ALLIANCE INCOME BUILDER FUND
SEMI-ANNUAL REPORT
APRIL 30, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
May 28, 1997
Dear Shareholder:
We are pleased to review Alliance Income Builder Fund performance and
investment activity for the period ended April 30, 1997.
INVESTMENT RESULTS
As you can see from the table below, your Fund's Class A shares achieved a
total return of 8.31% at net asset value for the six month period and a 17.00%
return for the twelve month period ended April 30, 1997. Since your Fund is
balanced between stocks and bonds, we compare its performance to a blended
composite of two indices. For the period ended April 30, 1997, your Fund
outperformed a 60/40 Composite composed of 60% of the Lehman Brothers
Government/Corporate Bond Index and 40% of the S&P 500 Stock Index. The
Composite achieved a total return of 6.66% for the six month period and a
14.08% for the twelve month period.
INVESTMENT RESULTS*
Period Ended April 30, 1997
TOTAL RETURN
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE INCOME BUILDER FUND
Class A 8.31% 17.00%
Class B 8.01% 16.22%
Class C 7.94% 16.17%
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX 1.30% 6.72%
S&P 500 STOCK INDEX 14.71% 25.12%
60/40 COMPOSITE:
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX/
S&P 500 STOCK INDEX 6.66% 14.08%
* TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF EACH CLASS OF SHARES AS
OF APRIL 30, 1997. TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO
DIFFERENT EXPENSES ASSOCIATED WITH THAT CLASS. THE UNMANAGED S&P 500 STOCK
INDEX INCLUDES 500 U.S. STOCKS AND IS A COMMON MEASURE OF THE PERFORMANCE OF
THE OVERALL U.S. STOCK MARKET. THE UNMANAGED LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX IS COMPOSED OF THE TREASURY BOND INDEX, THE
AGENCY BOND INDEX, THE 1-3 YEAR GOVERNMENT INDEX, THE 20+ YEAR INDEX AND THE
INDEX OF ALL PUBLICLY ISSUED NON-CONVERTIBLE INVESTMENT GRADE CORPORATE DEBTS.
THE 60/40 COMPOSITE IS A BLEND OF BOTH INDICES WITH A 60/40 WEIGHTING.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
MARKET OVERVIEW
During the last two months of 1996, Treasury yields remained fairly stable.
However, volatility has been high in 1997 with the 30 year Treasury rate
peaking at 7.2% on April 14, 1997--53 basis points higher than at the end of
1996. This followed the Federal Reserve Board's decision to raise interest
rates in March. Strong employment growth, a rebound in new home sales and
healthy consumer spending contributed to a stronger than expected economic
environment with first quarter Gross Domestic Product (GDP) up 5.8%. During the
latter part of April 1997, the Treasury market rallied, reflecting investors'
expectations of slower economic growth and favorable prospects for balancing
the U.S. fiscal budget.
FIXED INCOME INVESTMENTS
Continued evidence of a growing economy, combined with generally positive
earnings, have fueled persistent demand for corporate bonds. Consequently,
value was harder to find in late 1996, leading us to adopt a more defensive
posture. We also sold longer term issues to obtain a modestly shorter duration
as expectation of an increase in interest rates grew. As yields rose, we
responded with superior security selection, which allowed us to maximize the
benefits of the recent bond rally. Trust capital preferred securities were
introduced in late November 1996, offering superior value into early 1997.
One exceptional opportunity was First USA Capital Trust. Subsequent to our
investment in the company, the surprising announcement of its acquisition by AA
rated Banc One resulted in a 10 point increase in price. Our ability to select
improving credits continues to reduce the impact of weaker bond markets on your
portfolio. For example, Arkwright was upgraded by the major rating agencies. We
continued to research turnaround stories such as Time Warner, whose spread
narrowed significantly after we purchased the bonds. Yankee bonds (dollar
denominated securities issued by non U.S. companies) remain an attractive
sector relative to similarly rated domestic issuers offering above average
quality and higher yield spreads.
