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: 811-00134
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, 2004
Date of reporting period: November 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
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Asset Allocation
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AllianceBernstein Balanced Shares
Annual Report -- November 30, 2004
Investment Products Offered
- ---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
- ---------------------------
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
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, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes
full portfolio holdings for the Fund monthly at www.alliancebernstein.com.
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.
February 10, 2005
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, 2004.
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 table on page 4 shows the Fund's performance compared to a composite
benchmark (the "Composite"), a 60%/25%/15% blend of the Russell 1000 Value
Index, the LB Government/Credit Index and the Citigroup 1-Year Treasury Bond
Index, for the six- and 12-month periods ended November 30, 2004. Also included
in the table are returns for the Fund's peer group, as represented by the
Lipper Balanced Funds Average (the "Lipper Average"). Funds in the Lipper
Average have generally similar investment objectives to the Fund, although some
may have different investment policies and sales and management fees.
For both the six- and 12-month periods ended November 30, 2004, the Fund's
Class A shares underperformed the Composite. The performance of the Fund's
equity allocation during the six- and 12-month periods ended November 30, 2004
contributed to its underperformance. Specifically, performance was hindered by
an overweighted position in health care and an underweighted position in
utilities. The Fund's fixed-income allocation, however, modestly outperformed
the LB Government/Corporate Index during the six and 12-month periods ended
November 30, 2004.
The Fund's fixed-income allocation was structured to capture two investment
themes which were expected to unfold over the course of 2004. First, a turn in
the monetary policy cycle was expected to bring about a meaningful rise in
market rates. Second, the cyclical strengthening of balance sheets and a
concurrent fall in default rates was expected to result in an ongoing
tightening of credit spreads. These themes were embedded in the Fund through a
short duration exposure, and by overweighting BBB- rated bonds. The credit
allocation proved positive to returns as the overall risk premium of corporate
bonds narrowed over the course of the year, and lower credit quality bonds
outperformed those of higher quality bonds, according to the Lehman Brothers
family of bond indices.
Additionally, the Fund's security selection added incrementally to its sector
allocation. However, the Fund's short duration exposure did not prove positive,
and essentially offset the positive returns earned in credit. When the Federal
Reserve (the "Fed") raised policy rates by 100bp from June of 2004 through
November of 2004, the impact on market rates was unusual in that the term
structure of rates actually fell, according to the LB Government Index. During
this period of Fed tightening, the long rates rallied more than short-term
rates, causing the Fund's short duration exposure to detract from relative
returns.
Market Review and Investment Strategy
The annual reporting period was characterized by a solid economic environment,
offset to some degree by rising oil prices and increased short-term interest
rates.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 1
Robust economic growth, fueled by business and consumer spending, contributed
to a strong period of expansion. Employment growth which had been lagging the
economic recovery, began to improve helping to keep consumer spending strong.
The Fed finally began to tighten monetary policy, reversing an easing trend
that had been in place since January 2001. During the annual reporting period,
the Fed raised rates 100bp to 2.0%. However, it appears that this had
relatively little impact on monetary conditions because core inflation rose by
the same amount, so real policy rates stayed at essentially zero. Moreover, the
trade-weighted dollar actually depreciated, which, all else being equal,
typically stimulates growth via trade. Market rates had a mixed response to the
turn in the monetary policy cycle; short-term rates rose, but intermediate and
long-term rates actually fell, a highly unusual response during the early
stages of a monetary tightening cycle. Corporate profits remained very strong
throughout the annual reporting period. Overall credit metrics (leverage and
interest coverage) continued to improve, while default rates fell to
historically low levels. This facilitated the ongoing contraction in credit
risk premiums because the lower the credit quality, the greater the contraction
in risk premiums.
The investment discipline utilized by the Fund's equity management team was
largely focused on stock selection (as opposed to sector rotation) and the
Fund's underperformance, in part, stemmed from the Fund's overall underweight
in regional banks and utilities. The equity team had expected long-term
interest rates to follow short-term rates, thereby resulting in higher bond
yields (which would negatively impact utility valuations) and net interest
margin pressure at banks. The equity team further believed that interest rate
pressures would cause multiple contractions in these sectors, which had been
trading at close to historic valuations. In fact, long-term rates have
continued to decline, even in the face of rising short-term rates, and interest
rate sensitive sectors have outperformed, as valuations have remained at high
levels.
The fixed-income team's strategy was to position the portfolio for the turn in
the monetary policy cycle by shortening duration versus the Fund's composite
benchmark in order to make the portfolio less price sensitive to a rise in
market rates. Unfortunately, this detracted from performance as market rates
actually fell on average as the Fed tightened, an unusual response as discussed
above. The fixed-income team also positioned the Fund to capture the excess
return that would be generated by corporate bonds in a period of contracting
risk premiums. This was a successful strategy at both the sector and security
selection level. Netting the Fund's duration and corporate strategy proved to
be modestly positive to returns compared to the Fund's composite benchmark.
IN MEMORY
It is with sadness that we announce the passing of Clifford L. Michel, a member
of the Board of Directors of AllianceBernstein Balanced Shares. Mr. Michel
served the interests of the Fund's shareholders for the last 16 years. His hard
work, dedication and contributions to the Fund will be greatly missed.
_______________________________________________________________________________
2 o ALLIANCEBERNSTEIN BALANCED SHARES
Historical Performance
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HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein at (800) 227-4618. You should read the prospectus carefully
before you invest.
Returns are annualized for periods longer than one year. All fees and expenses
related to the operation of the Fund have been deducted. NAV returns do not
reflect sales charges; if sales charges were reflected, the Fund's quoted
performance would be lower. SEC returns reflect the applicable sales charges
for each share class: a 4.25% maximum front-end sales charge for Class A
shares; the applicable contingent deferred sales charge for Class B shares (4%
year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales
charge for Class C shares. Returns for Class R and Advisor Class shares will
vary due to different expenses associated with these classes. Performance
assumes reinvestment of distributions and does not account for taxes.
Benchmark Disclosure
None of the following indices or composites reflects 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 Lehman Brothers (LB) Government/Credit Index
represents a combination of two indices: the LB Government Index which is
composed of the LB Treasury Index and the LB Agency Index, and the LB Credit
Index which includes investment-grade bonds issued by corporations and
non-corporate entities. The unmanaged Citigroup 1-Year Treasury Bond Index
represents performance of U.S. Treasury bills with one-year maturities. The
composite benchmark represents a 60%/25%/15% blend of the Russell 1000 Value
Index, the LB Government/Credit Index and the Citigroup 1-Year Treasury Bond
Index, respectively. For the six- and 12-month periods ended November 30, 2004,
the Lipper Balanced Funds Average consisted of 633 and 566 funds, respectively.
These funds have generally similar investment objectives to AllianceBernstein
Balanced Shares, although some may have different investment policies and sales
and management fees. An investor cannot invest directly in an index or average,
and their results are not indicative of the performance for any specific
investment, including the Fund.
A Word About Risk
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. In order to achieve its investment
objectives, the Fund may at times use certain types of investment derivatives,
such as options, futures, forwards and swaps. These instruments involve risks
different from, and in certain cases, greater than, the risks presented by more
traditional investments. These risks are fully discussed in the Fund's
prospectus.
(Historical Performance continued on next page)
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 3
Historical Performance
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HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARK -------------------------
PERIODS ENDED NOVEMBER 30, 2004 6 Months 12 Months
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AllianceBernstein Balanced Shares
Class A 6.31% 12.78%
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Class B 5.91% 11.97%
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Class C 5.89% 11.92%
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Class R 6.16% 12.52%
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Advisor Class 6.45% 13.07%
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Russell 1000 Value Index 11.01% 19.67%
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Lehman Brothers Government/Credit Index 3.72% 4.11%
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Citigroup 1-Year Treasury Bond Index 0.45% 0.91%
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Composite: 60% Russell 1000 Value Index /
25% LB Government/Credit Index /
15% Citigroup 1-Year Treasury Bond Index 7.60% 12.97%
- -------------------------------------------------------------------------------
Lipper Balanced Funds Average 5.05% 8.84%
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GROWTH OF A $10,000 INVESTMENT IN THE FUND
11/30/94 TO 11/30/04
AllianceBernstein Balanced Shares Class A: $27,612
Composite: $28,505
Russell 1000 Value Index: $35,737
LB Government/Credit Index: $21,117
Citigroup 1-Year Treasury Bond Index: $16,237
[THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
Citigroup
AllianceBernstein Russell 1-Year
Balanced 1000 LB Government/ Treasury
Shares Value Credit Bond
Class A Composite Index Index Index
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11/30/94 $ 9,575 $ 10,000 $ 10,000 $ 10,000 $ 10,000
11/30/95 $ 12,052 $ 12,767 $ 13,653 $ 11,829 $ 10,784
11/30/96 $ 13,432 $ 15,074 $ 17,245 $ 12,491 $ 11,425
11/30/97 $ 16,521 $ 18,172 $ 22,362 $ 13,417 $ 12,107
11/30/98 $ 18,745 $ 20,453 $ 25,736 $ 14,806 $ 12,840
11/30/99 $ 20,219 $ 21,804 $ 28,431 $ 14,612 $ 13,399
11/30/00 $ 22,002 $ 22,816 $ 29,113 $ 15,930 $ 14,243
11/30/01 $ 23,326 $ 23,314 $ 28,199 $ 17,765 $ 15,370
11/30/02 $ 21,526 $ 22,504 $ 25,489 $ 19,065 $ 15,843
11/30/03 $ 24,483 $ 25,233 $ 29,863 $ 20,283 $ 16,090
11/30/04 $ 27,612 $ 28,505 $ 35,737 $ 21,117 $ 16,237
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Balanced Shares Class A shares (from 11/30/94 to 11/30/04) as
compared to the performance of its composite benchmark, a 60%/25%/15% blend of
the Russell 1000 Value Index, the LB Government/Credit Index and the Citigroup
1-Year Treasury Bond Index, respectively. 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.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
_______________________________________________________________________________
4 o ALLIANCEBERNSTEIN BALANCED SHARES
Historical Performance
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HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF NOVEMBER 30, 2004
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 12.78% 8.00%
5 Years 6.43% 5.52%
10 Years 11.17% 10.69%
Class B Shares
1 Year 11.97% 7.97%
5 Years 5.65% 5.65%
10 Years(a) 10.49% 10.49%
Class C Shares
1 Year 11.92% 10.92%
5 Years 5.66% 5.66%
10 Years 10.35% 10.35%
Class R Shares
1 Year 12.52%
Since Inception* 11.88%
Advisor Class Shares
1 Year 13.07%
5 Years 6.72%
Since Inception* 10.31%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2004)
- --------------------------------------------------------------
Class A Shares
1 Year 5.51%
5 Years 5.77%
10 Years 10.97%
Class B Shares
1 Year 5.40%
5 Years 5.92%
10 Years(a) 10.78%
Class C Shares
1 Year 8.37%
5 Years 5.91%
10 Years 10.63%
* Inception dates: 11/3/03 for Class R shares and 10/1/96 for Advisor Class
shares.
