UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-134
AllianceBernstein Balanced Shares, Inc.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: November 30, 2003
Date of reporting period: November 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
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Asset Allocation
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AllianceBernstein [LOGO](SM)
Investment Research and Management
AllianceBernstein Balanced Shares
Annual Report -- November 30, 2003
Investment Products Offered
- ---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
- ---------------------------
This shareholder report must be preceded or accompanied by the Fund's prospectus
for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and procedures,
without charge, upon request by visiting Alliance Capital's web site at
www.investor.alliancecapital.com or on the Securities and Exchange Commission's
web site at http://www.sec.gov, or by calling Alliance Capital at (800)
227-4618.
AllianceBernstein Investment Research and Management, Inc. is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
January 27, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Balanced Shares (the "Fund") for the annual reporting period
ended November 30, 2003.
Investment Objective and Policies
This open-end fund seeks a high return through a combination of current income
and capital appreciation. It invests principally in a diversified portfolio of
equity and fixed-income securities such as common and preferred stocks, U.S.
government and agency obligations, bonds and senior debt securities.
Investment Results
The following table provides performance data for the Fund and several indices,
the Russell 1000 Value Index and the S&P 500 Stock Index, as well as the Fund's
composite benchmark, a 60%/25%/15% blend of the Russell 1000 Value Index, the
Lehman Brothers (LB) Government/Credit Bond Index and the Salomon Brothers (SB)
1-Year Treasury Bond Index, for the six- and 12-month periods ended November 30,
2003.
Previously, the equity portion of the Fund's composite benchmark consisted of
60% of the S&P 500 Stock Index. However, from this point on, the equity portion
of the Fund will use the Russell 1000 Value Index in place of the S&P 500 Stock
Index, as the Russell 1000 Value Index more closely reflects the Fund's equity
strategy. We also compare the Fund's performance to the Lipper Balanced Funds
Average, which measures a group of funds with similar characteristics to the
Fund.
INVESTMENT RESULTS*
Periods Ended November 30, 2003
---------------------------------
Returns
---------------------------------
6 Months 12 Months
-------------- --------------
AllianceBernstein
Balanced Shares
Class A 5.19% 13.74%
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Class B 4.78% 12.95%
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Class C 4.84% 12.97%
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Lipper Balanced
Funds Average 6.90% 12.21%
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Russell 1000
Value Index 11.15% 17.16%
- ------------------------------------------------------------
S&P 500 Stock Index 10.80% 15.08%
- ------------------------------------------------------------
New Composite Benchmark:
60% Russell 1000 Value
Index / 25% Lehman
Brothers Government/
Credit Bond Index / 15%
Salomon Brothers
1-Year Treasury
Bond Index 6.23% 12.26%
- ------------------------------------------------------------
Old Composite Benchmark:
60% S&P 500 Stock
Index / 25% Lehman
Brothers Government/
Credit Bond Index / 15%
Salomon Brothers
1-Year Treasury
Bond Index 6.02% 11.06%
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ALLIANCEBERNSTEIN BALANCED SHARES o 1
* The Fund's investment results are for the periods shown and are based on the
net asset value (NAV) of each class of shares as of November 30, 2003.
Returns do not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the redemption of fund shares. 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 Advisor Class shares will vary due to different
expenses charged to this class. Returns for the Fund include the reinvestment
of any distributions paid during each period. Past performance is no
guarantee of future results.
None of the following indices or composites reflect fees and expenses associated
with the active management of a mutual fund portfolio. The unmanaged Russell
1000 Value Index contains those securities in the Russell 1000 Index with a
less-than-average growth orientation. The unmanaged Russell 1000 Index is
comprised of 1000 of the largest capitalized companies that are traded in the
United States. The unmanaged S&P 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market. The
unmanaged Lehman Brothers (LB) Government/Credit Bond Index is a broad measure
of the performance of intermediate (one- to 10-year) government and corporate
fixed-rate debt issues. The unmanaged Salomon Brothers (SB) 1-Year Treasury Bond
Index represents performance of U.S. Treasury bills with one-year maturities.
The new composite benchmark represents a 60%/25%/15% blend of the Russell 1000
Value Index, the LB Government/Credit Bond Index and the SB 1-Year Treasury Bond
Index. The old composite benchmark represents a 60%/25%/15% blend of the S&P 500
Stock Index, the LB Government/Credit Bond Index and the SB 1-Year Treasury Bond
Index.
The Lipper Balanced Funds Average reflects the performance of 541 funds for the
six-month period and 527 funds for the 12-month period ended November 30, 2003.
These funds have generally similar investment objectives to AllianceBernstein
Balanced Shares, although they may have different investment policies and sales
and management fees. An investor cannot invest directly in an index or average,
and its results are not indicative of the performance for any specific
investment, including AllianceBernstein Balanced Shares.
Additional investment results appear on page 7.
For the 12-month period ended November 30, 2003, the Fund outperformed the new
composite benchmark, but underperformed this benchmark over the six-month
period. Likewise, the Fund outperformed its peer group, as represented by the
Lipper Balanced Fund Average (the "Lipper Average"), over the 12-month period
but underperformed the Lipper Average over the six-month period.
An overweight position in technology stocks through the end of the second
quarter aided the Fund's performance during the 12-month period under review.
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2 o ALLIANCEBERNSTEIN BALANCED SHARES
However, the Fund's equity performance during the six-month period ended
November 30, 2003 was hindered by a declining position in technology stocks,
which continued their rally into October and November. This was the primary
reason for the Fund's underperformance versus its benchmark over this period. In
addition, an overweight position in health care stocks also hurt performance.
The Fund's fixed income allocation outperformed the fixed income market, as
measured by the LB Government/Credit Bond Index, over the 12-month period ended
November 30, 2003, primarily due to sector and industry allocation. At the
sector level, the Fund was overweight in credit, which produced favorable
relative returns. At the industry level, the Fund was overweight in telecom,
cable and autos--three industries which produced strong relative performance
within the credit sector. Many of the Fund's underweighted sectors, including
chemicals, rails and basic materials, also contributed to relative returns, as
they underperformed the benchmark. Additionally, within the Fund's Treasury
allocation, its exposure to TIPS (inflation-linked securities) benefited
relative performance.
Market Review and Investment Strategy
The equity portion of the Fund's performance during 2003 was aided by strong
economic data and more upbeat company commentary. Better-than- expected earnings
reports provided further support for the U.S. stock market's rally.
The equity portion of the Fund's investment discipline is largely focused on
stock picking (as opposed to sector rotation), and our proprietary valuation
work suggested to us that the most attractive stocks were largely centered in
the areas of health care and consumer staples. Thus, we built overweighted
positions in these two areas throughout the six-month period ended November 30,
2003. Conversely, we reduced our technology weighting to an underweighted
position as our valuation work suggested that this area of the market was fully,
if not over-valued. We also maintained underweighted positions in financial and
utility stocks as our research showed that there were fewer investment
opportunities in these two areas of the market.
In the fixed income market, interest rates were volatile throughout the course
of the year. During 2003, Treasury rates rose 25 basis points, which is
considered fairly flat. However, that masks tremendous volatility throughout the
course of the year, where the trading range was about 120 basis points. The
flattening of the rate trend towards the end of the year was attributable to
benign government inflation data and constant reassuring from the U.S. Federal
Reserve that rates did not need to be raised for some time. Nevertheless, the
yield curve remained very steep, with investors needing an inflation and
monetary policy premium given the strength of nominal GDP.
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ALLIANCEBERNSTEIN BALANCED SHARES o 3
The investment-grade corporate bond market had a strong fourth quarter to top
off a record-breaking year, with investment-grade corporate bonds outperforming
Treasuries by 5.80% in 2003, measured in terms of excess return. Within the
corporate sector, top-performing sectors included autos, airlines, cable,
wireless telecommunications and utilities, while supermarkets, rails and
food/beverage sectors underperformed.
By ratings class, the best performance was in the lower rated credit grades,
which typically see the greatest relative spread compression during a cyclical
improvement in credit fundamentals.
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4 o ALLIANCEBERNSTEIN BALANCED SHARES
PERFORMANCE UPDATE
ALLIANCEBERNSTEIN BALANCED SHARES CLASS A
GROWTH OF A $10,000 INVESTMENT
11/30/93-11/30/03
Russell 1000 Value Index: $29,490
New Composite Benchmark: $24,643
S&P 500 Stock Index: $27,453
Old Composite Benchmark: $23,924
AllianceBernstein Balanced Shares Class A: $23,324
[THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
AllianceBernstein New Old
Balanced Composite Composite Russell 1000 S&P 500
Shares Class A Benchmark Benchmark Value Index Stock Index
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11/30/93 9,572 10,000 10,000 10,000 10,000
11/30/94 9,122 9,905 10,042 9,875 10,104
11/30/95 11,482 12,616 12,815 13,482 13,835
11/30/96 12,797 14,885 15,238 17,030 17,689
11/30/97 15,741 17,932 18,251 22,082 22,730
11/30/98 17,860 20,154 21,453 25,414 28,112
11/30/99 19,262 21,500 24,227 28,075 33,985
11/30/00 20,960 22,487 24,375 28,749 32,547
11/30/01 22,221 22,832 23,423 27,846 28,573
11/30/02 20,506 21,991 21,590 25,170 23,856
11/30/03 23,324 24,643 23,924 29,490 27,453
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Balanced Shares Class A shares (from 11/30/93 to 11/30/03) as
compared to the performance of appropriate composites and indices. Returns do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The chart reflects the deduction
of the maximum 4.25% sales charge from the initial $10,000 investment in the
Fund and assumes the reinvestment of dividends and capital gains. Performance
for Class B, Class C and Advisor Class shares will vary from the results shown
above due to differences in expenses charged to these classes. Past performance
is not indicative of future results, and is not representative of future gain or
loss in capital value or dividend income.
None of the indices or composites in the chart reflect fees and expenses
associated with the active management of a mutual fund portfolio. The unmanaged
Russell 1000 Value Index contains those securities in the Russell 1000 Index
with a less-than-average growth orientation. The unmanaged Russell 1000 Index is
comprised of 1000 of the largest capitalized companies that are traded in the
United States. The unmanaged S&P 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market. The
unmanaged Lehman Brothers (LB) Government/Credit Bond Index is a broad measure
of the performance of intermediate (one- to 10-year) government and corporate
fixed-rate debt issues. The unmanaged Salomon Brothers (SB) 1-Year Treasury Bond
Index represents performance of U.S. Treasury bills with one-year maturities.
