ALLIANCE GROWTH FUND
ANNUAL REPORT
OCTOBER 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GROWTH FUND
_______________________________________________________________________________
December 15, 1997
Dear Shareholder:
We are pleased to provide you with an update of the Alliance Growth Fund's
performance and investment activity for the periods ended October 31, 1997. In
the table below, your Fund's performance is compared with that of the overall
U.S. stock market, represented by the S&P 500 Stock Index, and with the Russell
1000 Growth Index, which tracks large-cap U.S. stocks.
INVESTMENT RESULTS*
TOTAL RETURNS FOR
PERIODS ENDED OCTOBER 31, 1997
6 MONTHS 12 MONTHS
--------- ---------
ALLIANCE GROWTH FUND
Class A 22.84% 29.54%
Class B 22.38 28.64
Class C 22.41 28.66
S&P 500 STOCK INDEX 15.16 32.10
RUSSELL 1000 INDEX 16.59 31.84
* TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT
EXPENSES. THE S&P AND RUSSELL INDICES ARE UNMANAGED.
INVESTMENT ENVIRONMENT
The Fund achieved strong relative performance in the last six months, but not
quite enough to make up for the underperformance in the first half of the
fiscal year. The first half of the fiscal year was marked by continued
leadership by very large capitalization growth stocks and, in March and April,
a sharp correction which was particularly severe in the technology sector and
in the over-the- counter market.
The Fund has always emphasized stocks of companies somewhat smaller than those
that dominate the S&P 500. This, coupled with our strong emphasis on the
technology sector, made for a difficult performance comparison in the six
months ended April 30, 1997. In the last half of the fiscal year, these same
sectors came back strongly and the market rally broadened out, affording a
better environment for stocks below the top tier in size and quality. The Fund
has performed much better in the last six months, but not quite well enough to
match the gain in the S&P for the year as a whole.
The market decline last spring was largely due to fear that the economy was
growing too strongly and that the Federal Reserve would therefore continue to
raise interest rates to head off inflation. In the last six months, the economy
has indeed grown somewhat faster than generally expected but, to investors'
surprise and relief, inflation has not accelerated and interest rates have
moved lower. This has provided a very favorable environment for financial
markets and another year of well-above average returns.
AREAS OF OPPORTUNITY
Technology and financial services have been the major areas of emphasis in the
Fund for the last several years, and we continue to see above average potential
in these sectors. Within the technology sector, we have particularly stressed
networking and communications.
Computer networking has been perhaps the most dynamic area of the economy in
recent years. The tying together of previously stand-alone computers to enable
them to communicate with one another and to remotely access previously
inaccessible data has been a powerful spur to business productivity. The rapid
acceptance of new digital communication modes such as e-mail and the internet
has made it apparent that the entire communications infrastructure is about to
modernize rapidly to accommodate enormous growth in data communications.
This is the rationale behind our major holdings in companies such as Cisco
Systems, the leading provider of software and hardware for the building of
computer networks, and Worldcom, a newcomer to the ranks of the major
telecommunications companies and by far the most rapidly growing. These can be
volatile stocks whose performance may differ markedly from the popular market
averages over the short run, but we believe long-term holders will be amply
rewarded.
The trend toward lower interest rates has no doubt helped the performance of
the financial services sector, but this is not its sole attraction. This is a
growth sector of the economy and one in which a variety of businesses have been
able to earn above average returns on capital over the years. Our major
holdings in this area are Travelers Group and MBNA.
1
ALLIANCE GROWTH FUND
_______________________________________________________________________________
CURRENT OUTLOOK
The extraordinarily favorable combination of solid growth and low inflation has
led to another year of strong equity returns. The recent collapse of both stock
markets and currencies in several Asian countries delivered a brief shock to
the U.S. market, but it has quickly regained its footing and rebounded strongly.
Conditions appear favorable for continued stock market gains. Nevertheless, we
would caution that we have now experienced several years of strong results and
that common sense and experience suggest that future gains will be more
moderate. While there is no immediate evidence to suggest a reversal of
fortune, we note that the bull market has benefited greatly from a secular
decline in interest rates which is now fifteen years old. With the rate of
interest on long-term government bonds having declined to about six percent
from nearly fourteen percent in the early 1980's, one must question how much
longer the market can advance more rapidly than the rate of growth in corporate
earnings. That said, the immediate outlook for both the U. S. economy and the
stock market looks favorable.
Sincerly.
John D. Carifa
Chairman and President
Tyler J. Smith
Portfolio Manager
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 GROWTH FUND
_______________________________________________________________________________
Alliance Growth Fund seeks long-term growth of capital. The Fund invests
principally in a diversified portfolio of equity securities of companies with a
favorable outlook for earnings and whose rate of growth is expected to exceed
that of the United States economy over time.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +29.54% +24.03%
Five Years +21.87% +20.82%
Since Inception* +23.28% +22.54%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +28.64% +24.64%
Five Years +21.04% +21.04%
Ten Years(a) +21.01% +21.01%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +28.66% +27.66%
Since Inception* +18.31% +18.31%
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; 8/2/93, Class C.
(a) Assumes conversion of Class B shares into Class A shares after 8 years.
3
ALLIANCE GROWTH FUND
_______________________________________________________________________________
ALLIANCE GROWTH FUND
GROWTH OF A $10,000 INVESTMENT
10/31/87 TO 10/31/97
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
10/31/87 10/31/88 10/31/89 10/31/90 10/31/91 10/31/92
10/31/93 10/31/94 10/31/95 10/31/96 10/31/97
GROWTH FUND CLASS B: $67,346
RUSSELL 1000 STOCK INDEX: $49,008
S&P 500: $48,661
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Growth Fund Class B shares (from 10/31/87 to 10/31/97) as compared to
the performance of appropriate broad-based indices. The chart assumes the
reinvestment of dividends and capital gains. Performance for Class A, 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 Russell 1000 Stock Index measures the performance of the 1,000
largest U.S. stocks as measured by price-to-book ratios.