(a) Assumes conversion of Class B shares into Class A shares after eight years.
See Historical Performance disclosures on page 3.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 5
Fund Expenses
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FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed annual rate of return of 5% before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds by comparing this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
June 1, 2004 November 30, 2004 During Period*
- -----------------------------------------------------------------------------------------------
Class A
Actual $1,000 $1,063.11 $5.00
Hypothetical (5% return before expenses) $1,000 $1,020.15 $4.90
- -----------------------------------------------------------------------------------------------
Class B
Actual $1,000 $1,059.10 $8.80
Hypothetical (5% return before expenses) $1,000 $1,016.45 $8.62
- -----------------------------------------------------------------------------------------------
Class C
Actual $1,000 $1,058.88 $8.75
Hypothetical (5% return before expenses) $1,000 $1,016.50 $8.57
- -----------------------------------------------------------------------------------------------
Class R
Actual $1,000 $1,061.58 $6.13
Hypothetical (5% return before expenses) $1,000 $1,019.05 $6.01
- -----------------------------------------------------------------------------------------------
Advisor Class
Actual $1,000 $1,064.46 $3.51
Hypothetical (5% return before expenses) $1,000 $1,021.60 $3.44
- -----------------------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 0.97%,
1.71%, 1.70%, 1.19% and 0.68%, respectively, multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year/366 (to reflect the one-half year period).
_______________________________________________________________________________
6 o ALLIANCEBERNSTEIN BALANCED SHARES
Portfolio Summary and Ten Largest Holdings
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PORTFOLIO SUMMARY
November 30, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $1,666.00
SECURITY TYPE BREAKDOWN*
68.6% Common Stock
17.9% U.S. Government & Government
Sponsored Agency Obligations
7.6% Corporate Debt Obligation [PIE CHART OMITTED]
0.7% Preferred Stock
0.4% Sovereign Debt
0.1% Yankee Bond
4.7% Short-Term
TEN LARGEST HOLDINGS
November 30, 2004
Percent of
Company Value Net Assets
_______________________________________________________________________________
U.S. Treasury Notes $ 285,838,196 17.2%
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J.P. Morgan Chase & Co. 46,229,230 2.8
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ConocoPhillips 43,584,210 2.6
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Citigroup, Inc. 42,785,207 2.6
- -------------------------------------------------------------------------------
American International Group, Inc. 41,348,545 2.5
- -------------------------------------------------------------------------------
General Electric Co. (Common and Bond) 41,089,940 2.4
- -------------------------------------------------------------------------------
Bank of America Corp. 35,991,120 2.2
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Wellpoint 34,276,379 2.1
- -------------------------------------------------------------------------------
Microsoft Corp. 31,062,066 1.8
- -------------------------------------------------------------------------------
Viacom, Inc. (Common and Bond) 30,113,108 1.8
- -------------------------------------------------------------------------------
$ 632,318,001 38.0%
* All data are as of November 30, 2004. The Fund's security type breakdown is
expressed as a percentage of total investments (excluding security lending
collateral) and may vary over time.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 7
Portfolio of Investments
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PORTFOLIO OF INVESTMENTS
November 30, 2004
Company Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS & OTHER
INVESTMENTS-68.6%
Finance-17.4%
Banking - Money Centers-3.3%
J.P. Morgan Chase & Co. 1,227,868 $ 46,229,230
Wachovia Corp. 185,400 9,594,450
--------------
55,823,680
--------------
Banking - Regional-2.2%
Bank of America Corp. 777,850 35,991,120
--------------
Brokerage & Money Management-1.5%
Merrill Lynch & Co., Inc.* 301,600 16,802,136
Morgan Stanley* 150,000 7,612,500
--------------
24,414,636
--------------
Insurance-6.1%
ACE, Ltd. (Bermuda)* 622,500 25,161,450
AFLAC, Inc.* 239,800 9,021,276
American International Group, Inc. 652,700 41,348,545
Axis Capital Holdings, Ltd. (Bermuda) 138,500 3,609,310
Metlife, Inc.* 259,000 10,101,000
The Allstate Corp. 257,400 12,998,700
--------------
102,240,281
--------------
Mortgage Banking-1.2%
Fannie Mae* 216,400 14,866,680
PMI Group, Inc.* 92,400 3,805,032
Sovereign Capital Trust IV 16,000 760,000
--------------
19,431,712
--------------
Miscellaneous-3.1%
Citigroup, Inc. 956,094 42,785,206
MBNA Corp. 349,980 9,295,469
--------------
52,080,675
--------------
289,982,104
--------------
Energy-9.5%
Domestic Integrated-0.7%
Occidental Petroleum Corp. 199,000 11,981,790
--------------
Domestic Producers-0.8%
Noble Energy, Inc.* 212,200 13,536,238
--------------
International-3.9%
BP Plc (ADR) (United Kingdom) 359,700 22,067,595
ChevronTexaco Corp.* 336,400 18,367,440
Exxon Mobil Corp. 477,300 24,461,625
--------------
64,896,660
--------------
_______________________________________________________________________________
8 o ALLIANCEBERNSTEIN BALANCED SHARES
Portfolio of Investments
- -------------------------------------------------------------------------------
Company Shares Value
- -------------------------------------------------------------------------------
Oil Service-1.5%
EnCana Corp. (Canada)* 135,100 $ 7,704,753
Halliburton Co. 148,200 6,128,070
Nabors Industries, Ltd. (Barbados)(a)* 213,100 11,081,200
--------------
24,914,023
--------------
Miscellaneous-2.6%
ConocoPhillips 479,000 43,584,210
--------------
158,912,921
--------------
Consumer Services-8.4%
Broadcasting & Cable-5.0%
Clear Channel Communications, Inc. 377,800 12,724,304
Comcast Corp. Cl.A(a)* 307,206 9,228,468
Comcast Corp. Cl.A Special(a) 306,000 9,072,900
Time Warner, Inc.(a) 958,200 16,969,722
Viacom, Inc. Cl.B 852,600 29,585,220
Westwood One, Inc.(a) 260,600 5,842,652
--------------
83,423,266
--------------
Entertainment & Leisure-1.5%
Carnival Corp. (Panama)* 404,200 21,426,642
Harley-Davidson, Inc.* 64,000 3,700,480
--------------
25,127,122
--------------
Restaurants & Lodging-0.5%
McDonald's Corp. 274,200 8,428,908
--------------
Retail - General Merchandise-1.4%
The Home Depot, Inc. 557,600 23,279,800
--------------
140,259,096
--------------
Health Care-6.9%
Drugs-1.2%
Pfizer, Inc. 704,000 19,550,080
--------------
Medical Products-2.0%
Beckman Coulter, Inc.* 123,900 8,110,494
Boston Scientific Corp.(a) 743,700 25,888,197
--------------
33,998,691
--------------
Medical Services-3.7%
Caremark Rx, Inc.(a)* 290,500 10,388,280
HCA, Inc. 122,400 4,825,008
UnitedHealth Group, Inc. 154,300 12,783,755
Wellpoint, Inc.(a) 301,600 34,276,379
--------------
62,273,422
--------------
115,822,193
--------------
Capital Goods-6.2%
Automotive-0.2%
Ford Motor Co. Capital Trust II pfd. 60,000 3,147,000
--------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 9
Portfolio of Investments
- -------------------------------------------------------------------------------
Company Shares Value
- -------------------------------------------------------------------------------