EQUITY INVESTMENTS
The Fund's equity assets again outpaced the S&P 500 as they benefited from the
market's preference for high quality stocks and companies with improving
earnings.
1
ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
Our two largest sector investments, financials and consumer staples, continue
to outperform. Financials have done well due to attractive valuations and
strong earnings comparisons, while consumer staples have benefited from
investors' attraction to good earnings visibility. As was anticipated in our
last report, we used stock price strength to reduce our financials from 27% of
the portfolio to under 25%. Proceeds were redeployed into the higher yielding
energy sector, which is now our third largest equity exposure. Technology
stocks still represent only 6% of our equities as dividend opportunities are
limited.
Presently, stocks still comprise about 40% of total Fund assets, and we
continue to reinvest some of our equity gains into fixed income assets. This
strategy enhances the Fund's income earning capabilities. Our equity
investments are concentrated in high quality issues that have a history of
increasing dividends. Reflective of that quality are our ten largest holdings,
which, as of April 30, 1997, were: General Electric Co., Intel Corp., Merck &
Co., Philip Morris Cos., Inc., Chevron Corp., Shell Transport & Trading Co.,
Gillette Co., The Travelers Group, Inc., Royal Dutch Petroleum, and Proctor &
Gamble Co. Seven of these stocks were also in our top ten holding list last
October. Proctor & Gamble Co., Shell Transport & Trading Co., and Royal Dutch
Petroleum are new to our top ten list. In total, our equities dividend yield is
about 20% more than the S&P 500's.
We believe that the quality of our equities and the growth in their dividends
should continue to serve the Fund well in most market environments.
Thank you for your continued interest in Alliance Income Builder Fund. We look
forward to reporting to you again on market activity and the Fund's investment
results in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Thomas M. Perkins
Senior Vice President
Corinne L. Molof
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
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 RETURNS AS OF APRIL 30, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 17.00% 11.99%
Since Inception* 12.42% 10.87%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 16.22% 12.22%
Since Inception* 11.66% 11.41%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 16.17% 15.17%
Five Years 8.59% 8.59%
Since Inception* 8.39% 8.39%
The average annual total returns reflect reinvestment 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);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
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, 1997 (UNAUDITED) ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-45.0%
COMMON STOCKS-40.4%
CONSUMER PRODUCTS & SERVICES-10.2%
BROADCASTING & CABLE-0.6%
Comcast Corp. Cl. A. 10,120 $ 159,390
Vodafone Group Plc. (ADR) 4,000 177,000
------------
336,390
DRUGS, HOSPITALS, SUPPLIES &
MEDICAL SERVICES-4.5%
Health Care Property Investors, Inc. 14,000 463,750
Merck & Co., Inc. 9,000 814,500
Pfizer, Inc. 4,500 432,000
Schering-Plough Corp. 4,500 360,000
Smithkline Beecham Plc. (ADR) 4,000 322,500
------------
2,392,750
ENTERTAINMENT & LEISURE-1.7%
Carnival Corp. Cl. A. 8,000 295,000
Eastman Kodak Co. 4,000 334,000
Walt Disney Co. 3,500 287,000
------------
916,000
FOODS, BEVERAGES & TOBACCO-0.6%