The new composite benchmark is comprised of 60% Russell 1000 Value Index, 25% LB
Government/Credit Bond Index and 15% SB 1-Year Treasury Bond Index. The old
composite benchmark is comprised of 60% S&P 500 Stock Index, 25% Lehman Brothers
LB Government/Credit Bond Index and 15% SB 1-Year Treasury Bond Index. An
investor cannot invest directly in a composite or an index, and its results are
not indicative of any specific investment, including AllianceBernstein Balanced
Shares.
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ALLIANCEBERNSTEIN BALANCED SHARES o 5
PORTFOLIO SUMMARY
November 30, 2003
INCEPTION DATES
Class A Shares
6/8/32
Class B Shares
2/4/91
Class C Shares
5/3/93
PORTFOLIO STATISTICS
Net Assets ($mil): $1,392.1
SECURITY BREAKDOWN
65.5% Common Stock
10.8% Corporate Bond
9.3% Treasury Securities
5.8% FNMA [PIE CHART OMITTED]
1.7% Preferred Stock
0.5% Sovereign Debt
0.1% Yankee Bond
6.3% Short-Term
All data as of November 30, 2003. The Fund's security breakdown is expressed as
a percentage of total investments (excluding security lending collateral) and
may vary over time.
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6 o ALLIANCEBERNSTEIN BALANCED SHARES
INVESTMENT RESULTS
AVERAGE ANNUAL RETURNS AS OF NOVEMBER 30, 2003
Class A Shares
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Without Sales Charge With Sales Charge
1 Year 13.74% 8.94%
5 Years 5.49% 4.57%
10 Years 9.32% 8.84%
Class B Shares
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Without Sales Charge With Sales Charge
1 Year 12.95% 8.95%
5 Years 4.70% 4.70%
10 Years(a) 8.65% 8.65%
Class C Shares
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Without Sales Charge With Sales Charge
1 Year 12.97% 11.97%
5 Years 4.72% 4.72%
10 Years 8.52% 8.52%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT QUARTER-END (DECEMBER 31, 2003)
Class A Class B Class C
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1 Year 17.52% 17.79% 20.88%
5 Years 4.74% 4.89% 4.88%
10 Years 9.24% 9.04%(a) 8.90%
The Fund's investment results represent average annual returns. Returns do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The returns reflect reinvestment
of dividends and/or capital gains distributions in additional shares without and
with 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. Returns for Advisor Class shares will vary
due to different expenses associated with this class.
The Fund is a "balanced" fund and must invest at least 25% of its total assets
in fixed-income securities. The value of fixed-income securities will change as
the general level of interest rates fluctuates. The Fund can invest in foreign
securities, which may magnify fluctuations due to changes in foreign exchange
rates and the possibility of substantial volatility due to political and
economic uncertainties in foreign countries.
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.
(a) Assumes conversion of Class B shares into Class A shares after 8 years.
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ALLIANCEBERNSTEIN BALANCED SHARES o 7
TEN LARGEST HOLDINGS
November 30, 2003
Percent of
Company Value Net Assets
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U.S. Treasury Notes $ 110,087,339 7.9%
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Federal National Mortgage Association
(Common and Debt) 96,003,580 6.9
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Citigroup, Inc. (Common and Debt) 45,169,330 3.2
- -------------------------------------------------------------------------------
J.P. Morgan Chase & Co. 40,345,760 2.9
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American International Group, Inc. 33,066,270 2.4
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Bank One Corp. 31,756,864 2.3
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ConocoPhillips (Common and Debt) 28,042,850 2.0
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Union Pacific Corp. (Common and Debt) 28,002,377 2.0
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Viacom, Inc. Cl.B 27,394,244 2.0
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Bank of America Corp. 26,741,820 1.9
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$ 466,610,434 33.5%
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8 o ALLIANCEBERNSTEIN BALANCED SHARES
PORTFOLIO OF INVESTMENTS
November 30, 2003
Company Shares Value
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COMMON STOCKS & OTHER INVESTMENTS-69.0%
Finance-19.1%
Banking - Money Centers-8.0%
Bank of America Corp. 354,525 $ 26,741,820
Citigroup, Inc. 921,094 43,328,262
J.P. Morgan Chase & Co. 1,141,000 40,345,760
Royal Bank of Scotland Group Plc pfd.
(United Kingdom) 50,000 1,245,000
--------------
111,660,842
--------------
Banking - Regional-2.3%
Bank One Corp. 732,400 31,756,864
--------------
Brokerage & Money Management-1.8%
Merrill Lynch & Co., Inc. 301,600 17,115,800
Morgan Stanley 150,000 8,292,000
--------------
25,407,800
--------------
Insurance-5.0%
ACE, Ltd. (Bermuda) 455,000 16,584,750
American International Group, Inc. 570,600 33,066,270
Metlife, Inc. 293,500 9,594,515
The Allstate Corp. 257,400 10,393,812
--------------
69,639,347
--------------
Mortgage Banking-1.4%
Fannie Mae 174,000 12,180,000
PMI Group, Inc. 92,400 3,440,052
Washington Mutual, Inc. 76,300 3,495,303
--------------
19,115,355
--------------
Miscellaneous-0.6%
MBNA Corp. 349,980 8,581,510
--------------
266,161,718
--------------
Health Care-8.8%
Drugs-3.2%
Pfizer, Inc. 773,300 25,944,215
Wyeth 486,400 19,164,160
--------------
45,108,375
--------------
Medical Products-1.4%
Alcon, Inc. (Switzerland) 146,200 8,504,454
Johnson & Johnson 217,900 10,740,291
--------------
19,244,745
--------------
Medical Services-4.2%
Anthem, Inc.(a) 145,300 10,479,036
HCA, Inc. 459,300 19,249,263
Tenet Healthcare Corp.(a) 425,400 6,215,094
UnitedHealth Group, Inc. 92,400 4,980,360
WellPoint Health Networks, Inc.(a) 188,000 17,576,120
--------------
58,499,873
--------------
122,852,993
--------------
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ALLIANCEBERNSTEIN BALANCED SHARES o 9
Company Shares Value
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Energy-8.6%
Domestic Integrated-0.5%
Occidental Petroleum Corp. 199,000 $ 7,299,320
--------------
Domestic Producers-1.4%
Devon Energy Corp. 107,400 5,301,264
Kerr-McGee Corp. 173,600 7,289,464
Noble Energy, Inc. 169,800 6,732,570
--------------
19,323,298
--------------
International-3.9%
BP Plc (ADR) (United Kingdom) 359,700 15,355,593
ChevronTexaco Corp. 184,000 13,818,400
ENI SpA (ADR) (Italy) 74,200 6,330,744
Exxon Mobil Corp. 523,900 18,949,463
--------------
54,454,200
--------------
Oil Service-0.8%
Amerada Hess Corp. pfd.(a) 25,000 1,268,750
Nabors Industries, Ltd. (Barbados)(a) 132,900 4,933,248
Noble Corp.(a) 142,600 4,931,108
--------------
11,133,106
--------------
Miscellaneous-2.0%
ConocoPhillips 479,000 27,178,460
--------------
119,388,384
--------------
Consumer Services-8.0%
Broadcasting & Cable-5.5%
Clear Channel Communications, Inc. 215,000 8,989,150
Comcast Corp. Cl.A(a) 307,206 9,640,124
Comcast Corp. Cl.A Special(a) 306,000 9,225,900
Cox Communications, Inc. Cl.A(a) 141,600 4,800,240
Time Warner, Inc.(a) 496,200 8,078,136
United Pan Europe warrants, expiring 2/01/09
(Netherlands)(a) 971 0
United Pan Europe Cl.A pfd. (Netherlands)(a) 2 1,480
Viacom, Inc. Cl.B 696,700 27,394,244
Westwood One, Inc.(a) 260,600 7,911,816
--------------
76,041,090
--------------
Cellular Communications-0.3%
Nextel Communications, Inc.(a) 147,800 3,743,774
--------------
Entertainment & Leisure-1.3%
Carnival Corp. (Panama) 419,800 14,772,762
Harley-Davidson, Inc. 64,000 3,018,880
--------------
17,791,642
--------------
Restaurants & Lodging-0.4%
McDonald's Corp. 237,800 6,094,814
--------------
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10 o ALLIANCEBERNSTEIN BALANCED SHARES
Company Shares Value
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Retail - General Merchandise-0.5%
The Home Depot, Inc. 207,400 $ 7,624,024
--------------
111,295,344
--------------
Consumer Staples-7.6%
Beverages-1.3%
Anheuser-Busch Cos., Inc. 349,900 18,131,818
--------------
Cosmetics-1.7%
Avon Products, Inc. 262,540 17,983,990
International Flavors & Fragrances, Inc. 178,000 5,779,660
--------------
23,763,650
--------------
Food-0.3%
Dean Foods Co.(a) 146,800 4,816,508
--------------
Household Products-2.3%
Colgate-Palmolive Co. 265,000 13,912,500
The Procter & Gamble Co. 183,300 17,640,792
--------------
31,553,292
--------------
Tobacco-1.8%
Altria Group, Inc. 490,000 25,480,000
--------------
