LETTER TO SHAREHOLDERS ALLIANCE INCOME BUILDER FUND, INC.
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June 2, 1995
Dear Shareholder:
We are pleased to provide you with an update of Alliance Income Builder Fund's
performance and investment activity during its fiscal semi-annual period ended
April 30, 1995. The following table compares your Fund's total returns with
that of the overall U.S. stock market, represented by the unmanaged S&P
500-stock Index, and with the Lehman Brothers Government/Corporate Bond Index,
also unmanaged, which represents the overall Government and investment grade
corporate bond markets:
Six Months Ended April 30, 1995
Total Return Ending NAV
------------ ----------
ALLIANCE INCOME BUILDER FUND
Class A +3.48% $9.76
Class B +3.21% $9.76
Class C +3.11% $9.73
S&P 500+10.45%
Lehman Gov't./Corporate
Bond Index +6.95%
The Fund's total returns are based on the net asset values of each class of
shares as of April 30; additional investment results appear on page 3.
MARKET OVERVIEW
Our expectations for 1995, as we described in our last letter, have generally
come to pass. Last year's Federal Reserve-directed interest rate increases are
moderating economic growth rates to more sustainable levels. Short-term
interest rates stabilized following the late December 1994 Mexican crisis and
the well-advertised February 1995 Federal Funds rate increase. In April,
longer-term interest rates declined sharply as inflationary fears receded and
evidence mounted of a slowing, but still healthy, economy. This lower rate
environment combined with significant corporate earnings growth has supported a
strong rally in stocks and corporate bonds.
We expect further earnings progress during the remainder of the year, albeit at
more moderate levels. Corporate debt ratings improvements may also moderate,
but increased dividends and stock repurchase programs are reflecting strong
cash flow generation. Continued cash flow improvements and a moderate,
sustainable economic environment underpin our investment philosophy; we
continue to seek stocks which we believe have the ability to sustain growing
dividend rates and fixed income securities with attractive total return
profiles.
FIXED INCOME INVESTMENTS
Notable 'winners' in 1994 were the securities of financial and industrial
companies which experienced sustainable improvements. Our early identification
of such securities included Citicorp, First Nationwide, Paramount, Sears, Time
Warner and UAL Corp. Unfortunately, the Fund's moderate exposure to emerging
markets last year hindered performance. Representing 11% of the Fund as of
April 30, 1995, emerging markets have recovered modestly following a U.S.
Government-led Mexican support package and May's reelection of President Menem
in Argentina. As prices have recovered, we have lowered the Fund's investments
in Mexican and Argentine issuers to below 10%. We have recently marginally
increased holdings in preferred stock by adding issues of two investment-grade
European banks. These securities have yields in excess of 10%.
Investment grade securities in the portfolio which exhibit improving
fundamentals and anticipated above-average total returns include Bank of
Boston, Tele-Communications, Inc. and Westinghouse. Non-investment grade
securities with attractive yields and favorable prospects include the financial
firms CalFed, Greater NY Savings and Riggs National. The three firms are all
potential acquisition candidates.
As of April 30, two-thirds of the portfolio's total fixed income investments
were represented by domestic issuers and the other third was represented by
international issuers. All of the Fund's fixed income securities are
U.S.-dollar denominated.
EQUITY INVESTMENTS
Over the first half of Alliance Income Builder Fund's fiscal year, equity
portfolio performance slightly lagged that of the S&P 500 (however, the Fund's
fixed income holdings resulted in overall performance trailing the S&P
1
ALLIANCE INCOME BUILDER FUND, INC.
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by a significant margin). The Fund maintains about a 40% exposure to equities,
but we have taken some gains during the recent rally. The proceeds were
reinvested in fixed income securities, which has helped sustain the current
high level of income. Because of the stock market rally, the overall yield on
the Fund's equity portfolio has declined to about 3.5%, but it remains
significantly above the average yield of 2.7% for stocks included in the S&P
500. Additionally, the dividends on the Fund's equity holdings are currently
growing at an above-average rate.
