ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
SEMI-ANNUAL REPORT
FEBRUARY 29, 1996
LETTER TO SHAREHOLDERS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
April 5, 1996
Dear Shareholder:
The U.S. bond market enjoyed a sustained broad-based rally throughout most of
1995 and into early 1996, but economic news led to a setback in February. The
market reacted negatively to the stronger-than-expected job growth in the U.S.
and doubts about whether the Federal Reserve would lower interest rates again.
Overall, however, the bond market performed well during your Fund's six-month
reporting period ended February 29, 1996.
INVESTMENT RESULTS
The following table shows how your Fund performed in the periods ended February
29, and for comparison we've shown the performance for the Lehman Brothers (LB)
1-3 Year Government Bond Index, a measure of the shorter-term U.S. bond market,
and for the LB 3-Month Treasury Bill Index. The 1-3 Year Index provides an
appropriate broad-based comparison for the Short-Term U.S. Government Fund due
to the Fund's conservative investment objectives and the 3-Month Treasury Index
is a good narrow-based benchmark given its short-term orientation.
Total Return
Periods Ended February 29, 1996
Six Months Twelve Months
---------- -------------
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
Class A +2.86% +6.17%
Class B +2.47% +5.35%
Class C +2.47% +5.35%
LB 1-3 YEAR GOV'T BOND INDEX +3.44% +8.39%
LB 3-MO. TREAS. INDEX +2.81% +5.95%
TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF EACH CLASS OF SHARES AS OF
FEBRUARY 29; ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3. THE FUND'S
BENCHMARKS ARE UNMANAGED.
ECONOMIC REVIEW
The U.S. economy survived an inventory scare in 1995 and entered '96 in a
relatively balanced and healthy condition. The latest economic data show the
U.S. economy's 'soft landing' is still intact. February's shocking payroll gain
grabbed headlines, but the 12-month comparisons were all numbers that support a
soft landing. Consumer confidence has bounced back, debt service burdens are
still manageable, and February retail sales had their best showing since last
summer, climbing 5% on a year-on-year basis. Manufacturing is likely to remain
a soft spot, although new orders for durable goods are showing hidden strength
and unfilled orders continue to rise. Revised data show the much-feared
slowdown in capital spending has already occurred. A gradual re-strengthening
in the U.S. economy is expected over the next six to 12 months.
Measured inflation at the consumer and producer levels remains well behaved and
the U.S. economy continues to operate in the inflation 'safe zone.' However,
recent increases in unit labor costs and commodity prices warn against
complacency. Federal Reserve policy has moved into a holding pattern, and
chances for a meaningful deficit reduction plan have receded as politicians
increasingly turn their attention to the 1996 election campaign.
BOND MARKET REVIEW
From September to January the market continued to rally with interest rates
declining across the yield curve. Yields in the two- to three-year maturity
range dropped by almost 1% in anticipation of another cut in interest rates.
Since the economy had continued to slow, there wasn't much evidence to support
a sudden pick up in the growth rate. This, coupled with subdued inflation, led
the Federal Reserve to lower the Federal Funds rate in December to 5.5% from
5.75%.
Market participants were hoping for another interest rate reduction when
economic data released in mid February suggested a strengthening economy.
Consequently, Federal Reserve Chairman Alan Greenspan hinted that the Fed would
not aggressively ease rates further. This caused long-term interest rates to
increase by one-half percent during the month of February. The subsequent rise
in yields was accompanied by higher volatility in the bond markets.
AREAS OF THE MARKET
During this period the short duration segment of the mortgage market generally
performed on par with its
1
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
U.S. Treasury security equivalents. Adjustable rate and short-term
collateralized mortgage obligations (CMOs) were in strong supply as financial
institutions increased their selling due to regulatory issues. This supply was
offset, however, by ongoing demand of buyers in search of total return from
high quality spread assets. 'Spread assets' is a way to describe securities in
terms of the difference in yields ('yield spread') between issues of different
credit quality or maturity.
Even in the short end of the mortgage market, prepayments were a focal point as
the narrower yield curve drew borrowers from adjustable rate loans to fixed
rate loans. The best performing areas of the short duration market were very
'seasoned' adjustable rate mortgages, which experienced much slower prepayments
than more recent issues (seasoned mortgages have already experienced several
refinancing opportunities, so the outstanding balance is less sensitive to
interest rate fluctuations); high coupon fixed-rate mortgages; and CMOs, where
yield spreads had narrowed. Your Fund's investments in these sectors enhanced
its overall returns during the period.
INVESTMENT OUTLOOK
The U.S. economy appears to be healthy, with modest growth expected in the
period ahead and falling into the 2%-2.5% range by year end. With a gradually
strengthening economy and steady inflation, we expect no Federal Reserve action
on interest rates over the medium term. If our forecast proves correct, the
result should be steady U.S. bond prices.
