<PAGE>
ALLIANCE GROWTH AND INCOME FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
September 22, 2000
To the Stockholders of Alliance Growth and Income Fund, Inc. (the "Fund"):
The accompanying Notice of Meeting and Proxy Statement present five proposals
to be considered at the Fund's Special Meeting of Stockholders to be held on
November 2, 2000. The proposals are discussed more fully in the accompanying
Proxy Statement.
The first two proposals are for, respectively, the reelection of the Fund's
Directors and the ratification of the selection of PricewaterhouseCoopers LLP
as independent accountants to the Fund for its fiscal year ending October 31,
2000. The third proposal is for an amendment to the Fund's investment advisory
agreement with Alliance Capital Management L.P. to increase the advisory fee
payable by the Fund to Alliance and to revise the investment advisory fee
breakpoint schedule. The last two proposals relax or remove, in each case
consistent with the Investment Company Act of 1940 (the "1940 Act"), certain
investment restrictions required by state "blue sky" laws that were preempted
and thus nullified by Congress in 1996. These restrictions are not required by
the 1940 Act and could impair the ability of the Fund to respond competitively
to future market developments. The Board believes that it is in the best
interests of the Fund and its stockholders to change these restrictions to
provide the Fund with the investment flexibility allowed by the 1940 Act.
We welcome your attendance at the Meeting. If you are unable to attend, we
encourage you to vote your proxy promptly. Shareholder Communications
Corporation ("SCC"), a professional proxy solicitation firm, has been selected
to assist stockholders in the voting process. As the date of the Meeting
approaches, if we have not yet received your proxy, you may receive a telephone
call from SCC reminding you to exercise your right to vote. If you have any
questions regarding the Meeting agenda or how to submit your proxy, please call
SCC at (877) 504-9594.
Sincerely,
John D. Carifa
Chairman and President
<PAGE>
[Alliance Capital Logo]
ALLIANCE GROWTH AND INCOME FUND, INC.
-------------------------------------------------------------------------------
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
-------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
November 2, 2000
To the Stockholders of Alliance Growth and Income Fund, Inc.:
Notice is hereby given that a Special Meeting of Stockholders (the
"Meeting") of Alliance Growth and Income Fund, Inc., a Maryland corporation
(the "Fund"), will be held at the offices of the Fund, 1345 Avenue of the
Americas, 33rd Floor, New York, New York 10105, on Thursday, November 2, 2000
at 11:00 a.m., for the following purposes, all of which are more fully
described in the accompanying Proxy Statement dated September 22, 2000:
1. To elect eight Directors of the Fund, each to hold office until his
or her successor is duly elected and qualified;
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund for its fiscal year ending October 31, 2000;
3. To consider and vote on the approval of an amendment to the Fund's
Investment Advisory Agreement with Alliance Capital Management L.P. (the
"Adviser") to increase the advisory fee payable by the Fund to the Adviser
and revise the investment advisory fee breakpoint schedule;
4. To approve an amendment of a fundamental policy to permit the Fund to
engage in securities lending to the extent permitted by the Investment
Company Act of 1940, as amended (the "1940 Act");
5. To approve an amendment to the Fund's fundamental policy relating to
portfolio diversification to permit the Fund to fully utilize the
investment latitude for diversified funds established by the 1940 Act; and
<PAGE>
6. To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on September 8, 2000
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting and any postponement or adjournment thereof.
The enclosed proxy is being solicited on behalf of the Board of Directors of
the Fund. Each stockholder who does not expect to attend the Meeting in person
is requested to complete, date, sign and promptly return the enclosed proxy
card, or to vote by telephone or via the Internet as described on the enclosed
proxy card.
The Board of Directors recommends approval of all the proposals.
By Order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
New York, New York
September 22, 2000
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed proxy card, sign and
date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. You may also vote via the Internet or by
telephone. To do so, please follow the instructions on the enclosed proxy card.
Your vote is very important no matter how many shares you own. Please mark and
mail your proxy promptly or vote by telephone or through the Internet in order
to save the Fund any additional cost of further proxy solicitation and in order
for the Meeting to be held as scheduled.
--------------------------------------------------------------------------------
(R) This registered service mark used under license from the owner, Alliance
Capital Management L.P.
<PAGE>
PROXY STATEMENT
ALLIANCE GROWTH AND INCOME FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
-----------------------
SPECIAL MEETING OF STOCKHOLDERS
November 2, 2000
-----------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Alliance Growth and Income
Fund, Inc., a Maryland corporation (the "Fund"), to be voted at the Special
Meeting of Stockholders of the Fund (the "Meeting"), to be held at the offices
of the Fund, 1345 Avenue of the Americas, 33rd Floor, New York, New York
10105, on Thursday, November 2, 2000 at 11:00 a.m. Proxies will be solicited
primarily by mail and solicitation may also be made by telephone. Solicitation
costs will be borne by Alliance Capital Management L.P., the Fund's investment
adviser (the "Adviser").