The portfolio's industry diversification has not changed very much in the past
six months. A heavy commitment to financial stocks has been rewarding, and
while it remains the biggest sector exposure (about 20% of equity-oriented
assets), we have used recent market strength to reduce this weighting. The next
largest sectors are technology and capital goods, which each represent
approximately 10% of the equity portfolio. The technology holdings have
performed especially well, but opportunities are limited somewhat in this area
due to lower or non-existent dividend payouts.
The high quality of the Fund's equity positions is indicated by its largest
holdings. These include General Electric, Intel, Philip Morris, Procter &
Gamble, Travelers, Shell Transport, General Instrument (convertible debt),
American International Group, Chevron, Pfizer, Rohm & Haas, Allied Signal and
Monsanto.
We appreciate your investment in Alliance Income Builder Fund and look forward
to updating you on its progress in the coming months.
Sincerely,
John D. Carifa
Chairman and President
Thomas M. Perkins
Senior Vice President
Andrew M. Aran
Vice President
2
INVESTMENT RESULTS ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF APRIL 30, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
--------------------------------
. One Year +4.70% +0.21%
. Since Inception* +2.65 -1.29
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
--------------------------------
. One Year +3.75% -0.22%
. Since Inception* +1.99 -0.67
CLASS C SHARES
. One Year +3.54%
. Since Inception* +3.60
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares-with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
Class C shares are not subject to front-end or contingent deferred sales
charges. Past performance does not guarantee future results. Investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
* Inception: 3/25/94, Class A and Class B; 10/25/91 Class C.
3
PORTFOLIO OF INVESTMENTS
APRIL 30, 1995 (UNAUDITED) ALLIANCE INCOME BUILDER FUND, INC.
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COMPANY SHARES U.S. $VALUE
COMMON & PREFERRED STOCKS-50.2%
UNITED STATES INVESTMENTS-45.6%
COMMON STOCKS-31.5%
FINANCIAL SERVICES-6.9%
BANKING-0.4%
BankAmerica Corp. 5,000 $ 247,500
BROKERAGE & MONEY MANAGEMENT-0.3%
Merrill Lynch & Co., Inc. 4,000 182,000
INSURANCE-2.2%
American International Group, Inc 5,500 587,125
Travelers Corp. 15,000 620,625
1,207,750
MORTGAGE BANKING-0.8%
Federal National
Mortgage Assn. 5,000 441,250
REALTY-2.3%
Avalon Properties, Inc. 17,000 333,625
Federal Realty Investment Trust 11,000 224,125
General Growth Properties, Inc. 12,000 243,000
Spieker Properties, Inc. 12,000 234,000
Weingarten Realty Investors, Inc. 8,000 280,000
1,314,750
OTHER-0.9%
American Express Co. 8,000 278,000
Student Loan Marketing Assn. 5,000 202,500
480,500
3,873,750
CONSUMER PRODUCTS & SERVICES-6.0%
BROADCASTING & CABLE-0.6%
Comcast Corp. Cl. A. 19,620 309,015
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES-4.0%
Abbott Laboratories 10,000 $ 393,750
American Health Properties, Inc. 7,000 143,500
Health Care Property Investors, Inc. 16,000 484,000
Merck & Co., Inc. 10,000 428,750
Pfizer, Inc. 6,000 519,750
Schering-Plough Corp. 4,000 301,500
2,271,250
ENTERTAINMENT & LEISURE-0.6%
Eastman Kodak Co. 6,000 345,000
RETAILING-0.8%
May Department Stores Co. (The) 12,000 435,000
3,360,265
CAPITAL GOODS-6.0%
ELECTRICAL EQUIPMENT-3.0%
Emerson Electric Co. 5,000 336,250
General Electric Co. 24,000 1,344,000
1,680,250
MACHINERY-0.8%
Allied Signal , Inc. 11,000 435,875
TECHNOLOGY-2.2%
Intel Corp. 8,500 870,188
Motorola, Inc. 6,500 369,688
1,239,876
3,356,001
CONSUMER STAPLES-5.4%
COSMETICS-0.8%
Avon Products, Inc. 2,000 126,500
Gillette Co. 4,000 328,000
454,500
4
ALLIANCE INCOME BUILDER FUND, INC.