Miscellaneous-0.2%
Fortune Brands, Inc. 32,100 2,193,072
--------------
105,938,340
--------------
Utilities-5.5%
Electric & Gas Utility-2.7%
Consolidated Edison, Inc. 80,300 3,236,090
Constellation Energy Group 257,800 9,703,592
DTE Energy Trust I pfd. 60,000 1,638,750
Entergy Corp. 164,000 8,669,040
Exelon Corp. 151,200 9,347,184
PPL Corp. 140,300 5,735,464
--------------
38,330,120
--------------
Telephone Utility-2.8%
AT&T Corp. 204,600 4,057,218
BellSouth Corp. 220,700 5,744,821
SBC Communications, Inc. 323,000 7,519,440
Sprint Corp. 577,400 8,655,226
Verizon Communications, Inc. 399,500 13,091,615
--------------
39,068,320
--------------
77,398,440
--------------
Technology-3.7%
Communication Equipment-1.1%
Juniper Networks, Inc.(a) 357,300 6,742,251
Lucent Technologies, Inc. pfd.(b) 79,500 8,762,888
--------------
15,505,139
--------------
Computer Hardware/Storage-0.6%
Hewlett-Packard Co. 394,300 8,552,367
--------------
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ALLIANCEBERNSTEIN BALANCED SHARES o 11
Company Shares Value
- -------------------------------------------------------------------------------
Computer Services-0.8%
First Data Corp. 277,400 $ 10,499,590
--------------
Semi-Conductor Components-0.1%
Intersil Corp. Cl.A 70,000 1,848,700
--------------
Software-1.1%
Microsoft Corp. 443,400 11,395,380
VERITAS Software Corp.(a) 84,000 3,193,764
--------------
14,589,144
--------------
50,994,940
--------------
Transportation-2.6%
Railroad-2.6%
Burlington Northern Santa Fe Corp. 329,200 9,800,284
Union Pacific Corp. 411,100 26,178,848
--------------
35,979,132
--------------
Capital Goods-1.7%
Automotive-0.2%
Ford Motor Co. Capital Trust II pfd. 60,000 2,993,400
--------------
Electrical Equipment-0.7%
Johnson Controls, Inc. 85,700 9,379,008
--------------
Miscellaneous-0.8%
United Technologies Corp. 139,600 11,963,720
--------------
24,336,128
--------------
Consumer Manufacturing-1.2%
Building & Related-1.2%
American Standard Cos., Inc.(a) 131,800 13,140,460
Mohawk Industries, Inc.(a) 45,000 3,243,600
--------------
16,384,060
--------------
Aerospace & Defense-0.9%
Aerospace-0.9%
Goodrich Corp. 189,000 5,199,390
Northrop Grumman Corp. 79,700 7,382,611
--------------
12,582,001
--------------
Basic Industry-0.8%
Chemicals-0.4%
E.I. du Pont de Nemours & Co. 113,700 4,714,002
--------------
Containers-0.0%
Ball Corp. 8,500 475,575
--------------
Mining & Metals-0.4%
Alcoa, Inc. 162,000 5,315,220
--------------
10,504,797
--------------
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12 o ALLIANCEBERNSTEIN BALANCED SHARES
Shares or
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Multi-Industry Companies-0.5%
Tyco International, Ltd. 315,497 $ 7,240,656
--------------
Total Common Stocks & Other Investments
(cost $846,839,263) 961,056,933
--------------
DEBT OBLIGATIONS-27.5%
U.S. Government & Government Sponsored
Agency Obligations-15.7%
Federal National Mortgage Association
5.00%, 1/15/07 $ 16,000 17,011,120
6.50%, TBA 51,000 53,340,000
6.625%, 10/15/07 12,000 13,472,460
U.S. Treasury Bonds
5.375%, 2/15/31 50 51,821
6.25%, 8/15/23 3,400 3,842,401
8.125%, 8/15/19 3,815 5,117,170
9.875%, 11/15/15 1,000 1,484,649
11.25%, 2/15/15 9,000 14,356,062
U.S. Treasury Notes
3.25%, 8/15/08 10,000 9,988,680
3.50%, 1/15/11 18,088 20,210,138
3.625%, 1/15/08 16,277 17,939,882
3.625%, 5/15/13 6,390 6,130,662
4.25%, 8/15/13 4,430 4,413,737
5.625%, 5/15/08 18,850 20,767,403
6.00%, 8/15/09 2,250 2,534,328
6.125%, 8/15/07 23,000 25,637,824
7.50%, 2/15/05 2,300 2,464,685
--------------
Total U.S. Government & Government
Sponsored Agency Obligations
(cost $207,891,781) 218,763,022
--------------
Corporate Debt Obligations-11.2%
Aerospace - Defense-0.1%
Northrop Grumman Corp.
7.125%, 2/15/11 1,275 1,464,737
--------------
Agriculture-0.0%
Case New Holland, Inc.
9.25%, 8/01/11(b) 400 450,000
--------------
Automotive-0.6%
Ford Motor Credit Co.
7.875%, 6/15/10 400 428,251
General Motors Acceptance Corp.
6.125%, 8/28/07 3,500 3,704,200
8.00%, 11/01/31 67 71,010
General Motors Corp.
8.375%, 7/15/33 2,700 2,949,764
Lear Corp. Series B
8.11%, 5/15/09 1,100 1,284,250
--------------
8,437,475
--------------
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 13
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Banking-1.9%
Barclays Bank Plc (United Kingdom)
8.55%, 6/15/11(b) $ 1,000 $1,225,330
Bayerische Hypo-und Vereinsbank AG (Germany)
8.741%, 6/30/31(b) 850 977,943
BB&T Corp.
6.50%, 8/01/11 1,000 1,116,820
BNP Paribas
5.125%, 1/15/15(b) 1,200 1,189,907
Capital One Bank
6.50%, 6/13/13 800 835,229
Chase Manhattan Corp.
7.00%, 11/15/09 1,000 1,145,024
Citicorp
6.375%, 11/15/08 500 550,709
Citigroup, Inc.
5.625%, 8/27/12 1,750 1,841,068
DBS Group Holdings, Ltd.
7.125%, 5/15/11(b) 1,500 1,702,165
Dresdner Funding Trust I
8.151%, 6/30/31(b) 850 944,123
First Massachusetts Bank
7.625%, 6/15/11 800 930,679
First Union Capital II
7.95%, 11/15/29 1,350 1,629,426
First Union Corp.
7.80%, 8/18/10 850 1,019,666
HSBC Capital Funding LP (United Kingdom)
10.176%, 6/30/30(b) 2,500 3,648,057
Ing Capital Funding Trust III
8.439%, 12/31/49 2,000 2,413,198
Sanwa Bank, Ltd.
7.40%, 6/15/11 800 885,073
Scotland International Finance II (Netherlands)
4.25%, 5/23/13(b) 1,250 1,182,460
UFJ Finance Aruba AEC (Aruba)
6.75%, 7/15/13 800 839,429
US Bancorp
7.50%, 6/01/26 2,025 2,384,166
--------------
26,460,472
--------------
Broadcasting/Media-0.3%
AT&T Corp.- Liberty Media Group
8.25%, 2/01/30 1,250 1,487,949
Time Warner Entertainment Co.
8.375%, 3/15/23 1,625 1,998,753
--------------
3,486,702
--------------
Building/Real Estate-0.3%
Beazer Homes USA, Inc.
8.375%, 4/15/12 400 442,000
CRH America, Inc.
6.40%, 10/15/33 1,200 1,231,442
6.95%, 3/15/12 750 845,684
- -------------------------------------------------------------------------------
14 o ALLIANCEBERNSTEIN BALANCED SHARES
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
EOP Operating LP
5.875%, 1/15/13 $ 225 $ 234,799
7.875%, 7/15/31 1,000 1,150,336
Meritage Corp.
9.75%, 6/01/11 400 446,500
--------------
4,350,761
--------------
Cable-0.3%
Comcast Corp.
7.05%, 3/15/33 500 538,709
EchoStar DBS Corp.
9.125%, 1/15/09 520 582,400
5.75%, 10/01/08(b) 1,300 1,308,125
Rogers Cable, Inc. (Canada)
6.25%, 6/15/13 1,260 1,271,025
Shaw Communications, Inc. (Canada)
7.20%, 12/15/11 1,050 1,128,750
--------------
4,829,009
--------------
Communications-0.6%
Cox Enterprises, Inc.
4.375%, 5/01/08(b) 1,000 1,011,163
KPN NV (Netherlands)
8.375%, 10/01/30 2,500 3,137,527
Qwest Capital Funding, Inc.
5.875%, 8/03/04 1,675 1,683,375
Sprint Capital Corp.
6.875%, 11/15/28 1,700 1,606,891
Telstra Corp., Ltd.
6.375%, 4/01/12 1,000 1,103,958
TPSA Finance BV (Netherlands)
7.75%, 12/10/08 200 225,000
--------------
8,767,914
--------------
Communications - Fixed-0.5%
British Telecommunications Plc (United Kingdom)
8.875%, 12/15/30 4,650 5,970,623
Qwest Services Corp.
13.50%, 12/15/10(b) 725 856,406
--------------
6,827,029
--------------
Communications - Mobile-0.6%
AT&T Wireless Services, Inc.
7.875%, 3/01/11 2,000 2,258,514
8.75%, 3/01/31 2,000 2,349,380
Mobile Telesystems Finance, SA (Luxembourg)
8.375%, 10/14/10(b) 750 750,938
PTC International Finance II, SA (Luxembourg)
11.25%, 12/01/09 1,250 1,375,000
TELUS Corp. (Canada)
7.50%, 6/01/07 800 885,138
Tritel PCS, Inc.
10.375%, 1/15/11 195 232,521
--------------
7,851,491
--------------
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 15
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Containers-0.1%
Packaging Corp. of America
4.375%, 8/01/08(b) $ 800 $ 792,310
--------------
Electric & Gas Utility-0.1%
First Energy Corp.
7.375%, 11/15/31 2,000 2,074,540
--------------
Energy-0.4%
Chesapeake Energy Corp.
9.00%, 8/15/12 1,000 1,150,000
Conoco, Inc.
5.90%, 4/15/04 850 864,390
Devon Energy Corp.
7.95%, 4/15/32 1,000 1,203,769
Petronas Capital, Ltd.
7.00%, 5/22/12(b) 850 957,385
Union Pacific Resources Group, Inc.
7.30%, 4/15/09 850 967,187
XTO Energy, Inc.
7.50%, 4/15/12 400 456,000
--------------
5,598,731
--------------
Entertainment & Leisure-0.1%
Six Flags, Inc.
9.50%, 2/01/09 1,000 1,015,000
--------------
Financial-1.3%
CIT Group, Inc.
7.375%, 4/02/07 2,000 2,244,730
Countrywide Funding Corp.
4.25%, 12/19/07 1,500 1,529,252
Ford Motor Credit Co.
7.00%, 10/01/13 800 812,633
7.375%, 2/01/11 2,350 2,457,122
General Electric Capital Corp.
5.00%, 6/15/07 1,500 1,585,794
5.875%, 2/15/12 1,250 1,337,632
Goldman Sachs Group, Inc.
6.65%, 5/15/09 800 900,025
Household Finance Corp.
5.75%, 1/30/07 800 859,973
6.375%, 10/15/11 1,100 1,206,845
6.50%, 1/24/06 425 458,739
Lehman Brothers Holdings, Inc.