The Board of Directors has fixed the close of business on September 8, 2000
as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting and at any postponement or adjournment thereof
(the "Record Date"). The outstanding voting shares of the Fund as of the
Record Date consisted of 1,342,112,509 shares of common stock, representing
four classes of shares, each share being entitled to one vote. All properly
executed and timely received proxies will be voted in accordance with the
instructions marked thereon or otherwise provided therein. Accordingly, unless
instructions to the contrary are marked, proxies will be voted for the
election of eight directors (Proposal One), for the ratification of the
selection of PricewaterhouseCoopers LLP as the Fund's independent accountants
for its fiscal year ending October 31, 2000 (Proposal Two), for the approval
of an amendment to the Fund's Investment Advisory Agreement (the "Advisory
Agreement") with the Adviser to provide for an increase in the advisory fee
payable by the Fund to the Adviser and to revise the investment advisory fee
breakpoint schedule (Proposal Three), for the approval of an amendment to a
fundamental policy to permit the Fund to engage in securities lending to the
extent permitted by the Investment Company Act of 1940, as amended (the "1940
Act")(Proposal Four), and for the approval of an amendment to the Fund's
fundamental policy
1
<PAGE>
relating to portfolio diversification to permit the Fund to fully utilize the
investment latitude for diversified funds established by the 1940 Act
(Proposal Five). (These proposals are referred to individually as a "Proposal"
and collectively as the "Proposals".) Any stockholder may revoke that
stockholder's proxy at any time prior to exercise thereof by giving written
notice to the Secretary of the Fund at 1345 Avenue of the Americas, New York,
New York 10105, by signing another proxy of a later date or by personally
voting at the Meeting.
Properly executed proxies may be returned with instructions to abstain from
voting or to withhold authority to vote (an "abstention") or represent a
broker "non-vote" (which is a proxy from a broker or nominee indicating that
the broker or nominee has not received instructions from the beneficial owner
or other person entitled to vote shares on a particular matter with respect to
which the broker or nominee does not have discretionary power to vote). The
shares represented by such a proxy will be considered present for purposes of
determining the existence of a quorum for the transaction of business. Those
shares not being cast will have no effect, however, on the outcome of the
Proposals. If any proposal, other than the Proposals, properly comes before
the Meeting, the shares represented by proxies will be voted on all such other
proposals in the discretion of the person or persons voting the proxies. The
Fund has not received notice of, and is not otherwise aware of, any other
matter to be presented at the Meeting.
A quorum for the Meeting will consist of the presence in person or by proxy
of the holders of a majority of the shares entitled to vote at the Meeting.
Whether or not a quorum is present at the Meeting, if sufficient votes in
favor of the position recommended by the Board of Directors on any Proposal
described in the Proxy Statement are not timely received, the persons named as
proxies may, but are under no obligation to, with no other notice than
announcement at the Meeting, propose and vote for one or more adjournments of
the Meeting to permit further solicitation of proxies. The Meeting may be
adjourned with respect to fewer than all the Proposals in the Proxy Statement,
and a stockholder vote may be taken on any one or more of the Proposals prior
to any adjournment if sufficient votes have been received for approval
thereof. Shares represented by proxies indicating a vote contrary to the
position recommended by the Board of Directors on a Proposal will be voted
against adjournment as to that Proposal.
The Fund has engaged Shareholder Communications Corporation ("SCC"), 17
State Street, New York, New York 10004, to assist the Fund
2
<PAGE>
in soliciting proxies for the Meeting. SCC will receive a fee of $15,000 for
its services plus reimbursement of out-of-pocket expenses.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Meeting, eight Directors are to be elected, each to serve until his
or her successor is duly elected and qualifies. The affirmative vote of a
majority of the votes cast at the Meeting is required to elect a Director. It
is the intention of the persons named as proxies in the accompanying proxy to
nominate and vote in favor of the election of each nominee referred to below.
Messrs. John D. Carifa, David H. Dievler, John H. Dobkin, William H. Foulk,
Jr., Clifford L. Michel and Donald J. Robinson, Ms. Ruth Block and Dr. James
M. Hester were previously elected as Directors of the Fund by its
stockholders. The foregoing individuals are standing for reelection at the
Meeting. Each of the eight nominees has consented to serve as a Director of
the Fund. The Board of Directors knows of no reason why any of the nominees
will be unable to serve, but in the event any nominee is unable to serve or
for good cause will not serve, the proxies received indicating a vote in favor
of such nominee will be voted for a substitute nominee as the Board of
Directors may recommend.
3
<PAGE>
Certain information concerning the Fund's Directors is set forth below. Each
is a director or trustee of other investment companies sponsored by the
Adviser.
<TABLE>
<CAPTION>
Number of shares
of the Fund's
common stock
beneficially
Name, age, positions and offices with the Year first owned directly or
Fund, principal occupations during the past became a indirectly as of
five years and other Directorships Director September 8, 2000
------------------------------------------- ---------- -----------------
<S> <C> <C>
* John D. Carifa, Chairman of the Board, 55. 1987 0
President, Chief Operating Officer and a
Director of Alliance Capital Management
Corporation, the general partner of the
Adviser ("ACMC"), which he has been associated
with since prior to 1995.
**+ Ruth Block, Director, 69. Formerly Executive 1986 0
Vice President and Chief Insurance Officer of
The Equitable; Chairman and Chief Executive
Officer of Evlico; Director of Avon, Tandem
Financial Group and Donaldson Lufkin &
Jenrette Securities Corporation. She is
currently a Director of Ecolab Incorporated
(specialty chemicals) and BP Amoco Corporation
(oil and gas).
**+ David H. Dievler, Director, 70. Independent 1987 54,884
Consultant. Until December 1994 he was Senior
Vice President of ACMC responsible for mutual
fund administration. Prior to joining ACMC in
1984 he was Chief Financial Officer of
Eberstadt Asset Management since 1968. Prior
to that he was a Senior Manager at Price
Waterhouse & Co. Member of American Institute
of Certified Public Accountants since 1953.
**+ John H. Dobkin, Director, 58. President of 1992 46,919
Historic Hudson Valley (historic preservation)
since prior to 1995. Previously, he was
Director of the National Academy of Design.
During 1988-92, he was a Director and Chairman
of the Audit Committee of ACMC.
</TABLE>
-----------
* "Interested person," as defined in the 1940 Act, of the Fund because of an
affiliation with the Adviser.
** Member of the Audit Committee.
+ Member of the Nominating Committee.
