LETTER TO SHAREHOLDERS ALLIANCE STRATEGIC BALANCED FUND
March 2, 1995
Dear Shareholder:
During the first half of the 1995 fiscal year, we continued to position
Alliance Strategic Balanced Fund's portfolio for the slower economic growth
environment we expect later in the year. The Federal Reserve's most recent
increase in short-term interest rates may be sufficient to slow growth enough
so that inflation will not be a problem.
Your Fund's asset mix remains relatively conservatively postured, with 58%
invested in equity securities, 14% in Treasury bonds and 28% in short-term debt
securities as of January 31. We anticipate reinvesting some of the portfolio's
cash reserves in intermediate maturity Treasury bonds, since most of the
negative impact from Federal Reserve rate hikes should already be reflected in
prices. During the six-month reporting period, the Fund's investment returns
slightly lagged those of the domestic bond market. Higher interest rates
negatively impacted the price of bonds; in 1994, the U.S. bond market suffered
negative returns for the first time in several decades.
Within the equity investment environment, growth stocks appear to be poised to
outperform if the economy slows in the next six months. In this higher interest
rate environment, the equity market averages may come under some pressure, but
growth stocks should be less affected because of their greater earnings
visibility.
We continue to add to quality growth companies that we believe can weather the
storm in a slowing economy. In particular, select stocks in the
telecommunications equipment and health care areas currently enjoy a positive
earnings outlook. We have also added to consumer staple stocks and credit-
sensitive issues that should provide a defensive, as well as growth, element to
the portfolio.
ECONOMIC OUTLOOK
Economic growth continues to be above its long-term 2.5% potential, but last
year's interest rate increases should begin to cool the momentum as they work
through the economy. Slower growth should contain inflation pressures to a
manageable level. In Europe, and particularly in Mexico, slower growth and
higher interest rates will also contribute to the slower growth trend in the
U.S.
The positive implication of a slower growth trend would be an extension of this
economic growth cycle. In seeking investment opportunities for the Fund, we
continue to focus on solid fundamentals and high quality securities.
INVESTMENT RESULTS
The table below compares your Fund's investment results with the U.S. stock
market, represented by the unmanaged S&P 500-stock Index, and with the U.S.
bond market, represented by the unmanaged Lehman Brothers Government/Corporate
Bond Index.
Six Months Ended January 31, 1995
Total Ending
Return NAV
ALLIANCE STRATEGIC BALANCED FUND
Class A -1.79% $15.71
Class B -2.07% $13.65
Class C -2.07% $13.66
S&P 500 +4.14%
Lehman Brothers Government/
Corporate Bond Index +0.79%
The Fund's total returns are based on net asset values as of January 31, 1995.
Additional investment results for your Fund appear on page 3.
Your Fund's underperformance versus the S&P 500 can be attributed primarily to
its holdings in medium-
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LETTER TO SHAREHOLDERS ALLIANCE STRATEGIC BALANCED FUND
capitalization growth stocks. Areas that particularly underperformed were
cyclical growth stocks such as retailers, railroads and restaurants. These
sectors came under pressure with the strengthening economy and the increase in
short-term interest rates. Late in 1994, we repositioned the consumer segment
of your Fund's equity holdings, with some of the emphasis moved from cyclical
growth areas like home furnishings to more stable consumer demand areas. We
also continued to add to positions in the more defensive energy sectors.
Thank you for your investment in shares of Alliance Strategic Balanced Fund. We
look forward to reporting its progress to you in the coming months.
Sincerely,
John D. Carifa
Chairman and President
Judith A. Taylor
Portfolio Manager
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<PAGEBREAK>
INVESTMENT RESULTS ALLIANCE STRATEGIC BALANCED FUND
AVERAGE ANNUAL TOTAL RETURN AS OF JANUARY 31, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
* One Year -10.19% -14.01%
* Since Inception* +10.35 +9.25
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
* One Year -10.80% -14.33%
* Five Years +8.10 +8.10
* Since Inception* +10.96 +10.1
CLASS C SHARES
* One Year -10.74%
* Since Inception* -2.60
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares-with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
Class C shares are not subject to front-end or contingent deferred sales
charges. Past performance does not guarantee future results. Investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
*Inception: 9/4/90, Class A; 10/23/87, Class B; 8/2/93, Class C.