Growth Fund
Standard &Poor's 500 Stock Index
Russell 1000 Index
4
TEN LARGEST HOLDINGS*
OCTOBER 31, 1997 ALLIANCE GROWTH FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
CUC International, Inc. $ 288,548,885 5.7%
WorldCom, Inc. (common & preferred) 268,137,903 5.3
Cisco Systems, Inc. 258,698,409 5.1
Travelers Group, Inc. 207,391,310 4.1
MBNA Corp. 146,949,785 2.9
American International Group, Inc. 144,574,083 2.9
American Express Co. 143,241,150 2.8
3Com Corp. (common stock and bond) 142,874,087 2.8
Loews Corp. 128,440,625 2.6
Chase Manhattan Corp. 113,177,337 2.2
$1,842,033,574 36.4%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED OCTOBER 31, 1997
_______________________________________________________________________________
SHARES
- -------------------------------------------------------------------------------
PURCHASES BOUGHT HOLDINGS 10/31/97
- -------------------------------------------------------------------------------
ADC Telecommunications, Inc. 1,550,000 1,550,000
Boston Scientific Corp. 530,000 839,200
Chrysler Corp. 936,000 936,000
CUC International, Inc. 2,855,500 9,914,800
DSC Communications Corp. 1,800,000 3,167,400
MBNA Corp. 4,953,075 5,643,225
MCI Communications Corp. 2,029,700 2,029,700
Philip Morris Cos., Inc. 985,000 2,824,000
Republic Industries, Inc. 2,637,000 3,272,000
Teleport Communications Group, Inc. Cl.A 1,240,100 1,698,400
SALES SOLD HOLDINGS 10/31/97
- -------------------------------------------------------------------------------
Allstate Corp. 449,410 -0-
CompUSA, Inc. 2,619,800 500,000
Electronic Data Systems Corp. 988,000 -0-
EMC Corp. 1,362,300 650,000
First Chicago NBD Corp. 500,000 -0-
Lowes Cos., Inc. 852,500 -0
Microsoft Corp. 428,000 -0
NationsBank Corp. 585,000 547,000
Sears, Roebuck & Co. 688,000 330,500
TCI Group Series A 2,801,635 1,777,865
* Adjusted for market value of call options written.
5
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-95.2%
TECHNOLOGY-28.7%
COMPUTER SOFTWARE & SERVICES-4.1%
Ceridian Corp. (a) 2,209,800 $ 86,320,313
Sterling Commerce, Inc. (a)(b) 2,126,044 70,558,085
Sterling Software, Inc. 1,516,000 51,733,500
------------
208,611,898
ELECTRONICS-3.5%
3Com Corp. (a)(b) 3,217,800 133,337,587
Applied Magnetics Corp. (a) 429,100 9,869,300
EMC Corp. (a)(b) 650,000 36,400,000
------------
179,606,887
NETWORKING SOFTWARE-5.3%
Cabletron Systems, Inc. (a)(b) 250,000 7,250,000
Cisco Systems, Inc. (a)(b) 3,191,000 261,761,719
Fore Systems (a) 41,400 672,750
------------
269,684,469
OFFICE EQUIPMENT & SERVICES-0.7%
Xerox Corp. 437,400 34,691,288
PRINTING, PUBLISHING & BROADCASTING-0.2%
Cox Communications, Inc. Cl.A (a) 281,300 8,649,975
SEMI-CONDUCTOR COMPONENTS-2.8%
Intel Corp. (b) 1,270,000 97,790,000
National Semiconductor Corp. (a)(b) 1,235,300 44,470,800
------------
142,260,800
TELECOMMUNICATIONS-12.1%
ADC Telecommunications, Inc. (b) 1,550,000 51,343,750
Ascend Communications, Inc. (a)(b) 1,020,230 27,546,210
Brooks Fiber Properties, Inc. (a) 16,700 933,112
Colt Telecom Group Plc (ADR) (a)(c) 741,400 25,578,300
DSC Communications Corp. (a)(b) 3,167,400 77,205,375
Loral Space & Communications (a)(b) 770,000 16,170,000
Lucent Technologies, Inc. (b) 150,000 12,365,625
Millicom International
Cellular, S.A. (a)(d) 362,800 15,237,600
Teleport Communications
Group, Inc. Cl.A (a)(b) 1,698,400 82,160,100
Tellabs, Inc. (b) 350,000 18,900,000
United States Cellular Corp. (a) 363,500 11,813,750
WorldCom, Inc., (a)
Common (b) 6,856,696 230,556,403
8% cv. pfd. 343,000 40,131,000
--------------
609,941,225
--------------
1,453,446,542
FINANCIAL SERVICES-25.2%
BANKING & CREDIT-10.8%
American Express Co. (b) 1,870,200 145,875,600
Automatic Common Exchange Security
Trust II 337,900 9,545,675
Chase Manhattan Corp. 980,952 113,177,337
First Union Corp. 1,138,000 55,833,125
Household International, Inc. 102,500 11,608,125
MBNA Corp. (b) 5,643,225 148,487,358
Morgan Stanley, Dean Witter,
Discover and Co. 603,400 29,566,600
NationsBank Corp. 547,000 32,751,625
- ------------
546,845,445
INSURANCE-9.9%
20th Century Industries, Inc. 1,063,300 26,582,500
Acceptance Insurance Co. (a) 601,800 13,991,850
American International Group, Inc. 1,416,525 144,574,083
PennCorp Financial Group, Inc. 514,900 16,766,431
PMI Group, Inc. 476,600 28,804,513
Progressive Corp. 358,200 37,342,350
6
ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
The Hartford Financial Services
Group, Inc. 286,600 $ 23,214,600