7.875%, 8/15/10 850 1,001,251
Markel Capital Trust I Series B
8.71%, 1/01/46 800 802,000
MBNA America Bank
7.125%, 11/15/12 1,000 1,135,229
- -------------------------------------------------------------------------------
16 o ALLIANCEBERNSTEIN BALANCED SHARES
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.
6.00%, 2/17/09 $ 1,000 $ 1,092,373
--------------
17,423,598
--------------
Food/Beverage-0.2%
Fosters Fin Corp.
6.875%, 6/15/11(b) 800 904,254
Kellogg Co. Series B
6.60%, 4/01/11 700 782,576
Kraft Foods, Inc.
5.25%, 10/01/13 1,200 1,197,612
--------------
2,884,442
--------------
Healthcare-0.3%
HCA, Inc.
6.25%, 2/15/13 1,600 1,607,030
Triad Hospitals, Inc. Series B
8.75%, 5/01/09 1,000 1,086,250
UnitedHealth Group, Inc.
4.875%, 4/01/13 1,250 1,248,063
--------------
3,941,343
--------------
Industrial-0.4%
Continental Cablevision, Inc.
9.00%, 9/01/08 1,700 2,037,654
General Motors Corp.
7.20%, 1/15/11 750 793,779
Tyco International Group, SA
6.375%, 2/15/06 220 234,025
6.375%, 10/15/11 800 844,000
Waste Management, Inc.
6.375%, 11/15/12 1,500 1,634,322
--------------
5,543,780
--------------
Municipal Obligation-0.2%
Dallas-Fort Worth Texas International
7.07%, 11/01/24 2,000 2,170,360
--------------
Non-Air Transportation-0.2%
Bombardier Capital, Inc.
7.50%, 10/17/05(b) 1,500 1,627,500
Union Pacific Corp.
6.625%, 2/01/29 1,700 1,823,529
--------------
3,451,029
--------------
Paper/Packaging-0.3%
Abitibi-Consolidated Inc. (Canada)
8.30%, 8/01/05 750 786,972
Domtar, Inc. (Canada)
7.875%, 10/15/11 750 878,982
MeadWestvaco Corp.
6.85%, 4/01/12 1,000 1,094,130
Owens-Brockway Glass
8.875%, 2/15/09 850 924,375
--------------
3,684,459
--------------
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 17
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Petroleum Products-0.2%
Amerada Hess Corp.
7.30%, 8/15/31 $ 1,650 $ 1,698,652
Canadian Natural Resources, Ltd.
6.70%, 7/15/11 700 781,980
--------------
2,480,632
--------------
Public Utilities - Electric & Gas-0.9%
American Electric Power Co., Inc. Series C
5.375%, 3/15/10 1,200 1,250,161
CenterPoint Energy Resources Corp.
7.875%, 4/01/13(b) 1,300 1,474,517
Dominion Resources Capital Trust III
8.40%, 1/15/31 800 952,115
Dominion Resources, Inc.
8.125%, 6/15/10 850 1,011,021
DPL, Inc.
8.25%, 3/01/07 1,000 1,093,212
Elwood Energy LLC
8.159%, 7/05/26 945 960,783
FPL Energy Virginia Funding Corp.
7.52%, 6/30/19(b) 584 633,357
Nevada Power Co.
8.25%, 6/01/11 800 859,000
Nisource Finance Corp.
7.875%, 11/15/10 1,000 1,179,776
Progress Energy, Inc.
7.10%, 3/01/11 1,600 1,803,803
Xcel Energy, Inc.
7.00%, 12/01/10 775 875,933
Yorkshire Power
8.25%, 2/15/05(b) 850 907,660
--------------
13,001,338
--------------
Public Utilities - Telephone-0.9%
New Jersey Bell Telephone
8.00%, 6/01/22 1,500 1,785,411
Qwest Capital Funding, Inc.
7.75%, 8/15/06 255 262,650
Telecom Italia Capital (Luxembourg)
4.00%, 11/15/08(b) 1,000 999,893
Telefonos de Mexico SA de CV (Mexico)
8.25%, 1/26/06 1,750 1,938,125
Verizon Maryland, Inc. Ser A,
6.125%, 3/01/12 4,500 4,815,625
Verizon New York, Inc. Ser A,
6.875%, 4/01/12 1,900 2,084,186
--------------
11,885,890
--------------
Publishing-0.0%
Dex Media West LLC
9.875%, 8/15/13(b) 200 228,000
--------------
- -------------------------------------------------------------------------------
18 o ALLIANCEBERNSTEIN BALANCED SHARES
Shares or
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Retail-0.0%
J.C. Penney & Co., Inc.
7.60%, 4/01/07 $ 400 $ 445,000
--------------
Service-0.1%
Allied Waste North America, Inc. Series B
10.00%, 8/01/09 850 922,250
--------------
Supermarket/Drug-0.2%
Delhaize America, Inc.
7.375%, 4/15/06 2,000 2,165,000
Kroger Co.
5.50%, 2/01/13 1,200 1,217,581
--------------
3,382,581
--------------
Technology-0.1%
Computer Sciences Corp.
5.00%, 2/15/13 750 751,864
ON Semiconductor Corp.
12.00%, 3/15/10 1,000 1,195,000
--------------
1,946,864
--------------
Total Corporate Debt Obligations
(cost $143,146,245) 155,797,737
--------------
Sovereign-0.5%
Korea Development Bank
5.75%, 9/10/13 800 819,809
Republic of South Africa
7.375%, 4/25/12 3,000 3,405,000
United Mexican States
6.375%, 1/16/13 2,300 2,363,250
--------------
(cost $6,060,236) 6,588,059
--------------
Yankee Bonds-0.1%
Imperial Tobacco Overseas BV (Netherlands)
7.125%, 4/01/09 1,000 1,106,097
Westpac Banking Corp. (Australia)
4.625%, 6/01/18 800 742,401
--------------
(cost $1,956,697) 1,848,498
--------------
Total Debt Obligations
(cost $359,054,959) 382,997,316
--------------
Preferred Stocks-0.6%
Automotive
Delphi TrustI
8.25%, 10/15/33 54 1,370,250
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 19
Shares or
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Banking
Abbey National Capital Trust I
(United Kingdom)
8.963%, 6/30/30 875 $ 1,155,909
Fuji JGB Investment
9.87%, 6/30/08(b) 2,000 2,207,110
Communications
Centaur Funding Corp. (Cayman Islands)
9.08%, 4/21/02(b) 800 965,120
Financial
Sovereign Real Estate Investor Trust
12%, 5/16/20(b) 500 701,250
Insurance
Mangrove Bay PassThru Trust
6.102%, 7/15/33(b) 1,600 1,559,056
--------------
Total Preferred Stock
(cost $7,509,064) 7,958,695
--------------
SHORT-TERM INVESTMENT-6.6%
U.S. Treasury Bill-5.0%
U.S. Treasury Bill
0.01%, 12/11/03 70,000 69,982,403
--------------
Time Deposit-1.6%
State Street Euro Dollar
0.50%, 12/01/03 21,517 21,517,000
--------------
Total Short-Term Investment
(amortized cost $91,499,403) 91,499,403
--------------
Total Investments Before Security
Lending Collateral-103.7%
(cost $1,304,902,689) 1,443,512,347
--------------
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED*-26.8%
Short-Term Investments
Bank One
1.17%, 2/25/04 $16,000 16,020,628
CCUSAPrime
1.06%, 6/14/04-7/04/04 50,000 49,998,750
Federal Home Loan Bank
1.40%, 1/24/05 15,000 15,000,000
Federal Home Loan Mortgage Corp.
1.14%-1.31%, 8/10/04-8/30/04 75,000 75,000,000
Gotfun
1.10%-1.11%, 12/03/03-12/16/03 30,187 30,168,664
Gotham Funding
1.11%, 12/11/03 36,676 36,651,121
Lexpar
1.06%, 12/02/03 25,000 24,988,958
- -------------------------------------------------------------------------------
20 o ALLIANCEBERNSTEIN BALANCED SHARES
Shares or
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
NCNBTexas National
1.17%, 6/01/04 $ 5,015 $ 5,438,107
Verizon Wireless
1.12%, 12/17/03 12,500 12,538,519
Wells Fargo
1.20%-1.22%, 2/01/04-7/15/04 9,041 9,469,675
Wells Fargo Financial
1.16%, 5/03/04 14,050 14,684,916
Yorkshire
1.04%, 12/10/03 30,000 29,982,667
Zommfc
1.08%, 12/05/03 15,650 15,630,281
--------------
335,572,286
--------------
UBSPrivate Money Market Fund, LLC, 1.02% 37,993,341 37,993,341
--------------
Total Investment of Cash Collateral
for Securities Loaned
(cost $373,565,627) 373,565,627
--------------
Total Investments-130.5%
(cost $1,678,468,316) 1,817,077,974
Other assets less liabilities-(30.5%) (424,948,413)
--------------
Net Assets-100% $1,392,129,561
==============
* See Note E for securities lending information.
(a) Non-income producing security.
(b) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to quailified institutional buyers. At November 30,
2003, the aggregate market value of these securities amounted to
$37,966,917 or 2.7% of net assets.
Glossary of Terms:
ADR - American Depositary Receipt.
TBA - (To Be Assigned)-Securities are purchased on a forward commitment with
an appropriate principal amount (generally +/- 1.0%) and no definite
maturity date. The actual principal amount and maturity date will be
determined upon settlement when the specific mortgage pools are assigned.
