ALLIANCE STRATEGIC BALANCED FUND
SEMI-ANNUAL REPORT
JANUARY 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
March 27, 1998
Dear Shareholder:
This semi-annual report contains an update of Alliance Strategic Balanced Fund
performance and market activity for the period ended January 31, 1998.
MARKET REVIEW
After the strong resynchronization of world growth in the early part of 1997,
the liquidity crisis of the late spring and early summer resulted in the
collapse of some of the smaller Asian economies' currency pegs. Thus, the
latter part of the year was marked by the intensification of the Asian crisis,
increased financial market volatility and a wholesale downgrading of 1998
global growth forecasts.
INVESTMENT RESULTS
Alliance Strategic Balanced Fund Class A shares posted a 0.27% return at net
asset value (NAV) during the six month period ended January 31, 1998,
underperforming both of its benchmarks, the S&P 500 Stock Index, which returned
3.56% and the Lehman Brothers Government/Corporate Bond Index, which returned
5.12%. Your Fund's returns improved during the 12 month period ending January
31, 1998, posting an 11.04% return at NAV. However, your Fund trailed both the
Lehman Brothers Government/Corporate Bond Index, which returned 11.17%, and the
S&P 500 Stock Index, which returned 26.90% over the same 12 month time frame.
The Fund underperformed its benchmarks due to poor U.S. stock selection in the
early part of 1997 and a large exposure to overseas equity markets in the
second half of the period. More recently, both of these components have
improved.
INVESTMENT RESULTS*
Periods Ended January 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
--------- ---------
ALLIANCE STRATEGIC BALANCED FUND
Class A 0.27% 11.04%
Class B -0.01% 10.29%
Class C -0.01% 10.29%
S&P 500 STOCK INDEX 3.56% 26.90%
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX 5.12% 11.17%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF JANUARY 31,
1998. ALL FEES AND EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN
DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN
SHARES ARE PURCHASED OR REDEEMED. TOTAL RETURN FOR ADVISOR CLASS SHARES WILL
DIFFER DUE TO DIFFERENT EXPENSES ASSOCIATED WITH THAT CLASS. RETURNS FOR THE
FUND AND ITS COMPARATIVE INDICES INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS
PAID DURING THE PERIOD. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE S&P 500 STOCK INDEX INCLUDES 500 U.S. STOCKS AND IS A COMMON MEASURE
OF THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. THE LEHMAN BROTHERS
GOVERNMENT/ CORPORATE BOND INDEX REPRESENTS A COMBINATION OF THE GOVERNMENT
BOND INDEX AND THE CORPORATE BOND INDEX. ALL COMPARATIVE INDICES ARE UNMANAGED
AND REFLECT NO FEES OR EXPENSES. AN INVESTOR CANNOT INVEST DIRECTLY IN THE
INDICES.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
ECONOMIC COMMENTARY
As a result of the Asian crisis, inflation and growth in the developed world
will be significantly lower in 1998. In Asia, high inflation and serial debt
defaults are likely over the next few months. Implications for first world
inflation rates are clear. Prices for commodities and internationally traded
goods will be lower. With the need for higher demand in the West to counteract
weak growth in Asia, the tightening cycle has at least been postponed.
Bond markets continued to rally in consequence, in spite of rapidly rising U.S.
consumption, money supply and wages. Equity markets had a mixed performance
against the background of the Asian problems with very volatile trading during
the fall. Overseas stock markets fared worse than the U.S. during this period,
with the U.S.
1
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
recovering sharply during December. Exposure to foreign markets was a
short-term drag on the Fund's performance during the reporting period, but we
expect this to be short-lived.
Even though conditions in Asia are bad, there is a dynamic adjustment mechanism
in place which will likely aid Asia's recovery. The U.S. runs a large external
deficit and acts as a demand "locomotive" for the world economy. Present
buoyant U.S. consumption trends should buy time for Asia to stabilize, allow
Japan to introduce its much needed fiscal reflation and enable consumer demand
in the core European countries to recover. For the U.S., this would be a "feel
good" slowdown, involving much improved terms of trade, rising imports and
stable interest rates.
While we believe this is the most likely scenario, and indeed that which most
stock markets are currently discounting, there are growing risks. First, we are
increasingly in an environment where financial conditions determine economic
conditions, rather than vice-versa. For U.S. consumer demand to provide the
necessary impetus, confidence must be maintained in both the U.S. dollar and
its stock markets. If earnings shortfalls in the U.S. are too great to be
compensated by lower bond yields and the stock market falls, consumer
confidence and the required further fall in the savings ratio is at risk.
