ALLIANCE STRATEGIC BALANCED FUND
ANNUAL REPORT
JULY 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
September 16, 1997
Dear Shareholder:
We are pleased to provide a summary of investment performance for Alliance
Strategic Balanced Fund's fiscal year ended July 31, 1997.
In the table below, your Fund's performance is compared to that of the U.S.
stock market, as represented by the S&P 500, and the U.S. bond market, as
represented by the Lehman Brothers Government/Corporate Bond Index. As you can
see, stocks dramatically outperformed bonds during the past year.
INVESTMENT RESULTS*
Total returns as of July 31, 1997
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE STRATEGIC BALANCED FUND
Class A 10.74% 23.90%
Class B 10.30 23.01
Class C 10.30 23.01
S&P 500 STOCK INDEX 22.54 52.11
LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX 5.76 10.79
* THE TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT
EXPENSES.
MARKET ENVIRONMENT
Equity markets continued to produce extraordinary returns during the second
half of your Fund's fiscal year. However, other indices did not fare as well.
The Russell 2000, a broader index of U.S. equities, returned only 13.1% for the
six months ended July 31, while international stocks, as measured by the Morgan
Stanley Capital International Europe Asia Far East Index (MSCI EAFE,) produced
returns of 17.3% during the same period. This divergence of performance
measurements was largely due to outperformance of large capitalization stocks,
a trend which developed over a year ago. As your Fund's fiscal year drew to a
close, the gap between performance of large cap and small cap stocks narrowed
slightly, and we expect the gap to narrow further due to the deceleration in
relative earnings gains of large capitalization stocks. Fund performance was
negatively impacted by the relative underperformance of small cap and
international stocks in the portfolio.
Fixed income markets were impacted by extreme shifts in investor sentiment
during the period. During the earlier part of the fiscal year, the Federal
Reserve raised the Federal Funds rate by 25 basis points, signaling concern
about rapid economic growth and the possibility of greater inflation. Not
surprisingly, investors became wary of future hikes in interest rates. This
produced negative returns for the bond market and for the fixed income portion
of the portfolio for the first three months of 1997.
Early in the second quarter of 1997, newly released economic data suggested a
sharp slowdown in the economy's rate of growth when compared with the torrid
pace set in the prior period. Once again investors altered their views,
resuming their expectations for non-inflationary economic growth and for
corporate earnings gains that would continue to exceed forecasts.
MARKET OUTLOOK
Over the last 15 years, the U.S. equity market has produced historically high
rates of return. A large part of these extraordinary returns can not simply be
accounted for by higher corporate profits and lower inflation and interest
rates, two of the more important valuation determinants. There are other,
longer-term factors at work.
First, for the first time in 50 years, the Western developed nations no longer
face a hostile enemy that could emerge as a significant political or military
threat. Second, virtually all governments in the developed world are attempting
to reduce fiscal deficits and are moving towards more liberalized markets.
Third, inflation, which is probably the most debilitating factor for capital
markets, remains extremely well-behaved this far into the current cycle of
economic expansion. Indeed, inflation rates are now down to levels not seen in
the developed world in the past 25 years. Stable inflation is due in large part
to the globalization of production and to large advances in productivity.
Fourth, the capital markets, especially the equity market, has enjoyed record
inflows as the baby boom generation matures and acknowledges the need to invest
for retirement. Lastly, a strong dollar and the demonstrated improvement in the
competitiveness of U.S. industry have attracted foreign investors.
1
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
We expect these positive forces to persist. Nonetheless, we have some concerns
about U.S. equity valuations. It is not clear how much further and longer the
process of corporate restructuring and economic austerity can push equity
prices upward. Employment gains are comparatively robust, there are signs of
real wage gains, and consumer confidence stands at a 28-year high. Should those
conditions cause an acceleration in the rate of growth in consumer spending,
the Federal Reserve might adopt a more restrictive monetary policy. Such a
stance would most likely prove disruptive to the current, high level of
investor optimism. If stock prices continue their rapid ascent, a modest
increase in the Fund's cash position, to cushion a correction, might be
warranted.
Thank you for your interest and investment in the Alliance Strategic Balanced
Fund. We look forward to reporting future investment results.
Sincerely,
John D. Carifa
Chairman and President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES 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 JULY 31, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 23.90% 18.64%
Five Years 10.78% 9.83%
Since Inception* 13.27% 12.55%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 23.01% 19.01%
Five Years 10.00% 10.00%
Since Inception* 12.83%** 12.83%**
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 23.01% 22.01%
Since Inception* 9.67% 9.67%
The average annual total returns reflect reinvestment 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);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 9/4/90, Class A; 10/23/87, Class B; 8/2/93, Class C.
** Reflects conversion to Class A shares.
3
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
ALLIANCE STRATEGIC BALANCED FUND
GROWTH OF A $10,000 INVESTMENT
9/30/90* TO 7/31/97
$38,000
$34,000
$30,000
$26,000
$22,000
$18,000
$14,000
$10,000
$6,000
S&P 500: $37,526
STRATEGIC BALANCED FUND
CLASS A: $23,062
LEHMAN BROTHERS GOV'T/CORP. BOND INDEX: $18,276
9/30/90 7/31/91 7/31/92 7/31/93 7/31/94 7/31/95 7/31/96 7/31/97
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Strategic Balanced Fund Class A shares (from 9/30/90 to 7/31/97) as
compared to the performance of an appropriate broad-based index. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains. Performance for Class B, Class C and Advisor Class shares will
vary from the results shown above due to differences in expenses charged to
those classes. Past performance is not indicative of future results, and is not
representative of future gain or loss in capital value or dividend income.
