ALLIANCE STRATEGIC BALANCED FUND
SEMI-ANNUAL REPORT
JANUARY 31, 1996
LETTER TO SHAREHOLDERS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
March 8, 1996
Dear Shareholder:
It's been a period of strong gains in global financial markets, and Alliance
Strategic Balanced Fund enjoyed solid returns in the six months since we last
reported. The following table shows how your Fund performed during its fiscal
half year ended January 31, 1996, and for comparison we've shown performance
for the S&P 500, a common measure of stock market performance in the U.S., and
for the Lehman Brothers (LB) Government/Corporate Bond Index, which represents
the broad U.S. bond market:
Total Return
Periods Ended January 31, 1996
Six Months Twelve Months
---------- -------------
ALLIANCE STRATEGIC BALANCED FUND
Class A +8.29% +23.93%
Class B +8.01% +23.13%
Class C +7.95% +23.04%
S&P 500 +14.49% +38.56%
LB GOV'T/CORP. BOND INDEX +7.74% +17.72%
TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF EACH CLASS OF SHARES AS OF
JANUARY 31; ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 2.
MARKET OVERVIEW
Capital markets produced very substantial returns over both the six and
12-month periods through the end of January. The performance of your Fund
benefited from strength in both the bond and stock markets. During most of the
six-month period, economic data suggested that the economy was decelerating to
a very slow rate of growth. Some forecasters began to warn of a impending
recession.
The early successes of the Republican-controlled Congress led investors to
expect a significant and permanent reduction in the federal deficit. This
expectation contributed to the strength of the fixed-income markets and in
turn, provided support for equity valuations.
Severe weather and several brief shut-downs of parts of the Federal government
added to the difficulty of interpreting the economy's performance. This set of
conditions led investors to drive stock and bond prices higher in anticipation
of the Federal Reserve cutting short-term interest rates.
By mid February the complexion of the economy, as perceived by investors, began
to change. Anecdotal evidence coupled with scattered signs of strength among
economic data halted the rally in fixed income markets. The release of February
employment data-almost twice as strong as the consensus forecast-caused the
bond market to decline and dashed investors' hopes of further cuts in interest
rates.
We believe that this sharp reversal in investor expectations was overdone. Our
forecasts of economic performance have not been substantially altered by this
shift in investor psychology. We expect continued moderate growth of 2.5%
accompanied by benign inflation. Stock selection will prove to be critical in
this slow growth environment and, looking forward, we can expect a much higher
proportion of negative earnings surprises. Accordingly, we find fixed-income
markets attractive at the available 6.75 to 7% yield level. We are also
attracted to some mid- and small-cap equities because they have lagged the
overall cap segments by a significant amount. We are shifting the Fund's
positions to reflect our assessments of relative attraction.
NEW PORTFOLIO MANAGER
On a note concerning your Fund's portfolio management, we are pleased to
announce that Alliance Strategic Balanced Fund is now being managed by Robert
Heisterberg. Mr. Heisterberg, a senior vice president of Alliance, is Associate
Director, Research and Chair of Alliance's Asset Allocation Committee.
Previously, Mr. Heisterberg served as Global Economic and Policy Analyst. He
joined the firm in 1977 and received his undergraduate degree from Knox College
and his M.B.A. with honors from the University of Chicago. Mr. Heisterberg is a
Chartered Financial Analyst and has been in the financial services industry for
34 years.
Sincerely,
John D. Carifa
Chairman and President
1
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
Alliance Strategic Balanced Fund seeks a high long-term total return by
investing in a combination of equity and debt securities. It invests
principally in a diversified portfolio of dividend-paying common stocks and
fixed-income securities, and also in equity-type securities such as warrants,
preferred stocks and convertible debt instruments.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF JANUARY 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +23.93% +18.64%
. Five Years +11.52% +10.56%
. Since Inception* +12.74% +11.83%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +23.13% +19.13%
. Five Years +10.73% +10.73%
. Since Inception* +12.41% +12.41%
CLASS C SHARES
. One Year +23.04%
. Since Inception* +6.94%
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; 5/3/93; 8/2/93, Class C.