Electrical Equipment-1.2%
Emerson Electric Co.* 141,300 $ 9,441,666
Johnson Controls, Inc.* 171,400 10,523,960
--------------
19,965,626
--------------
Machinery-1.5%
Ingersoll-Rand Co. Cl.A (Bermuda) 202,900 15,099,818
PACCAR, Inc. 123,000 9,606,300
--------------
24,706,118
--------------
Miscellaneous-3.3%
General Electric Co. 1,080,400 38,202,944
United Technologies Corp. 170,600 16,647,148
--------------
54,850,092
--------------
102,668,836
--------------
Consumer Staples-5.1%
Beverages-0.7%
Anheuser-Busch Cos., Inc. 112,600 5,640,134
PepsiCo, Inc. 125,100 6,243,741
--------------
11,883,875
--------------
Cosmetics-1.5%
Avon Products, Inc.* 654,780 24,580,441
--------------
Household Products-1.2%
The Procter & Gamble Co. 366,600 19,605,768
--------------
Tobacco-1.7%
Altria Group, Inc. 490,000 28,170,100
--------------
84,240,184
--------------
Technology-4.6%
Communication Equipment-0.4%
Corning, Inc.(a) 517,200 6,506,376
--------------
Computer Hardware/Storage-1.6%
EMC Corp.(a) 443,800 5,955,796
Hewlett-Packard Co. 481,700 9,634,000
International Business Machines Corp. 121,800 11,478,432
--------------
27,068,228
--------------
Semi-Conductor Capital Equipment-0.2%
Applied Materials, Inc.(a) 252,800 4,206,592
--------------
Semi-Conductor Components-0.5%
Marvell Technology Group, Ltd. (Bermuda)(a) 258,000 8,271,480
--------------
Software-1.9%
Microsoft Corp. 1,158,600 31,062,066
--------------
77,114,742
--------------
_______________________________________________________________________________
10 o ALLIANCEBERNSTEIN BALANCED SHARES
Portfolio of Investments
- -------------------------------------------------------------------------------
Company Shares Value
- -------------------------------------------------------------------------------
Utilities-3.6%
Electric & Gas Utility-1.9%
DTE Energy Trust I pfd. 60,000 $ 1,599,000
Entergy Corp. 164,000 10,630,480
Exelon Corp.* 302,400 12,613,104
PPL Corp. 140,300 7,288,585
--------------
32,131,169
--------------
Telephone Utility-1.7%
BellSouth Corp. 220,700 5,919,174
Sprint Corp. 456,600 10,415,046
Verizon Communications, Inc.* 281,500 11,606,245
--------------
27,940,465
--------------
60,071,634
--------------
Transportation-2.6%
Railroad-2.6%
Burlington Northern Santa Fe Corp. 461,400 20,781,456
Union Pacific Corp. 344,100 21,829,704
--------------
42,611,160
--------------
Basic Industry-1.6%
Chemicals-1.2%
Air Products & Chemicals, Inc.* 192,100 10,997,725
E.I. du Pont de Nemours & Co. 213,700 9,684,884
--------------
20,682,609
--------------
Containers-0.1%
Ball Corp. 17,000 760,410
--------------
Mining & Metals-0.3%
Alcoa, Inc. 162,000 5,504,760
--------------
26,947,779
--------------
Consumer Manufacturing-2.1%
Building & Related-1.3%
American Standard Cos., Inc.(a) 442,800 17,242,632
Mohawk Industries, Inc.(a)* 45,000 3,946,500
--------------
21,189,132
--------------
Multi-Industry Companies-0.8%
3M Co. 69,300 5,515,587
Tyco International, Ltd.* 237,097 8,054,185
--------------
13,569,772
--------------
34,758,904
--------------
Aerospace & Defense-0.6%
Aerospace-0.6%
Northrop Grumman Corp. 179,400 10,105,602
--------------
Total Common Stocks & Other Investments
(cost $901,272,350) 1,143,495,155
--------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 11
Portfolio of Investments
- -------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
DEBT OBLIGATIONS-26.0%
U.S. Government & Government Sponsored
Agency Obligations-17.9%
Federal National Mortgage Association
6.625%, 10/15/07 $ 12,000 $ 13,025,352
U.S. Treasury Bonds
5.375%, 2/15/31 * 24,375 25,654,687
8.125%, 8/15/19 3,815 5,131,324
9.875%, 11/15/15 1,000 1,463,398
11.25%, 2/15/15 * 9,000 14,039,649
U.S. Treasury Notes
1.875%, 12/31/05 * 18,000 17,841,798
2.00%, 8/31/05 * 82,000 81,673,312
3.00%, 11/15/07-2/15/09* 17,850 17,663,799
3.125%, 4/15/09 900 882,879
3.25%, 8/15/08 * 10,000 9,933,200
3.625%, 5/15/13 * 6,390 6,126,662
4.00%, 11/15/12-2/15/14* 31,670 31,181,271
4.25%, 8/15/13-8/15/14* 22,650 22,538,248
5.625%, 5/15/08 * 19,375 20,781,954
6.00%, 8/15/09 3,130 3,443,977
6.125%, 8/15/07 * 23,395 25,154,187
7.50%, 2/15/05 2,300 2,327,851
--------------
Total U.S. Government & Government
Sponsored Agency Obligations
(cost $294,630,210) 298,863,548
--------------
Corporate Debt Obligations-7.6%
Agriculture-0.0%
Case New Holland, Inc.
9.25%, 8/01/11(b) 400 443,000
--------------
Automotive-0.1%
Lear Corp. Series B
8.11%, 5/15/09 1,100 1,244,295
--------------
Banking-1.1%
Barclays Bank Plc (United Kingdom)
8.55%, 6/15/11(b) 1,000 1,207,718
BB&T Corp.
6.50%, 8/01/11 1,000 1,106,261
BNP Paribas
5.125%, 1/15/15(b) 1,200 1,211,137
Capital One Bank
6.50%, 6/13/13 1,600 1,726,166
Chase Manhattan Corp.
7.00%, 11/15/09 1,000 1,113,728
DBS Group Holdings, Ltd.
7.125%, 5/15/11(b) 1,500 1,701,489
Dresdner Funding Trust I
8.151%, 6/30/31(b) 850 1,023,151
_______________________________________________________________________________
12 o ALLIANCEBERNSTEIN BALANCED SHARES
Portfolio of Investments
- -------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
HBOS Plc (United Kingdom)
5.375%, 11/01/13(b) $ 1,250 $ 1,267,496
HSBC Bank USA
5.875%, 11/01/34 2,500 2,460,828
Ing Capital Funding Trust III
8.439%, 12/31/50 2,000 2,383,886
Royal Bank of Scotland Group Plc
(United Kingdom)
7.648%, 8/31/49 1,000 1,201,219
Sanwa Bank, Ltd.
7.40%, 6/15/11 800 911,794
UFJ Finance Aruba AEC (Aruba)
6.75%, 7/15/13 800 881,677
--------------
18,196,550
--------------
Broadcasting/Media-0.2%
News America Holdings
9.25%, 2/01/13 500 639,540
PRIMEDIA, Inc.
8.00%, 5/15/13(b) 500 497,500
Time Warner, Inc.
6.875%, 5/01/12 1,000 1,122,966
Viacom, Inc.
5.625%, 8/15/12 500 527,888
WPP Finance Corp. (United Kingdom)
5.875%, 6/15/14(b)* 1,000 1,030,504
--------------
3,818,398
--------------
Building/Real Estate-0.3%
CRH America, Inc.
6.40%, 10/15/33 1,200 1,272,221
6.95%, 3/15/12 750 847,663
EOP Operating LP
5.875%, 1/15/13 225 234,670
7.875%, 7/15/31 1,000 1,178,602
iStar Financial, Inc.
5.70%, 3/01/14 900 900,236
Williams Lyon Homes, Inc.
10.75%, 4/01/13 400 450,000
--------------
4,883,392
--------------
Cable-0.2%
British Sky Broadcasting Group Plc
8.20%, 7/15/09 350 403,700
Comcast Corp.
7.05%, 3/15/33 500 554,711
Innova S de R.L. (Mexico)
9.375%, 9/19/13 500 566,250
Rogers Cable, Inc. (Canada)
6.25%, 6/15/13 610 608,475
Shaw Communications, Inc. (Canada)
7.20%, 12/15/11 500 548,125
--------------
2,681,261
--------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 13
Portfolio of Investments
- -------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Chemicals-0.1%
Eastman Chemical Co.
7.25%, 1/15/24 $ 800 $ 882,753
--------------
Communications-0.1%
Sprint Capital Corp.
6.875%, 11/15/28 2,000 2,125,188
TPSA Finance BV (Netherlands)
7.75%, 12/10/08 200 224,160
--------------
2,349,348
--------------
Communications - Fixed-0.2%
British Telecommunications Plc (United Kingdom)
8.875%, 12/15/30 850 1,106,752
Cincinnati Bell, Inc.
8.375%, 1/15/14* 800 798,000
Eircom Funding (Ireland)
8.25%, 8/15/13 300 333,000
Qwest Services Corp.
14.00%, 12/15/10(b) 725 859,125
--------------
3,096,877
--------------
Communications - Mobile-0.4%
America Movil S.A de C.V. (Mexico)
5.50%, 3/01/14 550 532,160
AT&T Wireless Services, Inc.
8.75%, 3/01/31 1,250 1,634,162
Inmarsat Finance Plc (United Kingdom)
7.625%, 6/30/12 750 766,875
Kyivstar (Germany)
10.375%, 8/17/09(b) 500 537,500
Mobifon Holdings BV (Netherlands)
12.50%, 7/31/10 500 592,500
Nextel Communications, Inc.
