N-CSRS 1 edg11805_sr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-00126 ALLIANCEBERNSTEIN GROWTH AND INCOME FUND, INC. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley AllianceBernstein L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: October 31, 2006 Date of reporting period: April 30, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. SEMI-ANNUAL REPORT AllianceBernstein Growth & Income Fund Semi-Annual Report April 30, 2006 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS Investment Products Offered o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission's (the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com. AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the funds, and is a member of the NASD. AllianceBernstein(R) and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. June 16, 2006 Semi-Annual Report This report provides management's discussion of fund performance for AllianceBernstein Growth and Income Fund (the "Fund") for the semi-annual reporting period ended April 30, 2006. Investment Objective and Policies The objective of this open-ended fund is long-term growth of capital. The Fund invests primarily in the equity securities of U.S. companies that AllianceBernstein believes are undervalued. The Fund also invests in high-quality securities of non-U.S. issuers. Investment Results The table on page 4 shows the Fund's performance compared to its benchmark, the Russell 1000 Value Index, for the six- and 12-month periods ended April 30, 2006. Also included in the table are returns for the Fund's peer group, as represented by the Lipper Large-Cap Value Funds Average (the "Lipper Average"). Funds in the Lipper Average have generally similar investment objectives to the Fund, although some may have different investment policies and sales and management fees. The Fund underperformed its benchmark and its Lipper Average during both the six-month and 12-month periods ended April 30, 2006. During both periods, disappointing relative performance was due primarily to stock selection. More specifically, the Fund's relative performance shortfall was rooted in what stocks the Fund has not owned, as opposed to the stocks that it has owned. On the sector front, the Fund's underweighted positions in traditional value sectors, such as energy and financials, continued to hurt the Fund's performance. On the stock front, stock selection in the health care sector was weak. Market Review and Investment Strategy U.S. stocks rose faster than their long-term trend during the six- and 12-month periods ended April 30, 2006, as the economy and corporate profits remained buoyant despite escalating geopolitical tension, surging commodity prices and rising interest rates. As they have since the end of the internet bubble, smaller companies and deep value stocks outperformed U.S. broad market indices in both periods. The Fund's Relative Value Investment team ("the team") continues to see great investment opportunity in large, high-quality stocks which have severely underperformed the broad market over the past five years, despite delivering strong fundamental performance. In an investment period generally characterized by a low concern for risk, the best performers have been the riskiest asset classes: emerging markets, small companies and the stocks of volatile businesses. This phenomenon has been dominant around the world for a number of years now. The team has always sought to buy high-quality businesses that are undervalued. It is the cornerstone of a disciplined investment process that has served the Fund's shareholders well over the long-term. The team remains ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 1 fully committed to executing on its strategy and believes recent underperformance is mostly a function of the market's unusual appetite for the types of companies that we generally limit the Fund's exposure to. As the global economic and corporate profit cycles mature, the team expects investor appetite for risk taking to approach more historically normal levels. The team believes this could benefit many of the big, high-quality holdings similar to stocks that currently populate the Fund. The Fund continues to maintain a lower-than-benchmark and lower-than-peer group profile in winning "value" sectors like commodities, including the energy and basic materials sectors. The team believes prices have detached from fundamentals in many of these areas as speculators have become more involved in the short-term direction of stock prices. In some respects, the momentum building in these areas is reminiscent of the excesses that defined the prior investment style cycle top in early 2000. In that period, "growth" style investing was all the rage and companies like Yahoo, Cisco and Intel were the "can't get enough of" stocks. Today, companies like Burlington Northern and Phelps Dodge, a railroad and a copper mining company, are now considered "growth" stocks. 2 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND HISTORICAL PERFORMANCE An Important Note About the Value of Historical Performance The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein Investments at (800) 227-4618. You should read the prospectus carefully before you invest. Returns are annualized for periods longer than one year. All fees and expenses related to the operation of the Fund have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Fund's quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes. Benchmark Disclosure The unmanaged Russell 1000 Value Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Russell 1000 Value Index contains those securities in the Russell 1000 Index with a less-than-average growth orientation. The Russell 1000 Index is comprised of 1000 of the largest capitalized companies that are traded in the United States. For the six- and 12-month periods ended April 30, 2006, the Lipper Large-Cap Value Funds Average consisted of 506 and 496 funds, respectively. These funds have generally similar investment objectives to the Fund, although some may have different investment policies and sales and management fees. An investor cannot invest directly in an index or average, and their results are not indicative of the performance for any specific investment, including the Fund. A Word About Risk Value investing does not guarantee profit or eliminate risk. Not all companies whose stocks are considered to be value stocks are able to turn their businesses around or successfully employ corrective strategies which would result in stock prices that do not rise as initially expected. The Fund's assets can be invested in foreign securities which may magnify asset value fluctuations due to changes in foreign exchange rates and the possibility of substantial volatility due to political and economic uncertainties in foreign countries. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the Fund's prospectus. (Historical Performance continued on next page) ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 3 HISTORICAL PERFORMANCE (continued from previous page) THE FUND VS. ITS BENCHMARK Returns ------------------------------- PERIODS ENDED APRIL 30, 2006 6 Months 12 Months ---------- ----------- AllianceBernstein Growth & Income Fund Class A 9.17% 13.12% Class B 8.86% 12.24% Class C 8.84% 12.21% Advisor Class* 9.05% 13.28% Class R* 8.97% 12.60% Class K* 8.99% 12.92% Class I* 9.27% 13.21% Russell 1000 Value Index 12.87% 18.30% Lipper Large-Cap Value Funds Average 11.05% 16.53% ------------------------------------------------------------------------------- * Please note that these share classes are for investors purchasing shares through institutional pension plans. See Historical Performance and Benchmark disclosures on previous page. (Historical Performance continued on next page) 4 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF APRIL 30, 2006 --------------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 13.12% 8.30% 5 Years 2.22% 1.36% 10 Years 10.20% 9.71% Class B Shares 1 Year 12.24% 8.24% 5 Years 1.44% 1.44% 10 Years(a) 9.53% 9.53% Class C Shares 1 Year 12.21% 11.21% 5 Years 1.44% 1.44% 10 Years 9.37% 9.37% Advisor Class Shares+ 1 Year 13.28% 13.28% 5 Years 2.46% 2.46% Since Inception* 10.37% 10.37% Class R Shares+ 1 Year 12.60% 12.60% Since Inception* 10.99% 10.99% Class K Shares+ 1 Year 12.92% 12.92% Since Inception* 6.73% 6.73% Class I Shares+ 1 Year 13.21% 13.21% Since Inception* 7.01% 7.01% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 10/1/96 for Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares. + These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through institutional pension plans. The inception dates for these share classes are listed above. See Historical Performance disclosures on page 3. (Historical Performance continued on next page) ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 5 HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2006) ------------------------------------------------------------------------------- SEC Returns Class A Shares 1 Year 4.47% 5 Years 2.55% 10 Years 9.81% Class B Shares 1 Year 4.40% 5 Years 2.60% 10 Years(a) 9.60% Class C Shares 1 Year 7.38% 5 Years 2.60% 10 Years 9.43% Advisor Class Shares+ 1 Year 9.18% 5 Years 3.67% Since Inception* 10.30% Class R Shares+ 1 Year 8.80% Since Inception* 10.69% Class K Shares+ 1 Year 9.12% Since Inception* 5.78% Class I Shares+ 1 Year 9.40% Since Inception* 6.09% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 10/1/96 for Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares. + Please note that these share classes are for investors purchasing shares through institutional pension plans. The inception dates for these share classes are listed above. See Historical Performance disclosures on page 3. 6 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND FUND EXPENSES As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses The table below provides information about actual account values and actual expenses. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the hypothetical example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Ending Account Value Account Value Expenses Paid November 1, 2005 April 30, 2006 During Period* ------------------------------ ------------------------------ ------------------------------ Actual Hypothetical Actual Hypothetical** Actual Hypothetical -------------- -------------- -------------- -------------- -------------- -------------- Class A $ 1,000 $ 1,000 $ 1,091.74 $ 1,019.54 $ 5.50 $ 5.31 Class B $ 1,000 $ 1,000 $ 1,088.62 $ 1,015.82 $ 9.37 $ 9.05 Class C $ 1,000 $ 1,000 $ 1,088.37 $ 1,015.92 $ 9.27 $ 8.95 Advisor Class $ 1,000 $ 1,000 $ 1,090.52 $ 1,020.88 $ 4.09 $ 3.96 Class R $ 1,000 $ 1,000 $ 1,089.65 $ 1,018.35 $ 6.74 $ 6.51 Class K $ 1,000 $ 1,000 $ 1,089.91 $ 1,020.08 $ 4.92 $ 4.76 Class I $ 1,000 $ 1,000 $ 1,092.71 $ 1,021.22 $ 3.74 $ 3.61
* Expenses are equal to the classes' annualized expense ratios of 1.06%, 1.81%, 1.79%, 0.79%, 1.30%, 0.95% and 0.72%, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). ** Assumes 5% return before expenses. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 7 PORTFOLIO SUMMARY April 30, 2006 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): 4,920.7 SECTOR BREAKDOWN* [ ] 28.2% Finance [PIE CHART OMITTED] [ ] 16.2% Consumer Services [ ] 12.8% Technology [ ] 8.8% Energy [ ] 8.6% Capital Goods [ ] 7.2% Consumer Staples [ ] 6.0% Health Care [ ] 5.3% Utilities [ ] 3.3% Transportation [ ] 3.2% Basic Industry [ ] 0.4% Consumer Manufacturing TEN LARGEST HOLDINGS April 30, 2006 (unaudited) Company U.S. $ Value Net Assets ---------------------------------------------------------------------------- Citigroup, Inc. $247,252,500 5.0% JPMorgan Chase & Co. 233,707,000 4.7 American International Group, Inc. 207,788,625 4.2 Time Warner, Inc. 183,570,000 3.7 Home Depot, Inc. 179,820,762 3.7 Fannie Mae 174,570,000 3.5 Microsoft Corp. 171,465,000 3.5 General Electric Co. 147,007,500 3.0 WellPoint, Inc. 145,237,600 3.0 International Business Machines Corp. 132,990,000 2.9 ---------------------------------------------------------------------------- $1,823,408,987 37.2% * All data are as of April 30, 2006. The Fund's sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. Please Note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Fund's prospectus. 8 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS April 30, 2006 (unaudited) Company Shares U.S. $ Value ------------------------------------------------------------------------ COMMON STOCKS-99.6% Finance-28.1% Banking-0.6% The Bank of New York, Inc. 850,000 $29,877,500 -------------- Banking - Money Center-5.7% JPMorgan Chase & Co. 5,150,000 233,707,000 Wachovia Corp.* 800,000 47,880,000 -------------- 281,587,000 Banking - Regional-4.1% Bank of America Corp. 2,647,900 132,183,168 Northern Trust Corp.* 1,150,000 67,723,500 -------------- 199,906,668 Brokerage & Money Management-1.2% Goldman Sachs Group, Inc. 176,900 28,355,301 Merrill Lynch & Co., Inc.* 418,100 31,884,306 -------------- 60,239,607 Insurance-7.6% ACE, Ltd.* 1,400,000 77,756,000 American International Group, Inc. 3,184,500 207,788,625 Axis Capital Holdings, Ltd. 3,001,600 89,507,712 -------------- 375,052,337 Mortgage Banking-3.6% Fannie Mae 3,450,000 174,570,000 -------------- Miscellaneous-5.3% Ambac Financial Group, Inc.* 150,000 12,354,000 Citigroup, Inc. 4,950,000 247,252,500 -------------- 259,606,500 -------------- 1,380,839,612 Consumer Services-16.1% Broadcasting & Cable-9.3% CBS Corp. 750,000 19,102,500 Comcast Corp. Cl.A(a) 1,150,000 35,592,500 News Corp.* 7,750,000 132,990,000 Time Warner, Inc.* 10,550,000 183,570,000 Viacom, Inc. Cl. B(a) 1,850,000 73,685,500 Westwood One, Inc. 1,200,000 11,580,000 -------------- 456,520,500 Restaurants & Lodging-2.4% Hilton Hotels Corp.* 2,750,000 74,085,000 McDonald's Corp. 1,334,400 46,130,208 -------------- 120,215,208 ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 9 Company Shares U.S. $ Value ------------------------------------------------------------------------- Retail - General Merchandise-4.4% Home Depot, Inc.* 4,503,400 $179,820,762 Lowe's Cos., Inc. 392,100 24,721,905 The Gap, Inc. 709,300 12,831,237 -------------- 217,373,904 -------------- 794,109,612 Technology-12.7% Communication Equipment-1.4% Cisco Systems, Inc.(a) 1,420,700 29,763,665 Juniper Networks, Inc.(a) 395,100 7,301,448 Motorola, Inc. 1,400,000 29,890,000 -------------- 66,955,113 Computer Hardware/Storage-4.9% EMC Corp.(a) 5,750,000 77,682,500 International Business Machines Corp. 1,750,000 144,095,000 Sun Microsystems, Inc.(a) 4,444,700 22,223,500 -------------- 244,001,000 Computer Services-0.2% Fiserv, Inc.(a) 250,000 11,270,000 -------------- Computer Software-3.5% Microsoft Corp. 7,100,000 171,465,000 -------------- Semiconductor Capital Equipment-1.7% Applied Materials, Inc.* 2,429,300 43,605,935 KLA-Tencor Corp. 827,800 39,866,848 -------------- 83,472,783 Semiconductor Components-0.6% Advanced Micro Devices, Inc.(a)* 908,700 29,396,445 -------------- Software-0.4% BEA Systems, Inc.(a)* 1,200,000 15,900,000 Check Point Software Technologies Ltd.(a) 250,000 4,837,500 -------------- 20,737,500 -------------- 627,297,841 Energy-8.8% Domestic Producers-1.6% Noble Energy, Inc. 1,750,000 78,715,000 -------------- International-4.1% Chevron Corp. 1,250,000 76,275,000 Exxon Mobil Corp. 2,007,500 126,633,100 -------------- 202,908,100 Oil Service-2.3% Baker Hughes, Inc. 375,600 30,359,748 GlobalSantaFe Corp.* 46,800 2,864,628 Nabors Industries, Ltd.