Travelers Group, Inc. 2,962,733 207,391,310
-------------
498,667,637
MORTGAGE BANKING-0.2%
Federal National Mortgage Assn. 256,200 12,409,687
REAL ESTATE-4.3%
American General Hospitality Corp. 254,600 6,937,850
Arden Realty Group, Inc. 215,200 6,563,600
CBL & Associates Properties, Inc. 124,000 2,991,500
Highwoods Properties, Inc. 329,200 11,357,400
JP Realty, Inc. 755,300 18,410,437
Koger Equity, Inc. 1,762,571 38,115,598
Macerich Co. 1,051,400 27,862,100
Prentiss Properties Trust 662,500 18,839,844
Simon DeBartolo Group, Inc. 216,500 6,697,969
Spieker Properties, Inc. 777,200 30,407,950
Storage USA, Inc. 383,700 14,556,619
Summit Properties, Inc. 716,700 14,826,731
Sun Communities, Inc. 520,000 18,135,000
--------------
215,702,598
--------------
1,273,625,367
CONSUMER NONCYCLICALS-18.5%
COMMERCIAL SERVICES-5.8%
CUC International, Inc. (a)(b) 9,914,800 292,486,600
DIVERSIFIED-1.9%
Republic Industries, Inc. (b) 3,272,000 96,524,000
DRUGS-4.7%
Abbott Laboratories 400,000 24,525,000
Astra AB, Series A (e) 595,000 9,612,278
Boston Scientific Corp. (a)(b) 839,200 38,183,600
Gensia, Inc. pfd. (a)(f)(g) 68,500 1,755,312
Merck & Co., Inc. 1,126,200 100,513,350
Pfizer, Inc. (b) 550,000 38,912,500
Schering-Plough Corp. 436,000 24,443,250
-------------
237,945,290
HOSPITAL SUPPLIES & SERVICES-1.4%
Medtronic, Inc. (b) 1,329,800 57,846,300
Quest Medical, Inc. (a) 265,225 2,188,106
United Healthcare Corp. (b) 250,000 11,578,125
-------------
71,612,531
TOBACCO-4.7%
Loews Corp. 1,150,000 128,440,625
Philip Morris Cos., Inc. (b) 2,824,000 111,901,000
-------------
240,341,625
-------------
938,910,046
CONSUMER CYCLICALS-7.2%
AIRLINES-1.5%
AMR Corp. (a) 100,000 11,643,750
Delta Air Lines, Inc. 372,200 37,499,150
Northwest Airlines Corp. Cl.A (a) 208,300 9,373,500
UAL Corp. (a) 177,400 15,544,675
USAIR Group, Inc. (a) 100,000 4,687,500
------------
78,748,575
AUTO & RELATED-1.8%
AutoZone, Inc. (a) 1,947,200 57,564,100
Chrysler Corp. 936,000 32,994,000
------------
90,558,100
RESTAURANTS & LODGING-1.0%
ITT Corp. (a) 690,600 51,579,188
RETAILING - GENERAL-2.9%
CompUSA, Inc. (a)(b) 500,000 16,375,000
Home Depot, Inc. 1,257,500 69,948,437
Sears, Roebuck & Co. 330,500 13,839,688
The Limited, Inc. 852,500 20,087,031
Wal-Mart Stores, Inc. 745,000 26,168,125
------------
146,418,281
------------
367,304,144
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
ENERGY-6.4%
OIL & GAS SERVICES-6.4%
Baker Hughes, Inc. 476,000 $ 21,866,250
BJ Services Co. (a)(b) 462,400 39,188,400
Dresser Industries, Inc. 451,600 19,023,650
Gulf Canada Resources, Ltd. (a)(f) 13,245,900 110,934,413
Halliburton Co. 1,217,800 72,611,325
Nabors Industries, Inc. (a) 33,000 1,357,125
Santa Fe International Corp. (a) 126,200 6,207,463
Transocean Offshore, Inc. 700,000 37,800,000
Union Pacific Resources Group, Inc. 563,277 13,870,696
-------------
322,859,322
BUSINESS SERVICES-5.3%
PRINTING, PUBLISHING & BROADCASTING-4.2%
Comcast Corp. Cl.A 516,500 14,203,750
TCI Group Series A (b) 1,777,865 40,779,779
TCI Ventures Group Series A 2,453,235 56,577,732
Tele-Communications, Inc. - Liberty
Media Group Cl.A 1,476,462 51,399,333
Viacom, Inc. Cl.B (a) 1,586,800 48,000,700
------------
210,961,294
RAILROADS-1.1%
Canadian Pacific, Ltd. (f) 1,270,000 37,861,875
Union Pacific Corp. 322,866 19,775,542
------------
57,637,417
------------
268,598,711
UTILITY-2.0%
TELEPHONE-2.0%
AT&T Corp. 300,000 14,681,250
MCI Communications Corp. (b) 2,029,700 72,054,350
Telephone and Data Systems, Inc. 312,600 13,285,500
------------
100,021,100
DIVERSIFIED-0.8%
Tyco International, Ltd. 1,054,112 39,792,728
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
CAPITAL GOODS-0.8%
ENVIRONMENTAL CONTROL-0.1%
Waste Management, Inc. 307,000 $ 7,176,125
MACHINERY-0.7%
Mannesmann AG (ADR) (h) 77,000 32,568,898
------------
39,745,023
BASIC MATERIALS-0.3%
CHEMICALS-0.3%
Monsanto Co. (b) 382,500 16,351,875
Total Common & Preferred Stocks
(cost $3,562,146,648) 4,820,654,858
LONG-TERM DEBT SECURITIES-0.8%
COMPUTER SOFTWARE & SERVICES-0.0%
Applied Magnetics Corp. Conv.
7.00%, 3/15/06 $ 900 1,170,000
ELECTRONICS-0.8%
3Com Corp. Conv.
10.25%, 11/01/01 (g) 8,500 10,965,000
Altera Corp. Conv.
5.75%, 6/15/02 (g) 15,540 26,845,350
------------
37,810,350
Total Long-Term Debt Securities
(cost $32,825,477) 38,980,350
SHORT-TERM DEBT SECURITIES-4.0%
Federal Home Loan Bank
5.50%, 11/03/97 9,400 9,397,128
Federal Home Loan Mortgage Corp.
