ALLIANCE GROWTH FUND
ANNUAL REPORT
OCTOBER 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GROWTH FUND
_______________________________________________________________________________
December 24, 1998
Dear Shareholder:
We are pleased to provide a market commentary and the performance for the
Alliance Growth Fund (the "Fund") for the annual reporting period ended October
31, 1998. The following table also provides performance data for the Standard &
Poor's 500 Stock Index (the "S&P 500"), a measure of the broad U.S. stock
market, and the Russell 1000 Index, which tracks U.S. large-cap stocks, for the
six- and 12-month periods ended October 31, 1998.
INVESTMENT RESULTS*
Periods Ended October 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- ---------
ALLIANCE GROWTH FUND
Class A -2.88% 14.56%
Class B -3.22% 13.78%
Class C -3.22% 13.76%
S&P 500 -0.40% 22.01%
RUSSELL 1000 INDEX -1.82% 19.71%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF OCTOBER 31, 1998. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. RETURNS FOR
THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE S&P 500 IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES. THE RUSSELL 1000
INDEX CONSISTS OF 1000 OF THE LARGEST STOCKS REPRESENTING APPROXIMATELY 87% OF
THE U.S. EQUITY MARKET. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX.
INVESTMENT ENVIRONMENT
Alliance Growth Fund's October 1998 fiscal year showed another solid gain, but
one marked with dramatic volatility in its final quarter. After advancing
strongly into July, the market dropped about twenty percent by early October.
By the end of October, the market was well into a remarkable advance, which
would carry it to new all time highs in November. For the fiscal year, the
Fund's Class A shares recorded a gain of 14.56% compared to a gain of 22.01%
for the S&P 500.
For much of the year stocks moved steadily higher, responding to moderate
growth and low interest rates, and seemingly ignoring the severe economic
problems which Asia had been experiencing since the summer of 1997. After a
relatively modest correction in August of 1998, the U. S. market declined
precipitously beginning in August when Russia declared a moratorium on
repayment of foreign debt. The vulnerability of speculative investors, such as
hedge funds, to these events proved to be alarmingly great. When it became
known that funds such as Long Term Capital Management ("LTCM") had lost most of
their equity capital, and that banks and brokers had extended shockingly large
amounts of credit to these funds, the market decline accelerated. Scare stories
of an imminent credit crunch sent financial stocks sharply lower. Sentiment
quickly turned bearish with some pundits forecasting recession and even a
prolonged period of deflation or depression. The Federal Reserve then stepped
in and convinced the lenders to extend additional credit to LTCM in hopes of
their being able to buy time for an orderly liquidation over many months rather
than a forced immediate liquidation. This prevented a forced sale of the
portfolio, which could have greatly exacerbated already extreme market
conditions.
To some, these events signaled the death of optimism about the ability of the
United States and Europe to continue to prosper while Asia struggles with
economic disarray. We took a more positive view. We saw elements of a financial
panic in this situation, and did not believe that these events would
necessarily presage recession or worse for the United States. The stock market
is an acknowledged forecaster of recessions. Unfortunately, the stock market
forecasts more recessions than actually occur. In other words, market declines
are not necessarily followed by recession.
PERFORMANCE REVIEW
With our heavy emphasis on the financial service and technology sectors, the
Fund declined more than the averages on the way down. With the market down 15%
to 20%, we took steps to position the Fund even more aggressively, especially
in the area of technology and communications. Over the past 25 years, treating
extreme market weakness as an opportunity has always turned out to be the right
thing to do. To do otherwise now would be to accept the notion that we are
headed
1
ALLIANCE GROWTH FUND
_______________________________________________________________________________
into a deflationary environment more like the 1930s than like anything we have
experienced in the post-war period. We do not think that is the correct
analysis. Since the market bottom in early October 1998, the Fund has performed
much better than the averages and by the end of November it had recovered
nearly all of its loss relative to the S&P 500.
INVESTMENT OUTLOOK
With the economy still growing, inflation low and the Federal Reserve now
actively easing we are cautiously optimistic about the outlook for the market
in the year ahead. In view of the market's rapid and full recovery from its
recent losses we are now inclined to be somewhat less aggressive. However we
continue to emphasize most strongly investments in technology and
communications. Dramatic changes in technology along with deregulation indicate
to us that this sector will continue to be the most attractive place to look
for strong earnings growth in the year ahead.