3
<PAGEBREAK>
TEN LARGEST HOLDINGS
JANUARY 31, 1995 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
COMPANY VALUE PERCENT OF NET ASSETS
Federal Home Loan Mortgage Corp. $ 10,792,584 20.7%
U.S. Treasury Bond 6.25%, 8/15/23 7,352,403 14.1
Tennessee Valley Auth Discount Note 5.66%,
2/07/95 3,196,981 6.1
Illinois Central Corp. 1,808,125 3.4
Sensormatic Electronics Corp. 1,478,094 2.8
Mylan Laboratories, Inc. 1,159,200 2.2
Nabisco Holdings Corp. Cl.A 1,130,000 2.2
Thermo Instrument Systems, Inc. 973,875 1.9
Gaylord Entertainment Co. Cl.A 960,225 1.8
General Instrument Corp. cv. 5.00%, 6/15/00 882,900 1.7
$29,734,387 56.9%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
SHARES OR PRINCIPAL
PURCHASES BOUGHT HOLDINGS 1/31/95
Airtouch Communications, Inc. 19,800 19,800
American International Group, Inc. 4,800 4,800
Infinity Broadcasting Group, Inc. 19,000 19,000
Loewen Group, Inc. 20,400 20,400
Mylan Laboratories, Inc. 27,400 41,400
Nabisco Holdings corp. Cl.A 40,000 40,000
Telephone & Data Systems, Inc. 11,000 11,000
Tidewater, Inc. 21,200 21,200
Vodaphone Group Plc. (ADR) 17,700 17,700
YPF, S.A. (ADR) Cl.D 21,000 21,000
SALES SOLD HOLDINGS 1/31/95
Air & Water Technologies Corp. 40,000 -0-
Compania de Telefonos de Chile (ADR) 8,800 -0-
Eckerd Corp. 26,400 -0-
Enron Corp. 30,000 10,000
Grupo Televisa, S.A. (ADR) 20,300 -0-
Heilig-Meyers Co. 29,800 -0-
Kroger Co. cv. 6.375%, 12/01/99 $470,000 -0-
Leggett & Platt, Inc. 27,800 -0-
Outback Steakhouse, Inc. 24,000 -0-
Questar Corp. 25,000 -0-
4
<PAGEBREAK>
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1995 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
COMPANY SHARES VALUE
COMMON STOCKS-55.9%
CONSUMER
NONCYCLICALS-12.3%
BEVERAGES-0.2%
Celestial Seasonings, Inc.* 6,000 $ 89,250
CONTAINERS-0.5%
Bernis Co., Inc. 9,600 241,200
DRUGS-3.0%
Merck & Co. 10,000 402,500
Mylan Laboratories, Inc. 41,400 1,159,200
1,561,700
FOODS-4.7%
McCormick & Co., Inc. 25,700 558,975
Nabisco Holdings
Corp. Cl.A* 40,000 1,130,000
Wrigley Wm. Jr., Co. 16,900 749,937
2,438,912
HOSPITAL SUPPLY &
SERVICE-1.4%
Isolyser Co., Inc.* 7,800 130,650
Surgical Care Affiliates, Inc. 30,000 622,500
753,150
RETAIL - FOOD-0.9%
Sysco Corp. 18,300 496,388
SOAPS & TOILETRIES-1.6%
Clorox Co. 7,000 410,375
Gillette Co. 5,200 399,750
810,125
6,390,725
ENERGY-11.3%
OIL-DOMESTIC-3.9%
Anadarko Petroleum Corp. 16,200 619,650
Apache Corp. 12,000 279,000
Enron Oil & Gas Co. 11,000 195,250
Philips Petroleum Co. 17,100 545,062
Valero Energy Corp. 22,000 385,000
2,023,962
OIL-INTERNATIONAL-0.8%
YPF, S.A. (ADR) Cl.D 21,000 $ 433,125
OIL-SUPPLIES &
CONSTRUCTION-3.1%
Seitel, Inc.* 18,800 519,350
Smith International, Inc.* 28,000 325,500
Tidewater, Inc. 21,200 355,100
Western Atlas, Inc.* 11,500 421,188
1,621,138
RAILROADS-3.5%
Illinois Central Corp. 55,000 1,808,125
5,886,350
CONSUMER CYCLICALS-9.5%
AUTOS & TRUCKS-1.3%
Ek Chor China Motorcycle