McDonald's Corp. 5,500 294,937
HOUSEHOLD PRODUCTS-0.6%
Crown Cork & Seal, Inc. 5,500 301,125
MULTI-INDUSTRY-0.5%
Canadian Pacific, Ltd. 10,000 243,750
REALTY-0.2%
Storage USA, Inc. 3,000 112,875
RETAILING-1.2%
Dayton Hudson Corp. 5,000 225,000
Gap, Inc. 5,000 159,375
May Department Stores Co. 4,800 222,000
------------
606,375
OTHER-0.3%
Newell Co. 5,000 175,000
------------
5,379,202
CONSUMER STAPLES-7.2%
COSMETICS-1.6%
Avon Products, Inc. 4,000 246,500
Gillette Co. 7,000 595,000
------------
841,500
FOODS, BEVERAGES & TOBACCO-4.6%
American Brands, Inc. 8,000 430,000
Anheuser Busch, Inc. 7,000 300,125
Campbell Soup Co. 7,500 383,437
Heinz (H.J.) Co. 7,000 290,500
Philip Morris Cos., Inc. 18,300 720,562
Sara Lee Corp. 8,000 336,000
------------
2,460,624
HOUSEHOLD PRODUCTS-1.0%
Proctor & Gamble Co. 4,200 528,150
------------
3,830,274
FINANCIAL SERVICES-7.1%
BANKING & FINANCE-2.2%
BankAmerica Corp. 3,000 350,625
Chase Manhattan Corp. 3,500 324,188
Dean Witter Discover & Co. 9,000 344,250
First Union Corp. 2,000 168,000
------------
1,187,063
4
ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
Company Shares U.S. $ Value
- -------------------------------------------------------------------------
BROKERAGE & MONEY MANAGEMENT-1.0%
Legg Mason, Inc. 5,192 $ 246,620
Merrill Lynch & Co., Inc. 3,000 285,750
------------
532,370
INSURANCE-2.3%
American International Group, Inc. 2,500 321,250
Progressive Corp. 4,000 304,500
Travelers Group, Inc. 10,166 562,942
------------
1,188,692
REALTY-1.0%
Bay Apartment Communities 5,000 167,500
JP Realty, Inc. 8,000 203,000
Weingarten Realty Investors, Inc. 4,000 170,500
------------
541,000
OTHER-0.6%
American Express Co. 4,500 296,438
------------
3,745,563
CAPITAL GOODS-6.8%
ELECTRICAL EQUIPMENT-2.9%
Emerson Electric Co. 8,000 406,000
General Electric Co. 9,000 997,875
Houston Industries, Inc. 5,000 100,000
------------
1,503,875
MACHINERY-0.8%
Allied Signal, Inc. 6,000 433,500
TECHNOLOGY-3.1%
Boeing Co. 3,000 295,875
Hewlett Packard Co. 4,000 210,000
Intel Corp. 5,700 872,813
Texas Instruments, Inc. 3,000 267,750
------------
1,646,438
------------
3,583,813
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
ENERGY-4.4%
OIL & GAS-4.4%
Chevron Corp. 10,000 $ 685,000
Exxon Corp. 8,000 453,000
Royal Dutch Petroleum Co. 3,000 540,750
Shell Transport & Trading Co. (ADR) 6,000 638,250
------------
2,317,000
BASIC INDUSTRIES-1.8%
CHEMICAL-1.8%
Du Pont (Ei) De Nemours 3,000 318,375
Monsanto Co. 9,000 384,750
Morton International, Inc. 6,000 251,250
------------
954,375
UTILITIES-1.8%
TELECOMMUNICATION-1.8%
Frontier Corp. 7,000 111,125
GTE Corp. 10,715 491,551
Southern New England
Telecommunications, Inc. Cl. A. 6,000 219,000
U.S. West Communications Group 3,000 105,375
------------
927,051
TRANSPORTATION-0.8%
Union Pacific Corp. 7,000 446,250
INDUSTRIAL-0.3%
WMX Technologies, Inc. 6,000 176,250
Total Common Stocks
(cost $14,593,686) 21,359,778
PREFERRED STOCKS-4.6%
CONSUMER PRODUCTS & SERVICES-1.8%
Cablevision pfd., 11.13% 285 26,398
Granite Broadcast pfd., 4.47% 1,021 935,491
------------
961,889
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
INSURANCE-2.6%
Penncorp Financial Group cv. pfd., 3.50% 4,000 $ 320,000
SI Financing Trust I pfd., 9.5% 40,000 1,040,000
------------
1,360,000
REALTY-0.2%
Excel Realty Trust pfd., 2.13% 5,200 132,600
Total Preferred Stocks
(cost $2,456,463) 2,454,489
Total Common & Preferred Stocks
(cost $17,050,149) 23,814,267
CORPORATE DEBT OBLIGATIONS-45.1%
BANKING & FINANCE-11.6%
Amersco, Inc.