5.47%, 11/13/97 2,000 1,996,353
5.47%, 11/17/97 6,000 5,985,414
Federal National Mortgage Assn.
5.47%, 11/07/97 2,000 1,998,177
5.47%, 11/12/97 2,000 1,996,657
5.54%, 3/12/98 5,000 5,000,000
8
ALLIANCE GROWTH FUND
_______________________________________________________________________________
CONTRACTS (I)
OR PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
Student Loan Marketing Assn.
5.63%, 11/03/97 $177,000 $ 176,944,638
Total Short-Term Debt Securities
(amortized cost $203,318,367) 203,318,367
TOTAL INVESTMENTS-100.0%
(cost $3,798,290,492) 5,062,953,575
OUTSTANDING CALL OPTIONS WRITTEN-(0.9%)
3Com Corp.
expiring Nov 1997
@ $48.00 (1,000) (103,000)
expiring Dec 1997
@ $46.75 (2,000) (362,000)
@ $47.75 (1,500) (262,500)
@ $49.13 (1,000) (145,000)
@ $50.88 (1,000) (115,000)
@ $53.00 (1,000) (93,000)
expiring Jan 1998
@ $53.50 (3,000) (348,000)
ADC Telecommunications, Inc.
expiring Nov 1997
@ $33.50 (1,500) (255,000)
@ $33.50 (1,500) (271,500)
@ $34.75 (1,500) (192,000)
@ $36.75 (1,500) (123,000)
expiring Dec 1997
@ $32.00 (1,500) (495,000)
@ $35.38 (1,500) (258,000)
@ $35.88 (1,500) (222,000)
@ $36.69 (2,000) (238,000)
@ $37.25 (1,500) (132,000)
@ $37.50 (1,500) (168,000)
American Express Co.
expiring Nov 1997
@ $82.38 (1,000) (67,060)
@ $84.63 (1,000) (41,000)
expiring Dec 1997
@ $78.06 (1,500) (526,500)
@ $79.88 (1,000) (288,820)
@ $80.38 (2,000) (882,000)
@ $82.50 (1,000) (212,000)
@ $84.38 (1,000) (148,000)
expiring Jan 1998
@ $77.75 (1,000) $(469,070)
Applied Magnetics Corp.
expiring Nov 1997
@ $35.13 (1,500) (9,000)
Ascend Communications, Inc.
expiring Dec 1997
@ $33.13 (1,000) (106,000)
@ $33.63 (1,500) (162,000)
@ $37.50 (2,000) (90,000)
@ $41.88 (1,500) (22,500)
expiring Jan 1998
@ $33.75 (1,500) (198,000)
@ $34.13 (1,500) (133,500)
BJ Services Co.
expiring Dec 1997
@ $70.69 (1,000) (1,479,000)
Boston Scientific Corp.
expiring Dec 1997
@ $63.00 (1,000) (15,000)
@ $63.25 (1,000) (12,000)
Cabletron Systems, Inc.
expiring Nov 1997
@ $30.00 (1,500) (213,000)
expiring Dec 1997
@ $32.38 (1,000) (107,000)
Cisco Systems, Inc.
expiring Nov 1997
@ $81.75 (1,000) (209,080)
@ $82.63 (1,000) (163,230)
@ $82.75 (2,000) (358,000)
expiring Dec 1997
@ $79.25 (1,000) (678,000)
@ $80.50 (1,000) (542,000)
@ $82.00 (1,000) (564,000)
@ $82.63 (1,000) (549,000)
CompUSA, Inc.
expiring Nov 1997
@ $29.88 (1,000) (392,000)
@ $30.25 (1,500) (529,890)
expiring Dec 1997
@ $32.25 (1,500) (388,500)
@ $33.00 (1,000) (239,530)
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (I) VALUE
- -------------------------------------------------------------------------
CUC International, Inc.
expiring Dec 1997
@ $27.75 (2,000) $ (506,000)
@ $28.13 (1,500) (353,715)
@ $28.50 (2,500) (520,000)
@ $28.56 (1,500) (336,000)
@ $29.13 (2,000) (366,000)
@ $29.44 (1,000) (165,000)
@ $29.75 (1,500) (267,000)
@ $30.13 (1,000) (167,000)
@ $30.63 (2,000) (506,000)
@ $30.75 (2,000) (168,000)
@ $31.13 (3,000) (387,000)
@ $31.75 (1,000) (196,000)
DSC Communications Corp.
expiring Nov 1997
@ $27.63 (1,500) (79,500)
@ $28.25 (1,000) (21,000)
@ $28.38 (1,500) (33,900)
@ $29.00 (1,000) (6,000)
expiring Dec 1997
@ $27.75 (1,500) (163,500)
@ $28.25 (2,000) (156,000)
@ $28.69 (1,500) (150,000)
@ $30.25 (2,000) (38,000)
@ $31.00 (2,500) (65,000)
expiring Jan 1998
@ $29.50 (2,000) (164,000)
EMC Corp.
expiring Nov 1997
@ $52.00 (1,000) (452,000)
@ $53.00 (1,500) (754,500)
@ $53.88 (1,500) (610,500)
expiring Dec 1997
@ $59.44 (500) (109,000)
@ $61.56 (1,000) (265,000)
@ $62.31 (1,000) (175,000)
Intel Corp.
expiring Nov 1997
@ $99.38 (1,000) (6,000)
expiring Dec 1997
@ $86.75 (2,000) (326,000)
@ $92.00 (1,000) (138,000)
@ $96.44 (1,000) (46,000)
@ $96.63 (2,000) (111,440)
expiring Jan 1998
@ $84.63 (2,000) (650,000)
@ $86.50 (2,000) (558,460)
Loral Space & Communications
expiring Nov 1997
@ $17.50 (1,000) (376,000)
expiring Dec 1997
@ $22.44 (1,500) (58,500)
@ $22.63 (1,500) (142,500)
@ $23.25 (1,000) (67,000)
expiring Jan 1998
@ $21.50 (1,200) (162,000)
@ $22.13 (1,500) (181,500)
Lucent Technologies, Inc.
