expenses 577,930
Less: expenses waived and reimbursed by adviser
(See Note B) (305,955)
Net expenses 271,975
Net investment income 547,800
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (26,997)
Net change in unrealized depreciation of investments 71,312
Net gain on investments 44,315
NET INCREASE IN NET ASSETS FROM OPERATIONS $592,115
See notes to financial statements.
7
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
YEAR ENDED MAY 1, 1994 YEAR ENDED
AUGUST 31, THROUGH APRIL 30,
1995 AUG. 31,1994* 1994
----------- ------------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 547,800 $ 182,068 $ 398,559
Net realized loss on investments (26,997) (509,561) (29,976)
Net change in unrealized appreciation
(depreciation) of investments 71,312 366,675 (562,535)
Net increase (decrease) in net assets
from operations 592,115 39,182 (193,952)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (117,047) (23,466) (186,963)
Class B (210,021) (58,127) (92,418)
Class C (196,348) (67,817) (113,051)
Distributions in excess of net
investment income
Class A (9,973) (3,831) (15,558)
Class B (17,854) (9,485) (7,691)
Class C (16,698) (11,068) (9,409)
Return of capital
Class A -0- (6,485) (39,984)
Class B -0- (16,063) (19,765)
Class C -0- (18,742) (24,177)
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Net increase (decrease) (1,148,386) (2,093,364) 11,280,320
Total increase (decrease) (1,124,212) (2,269,266) 10,577,352
NET ASSETS
Beginning of period 15,681,164 17,950,430 7,373,078
End of period $14,556,952 $15,681,164 $17,950,430
* The Fund changed its fiscal year end from April 30 to August 31.
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1995 ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Short-Term U.S. Government Fund (the 'Fund'), a series of The Alliance
Portfolios (the 'Trust') which was organized as a Massachusetts Business Trust
on March 29, 1987 is registered under the Investment Company Act of 1940, as a
diversified, open-end management investment company. The Fund offers Class A,
Class B and Class C shares. Class A shares are sold with a front-end sales
charge of up to 4.25%. Class B shares are sold with a contingent deferred sales
charge which declines from 3.0% to zero depending on the period of time the
shares are held. Class B shares purchased before August 2, 1993 and redeemed
within six years of purchase are subject to different rates than shares
purchased after that date. Class C shares are sold without an initial or
contingent deferred sales charge. All three classes of shares have identical
voting, dividend, liquidation and other rights with respect to its distribution
plan. The following is a summary of significant accounting policies followed by
the Fund.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last reported sales price on such exchange. Listed securities not traded and
securities traded in the over-the-counter market, including listed debt
securities whose primary market is believed to be over-the-counter, are valued
at the mean of the closing bid and asked price as obtained from a recognized
pricing service and brokers. Securities for which bid and asked price
quotations are not readily available are valued in good faith at fair value
using methods determined by the Board of Trustees. Securities which mature in
60 days or less are valued at amortized cost, which approximates market value.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $50,000 have been deferred and are being
amortized on a straight-line basis through May, 1997.
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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Security transactions are accounted for on
the date securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. The Fund accretes discounts as
adjustments to interest income.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
6. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the shares of such Class, except that the Fund's Class
B and Class C shares bear higher distribution fees and, in the case of Class B
shares, higher transfer agent fees. Expenses of the Trust are charged to each
Fund in proportion to net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Prior to July 22, 1993, Equitable Capital Management Corporation (Equitable
Capital) served as the investment adviser to the Trust. On July 22, 1993,
Alliance Capital Management, L.P. (Alliance) acquired the business and
substantially all of the assets of Equitable Capital and became the investment
adviser to the Trust. Under the terms of an investment advisory agreement, the
Fund pays Alliance an advisory fee at an annual rate of .55 of 1% of the Fund's
average daily net assets. Under the old agreement the fee charged was the same.
