THE ALLIANCE FUND
ANNUAL REPORT
NOVEMBER 30, 1995
LETTER TO SHAREHOLDERS THE ALLIANCE FUND
_______________________________________________________________________________
January 15, 1996
Dear Shareholder:
The Alliance Fund has benefited a great deal from the strong sustained rally in
the U.S. stock market over much of 1995. As shown in the table below, the Fund
has achieved superior investment returns during the annual reporting period
ended November 30, 1995. Also shown are equally strong returns over the period
for the overall U.S. stock market, represented by the S&P 500-stock Index, and
for the Russell 1000 Growth Stock Index. (Complete descriptions of these
unmanaged benchmarks appear on page 4):
12 Months Ended November 30, 1995
Total Return Ending NAV
------------ ----------
THE ALLIANCE FUND
Class A +37.87% $7.72
Class B +36.61% $7.49
Class C +36.79% $7.50
S&P 500 +36.95%
RUSSELL 1000 +37.64%
The Fund's total returns are based on the net asset values of each class of
shares as of November 30; additional investment results appear on page 3. Also
provided on page 4 is a chart that shows the performance of a hypothetical
$10,000 initial investment in The Alliance Fund Class A shares over a ten-year
period through the end of November.
U.S. EQUITY MARKET OUTPERFORMS
Although the market witnessed a few shocks in December, there can be few
complaints about the overall performance of U.S. equities in 1995. Ironically
(though understandably), it is after such periods of strong performance that
many investors become nervous because they believe they will eventually be
faced with 'paying the piper' for these impressive gains.
Our view, however, is that the market's prospects are still quite good. When
compared with other stock markets, not only is the U.S. in a very strong
technology leadership position, we also continue to reap the benefits from many
years of corporate cost cutting and we still enjoy a competitive level for the
dollar. Also important is that we now have a shift towards conservative fiscal
as well as monetary policy-a change not totally appreciated by domestic
investors, and certainly not by their foreign counterparts.
The risk to equity portfolios, in our view, lies more with investor reaction to
individual earnings disappointments than to any news that might be construed as
broadly negative for all stocks. We believe that the current estimate for a
15.5x price/earnings multiple in 1996 is not too high in today's interest rate
environment.
ECONOMIC REVIEW & OUTLOOK
Today we are facing a domestic and world economic outlook that may best be
described as subdued. In this context it is unlikely that inflation will become
a problem, and our forecast for interest rates is that, at a minimum, there
will be no major upward revision. What this means is that the competition for
the U.S. equity market is essentially the 6% yield offered by the long bond.
Hypothetically we can compare the two: assume, for example, a good regional
bank whose stock is trading at an 11x price/earnings multiple-a 9% earnings
yield-with total return prospects (earnings growth plus dividends) in the range
of 10-15% annually. So, the total return from the stock, higher than the 6%
bond yield, consequently supports our expectation that at least for the
medium term stocks should outperform. It appears that a similar outlook is
influencing 401(k) retirement plan cash flows, which are increasingly
directed to equity investments.
Given the U.S.' democratic and capitalist strengths, foreign investors may be
encouraged to invest in U.S. equities of comparable valuation as an alternative
to accepting low local interest rates or investing in their own equity market
where growth prospects are not as clear. U.S. companies in recent years have
enjoyed good earnings, good cash flow, and have strengthened their balance
sheets considerably-factors we should not casually dismiss. Moreover, the
current slow economic environment means that corporate America must continue to
focus on cost cutting, which could result in impressive earnings gains when the
U.S. and world
1
THE ALLIANCE FUND
_______________________________________________________________________________
economies begin to experience a slightly higher rate of growth. We do not
believe that such gains would be negated by a material back-up of interest
rates and higher inflation.
INVESTMENT STRATEGY
In managing The Alliance Fund, our strategy is to keep the portfolio fully
invested, but to vary the degree of aggressiveness from time to time. Though
today we are not as bullish as we were a year ago, we still believe the market
will post respectable gains in 1996. For those who are bearish (i.e., believing
the market is due for broad declines), we believe they may be unable to buy
stocks materially below today's levels. However, despite our forecast for
market upside, stock selection will be critical and it will be incumbent on
portfolio managers to continually assess each company's fundamentals carefully
and to pay particular attention to price. Because we believe that successful
investing comes from the correct marriage of company fundamentals and price,
stock selection for your Fund is based on a research process in which we try to
assess where a particular company, and the market, are at any time both
relatively and absolutely as prices fluctuate.