5.95%, 3/15/14 750 763,125
PTC International Finance II, SA (Luxembourg)
11.25%, 12/01/09 1,250 1,325,000
TELUS Corp. (Canada)
7.50%, 6/01/07 800 867,469
--------------
7,018,791
--------------
Conglomerate/Miscellaneous-0.0%
Hutchison Whampoa International, Ltd
(Cayman Islands)
7.45%, 11/24/33(b) 500 529,559
--------------
Consumer Manufacturing-0.1%
Jostens IH Corp.
7.625%, 10/01/12(b) 855 895,612
--------------
Containers-0.1%
Packaging Corp. of America
4.375%, 8/01/08 1,800 1,800,535
--------------
_______________________________________________________________________________
14 o ALLIANCEBERNSTEIN BALANCED SHARES
Portfolio of Investments
- -------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Electric & Gas Utility-0.1%
First Energy Corp.
7.375%, 11/15/31 $ 2,000 $ 2,212,350
--------------
Energy-0.4%
Chesapeake Energy Corp.
9.00%, 8/15/12 1,000 1,150,000
Devon Financing Corp.
7.875%, 9/30/31 700 861,877
Enterprise Products Operating L.P.
5.60%, 10/15/14(b) 850 847,360
Petronas Capital, Ltd.
7.00%, 5/22/12(b) 850 965,235
The Williams Cos Inc
7.875%, 9/01/21 750 847,500
Valero Energy Corp
4.75%, 6/15/13 1,000 973,153
XTO Energy, Inc.
7.50%, 4/15/12 400 463,982
--------------
6,109,107
--------------
Entertainment & Leisure-0.1%
Six Flags, Inc.
9.50%, 2/01/09 1,000 1,040,000
9.75%, 4/15/13 800 792,000
--------------
1,832,000
--------------
Financial-1.1%
CIT Group, Inc.
7.375%, 4/02/07* 2,000 2,165,610
Countrywide Funding Corp.
4.25%, 12/19/07 1,500 1,509,340
Ford Motor Credit Co.
7.00%, 10/01/13 * 800 834,660
7.375%, 2/01/11 2,350 2,513,168
General Electric Capital Corp.
5.00%, 6/15/07 * 1,500 1,552,353
5.875%, 2/15/12 1,250 1,334,642
Goldman Sachs Capital Trust I
6.345%, 2/15/34* 1,450 1,466,179
Goldman Sachs Group, Inc.
6.65%, 5/15/09 800 879,832
Household Finance Corp.
5.75%, 1/30/07 800 836,392
6.50%, 1/24/06 425 440,773
iStar Financial, Inc.
6.00%, 12/15/10 800 836,768
Lehman Brothers Holdings, Inc.
7.875%, 8/15/10 850 992,497
Markel Capital Trust I Series B
8.71%, 1/01/46 800 840,000
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 15
Portfolio of Investments
- -------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.
6.00%, 2/17/09 $ 1,000 $ 1,069,528
Tig Cap Trust I
8.597%, 1/15/27(b) 1,700 1,496,000
--------------
18,767,742
--------------
Food/Beverage-0.2%
DIMON, Inc. Series B
9.625%, 10/15/11 800 870,000
Kellogg Co. Series B
6.60%, 4/01/11 700 779,981
Kraft Foods, Inc.
5.25%, 10/01/13* 1,200 1,215,984
--------------
2,865,965
--------------
Hotel/Lodging-0.1%
Intrawest Corp. (Canada)
7.50%, 10/15/13 800 852,000
--------------
Healthcare-0.1%
Hanger Orthopedic Group, Inc.
10.375%, 2/15/09 235 238,525
HCA, Inc.
6.25%, 2/15/13 2,050 2,044,569
--------------
2,283,094
--------------
Industrial-0.5%
Continental Cablevision, Inc.
9.00%, 9/01/08 500 579,634
Ford Motor Credit Co.
7.875%, 6/15/10 400 437,184
General Motors Acceptance Corp.
6.125%, 8/28/07 3,500 3,610,943
8.00%, 11/01/31 67 67,140
General Motors Corp.
7.20%, 1/15/11* 750 771,136
Inco, Ltd (Canada)
7.75%, 5/15/12 800 938,955
TriMas Corp.
9.875%, 6/15/12 800 828,000
Tyco International Group, SA
6.375%, 02/15/06-10/15/11 1,020 1,108,057
Waste Management, Inc.
6.375%, 11/15/12 675 739,604
--------------
9,080,653
--------------
Insurance-0.1%
Royal & Sun Alliance Insurance Group Plc
(United Kingdom)
8.95%, 10/15/29 725 889,363
Zurich Capital Trust I
8.376%, 6/01/37(b) 950 1,049,308
--------------
1,938,671
--------------
_______________________________________________________________________________
16 o ALLIANCEBERNSTEIN BALANCED SHARES
Portfolio of Investments
- -------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Metals/Mining-0.1%
International Steel Group, Inc.
6.50%, 4/15/14 $ 795 $ 844,687
--------------
Municipal Obligation-0.1%
Dallas-Fort Worth Texas International
7.07%, 11/01/24 2,000 2,172,320
--------------
Non-Air Transportation-0.1%
Bombardier Capital, Inc.
7.50%, 10/17/05(b) 1,500 1,530,000
--------------
Paper/Packaging-0.3%
Abitibi-Consolidated Inc. (Canada)
8.30%, 8/01/05 750 770,625
Domtar, Inc. (Canada)
7.875%, 10/15/11 750 855,276
Georgia-Pacific Corp.
7.25%, 6/01/28 1,300 1,378,000
MeadWestvaco Corp.
6.85%, 4/01/12 1,000 1,121,499
Owens-Brockway Glass
8.875%, 2/15/09 850 918,000
Packaging Corp. of America
5.75%, 8/01/13 425 433,380
--------------
5,476,780
--------------
Petroleum Products-0.2%
Amerada Hess Corp.
7.30%, 8/15/31 1,650 1,789,468
Tengizchevroil Finance Co. (Luxembourg)
6.124%, 11/15/14(b) 800 796,000
--------------
2,585,468
--------------
Public Utilities - Electric & Gas-0.7%
American Electric Power Co., Inc. Series C
5.375%, 3/15/10 1,200 1,247,542
Calpine Corp.
8.50%, 7/15/10(b)* 800 634,000
CenterPoint Energy Resources Corp. Series B
7.875%, 4/01/13 1,300 1,527,971
Consumers Energy Co.
5.375%, 4/15/13 850 869,364
Dominion Resources Capital Trust III
8.40%, 1/15/31 800 981,314
DPL Capital Trust II
8.125%, 9/01/31 1,000 1,127,500
DPL, Inc.
6.875%, 9/01/11 1,500 1,631,250
Nisource Finance Corp.
7.875%, 11/15/10 1,000 1,170,014
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 17
Portfolio of Investments
- -------------------------------------------------------------------------------
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Xcel Energy, Inc.
7.00%, 12/01/10 $ 775 $ 871,740
Yorkshire Power
8.25%, 2/15/05(b) 850 867,076
Yorkshire Power Finance Ltd Series B
(Cayman Islands)
6.496%, 2/25/08 750 784,081
--------------
11,711,852
--------------
Public Utilities - Telephone-0.2%
Qwest Capital Funding, Inc.
7.75%, 8/15/06 255 263,925
SBC Communications, Inc.
6.45%, 6/15/34 2,250 2,321,980
Telecom Italia Capital (Luxembourg)
4.00%, 11/15/08 1,000 990,906
--------------
3,576,811
--------------
Retail-0.0%
TM Group Holdings Plc (United Kingdom)
11.00%, 5/15/08 586 609,440
--------------
Supermarket/Drug-0.2%
Couche-Tard
7.50%, 12/15/13 800 868,000
Delhaize America, Inc.
8.125%, 4/15/11 1,000 1,150,238
Safeway, Inc.
5.80%, 8/15/12 1,240 1,288,530
--------------
3,306,768
--------------
Technology-0.1%
ON Semiconductor Corp.
12.00%, 3/15/10 650 763,750
Motorola, Inc.
7.625%, 11/15/10 500 577,595
--------------
1,341,345
--------------
Total Corporate Debt Obligations
(cost $121,265,717) 126,937,424
--------------
Sovereign-0.4%
Korea Development Bank
5.75%, 9/10/13 800 840,840
Republic of South Africa
7.375%, 4/25/12 3,000 3,416,250
United Mexican States
6.375%, 1/16/13 2,300 2,402,350
--------------
Total Sovereign (cost $6,063,730) 6,659,440
--------------
_______________________________________________________________________________
18 o ALLIANCEBERNSTEIN BALANCED SHARES
Portfolio of Investments
- -------------------------------------------------------------------------------
Shares or
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Yankee Bonds-0.1%
Imperial Tobacco Overseas BV (Netherlands)
7.125%, 4/01/09
(cost $1,133,483) $ 1,000 $ 1,095,927
--------------
Total Debt Obligations
(cost $423,093,140) 433,556,339
--------------
PREFERRED STOCKS-0.7%
Banking-0.4%
Abbey National Capital Trust I (United Kingdom)
8.963%, 6/30/30 875 1,189,849
Deutsche Bank Capital Funding Trust I
7.872%, 6/30/09(b) 1,000 1,137,448
Fuji JGB Investment
9.87%, 6/30/08(b) 2,000 2,356,820
Royal Bank of Scotland Group Plc
(United Kingdom)
5.75%, 9/30/09 50 1,208,500
UBS Preferred Funding Trust II
7.247%, 6/26/11 1,000 1,141,353
--------------
7,033,970
--------------
Communications-0.1%
Centaur Funding Corp. (Cayman Islands)
9.08%, 4/21/20(b) 800 1,031,440
--------------
Financial-0.1%
Rabobank Capital Fund II.