(a)* 2,083,600 77,780,788 -------------- 111,005,164 10 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Company Shares U.S. $ Value ------------------------------------------------------------------------- Miscellaneous-0.8% ConocoPhillips 604,500 $40,441,050 -------------- 433,069,314 Capital Goods-8.5% Electrical Equipment-1.7% Emerson Electric Co. 1,016,600 86,360,170 -------------- Machinery-0.4% ITT Industries, Inc. 384,800 21,637,304 -------------- Miscellaneous-6.4% General Electric Co. 4,250,000 147,007,500 Illinois Tool Works, Inc. 422,000 43,339,400 United Technologies Corp. 1,950,000 122,479,500 -------------- 312,826,400 -------------- 420,823,874 Consumer Staples-7.2% Household Products-4.6% Colgate-Palmolive Co. 250,000 14,780,000 Fortune Brands, Inc. 1,600,000 128,480,000 The Procter & Gamble Co. 1,400,000 81,494,000 -------------- 224,754,000 Retail - Food & Drug-0.1% CVS Corp.* 218,400 6,490,848 -------------- Tobacco-2.5% Altria Group, Inc. 951,900 69,641,004 Loews Corp. - Carolina Group* 1,048,600 53,730,264 -------------- 123,371,268 -------------- 354,616,116 Health Care-6.0% Drugs-2.7% Eli Lilly & Co. 525,000 27,783,000 Forest Laboratories, Inc.(a)* 500,000 20,190,000 Merck & Co., Inc. 936,700 32,241,214 Pfizer, Inc. 1,500,000 37,995,000 Wyeth 249,300 12,133,431 -------------- 130,342,645 Medical Services-3.3% Health Management Associates, Inc. Cl.A* 365,000 7,559,150 UnitedHealth Group, Inc. 234,600 11,669,004 WellPoint, Inc.(a) 2,045,600 145,237,600 -------------- 164,465,754 -------------- 294,808,399 Utilities-5.3% Electric & Gas Utility-0.8% FirstEnergy Corp. 750,000 38,032,500 -------------- ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 11 Company Shares U.S. $ Value ------------------------------------------------------------------------- Telephone Utility-4.5% AT&T, Inc. 3,850,000 $100,908,500 BellSouth Corp. 1,148,400 38,792,952 Verizon Communications, Inc. 2,500,000 82,575,000 -------------- 222,276,452 -------------- 260,308,952 Transportation-3.3% Air Freight-2.6% United Parcel Service, Inc. Cl.B* 1,550,000 125,658,500 -------------- Railroads-0.7% Union Pacific Corp. 397,400 36,246,854 -------------- 161,905,354 Basic Industry-3.2% Chemicals-3.0% Air Products & Chemicals, Inc.* 1,850,000 126,762,000 E.I. Du Pont de Nemours & Co. 484,400 21,362,040 -------------- 148,124,040 Containers - Metal/Glass/Paper-0.2% Ball Corp. 265,000 10,594,700 -------------- 158,718,740 Consumer Manufacturing-0.4% Textile Products-0.4% Building Materials Holding Corp.* 539,445 18,028,252 -------------- Total Investments Before Security Lending Collateral-99.6% (cost $4,200,911,583) 4,904,526,066 -------------- INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-4.1% Short-Term Investment UBS Private Money Market Fund, LLC, 4.74% (cost $200,375,550) 200,375,550 200,375,550 -------------- Total Investments-103.7% (cost $4,401,287,133) 5,104,901,616 Other assets less liabilities-(3.7)% (184,191,483) -------------- Net Assets-100% $4,920,710,133 -------------- * Represents entire or partial securities out on loan. See Note E for securities lending information. (a) Non-income producing security. See notes to financial statements. 12 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND STATEMENT OF ASSETS & LIABILITIES April 30, 2006 (unaudited) Statement of Assets & Liabilities Assets Investments in securities, at value (cost $4,401,287,133- including investments of cash collateral for securites loaned of $200,375,550) $5,104,901,616(a) Receivable for investment securities sold 104,338,169 Receivable for capital stock sold 13,544,593 Dividends receivable 9,090,596 --------------- Total assets 5,231,874,974 Liabilities Due to custodian 7,214,529 Payable for collateral on securities loaned 200,375,550 Payable for investment securities purchased 65,535,339 Payable for capital stock redeemed 31,256,284 Advisory fee payable 2,045,108 Transfer Agent fee payable 970,648 Distribution fee payable 557,462 Administrative fee payable 7,748 Accrued expenses 3,202,173 --------------- Total liabilities 311,164,841 --------------- Net Assets $4,920,710,133 Composition of Net Assets Capital stock, at par $ 12,290,059 Additional paid-in capital 4,501,046,250 Undistributed net investment income 17,354,847 Accumulated net realized loss on investment transactions (313,595,506) Net unrealized appreciation of investments 703,614,483 --------------- $4,920,710,133 Net Asset Value Per Share--21 billion shares of capital stock authorized, $.01 par value Shares Net Asset Class Net Assets Outstanding Value ------------------------------------------------------------------------ A $ 2,537,979,916 628,545,826 $ 4.04* B $ 1,556,382,605 393,297,401 $ 3.96 C $ 624,879,529 157,472,306 $ 3.97 Advisor $ 198,646,028 48,987,996 $ 4.05 R $ 2,301,469 573,524 $ 4.01 K $ 44,968 11,129 $ 4.04 I $ 475,618 117,736 $ 4.04 * The maximum offering price per share for Class A shares was $4.22 which reflects a sales charge of 4.25%. (a) Includes securities on loan with a value of $193,791,504 (see Note E). See notes to financial statements. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 13 STATEMENT OF OPERATIONS Six Months Ended April 30, 2006 (unaudited) Investment Income Dividends $53,664,395 Interest 394,988 $54,059,383 Expenses Advisory fee 12,880,265 Distribution fee--Class A 3,569,366 Distribution fee--Class B 8,326,888 Distribution fee--Class C 3,274,911 Distribution fee--Class R 5,060 Distribution fee--Class K 35 Transfer agency--Class A 3,056,508 Transfer agency--Class B 2,211,616 Transfer agency--Class C 812,577 Transfer agency--Advisor Class 388,516 Transfer agency--Class R 2,665 Transfer agency--Class K 28 Transfer agency--Class I 25 Printing 631,344 Custodian 330,106 Registration 87,391 Legal 61,924 Administrative 45,584 Audit 33,051 Directors' fees 15,567 Miscellaneous 140,253 Total expenses 35,873,680 Less: expense offset arrangement (see Note B) (84,489) Net expenses 35,789,191 Net investment income 18,270,192 Realized and Unrealized Gain on Investment Transactions Net realized gain on investment transactions 191,123,347 Net change in unrealized appreciation/depreciation of investments 240,945,739 Net gain on investment transactions 432,069,086 Net Increase in Net Assets from Operations $450,339,278 See notes to financial statements. 14 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND STATEMENT OF CHANGES IN NET ASSETS Statement of Changes in Net Assets Six Months Ended Year Ended April 30, 2006 October 31, (unaudited) 2005 --------------- --------------- Increase (Decrease) in Net Assets from Operations Net investment income $ 18,270,192 $ 61,673,862 Net realized gain on investment transactions 191,123,347 1,062,096,564 Net change in unrealized appreciation/depreciation of investments 240,945,739 (590,725,074) Net increase in net assets from operations 450,339,278 533,045,352 Dividends to Shareholders from Net investment income Class A (20,532,682) (15,823,255) Class B (5,889,478) (4,834,738) Class C (2,296,026) (1,811,072) Advisor Class (3,827,969) (7,272,607) Class R (21,113) (631) Class K (93) (29) Class I (119) (34) Capital Stock Transactions Net decrease (841,625,570) (2,174,499,337) Total decrease (423,853,772) (1,671,196,351) Net Assets Beginning of period 5,344,563,905 7,015,760,256 End of period, (including undistributed net investment income of $17,354,847 and $31,652,135, respectively) $4,920,710,133 $5,344,563,905 See notes to financial statements. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 15 NOTES TO FINANCIAL STATEMENTS April 30, 2006 (unaudited) NOTE A Significant Accounting Policies AllianceBernstein Growth and Income Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund offers Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I 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 may 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% 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 subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Fund. 1. Security Valuation Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Fund's Board of Directors. In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities not listed 16 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND on an exchange but traded on The NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market, ("OTC") (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, AllianceBernstein L.P. (prior to February 24, 2006 known as Alliance Capital Management L.P.) (the "Adviser") may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer's financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because, most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. 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 any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 17 Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned. 3. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date or as soon as the Fund is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the trade date the securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Fund accretes discounts and amortizes premiums as adjustments to interest income. 4. Class Allocations All income earned and expenses incurred by the Fund are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Realized and unrealized gains and losses are allocated among the various share classes based on relative net assets. 5. Dividends and Distributions Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. NOTE B Advisory Fee and Other Transactions with Affiliates Under the terms of the investment advisory agreement, the Fund pays the Adviser an advisory fee at an annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the Fund's average daily net assets. Prior to September 7, 2004, the Fund paid the Adviser an advisory fee at an annual rate of .625% of the first $5 billion, .60% of the excess over $5 billion up to $7.5 billion, .575% of the excess over $7.5 billion up to $10 billion and .55% of the excess over $10 billion of the Fund's average daily net assets. The fee is accrued daily and paid monthly. Pursuant to the advisory agreement, the Fund paid $45,584 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, 2006. 18 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND The Fund compensates AllianceBernstein Investor Services, Inc. (prior to February 24, 2006 known as Alliance Global Investor Services, Inc.) ("ABIS"), 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. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $2,432,496 for the six months ended April 30, 2006. For the six months ended April 30, 2006, the Fund's expenses were reduced by $84,489 under an expense offset arrangement with ABIS. AllianceBernstein Investments, Inc. (prior to February 24, 2006 known as AllianceBernstein Investment Research and Management, Inc.) (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Fund's shares. The Distributor has advised the Fund that it has retained front-end sales charges of $23,262 from the sale of Class A shares and received $27,509, $450,606 and $26,058 in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the six months ended April 30, 2006. Brokerage commissions paid on investment transactions for the six months ended April 30, 2006 amounted to $4,899,298, of which $780,540 and $0, respectively, was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates 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 distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Fund's average daily net assets attributable to Class A shares, 1% of the Fund's average daily net assets attributable to Class B and Class C shares, .50% of the Fund's average daily net assets attributable to Class R shares and .25% of the average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. During the fiscal year, with respect to Class A shares, payments to the Distributor were limited to .28% of the average daily net assets attributable to Class A shares. The fees are 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 amounts of $40,647,617, $9,447,230, $6,326 and $4 for Class B, Class C, Class R and Class K shares, respectively; such costs may be recovered from the Fund in future ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 19 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) for the six months ended April 30, 2006, were as follows: Purchases Sales --------------- --------------- Investment securities (excluding U.S. government securities) $1,479,142,541 $2,334,837,048 U.S. government securities -0- -0- The cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation are as follows: Gross unrealized appreciation $770,123,841 Gross unrealized depreciation (66,509,358) -------------- Net unrealized appreciation $703,614,483 1. Option Transactions For hedging purposes, the Fund may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. The risk associated with purchasing an option is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid. When the Fund writes an option, the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from written options which expire unexercised are recorded by the Fund on the expiration date as realized gains from options written. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commis- 20 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND sions, is also treated as a realized gain, or if the premium received is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium received is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Fund. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Fund could result in the Fund selling or buying a security or currency at a price different from the current market value. For the six months ended April 30, 2006 the Fund had no transactions in written options. NOTE E Securities Lending The Fund has entered into a securities lending agreement with UBSWarburg LLC, (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Fund, administers the lending of portfolio securities to certain broker-dealers. In return, the Fund receives fee income from the lending transactions or it retains a portion of interest on the investment of any cash received as collateral. The Fund also continues to receive dividends or interest on the securities loaned. Unrealized gain or loss on the value of the securities loaned that may occur during the term of the loan will be reflected in the accounts of the Fund. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. government securities. The Lending Agent may invest the cash collateral received in an eligible money market vehicle in accordance with the investment restriction of the Fund. The Lending Agent will indemnify the Fund for any losses resulting from a borrower's failure to return a loaned security when due. As of April 30, 2006, the Fund had loaned securities with a value of $193,791,504 and received cash collateral which was invested in a money market fund at $200,375,550 as included in the accompanying portfolio of investments. For the six months ended April 30, 2006, the Fund earned fee income of $27,263 which is included in interest income in the accompanying statement of operations. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 21 NOTE F Capital Stock Each class consists of 3,000,000,000 authorized shares. Transactions in capital shares for each class were as follows: Shares Amont --------------------------- ------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended April 30, 2006 October 31, April 30, 2006 October 31, (unaudited) 2005 (unaudited) 2005 ------------ ------------ -------------- -------------- Class A Shares sold 37,003,552 89,289,179 $144,925,537 $330,847,312 Shares issued in reinvestment of dividends 4,536,738 3,585,942 17,647,910 13,234,952 Shares converted from Class B 13,928,213 24,186,427 54,941,718 90,038,345 Shares redeemed (111,214,467) (263,667,347) (436,108,493) (980,602,824) Net decrease (55,745,964) (146,605,799) $(218,593,328) $(546,482,215) Class B Shares sold 5,492,510 19,711,198 $21,108,404 $71,722,619 Shares issued in reinvestment of dividends 1,256,335 1,068,417 4,811,762 3,879,250 Shares converted to Class A (14,199,143) (24,642,982) (54,941,718) (90,038,345) Shares redeemed (72,207,742) (171,041,829) (278,002,310) (623,343,184) Net decrease (79,658,040) (174,905,196) $(307,023,862) $(637,779,660) Class C Shares sold 2,675,721 9,559,272 $10,315,023 $34,892,110 Shares issued in reinvestment of dividends 421,178 349,626 1,617,324 1,272,950 Shares redeemed (29,866,787) (69,109,584) (115,280,817) (252,384,120) Net decrease (26,769,888) (59,200,686) $(103,348,470) $(216,219,060) Advisor Class Shares sold 7,325,864 62,142,357 $28,744,552 $231,129,450 Shares issued in reinvestment of dividends 472,693 1,586,290 1,843,503 5,868,702 Shares redeemed (61,739,349) (266,691,483) (244,261,623) (1,012,515,141) Net decrease (53,940,792) (202,962,836) $(213,673,568) $(775,516,989) 22 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Shares Amount --------------------------- ------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended April 30, 2006 October 31, April 30, 2006 October 31, (unaudited) 2005 (unaudited) 2005 ------------ ------------ -------------- -------------- Class R Shares sold 184,901 404,334 $713,424 $1,514,879 Shares issued in reinvestment of dividends 5,453 171 21,104 631 Shares redeemed (53,303) (10,209) (207,351) (36,995) Net increase 137,051 394,296 $527,177 $1,478,515 March 1, March 1, Six Months Ended 2005(a) to Six Months Ended 2005(a) to April 30, 2006 October 31, April 30, 2006 October 31, (unaudited) 2005 (unaudited) 2005 ------------ ------------ -------------- -------------- Class K Shares sold 8,472 2,657 $33,318 $10,072 Net increase 8,472 2,657 $33,318 $10,072 Class I Shares sold 119,656 2,638 $471,442 $10,000 Shares redeemed (4,558) -0- (18,279) -0- Net increase 115,098 2,638 $453,163 $10,000 (a)Commencement of distributions. NOTE G Risks Involved in Investing in the Fund Foreign Securities Risk--Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies or of the U.S. Government. Indemnification Risk--In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these indemnifications provisions and expects the risk of loss thereunder to be remote. NOTE H Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $250 million revolving credit facility (the "Facility") intended to provide short-term financing if necessary, subject to certain restrictions in ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 23 connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expense in the statement of operations. The Fund did not utilize the Facility during the six months ended April 30, 2006. NOTE I Distributions to Shareholders The tax character of distributions to be paid for the year ending October 31, 2006 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended October 31, 2005 and October 31, 2004 were as follows: 2005 2004 --------------- --------------- Distributions paid from: Ordinary income $29,742,366 $65,673,907 --------------- --------------- Total taxable distributions $29,742,366 $65,673,907 As of October 31, 2005, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $31,589,348 Accumulated capital and other losses (494,474,066)(a) Unrealized appreciation/(depreciation) 452,486,744(b) -------------- Total accumulated earnings/(deficit) $(10,397,974) (a) On October 31, 2005, the Fund had a net capital loss carryforward of $494,474,066, which will expire in the year 2011. Future realized gains offset by the loss carryforwards are not required to be distributed to shareholders. To the extent future capital gains are offset by capital loss carryforwards such gains will not be distributed. Any such gains distributed may be taxable to shareholders. During the fiscal year, the Fund utilized capital loss carryforwards of $998,579,052. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. NOTE J Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein 24 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation of the NYAG Order and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. On September 7, 2004, the Fund's investment advisory agreement was amended to reflect the reduced advisory fee. For more information on this waiver and amendment to the Fund's investment advisory agreement, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, directed and oversaw an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P. ("Alliance ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 25 Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser ("Alliance defendants"), and certain other defendants not affiliated with the Adviser, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the Alliance defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in "late trading" and "market timing" of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, 43 additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed in various federal and state courts against the Adviser and certain other defendants. The plaintiffs in such lawsuits have asserted a variety of theories for recovery including, but not limited to, violations of the Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), certain state securities laws and common law. All state court actions against the Adviser either were voluntarily dismissed or removed to federal court. On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred all actions to the United States District Court for the District of Maryland (the "Mutual Fund MDL"). On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Alliance Holding; and claims brought under ERISA by participants in the Profit Sharing Plan for Employees of the Adviser. All four complaints include substantially identical factual allegations, which appear to be based in large part on the SEC Order and the NYAG Order. The claims in the mutual fund derivative consolidated amended complaint are generally based on the theory that all fund advisory agreements, distribution agreements and 12b-1 plans between the Adviser and the AllianceBernstein Funds should be invalidated, regardless of whether market timing occurred in each individual fund, because each was approved by fund trustees on the basis of materially misleading information with respect to the level of market timing permitted in funds managed by the Adviser. The claims asserted in the other three consolidated amended complaints are similar to those that the respective plaintiffs asserted in their previous federal lawsuits. All of these lawsuits seek an unspecified amount of damages. 26 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND On April 21, 2006, the Advisor and attorneys for the plaintiffs in the mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims entered into a confidential memorandum of understanding ("MOU") containing their agreements to settle these claims. The agreement will be documented by a stipulation of settlement and will be submitted for court approval at a later date. On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commissioner") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Holding, and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The WVAG Complaint makes factual allegations generally similar to those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On August 30, 2005, the deputy commissioner of securities of the West Virginia Securities Commissioner signed a Summary Order to Cease and Desist, and Notice of Right to Hearing addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in the Commission Order and the NYAG Order. On January 26, 2006, the Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. On April 12, 2006, respondents' petition was denied. On May 4, 2006, respondents appealed the court's determination. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 27 Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiffs' claim under Section 36(b) of the Investment Company Act. On January 11, 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court denied plaintiffs' motion for leave to file an amended complaint. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds' shares or other adverse consequences to the AllianceBernstein Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the AllianceBernstein Mutual Funds. 28 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND NOTE K Subsequent Event On June 14, 2006, KPMG LLP ("KPMG") was selected as the Fund's independent registered public accounting firm for the 2006 fiscal year. A majority of the Fund's Board of Directors, including a majority of the independent Directors, approved the appointment of KPMG LLP. The predecessor independent registered public accounting firm's reports on the Fund's financial statements for the year ended October 31, 2005 and the year ended October 31, 2004 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During such fiscal periods there were no disagreements between the Fund and the predecessor independent registered public accounting firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which such disagreements, if not resolved to the satisfaction of the predecessor independent registered accounting firm, would have caused them to make reference to the subject matter of the disagreement in connection with their reports on the financial statements for such periods. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 29 FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------- Class A ---------------------------------------------------------------------------- Six Months Ended April 30, Year Ended October 31 2006, -------------------------------------------------------------- (unaudited) 2005 2004 2003 2002 2001 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $3.73 $3.48 $3.15 $2.60 $3.42 $4.07 Income From Investment Operations Net investment income(a) .02 .04 .03(b) .03 .03 .02 Net realized and unrealized gain (loss) on investment transactions .32 .23 .34 .56 (.71) (.39) Net increase (decrease) in net asset value from operations .34 .27 .37 .59 (.68) (.37) Less: Dividends and Distributions Dividends from net investment income (.03) (.02) (.03) (.02) (.02) (.04) Tax return of capital -0- -0- -0- (.02) (.02) -0- Distributions from net realized gain on investment transactions -0- -0- (.01) -0- (.10) (.24) Total dividends and distributions (.03) (.02) (.04) (.04) (.14) (.28) Net asset value, end of period $4.04 $3.73 $3.48 $3.15 $2.60 $3.42 Total Return Total investment return based on net asset value(c) 9.17% 7.77% 11.77% 22.89% (20.89)% (9.49)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $2,537,980 $2,553,632 $2,893,373 $3,003,001 $2,553,700 $2,914,367 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.06%(d)(e) 1.06% 1.02% 1.22% 1.14% 1.09% Expenses, before waivers/ reimbursements 1.06%(d)(e) 1.06% 1.13% 1.22% 1.14% 1.09% Net investment income 1.02%(d) 1.19% .85%(b) .94% .83% .64% Portfolio turnover rate 27% 63% 48% 43% 75% 67%
See footnote summary on page 36. 30 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Financial Highlights
---------------------------------------------------------------------------------- Class B ---------------------------------------------------------------------------------- Six Months Ended April 30, Year Ended October 31, 2006, -------------------------------------------------------------------- (unaudited) 2005 2004 2003 2002 2001 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $3.65 $3.42 $3.11 $2.56 $3.37 $4.02 Income From Investment Operations Net investment income(a) .01 .02 -0-(b)(f) .01 -0-(e) -0-(f) Net realized and unrealized gain (loss) on investment transactions .31 .22 .33 .56 (.69) (.39) Net increase (decrease) in net asset value from operations .32 .24 .33 .57 (.69) (.39) Less: Dividends and Distributions Dividends from net investment income (.01) (.01) (.01) (.01) (.01) (.02) Tax return of capital -0- -0- -0- (.01) (.01) -0- Distributions from net realized gain on investment transactions -0- -0- (.01) -0- (.10) (.24) Total dividends and distributions (.01) (.01) (.02) (.02) (.12) (.26) Net asset value, end of period $3.96 $3.65 $3.42 $3.11 $2.56 $3.37 Total Return Total investment return based on net asset value(c) 8.86% 6.96% 10.49% 22.19% (21.52)% (10.22)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $1,556,383 $1,728,375 $2,218,606 $2,555,235 $2,484,499 $3,360,119 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.81%(d)(e) 1.80% 1.77% 1.97% 1.88% 1.84% Expenses, before waivers/ reimbursements 1.81%(d)(e) 1.80% 1.88% 1.97% 1.88% 1.84% Net investment income (loss) .27%(d) .47% .10%(b) .19% .07% (.11)% Portfolio turnover rate 27% 63% 48% 43% 75% 67%
See footnote summary on page 36. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 31 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------- Class C ---------------------------------------------------------------------------- Six Months Ended April 30, Year Ended October 31, 2006, ----------------------------------------------------------------- (unaudited) 2005 2004 2003 2002 2001 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $3.66 $3.43 $3.11 $2.57 $3.37 $4.02 Income From Investment Operations Net investment income(a) .01 .02 -0-(b)(f) .01 -0-(f) -0-(f) Net realized and unrealized gain (loss) on investment transactions .31 .22 .34 .55 (.68) (.39) Net increase (decrease) in net asset value from operations .32 .24 .34 .56 (.68) (.39) Less: Dividends and Distributions Dividends from net investment income (.01) (.01) (.01) (.01) (.01) (.02) Tax return of capital -0- -0- -0- (.01) (.01) -0- Distributions from net realized gain on investment transactions -0- -0- (.01) -0- (.10) (.24) Total dividends and distributions (.01) (.01) (.02) (.02) (.12) (.26) Net asset value, end of period $3.97 $3.66 $3.43 $3.11 $2.57 $3.37 Total Return Total investment return based on net asset value(c) 8.84% 6.94% 10.82% 21.71% (21.21)% (10.23)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $624,879 $675,089 $835,755 $975,038 $960,176 $1,233,033 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.79%(d)(e) 1.79% 1.75% 1.95% 1.86% 1.83% Expenses, before waivers/ reimbursements 1.79%(d)(e) 1.79% 1.86% 1.95% 1.86% 1.83% Net investment income (loss) .29%(d) .48% .12%(b) .21% .09% (.10)% Portfolio turnover rate 27% 63% 48% 43% 75% 67%
See footnote summary on page 36. 32 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Financial Highlights
