ALLIANCE UTILITY INCOME FUND
ANNUAL REPORT
NOVEMBER 30, 1995
LETTER TO SHAREHOLDERS ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
January 15, 1996
Dear Shareholder:
Alliance Utility Income Fund benefited from the sustained rally in the U.S.
stock market over much of 1995. As shown in the table below, the Fund provided
favorable investment returns for shareholders during the annual reporting
period ended November 30, 1995. Also shown are the strong returns over the
period for the overall U.S. stock market, represented by the S&P 500-stock
Index, and for the New York Stock Exchange (NYSE) Utility Index. (Complete
descriptions of these unmanaged benchmarks appear on page 4):
12 Months Ended November 30, 1995
Total Return Ending NAV
------------ ----------
ALLIANCE UTILITY INCOME FUND
Class A +19.58% $10.22
Class B +18.66% $10.20
Class C +18.76% $10.22
S&P 500 +36.95%
NYSE UTILITY INDEX +32.80%
The Fund's total returns are based on the net asset values of each class of
shares as of November 30; additional investment results appear on page 3. Also
provided on page 4 is a chart that shows the performance of a hypothetical
$10,000 initial investment in Alliance Utility Income Fund Class A shares from
inception through the end of November.
MARKET REVIEW: 1995
During 1995 telecommunication services and electric utility stocks performed
very well on an absolute basis relative to their performance in the past
several years. The NASDAQ Telecom Index ended 1995 up 35.1% for the year and
the Philadelphia Electric Utility Index gained 28.6%. The utility stocks of
emerging markets had another disappointing year; overall stock market
performance declined 9.2% (as measured by Morgan Stanley's Emerging Markets
Index) while the overall stock market in the U.S. (as measured by the S&P 500),
posted an impressive gain of 37.6% for the full calendar year.
We attribute the solid absolute performance of most utilities to a number of
factors, including a declining interest rate environment, positive regulatory
decisions, increased anticipation of telecommunications legislation, a pick up
in merger and acquisition activity and overall financial improvement (i.e.,
significant free cash flow generation, stronger balance sheets, solid earnings
and lower dividend payout ratios).
PERFORMANCE REVIEW
Throughout the past year the Fund's electric utility positions have been
largely focused on high quality companies with strong cash flow and improving
competitive positions. Overall, the domestic holdings in this area delivered
strong performance in 1995.
During the summer we significantly increased the portfolio's exposure to
telecommunication services and equipment. Our basis for overweighting these
two areas was improved valuations in the telecom services sector resulting
from poor performance of the group over the previous 18 months. In
addition, we had greater conviction in the long-term global growth and
profitability potential for the telecom equipment sector.
During the second half of the year, telecom services significantly outperformed
the S&P 500, but the telecom equipment sector experienced a sharp sell-off in
the fourth quarter of 1995.
Fortunately, the Fund's exposure to the poorly performing emerging markets was
underweighted throughout much of the year.
OUTLOOK AND INVESTMENT STRATEGY: 1996
Our forecast for the top performers in 1996, in order of preference, includes
telecom equipment stocks, telecom services and domestic electric utilities. We
are also optimistic about opportunities among several areas within the emerging
markets. As a result, our portfolio strategy for 1996 is to maintain about 25%
of the Fund's assets in telecom equipment stocks; to increase exposure to
emerging market utilities; to modestly increase the weighting in telecom
services, and to selectively reduce the weighting in domestic electric
utilities as these stocks become fully valued. (We have already begun to reduce
1
ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
exposure to the electric sector based solely on valuation, and are now focusing
on the best relative values within the group.)
In summary, we believe 1996 has the potential to be another strong absolute
performance year driven by telecom equipment and telecom services stocks, and
improving performance from emerging markets. Our positive outlook is based on
the following expectations: a declining global interest rate environment; low
to moderate global inflation; improving global economies; and finally, an
extended global business cycle-all of which will help to fuel higher
expectations for cash flow growth and more predictable future earnings.
