ALLIANCE STRATEGIC BALANCED FUND
SEMI-ANNUAL REPORT
JANUARY 31, 1999
ALLIANCE CAPITAL
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-44.9%
UNITED STATES INVESTMENTS-35.1%
CONSUMER SERVICES-8.1%
BROADCASTING & CABLE-2.6%
Scripps E.W. Co. Cl.A 9,000 $ 398,812
Tele-Communications, Inc. -
Liberty Media Group Cl.A (a) 20,000 1,070,000
------------
1,468,812
ENTERTAINMENT & LEISURE-1.4%
Harley-Davidson, Inc. 15,000 780,000
RETAIL - GENERAL MERCHANDISE-4.1%
Dayton Hudson Corp. 15,000 956,250
Home Depot, Inc. 12,000 724,500
Wal-Mart Stores, Inc. 8,000 688,000
------------
2,368,750
------------
4,617,562
TECHNOLOGY-7.2%
COMPUTER HARDWARE-2.2%
Computer Sciences Corp. 5,000 342,812
Dell Computer Corp. (a) 9,000 900,000
------------
1,242,812
COMPUTER SOFTWARE-2.4%
Microsoft Corp. (a) 8,000 1,400,000
NETWORKING SOFTWARE-1.8%
Cisco Systems, Inc. (a) 9,000 1,004,063
SEMI-CONDUCTOR COMPONENTS-0.8%
Altera Corp. (a) 7,000 440,125
------------
4,087,000
FINANCE-6.8%
BANKING - MONEY CENTER-3.4%
BankAmerica Corp. 14,999 1,003,058
Chase Manhattan Corp. 12,000 923,250
------------
1,926,308
BROKERAGE & MONEY MANAGEMENT-1.2%
Morgan Stanley, Dean Witter and Co. 8,000 694,500
INSURANCE-1.2%
American International Group, Inc. 7,000 720,563
MISCELLANEOUS-1.0%
MBNA Corp. 20,000 558,750
------------
3,900,121
HEALTH CARE-4.9%
BIOTECHNOLOGY-0.3%
Centocor, Inc. (a) 4,000 168,250
DRUGS-3.9%
Algos Pharmaceutical Corp. (a) 1,900 52,250
Bristol-Myers Squibb Co. 8,000 1,025,500
Pfizer, Inc. 2,000 257,250
Schering-Plough Corp. 16,000 872,000
------------
2,207,000
MEDICAL PRODUCTS-0.7%
Medtronic, Inc. 5,000 398,438
------------
2,773,688
CONSUMER STAPLES-3.7%
COSMETICS-0.8%
Gillette Co. 8,000 470,000
RETAIL - FOOD & DRUG-1.7%
Kroger Co. (a) 15,000 952,500
1
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
TOBACCO-1.2%
Philip Morris Cos., Inc. 15,000 $ 705,000
------------
2,127,500
MULTI INDUSTRY COMPANIES-2.0%
Tyco International, Ltd. 12,000 924,750
U.S. Industries, Inc. 10,000 188,750
------------
1,113,500
UTILITIES-1.4%
TELEPHONE UTILITY-1.4%
MCI Worldcom, Inc. (a) 10,000 797,500
ENERGY-1.0%
OIL SERVICES-1.0%
Halliburton Co. 10,000 296,875
Noble Drilling Corp. (a) 20,000 267,500
------------
564,375
Total United States Investments
(cost $13,074,169) 19,981,246
FOREIGN INVESTMENTS-9.8%
CANADA-0.2%
Newcourt Credit Group, Inc. 3,000 96,750
FINLAND-2.3%
Nokia AB OYJ Corp. Series A 9,000 1,314,651
FRANCE-2.0%
Carrefour, SA 400 267,591
Sanofi, SA 2,000 393,315
Seita 4,000 227,350
Total, SA Cl.B 2,500 254,348
------------
1,142,604
GERMANY-0.3%
ProSieben Media AG pfd. 4,000 197,794
JAPAN-0.5%
Honda Motor Co. 7,000 260,678
NETHERLANDS-0.4%
Akzo Nobel NV 6,000 240,082
SPAIN-1.2%
Banco Bilbao Vizcaya, SA 10,000 149,824
Tabacalera, SA Series A 12,000 277,867
Telefonica, SA 6,000 274,525
------------
702,216
SWEDEN-0.4%
Astra AB Series A 12,000 259,587
SWITZERLAND-1.6%
Nestle, SA 150 275,030
Novartis AG 130 243,963
Zurich Allied AG (a) 500 369,886
------------
888,879
UNITED KINGDOM-0.9%
Royal Bank of Scotland Group 9,000 160,110
United News & Media Plc 12,000 109,406
Vodafone Group Plc 12,000 234,019
------------
503,535
Total Foreign Investments
(cost $4,221,570) 5,606,776
Total Common & Preferred Stocks
(cost $17,295,739) 25,588,022
DEBT OBLIGATIONS-40.1%
U.S. GOVERNMENT & AGENCY OBLIGATIONS-33.3%
Federal National Mortgage Association
4.79%, 3/09/99 $1,417 1,410,212
U.S. Treasury Bonds
5.50%, 8/15/28 660 692,069
6.125%, 11/15/27 1,315 1,479,783
2
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. Treasury Notes
4.25%, 11/15/03 $ 550 $ 543,384
5.75%, 8/15/03 1,665 1,740,957
6.25%, 4/30/01 1,900 1,964,429