5.26%, 12/31/13(b) 1,100 1,111,364
Sovereign Real Estate Investor Trust
12.00%, 5/16/20(b) 500 750,000
--------------
1,861,364
--------------
Insurance-0.1%
Mangrove Bay PassThru Trust
6.102%, 7/15/33(b) 1,600 1,588,464
--------------
Total Preferred Stocks
(cost $10,896,435) 11,515,238
--------------
SHORT-TERM INVESTMENT-4.8%
Time Deposit-4.8%
State Street Euro Dollar
1.35%, 12/01/04
(cost $79,345,000) 79,345 79,345,000
--------------
Total Investments Before Security
Lending Collateral
(cost $1,414,606,925) 1,667,911,732
--------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 19
Portfolio of Investments
- -------------------------------------------------------------------------------
Shares
or Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED-24.9%
Short-Term Investments
Bradford & Bingley Plc
1.94%-2.08%, 12/29/04-1/18/05 $ 55,000 $ 54,730,238
Federal Home Loan Bank
1.27%-1.44%, 3/8/05-4/26/05 35,000 35,000,000
General Dynamics
2.00%, 12/03/04 47,000 46,973,889
General Electric
1.346%, 1/28/05 5,000 5,144,131
Goldman Sachs
2.158%, 12/02/04 50,000 50,000,000
Gotham Funding
2.06%-2.10%, 12/01/04-12/10/04 73,089 73,009,546
Merck & Co.
2.40%, 1/18/05 3,665 3,725,182
Morgan Stanley
2.12%-2.14%, 12/02/04-12/06/04 70,000 70,000,000
Sigma Finance
1.219%, 12/03/04 15,000 15,000,000
U.S. Bank
2.31%, 3/11/05 5,400 5,426,010
UBS Finance
2.07%, 12/01/04 48,000 47,997,240
--------------
407,006,236
UBS Private Money Market Fund, LLC,
1.91% 7,452,816 7,452,816
--------------
Total Investment of Cash Collateral
for Securities Loaned
(cost $414,459,052) 414,459,052
--------------
Total Investments-125.0%
(cost $1,829,065,977) 2,082,370,784
Other assets less liabilities-(25.0%) (416,344,815)
--------------
Net Assets-100% $1,666,025,969
==============
* Represents entire or partial securities out on loan. 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 are considered liquid and may be resold in
transactions exempt from registration, normally to quailified institutional
buyers. At November 30, 2004, the aggregate market value of these securities
amounted to $27,364,306 or 1.6% of net assets.
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
_______________________________________________________________________________
20 o ALLIANCEBERNSTEIN BALANCED SHARES
Statement of Assets & Liabilities
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
November 30, 2004
ASSETS
Investments in securities, at value
(cost $1,829,065,977--including investment of cash
collateral for securities loaned of $414,459,052) $2,082,370,784(a)
Cash 9,711
Dividends and interest receivable 10,844,708
Receivable for investment securities sold 7,879,656
Receivable for capital stock sold 3,164,449
--------------
Total assets 2,104,269,308
--------------
LIABILITIES
Payable for collateral received on securities loaned 414,459,052
Payable for investment securities purchased 17,741,769
Payable for capital stock redeemed 4,252,662
Distribution fee payable 811,352
Advisory fee payable 592,595
Transfer Agent fee payable 105,819
Administrative fee payable 13,934
Accrued expenses 266,156
--------------
Total liabilities 438,243,339
--------------
Net Assets $1,666,025,969
==============
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,013,790
Additional paid-in capital 1,464,257,476
Undistributed net investment income 5,775,707
Accumulated net realized loss on investment transactions (58,312,046)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 253,291,042
--------------
$1,666,025,969
==============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($788,685,501 / 46,925,411 shares of capital stock
issued and outstanding) $16.81
Sales charge--4.25% of public offering price .75
------
Maximum offering price $17.56
======
Class B Shares
Net asset value and offering price per share
($590,889,953 / 36,938,445 shares of capital stock
issued and outstanding) $16.00
======
Class C Shares
Net asset value and offering price per share
($174,040,221 / 10,838,311 shares of capital stock
issued and outstanding) $16.06
======
Class R Shares
Net asset value, redemption and offering price per share
($370,604 / 22,061 shares of capital stock
issued and outstanding) $16.80
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($112,039,690 / 6,654,762 shares of capital stock
issued and outstanding) $16.84
======
(a) Includes securities on loan with a value of $402,623,026 (see Note E).
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 21
Statement of Operations
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended November 30, 2004
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $82,770) $ 23,787,120
Interest 21,211,165 $ 44,998,285
------------
EXPENSES
Advisory fee 7,263,540
Distribution fee -- Class A 2,013,160
Distribution fee -- Class B 5,725,758
Distribution fee -- Class C 1,692,417
Distribution fee -- Class R 837
Transfer agency 2,782,054
Custodian 355,224
Printing 293,727
Registration 125,976
Administrative 88,606
Legal 82,699
Audit 62,626
Directors' fees 21,000
Miscellaneous 75,596
------------
Total expenses 20,583,220
Less: expenses waived and reimbursed
by the Adviser and the Transfer Agent
(see Note B) (516,640)
Less: expense offset arrangement
(see Note B) (114)
------------
Net expenses 20,066,466
------------
Net investment income 24,931,819
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain on investment
transactions 37,546,008
Net change in unrealized
appreciation/depreciation of:
Investments 114,695,149
Foreign currency denominated assets
and liabilities (3,504)
------------
Net gain on investment and foreign
currency transactions 152,237,653
------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $177,169,472
============
See notes to financial statements.
_______________________________________________________________________________
22 o ALLIANCEBERNSTEIN BALANCED SHARES
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
August 1, 2003
Year Ended to Year Ended
November 30, November 30, July 31,
2004 2003* 2003
============== ============== ==============
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 24,931,819 $ 6,820,791 $ 18,286,747
Net realized gain (loss) on
investment transactions 37,546,008 17,799,322 (60,005,693)
Net change in unrealized
appreciation/depreciation
of investments and foreign
currency denominated assets
and liabilities 114,691,645 35,201,008 165,980,918
-------------- -------------- --------------
Net increase in net assets
from operations 177,169,472 59,821,121 124,261,972
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (10,171,842) (3,031,983) (9,118,870)
Class B (4,775,552) (2,196,088) (7,018,785)
Class C (1,410,293) (673,535) (2,242,635)
Class R (1,822) -0- -0-
Advisor Class (1,978,377) (648,049) (2,372,287)
Tax return of capital
Class A -0- -0- (1,009,016)
Class B -0- -0- (776,639)
Class C -0- -0- (248,151)
Class R -0- -0- -0-
Advisor Class -0- -0- (262,497)
CAPITAL STOCK TRANSACTIONS
Net increase 115,064,822 69,101,285 165,685,849
-------------- -------------- --------------
Total increase 273,896,408 122,372,751 266,898,941
NET ASSETS
Beginning of period 1,392,129,561 1,269,756,810 1,002,857,869
-------------- -------------- --------------
End of period (including
undistributed/
(distributions in excess)
of net investment income
of $5,775,707,
($1,388,586) and
($1,707,623),
respectively) $1,666,025,969 $1,392,129,561 $1,269,756,810
============== ============== ==============
* The Fund changed its fiscal year end from July 31 to November 30.
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 23
Notes to Financial Statements
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
November 30, 2004
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 U.S. generally
accepted accounting principles which require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
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
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are 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. Securities listed on more than
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
_______________________________________________________________________________
24 o ALLIANCEBERNSTEIN BALANCED SHARES
Notes to Financial Statements
- -------------------------------------------------------------------------------
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 valuation, the last
available closing settlement price is used; securities traded in the
over-the-counter market, ("OTC") (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, Alliance Capital Management, L.P. (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 (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities. To account for this, the Fund may frequently value
many of its foreign equity securities using fair value prices based on third
party vendor modeling tools to the extent available.
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,
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 25
Notes to Financial Statements
- -------------------------------------------------------------------------------
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.
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. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. 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.
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, if any, 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 U.S. generally accepted accounting principles. To
the extent these differences are permanent, such amounts are reclassified
within the capital accounts based on their federal tax basis treatment;
temporary differences, do not require such reclassification.
_______________________________________________________________________________
26 o ALLIANCEBERNSTEIN BALANCED SHARES
Notes to Financial Statements
- -------------------------------------------------------------------------------
7. Change of Fiscal Year End
During 2003, the Fund changed its fiscal year end from July 31 to November 30.
Accordingly, the statement of changes in net assets and financial highlights
include the period from August 1, 2003 to November 30, 2003.
NOTE B
Advisory Fee and Other Transactions With Affiliates
Until September 6, 2004, under the terms of an investment advisory agreement,
the Fund paid the Adviser an advisory fee at an annual rate of .625% of the
first $200 million, .50% of the next $200 million and .45% in excess of $400
million of the Fund's average daily net assets. Effective September 7, 2004,
the terms of the investment advisory agreement were amended so that the
advisory fee was reduced to an annual rate of .60% of the first $200 million,
..50% of the next $200 million and .40% in excess of $400 million of the Fund's
average daily net assets. The fee is accrued daily and paid monthly.