expiring Dec 1997
@ $77.00 (1,500) (1,218,000)
MBNA Corp.
expiring Nov 1997
@ $40.38 (2,250) (189,563)
@ $42.00 (2,250) (83,250)
@ $43.67 (3,000) -0-
@ $45.38 (3,000) (21,000)
expiring Dec 1997
@ $27.63 (3,000) (399,000)
@ $27.75 (2,500) (225,000)
@ $28.25 (2,500) (162,500)
@ $39.63 (3,000) (349,260)
@ $41.88 (1,500) (108,000)
MCI Communications Corp.
expiring Nov 1997
@ $34.25 (1,500) (202,500)
@ $34.44 (1,500) (267,000)
expiring Dec 1997
@ $36.69 (1,500) (196,500)
Medtronic, Inc.
expiring Nov 1997
@ $45.50 (2,000) (200,000)
expiring Dec 1997
@ $46.75 (2,000) (236,000)
@ $49.11 (2,000) (168,780)
@ $49.48 (2,000) (181,360)
@ $49.50 (1,500) (102,180)
10
ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (I) VALUE
- -------------------------------------------------------------------------
Monsanto Co.
expiring Dec 1997
@ $40.44 (1,500) $ (495,000)
National Semiconductor Corp.
expiring Nov 1997
@ $33.63 (1,500) (439,500)
expiring Dec 1997
@ $36.00 (1,500) (342,000)
@ $36.13 (2,000) (522,000)
@ $36.75 (2,000) (396,000)
@ $39.56 (1,500) (189,000)
Pfizer, Inc.
expiring Dec 1997
@ $63.38 (1,000) (828,000)
@ $64.81 (2,000) (1,440,000)
@ $67.13 (1,500) (849,000)
@ $69.00 (1,000) (526,000)
Philip Morris Cos., Inc.
expiring Nov 1997
@ $44.38 (1,500) (10,500)
@ $44.60 (1,000) (23,000)
expiring Dec 1997
@ $41.25 (1,500) (205,500)
@ $41.31 (1,500) (175,500)
@ $41.50 (1,000) (138,000)
@ $42.19 (1,000) (97,000)
@ $42.69 (2,000) (144,000)
@ $43.38 (1,500) (133,500)
@ $44.13 (2,000) (134,000)
expiring Jan 1998
@ $40.00 (2,000) (510,000)
@ $40.94 (1,000) (219,000)
@ $41.13 (1,000) (184,060)
@ $41.25 (2,000) (350,000)
Republic Industries, Inc.
expiring Dec 1997
@ $27.69 (2,000) (612,000)
@ $27.88 (1,500) (420,000)
@ $28.00 (1,000) (269,130)
@ $28.06 (1,000) (292,000)
@ $28.31 (1,500) (414,960)
@ $28.38 (1,000) (260,190)
@ $28.50 (2,000) (530,000)
@ $32.19 (1,500) (106,500)
@ $33.75 (1,000) (73,000)
expiring Jan 1998
@ $30.88 (1,000) (216,000)
@ $32.06 (2,000) (370,000)
@ $32.63 (1,000) (141,000)
@ $32.88 (2,000) (304,160)
@ $33.00 (1,500) (213,000)
@ $34.44 (2,000) (173,700)
@ $35.25 (2,000) (124,000)
Sterling Commerce, Inc.
expiring Dec 1997
@ $37.88 (2,000) (154,000)
@ $38.13 (2,000) (110,000)
@ $38.50 (1,000) (60,000)
@ $38.50 (2,000) (140,000)
TCI Group Series A
expiring Dec 1997
@ $23.63 (1,000) (140,000)
@ $23.75 (1,000) (118,000)
Teleport Communications Group, Inc.
expiring Dec 1997
@ $47.00 (1,000) (470,000)
@ $49.13 (1,000) (274,000)
@ $50.50 (1,000) (289,000)
@ $51.00 (1,000) (225,000)
@ $51.63 (1,500) (441,000)
expiring Jan 1998
@ $49.50 (1,000) (386,000)
@ $50.31 (1,500) (543,000)
Tellabs, Inc.
expiring Dec 1997
@ $52.63 (2,000) (932,080)
@ $57.88 (1,500) (418,500)
United Healthcare Corp.
expiring Jan 1998
@ $52.94 (2,500) (320,000)
WorldCom, Inc.
expiring Nov 1997
@ $34.50 (1,000) (25,000)
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (I) VALUE
- -------------------------------------------------------------------------
expiring Dec1997
@ $33.81 (1,500) $ (274,500)
@ $35.13 (2,000) (272,000)
@ $35.94 (2,000) (224,000)
@ $36.00 (1,500) (178,500)
@ $36.00 (2,000) (280,000)
@ $36.13 (1,000) (118,000)
@ $37.75 (2,000) (198,000)
expiring Jan 1998
@ $32.88 (1,000) (289,000)
@ $34.44 (2,000) (482,000)
@ $36.75 (1,500) (208,500)
Total Outstanding Call Options Written
(premiums received $88,568,875) (48,331,868)
TOTAL INVESTMENTS NET OF OUTSTANDING
CALL OPTIONS WRITTEN -99.1%
(cost $3,709,721,617) $5,014,621,707
Other assets less liabilities-0.9% 47,947,927
NET ASSETS-100% $5,062,569,634
(a) Non-income producing security.
(b) Security on which options are written (shares subject to call have an
aggregate market value of $1,051,004,375).
(c) Country of origin--United Kingdom.
(d) Country of origin--Luxembourg.
(e) Swedish holding.
(f) Country of origin--Canada.
(g) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31, 1997,
these securities amounted to $39,565,662 or 0.78% of net assets.
(h) Country of origin--Sweden.
