ALLIANCE GROWTH & INCOME FUND
ANNUAL REPORT
OCTOBER 31, 1995
LETTER TO SHAREHOLDERS ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
December 4, 1995
Dear Shareholder:
It's been a year of positive changes for Alliance Growth and Income Fund.
Shareholders have benefited from outstanding investment results over a time
period that coincided with a strong equity market and, as you may recall, it
was at about this time last year when your Fund assumed a new portfolio manager.
In the table below, your Fund's performance during the fiscal year ended
October 31, 1995, is compared with that of the overall U.S. stock market,
represented by the unmanaged S&P 500-stock Index, and with the Lipper Growth &
Income Funds Average, which reflects performance of 473 funds (complete
descriptions of these benchmarks appear on page 4):
Twelve Months Ended October 31, 1995
Total Return Net Asset Value
------------ ---------------
ALLIANCE GROWTH AND INCOME FUND
Class A +24.21% $2.71
Class B +22.84% $2.69
Class C +23.30% $2.70
S&P 500 +26.36%
LIPPER G & I FUNDS AVERAGE +20.23%
The Fund's total returns are based on the net asset values of each class of
shares as of October 31; additional investment results appear on page 2. Also
provided on page 3 is a chart that shows the performance of a hypothetical
$10,000 initial investment in Alliance Growth and Income Fund Class A shares
over a ten-year period through the end of October.
While your Fund's performance modestly lagged the S&P 500 over the twelve-month
period, it outperformed its peer group by about 260 basis points. We believe
the positive trend in performance reflects portfolio restructuring that
occurred early in the Fund's fiscal year. In the first half (between October
and April), the Fund lagged the Lipper average by about 1% and the S&P 500 by
more than 3%; and in the second half, between May and October, it outperformed
both.
PORTFOLIO CHANGES
Several steps were taken during the fiscal year that helped improve the Fund's
risk-adjusted performance. First, sector weightings were brought more in line
with the sector weightings of the S&P 500. Importantly, however, it is the
selection of individual stocks within sectors, rather than sector selection,
that has led to the Fund's good performance. Second, the Fund's exposure to
covered call-writing was eliminated during the period. (This hedging technique
provides a good source of current income for your Fund, but its benefits are
diminished when the market is rising.) And finally, positions in stocks that
are no longer included in Alliance's broad research universe were also
eliminated. Taken in sum, we believe these actions contributed positively to
performance.
INVESTMENT STRATEGY
Given our inflation outlook, current stock market valuations appear reasonable.
The economy is expected to decelerate in 1996 and if our forecast that
inflation will remain well behaved proves correct, the Federal Reserve may cut
interest rates again in the months ahead. Lower rates would allow yields to
fall on longer-dated government securities, which consequently would put upward
pressure on the earnings multiples of stocks-a scenario that supports a
continued bull market. The risks to this forecast are a re-acceleration of the
economy which prevents interest rates from falling, or conversely, an economic
deceleration so profound that earnings fall from their current level.
While the short-term direction of the market is difficult to predict, over the
long term stocks have historically outperformed other types of investments. For
this reason we remain fully invested in equities and believe that stock picking
on a selective basis will be the key to superior performance notwithstanding
the economy's whims.
We appreciate your investment in Alliance Growth and Income Fund and look
forward to reporting to you again in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Paul Rissman
Senior Vice President
1
INVESTMENT RESULTS ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +24.21% +19.13%
. Five Years +14.79% +13.81%
. Ten Years +13.52% +10.36%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +22.84% +18.84%
. Since Inception* +9.98% +9.98%
CLASS C SHARES
. One Year +23.30%
. Since Inception* +11.35%
* Inception: 2/8/91, Class B; 5/3/93, Class C.
2
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
ALLIANCE GROWTH ANDINCOME FUND
GROWTH OF A $10,000 INVESTMENT:
10/31/85 TO 10/31/95
$45,000
$39,000
$33,000
$27,000
$21,000
$15,000
$9,000
Growth and Income Fund Class A: $34,065
Lipper Growth & Income Funds Average
10/31/85
10/31/95
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Growth and Income 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. Past performance
is not indicative of future results, and is not representative of future gain
or loss in capital value or dividend income.
The unmanaged Standard and Poor's 500-stock index includes 500 U.S. stocks. It
is a common measure of the performance of the overall U.S. stock market.
