THE ALLIANCE FUND
ANNUAL REPORT
NOVEMBER 30, 1996
LETTER TO SHAREHOLDERS THE ALLIANCE FUND
_______________________________________________________________________________
December 9, 1996
Dear Shareholder:
In concert with a strong U.S. stock market, The Alliance Fund showed further
appreciation in the 6- and 12-months ended November 30, 1996. Unfortunately, as
you can see below, the Fund did not perform as well relative to the S&P 500
Stock Index.
In part, this relative underperformance is due to the portion of the Fund that
is invested in small- to mid-cap growth stocks. (It has been the Fund's
operating policy to maintain approximately one third of net assets in small- to
mid-cap stocks.) These stocks, as measured by the Russell 2000 Index, did not
keep up with the performance of larger-cap issues, as measured by the S&P 500.
The Russell 2000 returned -1.36% and 16.52%, respectively, for the 6- and
12-month periods ended November 30, 1996.
TOTAL RETURNS FOR PERIODS ENDED
NOVEMBER 30, 1996
6 MONTHS 12 MONTHS
------------ -------------
THE ALLIANCE FUND
Class A 8.44% 16.49%
Class B 7.87% 15.47%
Class C 8.02% 15.48%
S&P 500 STOCK INDEX 14.37% 27.85%
RUSSELL 1000 GROWTH INDEX 12.20% 26.30%
U.S. EQUITY MARKET AND ECONOMIC REVIEW
The fundamentals behind the U.S. stock market's gains continue to be very
strong. On a macro level, the broad economic climate is one of moderate growth
and mild inflation. The U.S. position in the global economy remains very
strong, based on leadership in technology and a decade of corporate cost
cutting. Conservative fiscal and monetary policies are also helping to keep the
economy on track.
Given this backdrop, it is not surprising that mutual funds, and 401(k) plans
in particular, have continued to attract strong cash flows during 1996. This
has driven the price/earnings multiple of the market to over 17 times our
estimate of 1997 earnings. At this level, we believe it is unrealistic to
assume further advances on a valuation basis. Accordingly, our hope for 1997 is
that corporate earnings will continue to improve, thereby providing total
returns (earnings growth plus dividends) in the 10%-12% range. With bond yields
at approximately 6.5%, such results would be satisfactory.
INVESTMENT STRATEGY
In managing The Alliance Fund, our strategy is to keep the portfolio fully
invested while varying portfolio holdings according to our current outlook.
Consistent with comments made above, we are trying to keep the portfolio
positioned to take advantage of a moderately rising market. We are doing this
by keeping the portfolio's weighted price earnings ratio near that of the
market, and by broadly diversifying while adhering to our growth mandate. For
example, we continue to have about 20% of Fund holdings invested in financial
stocks, which currently have price multiples averaging 12 times earnings,
significantly less than the P/E of the overall market. We also have holdings in
the airline and auto industries, where companies are currently experiencing
strong earnings gains.
As always, we continue to keep a large portion of the portfolio in
consumer-oriented growth stocks. We are also maintaining our positions in many
of the better-known technology companies which dominate the microprocessor,
software, and networking sectors of the technology industry. Healthcare is
another area emphasized in the portfolio, and we continue to look for
advantageous opportunities in this area of the market.
Once again, we thank you for your interest and investment in The Alliance Fund,
and we look forward to reporting future progress.