(i) One contract relates to 100 shares.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
12
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 ALLIANCE GROWTH FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $3,798,290,492) $5,062,953,575
Receivable for investment securities sold 53,005,611
Receivable for shares of beneficial interest sold 30,010,302
Dividends and interest receivable 3,210,538
Total assets 5,149,180,026
LIABILITIES
Due to custodian 201,799
Outstanding call options written, at value (premiums
received $88,568,875) 48,331,868
Payable for investment securities purchased 18,678,413
Payable for shares of beneficial interest redeemed 14,024,342
Advisory fee payable 3,177,714
Distribution fee payable 602,671
Accrued expenses 1,593,585
Total liabilities 86,610,392
NET ASSETS $5,062,569,634
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 1,352
Additional paid-in capital 3,376,486,439
Accumulated net realized gain on investment transactions 381,251,181
Net unrealized appreciation of investments, options and
foreign currency denominated assets and liabilities 1,304,830,662
$5,062,569,634
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($783,110,177/17,816,215 shares of beneficial interest
issued and outstanding) $43.95
Sales charge--4.25% of public offering price 1.95
Maximum offering price $45.90
CLASS B SHARES
Net asset value and offering price per share
($3,578,805,746/98,548,974 shares of beneficial interest
issued and outstanding) $36.31
CLASS C SHARES
Net asset value and offering price per share
($599,449,178/16,500,423 shares of beneficial interest
issued and outstanding) $36.33
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($101,204,533/2,295,706 shares of beneficial interest
issued and outstanding) $44.08
See notes to financial statements.
13
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997 ALLIANCE GROWTH FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $196,103) $ 36,371,249
Interest 6,511,771
$ 42,883,020
EXPENSES
Advisory fee 31,680,829
Distribution fee - Class A 1,931,232
Distribution fee - Class B 30,755,087
Distribution fee - Class C 5,105,935
Transfer agency 7,070,205
Printing 1,284,106
Custodian 411,153
Registration 393,103
Audit and legal 148,990
Trustees' fees 34,100
Miscellaneous 61,531
Total expenses 78,876,271
Less: expense offset arrangement
(see Note B) (445,154)
Net expense 78,431,117
Net investment loss (35,548,097)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investment transactions 518,827,436
Net realized loss on written options transactions (87,527,539)
Net realized loss on foreign currency transactions (84,256)
Net change in unrealized appreciation (depreciation) of:
Investments 622,894,322
Written options 46,671,257
Foreign currency denominated assets and liabilities (34,571)
Net gain on investments 1,100,746,649
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,065,198,552
See notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GROWTH FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (35,548,097) $ (12,013,832)
Net realized gain on investments, options,
and foreign currency transactions 431,215,641 126,231,737
Net change in unrealized appreciation
(depreciation) of investments,
options, and foreign currency
denominated assets and liabilities 669,531,008 396,127,869
Net increase in net assets
from operations 1,065,198,552 510,345,774
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A -0- (1,878,354)
Net realized gain on investments
Class A (14,927,840) (6,274,504)
Class B (89,311,288) (39,764,242)
Class C (14,500,115) (6,015,295)
Advisor Class (20,469) -0-
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 714,151,085 931,724,109
Total increase 1,660,589,925 1,388,137,488
NET ASSETS
Beginning of year 3,401,979,709 2,013,842,221
End of year $5,062,569,634 $3,401,979,709
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 ALLIANCE GROWTH FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Growth Fund (the "Fund"), a series of The Alliance Portfolios (the
"Trust"), is registered under the Investment Company Act of 1940, as a
diversified, open-end investment company. 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 purchased on or after August 2, 1993 and held for a period ending eight
years after the end of the calendar month of purchase will convert to Class A
shares. 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 any initial or contingent deferred sales charge and are not
subject to ongoing distribution expenses. Advisor Class shares are offered to
investors participating in certain fee-based programs and retirement plans. All
four classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The following is
a summary of significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last sales price or, if no sale occurred, at the mean of the bid and asked
price at the regular close of such 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
are valued at their fair value as determined in good faith by the Fund's Board
of Trustees. Call options written or purchased by the Fund are valued at the
last sale price and put options purchased by the Fund are valued at the last
sale price. The Board of Trustees has further determined that the value of
certain portfolio debt securities, other than temporary investments in
short-term securities, be determined by reference to valuations obtained from a
pricing service. Restricted securities are valued at fair value as determined
by the Board of Trustees. Securities which mature in 60 days or less are valued
at amortized cost, which approximates market value. The ability of issuers of
debt securities held by the Fund to meet their obligations may be affected by
economic developments in a specific industry or region.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
foreign 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 earned or accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
from sales and maturities of debt 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. The Fund does not
isolate the effect of fluctuations in foreign currency exchange rates when
determining the gain or loss upon the sale or maturity of equity securities.
Net currency gains and losses from valuing foreign currency denomintaed assets
and liabilities at year end exchange rates are reflected as a component of
unrealized appreciation of 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 applicable, 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. 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 GROWTH FUND
_______________________________________________________________________________
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares on 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 fee.
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 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 treatment; temporary differences, do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to net investment loss, resulted in a net decrease in accumulated
net realized gains on investment transactions and accumulated net investment
loss and a corresponding increase in additional paid-in capital. This
reclassification had no effect on 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. Effective August 1, 1997, the
Board of Trustees approved an advisory fee equal to the annualized rate of .75%
of the Fund's average daily net assets up to $3 billion, .70% of the next $1
billion of the Fund's average daily net assets, .65% of the next $1 billion of
the Fund's average daily net assets, and .60% of the Fund's average daily net
assets over $5 billion. Such fee is accrued daily and paid monthly.
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 $4,518,264 for the year ended October 31, 1997.
In addition, for the year ended October 31, 1997, the Fund's expenses were
reduced by $445,154 under an expense offset arrangement with Alliance Fund
Services. Transfer Agency fees reported in the Statement of Operations 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 $216,796 from the sale of Class
A shares and $9,882, $4,125,626, and $101,192 in contingent deferred sales
charges imposed upon redemptions by shareholders of Class A, Class B and Class
C shares, respectively, for the year ended October 31, 1997.