The Lipper Growth & Income Funds Average reflects performance of 433 funds.
These funds have generally similar investment objectives to Alliance Growth and
Income Fund, though some funds included in the average may have somewhat
different investment policies.
When comparing Alliance Growth and Income Fund to the index and average 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
index or average.
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.
Growth and Income Fund
S&P 500
Lipper Growth & Income Funds Average
3
TEN LARGEST HOLDINGS
OCTOBER 31, 1995 ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- ----------------------------------------------------------------------------
Philip Morris Cos., Inc. $ 29,638,375 4.7%
Goodyear Tire & Rubber Co. 24,472,000 3.9
Time Warner, Inc. 23,660,416 3.7
ALLTEL Corp. 20,151,250 3.2
Travelers, Inc. 19,464,165 3.1
PepsiCo, Inc. 17,199,137 2.7
Vodafone Group Plc. (ADR) 17,085,750 2.7
Nokia Corp. (ADR) 16,318,025 2.6
Sprint Corp. 16,227,750 2.6
AT&T Corp. 15,833,600 2.5
$200,050,468 31.7%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED OCTOBER 31, 1995
SHARES OR PRINCIPAL
-------------------------------
PURCHASES BOUGHT HOLDINGS 10/31/95
- ------------------------------------------------------------------------
ALLTEL Corp. 658,000 658,000
AT&T Corp. 247,400 247,400
Century Telephone Enterprises, Inc. 327,700 327,700
General Instrument Corp. 435,400 435,400
Goodyear Tire & Rubber Co. 644,000 644,000
International Business Machines Corp. 156,800 156,800
Lowes Cos., Inc. 480,000 480,000
Protector & Gamble Co. 101,400 101,400
Time Warner, Inc., 8.75%, 1/10/15 $22,750,400 $22,750,400
WMX Technologies, Inc. 420,000 420,000
SALES SOLD HOLDINGS 10/31/95
- ------------------------------------------------------------------------
Chemical Banking Corp. 220,220 -0-
Colgate-Palmolive Co. 166,600 -0-
Comcast Corp. Cl.A 445,400 210,548
Eastman Kodak Co. 186,000 157,400
General Instrument Corp.,5.00%,6/15/00 $7,175,000 -0-
Merck & Co., Inc. 208,300 115,800
Pioneer Hi Bred International, Inc. 285,000 -0-
Sprint Corp. 271,000 421,500
Walt Disney Co. 143,200 -0-
YPF, S.A. (ADS) 500,700 -0-
4
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
COMMON & PREFERRED STOCKS90.9%
CONSUMER PRODUCTS & SERVICES31.6%
AUTO & TRUCKS0.9%
General Motors Corp. Cl.H 140,000 $ 5,880,000
BROADCASTING & CABLE1.5%
Comcast Corp. Cl.A (SPL) 210,548 3,776,705
Tele-Communications, Inc.* 58,500 1,444,219
Tele-Communications, Inc. Cl.A* 234,000 3,992,625
9,213,549
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES10.2%
Columbia/HCA Healthcare Corp. 284,000 13,951,500
Guidant Corp. 96,205 3,078,560
Lilly (Eli) & Co. 54,434 5,259,685
Meditrust 340,000 11,475,000
Merck & Co., Inc. 115,800 6,658,500
Schering-Plough Corp. 259,900 13,937,138
U.S. Healthcare, Inc. 265,600 10,242,200
64,602,583
ENTERTAINMENT & LEISURE TIME1.6%
Eastman Kodak Co. 157,000 9,832,125
FOOD, BEVERAGES & TOBACCO8.4%
Campbell Soup Co. 120,000 6,285,000
PepsiCo, Inc. 326,050 17,199,137
Philip Morris Cos., Inc. 350,750 29,638,375
53,122,512
HOUSEHOLD PRODUCTS1.3%
Procter & Gamble Co. 101,400 8,213,400
RETAILING3.8%
Federated Department Stores, Inc.* 231,600 $5,876,850
Lowes Cos., Inc. 480,000 12,960,000
May Department Stores Co. 137,500 5,396,875
24,233,725
TIRE & RUBBER3.9%