Sincerely,
John D. Carifa
Chairman and President
Alfred Harrison
Executive Vice President
1
INVESTMENT OBJECTIVE AND POLICIES THE ALLIANCE FUND
_______________________________________________________________________________
The Alliance Fund is an open-end, diversified investment company that seeks
long-term growth of capital and income primarily through investments in common
stocks. While the Fund normally invests substantially all of its assets in
equities that Alliance believes will appreciate in value, it may invest in a
variety of securities, including convertible bonds, U.S. Government securities,
and other high-quality instruments. The Fund has the flexibility to invest
without limit in foreign securities.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +16.49% +11.58%
. Five Years +18.26% +17.25%
. Ten Years +14.35% +13.85%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +15.47% +11.52%
. Five Years +17.34% +17.34%
. Since Inception* +14.82% +14.82%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +15.48% +14.49%
. Since Inception* +16.46% +16.46%
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 (1% year 1). 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.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
THE ALLIANCE FUND
_______________________________________________________________________________
THE ALLIANCE FUND
GROWTH OF A $10,000 INVESTMENT:
11/30/86 TO 11/30/96
$44,000
$39,000
$34,000
$29,000
$24,000
$19,000
$14,000
$9,000
11/30/86 '87 '88 '89 '90 '91 '92 '93 '94 '95 11/30/96
S&P 500: $41,128
RUSSELL 1000: $40,360
THE ALLIANCE FUND CLASS A: $36,577
This chart illustrates the total value of an assumed $10,000 investment in
Class A shares as compared to the performance of appropriate broad-based
indices. The chart reflects the deduction of the maximum 4.25% sales charge
from an initial $10,000 investment and assumes the reinvestment of dividends
and capital gains. Performance for Class B and 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 gains or losses.
Both the S&P 500 Stock Index and the Russell 1000 Growth Index are unmanaged.
The S&P 500 tracks 500 companies and is a common measure of the overall U.S.
stock market. The Russell 1000 Growth Index measures the performance of
large-cap stocks with a greater-than-average growth orientation.
When comparing The Alliance Fund to the indices shown above, remember that
sales charges and expenses are not reflected in the performance of indices.
The Alliance Fund
S&P 500
Russell 1000
3
TEN LARGEST HOLDINGS
NOVEMBER 30, 1996 THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------
Intel Corp. $ 59,263,312 5.6%
Philip Morris Cos., Inc. 54,078,750 5.1
UAL Corp. 32,004,500 3.0
Cisco Systems, Inc. 31,358,250 3.0
Chrysler Corp. 30,672,000 2.9
AirTouch Communications, Inc. 28,776,875 2.7
COMPAQ Computer Corp. 28,236,775 2.7
Merrill Lynch & Co., Inc. 26,562,750 2.5
Pfizer, Inc. 26,439,375 2.5
Microsoft Corp. 25,986,344 2.4
$343,378,931 32.4%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED NOVEMBER 30, 1996
_______________________________________________________________________________
SHARES*
----------------------------------
PURCHASES BOUGHT HOLDINGS 11/30/96
- ----------------------------------------------------------------------
Boeing Co. 90,000 90,000
Campbell Soup Co. 140,000 140,000
Cascade Communications Corp. 128,600 128,600
Chrysler Corp. 864,000 864,000
Cisco Systems, Inc. 402,000 462,000
Home Depot, Inc. 159,000 219,000
Intel Corp. 191,400 467,100
MBNA Corp. 361,000 426,000
Northwest Airlines Corp. Cl.A 238,000 238,000
Sears, Roebuck & Co. 294,800 324,800
SALES SOLD HOLDINGS 11/30/96
- ----------------------------------------------------------------------
American International Group, Inc. 132,000 72,500
Applied Materials, Inc. 936,800 -0-
AT & T Corp. 265,900 -0-
Federal Home Loan Mortgage Corp. 140,000 121,000
Ford Motor Co. 370,000 -0-
ITT Corp. 205,000 60,000
Merrill Lynch & Co., Inc. 155,000 331,000
NationsBank Corp. 217,800 -0-
Norwest Corp. 686,700 256,300
PepsiCo, Inc. 370,000 259,000
* Adjusted for stock splits.