---------------------------------------------------------------------------- Advisor Class ---------------------------------------------------------------------------- Six Months Ended April 30, Year Ended October 31, 2006, --------------------------------------------------------------- (unaudited) 2005 2004 2003 2002 2001 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $3.75 $3.49 $3.16 $2.61 $3.43 $4.08 Income From Investment Operations Net investment income(a) .03 .06 .04(b) .04 .04 .03 Net realized and unrealized gain (loss) on investment transactions .31 .22 .34 .56 (.71) (.39) Net increase (decrease) in net asset value from operations .34 .28 .38 .60 (.67) (.36) Less: Dividends and Distributions Dividends from net investment income (.04) (.02) (.04) (.03) (.02) (.05) Tax return of capital -0- -0- -0- (.02) (.03) -0- Distributions from net realized gain on investment transactions -0- -0- (.01) -0- (.10) (.24) Total dividends and distributions (.04) (.02) (.05) (.05) (.15) (.29) Net asset value, end of period $4.05 $3.75 $3.49 $3.16 $2.61 $3.43 Total Return Total investment return based on net asset value(c) 9.05% 8.15% 12.00% 23.15% (20.62)% (9.27)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $198,646 $385,823 $1,067,879 $994,254 $681,620 $700,348 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .79%(d)(e) .75% .73% .94% .86% .84% Expenses, before waivers/ reimbursements .79%(d)(e) .75% .84% .94% .86% .84% Net investment income 1.30%(d) 1.53% 1.13%(b) 1.22% 1.10% .87% Portfolio turnover rate 27% 63% 48% 43% 75% 67%
See footnote summary on page 36. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 33 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
-------------------------------------- Class R -------------------------------------- Six Months Ended November 3, April 30, Year Ended 2003(g) to 2006 October 31, October 31, (unaudited) 2005 2004 ----------- ----------- ----------- Net asset value, beginning of period $3.72 $3.48 $3.17 Income From Investment Operations Net investment income(a) .02 .01 .02(b) Net realized and unrealized gain on investment transactions .31 .25 .32 Net increase in net asset value from operations .33 .26 .34 Less: Dividends and Distributions Dividends from net investment income (.04) (.02) (.02) Distributions from net realized gain on investment transactions -0- -0- (.01) Total dividends and distributions (.04) (.02) (.03) Net asset value, end of period $4.01 $3.72 $3.48 Total Return Total investment return based on net asset value(c) 8.97% 7.36% 10.81% Ratios/Supplemental Data Net assets, end of period (000's omitted) $2,301 $1,625 $147 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.30%(d)(e) 1.42% 1.16%(d) Expenses, before waivers/reimbursements 1.30%(d)(e) 1.42% 1.27%(d) Net investment income .77%(d) .56% .67%(d) Portfolio turnover rate 27% 63% 48%
See footnote summary on page 36. 34 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Financial Highlights
------------------------- Class K ------------------------- Six Months Ended March 1, April 30, 2005(g) to 2006 October 31, (unaudited) 2005 ----------- ----------- Net asset value, beginning of period $3.74 $3.79 Income From Investment Operations Net investment income(a) .02 .03 Net realized and unrealized gain (loss) on investment transactions .32 (.07) Net increase (decrease) in net asset value from operations .34 (.04) Less: Dividends Dividends from net investment income (.04) (.01) Net asset value, end of period $4.04 $3.74 Total Return Total investment return based on net asset value(c) 8.99% (1.02)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $45 $10 Ratio to average net assets of: Expenses(d) .95%(e) 1.03% Net investment income(d) 1.19% .79% Portfolio turnover rate 27% 63%
See footnote summary on page 36. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 35 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
------------------------- Class I ------------------------- Six Months Ended March 1, April 30, 2005(g) to 2006 October 31, (unaudited) 2005 ----------- ----------- Net asset value, beginning of period $3.74 $3.79 Income From Investment Operations Net investment income(a) .02 .04 Net realized and unrealized gain (loss) on investment transactions .33 (.08) Net increase (decrease) in net asset value from operations .35 (.04) Less: Dividends Dividends from net investment income (.05) (.01) Net asset value, end of period $4.04 $3.74 Total Return Total investment return based on net asset value(c) 9.27% (.97)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $476 $10 Ratio to average net assets of: Expenses(d) .72%(e) .74% Net investment income(d) 1.64% 1.08% Portfolio turnover rate 27% 63%
(a) Based on average shares outstanding. (b) Net of expenses waived by the Adviser and the Transfer Agent. (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 charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total investment return calculated for a period of less than one year is not annualized. (d) Annualized. (e) The ratio includes expenses attributable to estimated cost of proxy solicitation. (f) Amount is less than $.005. (g) Commencement of distributions. 36 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND RESULTS OF SHAREHOLDERS MEETING (unaudited) A Special Meeting of the AllianceBernstein Growth and Income Fund (the "Fund") was held on November 15, 2005 and adjourned until December 6, 2005, and December 19, 2005. At the November 15, 2005 Meeting, with respect to the first item of business, the election of Directors, the required number of outstanding shares were voted in favor of the proposal, and the proposal was approved. At the December 19, 2005 Meeting, with respect to the third item of business, the amendment, elimination, or reclassification as non-fundamental of the fundamental investment restrictions, and the fourth item of business, the reclassification of the Fund's fundamental investment objective as non-fundamental with changes to the Fund's investment objectives, the required number of outstanding shares voted in favor of each proposal, and each proposal was approved. With respect to the second item of business, approval of amendment and restatement of the Charter, an insufficient number of required outstanding shares voted in favor of the proposal, and the proposal was not approved. A description of each proposal and number of shares voted at the Meetings are as follows (the proposal numbers shown below correspond to the proposal numbers in the Fund's proxy statement): 1. The election of the Trustees, each such Trustee to serve a term of an indefinite duration and until his or her successor is duly elected and qualifies. Withheld Voted For Authority -------------------------------------------- Ruth Block 773,835,066 24,612,239 David H. Dievler 399,223,652 26,153,721 John H. Dobkin 774,382,782 24,064,523 Michael J. Downey 774,585,427 23,861,877 William H. Foulk, Jr. 773,971,834 24,475,471 D. James Guzy 748,781,743 49,665,562 Marc O. Mayer 772,920,929 25,526,375 Marshall C. Turner, Jr. 774,391,468 24,055,837
Voted Broker Voted For Against Abstained Non-Votes ------------------------------------------------------------------------------------------ 2. Approve the Amendment 732,653,218 21,233,406 35,903,096 0 and Restatement of the Charter 3.A. Diversification 568,288,225 23,061,879 23,061,879 198,514,126 3.B. Issuing Senior Securities 564,518,323 26,733,319 8,681,537 198,514,126 and Borrowing Money 3.C. Underwriting Securities 565,750,949 24,557,807 9,624,423 198,514,126 3.D. Concentration of 566,651,220 23,885,295 9,396,663 198,514,126 Investments 3.E. Real Estate and 566,743,959 24,077,643 9,111,576 198,514,126 Companies that Deal in Real Estate 3.F. Commodity Contracts 565,208,828 25,576,163 9,148,187 198,514,126 and Futures Contracts
ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 37