Thank you for your continued interest in the Alliance Growth Fund. We look
forward to reporting to you on market activity and your Fund's investment
results in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Tyler J. Smith
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE 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
_______________________________________________________________________________
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF OCTOBER 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 14.56% 9.69%
Five Years 17.39% 16.37%
Since Inception* 22.17% 21.53%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 13.78% 9.78%
Five Years 16.58% 16.58%
Ten Years** 18.97% 18.97%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 13.76% 12.76%
Five Years 16.58% 16.58%
Since Inception* 17.43% 17.43%
SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END (SEPTEMBER 30, 1998)
CLASS A CLASS B CLASS C
--------- --------- ---------
1 Year -2.45% -2.58% 0.22%
5 Years 14.29% 14.49% 14.49%
10 Years n/a 17.59% n/a
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) 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; 8/23/87 Class B; 8/2/93 Class C.
** Assumes conversion of Class B shares into Class A shares after eight years.
n/a: not applicable.
3
ALLIANCE GROWTH FUND
_______________________________________________________________________________
ALLIANCE GROWTH FUND
GROWTH OF A $10,000 INVESTMENT
10/31/88 TO 10/31/98
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
GROWTH FUND CLASS B: $56,815
S&P 500: $51,737
RUSSELL 1000 STOCK INDEX: $50,739
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 10/31/98
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Growth Fund Class B shares (from 10/31/88 to 10/31/98) 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
Russell 1000 Stock Index
Standard &Poor's 500 Stock Index
4
TEN LARGEST HOLDINGS*
OCTOBER 31, 1998 ALLIANCE GROWTH FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
MCI WorldCom, Inc. $ 482,657,259 7.9%
Mannesmann AG (Common and ADR) 222,694,499 3.6
International Business Machines Corp. 220,132,812 3.6
American International Group, Inc. 206,522,292 3.4
Cisco Systems, Inc. 203,566,500 3.3
Citigroup, Inc. 198,641,353 3.2
TCI Ventures Group Series A 162,300,066 2.6
MBNA Corp. 157,858,782 2.6
Networks Associates, Inc. 156,077,500 2.6
Texas Instruments, Inc. 154,177,513 2.5
$2,164,628,576 35.3%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED OCTOBER 31, 1998
_______________________________________________________________________________
SHARES
PURCHASES BOUGHT HOLDINGS 10/31/98
- -------------------------------------------------------------------------------
Associates First Capital Corp. Cl.A 772,000 772,000
CBS Corp. 3,331,700 3,881,700
Global Telesystems Group, Inc. 2,226,700 2,226,700
International Business Machines Corp. 1,233,000 1,483,000
Loral Space & Communications 4,595,000 5,115,000
Lucent Technologies, Inc. 900,000 900,000
Networks Associates, Inc. 2,991,400 3,741,400
Philips Electronics NV 757,000 757,000
Sterling Commerce, Inc. 1,770,500 3,799,544
Tandy Corp. 1,570,900 1,570,900
SALES SOLD HOLDINGS 10/31/98
- -------------------------------------------------------------------------------
BankAmerica Corp. 916,000 736,000
Cisco Systems, Inc. 1,213,000 3,261,000
DSC Communications Corp. 3,252,400 -0-
MCI Communications 2,029,700 -0-
Merck & Co., Inc. 300,000 826,200
Nokia Corp. (ADR) 750,000 134,800
Philip Morris Cos., Inc. 2,115,000 1,808,400
Tellabs, Inc. 515,000 250,000
Texas Instruments, Inc. 1,260,000 2,475,000
3Com Corp. 2,226,000 227,700
* Adjusted for market value of call options written.
5
