ALLIANCE INCOME BUILDER FUND
SEMI-ANNUAL REPORT
APRIL 30, 1996
LETTER TO SHAREHOLDERS ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
June 3, 1996
Dear Shareholder:
It has been a period of steady gains in global financial markets, and Alliance
Income Builder Fund enjoyed favorable returns in the six months since we last
reported. The following table shows how your Fund performed during its fiscal
half year ended April 30, 1996. For comparison we've shown performance for the
overall U.S. stock market, represented by the S&P 500-stock Index, and for the
U.S. Government/investment grade bond market, represented by the Lehman
Brothers Government/Corporate Bond Index. We are pleased that the Fund
outperformed blended/composite returns (60% of the bond index and 40% of the
stock index) over these periods.
TOTAL RETURN
PERIODS ENDED APRIL 30, 1996
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE INCOME BUILDER FUND
Class A +6.30% +19.39%
Class B +5.88% +18.53%
Class C +5.89% +18.59%
S&P 500 +13.76% +30.13%
LB GOV'T/CORP. BOND INDEX +0.04% +8.65%
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. THE FUND'S BENCHMARKS
ARE UNMANAGED.
MARKET OVERVIEW
Moderate, but positive, economic growth trends became apparent earlier this
year. Stable short-term interest rates coupled with ample liquidity helped fuel
continued stock market gains. However, lack of progress in addressing U.S.
budget deficits, unexpectedly high commodity prices and continued economic
resiliency renewed expectations of inflation, resulting in lower bond prices.
Higher real long-term interest rates net of inflation of 3.5-4% are already, in
our opinion, largely discounting potential increases in inflation from last
year's below 3% rate to a possible 3.5-4% by 1997. Corporate earnings growth,
while slowing, has partly mitigated price declines in corporate bonds relative
to U.S. government bonds. Unlike the flurry of upgrades experienced in 1995,
corporate debt rating changes are expected to be balanced in the near term.
Increasingly, strong cash flow generation is funding higher dividends,
resulting in, among other things, more frequent stock repurchase programs. We
believe that cash flow growth will continue, reflecting a moderate and
sustained economy. These conditions will provide a favorable environment for
our investments in common stocks with growing dividend rates and fixed income
securities with attractive total returns.
FIXED-INCOME INVESTMENTS
As interest rates declined in late 1995 and bond prices rallied, we sold some
of the Fund's longer-dated bonds. Proceeds were subsequently reinvested in
bonds with higher yields when the bond market declined early in 1996. Although
the Fund has been negatively affected by lower overall bond prices in recent
months, it benefited from our selection of bonds with improving credit
conditions which helped minimize the impact of price declines. For example, the
Fund enjoyed good relative total return performance from FirstBank Puerto
Rico's 10-year notes with ratings of Baa3 (Moody's) and BB+ (S&P). Issued in
December 1995 at 2% more than 10-year U.S. Treasuries, they are currently
trading at a 130 basis-point spread, which is consistent with our low
investment grade credit opinion. Another successful trade involved Investec, a
South African merchant bank. Their convertible debt was sold at a substantial
profit within a few months. Surplus notes, issued by insurance companies, have
also performed well, as have selected preferred stocks. Finally, our purchase
of K-Mart bonds, after the refinancing of their bank facilities was announced,
proved to be a wise decision. The bonds are performing well, reflecting both
the company's new senior management and increased liquidity. As the current
economic expansion matures, we will continue to selectively upgrade our
portfolio's credit quality and, as always, continue to closely monitor the
evolving credit profiles of our corporate bonds
1
ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
EQUITY INVESTMENTS
The Fund's equity assets continued to perform well in the most recent six
months, generally matching the returns of the S&P 500. Most sectors of the
Fund's high quality, diversified portfolio contributed to the overall good
performance. We have slightly altered the Fund's asset allocation, but left
two areas-financial and consumer staples-unchanged. The financial sector
remains our largest area of emphasis, comprising 22% of the Fund's equity
assets. Despite higher interest rates and healthy appreciation, these stocks
continue to show strong earnings growth and still sell at below-average
valuations. Also unchanged, consumer staples remain at 13% of the Fund's equity
assets. We have cut back our technology holdings to 10% and increased the
energy sector to 9% of the equity portion of the Fund. However, equities still
represent slightly less than 40% of total Fund assets, since we have invested
some of their gains in fixed income securities in order to enhance the Fund's
income earning capabilities.