Co., Ltd. 21,200 251,750
PACCAR, Inc. 10,500 448,875
700,625
FOOD SERVICES &
LODGING-2.9%
Brinker International, Inc.* 36,700 646,838
Luby's Cafeterias, Inc. 22,500 506,250
Taco Cabana, Inc. Cl.A* 45,600 347,700
1,500,788
LEISURE RELATED-3.7%
Aldila, Inc.* 28,100 139,622
Callaway Golf Co. 11,000 353,375
Cobra Golf, Inc.* 7,000 224,875
Gaylord Entertainment Co. Cl.A 41,300 960,225
Oshmans Sporting Goods, Inc.* 35,000 240,625
1,918,722
RETAIL-GENERAL-1.6%
May Department Stores Co. 10,000 351,250
Walgreen Co. 10,200 484,500
835,750
4,955,885
5
<PAGEBREAK>
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
COMPANY SHARES VALUE
CREDIT SENSITIVE-7.8%
FINANCIAL SERVICES-1.5%
Mercury Finance Co. 51,000 $ 796,875
INSURANCE-1.0%
American International
Group, Inc. 4,800 499,800
REAL ESTATE-1.6%
Irvine Apartment
Communities, Inc. 20,000 317,500
Oasis Residential, Inc. 24,300 537,637
855,137
UTILITY-ELECTRIC-2.2%
Duke Power Co. 10,000 403,750
Southern Co. 18,000 375,750
Teco Energy, Inc. 18,000 391,500
1,171,000
UTILITY-GAS-0.6%
Enron Corp. 10,000 291,250
UTILITY-TELEPHONE-0.9%
Telephone & Data
Systems, Inc. 11,000 481,250
4,095,312
BUSINESS SERVICES-5.1%
ENVIRONMENTAL
CONTROL-1.9%
Thermo Instrument
Systems, Inc.* 31,800 973,875
PRINTING, PUBLISHING &
BROADCASTING-2.1%
Clear Channel
Communications, Inc.* 10,200 517,650
Infinity Broadcasting
Corp. Cl.A* 19,000 608,000
1,125,650
PROFESSIONAL
SERVICES-1.1%
Loewen Group, Inc. 20,400 $ 567,375
2,666,900
TECHNOLOGY-5.0%
ELECTRONICS-2.8%
Sensormatic Electronics Corp. 50,750 1,478,094
OFFICE EQUIPMENT
SERVICES-0.1%
Franklin Quest Co.* 2,000 66,000
TELECOMMUNICATIONS-2.1%
Airtouch Communications,
Inc.* 19,800 544,500
Vodafone Group Plc. (ADR) 17,700 539,850
1,084,350
2,628,444
CAPITAL GOODS-3.0%
MACHINERY-3.0%
Deere & Co. 5,700 406,125
Solectron Corp.* 16,000 382,000
Trinity Industries, Inc. 11,000 363,000
Wolverine Tube, Inc.* 18,000 438,750
1,589,875
BASIC MATERIALS-1.2%
METALS & MINING-1.2%
Barrick Gold Corp. 31,500 626,062
DIVERSIFIED-0.7%
Hanson Plc. (ADR) 20,000 367,500
Total Common Stocks
(cost $29,971,978) 29,207,053
6
<PAGEBREAK>
ALLIANCE STRATEGIC BALANCED FUND
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
LONG-TERM DEBT
SECURITIES-15.8%
CREDIT SENSITIVE-14.1%
U.S. Treasury Bond
6.25%, 8/15/23 $8,850 $ 7,352,403
TECHNOLOGY-1.7%
General Instrument Corp. cv.
5.00%, 6/15/00 720 882,900
Total Long-Term Debt Securities
(cost $8,590,260) 8,235,303
SHORT-TERM DEBT
SECURITIES-26.8%
FEDERAL HOME LOAN
MORTGAGE CORP.-20.7%
5.55%, 2/10/95 2,800 2,796,115
5.65%, 2/06/95 4,500 4,496,469
5.80%, 2/01/95 3,500 3,500,000
10,792,584
TENNESSE VALLEY AUTH
DISCOUNT NOTE-6.1%
5.66%, 2/07/95 $3,200 $ 3,196,981
Total Short-Term Debt Securities
(amortized cost $13,989,565) 13,989,565
TOTAL INVESTMENTS-98.5%
(cost $52,551,803) 51,431,921
Other assets less liabilities-1.5% 797,322
NET ASSETS-100% $52,229,243
* Non-income producing.