Second, there is a growing risk that the problem may spread to a point where
the hole in global consumer demand is too great to be filled by an increase in
the U.S. external deficit. In short, there is a viable route by which the world
economy avoids recession, but it is an increasingly steep and narrowing path.
Over the short term, however, Europe and the U.S. are likely to benefit from
lower oil prices and cheaper imports from Asia, sustaining the economic
expansion.
PORTFOLIO STRATEGY
The economic environment is unequivocally friendly to fixed income assets
world-wide. Under most circumstances in the past, equity markets have performed
as well, or better than bonds, while bond yields were falling. However, the
bulk of this "historical" experience is drawn from the inflationary market
cycle that has typified most of the post World War II period. In the downswing
of the current economic cycle, inflation is unlikely to be the major risk.
Rather, it will be characterized by credit problems, deflationary margin
pressures and rising risk premiums.
Our research suggests that irrespective of the inflationary or deflationary
nature of the cycle, the development of real interest rates is critical. Real
interest rates in the developing world have soared and a number of Asian
economies are now headed for recession. Given the importance of the developing
world in the global growth dynamic, we expect world growth and inflation to be
significantly lower in 1998. This is the rationale for including bonds in your
Fund's portfolio. Within the equity component, our largest position is the U.S.
which is the area with the strongest domestic growth dynamic and the greatest
scope for cutting interest rates if growth falters. We also expect to maintain
investments in selected overseas stock markets.
Thank you for your continued interest and investment in the Alliance Strategic
Balanced Fund. We look forward to reporting to you on market activity and the
Fund's investment results in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Nicholas D. Carn
Vice 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 RETURNS AS OF JANUARY 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 11.04% 6.34%
Five Years 9.50% 8.55%
Since Inception* 12.36% 11.70%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 10.29% 6. 35%
Five Years 8.76% 8.76%
Ten Years 11.43% 11.43%
CLASS C SHARES
One Year 10.29% 9.31%
Since Inception* 8.55% 8.55%
SEC AVERAGE ANNUAL TOTAL RETURNS (AT MAXIMUM OFFERING PRICE) AS OF THE MOST
RECENT QUARTER-END (DECEMBER 31, 1997)
CLASS A CLASS B CLASS C
--------- --------- ---------
Year to Date** 6.80% 6.84% 9.80%
1 Year 6.80% 6.84% 9.80%
3 Year 13.14% 13.53% 14.04%
5 Year 8.49% 8.70% n/a
10 Year n/a 11.41% n/a
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. SEC average annual total returns
for the period shown reflect reinvestment of all distributions and deduction of
the maximum 4.25% front-end sales charges.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 9/4/90, Class A; 10/23/87, Class B; 8/2/93, Class C.
** Not Annualized.
n/a: not applicable.
3
TEN LARGEST HOLDINGS
JANUARY 31, 1998 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 9,701,858 19.3%
Federal National Mortgage Association 3,341,936 6.6
U.S. Treasury Bond, 6.125%, 11/15/27 2,396,118 4.8
Government National Mortgage
Association, 7.00%, 1/21/28 1,116,500 2.2
Merck & Co., Inc. 1,055,250 2.1
Federal Home Loan Bank, 7.00%, 9/01/11 894,982 1.8
St. George Bank, Ltd., 7.15%, 10/15/05 886,907 1.8
Caliber Systems, Inc., 7.80%, 8/01/06 868,947 1.7
Schering-Plough Corp. 868,500 1.7
Walt Disney Co. 852,500 1.7
$21,983,498 43.7%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
_______________________________________________________________________________
SHARES OR PRINCIPAL*
PURCHASES BOUGHT HOLDINGS 1/31/98
- -------------------------------------------------------------------------------
Citicorp 3,000 3,000
Government National Mortgage Association,
7.00%, 1/21/28 $1,100,000 $1,100,000
Harley-Davidson, Inc. 22,000 22,000
Noble Drilling Corp. 14,000 20,000
PMI Group, Inc. 6,900 6,900
Railcar Leasing LLC, 7.125%, 1/15/13 $625,000 $625,000
Texas Utilities Co., 6.375%, 1/01/08 $425,000 $425,000
U.S. Treasury Bond, 6.125%, 11/15/27 $2,295,000 $2,295,000
U.S. Treasury Note, 6.00%, 8/15/00 $1,125,000 $1,125,000
U.S. Treasury Note, 6.50%, 8/31/01 $1,250,000 $1,250,000
SALES SOLD HOLDINGS 1/31/98
- -------------------------------------------------------------------------------
Deutsche Bank Financial, Inc.,
6.70%, 12/13/06 $700,000 -0-
Empresa Nacional de Electricidad, S.A.,
7.875%, 2/01/27 $700,000 -0-
Ras Laffan Liquefied Natural Gas,
7.628%, 9/15/06 $800,000 -0-
Texaco, Inc. 5,500 -0-
Transocean Offshore, Inc. 5,500 -0-
U.S. Treasury Bond, 6.625%, 2/15/27 $595,000 -0-
U.S. Treasury Note, 6.125%, 8/31/98 $1,150,000 -0-
U.S. Treasury Note, 6.25%, 4/30/01 $1,300,000 $1,900,000
U.S. Treasury Note, 6.50%, 5/31/02 $830,000 $1,110,000
Zurich Capital Trust I, 8.376%, 6/01/37 $800,000 -0-
* Adjusted for stock splits.