6.375%, 5/15/99 1,000 1,004,690
6.50%, 8/31/01 7,250 7,572,843
6.50%, 5/31/02 1,010 1,067,600
6.625%, 5/15/07 25 28,133
6.875%, 5/15/06 1,275 1,441,145
------------
18,945,245
CORPORATE DEBT OBLIGATIONS-5.2%
BANKING-1.8%
Chase Credit Card Master Trust
6.00%, 8/15/05 450 460,262
Chase Manhattan Corp.
6.75%, 8/15/08 530 569,035
------------
1,029,297
ELECTRIC & GAS UTILITY-0.8%
Texas Utilities Co.
6.375%, 1/01/08 425 436,694
INDUSTRIAL-1.3%
Time Warner, Inc.
8.375%, 3/15/23 600 737,364
SEMI-CONDUCTOR COMPONENTS-1.3%
Motorola, Inc.
6.50%, 11/15/28 750 770,655
------------
2,974,010
YANKEE BOND-1.6%
St. George Bank, Ltd.
7.15%, 10/15/05 (b) 850 883,634
Total Debt Obligations
(cost $22,514,636) 22,802,889
SHORT-TERM INVESTMENTS-14.4%
Federal Home Loan Mortgage Association
5.025%, 2/22/99 1,200 1,196,483
Student Loan Marketing Corp.
4.62%, 2/01/99 7,000 7,000,000
Total Short-Term Investments
(amortized cost $8,196,483) 8,196,483
TOTAL INVESTMENTS -99.4%
(cost $48,006,858) 56,587,394
Other assets less liabilities-0.6% 323,871
NET ASSETS-100% $ 56,911,265
(a) Non-income producing security.
(b) 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, 1999, these securities amounted to $883,634 representing 1.6% of net assets.
Glossary:
ADR - American Depositary Receipt
3
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $48,006,858) $ 56,587,394
Cash, at value (cost $86,100) 86,091
Interest and dividends receivable 437,072
Foreign taxes receivable 11,000
Receivable for shares of beneficial interest sold 4,016
Total assets 57,125,573
LIABILITIES
Payable for shares of beneficial interest redeemed 48,928
Advisory fee payable 28,556
Distribution fee payable 30,369
Accrued expenses 106,455
Total liabilities 214,308
NET ASSETS $ 56,911,265
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 32
Additional paid-in capital 48,369,206
Distribution in excess of net investment income (438,194)
Accumulated net realized gain on investments and foreign
currency transactions 394,583
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 8,585,638
$ 56,911,265
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($29,017,166/1,478,585 shares of beneficial interest
issued and outstanding) $19.62
Sales charge--4.25% of public offering price .87
Maximum offering price $20.49
CLASS B SHARES
Net asset value and offering price per share
($23,127,918/1,455,998 shares of beneficial interest
issued and outstanding) $15.88
CLASS C SHARES
Net asset value and offering price per share
($4,766,181/300,073 shares of beneficial interest
issued and outstanding) $15.88
See notes to financial statements.
4
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 887,843
Dividends (net of foreign taxes withheld
of $2,120) 88,027 $ 975,870
EXPENSES
Advisory fee 196,568
Distribution fee - Class A 39,429
Distribution fee - Class B 113,456
Distribution fee - Class C 17,205
Transfer agency 72,059
Trustees' fees 38,559
Custodian 33,969
Registration 9,735
Printing 2,170
Audit and legal 1,905
Miscellaneous 340
Total expenses 525,395
Less: expenses waived and assumed by adviser
(see Note B) (63,867)
Less: expense offset arrangement (see Note B) (3,138)
Net expenses 458,390
Net investment income 517,480
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 2,516,521
Net realized loss on foreign currency
transactions (34,855)
Net change in unrealized appreciation of:
Investments 2,025,583
Foreign currency denominated assets and
liabilities 27,436
Net gain on investments and foreign currency
transactions 4,534,685
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,052,165
See notes to financial statements.