See notes to financial statements.
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<PAGEBREAK>
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1995 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
ASSETS
Investments in securities, at value (cost $52,551,803) $51,431,921
Cash 85,392
Receivable for investment securities sold 527,008
Dividends and interest receivable 304,477
Receivable due from advisor 39,933
Receivable for shares of beneficial interest sold 21,666
Prepaid expenses and other assets 6,955
Total assets 52,417,352
LIABILITIES
Payable for shares of beneficial interest redeemed 68,793
Distribution fee payable 34,840
Accrued expenses 84,476
Total liabilities 188,109
NET ASSETS $52,229,243
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 37
Additional paid-in capital 54,142,602
Undistributed net investment income 82,593
Accumulated net realized loss on investments (854,144)
Net unrealized depreciation of investments and other assets (1,141,845)
$52,229,243
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($9,102,616/579,275 shares
of beneficial interest issued and outstanding) $15.71
Sales charge - 4.25% of public offering price .70
Maximum offering price $16.41
CLASS B SHARES
Net asset value and offering price per share ($39,007,701/2,858,496 shares
of beneficial interest issued and outstanding) $13.65
CLASS C SHARES
Net asset value, redemption and offering price per share ($4,118,926/301,638
shares of beneficial interest issued and outstanding) $13.66
See notes to financial statements.
8
<PAGEBREAK>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $2,973) $ 613,327
Interest 377,361 $ 990,688
EXPENSES
Advisory fee $ 209,978
Distribution fee-Class A 14,418
Distribution fee-Class B 210,368
Distribution fee-Class C 21,542
Transfer agency 43,901
Custodian 30,342
Audit and legal 25,480
Registration 15,474
Printing 15,157
Trustees' fees 11,470
Amortization of organization expenses 1,580
Miscellaneous 5,498
Total expenses 605,208
Less: expenses waived and assumed by adviser (see Note B)(54,004)
Net expenses 551,204
Net investment income 439,484
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 190,579
Net change in unrealized appreciation of investments and other assets
(1,769,785)
Net loss on investments (1,579,206)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(1,139,722)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<S><C>
SIX MONTHS ENDED MAY 1, 1994 YEAR ENDED
JANUARY 31, 1995 TO APRIL 30,
(UNAUDITED) JULY 31, 1994* 1994
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 439,484 $ 151,149 $ 509,064
Net realized gain (loss) on investments 190,579 (279,249) 1,846,056
Net change in unrealized appreciation (depreciation) of
investments (1,769,785) (677,270) (1,190,672)
Net increase (decrease) in net assets from operations (1,139,722) (805,370) 1,164,448
DIVIDENDS AND DISTRIBUTIONs TO SHAREHOLDERS FROM:
Net investment income
Class A (128,387) -0- (104,771)
Class B (351,616) -0- (329,947)
Class C (36,666) -0- (5,749)
Net realized gain on investments
Class A (20,950) -0- (507,212)
Class B (105,192) -0- (2,851,133)
Class C (10,969) -0- (47,095)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (3,512,006) 612,180 15,616,965
Total increase (decrease) (5,305,508) (193,190) 12,935,506
NET ASSETS
Beginning of period 57,534,751 57,727,941 44,792,435
End of period (including undistributed net investment income of $82,593,
$159,778 and $8,629, respectively) $52,229,243 $57,534,751 $57,727,941
*The Fund changed its fiscal year end from April 30 to July 31.
</TABLE>
9
<PAGEBREAK>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Strategic Balanced Fund, formerly Alliance Balanced Fund (the "Fund"),
a series of The Alliance Portfolios (the "Trust"), is registered under the
Investment Company Act of 1940, as a diversified, open-end investment company.