Brokerage commissions paid on securities transactions for the year ended
October 31, 1997 amounted to $4,109,583, of which $14,245 was paid to
Donaldson, Lufkin & Jenrette Securities Corp. ("DLJ"), an affiliate of the
Adviser.
Accrued expenses includes an amount owed to two of the trustees, under a
deferred compensation plan, of $121,788.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .50% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to both Class B
and Class C shares. There is no distribution fee on the Advisor Class Shares.
The fees are accrued daily and paid monthly. 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 GROWTH FUND
_______________________________________________________________________________
The Fund is not obligated under the Agreement to pay any distribution services
fee in excess of the amounts set forth above. The purpose of the payments to
the Distributor under the Agreement 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 Agreement during any year may be more or
less than its actual expenses. For this reason, the Agreement is characterized
by the staff of the Commission as being of the "compensation" variety.
In the event that the Agreement 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 contingent deferred sales charges.
The Agreement also provides that the Adviser may use its own resources to
finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $2,488,786,392 and $2,025,218,108,
respectively, for the year ended October 31, 1997. Purchases and sales amounted
to zero and $17,767,427, respectively of U.S. government and government agency
obligations for the year ended October 31, 1997.
At October 31, 1997, the cost of securities for federal income tax purposes was
$3,811,239,082. Accordingly gross unrealized appreciation of investments was
$1,347,248,424 and gross unrealized depreciation of investments was $95,533,931
resulting in net unrealized appreciation of $1,251,714,493.
1. OPTION TRANSACTIONS
For hedging purposes, the Fund purchases and writes (sells) put and call
options on U.S. and foreign government securities and foreign currencies that
are traded on U.S. and foreign securities exchanges and over-the-counter
markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of the premium and a change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions,
is also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a call
option is exercised, the premium received is added to the proceeds from the
sale of the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium received
reduces the cost basis of the security or currency purchased by the Fund. The
risk involved in writing an option is that, if the option were exercised, the
underlying security would then be purchased or sold by the Fund at a
disadvantageous price.
18
ALLIANCE GROWTH FUND
_______________________________________________________________________________
Transactions in options written for the year ended October 31, 1997 were as
follows:
NUMBER OF
CONTRACTS PREMIUMS
------------ ---------------
Options outstanding at beginning of year 87,800 $ 36,773,825
Options written 831,150 300,751,514
Options terminated in closing
purchase transactions (380,600) (148,507,450)
Options expired (182,300) (62,921,825)
Options exercised (91,350) (37,527,189)
Options outstanding at October 31, 1997 264,700 $ 88,568,875
2. FOREIGN 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 purchases and sale commitments. 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 contract and the closing of
such contract is included in net realized gain or loss from foreign currency
transactions.
Fluctuations in the value of open 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 securities 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.
At October 31, 1997, the Fund had no outstanding forward exchange currency
contracts.
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH 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
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 8,132,661 8,865,553 $ 318,891,520 $ 280,673,093
Shares issued in
reinvestment of
dividends and
distributions 358,984 238,657 12,705,352 7,133,447
Shares converted
from Class B 1,372,219 1,013,764 54,520,447 32,613,812
Shares redeemed (6,355,236) (5,484,207) (250,784,867) (173,773,360)
Net increase 3,508,628 4,633,767 $ 135,332,452 $ 146,646,992
CLASS B
Shares sold 23,967,815 33,339,591 $771,661,032 $887,177,634
Shares issued in
reinvestment of
distributions 2,307,390 1,182,878 67,883,610 29,773,038
Shares converted
to Class A (1,655,781) (1,208,740) (54,520,447) (32,613,812)
Shares redeemed (11,595,072) (8,398,216) (376,839,188) (224,298,136)
Net increase 13,024,352 24,915,513 $ 408,185,007 $ 660,038,724
CLASS C
Shares sold 5,404,558 6,734,641 $ 173,407,183 $ 179,622,559
Shares issued in
reinvestment of
distributions 278,004 125,326 8,181,650 3,155,709
Shares redeemed (2,988,645) (2,196,703) (97,513,487) (58,679,911)
Net increase 2,693,917 4,663,264 $ 84,075,346 $ 124,098,357
YEAR ENDED OCT. 2,1996(A) YEAR ENDED OCT. 2,1996(A)
OCTOBER 31, TO OCTOBER 31, TO
1997 OCT. 31,1996 1997 OCT. 31, 1996
------------ ------------ -------------- --------------
ADVISOR CLASS
Shares sold 2,521,405 27,111 $ 96,902,785 $ 940,036
Shares issued in
reinvestment of
distributions 570 -0- 20,184 -0-
Shares redeemed (253,380) -0- (10,364,689) -0-
Net increase 2,268,595 27,111 $ 86,558,280 $ 940,036
(a) Commencement of distribution.
20
FINANCIAL HIGHLIGHTS ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
MAY 1, 1994
YEAR ENDED OCTOBER 31, TO YEAR ENDED APRIL 30,
------------------------------------ OCT. 31, ------------------------
1997 1996 1995 1994(A) 1994(B) 1993(B)
------------ ---------- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $34.91 $29.48 $25.08 $23.89 $22.67 $20.31
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.10)(c) .05 .12 .09 (.01)(d) .05(d)
Net realized and unrealized gain
on investments 10.17 6.20 4.80 1.10 3.55 3.68
Net increase in net asset value
from operations 10.07 6.25 4.92 1.19 3.54 3.73
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.19) (.11) -0- -0- (.14)
Distributions from net realized gains (1.03) (.63) (.41) -0- (2.32) (1.23)
Total dividends and distributions (1.03) (.82) (.52) -0- (2.32) (1.37)
Net asset value, end of period $43.95 $34.91 $29.48 $25.08 $23.89 $22.67
TOTAL RETURN
Total investment return based on
net asset value (e) 29.54% 21.65% 20.18% 4.98% 15.66% 18.89%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $783,110 $499,459 $285,161 $167,800 $102,406 $13,889
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.26%(f) 1.30% 1.35% 1.35%(g) 1.40% 1.40%
Expenses, before waivers/reimbursements 1.26%(f) 1.30% 1.35% 1.35%(g) 1.46% 1.84%
Net investment income (loss) (.25)% .15% .56% .86%(g) .32% .20%
Portfolio turnover rate 48% 46% 61% 24% 87% 124%
Average commission rate (h) $.0562 $.0584 -- -- -- --
</TABLE>
See footnote summary on page 24.