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COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------------
FOOD, BEVERAGES & TOBACCO-3.4%
General Mills, Inc. 6,000 $ 366,000
Heinz (H.J.) Co. 7,500 315,000
Philip Morris Cos., Inc. 12,000 813,000
RJR Nabisco Holdings Corp. 6,000 162,000
Sara Lee Corp. 10,000 278,750
1,934,750
HOUSEHOLD PRODUCTS-1.2%
Procter & Gamble Co. 10,000 698,750
3,088,000
BASIC INDUSTRIES-2.5%
CHEMICAL-2.0%
Monsanto Co. 5,000 416,250
Morton International, Inc. 8,000 248,000
Rhom & Haas Co. 8,000 465,000
1,129,250
MACHINERY-0.5%
Cooper Industries, Inc 7,700 300,300
1,429,550
ENERGY-1.5%
DOMESTIC PRODUCERS-0.5%
Apache Corp. 4,000 108,000
Snyder Oil Corp. 12,760 183,425
291,425
INTERNATIONAL-1.0%
Chevron Corp. 12,000 568,500
859,925
UTILITIES-1.6%
TELEPHONE UTILITY-1.6%
GTE Corp. 12,715 433,899
Southern New England Telecommunications Corp 7,000 231,875
Sprint Corp. 7,000 231,000
896,774
CONSUMER MANUFACTURING-0.4%
AUTO & RELATED-0.4%
Magna International, Inc. Cl. A 6,000 $ 207,750
AEROSPACE & DEFENCE-0.7%
AEROSPACE-0.4%
Rockwell International Corp. 5,000 218,125
DEFENSE ELECTRONICS-0.3%
E Systems, Inc. 3,000 191,625
409,750
TRANSPORTATION-0.5%
RAILROADS-0.5%
Conrail, Inc. 5,000 273,125
Total Common Stocks
(cost $15,777,358) 17,754,890
PREFERRED STOCKS-14.1%
BANKING & FINANCE-10.2%
Banesto Holdings Series A, pfd. (a) 40,000 1,055,000
California Federal Bank F.S.B. Series B, pfd. 10,000 1,040,000
Central Hispano Cap, Ltd. Series A, pfd. 20,000 505,000
Chemical Banking Corp. pfd. 10.00% 4,000 317,500
First Bank System, Inc. Series A, cv. pfd. 4,500 316,688
Greater New York Savings Bank Series B, pfd. 12.00% 50,000 1,400,000
Nafinsa cv. pfd. 11.25% 21,300 662,963
Salomon, Inc. Oracle (ELKS) cv. pfd. $2.30, 7.25% 11,100 427,350
5,724,501
INDUSTRIAL-3.9%
General Motors Corp. cv. pfd. 5,000 313,125
Kaufman & Broad Home Corp. Series B, cv. pfd. 10,000 142,500
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- -------------------------------------------------------------------------------
Prime Retail, Inc. Series A, pfd. 10.50% 25,000 $ 465,625
Snyder Oil Corp. cv. pfd. $4.00 11,000 239,250
UAL Corp. Series B, pfd. 35,000 1,032,500
2,193,000
Total Preferred Stocks
(cost $8,265,994) 7,917,501
Total United States Investments
(cost $24,043,352) 25,672,391
FOREIGN INVESTMENTS-4.6%
IRELAND-2.3%
Allied Irish Banks Plc. (ADR) 50,000 1,318,750
UNITED KINGDOM-2.3%
Hanson Plc. (ADR) 19,000 361,000
Shell Transport & Trading Co. New (ADR) 9,000 641,250
Vodafone Group Plc. (ADR) 9,000 286,875
1,289,125
Total Foreign Investments
(cost $2,580,465) 2,607,875
Total Common & Preferred Stocks
(cost $26,623,817) 28,280,266
CORPORATE DEBT OBLIGATIONS-39.8%
BANKING & FINANCE-20.5%
Bank of Boston
6.625%, 12/01/05 $ 1,000 905,939
CCP Insurance, Inc.
10.50%, 12/15/04 1,000 987,900
Citicorp
6.75%, 8/15/05 2,000 1,816,400
Home Holdings, Inc.
8.625%, 12/15/03 2,000 1,410,000
Nationwide Contingent Surplus Notes
9.875%, 2/15/25 1,000 1,069,170
New York Life Insurance Co.