2
TEN LARGEST HOLDINGS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 5,645,053 10.5%
Philip Morris Cos., Inc. 2,046,000 3.8
Ceridian Corp. 1,863,000 3.5
Warner-Lambert Co. 1,734,375 3.2
Monsanto Co. 1,602,075 3.0
Hercules, Inc. 1,519,375 2.8
Federal National Mortgage Association,
6.00%, 12/01/09 1,329,800 2.5
MCI Communications Corp. 1,290,988 2.4
Transatlantic Holdings, Inc. 1,287,000 2.4
ITT Corp. 1,243,200 2.3
$19,560,866 36.4%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
_______________________________________________________________________________
SHARES OR PRINCIPAL*
-------------------------
PURCHASES BOUGHT HOLDINGS 1/31/96
- -------------------------------------------------------------------------------
Aetna Life & Casualty Co. 8,000 14,000
Delta Air Lines, Inc. 7,500 7,500
Freeport McMoran, Inc. 18,200 18,200
MCI Communications Corp. 45,100 45,100
Merrill Lynch & Co., Inc. 13,000 13,000
PepsiCo, Inc. 10,000 10,000
Pharmacia & Upjohn, Inc. 26,325 26,325
Seagate Technology 11,000 11,000
Travelers, Inc. 18,000 18,000
Union Pacific Corp. 11,000 11,000
SALES SOLD HOLDINGS 1/31/96
- -------------------------------------------------------------------------------
Airtouch Communications, Inc. 15,300 -0-
Bay Networks, Inc. 5,050 19,950
Champion International Corp. 14,000 -0-
Eastman Kodak Co. 31,500 -0-
IMC Global, Inc. 8,000 26,000
Occidental Petroleum Corp. 30,000 -0-
Philip Morris Cos., Inc. 4,500 22,000
U.S. Treasury Bond, 6.25%, 8/15/23 $850,000 $550,000
U.S. Treasury Note, 6.50%, 5/15/05 $815,000 -0-
U.S. Treasury Note, 7.75%, 1/31/00 $1,800,000 $3,200,000
*Adjusted for stock splits.
3
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
COMMON STOCKS-68.5%
TECHNOLOGY-19.0%
AEROSPACE & DEFENSE-0.3%
Coltec Industries, Inc.* 15,000 $ 176,250
COMPUTERS-7.2%
3Com Corp. 9,000 412,875
Bay Networks, Inc. 19,950 847,875
Ceridian Corp.* 41,400 1,863,000
Compuware Corp.* 5,200 94,900
Seagate Technology* 11,000 651,750
-----------
3,870,400
COMPUTER SOFTWARE & SERVICES-1.3%
Adobe Systems, Inc. 13,000 442,000
Informix Corp. 8,000 267,000
-----------
709,000
ELECTRONICS-1.4%
Applied Materials, Inc. 19,500 721,500
MISCELLANEOUS-2.3%
ITT Corp.* 22,400 1,243,200
-----------
TELECOMMUNICATIONS-4.9%
Cox Communications, Inc.* 24,000 501,000
MCI Communications Corp. 45,100 1,290,988
Scientific-Atlanta, Inc. 36,700 578,025
Tele-Communications, Inc.* 8,750 239,531
-----------
2,609,544
UTILITY-TELEPHONE-1.6%
Telephone and Data Systems, Inc. 21,800 885,625
-----------
10,215,519
CREDIT SENSITIVE-13.7%
FINANCIAL SERVICES-2.0%
CNA Financial Corp.* 2,800 319,900
Merrill Lynch & Co., Inc. 13,000 739,375
-----------
1,059,275
INSURANCE-11.7%
Aetna Life & Casualty Co. 14,000 1,043,000
American International Group, Inc. 10,650 1,031,719