Goodyear Tire & Rubber Co. 644,000 24,472,000
199,569,894
BASIC INDUSTRIES21.4%
AEROSPACE & DEFENSE0.9%
Boeing Co. 88,000 5,775,000
CHEMICALS6.3%
Monsanto Co. 149,250 15,633,937
Rohm & Haas Co. 216,400 11,956,100
Union Carbide Corp. 330,000 12,498,750
40,088,787
ELECTRICAL EQUIPMENT3.8%
General Electric Co. 246,900 15,616,425
General Instrument Corp.* 435,400 8,272,600
23,889,025
ENVIRONMENTAL CONTROL1.9%
WMX Technologies, Inc 420,000 11,812,500
MACHINERY0.8%
BWIP, Inc. 157,000 2,590,500
Coltec Industries* 244,200 2,655,675
5,246,175
OIL & GAS5.5%
Enron Corp. 440,000 15,125,000
Renaissance Energy, Ltd.* 390,100 8,625,700
Unocal Corp. 3.50% cv. pfd.(a) 206,900 10,862,250
34,612,950
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
OIL SERVICES1.0%
Western Atlas, Inc.* 138,000 $ 6,054,750
SURFACE TRANSPORTATION1.2%
Burlington Northern 6.25% cv. pfd. 83,600 7,440,400
134,919,587
PUBLIC UTILITIES15.2%
ELECTRIC2.7%
FPL Group, Inc. 156,000 6,532,500
Houston Industries, Inc. 142,000 6,585,250
Portland General Corp. 132,400 3,591,350
16,709,100
TELEPHONE12.5%
ALLTEL Corp. 658,000 20,151,250
AT&T Corp. 247,400 15,833,600
Century Telephone Enterprises, Inc. 327,700 9,503,300
Sprint Corp. 421,500 16,227,750
Vodafone Group Plc. (ADR) 418,000 17,085,750
78,801,650
95,510,750
FINANCIAL SERVICES12.9%
BANKING & CREDIT4.9%
BankAmerica Corp. 154,000 8,855,000
First Chicago Corp. 90,000 6,108,750
Fleet Financial Group, Inc. 165,300 6,405,375
NationsBank Corp. 150,500 9,895,375
31,264,500
BROKERAGE & MONEY MANAGEMENT0.9%
Merrill Lynch & Co., Inc. 100,100 5,555,550
INSURANCE7.1%
Allstate Corp. 246,000 10,701,000
American International Group, Inc. 136,209 11,492,634
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ----------------------------------------------------------------------
PennCorp Financial
Group, Inc. 51,000 $ 3,072,750
Travelers Group, Inc. 385,429 19,464,165
44,730,549
81,550,599
TECHNOLOGY9.8%
COMMUNICATIONS EQUIPMENT2.6%
Nokia Corp. (ADR)(c) 292,700 16,318,025
COMPUTER HARDWARE3.9%
Compaq Computer Corp.* 165,000 9,198,750
International Business Machines Corp. 156,800 15,248,800
24,447,550
SEMI-CONDUCTORS & RELATED3.3%
Intel Corp. 156,800 10,966,200
National Semiconductor Corp.
6.00% cv. pfd. 112,200 9,817,500
20,783,700
61,549,275
Total Common & Preferred Stocks
(cost $487,011,492) 573,100,105
CONVERTIBLE BONDS5.7%
Federated Department Stores, Inc.
9.72%, 2/15/04 $ 6,240 6,240,000
Time Warner, Inc.
8.75%, 1/10/15 22,750 23,660,416
Wendy's International, Inc.
7.00%, 4/01/06 3,715 6,120,462
Total Convertible Bonds
(cost $35,143,399) 36,020,878
6
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ----------------------------------------------------------------------
COMMERCIAL PAPER3.3%
General Electric Co.
5.55%, 11/02/95 $ 4,400 $ 4,399,322
Merrill Lynch & Co., Inc.
5.75%, 11/06/95 10,500 10,491,614
Prudential Funding
5.70%, 11/01/95 5,000 5,000,000
5.72%, 11/03/95 800 799,746
Total Commercial Paper
(amortized cost $20,690,682) 20,690,682
TOTAL INVESTMENTS99.9%
(cost $542,845,573) $629,811,665
Other assets less liabilities0.1% 938,794
NET ASSETS100% $630,750,459
* Non-income producing security.
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31, 1995,
these securities amounted to $10,862,250 or 1.7% of net assets.
(b) Country of origin-United Kingdom.
(c) Country of origin-Japan.