See notes to financial statements.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 21
STATEMENT OF ASSETS & LIABILITIES
November 30, 2003
ASSETS
Investments in securities, at value
(cost $1,678,468,316--including investment of cash
collateral for securities loaned of $373,565,627) $ 1,817,077,974(a)
Cash 3,574,207
Receivable for investment securities sold. 32,419,488
Dividends and interest receivable 7,425,964
Receivable for capital stock sold 3,031,991
---------------
Total assets 1,863,529,624
---------------
LIABILITIES
Payable for collateral on securities loaned 373,565,627
Payable for investment securities purchased 90,685,122
Payable for capital stock redeemed 5,250,826
Distribution fee payable 711,610
Advisory fee payable 551,739
Deferred income on dollar rolls 17,062
Accrued expenses 618,077
---------------
Total liabilities 471,400,063
---------------
Net Assets $ 1,392,129,561
===============
COMPOSITION OF NET ASSETS
Capital stock, at par $ 942,344
Additional paid-in capital 1,349,264,100
Distributions in excess of net investment income (1,388,586)
Accumulated net realized loss on investment and
foreign currency transactions (95,287,694)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 138,599,397
---------------
$ 1,392,129,561
===============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and
redemption price per share
($587,684,722/38,832,195 shares of capital stock
issued and outstanding) $15.13
Sales charge--4.25% of public offering price .67
------
Maximum offering price $15.80
======
Class B Shares
Net asset value and offering price per share
($534,751,848/37,099,623 shares of capital stock
issued and outstanding) $14.41
======
Class C Shares
Net asset value and offering price per share
($162,243,253/11,213,284 shares of capital stock
issued and outstanding) $14.47
======
Class R Shares
Net asset value and offering price per share
($10,028/663 shares of capital stock
issued and outstanding) $15.13
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($107,439,710/7,088,606 shares of capital stock
issued and outstanding) $15.16
======
(a) Includes securities on loan with a value of $359,133,729 (see Note E).
See notes to financial statements.
- -------------------------------------------------------------------------------
22 o ALLIANCEBERNSTEIN BALANCED SHARES
STATEMENT OF OPERATIONS
August 1, 2003
to Year Ended
November 30, July 31,
2003* 2003
============= =============
INVESTMENT INCOME
Interest $ 6,889,178 $ 19,098,503
Dividends (net of foreign taxes withheld
of $27,656 and $85,282, respectively) 6,301,247 15,078,924
------------- -------------
13,190,425 34,177,427
------------- -------------
EXPENSES
Advisory fee 2,179,544 5,309,457
Distribution fee--Class A 548,662 1,215,436
Distribution fee--Class B 1,727,725 4,181,192
Distribution fee--Class C 529,962 1,345,755
Distribution fee--Class R 4 -0-
Transfer agency 977,679 2,737,032
Custodian 113,306 281,267
Printing 110,138 369,335
Registration 60,037 130,615
Administrative 58,000 140,000
Audit and legal 44,184 109,207
Directors' fees 6,500 20,000
Miscellaneous 14,958 53,640
------------- -------------
Total expenses 6,370,699 15,892,936
Less: expense offset arrangement
(see Note B) (1,065) (2,256)
------------- -------------
Net expenses 6,369,634 15,890,680
------------- -------------
Net investment income 6,820,791 18,286,747
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain (loss) on
investment transactions 17,799,322 (60,005,693)
Net change in unrealized
appreciation/depreciation of:
Investments. 35,201,328 165,983,026
Foreign currency denominated assets
and liabilities (320) (2,108)
------------- -------------
Net gain on investment and foreign
currency transactions 53,000,330 105,975,225
------------- -------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 59,821,121 $ 124,261,972
============= =============
* The Fund changed its fiscal year end from July 31 to November 30.
See notes to financial statements.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 23
STATEMENT OF CHANGES IN NET ASSETS
August 1, 2003
to Year Ended Year Ended
November 30, July 31, July 31,
2003* 2003 2002
---------------- ---------------- ----------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 6,820,791 $ 18,286,747 $ 17,165,485
Net realized gain (loss) on
investment and foreign currency
transactions 17,799,322 (60,005,693) (44,258,546)
Net change in unrealized
appreciation/depreciation
of investments and foreign
currency denominated assets
and liabilities 35,201,008 165,980,918 (112,137,230)
---------------- ---------------- ----------------
Net increase (decrease) in net
assets from operations 59,821,121 124,261,972 (139,230,291)
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM
Net investment income
Class A (3,031,983) (9,118,870) (7,882,556)
Class B (2,196,088) (7,018,785) (6,222,056)
Class C (673,535) (2,242,635) (2,241,178)
Advisor Class (648,049) (2,372,287) (841,709)
Net realized gain on investment
transactions
Class A -0- -0- (7,747,354)
Class B -0- -0- (8,093,819)
Class C -0- -0- (3,001,449)
Advisor Class -0- -0- (147,401)
Tax return of capital
Class A -0- (1,009,016) -0-
Class B -0- (776,639) -0-
Class C -0- (248,151) -0-
Advisor Class -0- (262,497) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 69,101,285 165,685,849 503,215,928
---------------- ---------------- ----------------
Total increase 122,372,751 266,898,941 327,808,115
NET ASSETS
Beginning of period 1,269,756,810 1,002,857,869 675,049,754
---------------- ---------------- ----------------
End of period (including
undistributed net investment
income of $451,029
at July 31, 2002) $ 1,392,129,561 $ 1,269,756,810 $ 1,002,857,869
================ ================ ================
* The Fund changed its fiscal year end from July 31 to November 30.
See notes to financial statements.
- -------------------------------------------------------------------------------
24 o ALLIANCEBERNSTEIN BALANCED SHARES
NOTES TO FINANCIAL STATEMENTS
November 30, 2003
NOTE A
Significant Accounting Policies
AllianceBernstein Balanced Shares, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund offers Class A, Class B, Class C, Class R 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 may 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. Class B shares will automatically convert to
Class A shares eight years after the end of the calendar month of purchase.
Class C shares are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase. Class R shares are sold
without an initial or contingent deferred sales charge and are offered to
certain group retirement plans. Advisor Class shares are sold without an initial
or contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in
fee-based programs and to certain retirement plan accounts. All five 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 accounting principles generally accepted in the
United States 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. Additional information about
some of the items discussed in these Notes to Financial Statements is contained
in the Fund's Statement of Additional Information, which is available upon
request. The following is a summary of significant accounting policies followed
by the Fund.
1. Security Valuation
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to Alliance Capital Management L.P. (the "Adviser"), subject to the
Board's continuing oversight, certain responsibilities with respect to the
implementation of the Pricing Policies. Pursuant to the Pricing Policies,
securities for which market quotations are readily available are valued at their
current market value. In general, the market value of these securities is
determined as follows:
Securities listed on a national securities exchange or on a foreign securities
exchange are valued at the last sale price at the close of the exchange or
foreign securities exchange. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked prices on such
day. If no bid or asked prices are quoted on such day, then the security is
valued in good faith at fair value in accordance with the Pricing Policies.
Securities listed on more than
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 25
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities not listed on an exchange but traded on The
Nasdaq Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ
Official Closing Price; listed put or call options 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; open futures contracts and options thereon
are valued using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price. If there are no quotations available
for the day of valuations, the last available closing settlement price is used;
securities traded in the over-the-counter market, (but excluding securities
traded on NASDAQ) are valued at the mean of the current bid and asked prices as
reported by the National Quotation Bureau or other comparable sources; U.S.
Government securities and other debt instruments having 60 days or less
remaining until maturity are valued at amortized cost if their original maturity
was 60 days or less, or by amortizing their fair value as of the 61st day prior
to maturity if their original term to maturity exceeded 60 days; fixed-income
securities, including mortgage backed and asset backed securities, may be valued
on the basis of prices provided by a pricing service or at a price obtained from
one or more of the major broker/dealers. In cases where broker/dealer quotes are
obtained, the Pricing Policies provide that the Adviser may establish procedures
whereby changes in market yields or spreads are used to adjust, on a daily
basis, a recently obtained quoted price on a security; and OTC and other
derivatives are valued on the basis of a quoted bid price or spread from a major
broker/dealer in such security. Securities for which market quotations are not
readily available are valued at fair value in accordance with the Pricing
Policies.
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 gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
foreign investment transactions, and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Fund's books
and the U.S. dollar equivalent amounts actually received or paid. Net unrealized
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 or depreciation of investments and foreign currency
denominated assets and liabilities.
- -------------------------------------------------------------------------------
26 o ALLIANCEBERNSTEIN BALANCED SHARES
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. Investment gains and losses are determined on the
identified cost basis. The Fund accretes discounts as adjustments to interest
income. Additionally, the Fund amortizes premiums on debt securities for
financial statement reporting purposes only.
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, Class R and Advisor Class shares. Advisor Class shares have no
distribution fees.
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 accounting principles generally accepted in the United States.
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.
7. Change of Fiscal Year End
The Fund changed its fiscal year end from July 31 to November 30. Accordingly,
the statement of operations, the statement of changes in net assets and
financial highlights reflect the period from August 1, 2003 to November 30,
2003.
NOTE B
Advisory Fee and Other Transactions With Affiliates
Under the terms of an investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .625 of 1% of the first $200 million, .50
of 1% of the next $200 million and .45 of 1% of the excess over $400 million of
the average daily net assets of the Fund. Such fee is accrued daily and paid
monthly.
Effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee so as to charge the Fund at the reduced annual rate of .60 of 1% of the
first $200 million, .50 of 1% of the next $200 million and .40% in excess of
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 27
$400 million, of the average daily net assets of the Fund. The amount of the fee
waiver may increase or decrease as a result of a final, definitive agreement
with the New York Attorney General's Office ("NYAG"). For a more complete
discussion of the Adviser's settlement with the NYAG, please see "Subsequent
Events" below.
Pursuant to the advisory agreement, the Fund paid $58,000 and $140,000,
respectively, to the Adviser representing the cost of certain legal and
accounting services provided to the Fund by the Adviser for the period ended
November 30, 2003 and the year ended July 31, 2003.
The Fund compensates Alliance Global Investor Services, Inc. (AGIS), 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 $582,115 and $1,700,151, respectively, for
the period ended November 30, 2003 and the year ended July 31, 2003.
For the period ended November 30, 2003 and the year ended July 31, 2003, the
Fund's expenses were reduced by $1,065 and $2,256, respectively, under an
expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc., (the "Distributor"),
a wholly-owned subsidiary of the Adviser, serves as the distributor of the
Fund's shares. The Distributor has advised the Fund that it has retained
front-end sales charges of $46,901 and $39,956 from the sale of Class A shares
and received $24,589 and $22,185, $382,806 and $1,103,015 and $8,697 and
$33,247, respectively, in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the period ended November 30, 2003 and the year ended July 31,
2003.
Brokerage commissions paid on investment transactions for the period ended
November 30, 2003 and the year ended July 31, 2003, amounted to $482,142 and
$1,333,103, of which $29,310 and $52,700, respectively was paid to Sanford C.
Bernstein & Co. LLC, an affiliate of the Adviser.
Accrued expenses includes $17,606 owed to a Director under the Director's
deferred compensation plan.