Life Re Corp. 33,500 816,562
TIG Holdings, Inc. 32,500 901,875
Transatlantic Holdings, Inc. 18,000 1,287,000
Travelers, Inc. 18,000 1,183,500
-----------
6,263,656
-----------
7,322,931
CONSUMER NONCYCLICALS-13.1%
DRUGS-5.8%
Pharmacia & Upjohn, Inc. 26,325 1,102,359
Revco D. S., Inc.* 9,600 270,000
Warner-Lambert Co. 18,500 1,734,375
-----------
3,106,734
FOOD & BEVERAGES-1.1%
PepsiCo, Inc. 10,000 596,250
HOSPITAL SUPPLIES & SERVICES-1.9%
AMSCO International, Inc.* 30,800 438,900
U.S. Healthcare, Inc. 12,000 582,000
-----------
1,020,900
HOUSEHOLD PRODUCTS-0.5%
First Brands Corp. 5,200 256,750
TOBACCO-3.8%
Philip Morris Cos., Inc. 22,000 2,046,000
-----------
7,026,634
4
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ------------------------------------------------------------------------
BASIC MATERIALS-9.8%
CHEMICALS-7.6%
Hercules, Inc. 27,500 $ 1,519,375
IMC Global 26,000 975,000
Monsanto Co. 12,300 1,602,075
-----------
4,096,450
ENVIRONMENTAL CONTROL-0.9%
Wellman, Inc. 25,000 500,000
METALS & MINING-1.3%
Freeport McMoran, Inc. 18,200 687,050
Nord Resources Corp.* 812 2,030
-----------
689,080
-----------
5,285,530
CONSUMER CYCLICALS-5.1%
AIRLINES-1.0%
Delta Air Lines, Inc. 7,500 512,813
LEISURE RELATED-2.0%
Cyrk International, Inc.* 20,900 263,862
Loews Corp. 10,000 826,250
-----------
1,090,112
RETAIL-BUILDING MATERIALS-0.3%
Payless Cashways* 30,000 131,250
RETAIL-GENERAL-1.8%
Fingerhut Cos., Inc. 72,300 985,088
-----------
2,719,263
BUSINESS SERVICES-4.7%
BROADCASTING-2.2%
Cablevision Systems Corp.* 21,000 1,181,250
ENVIRONMENTAL CONTROL-1.5%
WMX Technologies, Inc 27,000 806,625
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ------------------------------------------------------------------------
PRINTING, PUBLISHING & BROADCASTING-1.0%
Infinity Broadcasting Corp. Cl.A 14,000 $ 556,500
-----------
2,544,375
TRANSPORTATION-1.4%
RAILROADS-1.4%
Union Pacific Corp. 11,000 732,875
ENERGY-1.2%
OIL & GAS-1.2%
Louis Dreyfus Natural Gas Corp.* 27,200 336,600
Louisiana Land & Exploration Co. 7,000 301,000
-----------
637,600
COMMERCIAL SERVICES-0.5%
Ideon Group, Inc. 25,200 267,750
Total Common Stocks (cost $32,330,084) 36,752,477
LONG TERM DEBT SECURITIES-18.9%
U.S. GOVERNMENT & AGENCIES-14.8%
Federal National Mortgage Association
6.00%, 12/01/09 $1,340 1,329,800
U.S. Treasury Bonds
6.25%, 8/15/23 550 560,483
7.625%, 2/15/25 335 405,558
U.S. Treasury Notes
6.125%, 5/15/98 2,000 2,048,120
6.50%, 8/15/05 100 106,437
7.75%, 1/31/00 3,200 3,490,496
-----------
7,940,894
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ------------------------------------------------------------------------
MISCELLANEOUS-4.1%
First Union Corp.
7.05%, 8/01/05 $500 $ 527,175
Liberty Mutual Insurance Co.