4
INDUSTRY DIVERSIFICATION
JANUARY 31, 1998 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 376,037 0.7%
Capital Goods 841,986 1.7
Consumer Manufacturing 1,157,087 2.3
Consumer Services 4,742,487 9.4
Consumer Staples 3,061,682 6.1
Energy 2,816,118 5.6
Finance 5,904,249 11.7
Health Care 3,822,609 7.6
Multi Industry 796,181 1.6
Technology 3,774,051 7.5
Transportation 86,557 0.2
Utilities 938,250 1.9
U.S. Government & Agencies 17,451,394 34.7
Corporate Debt Obligations 2,644,844 5.2
Yankee Bond 886,907 1.8
Total Investments* 49,300,439 98.0
Cash and receivables, net of liabilities 980,080 2.0
Net Assets $50,280,519 100.0%
* Excludes short-term obligations.
5
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-56.3%
UNITED STATES INVESTMENTS-37.5%
FINANCE-7.9%
BANKING - MONEY CENTER-1.5%
Chase Manhattan Corp. 4,000 $ 428,750
Citicorp 3,000 357,000
------------
785,750
BANKING - REGIONAL-0.7%
Banc One Corp. 6,000 335,250
BROKERAGE & MONEY MANAGEMENT-1.6%
Merrill Lynch & Co., Inc. 7,600 479,750
Morgan Stanley, Dean Witter,
Discover and Co. 6,000 350,250
------------
830,000
INSURANCE-1.9%
American International Group, Inc. 4,500 496,406
Travelers Group, Inc. 9,001 445,550
------------
941,956
MISCELLANEOUS-2.2%
MBNA Corp. 20,000 621,250
PMI Group, Inc. 6,900 467,906
------------
1,089,156
------------
3,982,112
TECHNOLOGY-5.7%
COMMUNICATIONS EQUIPMENT-0.9%
Lucent Technologies, Inc. 5,000 442,500
COMPUTER HARDWARE-1.2%
Compaq Computer Corp. 20,000 601,250
NETWORKING SOFTWARE-1.5%
Cisco Systems, Inc. (a) 12,000 756,750
SEMI-CONDUCTOR COMPONENTS-2.1%
Altera Corp. (a) 7,000 239,750
Intel Corp. 5,000 405,000
National Semiconductor Corp. (a) 15,000 421,875
------------
1,066,625
------------
2,867,125
CONSUMER SERVICES-5.6%
BROADCASTING & CABLE-1.8%
Cox Communications, Inc. Cl.A (a) 12,000 442,500
Scripps E.W. Co. Cl.A 4,000 193,000
Tele-Communications, Inc. -
Liberty Media Group Cl.A (a) 7,000 250,687
------------
886,187
ENTERTAINMENT & LEISURE-2.8%
Harley-Davidson, Inc. 22,000 552,750
Walt Disney Co. 8,000 852,500
------------
1,405,250
RETAIL-GENERAL MERCHANDISE-1.0%
Dayton Hudson Corp. 7,000 503,563
------------
2,795,000
ENERGY-4.8%
DOMESTIC INTEGRATED-0.7%
USX-Marathon Group 10,000 335,625
DOMESTIC PRODUCERS-0.7%
Apache Corp. 10,000 331,250
OIL SERVICES-3.4%
BJ Services Co. (a) 8,000 484,500
Halliburton Co. 16,000 719,000
Noble Drilling Corp. (a) 20,000 535,000
------------
1,738,500
------------
2,405,375
6
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
CONSUMER STAPLES-4.6%
COSMETICS-1.8%
Avon Products, Inc. 4,000 $ 240,000
Gillette Co. 4,000 395,000
The Estee Lauder Co., Inc. Cl.A 5,000 274,687
------------
909,687
RETAIL-FOOD & DRUG-1.2%
Kroger Co. (a) 15,000 586,875
TOBACCO-1.6%
Philip Morris Cos., Inc. 20,000 830,000
------------
2,326,562
HEALTH CARE-4.2%
DRUGS-3.8%
Merck & Co., Inc. 9,000 1,055,250
Schering-Plough Corp. 12,000 868,500
------------
1,923,750
MEDICAL PRODUCTS-0.4%
Medtronic, Inc. 4,000 204,250
------------
2,128,000
CAPITAL GOODS-1.5%
POLLUTION CONTROL-0.7%
USA Waste Services, Inc. (a) 9,000 330,750
MISCELLANEOUS-0.8%
United Technologies Corp. 5,000 408,125
------------