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998 ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-97.7%
TECHNOLOGY-41.8%
BUSINESS SERVICES-0.1%
Reuters Group Plc (ADR) (a) 62,280 $ 3,775,725
COMMUNICATION EQUIPMENT-2.6%
Global Telesystems Group, Inc. (b) 2,226,700 89,207,169
Lucent Technologies, Inc. (c) 900,000 72,168,750
--------------
161,375,919
COMPUTER HARDWARE-4.0%
Compaq Computer Corp. 800,000 25,300,000
International Business Machines Corp. 1,483,000 220,132,813
--------------
245,432,813
COMPUTER SOFTWARE & SERVICES-7.0%
Ceridian Corp. (b) 2,209,800 126,787,275
First Data Corp. 300,000 7,950,000
Ingram Micro, Inc. Cl.A (b)(c) 317,500 14,446,250
Microsoft Corp. (b) 200,000 21,175,000
Novell, Inc. (b) 750,000 11,156,250
Sterling Commerce, Inc. (b) 3,799,544 133,933,926
Sterling Software, Inc. (b) 4,301,000 112,632,437
--------------
428,081,138
ELECTRONICS-4.8%
3Com Corp. (b)(c) 227,700 8,211,431
EMC Corp. (c) 193,000 12,424,375
Philips Electronics NV 757,000 41,540,375
SCI Systems, Inc. (b)(c) 1,818,800 71,842,600
Texas Instruments, Inc. (c) 2,475,000 158,245,313
--------------
292,264,094
NETWORKING PRODUCTS-2.6%
Networks Associates, Inc. (b)(c) 3,741,400 159,009,500
NETWORKING SOFTWARE-3.4%
Cisco Systems, Inc. (c) 3,261,000 205,443,000
SEMI-CONDUCTOR COMPONENTS-1.1%
Altera Corp. (b) 398,759 16,598,343
Intel Corp. (c) 600,000 53,512,500
--------------
70,110,843
TELECOMMUNICATIONS-14.2%
ADC Telecommunications, Inc. (b) 247,500 5,692,500
Colt Telecom Group Plc (ADR) (a)(b) 1,030,000 52,916,250
Intermedia Communications,
Inc. pfd. Series D 464,600 12,602,275
Loral Space & Communications (b)(c) 5,115,000 96,865,313
MCI WorldCom, Inc. (b) 8,735,878 482,657,259
Millicom International Cellular, SA (b)(d) 1,130,800 37,740,450
Nextel Communications, Inc. Cl.A (b)(c) 2,763,600 50,090,250
Nextel Strypes Trust 360,000 6,255,000
Nokia Corp. (ADR) (e) 134,800 12,544,825
Pacific Gateway Exchange, Inc. (c) 349,400 10,088,925
Telecomunicacoes Brasileiras,
SA (ADR) (b)(c)(f) 1,184,000 89,910,000
Tellabs, Inc. (b)(c) 250,000 13,750,000
--------------
871,113,047
MISCELLANEOUS-2.0%
Sanmina Corp. (b) 969,800 39,761,800
Solectron Corp. (b)(c) 1,475,000 84,443,750
--------------
124,205,550
--------------
2,560,811,629
FINANCIAL SERVICES-22.1%
BANKING & CREDIT-7.1%
American Express Co. 455,000 40,210,625
Automatic Common Exchange
Security Trust II 337,900 5,596,469
Chase Manhattan Corp. 1,906,604 108,318,940
First Union Corp. 1,138,000 66,004,000
GreenPoint Financial Corp. 151,800 4,980,937
MBNA Corp. 6,919,837 157,858,782
6
ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
Morgan Stanley, Dean Witter & Co. 530,400 $ 34,343,400
Providian Financial Corp. (c) 188,000 14,922,500
--------------
432,235,653
BANKING - MONEY CENTER-1.1%
Bank Tokyo-Mitsubishi, Ltd. 2,827,500 27,568,125
BankAmerica Corp. 736,000 42,274,000
--------------
69,842,125
BANKING - REGIONAL-1.3%
Newcourt Credit Group, Inc. 2,346,300 77,134,612
INSURANCE-5.6%
20th Century Industries, Inc. 913,300 22,432,931
Acceptance Insurance Co. (b) 391,800 7,689,075
American Bankers Insurance Group, Inc. 941,600 42,077,750
American International Group, Inc. (c) 2,429,587 207,122,292
PMI Group, Inc. 475,500 23,983,031
Progressive Corp. 283,200 41,701,200
--------------
345,006,279
REAL ESTATE-2.7%
Arden Realty Group, Inc. 502,700 10,870,887
Entertainment Properties Trust 289,700 4,816,262
JP Realty, Inc. 755,300 15,814,094
Koger Equity, Inc. 1,762,571 29,743,386
Macerich Co. 1,051,400 28,979,212
Prentiss Properties Trust 157,500 3,248,438
Simon DeBartolo Group, Inc. 216,500 6,481,469
Spieker Properties, Inc. 522,200 18,015,900
Starwood Hotels & Resorts 220,879 6,253,637
Storage USA, Inc. 383,700 11,678,869
Summit Properties, Inc. 716,700 12,631,837