Such fee is accrued daily and paid monthly. The Investment Adviser has agreed,
under the terms of the investment advisory agreement, to voluntarily waive its
fees and bear certain expenses so that total expenses do not exceed on an
annual basis 1.40%, 2.10% and 2.10% of the daily average net assets for the
Class A, Class B and Class C shares, respectively. For the year ended August
31, 1995, such reimbursement amounted to
9
NOTES TO FINANCIAL STATEMENTS (CONT.) ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
$305,955. In addition to these voluntary arrangements, the Investment Adviser
will reduce its compensation, to the extent that expenses of the Fund for any
fiscal year (not including any distribution expenses paid by the Fund) exceed
the lowest applicable expense limitation prescribed by any state in which the
Fund's shares are qualified for sale. The Adviser believes that the most
restrictive expense ratio limitation imposed by any state in which the Fund has
qualified its shares for sale is 2.5% of the first $30 million of the Fund's
average daily net assets, 2% of the next $70 million of its average daily net
assets and 1.5% of its average daily net assets in excess of $100 million. The
Fund has a Services Agreement with Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) to provide personnel and facilities to perform
transfer agency services for the Fund. Compensation under this agreement
amounted to $29,367 for the year ended August 31, 1995. Alliance Fund
Distributors, Inc. (a wholly-owned subsidiary of the Adviser) serves as the
Distributor of the Fund's shares. The Distributor received front-end sales
charges of $1,837 from the sale of Class A shares and $44,667 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class B
shares for the year ended August 31, 1995. Accrued expenses includes an amount
owed to one of the Trustees under a deferred compensation plan of $13,015.
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 .50% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to both Class B
and Class C shares. For the year ended August 31, 1995 the Fund paid a
distribution fee to the distributor at an annual rate of .30% of the Fund's
average daily net assets attributable to Class A shares. The Trustees currently
limit payments under the Class A plan to .30% of the Fund's aggregate average
daily net assets attributable to Class A shares. The Agreement provides that
the Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred since
inception expenses in excess of the distribution costs reimbursed by the Fund
in the amount of $348,789 and $500,617 for Class B and C shares, respectively;
such costs may be recovered from the Fund in future periods. In accordance with
the Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $2,006,114 and $4,300,128, respectively, for the year ended August
31, 1995. At August 31, 1995 the cost of securities for federal income tax
purposes was the same as the cost for financial reporting purposes. Accordingly
gross unrealized appreciation of investments was $23,248 and gross unrealized
depreciation of investments was $590 resulting in net unrealized appreciation
of $22,658.
10
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
NOTE E: SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.00001 par value shares of beneficial
interest authorized divided into three classes, designated Class A, Class B and
Class C shares. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
--------------------------------------- -----------------------------------------
MAY 1,1994 MAY 1,1994
YEAR ENDED THROUGH YEAR ENDED YEAR ENDED THROUGH YEAR ENDED
AUGUST 31, AUGUST 31, APRIL 30, AUGUST 31, AUGUST 31, APRIL 30,
1995 1994* 1994 1995 1994* 1994
---------- ------------ ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold 424,619 63,865 305,285 $ 4,020,889 $ 621,582 $ 3,088,288
Shares issued in reinvestment of
dividends and distributions 8,027 2,640 18,496 77,235 24,637 188,107
Shares redeemed (358,681) (36,470) (713,916) (3,383,335) (353,354) (7,238,334)
Net increase (decrease) 73,965 30,035 (390,135) $714,789 $292,865 $(3,961,939)
CLASS B
Shares sold 591,993 191,442 1,038,373 $5,759,616 $1,879,078 $10,509,198
Shares issued in reinvestment of
dividends and distributions 13,420 4,974 6,998 130,566 48,786 71,232
Shares redeemed (597,126) (281,109) (443,714) (5,807,282) (2,763,343) (4,491,840)
Net increase (decrease) 8,287 (84,693) 601,657 $ 82,900 $ (835,479) $6,088,590
</TABLE>
<TABLE>
<CAPTION>
SHARES AMOUNT
--------------------------------------- -----------------------------------------
MAY 1,1994 AUGUST 2, MAY 1,1994 AUGUST 2,
YEAR ENDED THROUGH 1993** YEAR ENDED THROUGH 1993**
AUGUST 31, AUGUST 31, TO APRIL 30, AUGUST 31, AUGUST 31, TO APRIL 30,
1995 1994* 1994 1995 1994* 1994
---------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS C
Shares sold 275,893 236,907 1,504,955 $ 2,678,828 $ 2,323,716 $15,510,590
Shares issued in reinvestment of
dividends and distributions 12,237 5,079 6,182 118,917 49,793 62,755
Shares redeemed (488,878) (400,146) (623,499) (4,743,820) (3,924,259) (6,419,676)
Net increase (decrease) (200,748) (158,160) 887,638 $(1,946,075) $(1,550,750) $ 9,153,669
</TABLE>
NOTE F: RECLASSIFICATION OF COMPONENTS OF NET ASSETS
In accordance with Statement of Position 93-2 Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies, permanent book and tax differences
relating to shareholder distributions are reclassified to additional paid-in
capital. For the year ended August 31, 1995, there were no reclassifications
made.