738,875
UTILITIES-1.4%
TELEPHONE UTILITY-1.4%
WorldCom, Inc. (a) 20,000 716,250
MULTI INDUSTRY COMPANIES-1.2%
Tyco International, Ltd. 6,000 266,250
U.S. Industries, Inc. 12,000 336,750
------------
603,000
CONSUMER MANUFACTURING-0.6%
APPLIANCES-0.6%
Sunbeam Corp. 7,300 276,944
Total United States Investments
(cost $15,404,519) 18,839,243
FOREIGN INVESTMENTS-18.8%
AUSTRALIA-0.2%
Normandy Mining, Ltd. 75,000 87,909
BRAZIL-0.4%
Telebras SA (ADR) 2,000 222,000
CANADA-0.2%
Gulf Canada Resources, Ltd. (a) 18,400 98,900
DENMARK-0.7%
Ratin Cl.A (a) 2,000 286,496
Sophus Berendsen Cl.B (a) 2,000 67,040
------------
353,536
FINLAND-1.0%
Nokia AB OY Corp. pfd. 4,000 312,965
Orion-Yhtymae OY Cl.B 7,000 211,377
------------
524,342
FRANCE-1.7%
Sanofi SA 2,000 219,952
SEITA (b) 4,000 148,590
Total, SA Cl.B (b) 3,000 311,843
Unibail SA (b) 1,502 168,610
------------
848,995
GERMANY-1.1%
Adidas AG 1,300 190,540
Hornbach Holdings AG pfd. 2,000 125,553
ProSieben Media AG (a) 5,000 247,011
Schmalbach-Lubeca AG 96 16,979
------------
580,083
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
HONG KONG-0.6%
Cheung Kong Holdings, Ltd. 25,000 $ 127,633
Citic Pacific, Ltd. 11,000 31,563
Dickson Concepts
International, Ltd. 30,000 34,703
Sun Hung Kai Properties, Ltd. 20,000 102,624
------------
296,523
JAPAN-4.5%
Bank of Tokyo, Ltd. 12,000 173,927
Canon, Inc. 5,000 121,307
Daiwa Securities Co., Ltd. 30,000 137,771
Fuji Photo Film Co. 3,000 125,719
Honda Motor Co. 6,000 217,881
Japan Tobacco, Inc. 15 102,087
Nintendo Corp., Ltd. 2,000 211,107
Orix Corp 3,000 216,463
Promise Co., Ltd. 300 15,786
Rohm Co. 1,000 109,492
Sankyo Co., Ltd 5,000 130,366
Santen Pharmaceutical Co. 10,000 131,548
Sony Corp. 3,000 276,487
Sumitomo Electric Industries 7,000 103,111
Yamanouchi Pharmaceutical Co., Ltd. 7,000 169,831
------------
2,242,883
MEXICO-0.3%
Coca-Cola Femsa SA (ADS) 9,000 166,500
NETHERLANDS-1.6%
AKZO Nobel NV 1,500 271,149
ASM Lithography Holding NV 3,000 206,340
ING Groep NV 7,000 320,070
------------
797,559
NORWAY-0.2%
Bergesen DY AS 4,000 86,557
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
SWEDEN-0.7%
Ericsson LM Telecom Series B 4,000 $ 156,822
Volvo AB Cl.A 7,000 188,569
------------
345,391
SWITZERLAND-2.7%
Baloise Holdings, Ltd. 120 229,648
Ciba Specialty Chemicals AG (a) 1,500 171,628
Nestle, SA 200 317,943
Novartis AG 200 341,569
Zurich Versicherungsgesellschaft 600 299,311
------------
1,360,099
UNITED KINGDOM-2.9%
BAA Plc 30,000 234,101
BPB Plc 40,000 197,206
Compass Group Plc 25,000 321,194
HSBC Holdings Plc 5,000 130,294
SmithKline Beecham Plc 25,000 318,338
Tomkins Plc 30,000 161,618
United News Media Plc 9,000 104,023
------------
1,466,774
Total Foreign Investments
(cost $9,265,934) 9,478,051
Total Common & Preferred Stocks
(cost $24,670,453) 28,317,294
DEBT OBLIGATIONS-41.7%
U.S. GOVERNMENT & AGENCY OBLIGATIONS-34.7%
Federal Home Loan Bank
7.00%, 9/01/11 $875 894,982
Federal National Mortgage Association
6.00%, 4/01/11 343 340,175
6.50%, 5/01/11 568 574,967
6.50%, 6/01/11 638 645,721
6.50%, 9/01/11 398 401,442
7.00%, 5/01/26 924 938,056
7.00%, 5/01/27 435 441,575
8
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