Looking back at 1995, three sectors performed particularly well for your Fund:
technology, financial services and transportation. The 25-30% in technology
stocks and around 20% in financial services stocks benefited from a lower
interest rate environment, and transportation stocks such as United Airlines
turned in double-digit returns for the year.
Although historically the same sectors are not top performers in consecutive
years, as we look forward to 1996 we are currently maintaining positions in
these areas because they still seem to have the best earnings momentum, and
their prices, while not at bargain basement levels, are still reasonable in our
opinion.
Thank you for your interest and investment in The Alliance Fund. We look
forward to reporting its progress to you in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Alfred Harrison
Executive Vice President
2
INVESTMENT RESULTS THE ALLIANCE FUND
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +37.87% +32.09%
. Five Years +19.44% +18.40%
. Ten Years +14.99% +14.49%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +36.61% +32.61%
. Since Inception* +14.72% +14.72%
CLASS C SHARES
. One Year +36.79%
. Since Inception* +16.84%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares-with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
Class C shares are not subject to front-end or contingent deferred sales
charges. Past performance does not guarantee future results. Investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
* Inception: 3/4/91, Class B; 5/3/93, Class C.
3
THE ALLIANCE FUND
_______________________________________________________________________________
THE ALLIANCE FUND
GROWTH OF A $10,000 INVESTMENT:
11/30/85 TO 11/30/95
$42,000
$31,000
$20,000
$9,000
11/30/85 11/30/95
THE ALLIANCE FUND
CLASS A: $38,691
S&P 500
RUSSELL 1000 GROWTH
This chart illustrates the total value of an assumed $10,000 investment in The
Alliance Fund Class A shares after deducting the maximum 4.25% sales charge,
and with dividends and capital gains reinvested. Performance for Class B and
Class C shares will vary from the results shown above due to differences in
expenses charged to those classes. Results should not be considered
representative of future gain or loss in capital value or dividend income.
The unmanaged Standard and Poor's 500-stock Index includes 500 U.S. stocks and
is a common measure of the performance of the overall U.S. stock market.
The unmanaged Russell 1000 Growth Stock Index compiles the 1000 largest U.S.
stocks as measured by price to book ratios; those with the highest ratios are
considered 'growth' stocks (the remaining are considered 'value' stocks).
When comparing The Alliance Fund to the indices shown above, you should note
that the Fund's performance reflects the maximum sales charge of 4.25% while no
such charges are reflected in the performance of the indices.
The Alliance Fund
S&P 500
Russell 1000 Growth
4
TEN LARGEST HOLDINGS
NOVEMBER 30, 1995 THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Philip Morris Cos., Inc. $ 54,352,350 5.5%
Intel Corp. 50,568,862 5.1
Tele-Communications, Inc. (Cl.A & units) 35,074,650 3.6
Norwest Corp. 32,637,000 3.3
UAL, Corp. 32,360,512 3.3
ITT Corp. 30,656,250 3.1
United Healthcare, Inc. 30,330,900 3.1
Applied Materials, Inc. 25,615,650 2.6
McDonald's Corp. 25,177,425 2.5
AirTouch Communications, Inc. 23,387,375 2.4
$340,160,974 34.5%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED NOVEMBER 30, 1995
_______________________________________________________________________________
SHARES*
-------------------------------
PURCHASES BOUGHT HOLDINGS 11/30/95
- -----------------------------------------------------------------------------
Applied Materials, Inc. 265,900 526,800
AT&T Corp. 262,900 262,900
Federal National Mortgage Assn. 103,900 103,900
First Chicago Corp. 125,000 125,000
General Motors Corp. Cl.E 351,100 351,100
General Re Corp. 102,700 102,700
Gillette Co. 249,900 319,800
ITTCorp. 250,000 250,000
McDonald's Corp. 208,000 564,200
PepsiCo, Inc. 182,500 182,500
SALES SOLD HOLDINGS 11/30/95
- -----------------------------------------------------------------------------
Caterpillar, Inc. 265,000 -0-
Dow Chemical Co. 230,000 -0-
Du Pont (E.I.) de Nemours & Co. 151,500 -0-
General Motors Corp. 463,000 -0-
Motorola, Inc. 269,800 291,200
Nokia Corp.(ADR) 211,300 318,700
UAL, Corp. 100,000 154,650
United Healthcare, Inc. 470,000 482,400
Viacom, Inc. Cl.B 201,901 146,597
Xerox Corp. 129,900 -0-
* Adjusted for stock splits.