10.00%, 3/15/04 1,000 990,000
Amerus Capital I Ser. A.
8.85%, 2/01/27 1,000 989,400
Arkwright CSN Trust
9.625%, 8/15/26 (a) 1,000 1,085,961
FBOP Capital Trust
10.20%, 2/06/27 (a) 1,000 987,722
First USA Capital Trust
9.33%, 1/15/27 (a) 1,000 1,097,500
Renaissance Capital Trust
8.54%, 3/01/27 (a) 1,000 971,120
------------
6,121,703
CONSUMER PRODUCTS & SERVICES-5.7%
Globalstar LP
11.38%, 2/15/04 (a) $ 1,000 990,000
Optel, Inc.
13.00%, 2/15/05 (a) 1,000 955,000
Time Warner, Inc.
9.15%, 2/01/23 1,000 1,074,199
------------
3,019,199
INDUSTRIAL-10.9%
Anchor Glass Corp.
11.25%, 4/01/05 (a) 1,000 1,025,000
Arvin Capital
9.50%, 2/01/27 1,000 973,500
Caliber Systems, Inc.
7.80%, 8/01/06 1,000 1,016,862
Dyncorp, Inc.
9.50%, 3/01/07 (a) 1,000 977,500
Magna International, Inc.
5.00%, 10/15/02 200 218,500
Termoemcali Funding Corp.
10.13%, 12/15/14 (a) 1,000 1,041,250
USX Corp.
8.50%, 3/01/23 500 520,971
------------
5,773,583
Total Corporate Debt Obligations
(cost $14,837,105) 14,914,485
YANKEE BONDS-16.9%
Acindar Industries
11.25%, 2/15/04 1,000 1,017,500
Mc-Cuernavaca Trust
9.25%, 7/25/01 (a) 1,518 1,320,296
OPP Petroquica
11.00%, 10/29/04 1,000 998,750
Pepsi-Gemex, S.A.
9.75%, 3/30/04 (a) 1,000 1,000,000
Ras Laffan Liquid Natural Gas
8.29%, 3/15/14 (a) 1,000 1,016,584
Reliance Industries, Ltd.
10.38%, 6/24/16 (a) 1,500 1,605,360
RBS Participacoes, S.A.
11.00%, 4/01/07 (a) 1,000 1,010,000
RSL Communications, Ltd.
12.25%, 11/15/06 (a) 1,000 1,007,500
Total Yankee Bonds
(cost $9,060,586) 8,975,990
6
ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
GOVERNMENT
OBLIGATIONS-3.9%
Republic of Argentina
11.38%, 1/30/17 $ 1,000 $ 1,062,250
Republic of Panama
7.88%, 2/13/02 (a) 1,000 977,125
Total Government Obligations
(cost $2,000,237) 2,039,375
CONVERTIBLE BONDS-2.8%
Hasbro, Inc.
6.00%, 11/15/98 250 320,313
IRT Property Co.
7.30%, 8/15/03 200 201,750
Liberty Property
8.00%, 7/01/01 200 242,250
Nextel Communications
Zero coupon, 8/15/04 1,000 730,000
Total Convertible Bonds
(cost $1,435,644) 1,494,313
TIME DEPOSIT-2.1%
Bank Of Tokyo
5.69%, 5/01/97
(cost $1,100,000) 1,100 1,100,000
TOTAL INVESTMENTS-98.9%
(cost $45,483,721) 52,338,430
Other assets less liabilities-1.1% 582,273
NET ASSETS-100% $52,920,703
(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, 1997,
these securities amounted to $17,067,918 or 32.3% of net assets.