Government National Mortgage Association (TBA)
7.00%, 1/21/28 $1,100 $ 1,116,500
U.S. Treasury Bond
6.125%, 11/15/27 2,295 2,396,118
U.S. Treasury Notes
6.00%, 8/15/00 1,125 1,142,055
6.25%, 4/30/01 1,900 1,948,089
6.375%, 5/15/99 4,000 4,048,760
6.50%, 8/31/01 1,250 1,293,550
6.50%, 5/31/02 1,110 1,155,610
6.625%, 5/15/07 25 26,894
6.875%, 5/15/06 80 86,900
------------
17,451,394
CORPORATE DEBT OBLIGATIONS-5.2%
ELECTRIC & GAS UTILITY-0.8%
Texas Utilities Co.
6.375%, 1/01/08 (c) 425 416,458
FINANCIAL-1.3%
Railcar Leasing LLC
7.125%, 1/15/13 (c) 625 671,887
INDUSTRIAL-3.1%
Caliber Systems, Inc.
7.80%, 8/01/06 800 868,947
Time Warner, Inc.
8.375%, 3/15/23 600 687,552
------------
1,556,499
------------
2,644,844
YANKEE BOND-1.8%
St. George Bank, Ltd.
7.15%, 10/15/05 (c) 850 886,907
Total Debt Obligations
(cost $20,481,115) 20,983,145
SHORT-TERM INVESTMENT-5.0%
Student Loan Marketing Association
Zero Coupon, 2/02/98 2,500 2,499,614
TOTAL INVESTMENTS-103.0%
(cost $47,651,182) 51,800,053
Other assets less liabilities-(3.0%) (1,519,534)
NET ASSETS-100% $50,280,519
(a) Non-income producing security.
(b) Security, or portion thereof, with an aggregate market value of $629,043,
has 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 January
31, 1998, these securities amounted to $1,975,252 representing 3.9% of net
assets.
Glossary of Terms:
ADR - American Depositary Receipt
ADS - American Depositary Shares
pfd. - Preferred Stock
TBA - To be announced
9
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $47,651,182) $ 51,800,053
Cash, at value (cost $256,002) 253,948
Receivable for investment securities and
foreign currency sold 1,304,827
Interest and dividends receivable 302,661
Receivable for shares of beneficial interest sold 14,007
Unrealized appreciation of forward exchange
currency contracts 12,468
Foreign taxes receivable 6,783
Total assets 53,694,747
LIABILITIES
Payable for investment securities and foreign
currency purchased 3,154,606
Distribution fee payable 29,509
Advisory fee payable 7,265
Payable for shares of beneficial interest redeemed 930
Accrued expenses 221,918
Total liabilities 3,414,228
NET ASSETS $ 50,280,519
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 31
Additional paid-in capital 46,107,021
Distribution in excess of net investment income (165,926)
Accumulated net realized gain on investments and
foreign currency transactions 210,007
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 4,129,386
$ 50,280,519
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($21,688,399/1,209,382 shares of beneficial interest
issued and outstanding) $17.93
Sales charge--4.25% of public offering price .80
Maximum offering price $18.73
CLASS B SHARES
Net asset value and offering price per share
($25,475,448/1,721,652 shares of beneficial interest
issued and outstanding) $14.80
CLASS C SHARES
Net asset value and offering price per share
($3,116,324/210,620 shares of beneficial interest
issued and outstanding) $14.80
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($348/19.47 shares of beneficial interest issued
and outstanding) $17.87
See notes to financial statements.