5
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-97.7%
CONSUMER PRODUCTS & SERVICES-37.7%
AIRLINES-4.2%
AMR Corp.* 30,000 $ 2,298,750
KLM Royal Dutch Air 206,700 7,131,150
UAL, Corp.* 154,650 32,360,512
41,790,412
BIOTECHNOLOGY-0.3%
Amgen, Inc.* 66,500 3,300,063
BROADCASTING & CABLE-10.6%
AirTouch Communications, Inc.* 803,000 23,387,375
Bell Cablemedia Plc. (ADR)* (a) 70,000 1,120,000
Cablevision Systems Corp. Cl.A* 90,000 4,995,000
Cinergi Pictures Entertainment, Inc.* 20,000 76,250
Comcast Corp. Cl.A (SPL) 250,000 4,937,500
CommNet Cellular, Inc.* 90,000 2,441,250
Cox Communications, Inc.* 361,100 7,222,000
Jones Intercable, Inc. Cl.A* 240,000 3,150,000
Millicom International Cellular S.A. 50,000 1,525,000
Mobilemedia Corp.* 100,000 2,587,500
New World Communications Group, Inc.* 80,000 1,400,000
Nynex Cablecomms Group Plc (ADR)* (a) 110,000 2,145,000
Tele-Communications International Inc. Cl.A* 95,000 2,232,500
Tele-Comm Liberty Media (units)* 359,050 10,053,400
Tele-Communications, Inc. Cl.A* 1,352,500 25,021,250
Telephone & Data Systems, Inc. 90,000 3,431,250
Viacom, Inc. Cl.B* 146,597 7,073,294
Vodafone Group Plc (ADR)* (a) 60,000 2,167,500
104,966,069
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES-6.7%
Columbia HCA Healthcare Corp. 217,000 11,202,625
Pfizer, Inc. 200,000 11,600,000
Pharmacia & Upjohn, Inc. 50,750 1,820,656
Schering-Plough Corp. 103,500 5,938,313
Spine Technology, Inc.* 75,000 1,565,625
United Healthcare, Inc. 482,400 30,330,900
Warner Lambert Co. 38,000 3,391,500
65,849,619
ENTERTAINMENT & LEISURE-2.5%
Circus Circus Enterprises, Inc.* 80,000 2,220,000
Cyrk, Inc.* 75,000 750,000
Eastman Kodak Co. 40,000 2,720,000
Walt Disney Co. 312,600 18,795,075
24,485,075
FOOD, BEVERAGES & TOBACCO-6.5%
PepsiCo, Inc. 182,500 10,083,125
Philip Morris Cos., Inc. 619,400 54,352,350
64,435,475
HOUSEHOLD PRODUCTS-1.7%
Gillette Co. 319,800 16,589,625
PRINTING & PUBLISHING-0.5%
Aamulehti Yhtymae OY-II* (d) 140,000 3,059,611
Multimedia, Inc.* 38,000 1,714,750
4,774,361
6
THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
RESTAURANTS & LODGING-3.4%
Host Marriott Corp. 170,000 $ 2,188,750
John Q. Hammons Hotels, Inc.* 165,000 1,629,375
Marriot International, Inc. 65,000 2,421,250
McDonald's Corp. 564,200 25,177,425
Promus Hotel Corp.* 90,000 1,991,250
33,408,050
RETAILING-1.3%
Fingerhut Cos., Inc. 230,000 2,903,750
Home Depot, Inc. 132,700 5,888,563
Home Shopping Network, Inc.* 140,000 1,312,500
Payless Cashways, Inc.* 270,000 1,147,500
Wal-Mart Stores, Inc. 43,400 1,041,600
12,293,913
OTHER-0.0%
Ideon Group, Inc. 50,000 406,250
372,298,912
SCIENCE & TECHNOLOGY-26.6%
AEROSPACE-0.3%
Rockwell International Corp 50,000 2,450,000
COMMUNICATIONS EQUIPMENT-5.4%
Bay Networks, Inc.* 60,000 2,700,000