Prior to August 2, 1993, the Trust was known as The Equitable Funds, and the
Fund was known as The Equitable Balanced Fund. Class A shares are sold with a
front-end sales charge of up to 4.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. 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. The shares also bear different distribution
fees. All three classes of shares have identical voting, dividend, liquidation
and other rights with respect to its distribution plan. The Fund has changed
its fiscal year end from April 30 to July 31. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last sales price or, if no sale occurred, at the mean of the bid and asked
price at the regular close of the New York Stock Exchange. Securities traded
on the over-the-counter market are valued at the mean of the closing bid and
asked price. Securities for which current market quotations are not readily
available (including investments which are subject to limitations as to their
sale) are valued at their fair value as determined in good faith by the Board
of Trustees. The Board of Trustees has further determined that the value of
certain portfolio debt securities, other than temporary investments in short
term securities, be determined by reference to valuations obtained from a
pricing service. Restricted securities are valued at fair value as determined
by the Board of Trustees. Securities which mature in 60 days or less are
valued at amortized cost, which approximates market value. The ability of
issuers of debt securities held by the Fund to meet their obligations may be
affected by economic developments in a specific industry or region.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $30,000 has been deferred and is being
amortized on a straight-line basis through September, 1995.
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
Dividend income is recorded on the ex-dividend date. Interest income is
accrued daily. Security transactions are accounted for on the date securities
are purchased or sold. Security gains and losses are determined on the
identified cost basis. The Fund accretes discounts and amortizes premiums 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 outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Funds'
Class B and Class C shares bear higher distribution and transfer agent fees.
Expenses attributable to the Fund are charged to the Fund. Expenses of the
Trust are charged to the Fund in proportion to net assets.
10
<PAGEBREAK>
ALLIANCE STRATEGIC BALANCED FUND
7. CHANGE OF YEAR END
The Fund changed its fiscal year end from April 30 to July 31. Accordingly,
the statement of changes in net assets and per share data and ratios reflect
the period from May 1, 1994 to July 31, 1994.
8. CHANGE IN ACCOUNTING FOR DISTRIBUTION TO SHAREHOLDERS
Effective November 1, 1993, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As
a result, the Fund changed the classification of distributions to shareholders
to better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
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 .75% of the Fund's average daily net assets.
Under the old agreement the fee charge 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 average net assets, respectively, for the Class A, Class B and
Class C shares. Prior to August 2, 1993, the annual expense cap for Class B
Shares was 2.15%. For the six months ended January 31, 1995, such
reimbursement amount to $54,004. 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 Fund 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 $31,640 for the six months ended January 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 $1,349 from the sale of Class A shares and $48,469
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the six months ended January 31, 1995.
Brokerage commissions paid on securities transactions for the six months ended
January 31, 1995 amounted to $55,827, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
Trustees' fees and expenses payable include amounts owed to one of the Trustees
under a deferred compensation plan.
11
<PAGEBREAK>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
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. The Trustees currently limit payments under the
Class A plan to .30% of the Fund's average daily net assets attributable to
Class A shares. Prior to August 2, 1993, Equico Securities served as the
distributor of the Fund. The Fund paid a distribution fee to the distributor
of .25% of the Funds average daily net assets attributed 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 expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $550,672 and $188,225 for Class B and C
shares, respectively; such costs may be recovered from the Fund in future
periods so long as the agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $13,695,138 and $19,316,912, respectively, for the six months ended
January 31, 1995. There were purchases of $311,533,650 and sales of
$311,215,503 of U.S. Government and government agency obligations for the six
months ended January 31, 1995. At January 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
$1,644,203 and gross unrealized depreciation of investments was $2,764,085
resulting in net unrealized depreciation of $1,119,882.
NOTE E: TAXES
At July 31, 1994 the Alliance Strategic Balanced Fund had a net capital loss
carry forward of approximately $765,000 which will be available through July
31, 2002 to offset net realized gains, to the extent provided by regulations.
Any net capital losses incurred after October 31 ("Post-October losses") within
the taxable year are deemed to arise on the first business day of the Fund's
next taxable year. Pursuant to Federal income tax regulations, a net capital
loss of approximately $279,000 realized by the Alliance Strategic Balanced
Fund, between November 1, 1993 and July 31, 1994 has been deferred to fiscal
year 1995. This capital loss is available in fiscal 1995 to offset capital
gains and reduce amounts distributable to shareholders.