Thank you for your interest and investment in Alliance Utility Income Fund. We
look forward to reporting the Fund's progress to you in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Gregory G. Allison
Portfolio Manager
2
INVESTMENT RESULTS ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF NOVEMBER 30, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +19.58% +14.48%
. Since Inception* +5.87% +3.74%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year +18.66% +14.66%
. Since Inception* +5.06% +4.16%
CLASS C SHARES
. One Year +18.76%
. Since Inception* +5.15%
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: 10/18/93.
3
ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
ALLIANCE UTILITY INCOME FUND
$10,000 INVESTMENT OVER LIFE OF FUND:
10/31/93 TO 11/30/95
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
$8,000
10/31/93 11/30/95
NYSE
UTILITY INDEX
S&P 500
UTILITY INCOME FUND
CLASS A: $10,810
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Utility Income Fund Class A shares (since inception) after deducting
the maximum 4.25% sales charge, and with dividends and capital gains
reinvested. Performance for Class B and Class C shares will vary from the
results shown above due to differences in expenses charged to those classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The unmanaged Standard and Poor's 500-stock Index includes 500 U.S. stocks, and
is a common measure of the performance of the U.S. stock market.
The New York Stock Exchange Utility Index is comprised of all utility issues
traded on the Exchange.
When comparing Alliance Utility Income Fund to the indices shown above, you
should note that the Fund's performance reflects the maximum sales charge of
4.25% while no such charges are reflected in the performance of the indices.
Utility Income Fund
S&P 500
NYSEUtility Index
4
TEN LARGEST HOLDINGS
NOVEMBER 30, 1995 ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
PERCENT OF
COMPANY COUNTRY VALUE NET ASSETS
- -------------------------------------------------------------------------------
AT & T Corp. United States $1,181,400 6.8%
Public Service Company of New Mexico United States 838,950 4.9
New York State Electric & Gas Corp. United States 834,600 4.8
FPL Group, Inc. United States 824,125 4.8
AirTouch Communications, Inc. United States 792,200 4.6
MCI Communications Corp. United States 722,250 4.2
DSC Communications Corp. United States 645,887 3.7
Nokia Corp. (ADR) Finland 634,725 3.7
Houston Industries, Inc. United States 599,325 3.5
Portland General Corp. United States 587,600 3.4
$7,661,062 44.4%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED NOVEMBER 30, 1995
_______________________________________________________________________________
SHARES
----------------------
HOLDINGS
PURCHASES COUNTRY BOUGHT 11/30/95
- -------------------------------------------------------------------------------
AirTouch Communications, Inc. United States 15,900 27,200
AT&T Corp. United States 12,500 17,900
DSC Communications Corp. United States 16,300 16,300
General Instrument Corp. United States 14,900 14,900
Houston Industries, Inc. United States 13,100 13,100
New York State Electric & Gas Corp. United States 32,100 32,100
Nokia Corp. (ADR) Finland 11,700 11,700
Tele-Communications, Inc. Cl.A United States 27,800 27,800
United Sates Cellular Corp. United States 14,700 14,700