Our equity investments are concentrated in high quality issues that demonstrate
a pattern of increasing dividends. As an example, our ten largest stock
holdings (representing over 23% of the Fund's equity investments) have, on
average, showed dividend growth of over 9% annually over the past five years.
This growth is considerably greater than that of the S&P 500 dividends.
Moreover, none of our 10 largest holdings has had a dividend decrease in this
period and most have increased payments each year.
As a result of price appreciation, the yield of our equity portfolio has fallen
below 3%. However, this yield remains 25% above that of the S&P 500. This,
along with the quality and growth in our equities' dividends, should contribute
to relatively good performance for our holdings in a stock market that could be
subject to a correction.
Thank you for your continued interest in the Alliance Income Builder Fund. We
look forward to reporting to you again on market activity and the Fund's
investment results later in the year.
Sincerely,
John D. Carifa
Chairman and President
Thomas M. Perkins
Senior Vice President
Andrew M. Aran
Vice President
2
ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
OBJECTIVE AND POLICIES
Alliance Income Builder Fund seeks both an attractive level of current income
and long-term growth of income and capital. The Fund invests principally in a
non-diversified portfolio of fixed income securities and dividend-paying common
stocks. Alliance currently expects to maintain approximately 60% of the Fund's
net assets in fixed-income securities and 40% in equity securities.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF APRIL 30, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +19.39% +14.35%
. Since Inception* +10.31% +8.07%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +18.53% +14.53%
. Since Inception* +9.56% +8.69%
CLASS C SHARES
. One Year +18.59%
. Since Inception* +6.74%
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, 1996 (UNAUDITED) ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
COMMON & PREFERRED STOCKS45.3%
COMMON STOCKS32.3%
FINANCIAL SERVICES7.7%
BANKING & FINANCE1.5%
BankAmerica Corp. 3,000 $ 227,250
Chase Manhattan Corp. 5,200 358,150
First Chicago NBD Corp. 5,000 206,250
----------
791,650
BROKERAGE & MONEY MANAGEMENT1.0%
Legg Mason, Inc. 9,192 264,270
Merrill Lynch & Co., Inc. 4,000 241,500
----------
505,770
INSURANCE2.4%
American International Group, Inc. 6,000 548,250
Progressive Corp. 4,000 186,500
Travelers Group, Inc. 9,000 553,500
----------
1,288,250
MORTGAGE BANKING0.7%
Federal National Mortgage Assn. 12,500 382,812
REALTY1.3%
Federal Realty Investment Trust 11,000 239,250
JP Realty, Inc. 2,000 39,750
Spieker Properties, Inc. 7,500 195,000
Weingarten Realty Investors, Inc. 6,000 210,750
----------
684,750
OTHER0.8%
American Express Co. 8,000 388,000
----------
4,041,232
CONSUMER PRODUCTS & SERVICES6.7%
BROADCASTING & CABLE0.3%
Comcast Corp. Cl. A. 10,120 $177,100
DRUGS, HOSPITALS, SUPPLIES & MEDICAL SERVICES3.3%
Health Care Property Investors, Inc. 14,000 441,000
Merck & Co., Inc. 8,000 484,000
Pfizer, Inc. 8,000 551,000
Schering-Plough Corp. 5,000 286,875
----------
1,762,875
ENTERTAINMENT & LEISURE0.6%
Eastman Kodak Co. 4,000 306,000
HOME BULIDING0.3%
Kaufman & Broad Home Corp. 10,000 141,250
INSURANCE0.3%