4
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-96.9%
CONSUMER PRODUCTS & SERVICES-40.0%
AIRLINES-5.3%
AMR Corp. (a) 35,000 $ 3,193,750
Delta Air Lines, Inc. 42,000 3,160,500
KLM Royal Dutch Air 312,475 8,163,409
Northwest Airlines Corp. Cl.A (a) 238,000 9,609,250
UAL Corp. (a) 556,600 32,004,500
------------
56,131,409
BIOTECHNOLOGY-2.0%
Amgen, Inc. (a) 315,500 19,206,063
Biogen, Inc. (a) 44,000 1,683,000
------------
20,889,063
BROADCASTING & CABLE-7.9%
AirTouch Communications, Inc. (a) 1,123,000 28,776,875
Cablevision Systems Corp. Cl.A (a) 90,000 2,711,250
Comcast Corp. Cl.A 200,000 3,350,000
CommNet Cellular, Inc. (a) 85,000 2,401,250
Cox Communications, Inc. Cl.A (a) 386,100 7,915,050
Jones Intercable, Inc. Cl.A (a) 240,000 2,580,000
Millicom International Cellular, S.A. (a) 35,000 1,325,625
Nynex Cablecommunications
Group Plc (ADR) (a) (b) 100,000 1,912,500
TCI Group Series A (a) 815,500 11,009,250
Tele-Communications International,
Inc. Cl.A (a) 130,000 1,950,000
Tele-Communications-Liberty Media Cl.A (a) 374,050 9,351,250
Telephone & Data Systems, Inc. 80,000 2,990,000
Teleport Communications Group, Inc. Cl.A (a) 149,300 4,945,562
Viacom, Inc. Cl.B (a) 1 38
Vodafone Group Plc (ADR) (b) 50,000 2,162,500
------------
83,381,150
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES-9.5%
Centocor, Inc. (a) 74,000 2,044,250
Columbia HCA/Healthcare Corp. 637,400 25,496,000
Gensia, Inc. 158 731
Johnson & Johnson 100,000 5,312,500
Medtronic, Inc. 100,000 6,612,500
Merck & Co., Inc. 183,500 15,230,500
Pfizer, Inc. 295,000 26,439,375
Pharmacia & Upjohn, Inc. 50,000 1,931,250
Revco D.S., Inc. (a) 115,000 3,967,500
United Healthcare, Inc. 191,900 8,275,687
Value Health, Inc. (a) 90,000 1,631,250
Warner Lambert Co. 58,000 4,147,000
------------
101,088,543
ENTERTAINMENT & LEISURE-1.8%
Circus Circus Enterprises, Inc. (a) 45,000 1,642,500
Cyrk, Inc. (a) 75,000 928,125
Harrahs Entertainment, Inc. (a) 80,000 1,420,000
Walt Disney Co. 200,600 14,794,250
------------
18,784,875
FOOD, BEVERAGES & TOBACCO-6.9%
Campbell Soup Co. 140,000 11,567,500
PepsiCo, Inc. 259,000 7,737,625
Philip Morris Cos., Inc. 524,400 54,078,750
------------
73,383,875
PRINTING & PUBLISHING-0.8%
Aamulehti Yhtymae OY-II (c) 110,000 3,549,919
Reuters Holdings Plc (ADR) (b) 70,000 5,083,750
------------
8,633,669
5
PORTFOLIO OF INVESTMENTS (CONTINUED) THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
RESTAURANTS & LODGING-1.6%
Host Marriott Corp. (a) 200,000 $ 3,050,000
John Q. Hammons Hotels, Inc. Cl.A (a) 170,000 1,360,000
Marriot International, Inc. 78,400 4,370,800
McDonald's Corp. 169,200 7,910,100
------------
16,690,900
RETAILING-4.2%
AutoZone, Inc. (a) 80,000 1,970,000
Federated Department Stores, Inc. (a) 40,000 1,365,000
Fingerhut Cos., Inc. 140,000 1,750,000
Home Depot, Inc. 219,000 11,415,375
Kohl's Corp. (a) 85,000 3,389,375
Sears, Roebuck & Co. 324,800 16,158,800
Wal-Mart Stores, Inc. 339,000 8,644,500
------------
44,693,050
------------
423,676,534
SCIENCE & TECHNOLOGY-25.9%