Glossary:
ADR - American depository receipt
See notes to financial statements
7
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED) ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $45,483,721) $ 52,338,430
Cash 162,931
Receivable for investment securities sold 1,204,922
Interest and dividends receivable 590,740
Receivable for capital stock sold 32,209
Other assets 2,311
Total assets 54,331,543
LIABILITIES
Payable for investment securities purchased 1,100,000
Payable for capital stock redeemed 48,192
Distribution fee payable 41,411
Advisory fee payable 31,910
Accrued expenses 189,327
Total liabilities 1,410,840
NET ASSETS $ 52,920,703
COMPOSITION OF NET ASSETS
Capital stock, at par $ 4,566
Additional paid-in capital 44,089,064
Undistributed net investment income 313,419
Accumulated net realized gain on investments 1,658,944
Net unrealized appreciation of investments 6,854,710
$ 52,920,703
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($1,942,608 /
166,909 shares of capital stock issued and outstanding) $11.64
Sales charge--4.25% of public offering price .52
Maximum offering price $12.16
CLASS B SHARES
Net asset value and offering price per share ($7,328,461 /
630,694 shares of capital stock issued and outstanding) $11.62
CLASS C SHARES
Net asset value and offering price per share ($43,576,832 /
3,762,147 shares of capital stock issued and outstanding) $11.58
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($72,802 / 6,256 shares of capital stock
issued and outstanding) $11.64
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $1,326,687
Dividends (net of foreign taxes withheld of $2,637) 398,588 $1,725,275
EXPENSES
Advisory fee 198,139
Distribution fee - Class A 2,833
Distribution fee - Class B 33,541
Distribution fee - Class C 220,869
Custodian 84,511
Administrative 69,787
Registration 57,477
Audit and legal 48,065
Transfer agency 39,869
Directors' fees 13,500
Printing 12,963
Miscellaneous 3,307
Total expenses 784,861
Net investment income 940,414
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 1,702,999
Net change in unrealized appreciation of investments 1,426,251
Net gain on investments 3,129,250
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,069,664
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCT. 31,
(UNAUDITED) 1996
-------------- ------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 940,414 $ 2,199,994
Net realized gain on investments 1,702,999 3,052,921
Net change in unrealized appreciation
of investments 1,426,251 1,674,306
Net increase in net assets from operations 4,069,664 6,927,221
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (41,376) (76,978)
Class B (125,355) (201,924)
Class C (837,227) (2,021,377)
Advisor Class (1,676) -0-
Net realized gain on investments
Class A (100,177) (14,802)
Class B (327,329) (42,369)
Class C (2,292,629) (508,039)
Advisor Class (3,688) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 308,062 (6,063,958)
Total increase (decrease) 648,269 (2,002,226)
NET ASSETS
Beginning of year 52,272,434 54,274,660
End of period (including undistributed
net investment income of $313,419 and
$378,639 respectively) $52,920,703 $52,272,434
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED) ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Income Builder Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, open-end management
investment company. The Fund offers Class A, Class B, Class C and Advisor Class
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase will be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 4.00% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Class C shares purchased on or after July 1, 1996
are subject to a contingent deferred sales charge of 1.00% on redemptions made
within the first year after purchase. Advisor Class shares are sold without an
initial or contingent deferred sales charge and are not subject to an ongoing
distribution expense. Advisor Class shares are offered solely to investors
participating in certain fee based programs and retirement plans. All four
classes of shares have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The Fund commenced its public offering of Advisor Class
shares on October 2, 1996. 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 which mature in 60 days or less are valued at
amortized cost which approximates market value, unless this method does not
represent fair value. Securities for which market quotations are not readily
available and restricted securities are valued in good faith at fair value
using methods determined by the Board of Directors. In determining fair value,
consideration is given to cost, operating and other financial data.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on the
ex-dividend date. Investment transactions are accounted for on the date
securities are purchased or sold. Investment gains and losses are determined on
the identified cost basis. The Fund accretes discounts as an adjustment to
interest income.
4. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for
that year.
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.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
Pursuant to the advisory agreement, the Fund may reimburse the Adviser for
certain legal and accounting services provided to the Fund by the Adviser.