4
<PAGE>
<TABLE>
<CAPTION>
Number of shares
of the Fund's
common stock
beneficially
Name, age, positions and offices with the Year first owned directly or
Fund, principal occupations during the past became a indirectly as of
five years and other Directorships Director September 8, 2000
------------------------------------------- ---------- -----------------
<S> <C> <C>
**+ William H. Foulk, Jr., Director, 68. 1992 0
Investment Adviser and Independent
Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered
investment adviser, with which he had been
associated since prior to 1995. He was
formerly Deputy Comptroller of the State of
New York and, prior thereto, Chief Investment
Officer of the New York Bank for Savings.
**+ Dr. James M. Hester, Director, 76. President 1989 12,410
of The Harry Frank Guggenheim Foundation,
with which he has been associated since prior
to 1995. He was formerly President of New
York University and The New York Botanical
Garden, Rector of The United Nations
University and Vice Chairman of the Board of
the Federal Reserve Bank of New York.
**+ Clifford L. Michel, Director, 61. Member of 1989 3,267
the law firm of Cahill Gordon & Reindel, with
which he has been associated since prior to
1995. He is President and Chief Executive
Officer of Wenonah Development Company
(investments) and a Director of Placer Dome,
Inc. (mining).
**+ Donald J. Robinson, Director, 66. Senior 1996 0
Counsel of the law firm of Orrick, Herrington
& Sutcliffe LLP since January 1995. He was
formerly a senior partner and a member of the
Executive Committee of that firm. He was also
a member of the Municipal Securities
Rulemaking Board and Trustee of the Museum of
the City of New York.
</TABLE>
-----------
** Member of the Audit Committee.
+ Member of the Nominating Committee.
5
<PAGE>
It is the policy of the Boards of Directors of all registered investment
companies to which the Adviser provides investment advisory services including
the Fund (collectively, the "Alliance Fund Complex") that each Director will
invest specified minimum amounts and (in most cases) an overall total of at
least $150,000 in shares of investment companies within the Alliance Fund
Complex. As of the Record Date, the Directors and officers of the Fund as a
group owned less than 1% of the shares of the Fund.
During the Fund's fiscal year ended October 31, 1999 (the "1999 fiscal
year"), the Board of Directors met seven times, the Audit Committee met twice
for the purposes described below in Proposal Two and the Nominating Committee
of the Fund did not meet. Both the Audit Committee and the Nominating Committee
are standing committees of the Board. The Nominating Committee considers
individuals for nomination to fill vacancies on the Board of Directors. It does
not currently consider for nomination candidates proposed by stockholders.
The Fund does not pay any fees to, or reimburse expenses of, any Director
during a time in which such Director is considered an "interested person" of
the Fund. The aggregate compensation paid by the Fund to each of the Directors
during the 1999 fiscal year, the aggregate compensation paid to each of the
Directors during calendar year 1999 by all of the investment companies in the
Alliance Fund Complex and the total number of investment companies and
investment portfolios within the Alliance Fund Complex with respect to which
each of the Directors serves as a director or trustee are set forth below.
Neither the Fund nor any other investment company in the Alliance Fund Complex
provides compensation in the form of pension or retirement benefits to any of
its directors or trustees.
<TABLE>
<CAPTION>
Total Number
of Investment Total Number of
Total Companies in Investment
Compensation the Alliance Portfolios within
from the Fund Complex, the Alliance Fund
Aggregate Alliance Fund including the Complex,
Compensation from Complex, Fund, as to including the
the Fund during including the which the Fund, as to which
the Fiscal Year Fund, during Director is a the Director is a
Ended October 31, the 1999 Director or a Director or a
1999 Calendar Year Trustee Trustee
----------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
John D. Carifa.......... $ 0 $ 0 50 103
Ruth Block.............. $3,617 $154,263 38 80
David H. Dievler........ $3,735 $210,188 45 87
John H. Dobkin.......... $3,737 $206,488 42 84
William H. Foulk, Jr.... $3,738 $246,413 45 98
Dr. James M. Hester..... $3,740 $164,138 39 81
Clifford L. Michel...... $3,740 $183,388 39 83
Donald J. Robinson...... $2,984 $140,813 41 92
</TABLE>
Your Board of Directors recommends that the stockholders vote "FOR" the
election of each of the foregoing nominees to serve as a Director of the Fund.
6
<PAGE>
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, including a majority of the Directors who are not
"interested persons" of the Fund, as defined in the 1940 Act, at a meeting
held on September 24-25, 1999, selected PricewaterhouseCoopers LLP,
independent accountants to audit the accounts of the Fund for the fiscal year
ending October 31, 2000. PricewaterhouseCoopers LLP does not have any direct
financial interest or any material indirect financial interest in the Fund.
The affirmative vote of a majority of the votes cast at the Meeting is
required to ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund.
A representative of PricewaterhouseCoopers LLP is expected to attend the
Meeting and to have the opportunity to make a statement and to respond to
appropriate questions from stockholders. The Audit Committee of the Board of
Directors meets with representatives of PricewaterhouseCoopers LLP to discuss
the scope of their engagement and to review the financial statements of the
Fund and the results of their examination thereof.
Your Board of Directors recommends that the stockholders vote "FOR" the
ratification of the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund.
PROPOSAL THREE
APPROVAL OF A PROPOSAL TO AMEND THE INVESTMENT ADVISORY AGREEMENT TO INCREASE
THE INVESTMENT ADVISORY FEE AND REVISE THE ADVISORY FEE BREAKPOINT SCHEDULE
At a meeting of the Board of Directors held on July 19-20, 2000, the
Directors considered and approved the Adviser's proposal that the Fund's
Advisory Agreement be amended as described below to increase the advisory fee
payable by the Fund to the Adviser and revise the current advisory fee
breakpoint schedule and resolved to recommend the amendment to the
stockholders for their approval. Approval of Proposal Three requires the
affirmative vote of "a majority of the outstanding voting securities" as
defined by the 1940 Act, which means the lesser of (i) 67% or more of the
voting securities of the Fund present or
7
<PAGE>
represented at the Meeting, if the holders of more than 50% of the outstanding
voting securities of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding voting securities of the Fund.