7.50%, 12/15/23(a) $ 1,130 $ 1,014,175
Riggs National Corp.
8.50%, 2/01/06 2,000 1,920,000
Santander Finance Issuances
7.875%, 4/15/05 500 496,875
Saul (B.F.) Real Estate Investment Trust
Series B, 11.625%,
4/01/02 2,000 1,920,000
11,540,459
INDUSTRIAL-9.7%
Heartland Wireless Communication, Inc.
13.00%, 4/15/03 500 510,000
M.D.C. Hodings, Inc.
6.6421%, 4/01/98 1,700 1,394,000
11.125%, 12/15/03 750 633,750
National Medical Enterprises
10.125%, 3/01/05 25 26,063
Tele-Communications, Inc.
9.25%, 1/15/23 2,000 1,916,876
Westinghouse Electric Corp.
8.625%, 8/01/12 1,000 979,376
5,460,065
YANKEE BONDS-9.6%
Argentina Local Mkt. Securities Trust
11.30%, 4/01/00(a) 870 730,435
Banco Rio de la Plata, S.A
8.75%, 12/15/03 2,000 1,360,000
Grupo Mexico De Desarrollo
8.25%, 2/17/01 1,500 635,625
Hysla, S.A. DE
11.00%, 2/23/98 2,000 1,619,600
Mc-Cuernavaca Trust
9.25%, 07/25/01(a) 1,881 1,072,050
5,417,710
Total Corporate Debt Obligations
(cost $22,986,591) 22,418,234
6
ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- -------------------------------------------------------------------------------
CONVERTIBLE BONDS-3.9%
EMC Corp.
4.25%, 1/01/01 $ 100 $ 113,250
General Instrument Corp.
5.00%, 6/15/00 400 607,000
Hasbro, Inc.
6.00%, 11/15/98 350 388,500
Jones Intercable, Inc.
7.50%, 6/01/07 225 244,125
Legg Mason, Inc.
7.00%, 6/15/11 400 465,320
Wendy's International, Inc.
7.00%, 4/01/06 250 365,000
Total Convertible Bonds
(cost $4,009,410) 2,183,195
SOVEREIGN DEBT OBLIGATION-1.6%
COLLATERALIZED BRADY BOND-1.6%
ARGENTINA-1.6%
Republic of Argentina Euro Par Bonds VRN
5.00%, 3/31/23
(cost $801,083) 2,000 875,000
COMMERCIAL PAPER-4.5%
Prufunding
5.85%, 5/01/95 $ 852 $ 852,000
Prufunding
5.85%, 5/02/95 807 806,869
Sumitomo Bank
6.00%, 5/01/95 900 900,000
Total Commercial Paper
(amortized cost $2,558,869) 2,558,869
TOTAL INVESTMENTS-100.0%
(cost $56,979,770) 56,315,564
Other assets less liabilities-0.0% (10,062)
NET ASSETS-100% $56,305,502
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1995
these securities amounted to $3,871,660 or 6.9% of net assets.
See notes to financial statements.
Glossary of Terms:
ADR - American Depository Receipt
ELKS - Equity Linked Security
7
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995 (UNAUDITED) ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $56,979,770) $56,315,564
Receivable for investment securities sold 2,911,164
Interest and dividends receivable 724,373
Receivable for capital stock sold 2,910
Deferred organization expense and other assets 51,718
Total assets 60,005,729
LIABILITIES
Due to custodian 937,527
Payable for investment securities purchased 2,267,925
Payable for capital stock redeemed 368,295
Distribution fee payable 45,180
Advisory fee payable 33,044
Accrued expenses 48,256
Total liabilities 3,700,227
NET ASSETS $56,305,502
COMPOSITION OF NET ASSETS
Capital stock, at par $ 5,783
Additional paid-in capital 57,020,652
Undistributed net investment income 178,384
Accumulated net realized loss on investments (235,111)
Net unrealized depreciation of investments (664,206)
$56,305,502
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($1,237,229/126,812
shares of capital stock issued and outstanding) $ 9.76
Sales charge-4.25% of public offering price .43
Maximum offering price $10.19
CLASS B SHARES
Net asset value and offering price per share($2,875,673/294,746
shares of capital stock issued and outstanding) $ 9.76
CLASS C SHARES
Net asset value, redemption and offering price per share
($52,192,600/5,361,789 shares of capital stock issued
and outstanding) $ 9.73
See notes to financial statements.