The unmanaged Standard &Poor's 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market.
The unmanaged Lehman Brothers Government/Corporate Bond Index represents a
combination of the Lehman Government Bond Index and the Lehman Corporate Bond
Index and includes U.S. government treasury and agency securities, corporate
bonds and yankee bonds.
When comparing Alliance Strategic Balanced Fund to the indices shown above,
you should note that no charges or expenses are reflected in the performance of
the indices.
Strategic Balanced Fund
S&P500
Lehman BrothersGov't/Corp. Bond Index
* Month-end nearest to Fund's inception date of 9/4/90.
4
TEN LARGEST HOLDINGS
JULY 31, 1997 ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $10,770,769 21.0%
Federal National Mortgage Association 3,465,475 6.7
Philip Morris Cos., Inc. 1,128,125 2.2
Federal Home Loan Bank, 7.00%, 9/01/11 951,787 1.8
St. George Bank, Ltd., 7.15%, 10/15/05 870,868 1.7
Zurich Capital Trust I, 8.376%, 6/01/37 868,750 1.7
Caliber Systems, Inc., 7.80%, 8/01/06 851,257 1.7
Ras Laffan Liquefied Natural Gas,
7.628%, 9/15/06 843,244 1.6
Time Warner, Inc., 8.375%, 3/15/23 767,438 1.5
Empresa Nacional de Electricidad , S.A.,
7.875%, 2/01/27 752,046 1.5
$21,269,759 41.4%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JULY 31, 1997
_______________________________________________________________________________
SHARES OR PRINCIPAL
---------------------------
HOLDINGS
PURCHASES BOUGHT 7/31/97
- -------------------------------------------------------------------------------
Caliber Systems, Inc., 7.80%, 8/01/06 $800,000 $800,000
Empresa Nacional de Electricidad, S.A.,
7.875%, 2/01/27 $700,000 $700,000
Halliburton Co. 13,000 14,000
Philip Morris Cos., Inc. 21,950 25,000
Ras Laffan Liquefied Natural Gas,
7.628%, 9/15/06 $800,000 $800,000
Schering-Plough Corp. 12,000 12,000
U.S. Treasury Note, 6.125%, 8/31/98 $1,150,000 $1,150,000
U.S. Treasury Note, 6.25%, 4/30/01 $3,200,000 $3,200,000
U.S. Treasury Note, 6.50%, 5/31/02 $1,940,000 $1,940,000
Zurich Capital Trust I, 8.376%, 6/01/37 $800,000 $800,000
HOLDINGS
SALES SOLD 7/31/97
- -------------------------------------------------------------------------------
First Union Capital, 7.935%, 1/15/27 $750,000 -0-
Ford Motor Credit Co., 6.125%, 1/09/06 $750,000 -0-
Government National Mortgage Association,
7.50%, 5/15/26 $1,209,576 -0-
Government National Mortgage Association,
8.00%, 1/15/27 $2,211,000 -0-
John Hancock Mutual Life Insurance Co.,
7.375%, 2/15/24 $800,000 -0-
Leucadia Capital Trust I, 8.65%, 1/15/27 $500,000 -0-
Ras Laffan Liquefied Natural Gas, 8.294%, 3/15/14 $700,000 -0-
Republic of Croatia FRN, 6.50%, 7/31/97 $450,000 -0-
U.S. Treasury Note, 5.75%, 8/15/03 $2,045,000 -0-
U.S. Treasury Note, 6.125%, 5/15/98 $2,005,000 -0-
5
INDUSTRY DIVERSIFICATION
JULY 31, 1997 ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Aerospace & Defense $ 32,822 0.1%
Basic Industries 488,239 0.9
Capital Goods 1,677,480 3.3
Consumer Manufacturing 1,621,411 3.2
Consumer Services 3,326,373 6.5
Consumer Staples 3,563,023 6.9
Energy 3,076,708 6.0
Finance 4,625,669 9.0
Healthcare 3,268,702 6.4
Multi Industry 1,046,070 2.0
Technology 5,764,309 11.2
Transportation 385,035 0.7
Utilities 734,336 1.4
U.S. Government & Agencies 15,809,247 30.8
Corporate Debt Obligations 2,910,057 5.7
Yankee Bonds 3,622,004 7.0
Total Investments* 51,951,485 101.1
Cash and receivables, net of liabilities (557,444) (1.1)
Net Assets $51,394,041 100.0%
* Excludes short-term obligations.