8.50%, 5/15/25(a) 525 591,754
Quebec Province Canada
7.125%, 2/09/24 350 350,101
St. George Bank Ltd.
7.15%, 10/15/05 350 361,781
Time Warner, Inc.
8.375%, 3/15/23 350 373,653
-----------
2,204,464
Total Long Term Debt Securities
(cost $9,615,300) 10,145,358
PRINCIPAL
AMOUNT
(000) VALUE
- ------------------------------------------------------------------------
SHORT-TERM DEBT SECURITIES-7.3%
Federal Home Loan Bank
5.50%, 2/01/96
(amortized cost $3,900,000) $3,900 $ 3,900,000
TOTAL INVESTMENTS-94.7%
(cost $45,845,384) 50,797,835
Other assets less liabilities-5.3% 2,868,400
NET ASSETS-100% $53,666,235
* Non-income producing security.
(a) 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 institutional buyers. At January
31, 1996, these securities amounted to $591,754 representing 1.1% of net assets.
See notes to financial statements.
6
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 1996 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $45,845,384) $50,797,835
Cash 13,610
Receivable for investment securities sold 3,127,669
Interest and dividends receivable 159,723
Receivable for shares of beneficial interest sold 57,082
Total assets 54,155,919
LIABILITIES
Payable for investment securities purchased 294,269
Distribution fee payable 35,688
Payable for shares of beneficial interest redeemed 26,648
Advisory fee payable 24,590
Accrued expenses 108,489
Total liabilities 489,684
NET ASSETS $53,666,235
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 32
Additional paid-in capital 47,280,711
Distributions in excess of net investment income (40,256)
Accumulated net realized gain on investments 1,487,738
Net unrealized appreciation on investments and other assets 4,938,010
$53,666,235
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($15,757,953/
850,652 shares of beneficial interest issued and outstanding) $18.52
Sales charge-4.25% of public offering price .82
Maximum offering price $19.34
CLASS B SHARES
Net asset value and offering price per share ($34,654,912/
2,167,979 shares of beneficial interest issued and outstanding) $15.98
CLASS C SHARES
Net asset value, redemption and offering price per share($3,253,370
/203,553 shares of beneficial interest issued and outstanding) $15.98
See notes to financial statements.
7
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $410,463
Dividends(net of foreign of taxes withheld of $1,146) 308,440 $ 718,903
EXPENSES
Advisory fee 200,096
Distribution fee - Class A 20,031
Distribution fee - Class B 179,709
Distribution fee - Class C 20,316
Transfer agency 69,631
Custodian 41,520
Registration 39,320
Audit and legal 33,241
Trustees' fees 14,000
Printing 4,731
Amortization of organization expenses 951
Miscellaneous 8,708
Total expenses 632,254
Less: expenses waived and assumed by adviser
(see Note B) (119,751)
Net expenses 512,503
Net investment income 206,400
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 2,882,422
Net change in unrealized appreciation of investments
and other assets 1,077,583
Net gain on investments 3,960,005
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,166,405
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JANUARY 31,1996 JULY 31,
(UNAUDITED) 1995
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 206,400 $ 803,136
Net realized gain on investments 2,882,422 1,585,794
Net change in unrealized appreciation of
investments and other assets 1,077,583 3,225,074
Net increase in net assets from operations 4,166,405 5,614,004
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (251,709) (128,387)
Class B (425,006) (351,616)
Class C (52,350) (36,666)
Net realized gain on investments
Class A (479,820) (20,950)
Class B (1,296,269) (105,192)
Class C (159,666) (10,969)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net decrease (201,280) (10,129,045)
Total increase (decrease) 1,300,305 (5,168,821)
NET ASSETS
Beginning of period 52,365,930 57,534,751
End of period (including undistributed net
investment income of $482,409 for the year
ended July 31, 1995) $53,666,235 $52,365,930
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Strategic Balanced Fund (the 'Fund'), formerly Alliance Balanced 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. The Funds 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 4% to zero depending on the period of time the shares are
held. Shares purchased before August 2, 1993 and redeemed within eight 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 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. 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.