In this environment, we are maintaining the portfolio's market exposure and
anticipate increasing its investment in short duration mortgage-backed
securities. Spread assets such as adjustable rate mortgage-backed securities
are positioned to perform well in a stable interest rate environment.
Thank you for your interest in Alliance Short-Term U.S. Government Fund. We
look forward to reporting to you again on market activity and the Fund's
investment results in coming periods.
Sincerely,
John D. Carifa
Chairman and President
Patricia J. Young
Senior Vice President
Paul A. Ullman
Vice President
2
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
OBJECTIVE AND POLICIES
Alliance Short-Term U.S. Government Fund seeks high current income consistent
with preservation of capital by investing primarily in a portfolio of U.S.
Government securities. Under normal circumstances, the Portfolio maintains an
average dollar-weighted portfolio maturity of not more than three years.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF FEBRUARY 29, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +6.17% +1.63%
. Since Inception* +4.49% +3.32%
SEC Yield 4.42%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +5.35% +2.35%
. Since Inception* +3.72% +3.72%
SEC Yield 3.89%
CLASS C SHARES
. One Year +5.35%
. Since Inception* +2.11%
SEC Yield 3.88%
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 February 29, 1996.
* Inception: 5/4/92, Class A and Class B; 8/2/93, Class C.
3
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996 (UNAUDITED) ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
- ------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-90.6%
U.S. TREASURY NOTE-69.8%
7.875%, 7/15/96 (a) $10,350 $10,453,500
FEDERAL AGENCY SECURITIES-20.8%
Federal Home Loan Mortgage Corp.
12.00%, 2/01/14 447 515,442
Federal National Mortgage Association
11.50%, 6/01/20 491 559,358
12.00%, 3/01/13-5/01/15 1,778 2,044,290
3,119,090
Total U.S. Government and Agency Obligations
(cost $13,504,224) 13,572,590
COLLATERALIZED MORTGAGE OBLIGATIONS-14.0%
FIXED RATE-13.2%
Federal Home Loan Bank
7.61%, 4/25/02 1,445 1,466,920
Federal Home Loan Mortgage Corp.
Series 1163 Cl. H
7.50%, 12/15/19 515 519,837
1,986,757
ADJUSTABLE RATE-0.8%
Federal National Mortgage Association
Series 1993-89 Cl. F
5.744%, 9/25/21 $114 $114,614
Total Collateralized Mortgage Obligations
(cost $2,103,207) 2,101,371
REPURCHASE AGREEMENT-5.0%
UBS Securities LLC. 5.45%,
dated 2/29/96, due 3/01/96
collateralized by $1,728,000
FHLMC 1287C, 7.25%, 9/15/04,
(cost $744,000) 744 744,000
TOTAL INVESTMENTS-109.6%
(cost $16,351,431) 16,417,961
Other assets less liabilities-(9.6%) (1,431,498)
NET ASSETS-100% $14,986,463
(a) Security segregated to collateralize reverse repurchase agreement with an
aggregate market value of $1,530,000.
Glossary of Terms:
FHLMC - Federal Home Loan Mortgage Corp.
See notes to financial statements.
4
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996 (UNAUDITED) ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $16,351,431) $16,417,961
Cash 746
Interest receivable 134,938
Receivable for shares of beneficial interest sold 56,264
Receivable due from adviser 27,323
Deferred organization expense 10,221
Prepaid expenses and other assets 577
Total assets 16,648,030
LIABILITIES
Payable for reverse repurchase agreement 1,530,227
Dividend payable 14,887
Distribution fee payable 10,337
Accrued expenses and other liabilities 106,116
Total liabilities 1,661,567
NET ASSETS $14,986,463
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 15
Additional paid-in capital 15,576,434
Distributions in excess of net investment income (12,906)
Accumulated net realized loss (644,555)
Net unrealized appreciation of investments and other assets 67,475
$14,986,463
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($3,087,393/
316,640 shares of beneficial interest issued and outstanding) $ 9.75
Sales charge-4.25% of public offering price .43
Maximum offering price $10.18
CLASS B SHARES
Net asset value and offering price per share ($6,887,837/
698,691 shares of beneficial interest issued and outstanding) $ 9.86
CLASS C SHARES
Net asset value, redemption and offering price per share($5,011,233
/508,970 shares of beneficial interest issued and outstanding) $ 9.85
See notes to financial statements.