6
PORTFOLIO OF INVESTMENTS
JULY 31, 1997 ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-57.6%
UNITED STATES INVESTMENTS-39.1%
TECHNOLOGY-9.2%
AEROSPACE & DEFENSE-0.3%
United Technologies Corp. 2,000 $ 169,125
COMMUNICATIONS EQUIPMENT-1.3%
Lucent Technologies, Inc. 6,000 509,625
Tellabs, Inc. (a) 2,800 167,650
------------
677,275
COMPUTER HARDWARE-0.8%
COMPAQ Computer Corp. (a) 7,525 429,866
COMPUTER NETWORKING SOFTWARE-1.1%
Cisco Systems, Inc. (a) 7,000 556,937
COMPUTER SOFTWARE & SERVICES-1.7%
First Data Corp. 3,758 163,943
Microsoft Corp. (a) 1,700 240,550
Netscape Communications Corp. (a) 1,600 58,700
Oracle Systems Corp. (a) 7,550 411,003
------------
874,196
SEMI-CONDUCTORS & RELATED-2.3%
Altera Corp. (a) 6,084 367,321
Applied Materials, Inc. (a) 2,000 183,750
Intel Corp. 6,610 606,881
------------
1,157,952
TELECOMMUNICATIONS-1.0%
Cox Communications, Inc. Cl.A (a) 20,000 506,250
TELEPHONE UTILITY-0.7%
WorldCom, Inc. (a) 10,000 349,375
------------
4,720,976
FINANCE-6.2%
BANKING-MONEY CENTERS-1.1%
Chase Manhattan Corp. (a) 5,000 567,813
BROKERAGE & MONEY MANAGEMENT-1.4%
Merrill Lynch & Co., Inc. 4,600 324,012
Morgan Stanley, Dean Witter, Discover & Co. 7,900 413,269
------------
737,281
INSURANCE-1.9%
American International Group, Inc. 4,500 479,250
Travelers Group, Inc. 7,001 503,634
------------
982,884
MISCELLANEOUS-1.8%
American Express Co. 5,000 418,750
MBNA Corp. 11,040 496,800
------------
915,550
------------
3,203,528
CONSUMER STAPLES-5.7%
COSMETICS-0.5%
Gillette Co. 2,380 235,620
FOOD-1.7%
Campbell Soup Co. (a) 8,900 461,687
Coca-Cola Co. 6,000 415,500
------------
877,187
HOUSEHOLD PRODUCTS-0.7%
Colgate-Palmolive Co. 5,000 378,750
RETAIL-FOOD-0.6%
Kroger Co. (a) 10,000 295,625
TOBACCO-2.2%
Philip Morris Cos., Inc. 25,000 1,128,125
------------
2,915,307
HEALTH CARE-4.9%
BIOTECHNOLOGY-0.4%
Centocor, Inc. (a) 5,113 196,851
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
DRUGS-3.3%
Merck & Co., Inc. 7,000 $ 727,562
Pfizer, Inc. 5,000 298,125
Schering-Plough Corp. 12,000 654,750
------------
1,680,437
MEDICAL PRODUCTS-1.2%
Boston Scientific Corp. (a) 5,000 358,750
Medtronic, Inc. 3,000 261,750
------------
620,500
------------
2,497,788
ENERGY-4.6%
DOMESTIC PRODUCTS-0.2%
Apache Corp. 3,600 126,900
INTERNATIONAL-1.2%
Texaco, Inc. 5,500 638,344
OIL SERVICE-3.2%
BJ Services Co. (a) 3,800 247,000
Halliburton Co. 14,000 644,000
Noble Drilling Corp. (a) 6,000 168,375
Schlumberger Ltd. 1,500 114,563
Transocean Offshore, Inc. 5,500 449,281
------------
1,623,219
------------
2,388,463
CONSUMER SERVICES-3.9%
BROADCASTING & CABLE-0.5%
Tele-Communications, Inc.-
Liberty Media Cl.A (a) 9,000 230,063
ENTERTAINMENT & LEISURE-0.9%
Walt Disney Co. 6,000 484,875
RETAILING-GENERAL-2.5%
Dayton Hudson Corp. 4,600 297,275
Federated Department Stores, Inc. (a) 12,000 525,750
Sears, Roebuck & Co. 7,000 443,187
------------
1,266,212
------------
1,981,150
CAPITAL GOODS-2.1%
ELECTRICAL EQUIPMENT-1.0%
General Electric Co. 7,000 491,313
MACHINERY-0.6%
Allied-Signal, Inc. 3,600 332,100
POLLUTION CONTROL-0.5%
USA Waste Services, Inc. (a) 6,900 278,156
------------
1,101,569
CONSUMER MANUFACTURING-1.5%
APPLIANCES-0.6%
Sunbeam Corp. 8,000 313,000
AUTO & RELATED-0.9%
Ford Motor Co. 11,000 449,625
------------
762,625
TRANSPORTATION-0.7%
RAILROAD-0.7%
Union Pacific Corp. 4,800 344,100
MULTI INDUSTRY-0.3%
U.S. Industries, Inc. (a) 4,000 161,250
Total United States Investments
(cost $14,890,986) 20,076,756
FOREIGN INVESTMENTS-18.5%
AUSTRALIA-0.1%
Woolworths, Ltd. 17,326 54,102
BELGIUM-0.1%
Barco N.V. 221 46,236
BRAZIL-0.3%