If the stockholders of the Fund do not approve the amendment to increase the
advisory fee and revise the advisory fee breakpoint schedule, the Board of
Directors will consider other appropriate action.
Your Board of Directors recommends that the stockholders vote "FOR" the
approval of Proposal Three.
Summary of the Proposal
At the Board's July 19-20, 2000 Meeting, the Adviser presented data to the
Directors indicating that the Fund's current advisory fee is significantly
below both the average fee for funds with similar investment objectives and
the average fees paid by those funds that the Adviser has identified as the
Fund's main competitors. The Adviser noted that the Fund's lower than average
advisory fee is the result of its inherited fee breakpoint schedule, which had
been in place for many years when the Adviser assumed management of the Fund
in 1986 and which contains breakpoints at asset levels that are low in light
of the Fund's growth in recent years. The proposed increase in the advisory
fee and the new proposed breakpoint schedule are designed to bring the fee
closer to industry averages for comparable funds.
Proposed Fee. As approved by the Directors, the Fund's proposed advisory fee
would be .625 of 1% of the first $5 billion, .60 of 1% of the excess over $5
billion up to $7.5 billion, .575 of 1% of the excess over $7.5 billion up to
$10 billion and .55 of 1% of the excess over $10 billion of the average daily
value of the Fund's net assets. At the Fund's current asset level of $5.3
billion, the effective fee rate under the Proposal would be .624%. If the
Proposal is approved by the stockholders the new advisory fee would become
effective promptly following such approval. This proposed fee differs slightly
from the fee initially proposed to the Board of Directors by the Adviser. See
"Board Considerations" below.
Current Fee. The Fund's current advisory fee is .625 of 1% of the first $200
million, .50 of 1% of the excess over $200 up to $400 million and .45 of 1% of
any excess over $400 million of the average daily value of the Fund's net
assets. At the Fund's current asset level, its effective fee rate is .46%.
8
<PAGE>
Board Considerations
In its deliberations concerning the Adviser's proposal that they approve the
proposed increase in the advisory fee and revisions to the advisory fee
breakpoint schedule, the Directors considered that the Fund has been
experiencing superior investment performance and that the Fund's current
advisory fee is significantly below industry norms. The Directors reviewed a
comparison of the Fund's investment performance, advisory fee and expense
ratio against both the larger universe of the multi-cap value funds tracked by
Lipper Analytical Services, Inc. ("Lipper") and smaller universes, prepared by
the Adviser and based upon recent data supplied by Lipper, of the seven best
selling salesforce-distributed multicap value funds, including the Fund (the
"Key Competitor Universe") and the nine largest salesforce-distributed
multicap value funds, including the Fund (the "Adviser's Competitor
Universe"). The Adviser's Competitor Universe included only one competitive
fund per complex. The comparison reflects that, as of June 30, 2000, measured
against the broader universe of Lipper multi-cap funds, the Fund has achieved
top decile performance for the 3-year and 5-year periods and near top quartile
performance (124 of 482, or top 26%) for the 1-year period. Measured against
the more narrow Key Competitor Universe, the Fund's performance was second out
of seven funds for the 3-year and 5-year periods and fourth and third for the
1-year and 6-month periods, respectively, ending on June 30, 2000. In
addition, the Adviser provided the Directors with information that indicated
that the Fund significantly outperformed the Adviser's Competitor Universe by
approximately 403, 738 and 562 basis points for the one, three and five year
periods, respectively, ended May 31, 2000.
The Adviser further noted to the Directors that, while the Fund's
performance has been exceptional, the effective advisory fee rate as of June
30, 2000 of .46% is well below the Lipper multi-cap value fund average and
median fees of .76% and .77%, respectively, and significantly below the .628%
and .614% average fees of the Adviser's Competitor Universe at the $3 billion
and $5 billion asset levels, respectively. The Adviser also noted that the
Fund's effective fee as of June 30, 2000 is slightly below the average .48%
fee of funds of similar size and distribution.
In addition, the Adviser informed the Directors that under its proposed fee
schedule, the Fund's effective fee rate of .638% at its asset level as of June
30, 2000 would remain well below the average and median of the larger Lipper
peer group, but would be slightly above the average of the Adviser's
Competitor Universe and somewhat above the average of the Key Competitor
Universe. The Adviser stated that it believed that this
9
<PAGE>
fee is appropriate given the research intensive nature of the Adviser's
disciplined investment process and the Fund's consistently superior long-term
performance against these smaller groups.
The Adviser also noted that the expense ratio for the Fund's Class A shares
at current asset levels of .910% is in line with the .872% average of a group
of five salesforce-distributed multi-cap value funds of similar size and
distribution and well below the 1.38% Lipper average. The Adviser informed the
Directors that, if the Proposal is approved, it expected that the Fund's
expense ratio for the Fund's Class A shares would be 1.09% and would remain
well below the Lipper average, although it would be somewhat higher than the
average for funds of similar size and distribution. The current and pro forma
fees (assuming approval of the new advisory fee rate) and expenses for each
class of the Fund's shares are set forth in the tables below.
As proposed by the Adviser, the advisory fee would have been increased to
.650 of 1% of the first $2.5 billion, .625 of 1% of the next $2.5 billion, .600
of 1% of the next $2.5 billion, .575 of 1% of the next $2.5 billion and .550 of
1% of the excess over $10 billion, of the average daily value of the Fund's net
assets.