U.S. West, Inc. United States 11,800 17,600
HOLDINGS
SALES SOLD 11/30/95
- -------------------------------------------------------------------------------
American Electric Power, Inc. United States 8,100 -0-
Duke Power Co. United States 6,700 -0-
Enron Global Power Pipelines United States 9,200 -0-
GTE Corp. United States 9,000 -0-
Louisiana Gas & Electric Energy Corp. United States 7,000 -0-
NIPSCO Industries, Inc. United States 10,000 -0-
Pacific Gas & Electric Co. United States 8,400 -0-
Southern Co. United States 13,000 -0-
Teco Energy, Inc. United States 12,700 -0-
Unicom Corp. United States 8,800 -0-
5
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
COMMON & PREFERRED STOCKS AND
OTHER INVESTMENTS-94.4%
UNITED STATES INVESTMENTS-82.4%
PUBLIC UTILITIES-79.7%
ELECTRIC-37.2%
Allegheny Power Systems, Inc. 12,300 $ 341,325
Baltimore Gas & Electric Co. 20,600 548,475
CMS Energy Corp. 5,900 160,775
DPL, Inc. 16,900 405,600
FPL Group, Inc. 19,000 824,125
Houston Industries Inc. 13,100 599,325
New York State Electric & Gas Corp. 32,100 834,600
Oklahoma Gas & Electric Co. 14,000 567,000
Peco Energy Capital LP cv. pfd. 4,400 117,700
Pinnacle West Capital Corp. 5,200 141,700
Portland General Corp. 20,800 587,600
Public Service Company of New Mexico* 47,600 838,950
Texas Utilities Co. 11,500 442,750
6,409,925
GAS-1.0%
Enron Corp. 4,700 176,250
RAILROAD TRANSPORTATION-1.0%
Union Pacific Corp. 2,600 176,150
TELEPHONE-40.5%
AirTouch Communications, Inc.* 27,200 792,200
AT & T Corp. 17,900 1,181,400
DSC Communications Corp.* 16,300 645,887
General Instrument Corp.* 14,900 381,812
MCI Communications Corp. 27,000 722,250
Motorola, Inc. 7,700 471,625
Nynex Corp. 7,100 352,338
Scientific-Atlanta, Inc. 13,200 209,550
Tele-Communications, Inc. Cl.A 27,800 514,300
Telephone & Data Systems, Inc. 3,900 148,688
Tellabs, Inc.* 4,500 176,625
U.S. West Communications Group 17,600 550,000
U.S. West, Inc.* 17,600 316,800
United States Cellular Corp.* 14,700 514,500
6,977,975
13,740,300
ENERGY-2.7%
OIL SERVICES-2.7%
Western Atlas, Inc.* 9,500 454,813
Total United States Investments
(cost $13,167,136) 14,195,113
FOREIGN INVESTMENTS-12.0%
ARGENTINA-1.6%
MetroGas S.A. (ADR) 20,300 180,163
Gas
Telecom Argentina S.A. (ADR)(a) 2,200 96,250
Telephone Utility
276,413
CANADA-2.8%
Northern Telecom, Ltd. 11,100 448,162
Telephone Utility
Canadian National Railway Co. 2,800 42,000
Railroad Transportation
490,162
CHILE-3.2%
Compania Telecomunicacion Chile (ADR) 4,700 338,987
Telephone Utility
Enersis S.A. (ADR)* 8,000 205,000
Electric & Gas Utility
543,987
6
ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
FINLAND-3.7%
Nokia Corp. (ADR) 11,700 $ 634,725
Electronics
KOREA-0.7%
Korea Electric Power Corp. (ADR)* 5,300 129,188
Electric
Total Foreign Investments
(cost $2,055,800) 2,074,475
Total Common & Preferred
Stocks and Other Investments
(cost $15,222,936) 16,269,588
PRINCIPAL
AMOUNT
(000) VALUE
- ----------------------------------------------------------------------
SHORT TERM INVESTMENT-1.7%
Federal Home Loan Mortgage Corp.
5.80%, 12/01/95
(amortized cost $300,000) $300 $ 300,000
TOTALINVESTMENTS-96.1%
(cost $15,522,936) 16,569,588
Other assets less liabilities-3.9% 666,080
NETASSETS-100% $17,235,668
* 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 November 30, 1995,
these securities amounted to $96,250 or 0.6% of net assets.