Telecomunicacoes Brasileras S.A. (ADR) 1,200 178,050
CANADA-0.2%
Gulf Canada Resources, Ltd. (a) 12,100 93,775
8
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
DENMARK-0.4%
Den Danske Bank 2,000 $ 210,928
FINLAND-1.0%
Huhtamaki OY 600 27,063
Nokia AB OY Corp. Ser A 5,000 431,489
Orion-Yhtymae OY Cl.B 750 27,144
Rautaruukki OY 2,128 21,867
------------
507,563
FRANCE-1.2%
Banque National de Paris 11 523
Compagnie Francaise d'Etudes et de
Construction Technip (b) 375 47,250
Compagnie Generale des Eaux (b) 437 55,132
warrants expiring 5/02/01 (a) 437 260
Legrand S.A. (b) 125 25,156
Legris Industries S.A. (b) 544 23,666
Promodes (b) 90 36,079
Societe Centrale des Assurances
Generales de France (b) 1,228 44,024
Societe Generale (b) 1,024 134,964
Total, S.A. Cl.B (b) 1,200 120,264
Unibail, S.A. (b) 969 88,214
Usinor Sacilor (b) 1,900 37,808
------------
613,340
GERMANY-1.0%
Adidas A.G. 1,000 117,283
Bayer AG 1,310 55,054
Continental A.G. 2,000 51,257
Henkel KGAA 130 7,235
Hornbach Holding A.G. 2,000 144,432
Merck KG 975 39,758
Schmalbach Lubeca A.G. 240 48,933
Veba A.G. 650 37,729
------------
501,681
HONG KONG-0.8%
Cheung Kong 5,000 55,538
Citic Pacific, Ltd. 7,000 44,391
Dao Heng Bank Group, Ltd. 14,000 85,347
Dickson Concepts International, Ltd. 5,000 17,436
Hong Kong Electric Holdings, Ltd. 5,000 20,407
Peregrine Investments Holdings, Ltd. 14,000 30,920
Swire Pacific 12,000 113,917
Wing Hang Bank, Ltd 5,000 29,900
------------
397,856
INDIA-0.0%
Videsh Sanchar Nigam, Ltd. (a)(c) 500 8,825
INDONESIA-0.2%
BDNI Bank Dagang Nas 38,000 17,801
PT Indostat (ADR) 2,000 62,250
PT Tempo Scan Pacific 7,000 14,188
------------
94,239
IRELAND-0.2%
Allied Irish Banks 10,000 92,219
Smurfit (Jefferson) Group Plc 6,000 18,214
------------
110,433
ITALY-0.6%
Credito Italiano 50,000 99,356
Ente Nazionale Idrocarburi 5,000 29,180
IMI LNV 6,000 57,777
Parmalat Finanziaria S.p.A. 16,000 22,265
Telecom Italia S.p.A. (a) 13,885 88,106
------------
296,684
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
JAPAN-4.9%
77th Bank 4,000 $ 38,868
Canon, Inc. 6,000 191,635
Credit Saison Co., Ltd. 3,000 92,269
Daikin Industries, Ltd. 5,000 46,472
Daito Trust Construction Co., Ltd. 4,000 42,924
DDI Corp. 6 41,268
Fuji Photo Film, Co. (ORD) 2,000 84,157
Fujitec Co., Ltd. 4,000 50,697
Hirose Electric Co. 1,000 81,284
Hitachi Chemical Co., Ltd. 6,000 53,739
Honda Motor Co. 8,000 267,681
Hoya Corp. 1,000 50,697
Japan Tobacco, Inc. 5 38,826
Kokuyo 2,000 47,824
Kuraray Co., Ltd. 3,000 28,897
Mabuchi Motor Co. 500 31,812
Makita Corp. 7,000 105,281
Mitsubishi Heavy Industries, Ltd. 3,000 21,166
NGK Insulators, Ltd. 3,000 32,446
Nintendo Corp., Ltd. 1,000 101,394
Onward Kashiyama Co., Ltd. 3,000 47,655
Rohm Co., Ltd. 1,000 130,968
Sankyo Co. 3,000 107,224
Sony Corp. 2,000 199,409
Sumitomo Electric Industries 15,000 249,683
Taisho Pharmaceutical Co. 2,000 52,218
Takeda Chemical Industries 1,000 30,334
TDK Corp. 1,000 86,185
Yakult Honsha Co. 5,000 55,344
Yamaguchi Bank 2,000 29,066
Yamaha Motor Co., Ltd. 4,000 47,993
Yamanouchi Pharmaceutical Co., Ltd. 2,000 54,077
------------
2,539,493
KOREA-0.1%
SK Telecom Co., Ltd. 6,180 71,070
MALAYSIA-0.2%
Berjaya Sports 10,000 47,393
Telekom Malaysia Bhd. 4,500 16,550
UMW Holdings Bhd. 4,000 15,773
------------
79,716
NETHERLANDS-0.6%
AKZO Nobel N.V. 1,000 154,729
Hunter Douglas N.V. 608 28,240
Koninklijke Hoogovens N.V. 600 36,319
Koninklijke KNP BT 1,700 39,030
Stork N.V. 900 36,116
Vendex International N.V. 506 26,065
------------
320,499
NORWAY-0.1%
Bergesen DY AS 1,600 40,935
Orkla ASA 270 19,505
------------