For the six months ended April 30, 1997, the Fund reimbursed the Advisor for
$69,787 of such expenses.
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 $19,659 for the six months ended April 30, 1997.
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 $376 from the sale of Class A shares and $6,123 and
$195 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the six months
ended April 30, 1997. Brokerage commissions paid on securities transactions for
the six months ended April 30, 1997 amounted to $11,582, none of which was paid
to affiliated brokers.
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. (There is no distribution fee on the Advisor Class shares.)
Such 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
$981,960 and $1,840,917 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 and U.S.
government obligations) aggregated $42,131,643 and $43,193,241 respectively,
for the six months ended April 30, 1997. There were purchases of $998,125 and
sales of $999,453 of U.S. government and government agency obligations for the
six months ended April 30, 1997.
At April 30, 1997, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $7,468,381, and gross unrealized
depreciation of investments was $613,672 resulting in net unrealized
appreciation of $6,854,709.
12
ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 8,000,000,000 shares of $0.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. 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 30,1997 OCT. 31, APRIL 30,1997 OCT. 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 24,064 71,054 $ 275,858 $ 780,984
Shares issued in
reinvestment of
dividends and
distributions 9,403 6,505 106,324 70,930
Shares converted
from Class B 1,230 3,979 14,910 44,062
Shares redeemed (45,520) (34,458) (521,499) (385,149)
Net increase(decrease) (10,823) 47,080 $ (124,407) $ 510,827
CLASS B
Shares sold 153,605 186,705 $ 1,780,594 $ 2,057,991
Shares issued in
reinvestment of
dividends and
distributions 28,612 14,453 323,530 157,642
Shares converted
to Class A (1,230) (3,979) (14,910) (44,062)
Shares redeemed (50,169) (49,596) (579,859) (546,791)
Net increase 130,818 147,583 $ 1,509,355 $ 1,624,780
CLASS C
Shares sold 145,091 151,540 $ 1,645,761 $ 1,653,774
Shares issued in
reinvestment of
dividends and
distributions 112,775 90,197 1,270,426 980,210
Shares redeemed (352,810) (985,774) (4,066,701) (10,833,549)
Net decrease (94,944) (744,037) $(1,150,514) $ (8,199,565)
NOVEMBER 1,1996* NOVEMBER 1,1996*
TO TO
APRIL 30,1997 APRIL 30, 1997
(UNAUDITED) (UNAUDITED)
------------- --------------
ADVISOR CLASS
Shares sold 6,165 $ 72,601
Shares issued in
reinvestment of
dividends and
distributions 91 1,027
Net increase 6,256 $ 73,628
* Commencement of distribution.
13
FINANCIAL HIGHLIGHTS ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
SIX MONTHS MARCH 25,
ENDED 1994(A)
APRIL 30, YEAR ENDED OCTOBER 31, TO
1997 ------------------------ OCTOBER 31,
(UNAUDITED) 1996 1995 1994
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.57 $10.70 $9.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24(b) .56(b) .93(b) .96
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .69 .98 .59 (1.02)
Net increase (decrease) in net asset
value from operations .93 1.54 1.52 (.06)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.25) (.55) (.51) (.04)
Tax return of capital -0- -0- -0- (.01)
Distributions from net realized gains (.61) (.12) -0- (.20)
Total dividends and distributions (.86) (.67) (.51) (.25)
Net asset value, end of period $11.64 $11.57 $10.70 $ 9.69
TOTAL RETURN
Total investment return based on net
asset value(c) 8.31% 14.82% 16.22% (.54)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,943 $2,056 $1,398 $600
Ratio of expenses to average net assets 2.30%(d) 2.20% 2.38% 2.52%(d)
Ratio of net investment income to
average net assets 4.22%(d) 4.92% 5.44% 6.11%(d)
Portfolio turnover rate 169% 108% 92% 126%
Average commission rate paid (e) $.0519 $.0600 -- --
</TABLE>
See footnote summary on page 17.