* The Fund changed its fiscal year end from April 30 to August 31.
** Commencement of distribution.
11
NOTES TO FINANCIAL STATEMENTS (CONT.) ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
NOTE G: FEDERAL INCOME TAX STATUS
At August 31, 1995, the Fund had net capital loss carryforward of $631,486 of
which $72,933 expires in the fiscal year ending 2001, $36,136 in the fiscal
year ending 2002, and $522,417 in the fiscal year ending 2003 to the extent
provided by the regulations. To the extent that this loss carryforward is used
to offset future capital gains, it is probable that the gains as offset will
not be distributed to the shareholders. Capital losses incurred after October
31, within the Funds fiscal year are deemed to arise on the first business day
of the following fiscal year. The Fund incurred and elected to defer a post
October net capital loss of $14,141.
12
FINANCIAL HIGHLIGHTS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS A
-------------------------------------------------
YEAR ENDED MAY 1,1994 YEAR ENDED MAY 4,1992(A)
AUGUST 31, THROUGH APRIL 30, TO
1995 AUG.31,1994* 1994 APRIL 30,1993
--------- ------------ --------- -------------
Net asset value, beginning of
period $9.67 $9.77 $10.22 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .42** .14** .35** 46**
Net realized and unrealized gain
(loss) .05 (.09) (.29) .34
Net increase in net asset value
from operations .47 .05 .06 .80
LESS: DISTRIBUTIONS
Dividends from net investment
income (.41) (.12) (.42) (.46)
Dividends in excess of net
investment income (.03) -0- (.01) -0-
Return of capital -0- (.03) (.08) -0-
Distributions from net realized
gains -0- -0- -0- (.12)
Total dividends and distributions (.44) (.15) (.51) (.58)
Net asset value, end of period $9.70 $ 9.67 $ 9.77 $10.22
TOTAL RETURN
Total investment return based
on net asset value (b) 5.14% .53% .52% 8.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $2,997 $2,272 $2,003 $6,081
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.40% 1.40%(c) 1.27% 1.00%(c)
Expenses, before waivers/
reimbursements 3.71% 2.95%(c) 2.17% 2.20%(c)
Net investment income 4.56% 3.98%(c) 4.41% 4.38%(c)
Portfolio turnover rate 15% 144% 55% 294%
See footnotes on page 15.