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 distribution and servicing fees to the Distributor at
an annual rate of up to .30 of 1% of the Fund's average daily net assets
attributable to the Class A shares and 1% of the average daily net assets
attributable to
- -------------------------------------------------------------------------------
28 o ALLIANCEBERNSTEIN BALANCED SHARES
both Class B and Class C shares and .50 of 1% of the Fund's average daily net
assets attributable to the Class R shares. There are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has advised the Fund that it has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $15,013,077 and
$1,927,308, for Class B and Class C shares, respectively; such costs may be
recovered from the Fund in future periods as long as the Agreement is in effect.
In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs incurred by the Distributor beyond the current
fiscal year for Class A and Class R shares. 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)
for the period ended November 30, 2003, were as follows:
Purchases Sales
============== ==============
Investment securities (excluding
U.S. government securities) $ 204,957,453 $ 116,417,268
U.S. government securities 271,413,341 260,225,065
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding foreign currency
transactions) are as follows:
Cost $1,683,692,213
==============
Gross unrealized appreciation $ 168,431,475
Gross unrealized depreciation (35,045,714)
--------------
Net unrealized appreciation $ 133,385,761
==============
1. Forward Exchange Currency Contracts
The Fund may enter into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchase and sales commitments
denominated in foreign currencies and for investment purposes. A forward
exchange currency contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss arising
from the difference between the original contract and the closing of such
contract would be included in net realized gain or loss on foreign currency
transactions.
Fluctuations in the value of open forward exchange currency contracts are
recorded for financial reporting purposes as net unrealized appreciation or
depreciation 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 at least
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 29
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 the counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars reflects the total exposure the Fund has in that particular currency
contract.
2. Option Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. and foreign government securities and foreign
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk of
loss of 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 options
written. 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. In
writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security or currency underlying the written option. Exercise of
an option written by the Fund could result in the Fund selling or buying a
security or currency at a price different from the current market value.
NOTE E
Securities Lending
The Fund has entered into a securities lending agreement with AG Edwards & Sons,
Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent,
on behalf of the Fund, administers the lending of portfolio securities to
certain broker-dealers. In return, the Fund receives fee income from the lending
transactions or it retains a portion of interest on the investment of any cash
received as collateral. The Fund also continues to receive dividends or
- -------------------------------------------------------------------------------
30 o ALLIANCEBERNSTEIN BALANCED SHARES
interest on the securities loaned. Unrealized gain or loss on the value of the
securities loaned that may occur during the term of the loan will be reflected
in the accounts of the Fund. All loans are continuously secured by collateral
exceeding the value of the securities loaned. All collateral consists of either
cash or U.S. government securities. The Lending Agent may invest the cash
collateral received in accordance with the investment restrictions of the Fund
in one or more of the following investments: U.S. government or U.S. government
agency obligations, bank obligations, corporate debt obligations, asset-backed
securities, investment funds, structured products, repurchase agreements and an
eligible money market fund. The Lending Agent will indemnify the Fund for any
loss resulting from a borrower's failure to return a loaned security when due.
For the period ended November 30, 2003, the Fund had loaned securities with a
value of $359,133,729 and received cash collateral of $373,565,627 which was
invested in short-term securities as included in the accompanying portfolio of
investments. For the period ended November 30, 2003 and the year ended July 31,
2003, the Fund earned fee income of $132,341 and $177,292, respectively, which
is included in interest income in the accompanying statement of operations.
NOTE F
Capital Stock
There are 15,000,000,000 shares of $.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C, Advisor Class
and Class R shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
Shares
--------------------------------------------
August 1,
2003 to
November 30, Year Ended Year Ended
2003(a) July 31, 2003 July 31, 2002
------------ ------------- -------------
CLASS A
Shares sold 6,378,980 15,573,624 16,353,130
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 183,759 656,841 937,954
- -------------------------------------------------------------------------------
Shares converted from Class B 234,989 635,696 637,162
- -------------------------------------------------------------------------------
Shares redeemed (4,107,803) (9,689,505) (6,681,636)
- -------------------------------------------------------------------------------
Net increase 2,689,925 7,176,656 11,246,610
===============================================================================
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 31
Shares
--------------------------------------------
August 1,
2003 to
November 30, Year Ended Year Ended
2003(a) July 31, 2003 July 31, 2002
------------ ------------- -------------
CLASS B
Shares sold 4,525,502 12,919,357 18,945,274
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 125,242 485,794 823,750
- -------------------------------------------------------------------------------
Shares converted to Class A (246,460) (665,956) (677,768)
- -------------------------------------------------------------------------------
Shares redeemed (2,517,758) (7,962,965) (6,757,334)
- -------------------------------------------------------------------------------
Net increase 1,886,526 4,776,230 12,333,922
===============================================================================
CLASS C
Shares sold 1,481,488 3,475,971 5,536,890
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 33,342 133,310 253,844
- -------------------------------------------------------------------------------
Shares redeemed (1,089,721) (3,175,658) (2,569,148)
- -------------------------------------------------------------------------------
Net increase 425,109 433,623 3,221,586
===============================================================================
ADVISOR CLASS
Shares sold 343,873 1,523,370 8,821,041
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 41,719 190,466 61,830
- -------------------------------------------------------------------------------
Shares redeemed (547,517) (2,072,068) (1,614,910)
- -------------------------------------------------------------------------------
Net increase (decrease) (161,925) (358,232) 7,267,961
===============================================================================
November 3,
2003(b) to
November 30,
2003
------------
CLASS R
Shares sold 663
- -----------------------------------------------
Net increase 663
===============================================
(a) The Fund changed its fiscal year end from July 31 to November 30.
(b) Commencement of distributions.
- -------------------------------------------------------------------------------
32 o ALLIANCEBERNSTEIN BALANCED SHARES
Amount
--------------------------------------------
August 1,
2003 to
November 30, Year Ended Year Ended
2003(a) July 31, 2003 July 31, 2002
------------ ------------- -------------
CLASS A
Shares sold $ 94,053,732 $ 213,741,476 $ 241,460,812
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 2,722,192 8,851,198 13,680,072
- -------------------------------------------------------------------------------
Shares converted from Class B 3,490,046 8,572,412 9,585,523
- -------------------------------------------------------------------------------
Shares redeemed (60,992,465) (130,876,465) (96,368,065)
- -------------------------------------------------------------------------------
Net increase $ 39,273,505 $ 100,288,621 $ 168,358,342
===============================================================================
CLASS B
Shares sold $ 63,744,936 $ 167,269,278 $ 267,643,098
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 1,771,796 6,245,526 11,512,051
- -------------------------------------------------------------------------------
Shares converted to Class A (3,490,046) (8,572,412) (9,585,523)
- -------------------------------------------------------------------------------
Shares redeemed (35,651,747) (101,386,653) (92,094,196)
- -------------------------------------------------------------------------------
Net increase $ 26,374,939 $ 63,555,739 $ 177,475,430
===============================================================================
CLASS C
Shares sold $ 20,948,666 $ 45,360,422 $ 78,742,675
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 473,113 1,718,628 3,558,209
- -------------------------------------------------------------------------------
Shares redeemed (15,521,151) (40,635,603) (35,470,136)
- -------------------------------------------------------------------------------
Net increase $ 5,900,628 $ 6,443,447 $ 46,830,748
===============================================================================
ADVISOR CLASS
Shares sold $ 5,087,998 $ 20,590,293 $ 132,526,619
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 619,112 2,558,987 876,232
- -------------------------------------------------------------------------------
Shares redeemed (8,164,897) (27,751,238) (22,851,443)
- -------------------------------------------------------------------------------
Net increase (decrease) $ (2,457,787) $ (4,601,958) $ 110,551,408
===============================================================================
November 3,
2003(b) to
November 30,
2003
------------
CLASS R
Shares sold $ 10,000
- -----------------------------------------------
Net increase $ 10,000
===============================================
(a) The Fund changed its fiscal year end from July 31 to November 30.
(b) Commencement of distributions.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 33
NOTE G
Risks Involved in Investing in the Fund
Interest Rate Risk and Credit Risk-- Interest rate risk is the risk that changes
in interest rates will affect the value of the Fund's investments in
fixed-income debt securities such as bonds or notes. Increases in interest rates
may cause the value of the Fund's investments to decline. Credit risk is the
risk that the issuer or guarantor of a debt security, or the counterparty to a
derivative contract, will be unable or unwilling to make timely principal and/or
interest payments, or to otherwise honor its obligations. The degree of risk for
a particular security may be reflected in its credit risk rating. Credit risk is
greater for medium quality and lower-rated securities. Lower-rated debt
securities and similar unrated securities (commonly known as "junk bonds") have
speculative elements or are predominantly speculative risks.
NOTE H
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $500 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
the miscellaneous expenses in the statement of operations. The Fund did not
utilize the Facility during the period ended November 30, 2003.
NOTE I
Distributions to Shareholders
The tax character of distributions paid during the fiscal period ended November
30, 2003, and the fiscal years ended July 31, 2003 and July 31, 2002 were as
follows:
November 30, July 31, July 31,
2003 2003 2002
============ ============= =============
Distributions paid from:
Ordinary income $ 6,549,655 $ 20,752,577 $ 17,187,499
Long term capital gains -0- -0- 18,990,023
------------ ------------- -------------
Total taxable distributions 6,549,655 20,752,577 36,177,522
Tax return of capital -0- 2,296,303 -0-
------------ ------------- -------------
Total distributions paid $ 6,549,655 $ 23,048,880 $ 36,177,522
============ ============= =============
- -------------------------------------------------------------------------------
34 o ALLIANCEBERNSTEIN BALANCED SHARES
As of November 30, 2003, the components of accumulated earnings (deficit) on a
tax basis were as follows:
Accumulated capital losses and other losses $ (92,157,566)(a)
Undistributed ordinary income 722,794
Unrealized appreciation/(depreciation) 133,375,500(b)
-------------
Total accumulated earnings/(deficit) $ 41,940,728
-------------
(a) On November 30, 2003, the Fund had net capital loss carryforward of
$92,157,566 of which $83,821,002 expires in 2010 and $8,336,564 expires in the
year 2011.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributed primarily to the tax deferral of
losses on wash sales and the difference between book tax amortization methods
for premium and market discount.