12
<PAGEBREAK>
ALLIANCE STRATEGIC BALANCED 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>
<S><C>
<S><C>
SHARES AMOUNT
SIX MONTHS SIX MONTHS
ENDED ENDED
JANUARY 31, MAY 1, 1994 YEAR ENDED JANUARY 31, MAY 1, 1994 YEAR ENDED
1995 TO APRIL 30, 1995 TO APRIL 30,
(UNAUDITED) JULY 31, 1994** 1994 (UNAUDITED) JULY 31, 1994** 1994
CLASS A
Shares sold 91,401 49,331 276,843 $ 1,470,099 $ 798,528 $ 4,797,182
Shares issued in reinvestment of
dividends and distributions 8,938 -0- 34,373 138,715 -0- 589,070
Shares redeemed (113,974) (53,073) (223,556) (1,830,822) (861,885) (3,785,573)
Net increase (decrease) (13,635) (3,742) 87,660 $ (222,008) $ (63,357) $ 1,600,679
CLASS B
Shares sold 184,530 185,371 916,638 $ 2,581,361 $2,621,004 $13,826,031
Shares issued in reinvestment
of dividends and distributions 30,603 -0- 202,615 412,834 -0- 3,027,444
Shares redeemed (447,320) (144,019) (493,204) (6,225,700) (2,029,917) (7,402,027)
Net increase (decrease) (232,187) 41,352 626,049 $(3,231,505) $ 591,087 $ 9,451,448
SHARES AMOUNT
SIX MONTHS ENDED MAY 1, 1994 AUGUST 2, 1993* SIX MONTHS ENDED MAY 1, 1994 AUGUST 2, 1993*
JANUARY 31, 1995 TO TO JANUARY 31, 1995 TO TO
(UNAUDITED) JULY 31, 1994** APRIL 30, 1994 (UNAUDITED) JULY 31, 1994** APRIL 30, 1994
CLASS C
Shares sold 69,716 42,010 357,421 $ 974,795 $ 594,022 $5,401,615
Shares issued in
reinvestment of
dividends and
distributions 3,015 -0- 2,365 40,701 -0- 35,078
Shares redeemed (77,077) (35,791) (60,021) (1,073,989) (509,572) (871,855)
Net increase
(decrease) (4,346) 6,219 299,765 $ (58,493) $ 84,450 $4,564,838
* Commencement of distribution.
** The Fund changed its fiscal year end from April 30 to July 31.
</TABLE>
13
<PAGEBREAK>
FINANCIAL HIGHLIGHTS ALLIANCE STRATEGIC BALANCED FUND
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<S><C>
CLASS A
SIX MONTHS ENDED MAY 1, 1994
JANUARY 31, 1995 TO YEAR ENDED APRIL 30,
(UNAUDITED) JULY 31, 1994** 1994 1993 1992 1991(A)
Net asset value, beginning of period $16.26 $16.46 $16.97 $17.06 $14.48 $12.51
INCOME FROM INVESTMENT OPERATIONS
Net investment income * .18 .07 .16 .39 .27 .34
Net realized and unrealized
gain (loss) on investments (.47) (.27) .74 .59 2.80 1.66
Net increase (decrease) in net asset
value from operations (.29) (.20) .90 .98 3.07 2.00
LESS: DISTRIBUTIONS
Dividends from net
investment income (.22) -0- (.24) (.42) (.17) (.03)
Distributions from net
realized gains (.04) -0- (1.17) (.65) (.32) -0-
Total dividends and
distributions (.26) -0- (1.41) (1.07) (.49) (.03)
Net asset value,
end of period $15.71 $16.26 $16.46 $16.97 $17.06 $14.48
TOTAL RETURN
Total investment return
based on net asset value (b) (1.79)% (1.22)% 5.06% 5.85% 20.96% 16.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $9,102 $9,640 $9,822 $8,637 $6,843 $443
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 1.40%(c) 1.40%(c) 1.40% 1.40% 1.40% 1.40%(c)
Expenses, before waivers/
reimbursements 1.59%(c) 1.94%(c) 1.70% 1.85% 2.05% 11.59%(c)
Net investment income 2.14%(c) 1.63%(c) 1.67% 2.29% 1.92% 3.54%(c)
Portfolio turnover rate 34% 21% 139% 98% 103% 137%
See footnote summary on page 16.
