ALLIANCE GROWTH & INCOME FUND
ANNUAL REPORT
OCTOBER 31, 1996
LETTER TO SHAREHOLDERS
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
November 27, 1996
Dear Shareholder:
We are pleased to provide you with an update of your Fund's performance and
market activity for Alliance Growth and Income Fund. The following pages
include information that covers the fiscal period ended October 31, 1996.
INVESTMENT PERFORMANCE
The following table shows how your Fund performed during its fiscal year ended
October 31, 1996. As a comparison, we also show the performance of the overall
U.S. stock market, represented by the S&P 500-Stock Index, and of the Lipper
Growth & Income Funds Average. The unmanaged Standard & 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 Lipper Growth & Income Funds Average reflects
performance of 576 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.
TOTAL RETURN
PERIOD ENDED OCTOBER 31, 1996
6 MONTHS 12 MONTHS
------------ -------------
ALLIANCE GROWTH & INCOME FUND
Class A 6.17% 21.51%
Class B 5.82% 21.20%
Class C 5.82% 20.72%
S&P 500 9.03% 24.02%
LIPPER GI FUNDS AVG. 6.57% 21.21%
TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF EACH CLASS OF SHARES AS OF
OCTOBER 31, 1996; ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3. THE FUND'S
BENCHMARKS ARE UNMANAGED.
Your Fund's three classes of shares essentially tracked the Growth and Income
average in the fiscal year ended October 31, 1996. Growth and Income funds
generally lagged the S&P 500 index over the same period. This time frame was
marked by the continued advance of the stock market, particularly for the
largest and historically most successful domestic companies. As the equity
prices of these companies rose, their valuations became increasingly dear and
your Fund reduced its exposure to them. The prices of some of these stocks,
such as Coca Cola and General Electric, nevertheless gained throughout the
period and your Fund's performance lagged in comparison.
We have maintained our emphasis on owning stocks with more reasonable
valuations. While this strategy has not yet borne fruit, we remain confident
that this is the best long-term approach for the Fund.
MARKET ENVIRONMENT
Stocks rose strongly in the beginning of the fiscal year, following the pattern
set throughout 1995. Strong earnings coupled with declines in interest rates
fueled this rally. By February, stock appreciation moderated due to signs of
reacceleration of the U.S. economy, and this choppy period ended with July's
decline. By August, it became apparent that the economy was not in imminent
danger of overheating, and the market rallied anew.
Looking forward, it is difficult to see signs of any major change, either
positive or negative, that could affect the economy. Our current slow-growth
environment is expected, by most economists, to continue with minor
fluctuations. An easier monetary policy on the part of the Federal Reserve in
1997 is also anticipated. Corporate earnings in the coming year should increase
by a moderate degree. This setting remains conducive to favorable market
activity.
PORTFOLIO STRATEGY
It must be remembered, however, that the market is most affected by trends and
events that have not been anticipated prior to their appearance. An economic
reacceleration would be detrimental to equity performance, as would an economy
that slips into recession. Your Fund tries to "expect the unexpected" by
maintaining a defensive posture in its yield, diversification and valuation
characteristics at all times. We continue to attempt enhancements to our
performance, within this defensive context, by relying upon Alliance's internal
research capabilities in selecting stocks that we expect to deliver superior
performance.
1
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
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,
regardless of the economy's whims. The top ten holdings of your Fund (as of
October 31, 1996) are: Campbell Soup Co., Exxon Corp., AT&T Corp., PepsiCo,
Inc., Mobil Corp., Merck & Co., Inc., Philip Morris Cos., Inc., First Union
Corp., Nokia Corp., and IBM Corp.
Thank you for your continued interest and investment in Alliance Growth and
Income Fund. We look forward to reporting to you again on market activity and
the Fund's investment results in the future.