COMMUNICATIONS EQUIPMENT-3.2%
Ascend Communications, Inc. 77,000 5,476,625
DSC Communications Corp. (a) 90,000 1,620,000
Ericsson (L.M.) Telephone Co. Cl.B (ADR) (d) 273,510 8,444,621
Lucent Technologies, Inc. 116,100 5,950,125
MFS Communications, Inc. (a) 98,600 4,757,450
Nokia Corp. (ADR) (e) 55,000 3,086,875
Scientific-Atlanta, Inc. 160,000 2,480,000
WorldCom, Inc. (a) 90,700 2,097,438
------------
33,913,134
COMPUTER HARDWARE-5.4%
Ceridian Corp. (a) 75,000 3,609,375
COMPAQ Computer Corp. (a) 356,300 28,236,775
Dell Computer Corp. (a) 60,400 6,138,150
Hewlett-Packard Co. 292,400 15,753,050
Intergraph Corp. (a) 150,000 1,368,750
Storage Technology Corp. (a) 34,400 1,715,700
------------
56,821,800
COMPUTER PERIPHERALS-0.5%
Seagate Technology (a) 140,000 5,530,000
COMPUTER SOFTWARE & SERVICES-4.3%
Electronic Data Systems Corp. 100,000 4,837,500
First Data Corp. 110,000 4,386,250
Informix Corp. (a) 170,000 4,037,500
Microsoft Corp. (a) 165,650 25,986,344
Oracle Corp. (a) 50,000 2,450,000
Sterling Commerce, Inc. (a) 55,741 1,755,841
Sterling Software, Inc. (a) 35,000 1,159,375
The Learning Co., Inc. (a) 58,000 986,000
------------
45,598,810
NETWORK SOFTWARE-4.6%
3Com Corp. (a) 55,000 4,131,875
Bay Networks, Inc. (a) 125,000 3,343,750
Cascade Communications Corp. (a) 128,600 8,889,475
Cisco Systems, Inc. (a) 462,000 31,358,250
Netscape Communications Corp. (a) 15,000 838,125
------------
48,561,475
OFFICE EQUIPMENT SERVICES-0.6%
Xerox Corp. 125,500 6,165,188
SEMI-CONDUCTORS & RELATED-7.3%
Intel Corp. 467,100 59,263,312
Linear Technology Corp. 70,000 3,298,750
National Semiconductor Corp. (a) 235,000 5,757,500
Teradyne, Inc. (a) 153,000 3,614,625
Texas Instruments, Inc. 37,900 2,416,125
Xilinx, Inc. (a) 70,000 3,071,250
------------
77,421,562
------------
274,011,969
6
THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
FINANCIAL SERVICES-16.6%
BANKING & CREDIT-5.2%
Citicorp 100,000 $ 10,925,000
First Union Corp. 50,000 3,818,750
Household International, Inc. 120,000 11,370,000
MBNA Corp. 426,000 17,199,750
Norwest Corp. 256,300 11,982,025
------------
55,295,525
BROKERAGE-4.8%
Green Tree Financial Corp. 133,500 5,590,313
Legg Mason, Inc. 60,000 2,332,500
Merrill Lynch & Co., Inc. 331,000 26,562,750
Morgan Stanley Group, Inc. 277,900 16,708,737
------------
51,194,300
INSURANCE-3.6%
American International Group, Inc. 72,500 8,337,500
Equitable of Iowa Cos. 18,800 841,300
Home State Holdings, Inc. (a) 57,400 437,675
IPC Holdings Ltd. 112,100 2,550,275
ITT Hartford Group, Inc. 37,000 2,529,875
John Alden Financial Corp. 90,000 1,586,250
Life Re Corp. 48,000 1,770,000
MGIC Investment Corp. 80,100 5,997,488
NAC Re Corp. 63,300 2,310,450
Progressive Corp. 40,000 2,790,000
TIG Holdings, Inc. 130,000 3,965,000
Travelers Group, Inc. 113,333 5,100,000
------------
38,215,813
MORTGAGE BANKING-2.6%
Federal Home Loan Mortgage Corp. 121,000 13,824,250
Federal National Mortgage Assn. 320,600 13,224,750
------------
27,049,000
REAL ESTATE-0.4%
Avalon Properties, Inc. 80,000 2,050,000