3. 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.
4. 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.
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 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.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
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.
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
10
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
expense cap for Class B Shares was 2.15%. For the six months ended January 31,
1996, such reimbursement amounted to $119,751 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 $56,388 for the six months ended January 31, 1996.
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 $232 from the sale of Class A shares and $30,785 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the six months ended January 31, 1996.
Brokerage commissions paid on securities transactions for the six months ended
January 31, 1996 amounted to $62,161, 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.
Accrued expenses includes amounts owed to two of the Trustees under a deferred
compensation plan of $43,184.
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 $864,077 and $247,770 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 $23,981,798 and $32,540,676, respectively, for the six months ended
January 31, 1996. There were purchases of $463,746 and sales of $4,636,796 of
U.S. Government and government agency obligations for the six months ended
January 31, 1996. At January 31, 1996, the cost of securities for federal
income tax purposes was $45,931,191. Accordingly, gross unrealized appreciation
of investments was $6,074,970 and gross unrealized depreciation of investments
was $1,208,326 resulting in net unrealized appreciation of $4,866,644.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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:
SHARES AMOUNT
------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JAN. 31,1996 JULY 31, JAN. 31,1996 JULY 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------ ----------- ------------ -------------
CLASS A
Shares sold 331,167 215,830 $ 6,109,127 $ 3,566,155
Shares issued in
reinvestment of
dividends and
distributions 37,529 8,938 680,784 138,715
Shares redeemed (127,313) (208,409) (2,336,052) (3,417,256)
Net increase 241,383 16,359 $ 4,453,859 $ 287,614
CLASS B
Shares sold 214,812 323,750 $ 3,413,410 $ 4,608,223
Shares issued in
reinvestment of
dividends and
distributions 98,905 30,603 1,547,869 412,834
Shares redeemed (543,523) (1,047,251) (8,648,557) (14,853,928)
Net decrease (229,806) (692,898) $(3,687,278) $ (9,832,871)
CLASS C
Shares sold 30,441 88,024 $ 480,732 $ 1,241,321
Shares issued in
reinvestment of
dividends and
distributions 11,410 3,015 178,563 40,701
Shares redeemed (102,491) (132,830) (1,627,156) (1,865,810)
Net decrease (60,640) (41,791) $ (967,861) $ (583,788)
12
FINANCIAL HIGHLIGHTS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
SIX MONTHS
ENDED MAY 1,1994
JANUARY 31, YEAR ENDED TO YEAR ENDED APRIL 30,
1996 JULY 31, JULY 31, ---------------------------
(UNAUDITED) 1995 1994** 1994 1993 1992
------------ -------- ---------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.98 $16.26 $16.46 $16.97 $17.06 $14.48
INCOME FROM INVESTMENT OPERATIONS
Net investment income* .06(a) .34 .07 .16 .39 .27
Net realized and unrealized gain (loss)
on investments 1.41 1.64 (.27) .74 .59 2.80
Net increase (decrease) in net asset
value from operations 1.47 1.98 (.20) .90 .98 3.07
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.32) (.22) -0- (.24) (.42) (.17)
Distributions from net realized gains (.61) (.04) -0- (1.17) (.65) (.32)
Total dividends and distributions (.93) (.26) -0- (1.41) (1.07) (.49)
Net asset value, end of period $18.52 $17.98 $16.26 $16.46 $16.97 $17.06
TOTAL RETURN
Total investment return based on net
asset value (b) 8.29% 12.40% (1.22)% 5.06% 5.85% 20.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $15,758 $10,952 $9,640 $9,822 $8,637 $6,843
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.40%(c) 1.40% 1.40%(c) 1.40% 1.40% 1.40%
Expenses, before waivers/reimbursements 1.84%(c) 1.81% 1.94%(c) 1.70% 1.85% 2.05%
Net investment income 1.28%(c) 2.07% 1.63%(c) 1.67% 2.29% 1.92%
Portfolio turnover rate 47% 172% 21% 139% 98% 103%
</TABLE>
See footnote summary on page 15.