Sincerely,
John D. Carifa
Chairman and President
Paul Rissman
Senior Vice President
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
INVESTMENT OBJECTIVE AND POLICIES
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
Alliance Growth and Income Fund seeks to provide income and appreciation. The
Fund invests principally in a diversified portfolio of dividend-paying common
stocks of good quality, and, under certain market conditions, other types of
securities, including bonds, convertible bonds and preferred stocks.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +21.51% +16.36%
. Five Years +13.07% +12.11%
. Ten Years +12.34% +10.52%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +21.20% +17.20%
. Five Years +12.21% +12.21%
. Since Inception* +11.86% +11.86%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +20.72% +19.72%
. Since Inception* +13.94% +13.94%
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). Class B shares convert to Class A shares after 8 years.
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: 2/8/91, Class B; 5/3/93, Class C.
3
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
ALLIANCE GROWTH AND INCOME FUND
GROWTH OF A $10,000 INVESTMENT:
10/31/86 TO 10/31/96
$39,000
$34,000
$29,000
$24,000
$19,000
$14,000
$9,000
10/31/86
10/31/96
S&P 500
LIPPER GROWTH & INCOME AVERAGE
GROWTH AND INCOME FUND CLASS A: $30,613
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Growth and Income Fund Class A shares as compared to the performance
of an appropriate broad-based index. The chart reflects the deduction of the
maximum 4.25% sales charge from the initial $10,000 investment in the Fund and
assumes the reinvestment of dividends and capital gains. Performance for Class
B 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 576 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 no charges or expenses are reflected in the
performance of the index or average.
Growth And Income Fund
S&P 500
Lipper Growth & Income Funds Average
4
TEN LARGEST HOLDINGS
OCTOBER 31, 1996
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Campbell Soup Co. $ 25,600,000 3.0%
Exxon Corp. 25,169,500 3.0
AT&T Corp. 24,883,312 2.9
PepsiCo, Inc. 24,816,862 2.9
Mobil Corp. 24,517,500 2.9
Merck & Co., Inc. 23,038,050 2.7
Philip Morris Cos., Inc. 22,206,844 2.6
First Union Corp. 21,825,000 2.6
Nokia Corp. (ADR) 21,402,063 2.5
International Business Machines Corp. 20,227,200 2.4
$233,686,331 27.5%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED OCTOBER 31, 1996
_______________________________________________________________________________
SHARES OR PRINCIPAL
----------------------------------
PURCHASES BOUGHT HOLDINGS 10/31/96
- -------------------------------------------------------------------------------
AutoZone, Inc. 323,300 323,300
Bristol-Myers Squibb Co. 135,000 135,000
Campbell Soup Co. 200,000 320,000
Exxon Corp. 284,000 284,000
Federated Department Stores, Inc.,
5.00%, 10/01/03 $8,000,000 $8,000,000
Mobil Corp. 210,000 210,000
Pharmacia & Upjohn, Inc. 527,000 527,000
RJR Nabisco Holdings Corp. cv. pfd. 3,000,000 3,000,000
Sears, Roebuck & Co. 190,000 190,000
Walt Disney Co. 200,000 200,000
SALES SOLD HOLDINGS 10/31/96
- -------------------------------------------------------------------------------