13
FINANCIAL HIGHLIGHTS (CONT.) ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS B
-------------------------------------------------
YEAR ENDED MAY 1,1994 YEAR ENDED MAY 4,1992(A)
AUGUST 31, THROUGH APRIL 30, TO
1995 AUG.31,1994* 1994 APRIL 30,1993
---------- ------------- --------- -------------
Net asset value, beginning of
period $9.78 $9.88 $10.31 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .36** .10** .40** .38**
Net realized and unrealized gain
(loss) .04 (.07) (.39) .33
Net increase in net asset value
from operations .40 .03 .01 .71
LESS: DISTRIBUTIONS
Dividends from net investment
income (.34) (.11) (.35) (.38)
Dividends in excess of net
investment income (.03) -0- (.01) -0-
Return of capital -0- (.02) (.08) -0-
Distributions from net realized
gains -0- -0- -0- (.02)
Total dividends and distributions (.37) (.13) (.44) (.40)
Net asset value, end of period $9.81 $9.78 $9.88 $10.31
TOTAL RETURN
Total investment return based
on net asset value (b) 4.32% .28% .03% 7.22%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $6,380 $6,281 $7,184 $1,292
Ratios of average net assets of:
Expenses, net of waivers/
reimbursements 2.10% 2.10%(c) 2.05% 1.75%(c)
Expenses, before waivers/
reimbursements 4.33% 3.60%(c) 3.21% 4.81%(c)
Net investment income 3.82% 3.22%(c) 3.12% 3.36%(c)
Portfolio turnover rate 15% 144% 55% 294%
See footnotes on page 15.
14
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS C
-------------------------------------
YEAR ENDED MAY 1,1994 AUG.2,1993(D)
AUGUST 31, THROUGH TO
1995 AUG.31,1994* APR.30,1994
---------- ----------- -------------
Net asset value, beginning of period $9.77 $9.87 $10.34
INCOME FROM INVESTMENT OPERATIONS
Net investment income .34** .10** .26**
Net realized and unrealized gain (loss) .06 (.07) (.42)
Net increase (decrease) in net asset value
from operations .40 .03 (.16)
LESS: DISTRIBUTIONS
Dividends from net investment income (.34) (.11) (.25)
Dividends in excess of net investment income (.03) -0- (.01)
Return of capital -0- (.02) (.05)
Distributions from net realized gains -0- -0- -0-
Total dividends and distributions (.37) (.13) (.31)
Net asset value, end of period $9.80 $9.77 $ 9.87
TOTAL RETURN
Total investment return based on net
asset value (b) 4.33% .28% (1.56)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,180 $7,128 $8,763
Ratios of average net assets of:
Expenses, net of waivers/reimbursements 2.10% 2.10%(c) 2.10%(c)
Expenses, before waivers/reimbursements 4.23% 3.64%(c) 3.10%(c)
Net investment income 3.80% 3.26%(c) 2.60%(c)
Portfolio turnover rate 15% 144% 55%
* The Fund changed its fiscal year end from April 30 to August 31.
** Net of fee waived and expenses reimbursed by Adviser.
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) Annualized.
(d) Commencement of distribution.
Prior to July 22, 1993, Equitable Capital Management Corporation (Equitable
Capital) served as the investment adviser to the Trust. On July 22, 1993,
Alliance Capital Management L.P. acquired the business and substantially all of
the assets of Equitable Capital and became the investment adviser of the Trust.
15
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE SHORT-TERM U.S.
GOVERNMENT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance Short-Term U.S.
Government Fund (one of the portfolios of the Alliance Portfolios, hereafter
referred to as the 'Fund') at August 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for the year then ended,
for the period May 1, 1994 through August 31, 1994 and for the year ended April
30, 1994, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall finan-cial statement
presentation. We believe that our audits, which included confirmation of
securities at August 31, 1995 by correspondence with the custodian and brokers
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
October 20, 1995
16
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
BOARD OF TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
ALBERTA B. ARTHURS (1)
RUTH BLOCK (1)
RICHARD W. COUPER (1)
BRENTON W. HARRIES (1)
DONALD J. ROBINSON (1)
OFFICERS
BRUCE W. CALVERT, VICE PRESIDENT
KATHLEEN A. CORBET, VICE PRESIDENT
FRANKLIN KENNEDY III, VICE PRESIDENT
BARBARA J. KRUMSIEK, VICE PRESIDENT - MARKETING
EDMUND P. BERGAN, JR., CLERK
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER & CHIEF ACCOUNTING OFFICER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
ROPES & GRAY
One International Place
Boston, MA 02110-2624
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
(1) Member of the Audit Committee.
17
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
THIS REPORT IS DISTRIBUTED SOLELY TO SHAREHOLDERS OF THE FUND
AND IS NOT TO BE USED AS SALES LITERATURE.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
STMUSGAR