In its deliberations on the proposed increase in the advisory fee, the Board
of Directors reviewed the materials provided by the Adviser and considered,
among other things, the following: (1) the performance of the Fund, noting the
Fund had outperformed both the larger Lipper Universe and the smaller Key
Competitor and Adviser's Competitor Universes, (2) the level of the proposed
fee as compared to the fees paid by other funds in the Lipper Universe, the
Adviser's Competitor Universe and the universe of the funds of similar size and
distribution, (3) the nature and quality of the services rendered by the
Adviser, (4) actual expense ratios of the Fund as of June 30, 2000 and pro-
forma expense ratios assuming adoption of the proposed fee increase, and (5)
the profitability of the Fund to the Adviser for calendar year 1999 and pro-
forma data regarding the profitability of the Fund to the Adviser assuming
adoption of the proposed fee increase.
Following the Adviser's presentation, the independent Directors consulted
separately with their independent counsel. Thereafter, the Directors met with
representatives of the Adviser and indicated their general agreement with the
proposal presented by the Adviser but stated their belief that it would be more
suitable to reduce the fee at the initial breakpoint from .650% on the first
$2.5 billion to .625% on the first $5 billion and to thereafter continue with
the breakpoint schedule as proposed. In response, the Adviser indicated its
willingness to accept this recommendation of the disinterested Directors, after
which the Directors
10
<PAGE>
and the disinterested Directors as a whole, approved the proposal and
determined to recommend the proposal to shareholders for their approval.
Fees and Expenses
The following tables describe, for each of the Fund's four classes of shares,
the Fund's operating expenses for the 1999 fiscal year, including the advisory
fee, and the Fund's corresponding pro forma fees and expenses to the 1999
fiscal year, including the advisory fee, if the Proposal is approved.
Current Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
Class Class Class Advisor
A B C Class
----- ----- ----- -------
<S> <C> <C> <C> <C>
Advisory fees......................................... .47% .47% .47% .47%
Distribution (12b-1) fees............................. .24% 1.00% 1.00% None
Other expenses........................................ .22% .23% .22% .21%
Total fund operating expenses......................... .93% 1.70% 1.69% .68%
Pro Forma Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<CAPTION>
Class Class Class Advisor
A B C Class
----- ----- ----- -------
<S> <C> <C> <C> <C>
Advisory fees......................................... .63% .63% .63% .63%
Distribution (12b-1) fees............................. .24% 1.00% 1.00% None
Other expenses........................................ .22% .23% .22% .21%
Total fund operating expenses......................... 1.09% 1.86% 1.85% .84%
</TABLE>
Examples
The Examples are to help you compare the cost of investing in the Fund with
the cost of investing in other funds. They assume that you invest $10,000 in
the Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. They also assume that your investment has a 5% return
each year, that the Fund's operating expenses stay the same and that all
dividends and distributions are reinvested. Your actual costs may be higher or
lower. Although Proposal Three involves no change in such charges, for the sake
of comparison these examples also include the 4.25% maximum sales charge
imposed on purchases of Class A shares and the 4.0% and 1.0% maximum deferred
11
<PAGE>
sales charges imposed as a percentage of the original purchase price or
redemption proceeds, whichever is lower, of Class B shares and Class C shares,
respectively.
Current Examples
<TABLE>
<CAPTION>
Class Class Class Advisor
A B C Class
------ ------ ------ -------
<S> <C> <C> <C> <C>
After 1 year...................................... $ 516 $ 573 $ 272 $ 69
After 3 years..................................... $ 709 $ 736 $ 533 $218
After 5 years..................................... $ 918 $ 923 $ 918 $379
After 10 Years.................................... $1,519 $1,804+ $1,998 $847
</TABLE>
-----------
+ Assumes Class B shares convert to Class A shares after eight years.
Pro Forma Examples
<TABLE>
<CAPTION>
Class Class Class Advisor
A B C Class
------ ------ ------ -------
<S> <C> <C> <C> <C>
After 1 year...................................... $ 531 $ 589 $ 288 $ 86
After 3 years..................................... $ 757 $ 785 $ 582 $ 268
After 5 years..................................... $1,000 $1,006 $1,001 $ 466
After 10 Years.................................... $1,697 $1,979+ $2,169 $1037
</TABLE>
-----------
+ Assumes Class B shares convert to Class A shares after eight years.
The Adviser received aggregate advisory fees from the Fund in the amount of
$13,402,371 for the 1999 fiscal year. If the proposed fee had been in effect
during the 1999 fiscal year, the Adviser would have received an aggregate
amount of $17,989,404, representing an increase of 34.2%. If approved, the
increase in advisory fees could negatively affect the Fund's performance and
returns because the Fund will have higher expenses than otherwise would be the
case.
Investment Advisory Agreement
The current Advisory Agreement, dated July 22, 1992, was approved by a
majority of the outstanding voting securities of the Fund at a meeting held on
June 11, 1992.
Under the Advisory Agreement, the Adviser furnishes advice and
recommendations with respect to the Fund's portfolio of securities and
investments and provides persons satisfactory to the Board of Directors to act
as officers and employees of the Fund. These officers and employees, as well
as certain Directors of the Fund, may be employees of the Adviser or its
affiliates.