cisco Systems, Inc.* 25,000 2,103,125
DSC Communications Corp.* 46,000 1,822,750
Ericsson (LM) Telephone (ADR) (b) 273,510 6,495,863
General Instrument Corp.* 140,000 3,587,500
Motorola, Inc. 291,200 17,836,000
Nokia Corp. (ADR)(c) 318,700 17,289,475
Scientific-Atlanta, Inc. 115,000 1,825,625
53,660,338
COMPUTER HARDWARE-5.0%
Ceridian Corp. 67,000 2,814,000
COMPAQ Computer Corp.* 356,300 17,636,850
Digital Equipment Corp.* 45,000 2,649,375
Hewlett-Packard Co. 260,800 21,613,800
Intergraph Corp.* 150,000 2,578,125
SCI Systems, Inc.* 55,000 1,842,500
49,134,650
COMPUTER PERIPHERALS-0.2%
Seagate Technology* 45,000 2,373,750
COMPUTER SOFTWARE & SERVICES-6.0%
Adobe Systems, Inc. 45,000 3,043,125
Compuware Corp.* 80,000 1,640,000
DST Systems, Inc.* 94,000 2,714,250
First Data Corp. 110,400 7,838,400
General Motors Corp. Cl.E 351,100 17,730,550
Informix Corp. 37,000 1,024,438
Microsoft Corp.* 155,650 13,561,006
Newbridge Networks Corp.* 45,000 1,918,125
Oracle Systems Corp.* 210,300 9,542,362
59,012,256
SEMI-CONDUCTORS & RELATED-9.7%
Applied Materials, Inc.* 526,800 25,615,650
Intel Corp. 830,700 50,568,862
Lam Research Corp.* 40,000 2,190,000
Micron Technology, Inc. 150,000 8,212,500
National Semiconductor Corp.* 225,000 4,809,375
Teradyne, Inc.* 80,000 2,090,000
Texas Instruments, Inc. 34,000 1,967,750
95,454,137
262,085,131
FINANCIAL SERVICES-20.0%
BANKING & CREDIT-7.3%
First Bank Systems, Inc. 193,200 9,973,950
First Chicago Corp. 125,000 8,687,500
First Interstate Bancorp 46,900 6,284,600
Household International, Inc. 45,000 2,812,500
NationsBank Corp. 158,000 11,277,250
Norwest Corp. 989,000 32,637,000
71,672,800
7
PORTFOLIO OF INVESTMENTS (CONTINUED) THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
BROKERAGE-2.7%
Edwards (A.G.), Inc. 100,000 $ 2,700,000
Legg Mason, Inc. 80,000 2,380,000
Merrill Lynch & Co., Inc. 387,200 21,538,000
26,618,000
INSURANCE-6.1%
Aetna Life & Casualty Co. 45,000 3,301,875
American International Group, Inc. 218,000 19,565,500
Amerin Corp. 200,000 4,400,000
Equitable of Iowa Cos. 30,000 1,050,000
General Re Corp. 102,700 15,366,487
Home State Holdings, Inc.* 57,400 480,725
John Alden Financial Corp. 100,000 2,062,500
Life Partners Group, Inc. 107,300 1,327,838
NAC Re Corp. 70,000 2,310,000
Progressive Corp. 38,400 1,708,800
TIG Holdings, Inc. 120,000 3,240,000
Transatlantic Holdings, Inc. 35,000 2,406,250
Travelers Group, Inc. 60,000 3,570,000
60,789,975
MORTGAGE BANKING-3.2%
Federal Home Loan Mortgage Corp. 261,000 20,097,000
Federal National Mortgage Assn. 103,900 11,377,050
31,474,050
REAL ESTATE-0.4%
Avalon Properties, Inc. 80,000 1,560,000
Simon Property Group, Inc. 100,000 2,325,000
3,885,000
OTHER-0.3%
American Express Co. 25,000 1,062,500
MBNA Corp. 50,000 2,018,750