Glossary:
ADR - American Depository Receipt
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $15,522,936) $16,569,588
Cash, at value (cost $54,864) 48,778
Receivable for investment securities sold 415,829
Receivable from Adviser 144,368
Receivable for capital stock sold 126,459
Deferred organization expenses 96,891
Dividends receivable 34,296
Total assets 17,436,209
LIABILITIES
Payable for capital stock redeemed 64,461
Distribution fee payable 12,101
Accrued expenses 123,979
Total liabilities 200,541
NET ASSETS $17,235,668
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,689
Additional paid-in capital 15,991,921
Accumulated net realized gain on investments and foreign
currency denominated assets and liabilities 201,492
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 1,040,566
$17,235,668
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($2,747,815/
268,998 shares of capital stock issued and outstanding) $10.22
Sales charge-4.25% of public offering price .45
Maximum offering price $10.67
CLASS B SHARES
Net asset value and offering price per share($10,988,019/
1,077,424 shares of capital stock issued and outstanding) $10.20
CLASS C SHARES
Net asset value, redemption and offering price per share($3,499,834
/342,617 shares of capital stock issued and outstanding) $10.22
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995 ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld $4,067) $ 426,913
Interest 48,573 $ 475,486
EXPENSES
Advisory fee 89,692
Distribution fee - Class A 7,027
Distribution fee - Class B 62,638
Distribution fee - Class C 33,529
Administrative 150,627
Custodian 66,756
Audit and legal 60,619
Registration 51,445
Amortization of organization expenses 48,881
Transfer agency 29,596
Director's fees 24,327
Printing 23,611
Total expenses 648,748
Less: expenses waived and assumed by the Adviser
(Note B) (402,047)
Net expenses 246,701
Net investment income 228,785
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 540,677
Net realized gain on foreign currency denominated
assets and liabilities 8,284
Net change in unrealized depreciation of:
Investments 1,346,580
Foreign currency denominated assets and liabilities (6,086)
Net gain on investments 1,889,455
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,118,240
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30,
1995 1994
------------ -----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 228,785 $ 133,020
Net realized gain (loss) on investments and
foreign currency transactions 548,961 (102,949)
Net change in unrealized depreciation of
investments and foreign currency denominated
assets and liabilities 1,340,494 (299,065)
Net increase(decrease)in net assets from operations 2,118,240 (268,994)
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (101,893) (39,724)
Class B (236,075) (65,322)
Class C (137,196) (42,339)
CAPITAL STOCK TRANSACTIONS
Net increase 9,520,734 5,996,770
Total increase 11,163,810 5,580,391
NET ASSETS
Beginning of year 6,071,858 491,467
End of year $17,235,668 $6,071,858
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995 ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Utility Income Fund, Inc. (the 'Fund') organized as a Maryland
corporation on July 28, 1993, is registered under the Investment Company Act of
1940 as a diversified, open-end management investment company. The Fund offers
Class A, Class B and Class C shares. Class A and B shares commenced operations
on October 18, 1993 and Class C shares distribution commenced on October 27,
1993. Class A shares are sold with a front-end sales charge of up to 4.25%.
Class B shares are sold with a contingent deferred sales charge which declines
from 4.00% 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 are sold without an 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. The
following is a summary of the significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last reported sales price, or, if no sale occurred, at the last bid price
quoted at the regular close of the New York Stock Exchange. Over-the-counter
securities not traded on national securities exchanges are valued at the mean
of the closing bid and asked price. Securities which mature in 60 days or less
are valued at amortized cost, which approximates market value. Securities for
which current market quotations are not readily available (including
investments which are subject to limitations as to their sale) are valued at
their fair value as determined in good faith by the Board of Directors.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $189,000 have been deferred and are
being amortized on a straight-line basis through October, 1998.
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.
Net foreign exchange gain of $8,284 represents foreign exchange gains and
losses from sales and maturities of securities, holdings of foreign currencies
exchange gains and losses realized between the trade and settlement dates on
security transactions, and the difference between the amounts of dividends
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net unrealized currency gains and losses from valuing
foreign currency denominated assets and liabilities at period end exchange
rates are reflected as a component of unrealized appreciation of investments
and foreign currency denominated assets and liabilities.