During the current fiscal year, permanent differences, primarily due to the
different tax treatment of accretion of market discount and premiums on fixed
income securities, resulted in a net decrease in distributions in excess of net
investment income and an increase in accumulated net realized loss on investment
and foreign currency transactions. This reclassification had no effect on net
assets.
NOTE J
Legal Proceedings
As has been previously reported in the press, the Staff of the U.S. Securities
and Exchange Commission ("SEC") and the NYAG have been investigating practices
in the mutual fund industry identified as "market timing" and "late trading" of
mutual fund shares. Certain other regulatory authorities have also been
conducting investigations into these practices within the industry and have
requested that Alliance Capital Management L.P. ("Alliance Capital"), the Fund's
Adviser, provide information to them. Alliance Capital has been cooperating and
will continue to cooperate with all of these authorities. Please see "Subsequent
Events" below for a description of the agreements reached by Alliance Capital
and the SEC and NYAG in connection with the investigations mentioned above.
The special committee of Alliance Capital's Board of Directors, comprised of the
members of Alliance Capital's Audit Committee and the other independent member
of the Board, is continuing to direct and oversee an internal investigation and
a comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
In addition, the Independent Directors of the Fund (the "Independent Directors")
have initiated an investigation of the above-mentioned matters with the advice
of an independent economic consultant and independent counsel. The Independent
Directors have formed a special committee to supervise the investigation.
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 35
filed against Alliance Capital; Alliance Capital Management Holding L.P.;
Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the
AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles
Schaffran (collectively, the "Alliance Capital defendants"); and certain other
defendants not affiliated with Alliance Capital. The Hindo Complaint was filed
in the United States District Court for the Southern District of New York by
alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo
Complaint alleges that certain of the Alliance Capital defendants failed to
disclose that they improperly allowed certain hedge funds and other unidentified
parties to engage in late trading and market timing of AllianceBernstein Fund
securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b)
and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act.
Plaintiffs seek an unspecified amount of compensatory damages and rescission of
their contracts with Alliance Capital, including recovery of all fees paid to
Alliance Capital pursuant to such contracts.
Since October 2, 2003, approximately forty additional lawsuits making factual
allegations similar to those in the Hindo Complaint were filed against Alliance
Capital and certain other defendants, some of which name the Fund as a
defendant. All of these lawsuits seek an unspecified amount of damages.
As a result of the matters more fully discussed in the note entitled "Subsequent
Events" below, investors in the AllianceBernstein Mutual Funds may choose to
redeem their investments. This may require the AllianceBernstein Mutual Funds to
sell investments held by those funds to provide for sufficient liquidity and
could also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds.
NOTE K
Subsequent Events
On December 18, 2003, Alliance Capital, the Fund's Adviser, confirmed that it
had reached terms with the SEC and the NYAG for the resolution of regulatory
claims relating to the practice of "market timing" mutual fund shares in some of
the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in
an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject
to final, definitive documentation. Among the key provisions of these agreements
are the following:
(i) Alliance Capital agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
- -------------------------------------------------------------------------------
36 o ALLIANCEBERNSTEIN BALANCED SHARES
(ii) Alliance Capital agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds, commencing January 1,
2004, for a period of at least five years. The determination of which funds will
have their fees reduced and to what degree is subject to the terms of the
definitive agreement with the NYAG; and
(iii) Alliance Capital agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order contemplates that Alliance
Capital's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation and effective January 1,
2004, the Adviser began waiving a portion of its advisory fee. For a more
complete description of this waiver, please see "Advisory Fee and Other
Transactions with Affiliates" above.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 37
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
----------------------------------------------------------------------------
August 1,
2003 to Year Ended July 31,
November 30, ---------------------------------------------------------------
2003(a) 2003 2002(b) 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.54 $13.26 $15.96 $15.53 $15.63 $15.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income(c) .09 .28 .35 .39 .40 .36
Net realized and unrealized
gain (loss) on investment
transactions .58 1.32 (2.35) 1.16 .49 1.29
Net increase (decrease) in net
asset value from operations .67 1.60 (2.00) 1.55 .89 1.65
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.08) (.29) (.34) (.38) (.35) (.34)
Distributions from net realized
gain on investment transactions -0- -0- (.36) (.74) (.64) (1.65)
Tax return of capital -0- (.03) -0- -0- -0- -0-
Total dividends and distributions (.08) (.32) (.70) (1.12) (.99) (1.99)
Net asset value, end of period $15.13 $14.54 $13.26 $15.96 $15.53 $15.63
TOTAL RETURN
Total investment return based
on net asset value(d) 4.62% 12.29% (12.91)% 10.42% 6.22% 11.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $587,685 $525,637 $384,212 $282,874 $212,326 $189,953
Ratio to average net assets of:
Expenses 1.07%(g) 1.12% 1.10% 1.17% 1.12% 1.22%(e)
Net investment income 1.84%(g) 2.04% 2.36% 2.46% 2.62% 2.31%
Portfolio turnover rate 29% 62% 79% 63% 76% 105%
See footnote summary on page 43.
- -------------------------------------------------------------------------------
38 o ALLIANCEBERNSTEIN BALANCED SHARES
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
----------------------------------------------------------------------------
August 1,
2003 to Year Ended July 31,
November 30, ---------------------------------------------------------------
2003(a) 2003 2002(b) 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $13.87 $12.68 $15.31 $14.96 $15.11 $15.54
INCOME FROM INVESTMENT OPERATIONS
Net investment income(c) .05 .17 .23 .26 .27 .23
Net realized and unrealized
gain (loss) on investment
transactions .55 1.26 (2.25) 1.12 .48 1.25
Net increase (decrease) in net
asset value from operations .60 1.43 (2.02) 1.38 .75 1.48
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.06) (.22) (.25) (.29) (.26) (.26)
Distributions from net realized
gain on investment transactions -0- -0- (.36) (.74) (.64) (1.65)
Tax return of capital -0- (.02) -0- -0- -0- -0-
Total dividends and distributions (.06) (.24) (.61) (1.03) (.90) (1.91)
Net asset value, end of period $14.41 $13.87 $12.68 $15.31 $14.96 $15.11
TOTAL RETURN
Total investment return based
on net asset value(d) 4.33% 11.44% (13.53)% 9.63% 5.46% 10.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $534,752 $488,365 $385,868 $277,138 $155,060 $136,384
Ratio to average net assets of:
Expenses 1.81%(g) 1.86% 1.84% 1.93% 1.86% 1.97%(e)
Net investment income 1.14%(g) 1.30% 1.61% 1.70% 1.88% 1.56%
Portfolio turnover rate 29% 62% 79% 63% 76% 105%
See footnote summary on page 43.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 39
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
----------------------------------------------------------------------------
August 1,
2003 to Year Ended July 31,
November 30, ---------------------------------------------------------------
2003(a) 2003 2002(b) 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $13.92 $12.72 $15.36 $15.01 $15.15 $15.57
INCOME FROM INVESTMENT OPERATIONS
Net investment income(c) .05 .17 .23 .26 .28 .24
Net realized and unrealized
gain (loss) on investment
transactions .56 1.27 (2.26) 1.12 .48 1.25
Net increase (decrease) in net
asset value from operations .61 1.44 (2.03) 1.38 .76 1.49
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.06) (.22) (.25) (.29) (.26) (.26)
Distributions from net realized
gain on investment transactions -0- -0- (.36) (.74) (.64) (1.65)
Tax return of capital -0- (.02) -0- -0- -0- -0-
Total dividends and distributions (.06) (.24) (.61) (1.03) (.90) (1.91)
Net asset value, end of period $14.47 $13.92 $12.72 $15.36 $15.01 $15.15
TOTAL RETURN
Total investment return based
on net asset value(d) 4.39% 11.49% (13.55)% 9.59% 5.52% 10.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $162,243 $150,188 $131,761 $109,592 $65,214 $63,517
Ratio to average net assets of:
Expenses 1.80%(g) 1.85% 1.84% 1.93% 1.86% 1.96%(e)
Net investment income 1.15%(g) 1.32% 1.61% 1.71% 1.88% 1.57%
Portfolio turnover rate 29% 62% 79% 63% 76% 105%
See footnote summary on page 43.
- -------------------------------------------------------------------------------
40 o ALLIANCEBERNSTEIN BALANCED SHARES
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class R
-------------
November 3,
2003(f) to
November 30,
2003(a)
-------------
Net asset value, beginning of period $15.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income(c) .02
Net realized and unrealized gain on investment transactions .02
Net increase in net asset value from operations .04
Net asset value, end of period $15.13
TOTAL RETURN
Total investment return based on net asset value(d) .27%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $ 10
Ratio to average net assets of:
Expenses 1.34%(g)
Net investment income. 1.70%(g)
Portfolio turnover rate. 29%
See footnote summary on page 43.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 41
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
----------------------------------------------------------------------------
August 1,
2003 to Year Ended July 31,
November 30, ---------------------------------------------------------------
2003(a) 2003 2002(b) 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.56 $13.28 $15.98 $15.54 $15.64 $15.98
INCOME FROM INVESTMENT OPERATIONS
Net investment income(c) .10 .32 .37 .44 .43 .39
Net realized and unrealized
gain (loss) on investment
transactions .59 1.32 (2.34) 1.16 .50 1.29
Net increase (decrease) in net
asset value from operations .69 1.64 (1.97) 1.60 .93 1.68
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.09) (.32) (.37) (.42) (.39) (.37)
Distributions from net realized
gain on investment transactions -0- -0- (.36) (.74) (.64) (1.65)
Tax return of capital -0- (.04) -0- -0- -0- -0-
Total dividends and distributions (.09) (.36) (.73) (1.16) (1.03) (2.02)
Net asset value, end of period $15.16 $14.56 $13.28 $15.98 $15.54 $15.64
TOTAL RETURN
Total investment return based
on net asset value(d) 4.75% 12.57% (12.67)% 10.75% 6.48% 11.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $107,440 $105,567 $101,017 $5,446 $2,943 $2,627
Ratio to average net assets of:
Expenses .78%(g) .83% .85% .91% .86% .97%(e)
Net investment income 2.11%(g) 2.36% 2.79% 2.75% 2.88% 2.56%
Portfolio turnover rate 29% 62% 79% 63% 76% 105%
See footnote summary on page 43.
- -------------------------------------------------------------------------------
42 o ALLIANCEBERNSTEIN BALANCED SHARES
(a) The Fund changed its fiscal year end from July 31 to November 30.