3,081,250
197,521,075
BASIC INDUSTRIES-7.6%
CHEMICALS-1.4%
Freeport McMoran, Inc. 50,002 1,956,328
Hercules, Inc. 40,000 2,195,000
IMC Fertilizer Group, Inc. 50,000 3,868,750
Monsanto Co. 32,000 3,664,000
Union Carbide Corp. 50,000 1,981,250
13,665,328
MACHINERY-0.7%
Allied-Signal, Inc. 50,000 2,362,500
Case Corp. 65,600 2,738,800
Coltec Industries, Inc.* 180,000 1,980,000
7,081,300
MINING & METALS-0.7%
Alumax, Inc.* 85,000 2,826,250
Kaiser Aluminum Corp.* 163,074 2,364,573
Lukens, Inc. 65,000 1,990,625
7,181,448
OIL & GAS-2.1%
Brown (Tom), Inc.* 150,000 1,912,500
Camco International, Inc. 90,000 2,115,000
ENSERCH Corp. 70,000 1,085,000
Louis Dreyfus Natural Gas Corp.* 180,000 2,452,500
Louisiana Land & Exploration Co. 60,000 2,340,000
Mitchell Energy & Development Corp. Cl.B 70,000 1,233,750
Noble Affiliates, Inc. 90,000 2,441,250
Occidental Pete Corp. 100,000 2,212,500
Seagull Energy Corp.* 90,000 1,642,500
United Meridian Corp.* 183,700 3,054,013
20,489,013
PAPER & FOREST PRODUCTS-0.3%
Champion International Corp. 34,000 1,602,250
Rayonier, Inc. 45,000 1,721,250
3,323,500
POLLUTION CONTROL-0.4%
Wellman, Inc. 60,000 1,537,500
WMX Technologies, Inc. 80,000 2,360,000
3,897,500
8
THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
SURFACE TRANSPORTATION-1.3%
Burlington Northern Santa Fe 35,000 $ 2,821,875
Canadian National Railway Co. 16,500 247,500
Conrail, Inc. 25,000 1,746,875
GATX Corp. 60,000 2,925,000
Illinois Central Corp. 60,000 2,430,000
Southern Pacific Rail Corp.* 120,000 2,865,000
13,036,250
TRUCKING & SHIPPING-0.5%
Ryder System, Inc. 130,000 3,103,750
Sea Containers, Ltd. Cl.A 100,000 1,737,500
4,841,250
OTHER-0.2%
Xtra Corp. 45,000 1,923,750
75,439,339
MULTI INDUSTRY-3.1%
ITT Corp. 250,000 30,656,250
UTILITIES-2.2%
TELEPHONE UTILITIES-2.2%
AT & T Corp. 262,900 17,351,400
MCI Communications Corp. 150,000 4,012,500
21,363,900
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ----------------------------------------------------------------------
CONSUMER MANUFACTURING-0.5%
AUTO & RELATED-0.3%
Magna International, Inc. 60,000 $ 2,610,000
BUILDING & RELATED-0.1%
American Standard Cos., Inc.* 30,000 900,000
TEXTILE PRODUCTS-0.1%
Cone Mills Corp.* 100,000 1,125,000
4,635,000
Total Common Stocks
& Other Investments
(cost $740,542,989) 963,999,607
COMMERCIAL PAPER-0.3%
General Electric Capital Corp.
5.88%, 12/01/95
(amortized cost $3,161,000) $3,161 3,161,000
TOTALINVESTMENTS-98.0%
(cost $743,703,989) 967,160,607
Other assets less liabilities-2.0% 19,965,163
NETASSETS-100% $987,125,770
* Non-income producing security.
(a) Country of origin - United Kingdom.
(b) Country of origin - Sweden.
(c) Country of origin - Finland.
(d) Finnish holding.
Glossary:
ADR - American Depository Receipt.