Alltel Corp. 453,000 -0-
Colgate-Palmolive Co. 100,000 -0-
Enron Corp. 235,000 205,000
First Data Corp. 160,000 -0-
General Electric Co. 119,000 137,900
General Instrument Corp. 341,400 -0-
Lowes Cos., Inc. 417,000 -0-
RJR Nabisco Holdings Corp. 605,000 -0-
Schering-Plough Corp. 130,000 129,900
Unocal Corp. 3.50% cv. pfd. 206,900 -0-
5
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS-96.1%
CONSUMER PRODUCTS, MANUFACTURING &
SERVICES-40.0%
AUTO & RELATED-1.0%
AutoZone, Inc. (a) 323,300 $ 8,284,563
BROADCASTING & CABLE-2.7%
Cablevision Systems Corp. 8.50% cv. pfd 595,000 12,123,125
Comcast Corp. Cl.A (SPL) K 210,548 3,092,424
TCI Group, Series A (a) 234,000 2,910,375
Tele-Communications, Inc.-
Liberty Media Cl.A (a) 188,500 4,877,437
------------
23,003,361
DRUGS, HEALTHCARE, MEDICAL SERVICES &
PRODUCTS-12.6%
Amgen, Inc. (a) 65,000 3,985,312
Baxter International, Inc. 185,000 7,700,625
Bristol-Myers Squibb Co. 135,000 14,276,250
Centocor, Inc. (a) 239,500 7,020,344
Columbia/HCA Healthcare Corp. 426,000 15,229,500
Meditrust 240,000 8,640,000
Merck & Co., Inc. 310,800 23,038,050
Pharmacia & Upjohn, Inc. 527,000 18,972,000
Schering-Plough Corp. 129,900 8,313,600
------------
107,175,681
ENTERTAINMENT & LEISURE-1.6%
Walt Disney Co. 200,000 13,175,000
FOOD, BEVERAGES & TOBACCO-13.5%
American Brands, Inc. 190,000 9,072,500
Campbell Soup Co. 320,000 25,600,000
Nabisco Holdings Corp. 440,000 16,390,000
PepsiCo, Inc. 837,700 24,816,862
Philip Morris Cos., Inc. 239,750 22,206,844
RJR Nabisco Holdings Corp. cv. pfd. 3,000,000 16,875,000
------------
114,961,206
HOUSEHOLD PRODUCTS-0.9%
Black & Decker Corp. 200,000 7,475,000
PAPER & FOREST PRODUCTS-0.9%
Louisiana-Pacific Corp. 360,000 7,515,000
REAL ESTATE-1.2%
Ambassador Apartments, Inc. 7,000 141,750
Arden Reality Group, Inc.(a) 8,500 192,312
Avalon Properties, Inc. 6,000 138,750
Bay Apartment Community, Inc. 8,000 240,000
Beacon Properties 5,500 161,563
Boykin Lodging Co. (a) 8,000 160,000
Chateau Properties, Inc. 5,000 121,875
Crescent Real Estate Equities 6,000 250,500
Developers Diversified Reality 6,800 228,650
Duke Reality Investments, Inc. 7,000 241,500
Essex Property Trust 8,600 222,525
Excel Reality Trust, Inc. 8,300 181,563
Glenborough Reality Trust, Inc. 15,000 210,000
Highwoods Properties, Inc. 6,000 172,500
Innkeepers USA Trust 14,000 164,500
JP Realty, Inc. 8,000 182,000
Liberty Property, Inc. 9,500 205,437
Meridan Industrial Trust, Inc. 8,500 148,750
National Golf Properties, Inc. 4,000 116,000
Patriot American Hospitality, Inc. 5,600 196,700
Post Properties, Inc. 4,000 158,000
Public Storage, Inc. 8,000 184,000
Reckson Associates Reality Corp. 3,400 121,125
Rouse Co. 9,000 228,375
6
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
Security Capital Industrial Trust 13,800 $ 250,125
Simon De Bartolo Group, Inc. 6,000 158,250
Smith (Charles E.) Residential 7,000 170,625
Spieker Properties, Inc. 6,000 184,500
Starwood Lodging Trust 116,000 5,220,000
Storage USA, Inc. 6,000 208,500
------------
10,560,375
RESTAURANTS-0.7%
Wendy's International, Inc. 302,032 6,229,410
RETAILING-GENERAL-2.3%
Price/Costco, Inc (a) 117,500 2,327,969
Reebok International, Ltd. 230,000 8,222,500
Sears, Roebuck & Co. 190,000 9,191,250