Sun Communities, Inc. 520,000 17,387,500
--------------
165,921,491
MISCELLANEOUS-4.3%
Associates First Capital Corp. C1.A 772,000 54,426,000
Citigroup, Inc. 4,220,799 198,641,353
Household International, Inc. 307,500 11,242,969
--------------
264,310,322
--------------
1,354,450,482
BUSINESS SERVICES-9.9%
PRINTING, PUBLISHING & BROADCASTING-9.9%
CBS Corp. (c) 3,881,700 108,444,994
Comcast Corp. Cl.A 516,500 25,502,187
Cox Communications, Inc. Cl.A (b) 161,300 8,851,338
MediaOne Group, Inc. 400,000 16,925,000
News Corp., Ltd. (ADR) (g) 843,400 23,035,362
TCI Group Series A (b) 592,865 24,974,438
TCI Ventures Group Series A (b)(c) 8,728,970 162,577,066
Tele-Communications, Inc. -
Liberty Media Group Cl.A (b) 2,414,693 91,909,252
Time Warner, Inc. 243,000 22,553,438
Viacom, Inc. Cl.B (b)(c) 2,072,000 124,061,000
--------------
608,834,075
CONSUMER NONCYCLICALS-6.9%
BEVERAGES-0.1%
Coca-Cola Enterprises, Inc. 200,000 7,212,500
DRUGS-3.3%
Abbott Laboratories 166,600 7,819,787
Astra AB, Series A (h) 260,000 4,213,426
Boston Scientific Corp. 580,000 31,573,750
Gensia, Inc. pfd. (i)(j) 68,500 1,617,354
Merck & Co., Inc. 826,200 111,743,550
Schering-Plough Corp. 436,000 44,853,500
--------------
201,821,367
HOSPITAL SUPPLIES & SERVICES-0.3%
Medtronic, Inc. (c) 312,800 20,332,000
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
TOBACCO-3.2%
Loews Corp. 1,099,000 $103,237,312
Philip Morris Cos., Inc. (c) 1,808,400 92,454,450
-------------
195,691,762
-------------
425,057,629
CONSUMER CYCLICALS-5.0%
AIRLINES-0.8%
AMR Corp. (b) 200,000 13,400,000
Delta Air Lines, Inc. 358,400 37,833,600
-------------
51,233,600
DIVERSIFIED-0.3%
Republic Industries, Inc. (b) 1,257,600 20,200,200
RETAILING - GENERAL-3.9%
Home Depot, Inc. 2,515,000 109,402,500
Office Depot, Inc. (b) 250,000 6,250,000
Tandy Corp. (c) 1,570,900 77,857,731
The Limited, Inc. 871,425 22,330,266
Wal-Mart Stores, Inc. 299,000 20,631,000
-------------
236,471,497
-------------
307,905,297
CAPITAL GOODS-3.7%
MACHINERY-3.7%
Mannesmann AG (k) 1,493,000 146,911,561
ADR (l) 770,000 75,782,938
-------------
222,694,499
ENERGY-2.2%
OIL & GAS SERVICES-2.2%
BJ Services Co. (b) 270,200 5,522,213
Gulf Canada Resources, Ltd. (f) 13,520,900 50,703,375
Halliburton Co. 2,147,800 77,186,562
Transocean Offshore, Inc. 82,100 3,032,569
-------------
136,444,719
HEALTH CARE-2.0%
DRUGS-2.0%
Bristol-Myers Squibb Co. 1,107,000 122,392,687
MULTI INDUSTRY COMPANIES-1.9%
Tyco International, Ltd. (c) 1,904,112 117,935,937
CONSUMER SERVICES-1.8%
BUSINESS SERVICES-1.3%
Cendant Corp. (b) 6,602,000 75,510,375
ENTERTAINMENT & LEISURE-0.5%
Carnival Corp. Cl.A 625,800 20,260,275
Royal Caribbean Cruises, Ltd. 441,800 12,315,175
-------------
32,575,450
-------------
108,085,825
UTILITY-0.4%
TELEPHONE-0.4%
AT&T Corp. 380,196 23,667,201
Telephone and Data Systems, Inc. 62,400 2,488,200
-------------
26,155,401
Total Common & Preferred Stocks
(cost $4,547,820,233) 5,990,768,180
LONG-TERM DEBT SECURITIES-0.6%
COMMUNICATION EQUIPMENT-0.5%
Global Telesystems Group, Inc.
5.75%, 7/01/10 $37,210 29,861,025
HEALTHCARE-0.1%
Centocor, Inc.
4.75%, 2/15/05 (j) 7,960 8,467,450
Total Long-Term Debt Securities
(cost $34,480,354) 38,328,475
SHORT-TERM INVESTMENTS-3.2%
SHORT-TERM DEBT SECURITIES-3.2%
Federal Home Loan Bank
5.40%, 11/02/98 50,000 49,992,500
Federal Home Loan Mortgage Corp.
4.78%, 11/17/98 9,000 8,980,880
8
ALLIANCE GROWTH FUND
_______________________________________________________________________________
CONTRACTS (M)
OR PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- --------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.
4.79%, 11/10/98 $25,000 $ 24,970,063
Federal Home Loan Mortgage Corp.
4.80%, 11/16/98 25,600 25,548,800
Student Loan Marketing Assn.