8
STATEMENT OF OPERATIONS
APRIL 30, 1995 (UNAUDITED) ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $13,840) $1,547,685
Dividend income 881,608 $2,429,293
EXPENSES
Advisory fee 223,099
Distribution fee-Class A 1,488
Distribution fee-Class B 12,379
Distribution fee-Class C 280,030
Audit and legal 78,604
Administrative 70,934
Transfer agency 61,194
Custodian 46,709
Registration 34,952
Printing 20,128
Amortization of organization expenses 16,290
Director's fees 9,111
Miscellaneous 2,176
Total expenses 857,094
Net investment income 1,572,199
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized loss on investment transactions (235,111)
Net change in unrealized depreciation of investments 152,243
Net loss on investments (82,868)
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,489,331
9
STATEMENT OF CHANGES IN NET ASSETS
APRIL 30, 1995 (UNAUDITED) ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, YEAR ENDED
1995 OCTOBER 31,
(UNAUDITED) 1994
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $1,572,199 $3,144,639
Net realized gain (loss) on investments (235,111) 860,146
Net change in unrealized appreciation
(depreciation) investments 152,243 (7,040,971)
Net increase (decrease) in net assets
from operations 1,489,331 (3,036,186)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (26,145) (463)
Class B (59,555) (3,090)
Class C (1,308,115) (704,557)
Return of capital
Class A -0- (136)
Class B -0- (722)
Class C -0- (148,353)
Net realized gain on investments
Class A -0- (2,049)
Class B -0- (10,246)
Class C -0- (2,960,981)
CAPITAL STOCK TRANSACTIONS
Net decrease (10,415,052) (32,542,144)
Total decrease (10,319,536) (39,408,927)
NET ASSETS
Beginning of year 66,625,038 106,033,965
End of period (including undistributed net
investment income of $178,384 for
the six months ended April 30, 1995) $56,305,502 $66,625,038
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1995 (UNAUDITED) ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Income Builder Fund (the 'Fund'), is registered under the Investment
Company Act of 1940, as a non-diversified, open-end investment company. Prior
to March 22, 1994, the Fund was known as Alliance MultiMarket Income & Growth
Trust, Inc. which offered one class of shares. On March 22,1994, the Board of
Directors approved the creation of three classes of shares. The Fund's previous
shares have been converted into Class C shares. The Fund offers Class A, Class
B and Class C shares. Class A shares are sold with a front-end sales charge of
4.25%. Class B shares are sold with a contingent deferred sales charge which
declines from 4% to zero depending on the period of time the shares are held.
Class B shares will automatically convert to Class A shares eight years after
the end of the calendar month of purchase. Class C shares are sold without
initial or contingent deferred sales charge. All three classes of shares have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except that each class bears different distribution expenses and
has exclusive voting rights with respect to its distribution plan. Distribution
of Class A and Class B shares commenced on March 25, 1994. The following is a
summary of significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Investments are stated at value. Portfolio securities traded on a national
securities exchange are valued at the last sale price, or if no sale occurred,
the mean of the bid and asked price at the regular close of the New York Stock
Exchange. Investments for which market quotations are readily available are
valued at the closing price on day of valuation, which are obtained through
market makers. Securities for which market quotations are not readily available
are valued in good faith at fair value using methods determined by the Board of
Directors. Securities which mature in 60 days or less are valued at amortized
cost, which approximates market value, unless this method does not represent
fair value. Restricted securities are valued at fair value as determined by the
Board of Directors. In determining fair value, consideration is given to cost,
operating and other financial data.
2. OPTION WRITING
When the fund writes an option, an amount equal to 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. The difference between the premium and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also recorded as a realized gain, or if the premium is less than the amount
paid for the closing purchase transaction, as a realized loss. If a call option
is exercised, the premium is added to the proceeds from the sale of the
underlying security or currency in determining whether the fund has realized a
gain or loss. If a put option is exercised, the premium reduces the cost basis
of the security or currency purchased by the Fund. In writing an option, the
Fund bears the market risk of unfavorable changes 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.
3. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
4. ORGANIZATION EXPENSES
Organization expenses of approximately $165,000 have been deferred and are
being amortized on a straight-line basis through October 1996.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
5. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
6. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on ex-dividend
date. 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.
7. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the 'Advisor') an advisory fee at an annual rate of
.75 of 1% 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 fee, and extraordinary expenses) exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund believes that the most restrictive expense ratio limitation
currently imposed by any state is 2 1/2% of the first $30 million of the Fund's
average daily net assets, 2% of the next $70 million of its average daily net
assets and 1 1/2% of its average daily net assets in excess of $100 million. No
reimbursement was required by the Advisor for the six months ended April 30,
1995. Pursuant to the advisory agreement, the Fund also paid $70,934 to the
Adviser representing the cost of certain legal and accounting services provided
to the Fund by the Adviser for the six months ended April 30, 1995.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $33,320 for the six months ended April 30, 1995.
Alliance Fund Distributor, 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 $258 from the sale of Class A shares and $1,108 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the six months ended April 30, 1995.
Brokerage commissions paid for the six months ended April 30, 1995 on
securities transactions amounted to $19,548 none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ('DLJ'), an affiliate of the Adviser, nor to DLJ directly.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Service Agreement (the 'Agreement')
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to the Class
B and Class C shares. Such a fee is accrued daily and paid monthly. The
Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $343,332 and $1,569,037 for Class B and
C shares, respectively; such costs may be recovered from the Fund in future
periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
12
ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
NOTE D: INVESTMENT TRANSACTIONS
Purchase and sales of investment securities (excluding short-term investments)
aggregated $29,471,974 and $39,579,483 respectively, for the six months ended
April 30, 1995. There were no purchases or sales of U.S. Government and
government agency obligations for the six months ended April 30, 1995.
At April 30, 1995, the cost of investments for federal income tax purposes was
the same for financial reporting purposes. Accordingly, gross unrealized
appreciation of investments was $4,395,637 and gross unrealized depreciation of
investments was $3,731,431 resulting in net unrealized depreciation of $664,206.
NOTE E: CAPITAL STOCK
There are 6,000,000,000 shares of $.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Each class consists of 2,000,000,000 authorized shares. Transactions in capital
stock were as follows:
SHARES AMOUNT
--------------------------- --------------------------
SIX MONTHS MARCH 25, SIX MONTHS MARCH 25,
ENDED 1994* ENDED 1994*
APRIL 30,1995 TO OCT. 31, APRIL 30,1995 TO OCT. 31,
(UNAUDITED) 1994 (UNAUDITED) 1994
---------- ----------- ------------- -----------
CLASS A
Shares sold 66,657 65,917 $ 628,522 $ 642,709
Shares issued in
reinvestment of dividends 2,341 232 21,893 2,243
Shares redeemed (4,142) (4,193) (39,218) (41,358)
Net increase 64,856 61,956 $611,197 $603,594
CLASS B
Shares sold 106,882 217,604 $1,008,581 $2,130,734
Shares issued in
reinvestment of dividends 4,578 1,074 43,080 10,419
Shares redeemed (23,057) (12,335) (216,808) (122,090)
Net increase 88,403 206,343 $834,853 $2,019,063
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30,1995 OCT. 31, APRIL 30, 1995 OCT. 31,
(UNAUDITED) 1994 (UNAUDITED) 1994
------------ ----------- ------------- -------------
CLASS C
Shares sold 109,521 204,158 $ 1,024,140 $ 2,039,498
Shares issued in
reinvestment of dividends
and distributions 82,806 254,364 772,820 2,577,285
Shares redeemed (1,455,711) (3,960,260) (13,658,062) (39,781,584)
Net decrease (1,263,384) (3,501,738) $(11,861,102) $(35,164,801)
* Commencement of distribution.