13
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
SIX MONTHS
ENDED MAY 1,1994
JANUARY 31, YEAR ENDED TO YEAR ENDED APRIL 30,
1996 JULY 31, JULY 31, ---------------------------
(UNAUDITED) 1995 1994** 1994 1993 1992
------------ -------- ---------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.56 $14.10 $14.30 $14.92 $15.51 $13.96
INCOME FROM INVESTMENT OPERATIONS
Net investment income* .06(a) .22 .03 .06 .23 .22
Net realized and unrealized gain (loss)
on investments 1.17 1.40 (.23) .63 .53 2.70
Net increase (decrease) in net asset
value from operations 1.23 1.62 (.20) .69 .76 2.92
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.20) (.12) -0- (.14) (.25) (.29)
Distributions from net realized gains (.61) (.04) -0- (1.17) (1.10) (1.08)
Total dividends and distributions (.81) (.16) -0- (1.31) (1.35) (1.37)
Net asset value, end of period $15.98 $15.56 $14.10 $14.30 $14.92 $15.51
TOTAL RETURN
Total investment return based on net
asset value (b) 8.01% 11.63% (1.40)% 4.29% 4.96% 20.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $34,655 $37,301 $43,578 $43,616 $36,155 $31,842
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.10%(c) 2.10% 2.10%(c) 2.10% 2.15% 2.15%
Expenses, before waivers/reimbursements 2.55%(c) 2.49% 2.64%(c) 2.42% 2.56% 2.70%
Net investment income .60%(c) 1.38% .92%(c) .93% 1.55% 1.34%
Portfolio turnover rate 47% 172% 21% 139% 98% 103%
</TABLE>
See footnote summary on page 15.
14
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS C
---------------------------------------------
SIX MONTHS MAY 1,
ENDED YEAR 1994 AUGUST 2,
JANUARY 31, ENDED TO 1993(D)
1996 JULY 31, JULY 31, TO APR. 30,
(UNAUDITED) 1995 1994** 1994
----------- ------- ----------- ----------
Net asset value, beginning of
period $15.57 $14.11 $14.31 $15.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)* .08(a) .16 .03 .15
Net realized and unrealized gain
(loss) on investments 1.14 1.46 (.23) (.17)
Net increase (decrease) in net
asset value from operations 1.22 1.62 (.20) (.02)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income (.20) (.12) -0- (.14)
Distributions from net realized
gains (.61) (.04) -0- (1.17)
Total dividends and distributions (.81) (.16) -0- (1.31)
Net asset value, end of period $15.98 $15.57 $14.11 $14.31
TOTAL RETURN
Total investment return based on
net asset value (b) 7.95% 11.62% (1.40)% .45%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $3,253 $4,113 $4,317 $4,289
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 2.10%(c) 2.10% 2.10%(c) 2.10%(c)
Expenses, before waivers/
reimbursements 2.55%(c) 2.50% 2.64%(c) 2.07%(c)
Net investment income .61%(c) 1.38% .93%(c) .69%(c)
Portfolio turnover rate 47% 172% 21% 139%
* Net of fee waived and expenses reimbursed by the Adviser.
** The Fund changed its fiscal year end from April 30 to July 31.
(a) Based on average shares outstanding.
(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.
15
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
BRUCE CALVERT, VICE PRESIDENT
KATHLEEN A. CORBET, VICE PRESIDENT
FRANKLIN KENNEDY III, VICE PRESIDENT
WAYNE D. LYSKI, 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.
16
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 Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
17
ALLIANCE STRATEGIC BALANCED FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
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.
ASBSR