5.42%, 11/02/98 84,100 84,087,338
--------------
193,579,581
TIME DEPOSIT-0.0%
State Street Cayman Islands
4.75%, 11/02/98 1,776 1,776,000
Total Short-term investments
(cost $195,355,581) 195,355,581
TOTAL INVESTMENTS-101.5%
(cost $4,777,656,168) 6,224,452,236
OUTSTANDING CALL OPTIONS WRITTEN-(B)(0.5%)
3Com Corp.
expiring December 1998 @ $31.75 (1,500) (846,000)
American International Group, Inc.
expiring December 1998 @ $84.25 (1,000) (600,000)
CBS Corp.
expiring December 1998 @ $25.25 (2,500) (950,000)
Cisco Systems, Inc.
expiring November 1998
@ $59.13 (2,250) (909,000)
@ $63.00 (3,000) (579,000)
@ $66.00 (1,500) (369,000)
@ $69.63 (1,500) (19,500)
EMC Corp.
expiring December 1998 @ $62.13 (1,000) (632,000)
Ingram Micro, Inc.
expiring January 1999 @ $46.50 (2,000) (806,000)
Intel Corp.
expiring January 1999 @ $90.06 (2,000) (1,020,000)
Loral Space & Communications
expiring December 1998 @ $15.00 (2,500) (1,202,500)
Lucent Technologies, Inc.
expiring December 1998 @ $79.13 (2,000) (1,214,000)
expiring January 1999 @ $81.06 (1,000) (569,000)
Medtronic, Inc.
expiring January 1999 @ $62.38 (1,000) (566,000)
Networks Associates, Inc.
expiring November 1998 @ $39.25 (2,000) (986,000)
expiring December 1998 @ $38.75 (2,000) (1,182,000)
expiring January 1999 @ $43.00 (2,000) (764,000)
Nextel Communications, Inc.
expiring December 1998 @ $19.38 (2,500) (355,000)
Pacific Gateway Exchange, Inc.
expiring January 1999 @ $30.13 (1,600) (568,000)
Philip Morris Cos., Inc.
expiring December 1998 @ $48.75 (1,000) (359,960)
Providian Financial Corp.
expiring November 1998 @ $12.91 (1,000) (871,000)
SCI Systems, Inc.
expiring January 1999 @ $39.75 (2,500) (1,175,000)
Solectron Corp.
expiring December 1998
@ $54.63 (1,000) (572,000)
@ $58.25 (2,500) (1,027,500)
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
COMPANY CONTRACTS (M) VALUE
- --------------------------------------------------------------------------
Tandy Corp.
expiring December 1998
@ $44.94 (2,000) $(1,353,680)
@ $48.25 (2,000) (920,860)
expiring January 1999 @ $47.00 (1,500) (741,000)
TCI Ventures Group
Series A
expiring November 1998
@ $17.75 (1,500) (201,000)
@ $18.44 (2,000) (76,000)
Telecomunicacoes Brasileiras, SA
expiring November 1998
@ $73.37 (1,171) (721,336)
@ $73.62 (1,000) (676,000)
@ $78.13 (700) (291,900)
expiring January 1999 @ $74.50 (1,000) (808,000)
Tellabs, Inc.
expiring November 1998 @ $43.88 (1,500) (1,689,000)
expiring December 1998 @ $54.25 (1,000) (560,000)
Texas Instruments, Inc.
expiring December 1998
@ $58.75 (2,000) (1,489,720)
@ $59.75 (2,000) (1,320,320)
@ $60.63 (2,000) (1,257,760)
Tyco International, Ltd.
expiring December 1998 @ $58.63 (2,000) (1,218,000)
Viacom, Inc.
expiring December 1998
@ $58.13 (2,000) (720,000)
@ $63.38 (1,000) (201,000)
Total Outstanding Call Options Written
(premiums received $28,740,532) (32,388,036)
TOTAL INVESTMENTS NET OF OUTSTANDING CALL
OPTIONS WRITTEN -101.0%
(cost $4,748,915,636) 6,192,064,200
Other assets less liabilities-(1.0%) (59,781,163)
NET ASSETS-100% $6,132,283,037
(a) Country of origin--United Kingdom.
(b) Non-income producing security.
(c) Security on which options are written (shares subject to call have an
aggregate market value of $371,612,281).
(d) Country of origin-Luxembourg.
(e) Country of origin-Finland
(f) Country of origin-Brazil
(g) Country of origin-Australia
(h) Swedish holding.
(i) Country of origin--Canada.
(j) 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, 1998,
these securities amounted to $10,084,804 or 0.2% of net assets.
(k) German holding.
(l) Country of origin--Germany.
(m) One contract relates to 100 shares.