General Re Corp. 1,000 142,875
RETAILING0.5%
Lowe's Companies, Inc. 4,000 129,500
May Department Stores Co. 2,800 142,800
----------
272,300
TECHNOLOGY1.1%
General Motors Corp. Cl. E. 8,446 476,143
Lucent Technologies, Inc. * 2,000 70,250
----------
546,393
OTHER0.3%
Newell Co. 6,000 171,000
----------
3,519,793
CONSUMER STAPLES6.2%
COSMETICS1.4%
Avon Products, Inc. 2,000 177,750
Gillette Co. 11,000 594,000
----------
771,750
4
ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
FOODS, BEVERAGES & TOBACCO4.1%
Campbell Soup Co. 4,000 $ 250,000
Heinz (H.J.) Co. 9,000 304,875
McDonald's Corp. 5,000 239,375
Philip Morris Cos., Inc. 9,000 811,125
Sara Lee Corp. 10,000 310,000
Wendy's International, Inc. 12,195 233,229
-----------
2,148,604
HOUSEHOLD PRODUCTS0.7%
Procter & Gamble Co. 4,500 380,250
-----------
3,300,604
CAPITAL GOODS4.8%
ELECTRICAL EQUIPMENT2.6%
Emerson Electric Co. 5,000 418,125
General Electric Co. 12,000 930,000
-----------
1,348,125
MACHINERY0.8%
Allied Signal, Inc. 7,000 406,875
TECHNOLOGY1.4%
Intel Corp. 7,000 474,250
Texas Instuments, Inc. 5,000 282,500
-----------
756,750
-----------
2,511,750
ENERGY3.1%
OIL & GAS3.1%
Chevron Corp. 10,000 580,000
Enron Corp. 6,000 241,500
Exxon Corp. 9,500 807,500
-----------
1,629,000
BASIC INDUSTRIES1.6%
CHEMICAL1.6%
Monsanto Co. 3,000 454,500
Morton International, Inc. 8,000 283,000
Rohm & Haas Co. 2,000 132,750
-----------
870,250
UTILITIES1.4%
TELECOMMUNICATION1.4%
GTE Corp. 10,715 $464,763
Southern New England Telecommunications,
Inc. Cl. A. 6,000 267,000
-----------
731,763
TRANSPORTATION0.8%
RAILROADS0.8%
Conrail, Inc. 3,000 209,250
Union Pacific Corp. 3,500 238,437
447,687
Total Common Stocks
(cost $12,653,659) 17,052,079
PREFERRED STOCKS11.4%
BANKING & FINANCE8.5%
BBanesto Holdings Series A, pfd.,
10.50% (a) 40,000 1,130,000
Central Hispano Financial Services B,
pfd., 9.43% 52,000 1,313,000
Credit Lyonnais Capital SCA, pfd.,
9.50% (ADR) (a) 40,000 905,000
First Bank System, Inc. Series A,
cv. pfd., 7.12% 2,500 258,125
Penncorp Financial Group cv. pfd., 6.75% 4,000 297,000
Riggs National Corp. Series B, pfd., 10.75% 20,000 560,000
-----------
4,463,125
INDUSTRIAL1.9%
Time Warner Inc. Ser. K, pfd., 10.25% (a) 1,000 1,005,000
TECHNOLOGY-1.9%
Salomon, Inc. Oracle (ELKS) cv. pfd., 7.25% 11,100 525,863
Total Preferred Stocks
(cost $5,584,007) 5,993,988
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- ------------------------------------------------------------------------
FOREIGN INVESTMENTS1.6%
UNITED KINGDOM1.6%
Hanson Plc. (ADR) 19,000 $ 287,375
Shell Transport & Trading Co. New (ADR) 3,000 240,000
Vodafone Group Plc. (ADR) 8,000 321,000
-----------
848,375
Total Common & Preferred Stocks
(cost $19,016,054) 23,894,442
CORPORATE DEBT OBLIGATIONS49.1%
INDUSTRIAL19.7%
Digital Equipment Corp.
8.625%, 11/01/12 $1,000 1,004,270
Duty Free International
7.00%, 1/15/04 2,000 1,808,600
Eli Lilly & Co.
7.125%, 6/01/25 1,000 954,600
Freeport-McMoran Res.
7.00%, 2/15/08 500 450,745
Hyperion Communication
Zero coupon, 4/15/03 (a) 1,000 537,500
Magna International, Inc.
5.00%, 10/15/02 300 309,000
Reliance Industries, Ltd.
8.125%, 9/27/05 1,500 1,432,500
Sears Roebuck Acceptance
6.75%, 9/15/05 1,000 974,365
Solectron Corp.
7.375%, 3/01/06 (b) 500 477,500
Tele-Communications, Inc.
9.25%, 1/15/23 1,000 999,386
USX Corp.