14
ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------
SIX MONTHS MARCH 25,
ENDED 1994(A)
APRIL 30, YEAR ENDED OCTOBER 31, TO
1997 ------------------------ OCTOBER 31,
(UNAUDITED) 1996 1995 1994
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.55 $10.70 $ 9.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .20(b) .47(b) .63(b) .88
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .70 .98 .83 (.98)
Net increase (decrease) in net asset
value from operations .90 1.45 1.46 (.10)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.22) (.48) (.44) (.05)
Tax return of capital -0- -0- -0- (.01)
Distributions from net realized gains (.61) (.12) -0- (.16)
Total dividends and distributions (.83) (.60) (.44) (.22)
Net asset value, end of period $11.62 $11.55 $10.70 $ 9.68
TOTAL RETURN
Total investment return based on net
asset value(c) 8.01% 13.92% 15.55% (.99)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,328 $5,775 $3,769 $1,998
Ratio of expenses to average net assets 3.01%(d) 2.92% 3.09% 3.09%(d)
Ratio of net investment income to
average net assets 3.53%(d) 4.19% 4.73% 5.07%(d)
Portfolio turnover rate 169% 108% 92% 126%
Average commission rate paid (e) $.0519 $.0600 -- --
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30,1997 ---------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.52 $10.67 $9.66 $10.47 $ 9.80 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .21(b) .46(b) .40(b) .50 .52 .55
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .68 .99 1.05 (.85) .51 (.28)
Net increase (decrease) in net asset
value from operations .89 1.45 1.45 (.35) 1.03 .27
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.22) (.48) (.44) (.09) (.36) (.47)
Tax return of capital -0- -0- -0- (.02) -0- -0-
Distributions from net realized gains (.61) (.12) -0- (.35) -0- -0-
Total dividends and distributions (.83) (.60) (.44) (.46) (.36) (.47)
Net asset value, end of period $11.58 $11.52 $10.67 $ 9.66 $10.47 $ 9.80
TOTAL RETURN
Total investment return based on net
asset value(c) 7.94% 13.96% 15.47% (3.44)% 10.65% 2.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $43,577 $44,441 $49,107 $64,027 $106,034 $152,617
Ratio of expenses to average net assets 3.00%(d) 2.93% 3.02% 2.67% 2.32% 2.33%
Ratio of net investment income to
average net assets 3.53%(d) 4.13% 4.81% 3.82% 6.85% 5.47%
Portfolio turnover rate 169% 108% 92% 126% 101% 108%
Average commission rate paid (e) $.0519 $.0600 -- -- -- --
</TABLE>
See footnote summary on page 17.
16
ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
------------------
NOVEMBER 1,1996(A)
TO
APRIL 30, 1997
(UNAUDITED)
------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .25(b)
Net realized and unrealized gain on investments
and foreign currency transactions 2.27
Net increase in net asset value from operations 2.52
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.27)
Distributions from net realized gains (.61)
Total dividends and distributions (.88)
Net asset value, end of period $11.64
TOTAL RETURN
Total investment return based on net asset value(c) 8.48%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $73
Ratio of expenses to average net assets 2.07%(d)
Ratio of net investment income to average net assets 4.56%(d)
Portfolio turnover rate 169%
Average commission rate paid $.0519
(a) Commencement of distribution.
(b) Based on average shares outstanding.
(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) Annualized.
(e) 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. This amount includes commissions paid to foreign
brokers which may materially affect the rate shown. Amounts paid in foreign
currencies have been converted into US dollars using the prevailing exchange
rate on the date of the transaction.
17
ALLIANCE INCOME BUILDER FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
THOMAS M. PERKINS, SENIOR VICE PRESIDENT
ANDREW M. ARAN, SENIOR VICE PRESIDENT
CORINNE L. MOLOF, VICE PRESIDENT
VITA M. PIKE, 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.
18
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 High Yield Fund
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
Alliance/Regent Sector Opportunity 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 Real Estate Investment 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
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
19
ALLIANCE INCOME BUILDER FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
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