The Advisory Agreement is to remain in effect for successive twelve-month
periods, provided that such continuance is specifically approved at
12
<PAGE>
least annually by the Fund's Directors or by majority vote of the holders of
the outstanding voting securities of the Fund and in either case by a majority
of the Directors who are not parties to the Advisory Agreement, or interested
persons, as defined in the 1940 Act, of any such party, at a meeting in person
called for the purpose of voting on such matter. Continuance of the Advisory
Agreement for another annual term was approved by the Directors, including a
majority of the Directors who are not "interested persons" as defined in the
1940 Act, at a meeting of the Board of Directors held on July 19-20, 2000.
The Advisory Agreement may be terminated without penalty on 60 days' written
notice by a vote of a majority of the Fund's outstanding voting securities or
by a vote of a majority of the Fund's Directors, or by the Adviser on 60 days'
written notice, and will automatically terminate in the event of its
assignment. The Advisory Agreement provides that the Adviser shall not be
liable thereunder for any mistake of judgment or in any event whatsoever,
except for lack of good faith, provided that the Adviser shall be liable to
the Fund and stockholders by reason of willful misfeasance, bad faith or gross
negligence, or of reckless disregard of its obligations and duties under the
Advisory Agreement.
As to the obtaining of services other than those specifically provided to
the Fund by the Adviser, the Fund may employ its own personnel. For such
services, it also may utilize personnel employed by the Adviser or other
subsidiaries of The Equitable Life Assurance Society of the United States
("Equitable") and, in that event, the services are to be provided to the Fund
at cost and the payments therefore must be specifically approved by the Fund's
Directors. The Fund paid to the Adviser a total of $130,000 for the cost of
certain administrative, accounting, bookkeeping, legal and compliance services
to the Fund during the 1999 fiscal year.
Investment Adviser
Alliance Capital Management L.P. (the "Adviser"), a Delaware limited
partnership with principal offices at 1345 Avenue of the Americas, New York,
New York 10105, has been retained under the Advisory Agreement to provide
investment advice and, in general, to conduct the management and investment
program of the Fund under the supervision of the Fund's Board of Directors.
The Adviser is a leading international investment adviser supervising client
accounts with assets as of June 30, 2000 totaling more than $388 billion (of
which more than $185 billion represented assets of investment companies). As
of June 30, 2000, the Adviser managed retirement assets for many of the
largest public and
13
<PAGE>
private employee benefit plans (including 29 of the nation's FORTUNE 100
companies), for public employee retirement funds in 33 states, for investment
companies, and for foundations, endowments, banks and insurance companies
worldwide. As of June 30, 2000, the 52 registered investment companies managed
by the Adviser, comprising 122 separate investment portfolios, had more than
6.1 million shareholder accounts.
Alliance Capital Management Corporation, with principal offices at 1345
Avenue of the Americas, New York, New York 10105, is the general partner of
the Adviser and a wholly-owned subsidiary of Equitable. Equitable, with
principal offices at 1290 Avenue of the Americas, New York, New York 10104,
one of the largest life insurance companies in the United States, is the
beneficial owner of an approximately 55.4% partnership interest in the
Adviser. Alliance Capital Management Holding L.P. ("Alliance Holding") owns an
approximately 41.9% partnership interest in the Adviser./1/ Equity interests
in Alliance Holding are traded on the New York Stock Exchange in the form of
units. Approximately 98% of such interests are owned by the public and
management or employees of the Adviser and approximately 2% are owned by
Equitable. Equitable is a wholly owned subsidiary of AXA Financial, Inc. ("AXA
Financial"), a Delaware corporation with principal offices at 1290 Avenue of
the Americas, New York, New York 10104, whose shares are traded on the
New York Stock Exchange. AXA Financial serves as the holding company for the
Adviser, Equitable and Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), an
integrated investment and merchant bank. As of June 30, 1999, AXA, a French
insurance holding company, with principal offices at 25, Avenue Matignon,
75008 Paris, France, owned approximately 58.2% of the issued and outstanding
shares of common stock of AXA Financial.
Distribution and Transfer Agency Fees and Payments to Affiliated Brokers
The Fund has entered into a Distribution Services Agreement (the
"Distribution Agreement") with Alliance Fund Distributors, Inc., the Fund's
principal underwriter, to permit it to distribute the Fund's shares and to
permit the Fund to pay distribution services fees to defray expenses
associated with the distribution of its Class A shares, Class B shares and
-----------
/1/ Until October 29, 1999, Alliance Holding served as the investment adviser
to the Fund. On that date, Alliance Holding reorganized by transferring
its business to the Adviser. Prior thereto, the Adviser had no material
business operations. One result of the organization was that the Advisory
Agreement, then between the Fund and Alliance Holding, was transferred to
the Adviser and ownership of Alliance Fund Distributors, Inc. and Alliance
Fund Services, Inc., the Fund's principal underwriter and transfer agent,
respectively, also was transferred to the Adviser.
14
<PAGE>
Class C shares in accordance with a plan of distribution which is included in
the Distribution Agreement and has been duly adopted and approved in
accordance with Rule 12b-1 under the 1940 Act. During the Fund's 1999 fiscal
year, the Fund paid distribution services fees for expenditures under the
Distribution Agreement of $3,081,790 with respect to Class A shares,
$12,625,937 with respect to Class B shares, and $3,197,078 with respect to
Class C shares.
Alliance Fund Services, Inc., an indirect wholly-owned subsidiary of the
Adviser located at 500 Plaza Drive, Secaucus, New Jersey 07094, receives a
transfer agency fee per account holder of each of the Class A shares, Class B
shares, Class C shares and Advisor Class shares of the Fund, plus
reimbursement for out-of-pocket expenses. For the Fund's 1999 fiscal year, the
Fund paid AFS $3,157,091 for transfer agency services.
Distribution and transfer agency services will continue following the
approval of the Proposal.
During the Fund's fiscal year ended October 31, 1999, brokerage commissions
amounting in the aggregate to $288,596 were paid to DLJ, which as discussed
above, is an affiliate of the Adviser. The brokerage commissions paid to DLJ
constituted 5.04%% of the Fund's aggregate brokerage commissions.