</TABLE>
14
<PAGEBREAK>
ALLIANCE STRATEGIC BALANCED FUND
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<S><C>
CLASS B
SIX MONTHS ENDED MAY 1, 1994
JANUARY 31, 1995 TO YEAR ENDED APRIL 30,
(UNAUDITED) JULY 31, 1994** 1994 1993 1992 1991
Net asset value, beginning of period $14.10 $14.30 $14.92 $15.51 $13.96 $12.40
INCOME FROM INVESTMENT OPERATIONS
Net investment income * .11 .03 .06 .23 .22 .43
Net realized and unrealized gain (loss) on
investments (.40) (.23) .63 .53 2.70 1.60
Net increase (decrease) in net asset value
from operations (.29) (.20) .69 .76 2.92 2.03
LESS: DISTRIBUTIONS
Dividends from net investment income (.12) -0- (.14) (.25) (.29) (.47)
Distributions from net realized gains (.04) -0- (1.17) (1.10) (1.08) -0-
Total dividends and distributions (.16) -0- (1.31) (1.35) (1.37) (.47)
Net asset value, end of period $13.65 $14.10 $14.30 $14.92 $15.51 $13.96
TOTAL RETURN
Total investment return based on net asset
value (b) (2.07)% (1.40)% 4.29% 4.96% 20.14% 16.73%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted) $39,008 $43,578 $43,616 $36,155 $31,842 $22,552
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.10%(c) 2.10%(c) 2.10% 2.15% 2.15% 2.10%
Expenses, before waivers/reimbursements 2.29%(c) 2.64%(c) 2.42% 2.56% 2.70% 2.93%
Net investment income 1.44%(c) .92%(c) .93% 1.55% 1.34% 3.23%
Portfolio turnover rate 34% 21% 139% 98% 103% 137%
</TABLE>
See footnote summary on page 16.
15
<PAGEBREAK>
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<S><C>
CLASS C
SIX MONTHS ENDED MAY 1, 1994 AUGUST 2, 1993(D)
JANUARY 31, 1995 TO TO APRIL 30,
(UNAUDITED) JULY 31, 1994** 1994
Net asset value, beginning of period $14.11 $14.31 $15.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income * .10 .03 .15
Net realized and unrealized loss on
investments (.39) (.23) (.17)
Net decrease in net asset value
from operations (.29) (.20) (.02)
LESS: DISTRIBUTIONS
Dividends from net investment income (.12) -0- (.14)
Distributions from net realized gains (.04) -0- (1.17)
Total dividends and distributions (.16) -0- (1.31)
Net asset value, end of period $13.66 $14.11 $14.31
TOTAL RETURN
Total investment return based on net asset value (b) (2.07)% (1.40)% .45%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,119 $4,317 $4,289
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.10%(c) 2.10%(c) 2.10%(c)
Expenses, before waivers/reimbursements 2.29%(c) 2.64%(c) 2.07%(c)
Net investment income 1.45%(c) .93%(c) .69%(c)
Portfolio turnover rate 34% 21% 139%
</TABLE>
* Net of fee waived and expenses reimbursed by the Adviser.
** The Fund changed its fiscal year end from April 30 to July 31.
(a) For the period September 4, 1990 (commencement of operations) to April 30,
1991.
(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 is 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 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 investment adviser for the Trust.
16
<PAGEBREAK>
ALLIANCE STRATEGIC BALANCED 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
KATHLEEN A. CORBET, VICE PRESIDENT
FRANKLIN KENNEDY III, VICE PRESIDENT
BARBARA J. KRUMSIEK, VICE PRESIDENT
EDMUND P. BERGAN, JR., CLERK
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER & CHIEF ACCOUNTING OFFICER
CUSTODIAN
STATE STREE BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
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
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
17
<PAGEBREAK>
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<PAGEBREAK>
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<PAGEBREAK>
ALLIANCE STRATEGIC BALANCED FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
Alliance Capital
Mutual funds without the MysterySM
THIS REPORT IS DISTRIBUTED SOLELY TO SHAREHOLDERS OF THE FUND
AND IS NOT TO BE USED AS SALES LITERATURE.
THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
ASBSR
ALLIANCE
STRATEGIC BALANCED FUND
SEMI-ANNUAL
REPORT
JANUARY 31, 1995
Alliance
Mutual funds without the MysterySM