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
10
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998 ALLIANCE GROWTH FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $4,777,656,168) $6,224,452,236
Cash 120,799
Receivable for investment securities sold 71,438,236
Receivable for shares of beneficial interest sold 13,959,570
Dividends and interest receivable 5,020,371
Other assets 341,028
Total assets 6,315,332,240
LIABILITIES
Payable for investment securities purchased 131,274,976
Outstanding call options written, at value
(premiums received $28,740,532) 32,388,036
Payable for shares of beneficial interest redeemed 12,314,439
Advisory fee payable 3,299,673
Distribution fee payable 834,353
Accrued expenses 2,937,726
Total liabilities 183,049,203
NET ASSETS $6,132,283,037
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 1,548
Additional paid-in capital 4,141,396,771
Accumulated net investment loss (56,767)
Accumulated net realized gain on investment transactions 547,860,680
Net unrealized appreciation of investments, options and
foreign currency denominated assets and liabilities 1,443,080,805
$6,132,283,037
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($1,008,093,483/
21,370,522 shares of beneficial interest issued and outstanding) $47.17
Sales charge--4.25% of public offering price 2.09
Maximum offering price $49.26
CLASS B SHARES
Net asset value and offering price per share ($4,230,756,113/
110,889,404 shares of beneficial interest issued and outstanding) $38.15
CLASS C SHARES
Net asset value and offering price per share ($718,688,176/
18,828,844 shares of beneficial interest issued and outstanding) $38.17
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($174,745,265 /3,681,413 shares of beneficial interest issued
and outstanding) $47.47
See notes to financial statements.
11
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1998 ALLIANCE GROWTH FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $669,275) $ 55,315,657
Interest 9,546,213 $ 64,861,870
EXPENSES
Advisory fee 41,033,553
Distribution fee - Class A 2,794,078
Distribution fee - Class B 40,881,301
Distribution fee - Class C 6,870,520
Transfer agency 10,291,560
Printing 1,913,493
Custodian 556,600
Registration 361,955
Audit and legal 271,110
Trustees' fees 29,000
Miscellaneous 172,172
Total expenses 105,175,342
Less: expense offset arrangement (see Note B) (637,005)
Net expenses 104,538,337
Net investment loss (39,676,467)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 449,749,182
Net realized gain on written options transactions 152,319,721
Net realized loss on foreign currency transactions (445,245)
Net change in unrealized appreciation (depreciation) of:
Investments 182,132,985
Written options (43,884,511)
Foreign currency denominated assets and liabilities 1,669
Net gain on investments and foreign currency transactions 739,873,801
NET INCREASE IN NET ASSETS FROM OPERATIONS $700,197,334
See notes to financial statements.
12
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GROWTH FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (39,676,467) $ (35,548,097)
Net realized gain on investments, options
and foreign currency transactions 601,623,658 431,215,641
Net change in unrealized appreciation
(depreciation) of investments, options,
and foreign currency denominated assets
and liabilities 138,250,143 669,531,008
Net increase in net assets from operations 700,197,334 1,065,198,552
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (52,161,970) (14,927,840)
Class B (288,101,646) (89,311,288)
Class C (48,125,286) (14,500,115)
Advisor Class (7,005,557) (20,469)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 764,910,528 714,151,085
Total increase 1,069,713,403 1,660,589,925
NET ASSETS
Beginning of year 5,062,569,634 3,401,979,709
End of year $6,132,283,037 $5,062,569,634
See notes to financial statements.
13
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 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 currently sold with a contingent deferred sales charge which
declines from 4% to zero depending on the period of time the shares are held.
Shares purchased before August 2, 1993 and redeemed within six years of
purchase are subject to different rates than shares purchased after that date.
Class B shares 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 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 sale price or if no sale occurred, at the
mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of 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. Listed put and call options purchased by
the Fund are valued at the last sale price. If there has been no sale on that
day, such securities will be valued at the closing bid prices on that day.
Over-the-counter written options are valued using prices provided by brokers.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities, currency gains and
losses realized between the trade and settlement dates on security transactions
and the difference between the amounts of 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, options and
foreign currency denominated assets and liabilities.
14
ALLIANCE GROWTH 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 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. During the current fiscal year, permanent
differences, primarily due to net investment loss, resulted in a net decrease
in accumulated net investment loss and a corresponding decrease in accumulated
net realized gain on investment transactions. 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 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 $6,446,137 for the year ended October 31, 1998.
In addition, for the year ended October 31, 1998, the Fund's expenses were
reduced by $637,005 under an expense offset arrangement with Alliance Fund
Sevices. 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 $225,295 from the sales of
Class A shares and $9,744, $3,874,312, and $116,331 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, 1998.
Brokerage commissions paid on investment transactions for the year ended
October 31, 1998 amounted to $6,415,603, of which $30,458 was paid to
Donaldson, Lufkin & Jenrette Securities Corp., an affiliate of the Adviser.
Accrued expenses includes $128,126 owed to a trustee and a former trustee under
the Trust's deferred compensation plan.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
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.
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, 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 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 $4,144,330,225 and $3,481,220,194,
respectively, for the year ended October 31, 1998. There were no purchases and
sales of $15,674,270 in U.S. government and government agency obligations for
the year ended October 31, 1998.
At October 31, 1998, 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 $1,676,579,312 and gross unrealized
depreciation of investments was $233,430,748 resulting in net unrealized
appreciation of $1,443,148,564.