60,440
PHILIPPINES-0.0%
Philippine Long Distance 400 13,153
RUSSIA-0.7%
Lukoil Holdings (ADR)(c) 2,000 182,000
Tatneft (ADR)(a)(c) 1,400 167,230
------------
349,230
SINGAPORE-0.0%
Overseas Chinese Bank 480 4,829
SPAIN-0.2%
Tabacalera, S.A. 550 29,315
Telefonica de Espana 1,800 48,201
------------
77,516
SWEDEN-0.6%
Ericsson LM Telecom 4,000 180,198
Sparbanken Sverige AB 5,000 109,648
------------
289,846
10
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
SWITZERLAND-2.2%
Baloise Holdings, Ltd. 60 $ 146,225
Ciba Specialty Chemicals A.G. (a) 491 45,238
Nestle, S.A. 245 310,518
Novartis A.G. 250 400,733
Schindler Holding A.G. 35 45,654
Zurich Versicherungs-gesellschaft 500 203,421
------------
1,151,789
UNITED KINGDOM-2.8%
Anglian Water Plc 4,500 59,183
BAA Plc 20,000 188,375
Bass Plc 6,000 82,111
BG Plc 6,000 24,515
Boots Co. Plc 2,300 29,174
BPB Plc 15,000 82,947
British Aerospace Plc 1,500 32,822
British Petroleum Co. Plc 7,000 95,796
BTR Plc 9,000 27,986
Cable & Wireless Plc 3,500 35,263
Compass Group Plc 15,000 150,881
Granada Group Plc 3,300 45,486
Guinness Plc 2,000 19,198
IMI Plc 4,000 22,546
Kingfisher Plc 2,500 29,536
Ladbroke Group Plc 25,000 101,325
PowerGen Plc 3,400 40,727
Reed International 7,000 70,296
Scottish Power Plc 8,500 60,114
Tomkins Plc 30,000 151,619
United Assurance Group Plc 4,000 27,961
United News Media Plc 3,061 35,335
Whitbread Plc 3,500 48,932
------------
1,462,128
Total Foreign Investments
(cost $8,589,550) 9,533,421
Total Common Stocks & Other Investments
(cost $23,480,536) 29,610,177
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCIES-30.8%
Federal Home Loan Bank
7.00%, 9/01/11 $ 940 $ 951,787
Federal National Mortgage Association
6.00%, 4/01/11 362 356,135
6.50%, 5/01/11 605 602,699
6.50%, 6/01/11 677 675,119
6.50%, 9/01/11 423 421,369
7.00%, 5/01/26 966 966,246
7.00%, 5/01/27 445 443,907
U.S. Treasury Bond
6.625%, 2/15/27 595 621,216
U.S. Treasury Notes
6.125%, 8/31/98 1,150 1,156,106
6.25%, 4/30/01 3,200 3,244,000
6.375%, 5/15/99 4,000 4,043,760
6.50%, 5/31/02 1,940 1,987,278
6.625%, 5/15/07 325 339,625
Total U.S. Government & Agencies
(cost $15,532,853) 15,809,247
CORPORATE DEBT OBLIGATIONS-5.7%
FINANCIAL-2.5%
Ford Motor Credit Co.
7.50%, 8/01/26 400 422,612
Zurich Capital Trust I (c)
8.376%, 6/01/37 800 868,750
------------
1,291,362
INDUSTRIAL-3.2%
Caliber Systems, Inc.
7.80%, 8/01/06 800 851,257
Time Warner, Inc.
8.375%, 3/15/23 700 767,438
------------
1,618,695
Total Corporate Debt Obligations
(cost $2,750,456) 2,910,057
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
YANKEE BONDS-7.0%
Deutsche Bank Financial, Inc.
6.70%, 12/13/06 $ 700 $ 708,589
Empresa Nacional de Electricidad, S.A.
7.875%, 2/01/27 700 752,046
Quebec Province Canada
7.50%, 7/15/23 425 447,257
Ras Laffan Liquefied Natural Gas (c)
7.628%, 9/15/06 800 843,244
St. George Bank, Ltd. (c)
7.15%, 10/15/05 850 870,868
Total Yankee Bonds
(cost $3,480,824) 3,622,004
SHORT-TERM DEBT SECURITY-2.7%
Federal Home Loan Mortgage Association
5.75%, 8/01/97
(amortized cost $1,400,000) 1,400 1,400,000
TOTAL INVESTMENTS -103.8%
(cost $46,644,669) 53,351,485
Other assets less liabilities-(3.8%) (1,957,444)
NET ASSETS-100% $ 51,394,041
(a) Non-income producing security.
(b) Securities with an aggregate market value of $612,557 have been segregated
to collateralize forward exchange currency contracts.
(c) 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 July 31,
1997, these securities amounted to $2,940,917 representing 5.7% of net assets.
Glossary of Terms:
ADR - American Depository Receipt.
ORD - Ordinary.