8.5%, 3/01/23 500 498,850
Viacom, Inc.
7.75%, 6/01/05 1,000 972,000
10,419,316
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- ------------------------------------------------------------------------
CONSUMER PRODUCTS & SERVICES11.7%
Home Holdings, Inc.
8.625%, 12/15/03 $ 2,000 $1,650,000
K-Mart Corp.
8.25%, 1/01/22 1,500 1,151,250
M.D.C. Holdings, Inc.
6.6421%, 4/01/98 2,540 2,349,500
New York Life Insurance
7.50%, 12/15/23 (a) 1,130 1,044,911
-----------
6,195,661
BANKING & FINANCE11.3%
Arkwright CSN TR
9.625%, 8/15/26 (a) 1,000 1,004,300
Firstbank Puerto Rico
7.625%, 12/15/05 1,500 1,458,750
Mellon Financial Co.
6.70%, 3/01/08 500 471,160
Saul (B.F.) Real Estate
Investment Trust Series B
11.625%, 4/01/02 2,000 2,030,000
Wharf Capital International Ltd.
8.875%, 11/01/04 1,000 1,004,400
-----------
5,968,610
YANKEE BONDS5.6%
Grupo Mexico De Desarrollo
8.25%, 2/17/01 1,500 825,000
Mc-Cuernavaca Trust
9.25%, 7/25/01 (a) 1,718 1,180,790
Republic of Colombia
8.70%, 2/15/16 1,000 920,950
-----------
2,926,740
6
ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- ------------------------------------------------------------------------
UTILITIES0.8%
Niagara Mohawk Power Corp.
8.77%, 1/01/18 $ 500 $ 438,840
Total Corporate Debt Obligations
(cost $27,314,429) 25,949,167
CONVERTIBLE BONDS1.1%
General Instrument Corp.
5.00%, 6/15/00 200 278,000
Hasbro, Inc.
6.00%, 11/15/98 250 311,563
Total Convertible Bonds
(cost $547,775) 589,563
COMMERCIAL PAPER3.3%
Ford Motor Credit Corp.
Zero coupon, 5/02/96 677 676,801
Prudential Funding Corp.
Zero coupon, 5/01/96 1,071 1,071,000
Total Commercial Paper
(amortized cost $1,747,801) 1,747,801
TOTAL INVESTMENTS98.8%
(cost $48,626,059) 52,180,973
Other assets less liabilities1.2% 639,345
NET ASSETS100% $52,820,318
* Non-income producing security.
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1996,
these securities amounted to $6,807,501 or 12.9% of net assets.
(b) Restricted security, valued at fair value.
Glossary of Terms:
ADR - American Depository Receipt.
ELKS - Equitl Linked Security.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED) ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $48,626,059) $52,180,973
Cash 262,325
Receivable for investment securities sold 698,000
Interest and dividends receivable 575,355
Receivable for capital stock sold 127,615
Deferred organization expenses and other assets 18,793
Total assets 53,863,061
LIABILITIES
Payable for investment securities purchased 676,801
Payable for capital stock redeemed 95,372
Distribution fee payable 42,423
Advisory fee payable 32,411
Accrued expenses 195,736
Total liabilities 1,042,743
NET ASSETS $52,820,318
COMPOSITION OF NET ASSETS
Capital stock, at par $ 4,835
Additional paid-in capital 47,058,585
Undistributed net investment income 282,645
Accumulated net realized gain on investments 1,919,339
Net unrealized appreciation of investments 3,554,914
$52,820,318
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($1,402,216/
127,986 shares of capital stock issued and outstanding) $10.96
Sales Charge-4.25% of public offering price .49
Maximum offering price $11.45
CLASS B SHARES
Net asset value and offering price per share ($4,788,855/
437,371 shares of capital stock issued and outstanding) $10.95
CLASS C SHARES
Net asset value, redemption and offering price per share($46,629,247
/4,269,872 shares of capital stock issued and outstanding) $10.92
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $3,294) $1,460,150
Dividend income 403,755 $1,863,905
EXPENSES
Advisory fee 201,911
Distribution fee - Class A 2,135
Distribution fee - Class B 21,749
Distribution fee - Class C 240,349
Custodian 99,825
Administrative 72,841
Registration 44,032
Audit and legal 43,028
Transfer agency 39,494
Amortization of organization expenses 16,290
Printing 10,794
Directors' fees 10,783
Miscellaneous 2,814
Total expenses 806,045