1. OPTION TRANSACTIONS
For hedging and investment purposes, the Fund purchases and writes (sells) put
and call options on U.S. and foreign 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 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 was exercised the
underlying security could then be purchased or sold by the Fund at a
disadvantageous price.
16
ALLIANCE GROWTH FUND
_______________________________________________________________________________
Transactions in options written for the year ended October 31, 1998 were as
follows:
NUMBER OF
CONTRACTS PREMIUMS
---------- -------------
Options outstanding at beginning of year 264,700 $ 88,568,875
Options written 1,162,323 333,232,266
Options terminated in closing purchase transactions (381,770) (116,092,250)
Options expired (587,477) (169,097,751)
Options exercised (388,555) (107,870,608)
Options outstanding at October 31, 1998 69,221 $ 28,740,532
2. 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 contract 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 October 31, 1998, the Fund had no outstanding forward exchange currency
contracts.
17
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,
1998 1997 1998 1997
------------- ------------ -------------- --------------
CLASS A
Shares sold 14,313,089 8,132,661 $659,034,500 $318,891,520
Shares issued in
reinvestment of
distributions 1,103,597 358,984 47,609,915 12,705,352
Shares converted
from Class B 1,525,332 1,372,219 70,157,128 54,520,447
Shares redeemed (13,387,711) (6,355,236) (615,070,017) (250,784,867)
Net increase 3,554,307 3,508,628 $161,731,526 $135,332,452
CLASS B
Shares sold 20,547,117 23,967,815 $776,085,446 $771,661,032
Shares issued in
reinvestment of
distributions 7,651,345 2,307,390 268,634,078 67,883,610
Shares converted
to Class A (1,871,621) (1,655,781) (70,157,128) (54,520,447)
Shares redeemed (13,986,411) (11,595,072) (518,571,785) (376,839,188)
Net increase 12,340,430 13,024,352 $455,990,611 $408,185,007
CLASS C
Shares sold 4,951,688 5,404,558 $187,545,992 $173,407,183
Shares issued in
reinvestment of
distributions 1,279,996 278,004 44,966,581 8,181,650
Shares redeemed (3,903,263) (2,988,645) (145,672,105) (97,513,487)
Net increase 2,328,421 2,693,917 $ 86,840,468 $ 84,075,346
ADVISOR CLASS
Shares sold 2,358,835 2,521,405 $106,555,081 $ 96,902,785
Shares issued in
reinvestment of
distributions 149,933 570 6,490,605 20,184
Shares redeemed (1,123,061) (253,380) (52,697,763) (10,364,689)
Net increase 1,385,707 2,268,595 $ 60,347,923 $ 86,558,280
NOTEF: 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 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 year ended October 31, 1998.
18
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
----------------------------------------------------- OCTOBER 31, APRIL 30,
1998 1997 1996 1995 1994(A) 1994
-------------- ------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $43.95 $34.91 $29.48 $25.08 $23.89 $22.67
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.05)(b) (.10)(b) .05 .12 .09 (.01)(c)
Net realized and unrealized gain on
investments, options and foreign
currency transactions 6.18 10.17 6.20 4.80 1.10 3.55
Net increase in net asset value from
operations 6.13 10.07 6.25 4.92 1.19 3.54
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- (.19) (.11) -0- -0-
Distributions from net realized gains (2.91) (1.03) (.63) (.41) -0- (2.32)
Total dividends and distributions (2.91) (1.03) (.82) (.52) -0- (2.32)
Net asset value, end of period $47.17 $43.95 $34.91 $29.48 $25.08 $23.89
TOTAL RETURN
Total investment return based on net
asset value (d) 14.56% 29.54% 21.65% 20.18% 4.98% 15.66%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,008,093 $783,110 $499,459 $285,161 $167,800 $102,406
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.22%(e) 1.26%(e) 1.30% 1.35% 1.35%(f) 1.40%
Expenses, before waivers/reimbursements 1.22%(e) 1.26%(e) 1.30% 1.35% 1.35%(f) 1.46%
Net investment income (loss) (.11)% (.25)% .15% .56% .86%(f) .32%
Portfolio turnover rate 61% 48% 46% 61% 24% 87%
</TABLE>
See footnote summary on page 22.