21
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------------------------
MAY 1, 1994
YEAR ENDED OCTOBER 31, TO YEAR ENDED APRIL 30,
------------------------------------------ OCT. 31, ----------------------------
1997 1996 1995 1994(A) 1994(B) 1993(B)
-------------- ------------ ------------ ------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $29.21 $24.78 $21.21 $20.27 $19.68 $18.16
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.31)(c) (.12) (.02) .01 (.07)(c)(d) (.06)(d)
Net realized and unrealized gain
on investments 8.44 5.18 4.01 .93 2.98 3.23
Net increase in net asset value
from operations 8.13 5.06 3.99 .94 2.91 3.17
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- (.01) -0- -0- (.03)
Distributions from net realized gains (1.03) (.63) (.41) -0- (2.32) (1.62)
Total dividends and distributions (1.03) (.63) (.42) -0- (2.32) (1.65)
Net asset value, end of period $36.31 $29.21 $24.78 $21.21 $20.27 $19.68
TOTAL RETURN
Total investment return based on
net asset value (e) 28.64% 20.82% 19.33% 4.64% 14.79% 18.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $3,578,806 $2,498,097 $1,502,020 $751,521 $394,227 $56,704
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.96%(f) 1.99% 2.05% 2.05%(g) 2.10% 2.15%
Expenses, before waivers/reimbursements 1.96%(f) 1.99% 2.05% 2.05%(g) 2.13% 2.52%
Net investment income (loss) (.94)% (.54)% (.15)% .16%(g) (.36)% (.53)%
Portfolio turnover rate 48% 46% 61% 24% 87% 124%
Average commission rate (h) $.0562 $.0584 -- -- -- --
</TABLE>
See footnote summary on page 24.
22
ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------------------
MAY 1, 1994 AUGUST 2,
YEAR ENDED OCTOBER 31, TO 1993(I) TO
-------------------------------------- OCTOBER 31, APRIL 30,
1997 1996 1995 1994(A) 1994
------------ ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $29.22 $24.79 $21.22 $20.28 $21.47
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.31)(c) (.12) (.03) .01 (.02)(d)
Net realized and unrealized gain on
investments 8.45 5.18 4.02 .93 1.15
Net increase in net asset value from
operations 8.14 5.06 3.99 .94 1.13
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- (.01) -0- -0-
Distributions from net realized gains (1.03) (.63) (.41) -0- (2.32)
Total dividends and distributions (1.03) (.63) (.42) -0- (2.32)
Net asset value, end of period $36.33 $29.22 $24.79 $21.22 $20.28
TOTAL RETURN
Total investment return based on
net asset value (e) 28.66% 20.81% 19.32% 4.64% 5.27%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $599,449 $403,478 $226,662 $114,455 $64,030
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.97%(f) 2.00% 2.05% 2.05%(g) 2.10%(g)
Expenses, before waivers/reimbursements 1.97%(f) 2.00% 2.05% 2.05%(g) 2.13%(g)
Net investment income (loss) (.95)% (.55)% (.15)% .16%(g) (.31)%(g)
Portfolio turnover rate 48% 46% 61% 24% 87%
Average commission rate (h) $.0562 $.0584 -- -- --
</TABLE>
See footnote summary on page 24.
23
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ADVISOR CLASS
-------------------------------
OCTOBER 2,
YEAR ENDED 1996(I) TO
OCTOBER 31, OCTOBER 31,
1997 1996
-------------- --------------
Net asset value, beginning of period $34.91 $34.14
INCOME FROM INVESTMENT OPERATIONS
Net investment income (.05)(c) -0-
Net realized and unrealized gain
on investments 10.25 .77
Net increase in net asset value
from operations 10.20 .77
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.03) -0-
Total distributions (1.03) -0-
Net asset value, end of period $44.08 $34.91
TOTAL RETURN
Total investment return based on
net asset value (e) 29.92% 2.26%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $101,205 $946
Ratios to average net assets of:
Expenses, net of waivers/reimbursements .98%(f) 1.26%(g)
Expenses, before waivers/reimbursements .98%(f) 1.26%(g)
Net investment income (.12)% .50%(g)
Portfolio turnover rate 48% 46%
Average commission rate $.0562 $.0584
(a) The Fund changed its fiscal year end from April 30 to October 31.
(b) Prior to July 22, 1993, Equitable Capital Management Corporation
(Equitable Capital) served as investment adviser to the Trust. On July 22,
1993, Alliance Capital Management L.P. acquired the business and substantially
all of the assets of Equitable Capital and became investment adviser for the
Trust.
(c) Based on average shares outstanding.
(d) Net of fee waived and expenses reimbursed by the Adviser.
(e) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(f) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended October 31, 1997, the ratios of expenses net
of waiver/reimbursements and before waiver/reimbursements were 1.25%, 1.95%,
1.95% and .96% for Class A, B, C and Advisor Class shares, respectively.
(g) Annualized.
(h) For fiscal years 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.
(i) Commencement of distribution.
24
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE GROWTH FUND
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF ALLIANCE GROWTH 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 Growth Fund (one of the
portfolios of The Alliance Portfolios, hereafter referred to as the "Fund") at
October 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 October 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
December 12, 1997
25
ALLIANCE GROWTH FUND
_______________________________________________________________________________
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.
26
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
27
ALLIANCE GROWTH 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.
GFAR