12
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997 ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $46,644,669) $ 53,351,485
Cash, at value (cost $121,649) 121,700
Receivable for investment securities sold 1,012,194
Interest and dividends receivable 375,200
Receivable for shares of beneficial interest sold 193,286
Unrealized appreciation of forward exchange
currency contracts 22,126
Foreign taxes receivable 10,167
Total assets 55,086,158
LIABILITIES
Payable for investment securities purchased 3,180,990
Payable for shares of beneficial interest redeemed 241,389
Distribution fee payable 31,127
Advisory fee payable 5,135
Accrued expenses 233,476
Total liabilities 3,692,117
NET ASSETS $ 51,394,041
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 29
Additional paid-in capital 42,068,928
Undistributed net investment income 509,629
Accumulated net realized gain on investments and foreign
currency transactions 2,111,261
Net unrealized appreciation on investments and foreign
currency denominated assets and liabilities 6,704,194
$ 51,394,041
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($20,312,457/1,026,612 shares of beneficial interest
issued and outstanding) $19.79
Sales charge--4.25% of public offering price .88
Maximum offering price $20.67
CLASS B SHARES
Net asset value and offering price per share
($28,037,005/1,689,904 shares of beneficial interest
issued and outstanding) $16.59
CLASS C SHARES
Net asset value and offering price per share
($3,044,529/183,512 shares of beneficial interest
issued and outstanding) $16.59
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($50/2.526 shares of beneficial interest issued
and outstanding) $19.79
See notes to financial statements.
13
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1997 ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 1,669,018
Dividends (net of foreign of taxes
withheld of $15,907) 303,034 $ 1,972,052
EXPENSES
Advisory fee 380,244
Distribution fee - Class A 57,280
Distribution fee - Class B 283,015
Distribution fee - Class C 33,039
Custodian 174,945
Transfer agency 118,994
Audit and legal 82,303
Registration 58,001
Printing 37,233
Trustees' fees 30,000
Miscellaneous 18,564
Total expenses 1,273,618
Less: expenses waived and assumed
by adviser (see note B) (334,820)
Less: expense offset arrangement (see note B) (7,546)
Net expenses 931,252
Net investment income 1,040,800
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investment transactions 2,202,099
Net realized loss on foreign currency transactions (54,935)
Net change in unrealized depreciation of:
Investments 7,382,361
Foreign currency denominated assets
and liabilities 12,844
Net gain on investments and foreign
currency transactions 9,542,369
NET INCREASE IN NET ASSETS FROM OPERATIONS $10,583,169
See notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1997 1996
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,040,800 $ 645,462
Net realized gain on investments and foreign
currency transactions 2,147,164 7,954,336
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 7,395,205 (4,551,438)
Net increase in net assets from operations 10,583,169 4,048,360
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (368,073) (251,709)
Class B (450,279) (425,006)
Class C (53,257) (52,350)
Net realized gain on investments
Class A (2,227,559) (479,820)
Class B (3,959,058) (1,296,269)
Class C (468,257) (159,666)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net decrease (1,640,718) (3,771,397)
Total increase (decrease) 1,415,968 (2,387,857)
NET ASSETS
Beginning of year 49,978,073 52,365,930
End of year (including undistributed net
investment income of $564,564 and $395,373,
respectively) $ 51,394,041 $ 49,978,073
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997 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.
The Fund offers Class A, Class B, Class C and Advisor Class shares. Class A
shares are sold with a front-end sales charge of up to 4.25% for purchases not
exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a contingent
deferred sales charge of 1%. 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 B shares will automatically convert to Class A shares eight
years after the end of the calendar month of purchase. Class C shares are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. Advisor Class shares are sold without an initial
or contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in
fee-based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive votings
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 sale price or, if no sale occurred, at the mean of the bid and asked price
at the regular close of that 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 Funds to meet their obligations may be affected by
economic developments in a specific industry or region.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
from sales and maturities of securities, currency gains and losses realized
between the trade and settlement dates on security transactions and the
difference between the amounts of interest recorded on the Fund's books and the
U.S. dollar equivalent amounts actually received or paid. Net currency gains
and losses from valuing foreign currency denominated assets and liabilities at
year end exchange rates are reflected as a component of unrealized appreciation
on investments and foreign currency denominated assets and liabilities.
3. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts and amortizes premiums as adjustments
to interest income.
16
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to foreign exchange losses, resulted in a net increase in
accumulated net realized gain on investments and foreign currency transactions
and a corresponding decrease in undistributed net investment income. This
reclassification had no affect on net assets.
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
than Class A shares and the Advisory Class shares have no distribution 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
Capital Management L.P. (the "Adviser") 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 Adviser has agreed to voluntarily waive its fees and bear certain
expenses so that total expenses do not exceed on an annual basis 1.40%, 2.10%,
2.10% and 1.10% of average net assets, respectively, for the Class A, Class B,
Class C and Advisor Class shares. Prior to August 2, 1993, the annual expense
cap for Class B Shares was 2.15%. For the year ended July 31, 1997, such
reimbursement amounted to $334,820.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Compensation under
this agreement amounted to $71,092 for the year ended July 31, 1997.
In addition, for the year ended July 31, 1997, the Fund's expenses were reduced
by $7,546 under an expense offset arrangement with Alliance Fund Services.
Transfer Agency fees reported in the statement of operation exclude these
credits.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The
Distributor received front-end sales charges of $637 from the sales of Class A
shares and $45,934 and $1,317 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class B and Class C shares, respectively, for
the year ended July 31, 1997.
Brokerage commissions paid on investment transactions for the year ended July
31, 1997 amounted to $100,951, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp., an affiliate of the Adviser.
Accrued expenses includes $66,369 owed to a Trustee and a former Trustee under
the Trust's deferred compensation plan.