Net investment income 1,057,860
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 2,266,117
Net change in unrealized appreciation of investments (199,239)
Net gain on investments 2,066,878
NET INCREASE IN NET ASSETS FROM OPERATIONS $3,124,738
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
APRIL 30,1996 OCTOBER 31,
(UNAUDITED) 1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,057,860 $ 2,787,918
Net realized gain on investments 2,266,117 496,977
Net change in unrealized appreciation
(depreciation) of investments (199,239) 4,570,602
Net increase in net assets from operations 3,124,738 7,855,497
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (37,227) (58,469)
Class B (101,978) (129,550)
Class C (1,134,405) (2,380,051)
Net realized gain on investments
Class A (14,801) -0-
Class B (42,369) -0-
Class C (508,039) -0-
CAPITAL STOCK TRANSACTIONS
Net decrease (2,740,261) (17,637,805)
Total decrease (1,454,342) (12,350,378)
NET ASSETS
Beginning of period 54,274,660 66,625,038
End of period (including undistributed net
investment income of $282,645 and $498,395,
respectively) $52,820,318 $54,274,660
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996 (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 Multi Market 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. ORGANIZATION EXPENSES
Organization expenses of approximately $165,000 have been deferred and are
being amortized on a straight-line basis through October, 1996.
3. 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 provision for federal income or excise taxes is
required.
4. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on the
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.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
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 'Adviser'), 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 fees, and extraordinary expenses) exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund believes that the most restrictive expense ratio limitation
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 Adviser for the six months ended April 30,
1996. Pursuant to the advisory agreement, the Fund also paid $72,841 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, 1996.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
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 $29,730 for the six months ended April 30, 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 $322 from the sale of Class A shares and $3,596 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B for the six months ended April 30, 1996.
Brokerage commissions paid on securities transactions for the six months ended
April 30, 1996 amounted to $13,327, of which none was paid to Barings
Securities, a broker utilizing the services of the Pershing Division of
Donaldson, Lufkin & Jenrette Securities Corp., 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 .30 of 1% of the average daily net assets attributable to 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 $642,820 and $1,730,315 for Class B and Class C shares
respectively; such costs may be recovered from the Fund in future periods so
long as the Agreement is in effect. In accordance with the Agreement, there is
no provision for recovery of unreimbursed distribution costs, incurred by the
Distributor, beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $25,074,796 and $27,323,016 respectively, for the six months ended
April 30, 1996. There were purchases of $5,525,736 and sales of $7,506,367 of
U.S. Government and government agency obligations for the six months ended
April 30, 1996.
At April 30, 1996, the cost of investments for federal income tax purposes was
$48,626,059. Accordingly, gross unrealized appreciation of investments was
$5,409,252, and gross unrealized depreciation of investments was $1,854,337
resulting in net unrealized depreciation of $3,554,914.