------------
19,741,719
TIRE & RUBBER-1.8%
Goodyear Tire & Rubber Co. 339,500 15,574,562
TRANSPORTATION-0.8%
Xtra Corp. 156,000 6,474,000
------------
340,169,877
BASIC INDUSTRIES-16.3%
CHEMICALS-1.7%
Dow Chemical Co. 190,000 14,772,500
CONTAINERS-0.9%
Crown Cork & Seal, Inc. 63,700 3,057,600
Crown Cork & Seal, Inc., 4.5% cv. pfd. 101,300 4,710,450
------------
7,768,050
ELECTRICAL EQUIPMENT-2.5%
Cooper Industries, Inc. 190,000 7,647,500
General Electric Co. 137,900 13,341,825
------------
20,989,325
ENVIRONMENTAL CONTROL-1.7%
WMX Technologies, Inc. 420,000 14,437,500
OIL & GAS SERVICES-9.5%
Amoco Corp. 195,000 14,771,250
Apache Corp. 126,000 4,473,000
BJ Services Co. (a) 45,600 2,046,300
Enron Corp. 205,000 9,532,500
Exxon Corp. 284,000 25,169,500
Mobil Corp. 210,000 24,517,500
------------
80,510,050
------------
138,477,425
TECHNOLOGY-14.5%
COMMUNICATIONS EQUIPMENT-3.4%
Nokia Corp. (ADR) (b) 461,500 21,402,063
Scientific-Atlanta, Inc. 510,000 7,395,000
------------
28,797,063
COMPUTER HARDWARE & SERVICES-3.6%
COMPAQ Computer Corp.(a) 155,000 10,791,875
International Business Machines Corp. 156,800 20,227,200
------------
31,019,075
OFFICE EQUIPMENT & SERVICES-0.8%
Xerox Corp. 144,000 6,678,000
SEMI-CONDUCTORS & RELATED-6.7%
Altera Corp. (a) 161,000 9,971,937
Atmel Corp. (a) 458,000 11,650,375
Intel Corp. 156,800 17,218,600
Micron Technology, Inc. 170,000 4,313,750
National Semiconductor Corp. (a) 715,763 13,778,438
------------
56,933,100
------------
123,427,238
FINANCIAL SERVICES-14.0%
BANKING & CREDIT-7.0%
First Chicago Corp. 303,300 15,468,300
First Union Corp. 300,000 21,825,000
Fleet Financial Group, Inc. 165,300 8,244,338
NationsBank Corp. 150,500 14,184,625
------------
59,722,263
7
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
BROKERAGE & MONEY MANAGEMENT-1.9%
Merrill Lynch & Co., Inc. 225,100 $ 15,813,275
INSURANCE-5.1%
Allstate Corp. 246,000 12,207,750
General Reinsurance Corp. 75,000 11,043,750
ITT Hartford Group, Inc. 120,500 7,591,500
PennCorp Financial Group, Inc. 3.375% cv. pfd. 51,000 4,131,000
Travelers Group, Inc. 155,000 8,408,750
------------
43,382,750
------------
118,918,288
PUBLIC UTILITIES-10.4%
ELECTRIC-2.1%
Allegheny Power System, Inc. 140,000 4,182,500
FPL Group, Inc. 156,000 7,176,000
Houston Industries, Inc. 284,000 6,496,500
------------
17,855,000
ELECTRIC & GAS-1.7%
CINergy Corp. 150,000 4,968,750
CMS Energy Corp. 135,000 4,269,375
Edison International 260,000 5,135,000
------------
14,373,125
TELEPHONE-6.6%
AT&T Corp. 713,500 24,883,312
Century Telephone Enterprises, Inc. 508,300 16,329,138
Teleport Communications
Group, Inc. Cl.A (a) 359,000 8,840,375
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
Vodafone Group Plc (ADR) (c) 168,000 $ 6,489,000
------------
56,541,825
------------
88,769,950
DIVERSIFIED-0.9%
Whitman Corp. 300,000 7,275,000
Total Common and Preferred Stocks
(cost $711,335,349) 817,037,778
CONVERTIBLE BOND-1.1%
Federated Department Stores, Inc.
5.00%, 10/01/03
(cost $9,170,000) $8,000 9,180,000
COMMERCIAL PAPER-2.6%
American Express Co.
5.23%, 11/01/96 2,500 2,500,000
5.23%, 11/04/96 2,500 2,498,910
Ford Motor Credit Corp.
5.24%, 11/07/96 3,135 3,132,262
5.35%, 11/06/96 3,324 3,321,530
Merrill Lynch & Co., Inc.