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 THE ALLIANCE FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $743,703,989) $967,160,607
Cash, at value (cost $28,930) 30,143
Receivable for investment securities sold 26,309,389
Dividends receivable 818,039
Receivable for capital stock sold 346,786
Total assets 994,664,964
LIABILITIES
Payable for investment securities purchased 5,337,262
Unclaimed dividends 1,006,095
Management fee payable 562,768
Payable for capital stock redeemed 180,556
Distribution fee payable 179,480
Accrued expenses 273,033
Total liabilities 7,539,194
NET ASSETS $987,125,770
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,279,807
Additional paid-in capital 625,259,788
Undistributed net investment income 2,382,871
Accumulated net realized gain 134,745,473
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 223,457,831
$987,125,770
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($945,308,950/
122,400,986 shares of capital stock issued and outstanding) $7.72
Sales charge-4.25% of public offering price .34
Maximum offering price $8.06
CLASS B SHARES
Net asset value and offering price per share($31,738,453/
4,235,149 shares of capital stock issued and outstanding) $7.49
CLASS C SHARES
Net asset value, redemption and offering price per share($10,078,367
/1,344,394 shares of capital stock issued and outstanding) $7.50
See notes to financial statements.
10
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995 THE ALLIANCE FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends
(net of foreign taxes withheld of $59,378) $10,993,130
Interest 919,202 $ 11,912,332
EXPENSES
Management fee 6,096,506
Distribution fee - Class A 1,577,130
Distribution fee - Class B 236,212
Distribution fee - Class C 73,117
Transfer agency 732,582
Custodian 183,937
Audit and legal 166,945
Administrative 153,416
Printing 119,372
Registration 76,932
Taxes 60,225
Directors' fees 24,327
Miscellaneous 28,925
Total expenses 9,529,626
Net investment income 2,382,706
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investments 137,576,646
Net realized gain on foreign currency transactions 570
Net change in unrealized appreciation of:
Securities 136,437,158
Foreign currency denominated assets and liabilities 1,213
Net gain on investments 274,015,587
NET INCREASE IN NET ASSETS FROM OPERATIONS $276,398,293
See notes to financial statements.
11
STATEMENT OF CHANGES IN NET ASSETS THE ALLIANCE FUND
_______________________________________________________________________________
YEAR ENDED JAN. 1,1994
NOV. 30, TO
1995 NOV. 30,1994*
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,382,706 $ 1,421,289
Net realized gain on investments 137,577,216 117,472,711
Net change in unrealized appreciation of
investments 136,438,371 (146,186,786)
Net increase (decrease) in net assets from
operations 276,398,293 (27,292,786)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,599,712) -0-
Net realized gain on investments
Class A (114,265,138) -0-
Class B (2,789,853) -0-
Class C (972,583) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 45,307,923 (35,882,976)
Total increase (decrease) 202,078,930 (63,175,762)
NET ASSETS
Beginning of period 785,046,840 848,222,602
End of period (including undistributed net
investment income of $2,382,871 and
$1,393,547, respectively) $987,125,770 $785,046,840
* The Fund changed its fiscal year end from December 31 to November 30.
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995 THE ALLIANCE FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Alliance Fund, 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 and Class C shares. Class A shares are sold with a
front-end sales charge of up to 4.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. 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 sold without an initial or contingent deferred
sales charge. All three classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Securities traded on national securities exchanges are valued at the last
reported sales price, or, if no sale occurred, at the mean of the bid and asked
price at the close of the New York Stock Exchange. Over-the-counter securities
not traded on national securities exchanges are valued at the closing bid
price. Debt securities are valued at the mean of the bid and asked price except
that debt securities maturing within 60 days are valued at amortized cost which
approximates market value. Securities for which current market quotations are
not readily available (including investments which are subject to limitations
as to their sale) are valued at their fair value as determined in good faith by
the Board of Directors.
2. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date and dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. The Fund accretes discounts on debt securities owned. Security gains and
losses are determined on the identified cost basis.
3. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net foreign exchange gain of $570 represents foreign exchange gains and
losses from sales and maturities of securities, holdings of foreign currencies
exchange gains and losses realized between the trade and settlement dates on
security transactions, and the difference between the amounts of interest
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation of investments and foreign
currency denominated assets and liabilities.
4. 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.