NOTE C: DISTRIBUTION PLANS
The Trust has adopted a Plan for each class of shares of the Fund, except the
Advisor Class pursuant to Rule 12b-1 under the Investment Company Act of 1940
(each a "Plan" and collectively the "Plans"). Under the Plan, 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.
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
The Fund is not obligated under the Plan to pay any distribution services fee
in excess of the amounts set forth above. The purpose of the payments to the
Distributor under the Plan is to compensate the Distributor for its
distribution services with respect to the sale of the Fund's shares. Since the
Distributor's compensation is not directly tied to its expenses, the amount of
compensation received by it under the Plan during any year may be more or less
than its actual expenses. For this reason, the Plan is characterized by the
staff of the Commission as being of the "compensation" variety.
In the event that a Plan is terminated or not continued, (i) no distribution
services fees (other than current amounts accrued but not yet paid) would be
owed by the Funds to the Distributor with respect to the relevant class and
(ii) the Funds would not be obligated to pay the Distributor for any amounts
expended by the Distributor not previously recovered by the Distributor from
distribution services fees in respect of shares of such class or, in the case
of Class B shares, recovered through deferred sales charges.
The Plans also provides that the Adviser may use its own resources to finance
the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $40,977,433 and $44,378,007,
respectively, for the year ended July 31, 1997. There were purchases of
$40,238,803 and sales of $42,004,132 of U.S. government and government agency
obligations for the year ended July 31, 1997.
At July 31, 1997, the cost of investments for federal income tax purposes was
$46,673,357. Accordingly, gross unrealized appreciation of investments was
$6,843,523 and gross unrealized depreciation of investments was $165,395
resulting in net unrealized appreciation of $6,678,128 excluding foreign
currency.
The Fund incurred and elected to defer post October currency losses of $55,391
for the year ended July 31, 1997.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A foreign exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gains
or losses on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or liquid assets in a separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward exchange currency
contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At July 31, 1997, the Fund had an outstanding forward exchange currency
contract to sell foreign currency against the U.S. dollar, as follows:
CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
-------- ----------- -------- ------------
FOREIGN CURRENCY SALE CONTRACT
French Franc, maturing 9/5/97 2,580 $438,859 $416,733 $22,126
18
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 four classes, designated Class A, Class B,
Class C and Advisor Class shares. Transactions in shares of beneficial interest
were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 44,362 107,270 $ 813,717 $ 1,979,138
Shares issued in
reinvestment of
dividends and
distributions 140,204 37,530 2,424,151 680,784
Shares converted
from Class B 134,087 488,896 2,479,067 9,126,460
Shares redeemed (283,790) (251,216) (5,240,141) (4,690,077)
Net increase 34,863 382,480 $ 476,794 $ 7,096,305
CLASS B
Shares sold 249,874 328,916 $ 3,910,285 $ 5,260,317
Shares issued in
reinvestment of
dividends and
distributions 271,011 98,905 3,946,629 1,547,870
Shares converted
to Class A (158,380) (566,688) (2,479,067) (9,126,460)
Shares redeemed (465,417) (466,102) (7,252,359) (7,499,239)
Net decrease (102,912) (604,969) $ (1,874,512) $ (9,817,512)
CLASS C
Shares sold 54,856 59,772 $ 860,802 $ 956,171
Shares issued
in reinvestment
of dividends and
distributions 28,201 11,410 410,610 178,564
Shares redeemed (98,217) (136,703) (1,514,680) (2,184,925)
Net decrease (15,160) (65,521) $ (243,268) $ (1,050,190)
OCT. 2, 1996(A) OCT. 2, 1996(A)
TO TO
JULY 31, 1997 JULY 31, 1997
-------------- ---------------
ADVISOR CLASS
Shares sold 1,460 $ 26,057
Shares redeemed (1,457) (25,789)
Net increase 3 $ 268
(a) Commencement of distribution.
19
FINANCIAL HIGHLIGHTS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
MAY 1,
1994
YEAR ENDED JULY 31, TO YEAR ENDED APRIL 30,
------------------------------------- JULY 31, ------------------------
1997 1996 1995 1994(A) 1994 1993
------------ ------------ --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.48 $17.98 $16.26 $16.46 $16.97 $17.06
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .47(c) .35(c) .34 .07 .16 .39
Net realized and unrealized gain (loss)
on investment transactions 3.56 1.08 1.64 (.27) .74 .59
Net increase (decrease) in net asset
value from operations 4.03 1.43 1.98 (.20) .90 .98
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.39) (.32) (.22) -0- (.24) (.42)
Distributions from net realized gains (2.33) (.61) (.04) -0- (1.17) (.65)
Total dividends and distributions (2.72) (.93) (.26) -0- (1.41) (1.07)
Net asset value, end of period $19.79 $18.48 $17.98 $16.26 $16.46 $16.97
TOTAL RETURN
Total investment return based on net
asset value (d) 23.90% 8.05% 12.40% (1.22)% 5.06% 5.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $20,312 $18,329 $10,952 $9,640 $9,822 $8,637
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.41%(e) 1.40% 1.40% 1.40%(f) 1.40% 1.40%
Expenses, before waivers/reimbursements 2.06% 1.76% 1.81% 1.94%(f) 1.70% 1.85%
Net investment income (b) 2.50% 1.78% 2.07% 1.63%(f) 1.67% 2.29%
Portfolio turnover rate 170% 173% 172% 21% 139% 98%
Average commission rate (g) $.0395 -- -- -- -- --
</TABLE>
See footnote summary on page 23.