Effective January 1, 2004 through September 6, 2004, in contemplation of the
final agreement with the Office of New York Attorney General ("NYAG"), the
Adviser began waiving a portion of its advisory fee so as to charge the Fund at
the reduced annual rate discussed above. Through September 6, 2004 such waiver
amounted to $423,049. For a more complete discussion of the Adviser's
settlement with the NYAG, please see "Legal Proceedings" below.
For the year ended November 30, 2004, the Adviser voluntarily agreed to
reimburse a portion of certain audit fees related to the investigations
described under "Legal Proceedings" below in the amount of $2,600.
Pursuant to the advisory agreement, the Fund paid $88,606 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended November 30, 2004.
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 $1,456,292 for the year ended November 30,
2004. During the period, AGIS agreed to waive a portion of its fees for such
services. Such waiver amounted to $90,991.
For the year ended November 30, 2004, the Fund's expenses were reduced by $114
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 $98,896 from the sale of Class A shares
and received
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 27
Notes to Financial Statements
- -------------------------------------------------------------------------------
$32,964, $927,645, and $31,417, respectively, in contingent deferred sales
charges imposed upon redemptions by shareholders of Class A, Class B and Class
C shares, respectively, for the year ended November 30, 2004.
Brokerage commissions paid on investment transactions for the year ended
November 30, 2004 amounted to $817,847, of which $37,756 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, .50 of 1% of the Fund's average daily net
assets attributable to the Class R shares, and 1% of the average daily net
assets attributable to both Class B and Class C 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 $13,181,118 and $2,036,175, 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 year ended November 30, 2004, were as follows:
Purchases Sales
============= =============
Investment securities (excluding
U.S Government securities) $ 413,081,224 $ 430,798,324
U.S Government securities 533,543,781 430,366,636
_______________________________________________________________________________
28 o ALLIANCEBERNSTEIN BALANCED SHARES
Notes to Financial Statements
- -------------------------------------------------------------------------------
The cost of investments for federal income tax purpose, gross unrealized
appreciation and unrealized depreciation (excluding foreign currency
transactions) are as follows:
Cost $1,834,803,285
==============
Gross unrealized appreciation 266,057,242
Gross unrealized depreciation (18,489,743)
--------------
Net unrealized appreciation $ 247,567,499
==============
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 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.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 29
Notes to Financial Statements
- -------------------------------------------------------------------------------
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 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. As of November 30, 2004, the Fund had
loaned securities with a value of $402,623,026 and received cash collateral
which was invested in short-term securities valued at $414,459,052 as included
in the accompanying portfolio of investments. For the year ended November 30,
2004, the Fund earned fee income of $362,651 which is included in interest
income in the accompanying statement of operations.
_______________________________________________________________________________
30 o ALLIANCEBERNSTEIN BALANCED SHARES
Notes to Financial Statements
- -------------------------------------------------------------------------------
NOTE F
Capital Stock
There are 15,000,000,000 shares of $.01 par value capital stock authorized,
divided into five 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,
Year Ended 2003 to Year Ended
November 30, November 30, July 31,
2004 2003(a) 2003
--------------------------------------------
Class A
Shares sold 17,693,504 6,378,980 15,573,624
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 577,319 183,759 656,841
- -------------------------------------------------------------------------------
Shares converted from Class B 786,827 234,989 635,696
- -------------------------------------------------------------------------------
Shares redeemed (10,964,434) (4,107,803) (9,689,505)
- -------------------------------------------------------------------------------
Net increase 8,093,216 2,689,925 7,176,656
===============================================================================
Class B
Shares sold 7,795,058 4,525,502 12,919,357
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 257,118 125,242 485,794
- -------------------------------------------------------------------------------
Shares converted to Class A (824,336) (246,460) (665,956)
- -------------------------------------------------------------------------------
Shares redeemed (7,389,018) (2,517,758) (7,962,965)
- -------------------------------------------------------------------------------
Net increase (decrease) (161,178) 1,886,526 4,776,230
===============================================================================
Class C
Shares sold 2,427,381 1,481,488 3,475,971
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 65,120 33,342 133,310
- -------------------------------------------------------------------------------
Shares redeemed (2,867,474) (1,089,721) (3,175,658)
- -------------------------------------------------------------------------------
Net increase (decrease) (374,973) 425,109 433,623
===============================================================================
Advisor Class
Shares sold 1,122,218 343,873 1,523,370
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 120,204 41,719 190,466
- -------------------------------------------------------------------------------
Shares redeemed (1,676,266) (547,517) (2,072,068)
- -------------------------------------------------------------------------------
Net increase (decrease) (433,844) (161,925) (358,232)
===============================================================================
(a) The fund changed its fiscal year end from July 31 to November 30.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 31
Notes to Financial Statements
- -------------------------------------------------------------------------------
Shares
----------------------------
November 3,
Year Ended 2003(b) to
November 30, November 30,
2004 2003
----------------------------
Class R
Shares sold 23,926 663
- ---------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 49 -0-
- ---------------------------------------------------------------
Shares redeemed (2,577) -0-
- ---------------------------------------------------------------
Net increase 21,398 663
===============================================================
Amount
--------------------------------------------
August 1,
Year Ended 2003 to Year Ended
November 30, November 30, July 31,
2004 2003(a) 2003
--------------------------------------------
Class A
Shares sold $284,538,223 $ 94,053,732 $213,741,476
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 9,237,937 2,722,192 8,851,198
- -------------------------------------------------------------------------------
Shares converted from Class B 12,711,147 3,490,046 8,572,412
- -------------------------------------------------------------------------------
Shares redeemed (176,677,049) (60,992,465) (130,876,465)
- -------------------------------------------------------------------------------
Net increase $129,810,258 $ 39,273,505 $100,288,621
===============================================================================
Class B
Shares sold $119,601,050 $ 63,744,936 $167,269,278
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 3,920,206 1,771,796 6,245,526
- -------------------------------------------------------------------------------
Shares converted to Class A (12,711,147) (3,490,046) (8,572,412)
- -------------------------------------------------------------------------------
Shares redeemed (113,185,302) (35,651,747) (101,386,653)
- -------------------------------------------------------------------------------
Net increase (decrease) $ (2,375,193) $ 26,374,939 $ 63,555,739
===============================================================================
Class C
Shares sold $ 37,362,446 $ 20,948,666 $ 45,360,422
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 996,672 473,113 1,718,628
- -------------------------------------------------------------------------------
Shares redeemed (44,034,262) (15,521,151) (40,635,603)
- -------------------------------------------------------------------------------
Net increase (decrease) $ (5,675,144) $ 5,900,628 $ 6,443,447
===============================================================================
Advisor Class
Shares sold $ 18,085,882 $ 5,087,998 $ 20,590,293
- -------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 1,924,488 619,112 2,558,987
- -------------------------------------------------------------------------------
Shares redeemed (27,046,466) (8,164,897) (27,751,238)
- -------------------------------------------------------------------------------
Net increase (decrease) $ (7,036,096) $ (2,457,787) $ (4,601,958)
===============================================================================
(a) The fund changed its fiscal year end from July 31 to November 30.
(b) Commencement of distribution.
_______________________________________________________________________________
32 o ALLIANCEBERNSTEIN BALANCED SHARES
Notes to Financial Statements
- -------------------------------------------------------------------------------
Amount
----------------------------
November 3,
Year Ended 2003(b) to
November 30, November 30,
2004 2003
----------------------------
Class R
Shares sold $ 381,785 $ 10,000
- ---------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 792 -0-
- ---------------------------------------------------------------
Shares redeemed (41,580) -0-
- ---------------------------------------------------------------
Net increase $ 340,997 $ 10,000
===============================================================
(b) Commencement of distribution.
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.
Foreign Securities Risk--Investing in securities of foreign companies or
foreign governments involves special risks which include revaluation of
currencies and the possibility of future political and economic developments
which could adversely affect the value of such securities. Moreover, securities
of many foreign companies or foreign governments may be less liquid and their
prices more volatile than those of comparable United States companies or of the
United States Government.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 33
Notes to Financial Statements
- -------------------------------------------------------------------------------
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, 2004.
NOTE I
Distributions to Shareholders
The tax character of distributions paid during the fiscal periods ended
November 30, 2004, November 30, 2003 and July 31, 2003 were as follows:
November 30, November 30, July 31,
2004 2003 2003
============= ============= =============
Distributions paid from:
Ordinary income $ 18,337,886 $ 6,549,655 $ 20,752,577
------------- ------------- -------------
Total taxable distributions 18,337,886 6,549,655 20,752,577
Tax return of capital -0- -0- 2,296,303
------------- ------------- -------------
Total distributions paid $ 18,337,886 $ 6,549,655 $ 23,048,880
============= ============= =============
As of November 30, 2004, the components of accumulated earnings (deficit) on a
tax basis were as follows:
Accumulated capital losses and other losses $ (55,423,084)(a)
Undistributed ordinary income 8,641,659
Unrealized appreciation/(depreciation) 247,553,734(b)
-------------
Total accumulated earnings/(deficit) $ 200,772,309
-------------
(a) On November 30, 2004, the Fund had net capital loss carryforward of
$55,423,079 of which $47,086,515 expires in 2010 and $8,336,564 expires in the
year 2011. During the fiscal year ended November 30, 2004, $36,734,487 of
capital loss carryforward was utilized.