To reflect reclassifications arising from permanent book/tax differences for
the year ended November 30, 1995, $206,330 was reclassified from accumulated
net realized gain to undistributed net investment income.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE ALLIANCE FUND
_______________________________________________________________________________
NOTE B: MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the management agreement, the Fund pays its manager,
Alliance Capital Management L.P., a fee at an annual rate of .75% on the first
$500 million of average daily net assets, .65% on the next $500 million of
average daily net assets and .55% on average daily net assets in excess of $1
billion. The fee is accrued daily and paid monthly.
Pursuant to the management agreement, the Fund paid $153,416 to the Manager
representing the cost of certain legal and accounting services provided to the
Fund by the Manager for the year ended November 30, 1995.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Manager) for providing personnel and facilities to perform transfer agency
services for the Fund. Such compensation amounted to $516,476 for the year
ended November 30, 1995.
The Manager has agreed to reimburse the Fund to the extent that the Fund's
aggregate annual expenses (exclusive of interest, taxes, brokerage,
distribution fee and extraordinary expenses) exceed the limits prescribed by
any state in which the Fund's shares are qualified for sale. The Manager
believes that the most restrictive expense ratio limitation imposed by any
state is 2 1/2% of the first $30 million of its average daily net assets, 2% of
the next $70 million of its average daily net assets, and 1 1/2% of its average
daily net assets in excess of $100 million. No such reimbursement was required
for the year ended November 30, 1995.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Manager)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $49,229 from the sale of Class A shares and $49,596
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended November 30, 1995.
Brokerage commissions paid for the year ended November 30, 1995 on securities
transactions amounted to $1,823,026, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp., ('DLJ') nor to DLJ directly, an affiliate of the Manager.
NOTE C : DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the 'Agreement')
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the Fund's average daily net assets attributable to
the Class A shares and 1% of the average daily net assets attributable to the
Class B and Class C shares. Such fee is 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 incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $1,985,734 and $581,997, for Class B
and C shares, respectively; such costs may be recovered from the Fund in future
periods so 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
shares. The Agreement also provides that the Manager 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)
aggregated $687,054,092 and $746,355,143, respectively, for the year ended
November 30, 1995. At November 30, 1995, the cost of securities for federal
income tax purposes was $744,440,061. Accordingly, gross unrealized
appreciation of investments was $240,277,103 and gross unrealized depreciation
of investments was $17,556,557, resulting in net unrealized appreciation of
$222,720,546.
14
THE ALLIANCE FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 600,000,000 shares of $0.01 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Class A shares consists of 300,000,000 shares. Class B and Class C shares each
consist of 150,000,000 shares. Transactions in capital stock were as follows:
SHARES AMOUNT
-------------------------- ----------------------------
ELEVEN ELEVEN
YEAR ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1994* 1995 1994*
------------ ------------ ------------- -------------
CLASS A
Shares sold 11,552,553 4,326,797 $ 76,332,241 $ 29,295,693
Shares issued in
reinvestment of
dividends and
distributions 16,140,922 -0- 88,936,504 -0-
Shares redeemed (19,990,291) (10,990,633) (131,496,755) (74,078,822)
Net increase(decrease) 7,703,184 (6,663,836) $ 33,771,990 $(44,783,129)
CLASS B
Shares sold 2,132,283 1,460,913 $ 13,861,804 $ 9,756,379
Shares issued in
reinvestment of
distributions 429,040 -0- 2,312,524 -0-
Shares redeemed (1,117,997) (502,655) (7,184,000) (3,332,022)
Net increase 1,443,326 958,258 $ 8,990,328 $ 6,424,357
CLASS C
Shares sold 904,787 905,525 $ 5,865,193 $ 6,039,305
Shares issued in
reinvestment of
distributions 116,466 -0- 627,754 -0-
Shares redeemed (634,972) (539,376) (3,947,342) (3,563,509)
Net increase 386,281 366,149 $ 2,545,605 $ 2,475,796
* The Fund changed its fiscal year end from December 31 to November 30.