5.33%, 11/12/96 3,324 3,318,587
Prudential Funding
5.25%, 11/05/96 7,282 7,277,752
Total Commercial Paper
(amortized cost $22,049,041) 22,049,041
TOTAL INVESTMENTS-99.8%
(cost $742,554,390) 848,266,819
Other assets less liabilities-0.2% 1,590,335
NET ASSETS-100% $849,857,154
(a) Non-income producing security.
(b) Country of origin-Finland.
(c) Country of origin-United Kingdom.
Glossary:
ADR - American Depository Receipt
See notes to financial statements.
8
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $742,554,390) $848,266,819
Cash 9,445
Receivable for capital stock sold 3,044,958
Dividends and interest receivable 1,233,132
Receivable for investment securities sold 389,720
Total assets 852,944,074
LIABILITIES
Payable for capital stock redeemed 1,847,221
Advisory fee payable 360,343
Distribution fee payable 346,894
Payable for investment securities purchased 160,000
Accrued expenses and other liabilities 372,462
Total liabilities 3,086,920
NET ASSETS $849,857,154
COMPOSITION OF NET ASSETS
Capital stock, at par $ 2,834,622
Additional paid-in capital 632,740,955
Distributions in excess of net investment income (2,681)
Accumulated net realized gain on investments 108,576,963
Net unrealized appreciation of investments and other assets
less liabilities 105,707,295
$849,857,154
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($553,150,701/
184,148,890 shares of capital stock issued and outstanding) $3.00
Sales charge--4.25% of public offering price .13
Maximum offering price $3.13
CLASS B SHARES
Net asset value and offering price per share ($235,262,832/
78,761,657 shares of capital stock issued and outstanding) $2.99
CLASS C SHARES
Net asset value and offering price per share ($61,356,447/
20,522,557 shares of capital stock issued and outstanding) $2.99
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share($87,174
/29,058 shares of capital stock issued and outstanding) $3.00
See notes to financial statements.
9
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $63,225) $17,720,373
Interest 2,380,342 $ 20,100,715
EXPENSES
Advisory fee 3,804,160
Distribution fee - Class A 1,071,630
Distribution fee - Class B 1,862,502
Distribution fee - Class C 488,179
Transfer agency 1,080,812
Custodian 182,941
Printing 151,733
Administrative 142,000
Registration 125,048
Audit and legal 107,045
Taxes 44,864
Directors' fees 30,391
Miscellaneous 47,367
Total expenses 9,138,672
Net investment income 10,962,043
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on security transactions 111,164,477
Net change in unrealized appreciation of investments
and other assets less liabilities 18,743,701
Net gain on investments 129,908,178
NET INCREASE IN NET ASSETS FROM OPERATIONS $140,870,221
See notes to financial statements.
10
STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 10,962,043 $ 9,330,907
Net realized gain on investments 111,164,477 51,173,722
Net change in unrealized appreciation of
investments and other assets less liabilities 18,743,701 59,820,854
Net increase in net assets from operations 140,870,221 120,325,483
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (8,958,676) (8,640,268)
Class B (1,957,466) (1,398,551)
Class C (514,681) (298,822)
Net realized gain on investments
Class A (35,016,914) (20,295,635)
Class B (10,843,381) (5,118,075)
Class C (2,808,344) (954,530)
CAPITAL STOCK TRANSACTIONS
Net increase 138,335,936 10,804,177
Total increase 219,106,695 94,423,779
NET ASSETS
Beginning of year 630,750,459 536,326,680
End of year $849,857,154 $630,750,459
See notes to financial statements.
11
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
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. 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 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 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 any initial or
contingent deferred sales charge and are not subject to ongoing 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, 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 close of such 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. 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 any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
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.
5. RECLASSIFICATION OF NET ASSETS
At October 31, 1996 the Fund reclassed certain components of net assets. The
reclassification resulted in a net decrease to accumulated net realized gains
on investments and foreign currency transactions of $1,916,893 and a net
increase to distribution in excess of net investment income and additional paid
in capital of $471,175 and $1,445,718 respectively.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an advisory agreement, the Fund pays Alliance Capital
Management L.P. (the "Adviser"), 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)
12
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
exceed the limits prescribed by any state in which the Fund's shares are
qualified for sale. Pursuant to the advisory agreement, the Fund paid $153,540
to the Advisor representing the cost of certain legal and accounting services
provided to the Fund by the Adviser for the year ended October 31, 1996.