Simon De Bartolo Group, Inc. 70,000 1,916,250
------------
3,966,250
------------
175,720,888
BASIC INDUSTRIES-6.8%
CHEMICALS-1.1%
Dow Chemical Co. 35,000 2,931,250
Freeport McMoran, Inc. 90,000 2,745,000
Monsanto Co. 85,000 3,378,750
Olin Corp. 70,000 2,791,250
------------
11,846,250
MACHINERY-0.3%
Coltec Industries, Inc. (a) 200,000 3,700,000
MINING & METALS-0.4%
Kaiser Aluminum Corp. (a) 200,000 2,125,000
Reynolds Metals Co. 30,100 1,790,950
------------
3,915,950
OIL & GAS-2.6%
BJ Services Co. (a) 85,000 4,058,750
Brown (Tom), Inc. (a) 138,000 2,604,750
ENSERCH Corp. 90,000 2,103,750
Louis Dreyfus Natural Gas Corp. (a) 182,700 3,128,738
Louisiana Land & Exploration Co. 42,000 2,509,500
Nabors Industries, Inc. (a) 120,000 2,325,000
Noble Affiliates, Inc. 70,000 3,298,750
Parker Drilling Co. (a) 105,000 984,375
Petroleum Geo-Services ASA (ADR) (a) (f) 60,000 2,250,000
Seagull Energy Corp. (a) 70,000 1,601,250
Transocean Offshore, Inc. 46,333 2,791,563
------------
27,656,426
POLLUTION CONTROL-0.4%
WMX Technologies, Inc. 135,000 4,860,000
SURFACE TRANSPORTATION-1.2%
Burlington Northern Santa Fe 30,000 2,696,250
Canadian Pacific, Ltd. 130,000 3,575,000
GATX Corp. 60,000 2,992,500
Illinois Central Corp. 70,000 2,371,250
Union Pacific Corp. 13,069 761,269
------------
12,396,269
7
PORTFOLIO OF INVESTMENTS (CONTINUED) THE ALLIANCE FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
TRUCKING & SHIPPING-0.3%
Ryder System, Inc. 70,000 $ 2,126,250
Sea Containers, Ltd. Cl.A 80,000 1,240,000
------------
3,366,250
OTHER-0.5%
ADT Ltd. (a) 145,000 2,972,500
Xtra Corp. 45,000 1,895,625
------------
4,868,125
------------
72,609,270
CONSUMER MANUFACTURING-4.9%
AUTO & RELATED-4.5%
Chrysler Corp. 864,000 30,672,000
General Motors Corp. 242,600 13,979,825
Magna International, Inc. Cl.A 55,000 3,018,125
------------
47,669,950
BUILDING & RELATED-0.3%
American Standard Cos., Inc. (a) 80,000 3,050,000
TEXTILE PRODUCTS-0.1%
Cone Mills Corp. (a) 100,000 837,500
------------
51,557,450
CAPITAL GOODS-1.2%
ELECTRICAL EQUIPMENT-1.2%
General Electric Co. 120,000 12,480,000
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
AEROSPACE & DEFENSE-0.8%
Boeing Co. 90,000 $ 8,943,750
UTILITIES-0.3%
TELEPHONE UTILITIES-0.3%
Deutsche Telekom AG (ADR) (a) (g) 24,000 513,000
MCI Communications Corp. 85,000 2,592,500
--------------
3,105,500
MULTI INDUSTRY-0.3%
ITT Corp. (a) 60,000 2,767,500
DIVERSIFIED-0.1%
Frontier Corp. 50,000 1,312,500
Total Common Stocks (cost $798,489,192) 1,026,185,361
COMMERCIAL PAPER-3.9%
General Electric Capital Corp.
5.75%, 12/02/96
(amortized cost $40,759,489) $40,766 40,759,489
TOTAL INVESTMENTS-100.8%
(cost $839,248,681) 1,066,944,850
Other assets less liabilities-(0.8%) (8,445,399)
NET ASSETS-100% $1,058,499,451
(a) Non-income producing security.
(b) Country of origin - United Kingdom.
(c) Finnish holding.
(d) Country of origin - Sweden.
(e) Country of origin - Finland.
(f) Country of origin - Norway.
(g) Country of origin - Germany.
Glossary:
ADR - American Depository Receipt.