5
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 517,480 $ 878,462
Net realized gain on investments and foreign
currency transactions 2,481,666 4,284,224
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 2,053,019 (171,575)
Net increase in net assets from operations 5,052,165 4,991,111
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (695,177) (483,384)
Class B (459,462) (516,031)
Class C (68,670) (57,310)
Advisor Class -0- (9)
Net realized gain on investments
Class A (2,036,053) (1,572,349)
Class B (2,035,178) (2,315,766)
Class C (329,731) (257,187)
Advisor Class -0- (26)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 4,300,715 1,999,566
Total increase 3,728,609 1,788,615
NET ASSETS
Beginning of year 53,182,656 51,394,041
End of period (including undistributed net
investment income of $267,635 for the year
ended July 31, 1998) $ 56,911,265 $ 53,182,656
See notes to financial statements.
6
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 (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 offered Class A, Class B, Class C and Advisor Class shares. Class A
shares were 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 may be subject to a contingent
deferred sales charge of 1%. Class B shares were sold with a contingent
deferred sales charge which declines from 4% to zero depending on the period of
time the shares were 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 automatically convert to Class A
shares eight years after the end of the calendar month of purchase. Class C
shares were subject to a contingent deferred sales charge of 1% on redemptions
made within the first year after purchase. Advisor Class shares were sold
without an initial or contingent deferred sales charge and were not subject to
ongoing distribution expenses. Advisor Class shares were 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 voting 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. 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 Trustees.
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 market 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 prices 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 foreign denominated dividends and 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.
7
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 Advisor 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 dividends 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 1% 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, 1999, such reimbursement amounted to $63,867.
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 $47,784 for the six months ended January 31, 1999.
In addition, for the six months ended January 31, 1999, the Fund's expenses
were reduced by $3,138 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 $459 from the sales of Class A
shares and $7,326 and $438 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class B and Class C shares, respectively, for
the six months ended January 31, 1999.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 1999 amounted to $22,852, none of which was paid to Donaldson,
Lufkin & Jenrette Securities Corp., an affiliate of the Adviser.
Accrued expenses includes $22,367 owed to a Trustee and a former Trustee under
the Trust's deferred compensation plan.
8
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
NOTE C: DISTRIBUTION PLANS
The Trust has adopted a plan of distribution 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 1% of the Fund's average daily net assets attributable to Class A
shares and 1% of the average daily net assets attributable to both Class B and
Class C shares. The fees are accrued daily and paid monthly. The Trustees
currently limit payments under the Class A plan to .30 of 1% of the Fund's
average daily net assets attributable to Class A shares. The Plans provide that
the Distributor will use such payments in their entirety for distribution
assistance and promotional activities.
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 Plans 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, 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.
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 $12,961,286 and $20,235,654,
respectively, for the six months ended January 31, 1999. There were purchases
of $16,336,500 and sales of $10,661,990 of U.S. government and government
agency obligations for the six months ended January 31, 1999.
At January 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes. Gross
unrealized appreciation of investments was $9,089,754 and gross unrealized
depreciation of investments was $509,218 resulting in net unrealized
appreciation of $8,580,536, excluding foreign currency transactions.
The Fund incurred and elected to defer post October currency losses of $30,518
for the year ended July 31, 1998. To the extent that any post October losses
are used to offset future capital gains, it is probable that these gains will
not be distributed to shareholders.
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.
At January 31, 1999, the Fund had no outstanding forward exchange currency
contracts.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
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. The Fund's activities in domestic futures contracts are
conducted through regulated exchanges which do not result in counterparty
credit risk.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains with its custodian 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, 1999, the Fund had no outstanding futures contracts.