4. 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.
To reflect reclassifications arising from permanent book/tax differences for
the year ended November 30, 1995, $246,379 was reclassified from accumulated
net realized gain on investments and foreign currency denominated assets and
liabilities to distributions in excess of net investment income.
5. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
6. 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.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays its Adviser,
Alliance Capital Management L.P., an advisory fee at an annual rate of .75 of
1% of the Fund's average daily net assets. The fee is accrued daily and paid
monthly. The Adviser has agreed, under the terms of the investment 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
limitation imposed by any state is 2.5% of the first $30 million of its average
daily net assets, 2% of the next $70 million of its average daily net assets
and 1.5% of its average daily net assets in excess of $100 million. For the
same period the Adviser voluntarily agreed to waive its fees. In addition, the
Adviser agreed to reimburse the Fund for operating expenses. Such fees and
expenses amounted to $402,047. Pursuant to the Advisory Agreement, the Fund
paid $150,627 to the Adviser representing the cost of certain legal and
accounting services provided to the Fund by the Adviser for the year ended
November30, 1995. The Fund compensates Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Adviser) under a Services Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. Such compensation amounted to $17,232. 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 $1,910 from
the sale of Class A shares and $18,202 in contingent deferred sales charges
were imposed upon redemptions by shareholders of Class B shares for the year
ended November 30, 1995.
Brokerage commissions paid on securities transactions for the year ended
November 30, 1995, amounted to $92,322, 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 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 Fund's average daily net assets attributable to
the Class A shares and 1% of the average daily net assets attributable to both
Class B and C shares. The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and promotional
activities. The Distributor has incurred expenses in excess of the distribution
costs reimbursed by the Fund in the amount of $725,771 and $293,252 for Class B
and C shares, respectively; such costs may be recovered from the Fund in future
periods as 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 $27,313,624 and $18,436,560, respectively, for the
year ended November 30, 1995. At November 30, 1995, the cost of securities for
federal income tax purposes was $15,563,993. Accordingly, gross unrealized
appreciation of investments was $1,610,400 and gross unrealized depreciation of
investments was $604,805, resulting in net unrealized appreciation of
$1,005,595.
The Fund fully utilized its capital loss carryforward of $101,090 to offset
gain realized during the year ended November 30, 1995.
12
ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 9,000,000,000 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 3,000,000,000 authorized shares. Transactions in capital
stock were as follows:
SHARES AMOUNT
---------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1995 1994 1995 1994
---------- ---------- ------------ -------------
CLASS A
Shares sold 280,485 155,996 $ 2,562,935 $1,525,830
Shares issued in
reinvestment of
dividends 5,656 3,544 52,789 32,263
Shares redeemed (136,178) (63,588) (1,281,378) (616,988)
Net increase 149,963 95,952 $ 1,334,346 $ 941,105
CLASS B
Shares sold 1,060,967 325,292 $10,085,756 $3,102,363
Shares issued in
reinvestment of
dividends 13,786 5,345 130,190 48,378
Shares redeemed (259,756) (92,803) (2,433,366) (854,700)
Net increase 814,997 237,834 $ 7,782,580 $2,296,041
CLASS C
Shares sold 152,939 333,565 $ 1,435,226 $3,126,974
Shares issued in
reinvestment of
dividends 12,020 2,937 112,263 26,528
Shares redeemed (117,943) (42,784) (1,143,681) (393,878)
Net increase 47,016 293,718 $ 403,808 $2,759,624
13
FINANCIAL HIGHLIGHTS ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
OCT. 18,1993*
YEAR ENDED NOVEMBER 30, TO
----------------------- NOVEMBER 30,
1995 1994 1993
------------ --------- ------------
Net asset value, beginning of period $ 8.97 $ 9.92 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .27**(c) .42** .02**
Net realized and unrealized gain (loss)
on investments 1.43 (.89) (.10)
Net increase (decrease) in net asset
value from operations 1.70 (.47) (.08)
LESS: DISTRIBUTIONS
Dividends from net investment income (.45) (.48) -0-
Net asset value, end of period $10.22 $ 8.97 $ 9.92
TOTAL RETURN
Total investment return based on net
asset value (a) 19.58% (4.86)% (.80)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,748 $1,068 $229
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.50% 1.50% 1.50%(b)
Expenses, before waivers/reimbursements 4.86% 13.72% 145.63%(b)
Net investment income, net of waivers/
reimbursements 2.48% 4.13% 2.35%(b)
Net investment loss, before waivers/
reimbursements (.46)% (8.09)% (141.77)%(b)
Portfolio turnover rate 162% 30% 11%
See footnote summary on page 16.