5
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $474,306
EXPENSES
Advisory fee $ 40,547
Distribution fee - Class A 4,231
Distribution fee - Class B 33,260
Distribution fee - Class C 26,359
Custodian 41,327
Registration 34,564
Audit and legal 30,347
Printing 25,600
Transfer agency 16,592
Trustees' fees 11,041
Amortization of organization expenses 5,489
Miscellaneous 3,183
Total expenses 272,540
Less: expenses waived and reimbursed by adviser
(See Note B) (127,597)
Net expenses 144,943
Interest expense 2,692
Total expenses including interest expense 147,635
Net investment income 326,671
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 1,072
Net change in unrealized appreciation of investments 44,175
Net gain on investments 45,247
NET INCREASE IN NET ASSETS FROM OPERATIONS $371,918
See notes to financial statements.
6
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED
FEB. 29,1996 YEAR ENDED
(UNAUDITED) AUG. 31,1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 326,671 $ 547,800
Net realized gain (loss) on investments 1,072 (26,997)
Net change in unrealized appreciation
(depreciation) of investments 44,175 71,312
Net increase in net assets from operations 371,918 592,115
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (65,135) (117,047)
Class B (127,861) (210,021)
Class C (102,056) (196,348)
Distributions in excess of net investment income
Class A -0- (9,973)
Class B -0- (17,854)
Class C -0- (16,698)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) 352,645 (1,148,386)
Total increase (decrease) 429,511 (1,124,212)
NET ASSETS
Beginning of year 14,556,952 15,681,164
End of period $14,986,463 $14,556,952
See notes to financial statements.
7
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996 (UNAUDITED) 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
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 six months ended February 29, 1996,
such reimbursement amounted to $127,597. 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
8
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
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 $8,886 for
the six months ended February 29, 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 $2,263 from the
sale of Class A shares and $28,444 in contingent deferred sales charges imposed
upon redemptions by shareholders of Class B shares for the six months ended
February 29, 1996. Accrued expenses includes an amount owed to two of the
Trustees under a deferred compensation plan of $16,360.
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 six months ended February 29, 1996, 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 $415,312 and $578,615 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 $4,641,088 and $1,732,495, respectively, for the six months ended
February 29, 1996. At February 29, 1996 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 $72,371 and gross
unrealized depreciation of investments was $5,841 resulting in net unrealized
appreciation of $66,530.
9
NOTES TO FINANCIAL STATEMENTS (CONT.)
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:
SHARES AMOUNT
----------------------------- ----------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEB. 29,1996 AUGUST 31, FEB. 29,1996 AUGUST 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
----------- ---------- ------------ ------------
CLASS A
Shares sold 124,948 424,619 $1,216,536 $ 4,020,889
Shares issued in
reinvestment of
dividends 3,810 8,027 37,063 77,235
Shares redeemed (121,063) (358,681) (1,177,691) (3,383,335)
Net increase 7,695 73,965 $ 75,908 $ 714,789
CLASS B
Shares sold 456,733 591,993 $4,492,760 $ 5,759,616
Shares issued in
reinvestment of
dividends 7,247 13,420 71,261 130,566
Shares redeemed (415,872) (597,126) (4,090,871) (5,807,282)
Net increase 48,108 8,287 $ 473,150 $ 82,900
CLASS C
Shares sold 181,739 275,893 $1,784,635 $ 2,678,828
Shares issued in
reinvestment of
dividends 5,241 12,237 51,484 118,917
Shares redeemed (206,740) (488,878) (2,032,532) (4,743,820)
Net decrease (19,760) (200,748) $ (196,413) $(1,946,075)
NOTE F: 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.
10
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
NOTE G: REVERSE REPURCHASE AGREEMENTS
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing cash, cash equivalents or liquid
high-grade debt securities having a value at least equal to the repurchase
price.
As of February 29, 1996, the Fund had entered into the following reverse
repurchase agreement:
AMOUNT BROKER INTEREST RATE MATURITY
- ------------ -------------- ------------- -------------
$1,530,000 Morgan Stanley 5.30% March 7, 1996
For the six months ended February 29, 1996, the maximum amount of reverse
repurchase agreements outstanding was $1,530,000, the average amount
outstanding was approximately $1,086,316, and the daily weighted average
interest rate was 5.65%.