NOTE E: SHARES OF BENEFICIAL INTEREST
There are 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
JANUARY 31, 1999 JULY 31, JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 22,715 106,566 $ 423,572 $ 2,050,647
Shares issued in
reinvestment of
dividends and
distributions 136,166 107,795 2,562,208 1,920,917
Shares converted
from Class B 109,697 275,088 2,118,996 5,210,668
Shares redeemed (102,949) (203,105) (1,983,446) (3,866,878)
Net increase 165,629 286,344 $ 3,121,330 $ 5,315,354
CLASS B
Shares sold 64,159 304,735 $ 1,015,560 $ 4,808,290
Shares issued in
reinvestment of
dividends and
distributions 150,220 177,592 2,297,278 2,614,182
Shares converted
to Class A (133,906) (332,736) (2,118,996) (5,210,668)
Shares redeemed (103,401) (360,569) (1,617,296) (5,714,963)
Net decrease (22,928) (210,978) $ (423,454) $ (3,503,159)
CLASS C
Shares sold 98,124 75,156 $ 1,537,769 $ 1,171,128
Shares issued in
reinvestment of
dividends and
distributions 24,207 20,673 370,587 304,309
Shares redeemed (19,274) (82,325) (305,151) (1,288,398)
Net increase 103,057 13,504 $ 1,603,205 $ 187,039
10
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
ADVISOR CLASS
Shares sold -0- 15 $ -0- $ 300
Shares issued in
reinvestment of
dividends and
distributions -0- 2 -0- 32
Shares redeemed (19) -0- (366) -0-
Net increase (decrease) (19) 17 $ (366) $ 332
NOTE F: SUBSEQUENT EVENT
On February 1, 1999 all of the Fund's assets were acquired by Alliance Balanced
Shares, Inc. (the "Balanced Fund") pursuant to a plan of reorganization
approved by the Fund's shareholders on December 18, 1998. The acquisition was
accomplished by a tax-free exchange of 2,394,940 shares of the Balanced Fund
for 3,232,951 shares of the Fund on February 1, 1999. The aggregate net assets
of the Fund and the Balanced Fund immediately before the acquisition were
$56,818,236 and $281,968,797, respectively. Immediately after the acquisition
the combined net assets of the Balanced Fund amounted to $338,787,033.
NOTE G: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide for short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the facility during the six months ended January 31, 1999.
11
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
1999 ------------------------------------------------- JULY 31, APRIL 30,
(UNAUDITED) 1998 1997 1996 1995 1994(A) 1994
----------- ----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.76 $19.79 $18.48 $17.98 $16.26 $16.46 $16.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .23(c) .41(c) .47(c) .35(c) .34 .07 .16
Net realized and unrealized gain (loss)
on investment transactions 1.64 1.46 3.56 1.08 1.64 (.27) .74
Net increase (decrease) in net asset
value from operations 1.87 1.87 4.03 1.43 1.98 (.20) .90
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.52) (.45) (.39) (.32) (.22) -0- (.24)
Distributions from net realized gains (1.49) (1.45) (2.33) (.61) (.04) -0- (1.17)
Total dividends and distributions (2.01) (1.90) (2.72) (.93) (.26) -0- (1.41)
Net asset value, end of period $19.62 $19.76 $19.79 $18.48 $17.98 $16.26 $16.46
TOTAL RETURN
Total investment return based on net
asset value (d) 10.07% 10.50% 23.90% 8.05% 12.40% (1.22)% 5.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $29,017 $25,949 $20,312 $18,329 $10,952 $9,640 $9,822
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 1.41%(e)(f) 1.42%(e) 1.41%(e) 1.40% 1.40% 1.40%(f) 1.40%
Expenses, before waivers/
reimbursements 1.64%(f) 1.95% 2.06% 1.76% 1.81% 1.94%(f) 1.70%
Net investment income (b) 2.32%(f) 2.12% 2.50% 1.78% 2.07% 1.63%(f) 1.67%
Portfolio turnover rate 66% 94% 170% 173% 172% 21% 139%
</TABLE>
See footnote summary on page 15.