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 $800,073 for the year ended October 31, 1996. 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 $77,047 from the sale of Class A shares and $236,418 and $1,510 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B and Class C shares, respectively for the year ended October 31, 1996.
Brokerage commissions paid on securities transactions for the year ended
October 31, 1996 amounted to $1,843,545, none of which was paid to Donaldson,
Lufkin & Jenrette Securities Corp. ("DLJ"), an affiliate of the Adviser.
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. There is no distribution on Advisor Class 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 $5,883,895 and $975,417 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
and U.S. Government Securities) aggregated $710,461,929 and $623,235,412,
respectively, for the year ended October 31, 1996. There were no purchases or
sales of U.S. Government or government agency obligations for the year ended
October 31, 1996.
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
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
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 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.
For the year ended October 31, 1996, the Fund did not engage in any options
transactions.
At October 31, 1996, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $122,370,558 and
gross unrealized depreciation of investments was $16,658,129, resulting in net
unrealized appreciation of $105,712,429. The Fund may be able to use up to
$2,891,436 of Alliance Convertible Fund's (which was acquired in 1991) capital
loss carryforward, to offset future realized gains which expires in 1998.
14
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 1,350,000,000 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 consists of 450,000,000 shares, Class B of 225,000,000,
Class C of 225,000,000 and Advisor Class of 450,000,000. 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,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 20,905,586 9,243,334 $ 59,170,697 $ 22,536,400
Shares issued in
reinvestment of
dividends and
distributions 11,954,453 9,307,957 31,791,651 20,218,363
Shares converted
from Class B 1,815,203 -0- 5,221,368 -0-
Shares redeemed (19,840,417) (25,767,526) (55,989,608) (61,337,761)
Net increase
(decrease) 14,834,825 (7,216,235) $ 40,194,108 $(18,582,998)
CLASS B
Shares sold 36,536,109 15,198,094 $102,742,616 $ 37,172,148
Shares issued in
reinvestment of
dividends and
distributions 4,052,450 2,615,018 10,727,979 5,634,043
Shares converted
to Class A (1,824,728) -0- (5,221,368) -0-
Shares redeemed (10,761,214) (10,922,318) (30,355,431) (25,915,044)
Net increase 28,002,617 6,890,794 $ 77,893,796 $ 16,891,147
CLASS C
Shares sold 10,295,296 8,491,685 $ 29,011,135 $ 20,818,230
Shares issued in
reinvestment of
dividends and
distributions 951,608 364,223 2,529,282 793,203
Shares redeemed (4,017,599) (3,857,242) (11,379,623) (9,115,405)
Net increase 7,229,305 4,998,666 $ 20,160,794 $ 12,496,028
OCT. 2,1996* OCT. 2,1996*
TO TO
OCT. 31,1996 OCT. 31,1996
-------------- --------------
ADVISOR CLASS
Shares sold 29,058 $ 87,238
Shares issued in
reinvestment of
dividends and
distributions -0- -0-
Shares redeemed -0- -0-
Net increase 29,058 $ 87,238
Commencement of distribution.
15
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,
--------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $2.71 $2.35 $2.61 $2.48 $2.52
INCOME FROM INVESTMENT OPERATIONS
Net investment income .05 .02 .06 .06 .06
Net realized and unrealized gain (loss)
of investments .50 .52 (.08) .29 .11
Net increase (decrease) in net asset
value from operations .55 .54 (.02) .35 .17
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.05) (.06) (.06) (.06) (.06)
Distributions from net realized gains (.21) (.12) (.18) (.16) (.15)
Total dividends and distributions (.26) (.18) (.24) (.22) (.21)
Net asset value, end of year $3.00 $2.71 $2.35 $2.61 $2.48
TOTAL RETURN
Total investment return based on net
asset value (b) 21.51% 24.21% (.67)% 14.98% 7.23%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $553,151 $458,158 $414,386 $459,372 $417,018
Ratio of expenses to average net assets .97% 1.05% 1.03% 1.07% 1.09%
Ratio of net investment income to
average net assets 1.73% 1.88% 2.36% 2.38% 2.63%
Portfolio turnover rate 88% 142% 68% 91% 104%
Average commission rate (d) $.0625 -- -- -- --
</TABLE>
See footnote summary on page 19.