10
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 715,875
Dividends (net of foreign taxes
withheld of $3,413) 125,410 $ 841,285
EXPENSES
Advisory fee 190,439
Distribution fee - Class A 31,338
Distribution fee - Class B 134,436
Distribution fee - Class C 15,021
Custodian 108,252
Transfer agency 58,858
Registration 29,094
Audit and legal 27,618
Printing 15,164
Trustees' fees 15,000
Miscellaneous 5,100
Total expenses 630,320
Less: expenses waived and assumed
by adviser (see Note B) (170,214)
Net expenses 460,106
Net investment income 381,179
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investment transactions 2,538,758
Net realized loss on foreign currency transactions (42,978)
Net realized loss on futures transactions (251,706)
Net change in unrealized appreciation (depreciation) of:
Investments (2,557,945)
Foreign currency denominated assets and liabilities (16,863)
Net loss on investments and foreign
currency transactions (330,734)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 50,445
See notes to financial statements.
11
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JAN. 31, 1998 JULY 31,
(UNAUDITED) 1997
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 381,179 $ 1,040,800
Net realized gain on investments and foreign
currency transactions 2,244,074 2,147,164
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities (2,574,808) 7,395,205
Net increase in net assets from operations 50,445 10,583,169
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (407,484) (368,073)
Class B (435,005) (450,279)
Class C (48,311) (53,257)
Advisor Class (8) -0-
Distribution in excess of net investment income
Class A (75,900) -0-
Class B (81,026) -0-
Class C (8,999) -0-
Advisor Class (1) -0-
Net realized gain on investments
Class A (1,572,349) (2,227,559)
Class B (2,315,766) (3,959,058)
Class C (257,187) (468,257)
Advisor Class (26) -0-
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) 4,038,095 (1,640,718)
Total increase (decrease) (1,113,522) 1,415,968
NET ASSETS
Beginning of year 51,394,041 49,978,073
End of period (including undistributed net
investment income of $509,629 for the year
ended July 31, 1997) $50,280,519 $51,394,041
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 (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.
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 currently 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
financial statements have been prepared in conformity with generally accepted
accounting principles which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Fund's Board of Directors. Fixed income securities may be valued on the basis
of prices obtained from a pricing service when such prices are believed to
reflect the fair value of such securities.
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
and losses from sales and maturities of debt securities and foreign exchange
currency contracts, 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. The Fund does not isolate the effect of
fluctuations in foreign currency exchange rates when determining the gain or
loss upon the sale of equity securities. Net currency gains and losses from
valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net unrealized appreciation of
investments and foreign currency denominated assets and liabilities.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
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 trade date securities
are purchased or sold. The Fund accretes discounts and amortizes premiums as
adjustments to interest income. Investment gains and losses are determined on
the identified cost basis.
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 net assets of such class, except that the Fund's
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.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividend 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.
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 average daily net assets of the Fund. 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 daily 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 six months ended
January 31, 1998, such reimbursement amounted to $170,214.
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. Such compensation
amounted to $39,270 for the six months ended January 31, 1998.
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 $1,953 from the sales of Class
A shares and $335 in contingent deferred sales charges imposed upon redemptions
by shareholders of Class C shares, respectively, for the six months ended
January 31, 1998.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 1998 amounted to $59,727, none of which was paid to Donaldson,
Lufkin & Jenrette Securities Corp., an affiliate of the Adviser.
Accrued expenses includes $49,717 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 Plans, 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
14
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
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.
The Fund is not obligated under the Plans to pay any distribution services fee
in excess of the amounts set forth above. The purpose of the payments to the
Distributor under the Plans 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 Plans are 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 Fund to the Distributor with respect to the relevant class and (ii)
the Fund 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 provide 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 $19,296,584 and $23,309,687,
respectively, for the six months ended January 31, 1998. There were purchases
of $14,228,763 and sales of $12,609,686 of U.S. government and government
agency obligations for the six months ended January 31, 1998.
At January 31, 1998, the cost of investments for federal income tax purposes
was $47,651,658. Accordingly, gross unrealized appreciation of investments was
$4,920,449 and gross unrealized depreciation of investments was $772,054
resulting in net unrealized appreciation of $4,148,395 excluding foreign
currency transactions.
The Fund incurred and elected to defer post October currency losses of $55,391
for the year ended July 31, 1997.
1. 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 foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward 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 gain or
loss 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 other 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.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
At January 31, 1998, 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,
settling 3/5/98 2,580 $433,696 $421,228 $ 12,468
2. FINANCIAL FUTURES CONTRACTS
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse affects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments.
At the time the Fund enters into a futures contract the Fund deposits and
maintains as collateral an initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract.