See notes to financial statements.
8
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996 THE ALLIANCE FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $839,248,681) $1,066,944,850
Cash, at value (cost $78,985) 79,154
Receivable for investment securities sold 8,276,199
Dividends receivable 736,535
Receivable for capital stock sold 334,225
Total assets 1,076,370,963
LIABILITIES
Payable for investment securities purchased 15,269,480
Unclaimed dividends 1,005,964
Management fee payable 584,001
Payable for capital stock redeemed 546,369
Distribution fee payable 196,206
Accrued expenses 269,492
Total liabilities 17,871,512
NET ASSETS $1,058,499,451
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,375,841
Additional paid-in capital 684,528,374
Undistributed net investment income 2,417,164
Accumulated net realized gain 142,481,734
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 227,696,338
$1,058,499,451
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($999,067,317/
129,564,086 shares of capital stock issued and outstanding) $7.71
Sales charge--4.25% of public offering price .34
Maximum offering price $8.05
CLASS B SHARES
Net asset value and offering price per share($44,450,378/
6,003,649 shares of capital stock issued and outstanding) $7.40
CLASS C SHARES
Net asset value and offering price per share($13,899,091/
1,876,023 shares of capital stock issued and outstanding) $7.41
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share($1,082,665
/140,391 shares of capital stock issued and outstanding) $7.71
See notes to financial statements.
9
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996 THE ALLIANCE FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $146,869) $11,650,518
Interest 1,348,902 $ 12,999,420
EXPENSES
Management fee 6,794,888
Distribution fee - Class A 1,746,148
Distribution fee - Class B 371,631
Distribution fee - Class C 124,724
Transfer agency 713,260
Custodian 207,024
Administrative 140,000
Printing 120,781
Audit and legal 118,838
Registration 70,116
Taxes 69,554
Directors' fees 27,000
Miscellaneous 23,790
Total expenses 10,527,754
Net investment income 2,471,666
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 143,836,486
Net realized loss on foreign currency transactions (140)
Net change in unrealized appreciation of:
Investments 4,239,551
Foreign currency denominated assets and liabilities (1,044)
Net gain on investments 148,074,853
NET INCREASE IN NET ASSETS FROM OPERATIONS $150,546,519
See notes to financial statements.
10
STATEMENT OF CHANGES IN NET ASSETS THE ALLIANCE FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
--------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,471,666 $ 2,382,706
Net realized gain on investments and foreign
currency transactions 143,836,346 137,577,216
Net change in unrealized appreciation of
investments 4,238,507 136,438,371
Net increase in net assets from operations 150,546,519 276,398,293
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,437,233) (1,599,712)
Net realized gain on investments
Class A (129,777,164) (114,265,138)
Class B (4,556,157) (2,789,853)
Class C (1,766,904) (972,583)
CAPITAL STOCK TRANSACTIONS
Net increase 59,364,620 45,307,923
Total increase 71,373,681 202,078,930
NET ASSETS
Beginning of year 987,125,770 785,046,840
End of year (including undistributed net
investment income of $2,417,164 and
$2,382,871, respectively) $1,058,499,451 $987,125,770
See notes to financial statements.
11
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996 THE ALLIANCE FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Alliance Fund (the "Fund") is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. On April 15,
1996 the Board of Directors approved the creation of a fourth class of shares,
Advisor Class Shares. The Fund offers Class A, Class B, Class C and Advisor
Class shares. Class A shares are sold with a front-end sales charge of up to
4.25%. 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 Cshares
purchased on or after July 1, 1996, are subject to a contingent deferred sales
charge of 1% on redemptions made within the first year after purchase. Advisor
Class shares are sold without an initial or contingent deferred sales charge
and are not subject to ongoing principally distribution expenses. Advisor Class
shares are offered solely to investors participating in fee based programs. All
four classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The 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 such 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 INVESTMENT TRANSACTIONS
Investment 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. Investment 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 currency losses represent foreign exchange gains and losses from
sales and maturities of securities, currency 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.
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.