15
FINANCIAL HIGHLIGHTS THE ALLIANCE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
ELEVEN MONTHS
YEAR ENDED ENDED YEAR ENDED DECEMBER 31,
NOV. 30, NOV. 30, ----------------------------------------------
1995 1994** 1993 1992 1991
---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.63 $6.85 $6.68 $6.29 $5.22
INCOME FROM INVESTMENT OPERATIONS
Net investment income .02(b) .01 .02 .05 .07
Net realized and unrealized gain
(loss) on investments 2.08 (.23) .93 .87 1.70
Net increase (decrease) in net
asset value from operations 2.10 (.22) .95 .92 1.77
LESS: DISTRIBUTIONS
Dividends from net investment income (.01) -0- (.02) (.05) (.07)
Distributions from net realized gains (1.00) -0- (.76) (.48) (.63)
Total dividends and distributions (1.01) -0- (.78) (.53) (.70)
Net asset value, end of period $7.72 $6.63 $6.85 $6.68 $6.29
TOTAL RETURN
Total investment return based on
net asset value (c) 37.87% (3.21)% 14.26% 14.70% 33.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $945,309 $760,679 $831,814 $794,733 $748,226
Ratio of expenses to average net assets 1.08% 1.05%(d) 1.01% .81% .83%
Ratio of net investment income to
average net assets .31% .21%(d) .27% .79% 1.03%
Portfolio turnover rate 81% 63% 66% 58% 74%
</TABLE>
See footnote summary on page 18.
16
THE ALLIANCE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
ELEVEN MONTHS
YEAR ENDED ENDED YEAR ENDED DECEMBER 31,
NOV. 30, NOV. 30, -----------------------------------
1995 1994** 1993 1992 1991*
----------- ------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.50 $6.76 $6.64 $6.27 $6.14
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.03)(b) (.03) (.03) (.01)(b) .01(b)
Net realized and unrealized gain (loss)
on investments 2.02 (.23) .91 .87 .79
Net increase (decrease) in net asset
value from operations 1.99 (.26) .88 .86 .80
LESS: DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- (.01) (.04)
Distributions from net realized gains (1.00) -0- (.76) (.48) (.63)
Total dividends and distributions (1.00) -0- (.76) (.49) (.67)
Net asset value, end of period $7.49 $6.50 $6.76 $6.64 $6.27
TOTAL RETURN
Total investment return based on net
asset value (c) 36.61% (3.85)% 13.28% 13.75% 13.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $31,738 $18,138 $12,402 $3,825 $852
Ratio of expenses to average net assets 1.90% 1.89%(d) 1.90% 1.64% 1.64%(d)
Ratio of net investment income (loss) to
average net assets (.53)% (.60)%(d) (.64)% (.04)% .10%(d)
Portfolio turnover rate 81% 63% 66% 58% 74%
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) THE ALLIANCE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
-------------------------------------
ELEVEN MONTHS MAY 3,
YEAR ENDED ENDED 1993(A) TO
NOV. 30, NOV. 30, DEC. 31,
1995 1994** 1993
----------- ----------- -----------
Net asset value, beginning of period $6.50 $6.77 $6.67
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.03)(b) (.03) (.02)
Net realized and unrealized gain
(loss) on investments 2.03 (.24) .88
Net increase (decrease) in net asset
value from operations 2.00 (.27) .86
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.00) -0- (.76)
Net asset value, end of period $7.50 $6.50 $6.77
TOTAL RETURN
Total investment return based on net
asset value (c) 36.79% (3.99)% 13.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $10,078 $6,230 $4,006
Ratio of expenses to average net assets 1.89% 1.87%(d) 1.94%(d)
Ratio of net investment (loss) to
average net assets (.51)% (.59)%(d) (.74)%(d)
Portfolio turnover rate 81% 63% 66%
* For the period March 4, 1991 (commencement of distribution) to December
31, 1991.
** The Fund changed its fiscal year end from December 31 to November 30.
(a) Commencement of distribution.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment returns calculated for periods of less than one year
are not annualized.
(d) Annualized.
18
REPORT OF INDEPENDENT ACCOUNTANTS THE ALLIANCE FUND
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE ALLIANCE FUND, 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 The Alliance Fund, Inc. (the
'Fund') at November30, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
'financial statements') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at November 30, 1995 by correspondence with the custodian and
brokers and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
January 16, 1996
19
THE ALLIANCE FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER(1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
ALFRED HARRISON, EXECUTIVE VICE PRESIDENT
PAUL H. JENKEL, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
20
THE ALLIANCE FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
ALLAR