(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 increase in undistributed net investment
income and an increase in accumulated net realized loss on investment and
foreign currency transactions. The reclassification had no net effect on net
assets.
NOTE J
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
_______________________________________________________________________________
34 o ALLIANCEBERNSTEIN BALANCED SHARES
Notes to Financial Statements
- -------------------------------------------------------------------------------
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
the Adviser provide information to them. The Adviser has been cooperating and
will continue to cooperate with all of these authorities.
On December 18, 2003, the 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 memorialized in an
Assurrance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser 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;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's 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.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 35
Notes to Financial Statements
- -------------------------------------------------------------------------------
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 filed
against the Adviser; 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 the Adviser. 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 the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, numerous additional lawsuits making factual allegations
similar to those in the Hindo Complaint were filed against the Adviser and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages. The lawsuits are now
pending in the United States District Court for the District of Maryland
pursuant to a ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual fund cases involving market and
late trading in the District of Maryland.
As a result of the matters discussed above, 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.
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
an unaffiliated broker/dealer violated federal securities laws relating to its
receipt of compensation for selling specific mutual funds and the disclosure of
such compensation. The SEC has indicated publicly that, among other things, it
is considering enforcement action in connection with mutual funds' disclosure
of
_______________________________________________________________________________
36 o ALLIANCEBERNSTEIN BALANCED SHARES
Notes to Financial Statements
- -------------------------------------------------------------------------------
such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other
things, (i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and
48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting breaches of
common law fiduciary duties. Plaintiffs seek an unspecified amount of
compensatory damages and punitive damages, rescission of their contracts with
the Adviser, including recovery of all fees paid to the Adviser pursuant to
such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the Fund's shares or
other adverse consequences to the Fund. However, the Adviser believes that
these matters are not likely to have a material adverse effect on its ability
to perform advisory services relating to the Fund.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 37
Financial Highlights
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
----------------------------------------------------------------------------
August 1,
Year Ended 2003 to Year Ended July 31,
November November --------------------------------------------------
30, 2004 30, 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $15.13 $14.54 $13.26 $15.96 $15.53 $15.63
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(c) .31(d)(e) .09 .28 .35 .39 .40
Net realized and unrealized gain
(loss) on investment
transactions 1.61 .58 1.32 (2.35) 1.16 .49
Net increase (decrease) in net
asset value from operations 1.92 .67 1.60 (2.00) 1.55 .89
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income (.24) (.08) (.29) (.34) (.38) (.35)
Distributions from net realized
gain on investment
transactions -0- -0- -0- (.36) (.74) (.64)
Tax return of capital -0- -0- (.03) -0- -0- -0-
Total dividends and distributions (.24) (.08) (.32) (.70) (1.12) (.99)
Net asset value, end of period $16.81 $15.13 $14.54 $13.26 $15.96 $15.53
TOTAL RETURN
Total investment return based
on net asset value(f) 12.78% 4.62% 12.29% (12.91)% 10.42% 6.22%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $788,685 $587,685 $525,637 $384,212 $282,874 $212,326
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .97% 1.07%(g) 1.12% 1.10% 1.17% 1.12%
Expenses, before waivers/
reimbursements 1.00% 1.07%(g) 1.12% 1.10% 1.17% 1.12%
Net investment income 1.93%(d)(e) 1.84%(g) 2.04% 2.36% 2.46% 2.62%
Portfolio turnover rate 58% 29% 62% 79% 63% 76%
See footnote summary on page 43.
_______________________________________________________________________________
38 o ALLIANCEBERNSTEIN BALANCED SHARES
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
----------------------------------------------------------------------------
August 1,
Year Ended 2003 to Year Ended July 31,
November November --------------------------------------------------
30, 2004 30, 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.41 $13.87 $12.68 $15.31 $14.96 $15.11
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(c) .19(d)(e) .05 .17 .23 .26 .27
Net realized and unrealized gain
(loss) on investment
transactions 1.53 .55 1.26 (2.25) 1.12 .48
Net increase (decrease) in net
asset value from operations 1.72 .60 1.43 (2.02) 1.38 .75
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income (.13) (.06) (.22) (.25) (.29) (.26)
Distributions from net realized
gain on investment transactions -0- -0- -0- (.36) (.74) (.64)
Tax return of capital -0- -0- (.02) -0- -0- -0-
Total dividends and distributions (.13) (.06) (.24) (.61) (1.03) (.90)
Net asset value, end of period $16.00 $14.41 $13.87 $12.68 $15.31 $14.96
TOTAL RETURN
Total investment return based
on net asset value(f) 11.97% 4.33% 11.44% (13.53)% 9.63% 5.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $590,890 $534,752 $488,365 $385,868 $277,138 $155,060
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.70% 1.81%(g) 1.86% 1.84% 1.93% 1.86%
Expenses, before waivers/
reimbursements 1.73% 1.81%(g) 1.86% 1.84% 1.93% 1.86%
Net investment income 1.22%(d)(e) 1.14%(g) 1.30% 1.61% 1.70% 1.88%
Portfolio turnover rate 58% 29% 62% 79% 63% 76%
See footnote summary on page 43.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 39
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
----------------------------------------------------------------------------
August 1,
Year Ended 2003 to Year Ended July 31,
November November --------------------------------------------------
30, 2004 30, 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.47 $13.92 $12.72 $15.36 $15.01 $15.15
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(c) .19(d)(e) .05 .17 .23 .26 .28
Net realized and unrealized gain
(loss) on investment
transactions 1.53 .56 1.27 (2.26) 1.12 .48
Net increase (decrease) in net
asset value from operations 1.72 .61 1.44 (2.03) 1.38 .76
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income (.13) (.06) (.22) (.25) (.29) (.26)
Distributions from net realized gain
on investment transactions -0- -0- -0- (.36) (.74) (.64)
Tax return of capital -0- -0- (.02) -0- -0- -0-
Total dividends and distributions (.13) (.06) (.24) (.61) (1.03) (.90)
Net asset value, end of period $16.06 $14.47 $13.92 $12.72 $15.36 $15.01
TOTAL RETURN
Total investment return based
on net asset value(f) 11.92% 4.39% 11.49% (13.55)% 9.59% 5.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $174,040 $162,243 $150,188 $131,761 $109,592 $65,214
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.69% 1.80%(g) 1.85% 1.84% 1.93% 1.86%
Expenses, before waivers/
reimbursements 1.73% 1.80%(g) 1.85% 1.84% 1.93% 1.86%
Net investment income 1.23%(d)(e) 1.15%(g) 1.32% 1.61% 1.71% 1.88%
Portfolio turnover rate 58% 29% 62% 79% 63% 76%
See footnote summary on page 43.
_______________________________________________________________________________
40 o ALLIANCEBERNSTEIN BALANCED SHARES
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class R
--------------------------------
November 3
Year Ended 2003(h) to
November 30, November
2004 30, 2003(a)
--------------------------------
Net asset value, beginning of period $15.13 $15.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income(c) .30(d)(e) .02
Net realized and unrealized gain on
investment transactions 1.58 .02
Net increase in net asset value from
operations 1.88 .04
LESS: DIVIDENDS
Dividends from net investment income (.21) -0-
Net asset value, end of period $16.80 $15.13
TOTAL RETURN
Total investment return based on net
asset value(f) 12.52% .27%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $371 $10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.19% 1.34%(g)
Expenses, before waivers/reimbursements 1.22% 1.34%(g)
Net investment income 1.94%(d)(e) 1.70%(g)
Portfolio turnover rate 58% 29%
See footnote summary on page 43.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 41
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
----------------------------------------------------------------------------
August 1,
Year Ended 2003 to Year Ended July 31,
November November --------------------------------------------------
30, 2004 30, 2003(a) 2003 2002(b) 2001 2000
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $15.16 $14.56 $13.28 $15.98 $15.54 $15.64
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(c) .35(d)(e) .10 .32 .37 .44 .43
Net realized and unrealized gain
(loss) on investment
transactions 1.61 .59 1.32 (2.34) 1.16 .50
Net increase (decrease) in net
asset value from operations 1.96 .69 1.64 (1.97) 1.60 .93
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net investment
income (.28) (.09) (.32) (.37) (.42) (.39)
Distributions from net realized
gain on investment transactions -0- -0- -0- (.36) (.74) (.64)
Total return of capital -0- -0- (.04) -0- -0- -0-
Total dividends and distributions (.28) (.09) (.36) (.73) (1.16) (1.03)
Net asset value, end of period $16.84 $15.16 $14.56 $13.28 $15.98 $15.54
TOTAL RETURN
Total investment return based
on net asset value(f) 13.07% 4.75% 12.57% (12.67)% 10.75% 6.48%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $112,040 $107,440 $105,567 $101,017 $5,446 $2,943
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .67% .78%(g) .83% .85% .91% .86%
Expenses, before waivers/
reimbursements .71% .78%(g) .83% .85% .91% .86%
Net investment income 2.19%(d)(e) 2.11%(g) 2.36% 2.79% 2.75% 2.88%
Portfolio turnover rate 58% 29% 62% 79% 63% 76%
See footnote summary on page 43.