Such receipts or payments are known as variation margin and are recorded by the
Fund as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the time it was closed. At January
31, 1998, the Fund had no outstanding futures contracts.
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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JAN. 31, 1998 JULY 31, JAN. 31, 1998 JULY 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
-------------- ---------- ---------------- ------------
CLASSS A
Shares sold 17,021 44,362 $ 364,839 $ 813,717
Shares issued in
reinvestment of
dividends and
distributions 107,474 140,204 1,915,188 2,424,151
Shares converted
from Class B 128,047 134,087 2,378,555 2,479,067
Shares redeemed (69,772) (283,790) (1,314,460) (5,240,141)
Net increase 182,770 34,863 $ 3,344,122 $ 476,794
CLASS B
Shares sold 153,663 249,874 $ 2,424,580 $ 3,910,285
Shares issued in
reinvestment of
dividends and
distributions 177,542 271,011 2,613,418 3,946,629
Shares converted
to Class A (154,179) (158,380) (2,378,555) (2,479,067)
Shares redeemed (145,278) (465,417) (2,352,965) (7,252,359)
Net increase (decrease) 31,748 (102,912) $ 306,478 $ (1,874,512)
16
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JAN. 31, 1998 JULY 31, JAN. 31, 1998 JULY 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
-------------- ---------- ---------------- ------------
CLASS C
Shares sold 36,711 54,856 $ 561,396 $ 860,802
Shares issued in
reinvestment of
dividends and
distributions 20,673 28,201 304,309 410,610
Shares redeemed (30,276) (98,217) (478,542) (1,514,680)
Net increase (decrease) 27,108 (15,160) $ 387,163 $ (243,268)
OCT. 2,1996(A) OCT. 2,1996(A)
TO TO
JULY 31,1997 JULY 31,1997
------------- --------------
ADVISOR CLASS
Shares sold 15 1,460 $ 300 $ 26,057
Shares issued in
reinvestment of
dividends and
distributions 2 -0- 32 -0-
Shares redeemed -0- (1,457) -0- (25,789)
Net increase 17 3 $ 332 $ 268
(a) Commencement of distribution.
17
FINANCIAL HIGHLIGHTS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------
SIX MONTHS MAY 1,
ENDED 1994
JANUARY 31, YEAR ENDED JULY 31, TO YEAR ENDED APRIL 30,
1998 ------------------------------------- JULY 31, ----------------------
(UNAUDITED) 1997 1996 1995 1994(A) 1994 1993
------------- ----------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.79 $18.48 $17.98 $16.26 $16.46 $16.97 $17.06
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .18(c) .47(c) .35(c) .34 .07 .16 .39
Net realized and unrealized gain (loss)
on investment transactions (.14) 3.56 1.08 1.64 (.27) .74 .59
Net increase (decrease) in net asset
value from operations .04 4.03 1.43 1.98 (.20) .90 .98
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.39) (.39) (.32) (.22) -0- (.24) (.42)
Distributions in excess of net
investment income (.06) -0- -0- -0- -0- -0- -0-
Distributions from net realized gains (1.45) (2.33) (.61) (.04) -0- (1.17) (65)
Total dividends and distributions (1.90) (2.72) (.93) (.26) -0- (1.41) (1.07)
Net asset value, end of period $17.93 $19.79 $18.48 $17.98 $16.26 $16.46 $16.97
TOTAL RETURN
Total investment return based on
net asset value (d) .27% 23.90% 8.05% 12.40% (1.22)% 5.06% 5.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $21,688 $20,312 $18,329 $10,952 $9,640 $9,822 $8,637
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 1.40%(e) 1.41%(f) 1.40% 1.40% 1.40%(e) 1.40% 1.40%
Expenses, before waivers/
reimbursements 2.06%(e) 2.06% 1.76% 1.81% 1.94%(e) 1.70% 1.85%
Net investment income (b) 1.91%(e) 2.50% 1.78% 2.07% 1.63%(e) 1.67% 2.29%
Portfolio turnover rate 69% 170% 173% 172% 21% 139% 98%
Average commission rate (g) $.0412 $.0395 -- -- -- -- --
</TABLE>
See footnote summary on page 21.