11
FINANCIAL HIGHLIGHTS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
SIX MONTHS MAY 4,
ENDED MAY 1,1994 1992(C)
FEBRUARY 29, YEAR ENDED THROUGH YEAR ENDED TO
1996 AUGUST 31, AUGUST 31, APRIL 30, APRIL 30,
(UNAUDITED) 1995 1994(A) 1994 1993
-------------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.70 $9.67 $9.77 $10.22 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .24 .42 .14 .35 .46
Net realized and unrealized gain (loss) .04 .05 (.09) (.29) .34
Net increase in net asset value from
operations .28 .47 .05 .06 .80
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.23) (.41) (.12) (.42) (.46)
Dividends in excess of net investment income -0- (.03) -0- (.01) -0-
Return of capital -0- -0- (.03) (.08) -0-
Distributions from net realized gains -0- -0- -0- -0- (.12)
Total dividends and distributions (.23) (.44) (.15) (.51) (.58)
Net asset value, end of period $9.75 $9.70 $9.67 $ 9.77 $10.22
TOTAL RETURN
Total investment return based on net asset
value (d) 2.86% 5.14% .53% .52% 8.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,087 $2,997 $2,272 $2,003 $6,081
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.43%(g)(e) 1.40% 1.40%(e) 1.27% 1.00%(e)
Expenses, before waivers/reimbursements 3.18%(e) 3.71% 2.95%(e) 2.17% 2.20%(e)
Net investment income 5.03%(e) 4.56% 3.98%(e) 4.41% 4.38%(e)
Portfolio turnover rate 12% 15% 144% 55% 294%
</TABLE>
See footnotes on page 14.
12
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
SIX MONTHS MAY 4,
ENDED MAY 1,1994 1992(C)
FEBRUARY 29, YEAR ENDED THROUGH YEAR ENDED TO
1996 AUGUST 31, AUGUST 31, APRIL 30, APRIL 30,
(UNAUDITED) 1995 1994(A) 1994 1993
-------------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.81 $9.78 $9.88 $10.31 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .21 .36 .10 .40 .38
Net realized and unrealized gain (loss) .03 .04 (.07) (.39) .33
Net increase in net asset value from
operations .24 .40 .03 .01 .71
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.19) (.34) (.11) (.35) (.38)
Dividends in excess of net investment income -0- (.03) -0- (.01) -0-
Return of capital -0- -0- (.02) (.08) -0-
Distributions from net realized gains -0- -0- -0- -0- (.02)
Total dividends and distributions (.19) (.37) (.13) (.44) (.40)
Net asset value, end of period $9.86 $9.81 $9.78 $ 9.88 $10.31
TOTAL RETURN
Total investment return based on net asset
value (d) 2.47% 4.32% .28% .03% 7.22%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,888 $6,380 $6,281 $7,184 $1,292
Ratios of average net assets of:
Expenses, net of waivers/reimbursements 2.14%(g)(e) 2.10% 2.10%(e) 2.05% 1.75%(e)
Expenses, before waivers/reimbursements 3.87%(e) 4.33% 3.60%(e) 3.21% 4.81%(e)
Net investment income 4.30%(e) 3.82% 3.22%(e) 3.12% 3.36%(e)
Portfolio turnover rate 12% 15% 144% 55% 294%
</TABLE>
See footnotes on page 14.
13
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
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SIX MONTHS AUGUST 2,
ENDED MAY 1,1994 1993(F)
FEB. 29, YEAR ENDED THROUGH TO
1996 AUGUST 31, AUGUST 31, APRIL 30,
(UNAUDITED) 1995 1994(A) 1994
-------------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.80 $9.77 $9.87 $10.34
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .21 .34 .10 .26
Net realized and unrealized gain (loss) .03 .06 (.07) (.42)
Net increase (decrease) in net asset value
from operations .24 .40 .03 (.16)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.19) (.34) (.11) (.25)
Dividends in excess of net investment income -0- (.03) -0- (.01)
Return of capital -0- -0- (.02) (.05)
Distributions from net realized gains -0- -0- -0- -0-
Total dividends and distributions (.19) (.37) (.13) (.31)
Net asset value, end of period $9.85 $9.80 $9.77 $ 9.87
TOTAL RETURN
Total investment return based on net asset
value (d) 2.47% 4.33% .28% (1.56)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,011 $5,180 $7,128 $8,763
Ratios of average net assets of:
Expenses, net of waivers/reimbursements 2.14%(g)(e) 2.10% 2.10%(e) 2.10%(e)
Expenses, before waivers/reimbursements 3.86%(e) 4.23% 3.64%(e) 3.10%(e)
Net investment income 4.27%(e) 3.80% 3.26%(e) 2.60%(e)
Portfolio turnover rate 12% 15% 144% 55%
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(a) The Fund changed its fiscal year end from April 30 to August 31.
(b) Net of fee waived and expenses reimbursed by Adviser.
(c) Commencement of operations.
(d) 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.
(e) Annualized.
(f) Commencement of distribution.
(g) Expense ratio includes interest expense.
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.
14
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
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.
The financial information herein is taken from the records of the Fund without
audit by independent accountants who do not express an opinion thereon.
15
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 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.
STMUSGSR