Glossary:
ADR - American Depository Receipt.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
YEAR ENDED OCTOBER 31, 1995 ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $542,845,573) $629,811,665
Cash 89,668
Receivable for investment securities sold 7,440,838
Receivable for capital stock sold 1,203,821
Dividends and interest receivable 693,048
Total assets 639,239,040
LIABILITIES
Payable for investment securities purchased 7,307,402
Payable for capital stock redeemed 354,730
Advisory fee payable 279,165
Distribution fee payable 225,844
Accrued expenses and other liabilities 321,440
Total liabilities 8,488,581
NET ASSETS $630,750,459
COMPOSITION OF NET ASSETS
Capital stock, at par $ 2,333,666
Additional paid-in capital 493,460,257
Distributions in excess of net investment income (5,076)
Accumulated net realized gain on investments 47,998,018
Net unrealized appreciation of investments and
other assets less liabilities 86,963,594
$630,750,459
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($458,158,108/
169,314,065 shares of capital stock issued and outstanding) $2.71
Sales charge-4.25% of public offering price .12
Maximum offering price $2.83
CLASS B SHARES
Net asset value and offering price per share ($136,757,526/
50,759,040 shares of capital stock issued and outstanding) $2.69
CLASS C SHARES
Net asset value, redemption and offering price per share($35,834,825/
13,293,252 shares of capital stock issued and outstanding) $2.70
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995 ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of
$60,420) $12,413,356
Interest 3,882,448 $16,295,804
EXPENSES
Advisory fee 2,961,214
Distribution fee - Class A 883,750
Distribution fee - Class B 1,130,797
Distribution fee - Class C 241,343
Transfer agency 1,035,126
Administrative 139,020
Printing 128,649
Custodian 119,888
Registration 104,229
Audit and legal 101,988
Taxes 44,766
Directors' fees 22,500
Miscellaneous 51,627
Total expenses 6,964,897
Net investment income 9,330,907
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions 52,604,923
Net realized loss on foreign currency transactions (1,531,844)
Net realized gain on options 100,643
Net change in unrealized appreciation (depreciation) of:
Securities 59,515,814
Options 305,040
Net gain on investments 110,994,576
NET INCREASE IN NET ASSETS FROM OPERATIONS $120,325,483
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 9,330,907 $ 11,750,299
Net realized gain on investments, options and
foreign currency transactions 51,173,722 27,225,934
Net change in unrealized appreciation
(depreciation) of investments and options 59,820,854 (43,300,936)
Net increase (decrease) in net assets from
operations 120,325,483 (4,324,703)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (8,640,268) (9,853,395)
Class B (1,398,551) (1,317,073)
Class C (298,822) (212,277)
Net realized gain on investments
Class A (20,295,635) (32,185,313)
Class B (5,118,075) (5,690,597)
Class C (954,530) (667,713)
CAPITAL STOCK TRANSACTIONS
Net increase 10,804,177 46,798,254
Total increase (decrease) 94,423,779 (7,452,817)
NET ASSETS
Beginning of year 536,326,680 543,779,497
End of year (including undistributed net
investment income of $0 and $243,576,
respectively) $630,750,459 $536,326,680
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Growth and Income 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 and the same terms and
conditions, 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
Portfolio securities traded on national securities exchanges are valued at the
last sales price, or, if no sale occurred, at the mean of the bid and asked
price at the regular close of the New York Stock Exchange. Over-the-counter
securities are valued at the mean of the closing bid and asked price.
Securities for which current market quotations are not readily available
(including investments which are subject to limitations as to their sale) are
valued at fair value as determined in good faith by the Board of Directors. In
determining fair value, consideration is given to cost, operating and other
financial data. The Board of Directors has further determined that the value of
certain portfolio debt securities, other than temporary investments in
short-term securities, be determined by reference to valuations obtained from a
pricing service. Securities which mature in 60 days or less are valued at
amortized cost, which approximates market value. The ability of issuers of debt
securities held by the Fund to meet their obligations may be affected by
economic developments in a specific industry or region.