12
ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 6,000,000,000 shares of $0.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C. Each class
consists of 2,000,000,000 authorized shares. Transactions in capital stock were
as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30,1996 OCTOBER 31, APRIL 30,1996 OCTOBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------ ------------ -------------- --------------
CLASS A
Shares sold 16,034 76,113 $ 177,653 $ 727,101
Shares issued in
reinvestment of
dividends 4,016 4,962 43,543 49,223
Shares redeemed (22,716) (12,379) (253,158) (124,785)
Net increase(decrease) (2,666) 68,696 $ (31,962) $ 651,539
CLASS B
Shares sold 95,647 196,028 $ 1,049,292 $ 1,941,263
Shares issued in
reinvestment of
dividends 8,827 9,101 95,706 90,325
Shares redeemed (19,396) (59,179) (212,471) (592,437)
Net increase 85,078 145,950 $ 932,527 $ 1,439,151
CLASS C
Shares sold 95,766 184,418 $ 1,039,304 $ 1,804,787
Shares issued in
reinvestment of
dividends 58,943 121,055 637,261 1,170,782
Shares redeemed (485,965) (2,329,518) (5,317,391) (22,704,064)
Net decrease (331,256) (2,024,045) $(3,640,826) $(19,728,495)
13
FINANCIAL HIGHLIGHTS ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
--------------------------------------
MARCH 25,
SIX MONTHS 1994(A)
ENDED YEAR ENDED TO
APRIL 30,1996 OCTOBER 31, OCT. 31,
(UNAUDITED) 1995 1994
------------- ----------- ----------
Net asset value, beginning of period $10.70 $ 9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .26(f) .93(f) .96
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .40 .59 (1.02)
Net increase (decrease) in net asset
value from operations .66 1.52 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.29) (.51) (.04)
Tax return of capital -0- -0- (.01)
Distributions from net realized gains (.11) -0- (.20)
Total dividends and distributions (.40) (.51) (.25)
Net asset value, end of period $10.96 $10.70 $ 9.69
TOTAL RETURN
Total investment return based on
net asset value(c) 6.30% 16.22% (.54)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $1,402 $1,398 $600
Ratio expenses to average net assets 2.32%(e) 2.38% 2.52%(e)
Ratio of net investment income
to average net assets 4.64%(e) 5.44% 6.11%(e)
Portfolio turnover rate 120% 92% 126%
Average commission rate paid (g) $.0677 $ -0- $ -0-
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
--------------------------------------
MARCH 25,
SIX MONTHS 1994(A)
ENDED YEAR ENDED TO
APRIL 30,1996 OCTOBER 31, OCT. 31,
(UNAUDITED) 1995 1994
------------- ----------- ----------
Net asset value, beginning of period $10.70 $ 9.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .22(f) .63(f) .88
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .40 .83 (.98)
Net increase (decrease) in net asset
value from operations .62 1.46 (.10)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.26) (.44) (.05)
Tax return of capital -0- -0- (.01)
Distributions from net realized gains (.11) -0- (.16)
Total dividends and distributions (.37) (.44) (.22)
Net asset value, end of period $10.95 $10.70 $ 9.68
TOTAL RETURN
Total investment return based on
net asset value(c) 5.88% 15.22% (.99)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $4,789 $3,769 $1,998
Ratio expenses to average net assets 3.03%(e) 3.09% 3.09%(e)
Ratio of net investment income
to average net assets 3.93%(e) 4.73% 5.07%(e)
Portfolio turnover rate 120% 92% 126%
Average commission rate paid (g) $.0677 $ -0- $ -0-
See footnote summary on page 16.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------------------------
OCTOBER 25,
SIX MONTHS 1991(B)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30,1996 -------------------------------------------------- OCTOBER 31,
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.67 $ 9.66 $10.47 $ 9.80 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .22(f) .40(f) .50 .52 .55 .01
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .40 1.05 (.85) .51 (.28) -0-
Net increase (decrease) in net asset
value from operations .62 1.45 (.35) 1.03 .27 .01
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.26) (.44) (.09) (.36) (.47) (.01)
Tax return of capital -0- -0- (.02) -0- -0- -0-
Distributions from net realized gains (.11) -0- (.35) -0- -0- -0-
Total dividends and distributions (.37) (.44) (.46) (.36) (.47) (.01)
Net asset value, end of period $10.92 $10.67 $ 9.66 $10.47 $ 9.80 $10.00
TOTAL RETURN
Total investment return based on
net asset value(c) 5.89% 15.47% (3.44)% 10.65% 2.70% .11%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $46,629 $49,107 $64,027 $106,034 $152,617 $41,813
Ratio expenses to average net assets 3.02%(e) 3.02% 2.67% 2.32% 2.33% -0-%(e)(d)
Ratio of net investment income
to average net assets 3.93%(e) 4.81% 3.82% 6.85% 5.47% .94%(e)
Portfolio turnover rate 120% 92% 126% 101% 108% -0-%
Average commission rate paid (g) $.0677 $ -0- $ -0- $ -0- $ -0- $ -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 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 Adviser. If the Fund had borne
all expenses, the expenses ratio would have been 1.99% annualized.
(e) Annualized.
(f) Based on average shares outstanding.
(g) 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.
16
ALLIANCE INCOME BUILDER FUND, INC.
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
THOMAS M. PERKINS, SENIOR VICE PRESIDENT
ANDREW M. ARAN, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, 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
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
18
ALLIANCE INCOME BUILDER FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
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.
IBFSR