18
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------------------
SIX MONTHS MAY 1,
ENDED 1994
JANUARY 31, YEAR ENDED JULY 31, TO YEAR ENDED APRIL 30,
1998 ------------------------------------- JULY 31, ----------------------
(UNAUDITED) 1997 1996 1995 1994(A) 1994 1993
------------- ----------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.59 $15.89 $15.56 $14.10 $14.30 $14.92 $15.51
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .10(c) .28(c) .16(c) .22 .03 .06 .23
Net realized and unrealized gain
(loss) on investment transactions (.12) 3.02 .98 1.40 (.23) .63 .53
Net increase (decrease) in net asset
value from operations (.02) 3.30 1.14 1.62 (.20) .69 .76
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27) (.27) (.20) (.12) -0- (.14) (.25)
Distributions in excess of net
investment income (.05) -0- -0- -0- -0- -0- -0-
Distributions from net realized gains (1.45) (2.33) (.61) (.04) -0- (1.17) (1.10)
Total dividends and distributions (1.77) (2.60) (.81) (.16) -0- (1.31) (1.35)
Net asset value, end of period $14.80 $16.59 $15.89 $15.56 $14.10 $14.30 $14.92
TOTAL RETURN
Total investment return based on net
asset value (d) (.01)% 23.01% 7.41% 11.63% (1.40)% 4.29% 4.96%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $25,476 $28,037 $28,492 $37,301 $43,578 $43,616 $36,155
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 2.10%(e) 2.12%(f) 2.10% 2.10% 2.10%(e) 2.10% 2.15%
Expenses, before waivers/
reimbursements 2.78%(e) 2.76% 2.47% 2.49% 2.64%(e) 2.42% 2.56%
Net investment income (b) 1.21%(e) 1.78% .99% 1.38% .92%(e) .93% 1.55%
Portfolio turnover rate 69% 170% 173% 172% 21% 139% 98%
Average commission rate (g) $.0412 $.0395 -- -- -- -- --
</TABLE>
See footnote summary on page 21.
19
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS MAY 1, AUGUST 2,
ENDED 1994 1993(H)
JANUARY 31, YEAR ENDED JULY 31, TO TO
1998 ------------------------------------- JULY 31, APRIL 30,
(UNAUDITED) 1997 1996 1995 1994(A) 1994
------------- ------------ ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.59 $15.89 $15.57 $14.11 $14.31 $15.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .10(c) .28(c) .14(c) .16 .03 .15
Net realized and unrealized gain
(loss) on investment transactions (.12) 3.02 .99 1.46 (.23) (.17)
Net increase (decrease) in net asset
value from operations (.02) 3.30 1.13 1.62 (.20) (.02)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.28) (.27) (.20) (.12) -0- (.14)
Distributions in excess of
net investment income (.04) -0- -0- -0- -0- -0-
Distributions from net realized gains (1.45) (2.33) (.61) (.04) -0- (1.17)
Total dividends and distributions (1.77) (2.60) (.81) (.16) -0- (1.31)
Net asset value, end of period $14.80 $16.59 $15.89 $15.57 $14.11 $14.31
TOTAL RETURN
Total investment return based on
net asset value (d) (.01)% 23.01% 7.34% 11.62% (1.40)% .45%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $3,116 $3,045 $3,157 $4,113 $4,317 $4,289
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 2.10%(e) 2.12%(f) 2.10% 2.10% 2.10%(e) 2.10%(e)
Expenses, before waivers/
reimbursements 2.78%(e) 2.76% 2.48% 2.50% 2.64%(e) 2.07%(e)
Net investment income (b) 1.21%(e) 1.78% .99% 1.38% .93%(e) .69%(e)
Portfolio turnover rate 69% 170% 173% 172% 21% 139%
Average commission rate (g) $.0412 $.0395 -- -- -- --
</TABLE>
See footnote summary on page 21.
20
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ADVISOR CLASS
---------------------------
SIX MONTHS OCTOBER 2,
ENDED 1996(H)
JANUARY 31, TO
1998 JULY 31,
(UNAUDITED) 1997
------------ ------------
Net asset value, beginning of period $19.79 $19.49
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .22 .42
Net realized and unrealized loss on
investment transactions (.19) (.12)
Net increase in net asset value from operations .03 .30
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) -0-
Distributions in excess of net investment income (.05) -0-
Distributions from net realized gains (1.45) -0-
Total dividends and distributions (1.95) -0-
Net asset value, end of period $17.87 $19.79
TOTAL RETURN
Total investment return based on
net asset value (d) .23% 1.54%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $348 $50
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements (e) 1.10% 1.10%(f)
Expenses, before waivers/
reimbursements (e) 2.20% 2.35%
Net investment income (b)(e) 6.39% 3.40%
Portfolio turnover rate 69% 170%
Average commission rate $.0412 $.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) Annualized.
(f) 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.
(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.
21
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.
22
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 Environment 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 Greater China '97 Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage 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
23
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.
ASBSR