2. 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 applicable, 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 October 31, 1995, $(758,082) and $(1,445,718) was reclassified
from distributions in excess of net investment income and additional paid-in
capital, respectively, to accumulated net realized gain.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
4. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gains distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an advisory agreement, the Fund pays its Adviser, Alliance
Capital Management L.P., an advisory fee at an annual rate of 0.625% of the
first $200 million, 0.50% of the next $200 million and 0.45% in excess of $400
million of the average daily net assets of the Fund. Such fee is accrued daily
and paid monthly. The Adviser has agreed, under the terms of the advisory
agreement, to reimburse the Fund to the extent that its aggregate expenses
(exclusive of interest, taxes, brokerage, distribution fees, and extraordinary
expenses) exceed the limits prescribed by any state in which the Fund's shares
are qualified for sale. The Fund believes that the most restrictive expense
ratio limitation imposed by any state is 2.5% of the first $30 million of its
average daily net assets, 2% of the next $70 million of its average daily net
assets and 1.5% of its average daily net assets in excess of $100 million. No
reimbursement was required for the year ended October 31, 1995. Pursuant to the
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
advisory agreement, the Fund reimbursed the Adviser for the cost of certain
legal and accounting services provided to the Fund by the Adviser. For the year
ended October31, 1995 such reimbursement amounted to $139,020.
The Fund has a Services Agreement with Alliance Fund Services, Inc., (a
wholly-owned subsidiary of the Adviser), to provide personnel and facilities to
perform transfer agency services for the Fund. Compensation under this
agreement amounted to $756,130 for the year ended October 31, 1995. Alliance
Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser) serves as
the Distributor of the Fund's shares. The Distributor received front-end sales
charges of $37,609 from the sale of Class A shares and $298,929 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class B
shares for the year ended October 31, 1995.
Brokerage commissions paid on securities transactions for the year ended
October31, 1995 amounted to $1,918,386, of which $29,029 was paid to Donaldson,
Lufkin & Jenrette Securities Corp. ('DLJ'), an affiliate of the Advisor.
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 0.30% of the Fund's average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to Class B
and Class C shares. 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 $5,367,375 and $638,657 for Class
B and Class 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 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)
aggregated $745,818,384 and $748,128,658, respectively, for the year ended
October 31, 1995. There were no purchases or sales of U.S. Government or
government agency obligations for the year ended October 31, 1995.
OPTION TRANSATIONS
For hedging purposes, the Fund purchases and writes (sells) put and call
options on U.S. and foreign government securities and foreign currencies that
are traded on U.S. and foreign securities exchanges and over-the-counter
markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium 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 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
12
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
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.
Transactions in options written for the year ended October 31, 1995 were as
follows:
NUMBER OF
CONTRACTS PREMIUMS
--------- ----------
Options outstanding at beginning of year 1,850 $ 827,460
Options written -0- -0-
Options terminated in closing purchase transactions (1,090) (575,093)
Options expired (660) (177,769)
Options exercised (100) (74,598)
Options outstanding at October 31, 1995 -0- $-0-
At October 31, 1995, the cost of securities for federal income tax purposes was
$542,846,523. Accordingly, gross unrealized appreciation of investments was
$96,183,691 and gross unrealized depreciation of investments was $9,218,549,
resulting in net unrealized appreciation of $86,965,142. The Fund may be able
to use up to $4,337,154 of Alliance Convertible Fund's (which was acquired in
1991) capital loss carryforward, to offset future realized gains which expires
through 1998.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 900,000,000 shares of $0.01 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Class A consists of 450,000,000 shares, Class B of 225,000,000 and Class C of
225,000,000. Transactions in capital stock were as follows:
SHARES AMOUNT
-------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------ ------------ ------------- -------------
CLASS A
Shares sold 9,243,334 11,055,372 $ 22,536,400 $ 26,283,857
Shares issued in
reinvestment of
dividends and
distributions 9,307,957 12,665,627 20,218,363 29,718,393
Shares redeemed (25,767,526) (23,487,478) (61,337,761) (55,666,083)
Net increase(decrease) (7,216,235) 233,521 $(18,582,998) $ 336,167
CLASS B
Shares sold 15,198,094 21,500,279 $ 37,172,148 $ 50,737,762
Shares issued in
reinvestment of
dividends and
distributions 2,615,018 2,587,252 5,634,043 6,044,389
Shares redeemed (10,922,318) (9,744,100) (25,915,044) (22,879,205)
Net increase 6,890,794 14,343,431 $ 16,891,147 $ 33,902,946
CLASS C
Shares sold 8,491,685 8,581,936 $ 20,818,230 $ 20,240,216
Shares issued in
reinvestment of
dividends and
distributions 364,223 245,832 793,203 573,985
Shares redeemed (3,857,242) (3,526,354) (9,115,405) (8,255,060)
Net increase 4,998,666 5,301,414 $ 12,496,028 $ 12,559,141
* Commencement of distribution.