14
ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
OCT. 18,1993*
YEAR ENDED NOVEMBER 30, TO
----------------------- NOVEMBER 30,
1995 1994 1993
------------ --------- ------------
Net asset value, beginning of period $ 8.96 $ 9.91 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .18**(c) .37** .01**
Net realized and unrealized gain (loss)
on investments 1.45 (.91) (.10)
Net increase (decrease) in net asset
value from operations 1.63 (.54) (.09)
LESS: DISTRIBUTIONS
Dividends from net investment income (.39) (.41) -0-
Net asset value, end of period $10.20 $ 8.96 $ 9.91
TOTAL RETURN
Total investment return based on net
asset value (a) 18.66% (5.59)% (.90)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $10,988 $2,353 $244
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 2.20% 2.20% 2.20%(b)
Expenses, before waivers/reimbursements 5.34% 14.42% 133.62%(b)
Net investment income, net of waivers/
reimbursements 1.60% 3.53% 2.84%(b)
Net investment loss, before waivers/
reimbursements (2.71)% (8.69)% (128.58)%(b)
Portfolio turnover rate 162% 30% 11%
See footnote summary on page 16.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
OCT. 27,1993*
YEAR ENDED NOVEMBER 30, TO
----------------------- NOVEMBER 30,
1995 1994 1993
------------ --------- ------------
Net asset value, beginning of period $ 8.97 $ 9.92 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .18**(c) .39** .01**
Net realized and unrealized gain (loss)
on investments 1.46 (.93) (.09)
Net increase (decrease) in net asset
value from operations 1.64 (.54) (.08)
LESS: DISTRIBUTIONS
Dividends from net investment income (.39) (.41) -0-
Net asset value, end of period $10.22 $ 8.97 $ 9.92
TOTAL RETURN
Total investment return based on net
asset value (a) 18.76% (5.58)% (.80)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,500 $2,651 $18
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 2.20% 2.20% 2.20%(b)
Expenses, before waivers/reimbursements 5.99% 14.42% 148.03%(b)
Net investment income, net of waivers/
reimbursements 1.88% 3.60% 3.08%(b)
Net investment loss, before waivers/
reimbursements (.49)% (8.62)% (142.75)%(b)
Portfolio turnover rate 162% 30% 11%
* Commencement of distributions.
** Net of fee waived and expenses reimbursed by the Adviser.
(a) 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 charges are not reflected in the calculation of total investment
return. Total investment return calculated for period of less than one year is
not annualized.
(b) Annualized.
(c) Based on average shares outstanding.
16
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
ALLIANCE UTILITY INCOME FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance Utility Income Fund, Inc.
(the 'Fund') at November 30, 1995, the result of its operations for the year
then ended and the changes in its net assets and the financial highlights for
the two years then ended and for the period October 18, 1993 (commencement of
operations) to November 30, 1993, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as 'financial statements') are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1995 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
January 16, 1996
17
ALLIANCE UTILITY INCOME FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
ANDREW M. ARAN, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
(1) Member of the Audit Committee.
18
ALLIANCE UTILITY INCOME FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS 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.
UIFAR