12
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
1999 ------------------------------------------------- JULY 31, APRIL 30,
(UNAUDITED) 1998 1997 1996 1995 1994(A) 1994
----------- ----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.25 $16.59 $15.89 $15.56 $14.10 $14.30 $14.92
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .13(c) .22(c) .28(c) .16(c) .22 .03 .06
Net realized and unrealized gain (loss)
on investment transactions 1.33 1.21 3.02 .98 1.40 (.23) .63
Net increase (decrease) in net asset
value from operations 1.46 1.43 3.30 1.14 1.62 (.20) .69
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.34) (.32) (.27) (.20) (.12) -0- (.14)
Distributions from net realized gains (1.49) (1.45) (2.33) (.61) (.04) -0- (1.17)
Total dividends and distributions (1.83) (1.77) (2.60) (.81) (.16) -0- (1.31)
Net asset value, end of period $15.88 $16.25 $16.59 $15.89 $15.56 $14.10 $14.30
TOTAL RETURN
Total investment return based on net
asset value (d) 9.66% 9.78% 23.01% 7.41% 11.63% (1.40)% 4.29%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $23,128 $24,032 $28,037 $28,492 $37,301 $43,578 $43,616
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 2.11%(e)(f) 2.12%(e) 2.12%(e) 2.10% 2.10% 2.10%(f) 2.10%
Expenses, before waivers/
reimbursements 2.37%(f) 2.68% 2.76% 2.47% 2.49% 2.64%(f) 2.42%
Net investment income (b) 1.63%(f) 1.39% 1.78% .99% 1.38% .92%(f) .93%
Portfolio turnover rate 66% 94% 170% 173% 172% 21% 139%
</TABLE>
See footnote summary on page 15.
13
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------------------------------
SIX MONTHS MAY 1, AUGUST 2,
ENDED 1994 1993(G)
JANUARY 31, YEAR ENDED JULY 31, TO TO
1999 ------------------------------------------------- JULY 31, APRIL 30,
(UNAUDITED) 1998 1997 1996 1995 1994(A) 1994
----------- ----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.25 $16.59 $15.89 $15.57 $14.11 $14.31 $15.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .13(c) .22(c) .28(c) .14(c) .16 .03 .15
Net realized and unrealized gain (loss)
on investment transactions 1.33 1.21 3.02 .99 1.46 (.23) (.17)
Net increase (decrease) in net asset
value from operations 1.46 1.43 3.30 1.13 1.62 (.20) (.02)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.34) (.32) (.27) (.20) (.12) -0- (.14)
Distributions from net realized gains (1.49) (1.45) (2.33) (.61) (.04) -0- (1.17)
Total dividends and distributions (1.83) (1.77) (2.60) (.81) (.16) -0- (1.31)
Net asset value, end of period $15.88 $16.25 $16.59 $15.89 $15.57 $14.11 $14.31
TOTAL RETURN
Total investment return based on net
asset value (d) 9.66% 9.78% 23.01% 7.34% 11.62% (1.40)% .45%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $4,766 $3,201 $3,045 $3,157 $4,113 $4,317 $4,289
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements 2.11%(e)(f) 2.12%(e) 2.12%(e) 2.10% 2.10% 2.10%(f) 2.10%(f)
Expenses, before waivers/
reimbursements 2.49%(f) 2.68% 2.76% 2.48% 2.50% 2.64%(f) 2.07%(f)
Net investment income (b) 1.62%(f) 1.40% 1.78% .99% 1.38% .93%(f) .69%(f)
Portfolio turnover rate 66% 94% 170% 173% 172% 21% 139%
</TABLE>
See footnote summary on page 15.
14
ALLIANCE STRATEGIC BALANCED FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ADVISOR CLASS
--------------------------
OCTOBER 2,
1996(G)
YEAR ENDED TO
JULY 31, JULY 31,
1998 1997
----------- -----------
Net asset value, beginning of period $19.79 $19.49
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .47 .42
Net realized and unrealized gain
(loss) on investment transactions 1.36 (.12)
Net increase in net asset
value from operations 1.83 .30
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.50) -0-
Distributions from net realized gains (1.45) -0-
Total dividends and distributions (1.95) -0-
Net asset value, end of period $19.67 $19.79
TOTAL RETURN
Total investment return based on net
asset value (d) 10.32% 1.54%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $383 $50
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements (e) 1.12% 1.10%(f)
Expenses, before waivers/
reimbursements 1.12% 2.35%(f)
Net investment income (b) 2.39% 3.40%(f)
Portfolio turnover rate 94% 170%
(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 return calculated for a period of less than one year
is not annualized.
(e) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the periods shown below, the net expense ratios were as
follows:
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, --------------------
1999 1998 1997
-------- -------- --------
Class A 1.40% 1.40% 1.40%
Class B 2.10% 2.10% 2.10%
Class C 2.10% 2.10% 2.10%
Advisor Class -- 1.10% 1.10%
(f) Annualized.
(g) Commencement of distribution.
15
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, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
NICHOLAS D.P. CARN, 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
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, NY 10036
(1) Member of the Audit Committee.
16
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance 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 U.S. Government Fund
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 Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
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
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Trust Portfolio
Treasury Portfolio
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
17
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