12
THE ALLIANCE FUND
_______________________________________________________________________________
NOTE B: MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the management agreement, the Fund pays Alliance Capital
Management L.P., (the "Manager") 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 $140,000 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, 1996.
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 $552,511 for the year
ended November 30, 1996.
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 $48,517 from the sale of Class A shares and $60,344
and $360 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively for the year ended
November 30, 1996.
Brokerage commissions paid for the year ended November 30, 1996 on securities
transactions amounted to $1,682,047, 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. There is no distribution fee on the Advisor Class
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
$2,718,791 and $815,553, 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
and U.S. Government securities) aggregated $757,343,332 and $825,062,987,
respectively, for the year ended November 30, 1996. There were purchases of
$709,700 and sales of $18,435,770 of U.S. Government or government agency
obligations for the year ended November 30, 1996. At November 30, 1996, the
cost of securities for federal income tax purposes was $840,699,774.
Accordingly, gross unrealized appreciation of investments was $250,455,873 and
gross unrealized depreciation of investments was $24,210,797, resulting in net
unrealized appreciation of $226,245,076 excluding foreign currency.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE ALLIANCE FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 900,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Class A shares consists of 300,000,000 shares. Class B and Class
C shares each consist of 150,000,000 shares and Advisor Class shares consist of
300,000,000 shares. Transactions in capital stock were as follows:
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 4,150,468 11,552,553 $ 28,384,296 $ 76,332,241
Shares issued in
reinvestment of
dividends and
distributions 15,446,742 16,140,922 100,712,758 88,936,504
Shares converted
from Class B 118,728 -0- 823,774 -0-
Shares redeemed (12,552,838) (19,990,291) (86,836,564) (131,496,755)
Net increase 7,163,100 7,703,184 $ 43,084,264 $ 33,771,990
CLASS B
Shares sold 2,617,216 2,132,283 $ 17,347,199 $ 13,861,804
Shares issued in
reinvestment of
distributions 586,032 429,040 3,697,861 2,312,524
Shares converted
to Class A (123,214) -0- (823,774) -0-
Shares redeemed (1,311,534) (1,117,997) (8,719,518) (7,184,000)
Net increase 1,768,500 1,443,326 $ 11,501,768 $ 8,990,328
CLASS C
Shares sold 1,402,282 904,787 $ 9,611,884 $ 5,865,193
Shares issued in
reinvestment of
distributions 175,223 116,466 1,105,657 627,754
Shares redeemed (1,045,876) (634,972) (6,946,611) (3,947,342)
Net increase 531,629 386,281 $ 3,770,930 $ 2,545,605
OCT. 2, 1996* OCT. 2, 1996*
TO TO
NOV. 30, 1996 NOV. 30, 1996
------------- --------------
ADVISOR CLASS
Shares sold 140,391 $1,007,658
Shares issued in
reinvestment of
dividends and
distributions -0- -0-
Shares redeemed -0- -0-
Net increase 140,391 $1,007,658
* Commencement of distribution.
14
FINANCIAL HIGHLIGHTS THE ALLIANCE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
JAN. 1,1994
YEAR ENDED NOVEMBER 30, TO YEAR ENDED DECEMBER 31,
------------------------ NOVEMBER 30, ------------------------
1996 1995 1994(A) 1993 1992
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.72 $ 6.63 $ 6.85 $ 6.68 $ 6.29
INCOME FROM INVESTMENT OPERATIONS
Net investment income .02 .02(b) .01 .02 .05
Net realized and unrealized gain (loss)
on investments 1.06 2.08 (.23) .93 .87
Net increase (decrease) in net asset
value from operations 1.08 2.10 (.22) .95 .92
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.02) (.01) -0- (.02) (.05)
Distributions from net realized gains (1.07) (1.00) -0- (.76) (.48)
Total dividends and distributions (1.09) (1.01) -0- (.78) (.53)
Net asset value, end of period $ 7.71 $ 7.72 $ 6.63 $ 6.85 $ 6.68
TOTAL RETURN
Total investment return based on net
asset value (c) 16.49% 37.87% (3.21)% 14.26% 14.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $999,067 $945,309 $760,679 $831,814 $794,733
Ratio of expenses to average net assets 1.04% 1.08% 1.05%(d) 1.01% .81%
Ratio of net investment income to
average net assets .30% .31% .21%(d) .27% .79%
Portfolio turnover rate 80% 81% 63% 66% 58%
Average commission rate (e) $.0646 -- -- -- --
</TABLE>
See footnote summary on page 18.