20
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------
MAY 1,
1994
YEAR ENDED JULY 31, TO YEAR ENDED APRIL 30,
------------------------------------- JULY 31, ------------------------
1997 1996 1995 1994(A) 1994 1993
------------ ------------ --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.89 $15.56 $14.10 $14.30 $14.92 $15.51
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .28(c) .16(c) .22 .03 .06 .23
Net realized and unrealized gain (loss)
on investment transactions 3.02 .98 1.40 (.23) .63 .53
Net increase (decrease) in net asset
value from operations 3.30 1.14 1.62 (.20) .69 .76
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.20) (.12) -0- (.14) (.25)
Distributions from net realized gain s (2.33) (.61) (.04) -0- (1.17) (1.10)
Total dividends and distributions (2.60) (.81) (.16) -0- (1.31) (1.35)
Net asset value, end of period $16.59 $15.89 $15.56 $14.10 $14.30 $14.92
TOTAL RETURN
Total investment return based on net
asset value (d) 23.01% 7.41% 11.63% (1.40)% 4.29% 4.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $28,037 $28,492 $37,301 $43,578 $43,616 $36,155
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.12%(e) 2.10% 2.10% 2.10%(f) 2.10% 2.15%
Expenses, before waivers/reimbursements 2.76% 2.47% 2.49% 2.64%(f) 2.42% 2.56%
Net investment income (b) 1.78% .99% 1.38% .92%(f) .93% 1.55%
Portfolio turnover rate 170% 173% 172% 21% 139% 98%
Average commission rate (g) $.0395 -- -- -- -- --
</TABLE>
See footnote summary on page 23.
21
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
MAY 1, AUGUST 2,
1994 1993(H)
YEAR ENDED JULY 31, TO TO
------------------------------------- JULY 31, APRIL 30,
1997 1996 1995 1994(A) 1994
------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.89 $15.57 $14.11 $14.31 $15.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .28(c) .14(c) .16 .03 .15
Net realized and unrealized gain (loss)
on investment transactions 3.02 .99 1.46 (.23) (.17)
Net increase (decrease) in net asset
value from operations 3.30 1.13 1.62 (.20) (.02)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.20) (.12) -0- (.14)
Distributions from net realized gains (2.33) (.61) (.04) -0- (1.17)
Total dividends and distributions (2.60) (.81) (.16) -0- (1.31)
Net asset value, end of period $16.59 $15.89 $15.57 $14.11 $14.31
TOTAL RETURN
Total investment return based on net
asset value (d) 23.01% 7.34% 11.62% (1.40)% .45%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,045 $3,157 $4,113 $4,317 $4,289
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.12%(e) 2.10% 2.10% 2.10%(f) 2.10%(f)
Expenses, before waivers/reimbursements 2.76% 2.48% 2.50% 2.64%(f) 2.07%(f)
Net investment income (b) 1.78% .99% 1.38% .93%(f) .69%(f)
Portfolio turnover rate 170% 173% 172% 21% 139%
Average commission rate (g) $.0395 -- -- -- --
</TABLE>
See footnote summary on page 23.
22
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
ADVISOR CLASS
------------------
OCTOBER 2, 1996(H)
TO
JULY 31, 1997
------------------
Net asset value, beginning of period $19.49
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .42
Net realized and unrealized loss on investment transactions (.12)
Net increase in net asset value from operations .30
Net asset value, end of period $19.79
TOTAL RETURN
Total investment return based on net
asset value (d) 1.54%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $50
Ratio to average net assets of:
Expenses, net of waivers/reimbursements (e)(f) 1.10%
Expenses, before waivers/reimbursements (f) 2.35%
Net investment income (b)(f) 3.40%
Portfolio turnover rate 170%
Average commission rate $.0395
(a) The Fund changed its fiscal year end from April 30 to July 31.
(b) Net of fees waived and expenses reimbursed by the Adviser.
(c) Based on average shares outstanding.
(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 returns calculated for periods of less than one year
are not annualized.
(e) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended July 31, 1997, the ratios of expenses net of
waivers/reimbursements would have been 1.40%, 2.10%, 2.10% and 1.10% for Class
A, B, C and Advisor Class shares, respectively.
(f) Annualized.
(g) For fiscal year beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
(h) Commencement of distribution.
23
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE STRATEGIC BALANCED FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance Strategic Balanced Fund
(one of the portfolios of The Alliance Portfolios, hereafter referred to as the
"Fund") at July 31, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at July 31, 1997 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
September 17, 1997
24
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
BOARD OF TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
RICHARD W. COUPER (1)
WILLIAM H. FOULK, JR. (1)
BRENTON W. HARRIES (1)
DONALD J. ROBINSON (1)
OFFICERS
BRUCE CALVERT, VICE PRESIDENT
KATHLEEN A. CORBET, VICE PRESIDENT
WAYNE D. LYSKI, VICE PRESIDENT
EDMUND P. BERGAN, JR., CLERK
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, 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.
25
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term 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
Alliance/Regent Sector Opportunity 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 Real Estate Investment 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
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
26
ALLIANCE STRATEGIC BALANCED FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
ASBAR