16
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,
--------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $2.69 $2.34 $2.60 $2.47 $2.52
INCOME FROM INVESTMENT OPERATIONS
Net investment income .03 .01 .04 .05 .04
Net realized and unrealized gain (loss)
of investments .51 .49 (.08) .28 .11
Net increase (decrease) in net asset
value from operations .54 .50 (.04) .33 .15
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.03) (.03) (.04) (.04) (.05)
Distributions from net realized gains (.21) (.12) (.18) (.16) (.15)
Total dividends and distributions (.24) (.15) (.22) (.20) (.20)
Net asset value, end of year $2.99 $2.69 $2.34 $2.60 $2.47
TOTAL RETURN
Total investment return based on net
asset value (b) 21.20% 22.84% (1.50)% 14.22% 6.22%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $235,263 $136,758 $102,546 $76,633 $29,656
Ratio of expenses to average net assets 1.78% 1.86% 1.85% 1.90% 1.90%
Ratio of net investment income to
average net assets .91% 1.05% 1.56% 1.58% 1.69%
Portfolio turnover rate 88% 142% 68% 91% 104%
Average commission rate (d) $.0625 -- -- -- --
</TABLE>
See footnote summary on page 19.
17
FINANCIAL HIGHLIGHTS (CONTINUED)
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------
MAY 3,1993(A)
YEAR ENDED OCTOBER 31, TO
------------------------------------- OCTOBER 31,
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
1996 1995 1994 1993
Net asset value, beginning of period $2.70 $2.34 $2.60 $2.43
INCOME FROM INVESTMENT OPERATIONS
Net investment income .03 .01 .04 .02
Net realized and unrealized gain (loss)
on investments .50 .50 (.08) .17
Net increase (decrease) in net asset
value from operations .53 .51 (.04) .19
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.03) (.03) (.04) (.02)
Distributions from net realized gains (.21) (.12) (.18) -0-
Total dividends and distributions (.24) (.15) (.22) (.02)
Net asset value, end of period $2.99 $2.70 $2.34 $2.60
TOTAL RETURN
Total investment return based on net
asset value (b) 20.72% 23.30% (1.50)% 7.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $61,356 $35,835 $19,395 $7,774
Ratio of expenses to average net assets 1.76% 1.84% 1.84% 1.96%(c)
Ratio of net investment income to
average net assets .93% 1.04% 1.61% 1.45%(c)
Portfolio turnover rate 88% 142% 68% 91%
Average commission rate (d) $.0625 -- -- --
</TABLE>
See footnote summary on page 19.
18
ALLIANCE GROWTH AND INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
ADVISOR CLASS
OCTOBER 2,1996(A)
TO OCTOBER 31,1996
------------------
Net asset value, beginning of period $2.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income .00
Net realized and unrealized gain on investments .03
Net increase in net asset value from operations 3.00
Net asset value, end of period $3.00
TOTAL RETURN
Total investment return based on net asset value (b) 1.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $87
Ratio of expenses to average net assets .37%(c)
Ratio of net investment income to average net assets 3.40%(c)
Portfolio turnover rate 88%
Average commission rate (d) $.0625
(a) Commencement of distribution.
(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) For fiscal years 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.
19
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 October 31, 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 periods
presented, 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, 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
December 13, 1996
20
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)
DONALD J. ROBINSON (1)
ROBERT C. WHITE (1)
OFFICERS
PAUL RISSMAN, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
DANIEL V. PARKER, 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
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.
21
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
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 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
22
ALLIANCE GROWTH AND INCOME 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.
GTHAR