13
FINANCIAL HIGHLIGHTS ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
---------------------------
SIX MONTHS MARCH 25,
ENDED 1994(A)
APRIL 30, 1995 TO OCT. 31,
(UNAUDITED) 1994
-------------- -----------
Net asset value, beginning of period $ 9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .28 .96
Net realized and unrealized gain (loss) on
investments and foreign currency transactions .04 (1.02)
Net increase (decrease) in net assets from operations .32 (.06)
LESS: DISTRIBUTIONS
Dividends from net investment income (.25) (.04)
Return of capital -0- (.01)
Distributions from net realized gains -0- (.20)
Total dividends and distributions (.25) (.25)
Net asset value, end of period $ 9.76 $ 9.69
TOTAL RETURN:
Total investment return based on net asset value (c) 3.48% (.54)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,237 $ 600
Ratio expenses to average net assets 2.25%(e) 2.52%(e)
Ratio of net investment income to average net assets 6.00%(e) 6.11%(e)
Portfolio turnover rate 105% 126%
See footnote summary on page 16.
14
ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
---------------------------
SIX MONTHS MARCH 25,
ENDED 1994(A)
APRIL 30, 1995 TO OCT. 31,
(UNAUDITED) 1994
-------------- -----------
Net asset value, beginning of period $9.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24 .88
Net realized and unrealized gain (loss) on
investments and foreign currency transactions .06 (.98)
Net increase (decrease) in net assets from operations .30 (.10)
LESS: DISTRIBUTIONS
Dividends from net investment income (.22) (.05)
Return of capital -0- (.01)
Distributions from net realized gains -0- (.16)
Total dividends and distributions (.22) (.22)
Net asset value, end of period $9.76 $9.68
TOTAL RETURN:
Total investment return based on net asset value (c) 3.21% (.99)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,876 $1,998
Ratio expenses to average net assets 2.93%(e) 3.09%(e)
Ratio of net investment income to average net assets 5.30%(e) 5.07%(e)
Portfolio turnover rate 105% 126%
See footnote summary on page 16.
15
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
----------------------------------------------------------------
SIX MONTHS OCTOBER 25,
ENDED YEAR ENDED OCTOBER 31, 1991(B) TO
APRIL 30,1995 ----------------------------------- OCTOBER 31,
(UNAUDITED) 1994 1993 1992 1991
------------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.66 $10.47 $ 9.80 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .25 .50 .52 .55 .01
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions .04 (.85) .51 (.28) -0-
Net increase (decrease) in net assets
from operations .29 (.35) 1.03 .27 .01
LESS: DISTRIBUTIONS
Dividends from net investment income (.22) (.09) (.36) (.47) (.01)
Return of capital -0- (.02) -0- -0- -0-
Distributions from net realized gains -0- (.35) -0- -0- -0-
Total dividends and distributions (.22) (.46) (.36) (.47) (.01)
Net asset value, end of period $9.73 $9.66 $10.47 $9.80 $10.00
TOTAL RETURN:
Total investment return based on net
asset value (c) 3.11% (3.44)% 10.65% 2.70% .11%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $52,193 $64,027 $106,034 $152,617 $41,813
Ratio expenses to average net assets 2.89%(e) 2.67% 2.32% 2.33% -0-%(e)(d)
Ratio of net investment income to
average net assets 5.28%(e) 3.82% 6.85% 5.47% .94%(e)
Portfolio turnover rate 105% 126% 101% 108% -0-%
</TABLE>
(a) Commencement of distribution.
(b) Commencement of operations.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales 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.
(d) Net of expenses assumed and waived by the Advisor. If the Fund had borne
all expenses, the expense ratio would have been 1.99% annualized.
(e) Annualized.
16
ALLIANCE INCOME BUILDER FUND, INC.
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
THOMAS M. PERKINS, SENIOR VICE PRESIDENT
ANDREW M. ARAN, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
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 AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
17
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18
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19
BULK RATE
U.S. POSTAGE
PAID
New York, NY
Permit No. 7131
ALLIANCE INCOME BUILDER FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
Alliance Capital
Mutual funds without the mystery
THIS REPORT IS DISTRIBUTED SOLELY TO SHAREHOLDERS OF THE FUND
AND IS NOT TO BE USED AS SALES LITERATURE.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
IBFSR
ALLIANCE
INCOME BUILDER
FUND
SEMI-ANNUAL
REPORT
APRIL 30, 1995
Alliance
Mutual funds without the mystery