14
FINANCIAL HIGHLIGHTS ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $2.35 $2.61 $2.48 $2.52 $2.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income .02 .06 .06 .06 .07
Net realized and unrealized gain (loss) of investments .52 (.08) .29 .11 .56
Net increase (decrease) in net asset value from operations .54 (.02) .35 .17 .63
LESS: DISTRIBUTIONS
Dividends from net investment income (.06) (.06) (.06) (.06) (.09)
Distributions from net realized gains (.12) (.18) (.16) (.15) (.30)
Total dividends and distributions (.18) (.24) (.22) (.21) (.39)
Net asset value, end of year $2.71 $2.35 $2.61 $2.48 $2.52
TOTAL RETURN
Total investment return based on net asset value (b) 24.21% (.67)% 14.98% 7.23% 31.03%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $458,158 $414,386 $459,372 $417,018 $409,597
Ratio of expenses to average net assets 1.05% 1.03% 1.07% 1.09% 1.14%
Ratio of net investment income to average net assets 1.88% 2.36% 2.38% 2.63% 2.74%
Portfolio turnover rate 142% 68% 91% 104% 84%
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1995 1994 1993 1992 1991(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $2.34 $2.60 $2.47 $2.52 $2.40
INCOME FROM INVESTMENT OPERATIONS
Net investment income .01 .04 .05 .04 .04
Net realized and unrealized gain (loss) of investments .49 (.08) .28 .11 .12
Net increase (decrease) in net asset value from operations .50 (.04) .33 .15 .16
LESS: DISTRIBUTIONS
Dividends from net investment income (.03) (.04) (.04) (.05) (.04)
Distributions from net realized gains (.12) (.18) (.16) (.15) -0-
Total dividends and distributions (.15) (.22) (.20) (.20) (.04)
Net asset value, end of period $2.69 $2.34 $2.60 $2.47 $2.52
TOTAL RETURN
Total investment return based on net asset value (b) 22.84% (1.50)% 14.22% 6.22% 6.83%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $136,758 $102,546 $76,633 $29,656 $10,221
Ratio of expenses to average net assets 1.86% 1.85% 1.90% 1.90% 1.99%
Ratio of net investment income to average net assets 1.05% 1.56% 1.58% 1.69% 1.67%
Portfolio turnover rate 142% 68% 91% 104% 84%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
---------------------------------
MAY 3,1993(D)
YEAR ENDED OCT. 31, TO
------------------- OCTOBER 31,
1995 1994 1993
-------- --------- ------------
Net asset value, beginning of period $2.34 $2.60 $2.43
INCOME FROM INVESTMENT OPERATIONS
Net investment income .01 .04 .02
Net realized and unrealized gain on investments .50 (.08) .17
Net increase (decrease) in net asset value
from operations .51 (.04) .19
LESS: DISTRIBUTIONS
Dividends from net investment income (.03) (.04) (.02)
Distributions from net realized gains (.12) (.18) -0-
Total dividends and distributions (.15) (.22) (.02)
Net asset value, end of period $2.70 $2.34 $2.60
TOTAL RETURN
Total investment return based on
net asset value (b) 23.30% (1.50)% 7.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $35,835 $19,395 $7,774
Ratio of expenses to average net assets 1.84% 1.84% 1.96%(c)
Ratio of net investment income to average
net assets 1.04% 1.61% 1.45%(c)
Portfolio turnover rate 142% 68% 91%
(a) For the period February 8, 1991 (commencement of distribution) to October
31, 1991.
(b) 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 distribution at net asset value during the period, and redemption
on the last day of the period. Initial sales charge or contingent deferred
sales charge is not reflected in the calculation of total investment return.
Total investment return calculated for a period of less than one year is not
annualized.
(c) Annualized.
(d) Commencement of distribution.
17
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE GROWTH AND INCOME 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 Alliance Growth and Income Fund,
Inc. (the 'Fund') at October31, 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 October 31, 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
December 14, 1995
18
ALLIANCE GROWTH AND INCOME 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
PAUL RISSMAN, SENIOR VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER & CHIEF ACCOUNTING OFFICER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
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
(1) Member of the Audit Committee.
19
ALLIANCE GROWTH AND INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
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.
GTHAR