19
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
----------------------------------------------------- OCTOBER 31, APRIL 30,
1998 1997 1996 1995 1994(A) 1994
-------------- ------------ ----------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $36.31 $29.21 $24.78 $21.21 $20.27 $19.68
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.31)(b) (.31)(b) (.12) (.02) .01 (.07)(b)(c)
Net realized and unrealized gain on
investments, options and foreign
currency transactions 5.06 8.44 5.18 4.01 .93 2.98
Net increase in net asset value from
operations 4.75 8.13 5.06 3.99 .94 2.91
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- (.01) -0- -0-
Distributions from net realized gains (2.91) (1.03) (.63) (.41) -0- (2.32)
Total dividends and distributions (2.91) (1.03) (.63) (.42) -0- (2.32)
Net asset value, end of period $38.15 $36.31 $29.21 $24.78 $21.21 $20.27
TOTAL RETURN
Total investment return based on net
asset value (d) 13.78% 28.64% 20.82% 19.33% 4.64% 14.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,230,756 $3,578,806 $2,498,097 $1,502,020 $751,521 $394,227
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.94%(e) 1.96%(e) 1.99% 2.05% 2.05%(f) 2.10%
Expenses, before waivers/reimbursements 1.94%(e) 1.96%(e) 1.99% 2.05% 2.05%(f) 2.13%
Net investment income (loss) (.83)% (.94)% (.54)% (.15)% .16%(f) (.36)%
Portfolio turnover rate 61% 48% 46% 61% 24% 87%
</TABLE>
See footnote summary on page 22.
20
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(G) TO
----------------------------------------------------- OCTOBER 31, APRIL 30,
1998 1997 1996 1995 1994(A) 1994
-------------- ------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $36.33 $29.22 $24.79 $21.22 $20.28 $21.47
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.31)(b) (.31)(b) (.12) (.03) .01 (.02)(c)
Net realized and unrealized gain on
investments, options and foreign
currency transactions 5.06 8.45 5.18 4.02 .93 1.15
Net increase in net asset value from
operations 4.75 8.14 5.06 3.99 .94 1.13
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- (.01) -0- -0-
Distributions from net realized gains (2.91) (1.03) (.63) (.41) -0- (2.32)
Total dividends and distributions (2.91) (1.03) (.63) (.42) -0- (2.32)
Net asset value, end of period $38.17 $36.33 $29.22 $24.79 $21.22 $20.28
TOTAL RETURN
Total investment return based on net
asset value (d) 13.76% 28.66% 20.81% 19.32% 4.64% 5.27%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $718,688 $599,449 $403,478 $226,662 $114,455 $64,030
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.93%(e) 1.97%(e) 2.00% 2.05% 2.05%(f) 2.10%(f)
Expenses, before waivers/reimbursements 1.93%(e) 1.97%(e) 2.00% 2.05% 2.05%(f) 2.13%(f)
Net investment income (loss) (.83)% (.95)% (.55)% (.15)% .16%(f) (.31)%(f)
Portfolio turnover rate 61% 48% 46% 61% 24% 87%
</TABLE>
See footnote summary on page 22.
21
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GROWTH FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
ADVISOR CLASS
--------------------------------------
OCT. 2,
YEAR ENDED OCTOBER 31, 1996(G) TO
-------------------------- OCT. 31,
1998 1997 1996
------------ ------------ ----------
Net asset value, beginning of period $44.08 $34.91 $34.14
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) .08(b) (.05)(b) -0-
Net realized and unrealized gain on
investments, options and foreign
currency transactions 6.22 10.25 .77
Net increase in net asset value from
operations 6.30 10.20 .77
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.91) (1.03) -0-
Net asset value, end of period $47.47 $44.08 $34.91
TOTAL RETURN
Total investment return based on net
asset value (d) 14.92% 29.92% 2.26%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $174,745 $101,205 $946
Ratios to average net assets of:
Expenses, net of waivers/
reimbursements .93%(e) .98%(e) 1.26%(f)
Expenses, before waivers/
reimbursements .93%(e) .98%(e) 1.26%(f)
Net investment income (loss) .17% (.12)% .50%(f)
Portfolio turnover rate 61% 48% 46%
(a) The Fund changed its fiscal year end from April 30 to October 31.
(b) Based on average shares outstanding.
(c) Net of fees waived and expenses reimbursed by the Adviser.
(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) Ratio reflects expenses grossed up for expense offset arrangement with the
transfer agent. For the years ended October 31, 1998, and 1997 the ratios of
expenses net of waiver/reimbursements and before waiver/reimbursements were
1.21% and 1.25% for Class A shares, 1.93% and 1.95% for Class B shares, 1.92%
and 1.95% for Class C shares and .92% and .96% for Advisor Class shares,
respectively.
(f) Annualized.
(g) Commencement of distribution.
22
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE GROWTH FUND
_______________________________________________________________________________
TO THE 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, 1998, 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, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
December 15, 1998
TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $115,557,449 and $245,000,057 of the capital gain
distributions paid by the Fund during the fiscal year October 31, 1998 are
subject to maximum tax rates of 28% and 20%, respectively.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 1999.
23
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, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
TYLER J. SMITH, 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 10036-2798
(1) Member of the Audit Committee.
24
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
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
25
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