Other Fund Advised by the Adviser with Similar Investment Objectives
The Growth and Income Portfolio of Alliance Variable Products Series Fund,
Inc. (the "Variable Portfolio") has an investment objective that is similar to
that of the Fund. The fees paid to the Adviser pursuant to an advisory
agreement in effect for the Variable Portfolio are .625% (as a percentage of
average daily net assets). For the Variable Portfolio's fiscal year ending
December 31, 2000, the Adviser has agreed to waive its fee and bear certain
expenses so that its total expenses do not exceed on an accrued basis .95% for
Class A shares and 1.20% for class B shares. Because the Variable Portfolio's
total expenses are presently below these limits, the Adviser is not currently
waiving its fee or reimbursing expenses. The average net assets of the
Variable Portfolio for the year ended December 31, 1999 were $454,233,904.
15
<PAGE>
PROPOSAL FOUR
APPROVAL OF A PROPOSAL
TO AMEND A FUNDAMENTAL POLICY
TO PERMIT SECURITIES LENDING TO THE EXTENT
PERMITTED BY THE 1940 ACT
The fundamental policies of the Fund currently do not permit the lending of
securities. Under the Fund's current policy, the Fund may not make loans except
certain call loans upon collateral security. At its September 7, 2000 Special
Meeting, the Adviser informed the Directors that it was developing, for the
Director's consideration, proposed securities lending arrangements for many
Alliance Mutual Funds, including the Fund. The Adviser noted that the proposed
arrangements would enable each participating fund to earn incremental
investment income through the lending of a portion of the Fund's portfolio
securities on terms designed to avoid any impingement of the Fund's ongoing
investment process. The Adviser stated that in anticipation of these
recommendations, it was recommending the revision of the Fund's fundamental
investment restriction generally prohibiting the Fund from engaging in
securities lending. At the September 7, 2000 Meeting, the Board of Directors
approved the Adviser's recommendation that this fundamental policy be revised
to permit the Fund to engage in securities lending to the extent permitted by
the 1940 Act. The Board further resolved to recommend this change to the Fund's
stockholders for their approval.
In recommending this change, the Adviser informed the Board that this
absolute prohibition was not required by the 1940 Act. The Adviser noted that
this restriction was required by state "blue sky" laws that were nullified by
the federal preemption of state regulation of mutual fund prospectuses passed
by Congress in 1996. The Adviser noted that in order to ensure that the Fund
can continue to compete with newer funds created after federal preemption that
are not so constrained as well as older funds that changed their lending
policies to permit securities lending, it was recommending that this
fundamental policy be revised so as to provide the Fund with essentially the
same investment flexibilty to engage in securities lending as is possessed by
the majority of the Alliance Mutual Funds, which are permitted to engage in
securities lending to the extent permitted by the 1940 Act.
16
<PAGE>
Based on the information provided by the Adviser, the Directors approved the
Adviser's proposal and recommended its approval by the Fund's stockholders.
The proposed revised fundamental policy would provide as follows:
The Fund may not make loans to other persons, except that the Fund may
lend its portfolio securities in accordance with applicable law. The
acquisition of investment securities or other investment instruments shall
not be deemed to be the making of a loan.
If the proposed revised policy is adopted by the stockholders, under current
law the Fund would be able to lend portfolio securities up to a maximum in
value of 33 1/3% of its total assets (including collateral for any stock
loaned). The Fund would lend securities only on a fully collateralized basis
and only to borrowers deemed by the Adviser to be of sound financial standing.
While any such loan is outstanding, it would generally be secured by
collateral in the form of cash or securities issued or guaranteed by the U.S.
Government, equal at all times to at least 100% of the current market value of
the loaned securities plus, if applicable, accrued interest. All such loans
could be terminated at any time by either the Fund (entitling the Fund to the
return of the loaned securities at the end of the customary settlement period
for the type of securities loaned) or the borrower. It is currently expected
that the transactions would be structured so that the Fund would retain rights
of ownership of the loaned securities, including rights to dividends, interest
or other distributions on the loaned securities. Voting rights would pass with
the lending, although the Fund would be able to call loans to vote proxies if
desired.
Approval of this proposal requires the affirmative vote of " a majority of
the outstanding voting securities" defined herein. If the stockholders of the
Fund do not approve the amendment to the Fund's fundamental policy to permit
lending to the extent permitted by the 1940 Act, the policy will remain
unchanged.
Your Board of Directors recommends that the stockholders vote "FOR" the
approval of Proposal Four.
17
<PAGE>
PROPOSAL FIVE
APPROVAL OF A PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL POLICY RELATING TO
PORTFOLIO DIVERSIFICATION TO PERMIT THE FUND TO FULLY UTILIZE THE INVESTMENT
LATITUDE FOR DIVERSIFIED FUNDS ESTABLISHED BY THE 1940 ACT
Although the Fund is a "diversified" investment company under the 1940 Act,
it has a fundamental policy that is more restrictive than that required of a
diversified investment company. To be "diversified" under the 1940 Act, an
investment company must not, with respect to 75% of its total assets, invest
more than 5% of its total assets in the securities of any one issuer (the "5%
limit") or acquire more than 10% of the outstanding voting securities of any
one issuer (the "10% limit"). Up to 25% of its total assets (the "25% basket")
may be invested without regard to these restrictions (i.e., up to 25% in one
or more issues).