(b) As required, effective August 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide, Audits of Investment Companies and
began amortizing premium on debt securities for financial statement purposes
only. For the year ended July 31, 2002, the effect of this change toClass A,
Class B and Class C was to decrease net investment income by $.01 and decrease
Advisor Class by $.02 per share, increase net unrealized gains and losses by
$.01 for Class A, Class B and Class C; and increase Advisor Class by $.02 per
share. Consequently, the ratio of net investment income to average net assets
was decreased from 2.46% to 2.36% for Class A, 1.71% to 1.61% for Class B, 1.71%
to 1.61% for Class C and from 2.89% to 2.79% for Advisor Class on an annualized
basis. Per share, ratios and supplemental data prior to August 1, 2001 have not
been restated to reflect this change in presentation.
(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 return does not reflect the deduction of taxes that a shareholder would
pay on Fund distributions or the redemption of Fund shares. 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:
Year Ended
July 31, 1999
------------------
Class A 1.21%
Class B 1.96%
Class C 1.94%
Advisor Class .96%
(f) Commencement of distribution.
(g) Annualized.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 43
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of AllianceBernstein Balanced
Shares, Inc.
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 AllianceBernstein Balanced Shares,
Inc., formally Alliance Balanced Shares, Inc., (the "Fund") at November 30,
2003, the results of its operations for the period August 1, 2003 through
November 30, 2003 and for the year ended July 31, 2003, the changes in its net
assets for the period August 1, 2003 through November 30, 2003 and for each of
the two years in the period ended July 31, 2003 and the financial highlights for
the period August 1, 2003 through November 30, 2003 for each of the five years
in the period ended July 31, 2003, in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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
November 30, 2003 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
January 23, 2004
TAX INFORMATION (unaudited)
For the fiscal year ended November 30, 2003 certain dividends paid by the
Portfolio may be subject to a maximum tax rate of 15%, as provided for by the
Jobs and Growth Tax Relief Reconciliation Act of 2003. The Portfolio designates
a maximum amount of $6,120,415 as qualified dividend income, which is taxed at a
maximum rate of 15%.
The information and distributions reported herein may differ from the
information and distributions taxable to the shareholders for the calendar year
ending December 31, 2003. Complete information will be computed and reported in
conjunction with your 2003 Form 1099-DIV.
- -------------------------------------------------------------------------------
44 o ALLIANCEBERNSTEIN BALANCED SHARES
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Kathleen A. Corbet, Senior Vice President
Paul C. Rissman(2), Senior Vice President
Thomas J. Bardong, Vice President
Frank V. Caruso, Vice President
John J. Kelley, Vice President
Susanne M. Lent, Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Custodian
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Distributor
AllianceBernstein Investment Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Transfer Agent
Alliance Global Investor Services, Inc.
P.O. Box 786003
San Antonio, TX78278-6003
Toll-Free (800) 221-5672
Independent Auditors
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
(1) Member of the Audit Committee.
(2) Mr. Rissman is the person primarily responsible for the day-to-day
management of the Fund's investment portfolio.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 45
MANAGEMENT OF THE FUND
(unaudited)
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIP
ADDRESS, OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr., #+, 71 Investment adviser and an 116 None
2 Sound View Drive independent consultant. He was
Suite 100 formerly Senior Manager of Barrett
Greenwich, CT 06830 Associates, Inc., a registered
(12) investment adviser, with which he
Chairman of the Board had been associated since prior
to 1999. He was formerly Deputy Comptroller
and Chief Investment Officer of the State of
New York and, prior thereto, Chief
Investment Officer of the New York Bank for
Savings.
Ruth Block, #+, 73 Formerly Executive Vice President 96 None
500 SE Mizner Blvd. and Chief Insurance Officer of The
Boca Raton, FL 33432 Equitable Life Assurance Society
(18) of the United States; Chairman
and Chief Executive Officer of Evlico;
Director of Avon, BP (oil and gas), Ecolab
Incorporated (specialty chemicals), Tandem
Financial Group and Donaldson, Lufkin &
Jenrette Securities Corporation; former
Governor at Large National Association of
Securities Dealers, Inc.
David H. Dievler, #+, 74 Independent consultant. Until 100 None
P.O. Box 167 December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
(17) Management Corporation ("ACMC")
responsible for mutual fund administration.
Prior to joining ACMC in 1984 he was Chief
Financial Officer of Eberstadt Asset
Management since 1968. Prior to that he was
a Senior Manager at Price Waterhouse & Co.
Member of American Institute of Certified
Public Accountants since 1953.
- -------------------------------------------------------------------------------
46 o ALLIANCEBERNSTEIN BALANCED SHARES
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIP
ADDRESS, OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin, #+, 61 Consultant. Formerly President 98 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
(12) a Senior Advisor from June 1999
-June 2000 and President of Historic Hudson
Valley (historic preservation) from December
1989-May 1999. Previously, Director of the
National Academy of Design and during
1988-1992, he was Director and Chairman of
the Audit Committee of ACMC.
Clifford L. Michel, #+, 64 Senior Counsel of the law firm of 97 Placer
15 St. Bernard's Road Cahill Gordon & Reindel since Dome, Inc.
Gladstone, NJ 07934 February 2001 and a partner of
(15) that firm for more than twenty-five
years prior thereto. He is President
and Chief Executive Officer of
Wenonah Development Company
(investments) and a Director of Placer Dome,
Inc. (mining).
Donald J. Robinson, #+, 69 Senior Counsel to the law firm of 96 None
98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP
Weston, VT 05161 since prior to 1999. Formerly a
(8) senior partner and a member of
the Executive Committee of that firm. He was
also a member and Chairman of the Municipal
Securities Rulemaking Board and Trustee of
the Museum of the City of New York.
INTERESTED DIRECTOR
Marc O. Mayer, ++, 46 Executive Vice President of ACMC 68 None
1345 Avenue of the since 2001; prior thereto, Chief
Americas Executive Officer of Sanford C.
New York, NY 10105 Bernstein & Co., LLC and its
(Elected November 18, predecessor since prior to 1999.
2003)
* There is no stated term of office for the Fund's Directors.
# Member of the Audit Committee.
+ Member of the Nominating Committee.
++ Mr. Mayer is an "interested director", as defined in the 1940 Act, due to
his position as Executive Vice President of ACMC.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 47
Officer Information
Certain Information concerning the Fund's Officers is listed below.
NAME, POSITION(S) PRINCIPAL OCCUPATION
ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS**
- --------------------------------------------------------------------------------------------------------------
Marc O. Mayer, 46 President Executive Vice President of Alliance
Capital Management Corporation
("ACMC")** since 2001; prior thereto,
Chief Executive Officer of Sanford C.
Bernstein & Co., LLC and its
predecessor since prior to 1999.
Kathleen A. Corbet, 43 Senior Vice President Executive Vice President of ACMC, **
with which she has been associated
since prior to 1999.
Paul C. Rissman, 47 Senior Vice President Executive Vice President of ACMC, **
with which he has been associated since
prior to 1999.
Thomas J. Bardong, 58 Vice President Senior Vice President of ACMC, **
with which he has been associated since
prior to 1999.
Frank V. Caruso, 47 Vice President Senior Vice President of ACMC, **
with which he has been associated since
prior to 1999.
John J. Kelley, 43 Vice President Senior Vice President of ACMC, **
with which he has been associated since
prior to 1999.
Susanne M. Lent, 34 Vice President Senior Vice President of ACMC, **
with which she has been associated since
prior to 1999.
Mark R. Manley, 41 Secretary Senior Vice President and Acting
General Counsel of ACMC, ** with
which he has been associated since
prior to 1999.
Mark D. Gersten, 53 Treasurer and Chief Senior Vice President of Alliance Global
Financial Officer Investor Services, Inc. ("AGIS"), ** with
which he has been associated since
prior to 1999.
Vincent S. Noto, 39 Comptroller Vice President of AGIS, **
with which he has been associated since
prior to 1999.
* The address for each of the Fund's officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC and AGIS are affiliates of the Fund.
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at (800) 227-4618 for a free prospectus or SAI.
- -------------------------------------------------------------------------------
48 o ALLIANCEBERNSTEIN BALANCED SHARES
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- --------------------------------------------
Wealth Strategies Funds
- --------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy*
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy**
- --------------------------------------------
Blended Style Series
- --------------------------------------------
U.S. Large Cap Portfolio
- --------------------------------------------
Growth Funds
- --------------------------------------------
Domestic
Growth Fund
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Small Cap Growth Fund+
Technology Fund
Global & International
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
- --------------------------------------------
Value Funds
- --------------------------------------------
Domestic
Balanced Shares
Disciplined Value Fund
Growth & Income Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- --------------------------------------------
Taxable Bond Funds
- --------------------------------------------
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
- --------------------------------------------
Municipal Bond Funds
- --------------------------------------------
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
- --------------------------------------------
Intermediate Municipal Bond Funds
- --------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- --------------------------------------------
Closed-End Funds
- --------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
We also offer Exchange Reserves,++ which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus.
Please read the prospectus carefully before you invest or send money.
* Formerly Growth Investors Fund.
** Formerly Conservative Investors Fund.
+ Quasar Fund changed its name to Small Cap Growth Fund on 11/3/03.
++ An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BALANCED SHARES o 49
ALLIANCEBERNSTEIN BALANCED SHARES
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
AllianceBernstein [LOGO](SM)
Investment Research and Management
(SM) This service mark used under license from the owner, Alliance Capital
Management L.P.
BALAR1103
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting officer.
A copy of the registrant's code of ethics is filed herewith as Exhibit 10(a)(1).
(b) During the period covered by this report, no amendments were made to the
provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers to
the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended)
are effective at the reasonable assurance level based on their evaluation of
these controls and procedures as of a date within 90 days of the filing date of
this document.
(b) There were no significant changes in the registrant's internal controls that
could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
Exhibit No. DESCRIPTION OF EXHIBIT
10 (a) (1) Code of ethics that is subject to the disclosure
of Item 2 hereof
10 (b) (1) Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
10 (b) (2) Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
10 (c) Certification of Principal Executive Officer and
Principal Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Balanced Shares, Inc.
By: /s/ Marc O. Mayer
----------------------
Marc O. Mayer
President
Date: January 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
----------------------
Marc O. Mayer
President
Date: January 29, 2004
By: /s/ Mark D. Gersten
-----------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: January 29, 2004