15
FINANCIAL HIGHLIGHTS (CONTINUED) THE ALLIANCE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------
JAN. 1, 1994
YEAR ENDED NOVEMBER 30, TO YEAR ENDED DECEMBER 31,
------------------------- NOVEMBER 30, -------------------------
1996 1995 1994(A) 1993 1992
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.49 $ 6.50 $ 6.76 $ 6.64 $ 6.27
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.01) (.03)(b) (.03) (.03) (.01)(b)
Net realized and unrealized gain (loss)
on investments .99 2.02 (.23) .91 .87
Net increase (decrease) in net asset
value from operations .98 1.99 (.26) .88 .86
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- -0- (.01)
Distributions from net realized gains (1.07) (1.00) -0- (.76) (.48)
Total dividends and distributions (1.07) (1.00) -0- (.76) (.49)
Net asset value, end of period $ 7.40 $ 7.49 $ 6.50 $ 6.76 $ 6.64
TOTAL RETURN
Total investment return based on net
asset value (c) 15.47% 36.61% (3.85)% 13.28% 13.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $44,450 $31,738 $18,138 $12,402 $3,825
Ratio of expenses to average net assets 1.87% 1.90% 1.89%(d) 1.90% 1.64%
Ratio of net investment loss to average
net assets (.53)% (.53)% (.60)%(d) (.64)% (.04)%
Portfolio turnover rate 80% 81% 63% 66% 58%
Average commission rate (e) $.0646 -- -- -- --
</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 C
-------------------------------------------------------
JAN. 1,1994 MAY 3,
YEAR ENDED NOVEMBER 30, TO 1993(F) TO
------------------------- NOVEMBER 30, DECEMBER 31,
1996 1995 1994(A) 1993
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.50 $ 6.50 $ 6.77 $ 6.67
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.02) (.03)(b) (.03) (.02)
Net realized and unrealized gain (loss)
on investments 1.00 2.03 (.24) .88
Net increase (decrease) in net asset
value from operations .98 2.00 (.27) .86
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.07) (1.00) -0- (.76)
Net asset value, end of period $ 7.41 $ 7.50 $ 6.50 $ 6.77
TOTAL RETURN
Total investment return based on net
asset value (c) 15.48% 36.79% (3.99)% 13.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $13,899 $10,078 $6,230 $4,006
Ratio of expenses to average net assets 1.86% 1.89% 1.87%(d) 1.94%(d)
Ratio of net investment loss to average
net assets (.51)% (.51)% (.59)%(d) (.74)%(d)
Portfolio turnover rate 80% 81% 63% 66%
Average commission rate (e) $.0646 -- -- --
</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
ADVISOR CLASS
------------------
OCTOBER 2, 1996(F)
TO
NOVEMBER 30, 1996
------------------
Net asset value, beginning of period $ 6.99
INCOME FROM INVESTMENT OPERATIONS
Net realized and unrealized gain on investments .72
Net increase in net asset value from operations .72
Net asset value, end of period $ 7.71
TOTAL RETURN
Total investment return based on net asset value (c) 10.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,083
Ratio of expenses to average net assets .89%(d)
Ratio of net investment income to average net assets .38%(d)
Portfolio turnover rate 80%
Average commission rate (e) $.0646
(a) The Fund changed its fiscal year end from December 31 to November 30.
(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.
(e) For fiscal year beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
(f) Commencement of distribution.
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, 1996, 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, 1996 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 17, 1997
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)
DONALD J. ROBINSON (1)
ROBERT C. WHITE (1)
OFFICERS
ALFRED HARRISON, EXECUTIVE VICE PRESIDENT
PAUL H. JENKEL, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, 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 FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
21
THE ALLIANCE FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
INVESTING 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