_______________________________________________________________________________
42 o ALLIANCEBERNSTEIN BALANCED SHARES
Financial Highlights
- -------------------------------------------------------------------------------
(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) Net of expenses waived and reimbursed by the Adviser.
(e) Net of expenses waived and reimbursed by the Transfer Agent.
(f) 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.
(g) Annualized.
(h) Commencement of distribution.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 43
Report of Independent Registered Public Accounting Firm
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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., (the "Fund") at November 30, 2004, the results of its operations for the
year then ended, the changes in its net assets for the year then ended, for the
period August 1, 2003 through November 30, 2003 and for the year ended July 31,
2003 and the financial highlights for each of the periods presented, 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 the standards of the Public Company Accounting
Oversight Board (United States). Those standards 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, 2004 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 8, 2005
TAX INFORMATION (unaudited)
For the fiscal year ended November 30, 2004 certain dividends paid by the Fund
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 Fund designates 88.63% of
total ordinary income distributed as Qualified dividend income.
For corporate shareholders, 85% of the total ordinary income distribution paid
during the current fiscal year ended November 30, 2004 qualifies for the
corporate dividends received deduction.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099-DIV which will be sent to you separately in January 2005.
_______________________________________________________________________________
44 o ALLIANCEBERNSTEIN BALANCED SHARES
Board of Directors
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
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 and 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, TX 78278-6003
Toll-Free (800) 221-5672
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
(1) Member of the Audit Committee and the Governance and Nominating 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
- -------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
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, DATE OF BIRTH, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS AND OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr.,# Investment Adviser and an 113 None
2 Sound View Drive, Independent Consultant. He was
Suite 100, formerly Senior Manager of Barrett
Greenwich, CT 06830 Associates, Inc., a registered
Chairman of the Board investment adviser, with which he
9/7/32 had been associated since prior
(1992) 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, #** Formerly Executive Vice President 94 None
500 SE Mizner Blvd., and the Chief Insurance Officer of
Boca Raton, FL 33432 The Equitable Life Assurance
11/7/30 Society of the United States;
(1985) Chairman and Chief Executive
Officer of Evlico; a 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, # Independent Consultant. Until 98 None
P.O. Box 167, December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation ("ACMC")
(1987) 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
Management of the Fund
- -------------------------------------------------------------------------------
PORTFOLIOS
IN FUND OTHER
NAME, DATE OF BIRTH, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS AND OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin, # Consultant. Formerly President of 96 None
P.O. Box 12, Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002, a
2/19/42 Senior Advisor from June 1999 -
(1992) June 2000 and President of
Historic Hudson Valley (historic
preservation) from December 1989-
May 1999. Previously, he was Director
of the National Academy of Design
and during 1988-1992, he was
Director and Chairman of the Audit
Committee of ACMC.
Michael J. Downey # Consultant since January 2004. 66 Aisa Pacific
c/o Alliance Capital Formerly managing partner of Fund, Inc.,
Management L.P. Lexington Capital, LLC (investment) and The
1345 Avenue of the advisory firm) from 1997 until Merger Fund
Americas December 2003. Prior thereto,
New York, NY 10105 Chairman and CEO of Prudential
1/24/44 Mutual Fund Management (1987-
(2005) 1993).
INTERESTED DIRECTOR
Marc O. Mayer, + Executive Vice President of ACMC 66 None
1345 Avenue of the since 2001; prior thereto, Chief
Americas, Executive Officer of Sanford C.
New York, NY 10105 Bernstein & Co., LLC ("Bernstein")
10/2/57 and its predecessor since prior to 2000.
(2003)
* There is no stated term of office for the Fund's Directors.
** Ms.Block was an "interested person", as defined in the 1940 Act, until
October 21, 2004 by reason of her ownership of 116 American Depositary Shares
of AXA having a value of approximately $2,396. AXA is a controlling person of
ACMC. Ms. Block received shares of The Equitable Companies Incorporated as part
of the demutualization of The Equitable Life Assurance Society of the United
States, which were subsequently converted through a corporate action into 116
American Depositary Shares of AXA.
+ Mr. Mayer is an "interested person," as defined in the 1940 Act, due to his
position as an Executive Vice President of ACMC, the investment adviser.
# Member of the Audit Committee and the Governance and Nominating Committee.
_______________________________________________________________________________
ALLIANCEBERNSTEIN BALANCED SHARES o 47
Management of the Fund
- -------------------------------------------------------------------------------
Officer Information
Certain information concerning the Fund's Officers is set forth below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS**
- --------------------------------------------------------------------------------------------------------------
Marc O. Mayer President and See biography above.
10/2/57 Chief Executive Officer
Paul C. Rissman Senior Vice Executive Vice President of ACMC,**
11/10/56 President with which he has been associated
since prior to 2000.
Philip L. Kirstein Senior Vice President Senior Vice President, Independent
5/29/1945 and Independent Compliance Officer-Mutual Funds of
Compliance Officer ACMC** with which he has been
associated since October 2004. Prior
thereto, he was Of Counsel to
Kirkpatrick & Lockhart, LLP from
October 2003 to October 2004, and
General Counsel and First Vice
President of Merrill Lynch Investment
Managers, L.P. since prior to 1999 until
March 2003.
Thomas J. Bardong Vice President Senior Vice President of ACMC,** with
4/28/45 which he has been associated since
prior to 2000.
Frank V. Caruso Vice President Senior Vice President of ACMC,** with
10/28/56 which he has been associated since
prior to 2000.
John J. Kelley Vice President Senior Vice President of ACMC,** with
2/29/60 which he has been associated since
prior to 2000.
Susanne M. Lent Vice President Senior Vice President of ACMC,** with
8/29/69 which she has been associated since
prior to 2000.
Mark R. Manley Secretary Senior Vice President, Deputy General
10/23/62 Counsel and Chief Compliance Officer
of ACMC,** with which he has been
associated since prior to 2000.
Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance
10/4/50 Financial Officer Global Investor Services, Inc.
("AGIS"),** and a Vice President of
AllianceBernstein Investment Research
and Management ("ABIRM"),** with
which he has been associated since
prior to 2000.
Vincent S. Noto Controller Vice President of AGIS,** with which he
12/14/64 has been associated since prior to 2000.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM, AGIS and Bernstein 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
- -------------------------------------------------------------------------------
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 Funds
- --------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- --------------------------------------------
Growth Funds
- --------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund*
Small Cap Growth Portfolio
Global & International
All-Asia Investment Fund
Global Health Care Fund*
Global Research Growth Fund
Global Technology Fund*
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
- --------------------------------------------
Value Funds
- --------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund*
Growth & Income Fund
Real Estate Investment Fund
Small-Mid 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. You should read the prospectus carefully before you invest.
* Prior to December 15, 2004, these Funds were named as follows: Global Health
Care Fund was Health Care Fund; Large Cap Growth Fund was Premier Growth Fund;
Global Technology Fund was Technology Fund; and Focused Growth & Income Fund
was Disciplined Value Fund.
** Effective February 1, 2005, Small Cap Value Fund will be renamed
Small/Mid-Cap Value Fund.
*** 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.
BALAR1104
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 11(a)(1).
(b) During the period covered by this report, no material 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.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent auditor, PriceWaterhouse Coopers LLP, for the Fund's last two fiscal
years for professional services rendered for: (i) the audit of the Fund's annual
financial statements included in the Fund's annual report to stockholders; (ii)
assurance and related services that are reasonably related to the performance of
the audit of the Fund's financial statements and are not reported under (i),
which include advice and education on accounting and auditing issues, and
consent letters; and (iii) tax compliance, tax advice and tax return
preparation.
Audit-Related
Audit Fees Fees Tax Fees
---------- ------------- --------
AllianceBernstein Balanced Shares, Inc. 2003* $24,000 $1,348 $13,300
2004 $40,000 $3,175 $18,400
* During the course of calendar year 2003, AllianceBernstein Balanced Shares,
Inc. changed its fiscal year end from July 31 to November 30. Fees for 2003 are
from the period August 1, 2003 through November 30, 2003.
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or
after May 6, 2003, the Fund's Audit Committee policies and procedures require
the pre-approval of all audit and non-audit services provided to the Fund by the
Fund's independent auditors. The Fund's Audit Committee policies and procedures
also require pre-approval of all audit and non-audit services provided to the
Adviser and Service Affiliates to the extent that these services are directly
related to the operations or financial reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to
the Fund, the Fund's Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the Fund
("Service Affiliates"):
Total Amount of
Foregoing Column
Pre-approved by the
All Fees for Audit Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates Tax Fees)
---------------------- ---------------------
AllianceBernstein Balanced Shares, Inc. 2003* $118,570 $14,648
$1,348
$13,300
2004 $771,777 $21,575
$3,175
$18,400
* During the course of calendar year 2003, AllianceBernstein Balanced Shares ,
Inc. changed its fiscal year end from July 31 to November 30. Fees for 2003 are
from the period August 1, 2003 through November 30, 2003.
(h) The Audit Committee of the Fund has considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent auditor to the Adviser and Service Affiliates is compatible
with maintaining the auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last provided
disclosure in response to this item.
ITEM 10. 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 over
financial reporting 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 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
Exhibit No. DESCRIPTION OF EXHIBIT
11 (a) (1) Code of ethics that is subject to the disclosure
of Item 2 hereof
11 (b) (1) Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
11 (b) (2) Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
11 (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: February 11, 2005
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: February 11, 2005
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: February 11, 2005