Under the Fund's current fundamental policy, the 5% and 10% limits
apply to 100% of its total assets, not to 75% of its total assets as is
permissible under the 1940 Act. This restriction was required by state "blue
sky" laws that were nullified by the federal preemption of state regulation of
mutual fund prospectuses passed by Congress in 1996. At its September 7, 2000
Special Meeting, the Board of Directors approved the Adviser's recommendation
that this fundamental policy be revised to permit the Fund to invest in
accordance with the limits contained in the 1940 Act for diversified
investment companies. In making its recommendation, the Adviser noted that
these changes would enable the Fund to remain competitive with newer funds
that are not subject to these restrictions, as well as older funds that
changed their diversification policies to remove similar restrictions, and
would allow the Fund the flexibility to take larger positions within its non-
diversified 25% basket when the Adviser deems appropriate. The Adviser stated
that it believed that the adoption of this change would not materially affect
the operation of the Fund, although it was expected that the Fund would avail
itself of the occasional opportunities presented by the non-diversified 25%
basket. The returns of a fund that may invest 25% of its total assets in a
single issuer may be more dependent on a single stock and may be more volatile
than those of a fund that is subject to a lower limit on such investments.
18
<PAGE>
Approval of Proposal Five requires the affirmative vote of "a majority of
the outstanding voting securities" as defined herein. If the stockholders of
the Fund do not approve the Fund's fundamental policy with respect to the
diversification of the Fund's investments, the policy will remain unchanged.
Your Board of Directors recommends that the stockholders vote "FOR" the
approval of Proposal Five.
HOW TO VOTE
You may vote your shares by mail by signing and returning the enclosed proxy
card, by telephone, or over the Internet.
Voting by Mail or in Person. If you wish to participate at the Meeting, but
do not wish to give a proxy by telephone or via the Internet, you can
complete, sign and mail the enclosed proxy card or attend the Meeting in
person.
Internet and Telephone Voting. You may give your voting instructions via the
Internet or by touch-tone telephone by following the instructions provided on
your proxy card.
INFORMATION AS TO THE FUND'S PRINCIPAL OFFICERS
The principal officers of the Fund and their principal occupations during
the past five years are as follows:
John D. Carifa, Chairman and President (see page 4 for biographical
information).
Kathleen A. Corbet, Senior Vice President, 40, is an Executive Vice
President of Alliance Capital Management Corporation ("ACMC"), with which she
has been associated since prior to 1996.
Paul C. Rissman, Senior Vice President, 43, is an Executive Vice President
of ACMC, with which he has been associated since prior to 1996.
Thomas J. Bardong, Vice President, 55, is a Senior Vice President of ACMC,
with which he has been associated since prior to 1996.
19
<PAGE>
Frank V. Caruso, Vice President, 43, is a Senior Vice President of ACMC,
with which he has been associated since prior to 1996.
Edmund P. Bergan, Jr., Secretary, 50, is a Senior Vice President and the
General Counsel of Alliance Fund Distributors, Inc. ("AFD") and Alliance Fund
Services, Inc. ("AFS"), with which he has been associated since prior to 1996.
Andrew L. Gangolf, Assistant Secretary, 46, is a Senior Vice President and
Assistant General Counsel of AFD, with which he has been associated since
prior to 1996.
Domenick Pugliese, Assistant Secretary, 39, is a Senior Vice President and
Assistant General Counsel of AFD, with which he has been associated since
prior to 1996.
Mark D. Gersten, Treasurer and Chief Financial Officer, 49, is a Senior Vice
President of AFS, with which he has been associated since prior to 1996.
Vincent S. Noto, Controller, 35, is a Vice President of AFS, with which he
has been associated since prior to 1996.
The address of Messrs. Carifa, Rissman, Bardong, Caruso, Bergan, Gangolf and
Pugliese and Ms. Corbet is c/o Alliance Capital Management, L.P., 1345 Avenue
of the Americas, New York, New York 10105. The address of Messrs. Gersten and
Noto is c/o Alliance Fund Distributors, Inc., 500 Plaza Drive, Secaucus, New
Jersey 07094.
All of the officers of the Fund are employees of the Adviser and officers of
ACMC, the general partner of the Adviser, or a wholly-owned subsidiary of the
Adviser. As of the record date, no officer or Director of the Fund
beneficially owned more than 1% of the outstanding equity securities of the
Adviser.
20
<PAGE>
REPORTS TO STOCKHOLDERS
The Fund will furnish each person to whom this Proxy Statement is delivered
with a copy of the Fund's latest annual report to stockholders upon request and
without charge. To request a copy, please call Alliance Fund Services, Inc. at
(800) 227-4618 or contact Reid Conway at Alliance Capital Management L.P., 1345
Avenue of the Americas, New York, New York 10105.
By Order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
New York, New York
September 22, 2000
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
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<S> <C>
Introduction..............................................................
Proposal One
Election of Directors....................................................
Proposal Two
Ratification of Selections of Independent Accountants....................
Proposal Three
Approval of a Proposal to Amend the Investment Advisory Agreement to
increase the Investment Advisory Fee and Revise the Advisory Fee Break
Point Schedule.........................................................
Summary of the Proposal..................................................
Board Considerations.....................................................
Fees and Expenses........................................................
Examples.................................................................
Investment Advisory Agreement............................................
Investment Adviser.......................................................
Distribution and Transfer Agency Fees and Payments to Affiliated Broker..
Other Fund Advised by The Adviser with similar Investment Objectives.....
Proposal Four
Approval of a Proposal to Amend a Fundamental Policy to Permit Securities
Lending to the Extent Permitted by The 1940 Act........................
Proposal Five
Approval of a Proposal to Amend a Fundamental Policy to Permit the Fund
to Fully Utilize the Investment Latitude for Diversified Funds
established by The 1940 Act............................................
How to Vote.............................................................
Information as to the Fund's Principal Officers.........................
Reports to Stockholders..................................................
</TABLE>
Alliance Growth and
Income Fund, Inc.
--------------------------------------------------------------------------------
[LOGO OF ALLIANCE CAPITAL]
Alliance Capital Management L.P.
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NOTICE OF SPECIAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
November 2, 2000