Voted Broker Voted For Against Abstained Non-Votes ------------------------------------------------------------------------------------------ 3.G. Loans 564,925,534 26,092,880 8,914,764 198,514,126 3.I. Exercising Control 566,129,593 23,472,984 10,330,601 198,514,126 3.J. Other Investment 565,198,263 25,223,771 9,511,145 198,514,126 Companies 3.K. Oil, Gas and Other 567,216,385 24,165,590 8,551,203 198,514,126 Types of Minerals or Mineral Leases 3.L. Purchases of Securities 563,513,898 27,866,387 8,552,893 198,514,126 on Margin 3.M. Short Sales 564,226,660 26,945,490 8,761,028 198,514,126 3.N. Pledging, 563,241,701 27,215,592 9,475,885 198,514,126 Hypothecating, Mortgaging, or Otherwise Encumbering Assets 3.O. Illiquid or Restricted 563,914,849 26,943,681 9,074,649 198,514,126 Securities 3.P. Warrants 564,698,540 25,929,019 9,305,619 198,514,126 3.Q. Unseasoned 562,850,221 28,024,339 9,058,618 198,514,126 Companies 3.T. Securities of Issuers 564,144,613 27,156,496 8,632,069 198,514,126 in which Officers, or Directors, or Partners have an Interest 3.Z.1 Investment Grade 568,593,808 22,608,867 8,730,502 198,514,126 Securities 4.B. The Reclassification 644,204,384 51,953,828 35,365,858 200,643,254 as Non-Fundamental and Changes to Specific Fund's Investment Objectives
38 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President Ruth Block(1) David H. Dievler(1) John H. Dobkin(1) Michael J. Downey(1) D. James Guzy(1) Nancy P. Jacklin(1) Marshall C. Turner, Jr.(1) OFFICERS Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Frank V. Caruso(2), Senior Vice President Paul C. Rissman, Senior Vice President Craig Ayers, Vice President Thomas J. Bardong, Vice President Aryeh Glatter, Vice President Stephen Pelensky, Vice President Emilie D. Wrapp, Secretary Mark D. Gersten, Treasurer and Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company One Lincoln Street Boston, MA 02111 Principal Underwriter AllianceBernstein Investments, Inc. 1345 Avenue of the Americas New York, NY 10105 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 Transfer Agent AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-Free (800) 221-5672 Independent Registered Public Accounting Firm KPMG LLP 345 Park Avenue 23rd Floor New York, NY 10154 (1) Member of the Audit Committee, Governance and Nominating Committee and the Independent Directors Committee. (2) The day-to-day management of and investment decisions for the Fund are made by the Relative Value Investment Team. Mr. Caruso is the investment professional with the most significant responsibility for the day-to-day management of the Fund. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 39 ALLIANCEBERNSTEIN FAMILY OF FUNDS -------------------------------------------- Wealth Strategies Funds -------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy -------------------------------------------- Blended Style Funds -------------------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio -------------------------------------------- Growth Funds -------------------------------------------- Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund Small Cap Growth Portfolio Global & International Global Health Care Fund Global Research Growth Fund Global Technology Fund Greater China '97 Fund International Growth Fund International Research Growth Fund* -------------------------------------------- Value Funds -------------------------------------------- Domestic Balanced Shares Focused Growth & Income Fund Growth & Income Fund Real Estate Investment Fund Small/Mid-Cap Value Fund Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund -------------------------------------------- Taxable Bond Funds -------------------------------------------- Global Government Income Trust* Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Intermediate Bond Portfolio* Short Duration Portfolio U.S. Government Portfolio -------------------------------------------- Municipal Bond Funds -------------------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts Virginia -------------------------------------------- Intermediate Municipal Bond Funds -------------------------------------------- Intermediate California Intermediate Diversified Intermediate New York -------------------------------------------- Closed-End Funds -------------------------------------------- All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II -------------------------------------------- Retirement Strategies Funds -------------------------------------------- 2000 Retirement Strategy 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our website at www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus. You should read the prospectus carefully before you invest. * On July 8, 2005, New Europe Fund merged into International Research Growth Fund. Prior to February 1, 2006, Global Government Income Trust was named Americas Government Income Trust and Intermediate Bond Portfolio was named Quality Bond Portfolio. ** An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 40 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT* The following is a summary of the evaluation of the investment advisory agreement between Alliance Capital Management L.P., (the "Adviser") and AllianceBernstein Growth & Income Fund, Inc. (the "Fund"), prepared by Philip L. Kirstein, the Senior Officer, for the independent directors of the Fund, as required by the Assurance of Discontinuance between the New York State Attorney General and the Adviser. The Senior Officer's evaluation of the investment advisory agreement is not meant to diminish the responsibility or authority of the Boards of Directors to perform their duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees which was provided to the independent directors in connection with their review of the proposed continuance of the investment advisory agreement. The Senior Officer's evaluation considered the following factors: 1. Management fees charged to institutional and other clients of the Adviser for like services. 2. Management fees charged by other mutual fund companies for like services. 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit. 4. Profit margins of the Adviser and its affiliates from providing such services. 5. Possible economies of scale as the Fund grows larger. 6. Nature and quality of the Adviser's services, including the performance of the Fund. * It should be noted that the information in the fee summary was completed on June 8, 2005 and presented to the Board of Directors and Trustees on June 15, 2005 in accordance with the Assurance of Discontinuance with the New York State Attorney General. It also should be noted that references in the fee summary pertaining to performance and expense ratios refer to Class A shares of the Fund. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 41 FUND ADVISORY FEES, EXPENSE REIMBURSEMENTS & RATIOS The table below describes the Fund's advisory fee pursuant to the Investment Advisory Agreement. This is the fee schedule the Adviser implemented in January 2004 as a result of the settlement with the New York State Attorney General. Advisory Fee Based on % of Average Daily Net Assets ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. First $2.5 billion .55% Next $2.5 billion .45% Excess over $5 billion .40% The table below shows pro-forma expense ratio information for the Fund for its most recent fiscal year. Pro-Forma Fiscal Expense Ratio* Year End ------------------------------------------------------------------------------- AllianceBernstein Advisor-.69% October 31, Growth and Income Fund, Inc. Class A-.97% 2004 Class B-1.72% Class C-1.70% Class R-1.26% The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Funds as indicated below: Latest Fiscal As % of Average Year Amount Daily Net Assets ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. $98,000.00 .001 I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS The management fees charged to investment companies which the Adviser manages and sponsors may be higher than those charged to institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Fund that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers and coordinating with and monitoring the Fund's third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative and legal/compliance requirements for the Fund are more costly than those for institutional assets due to the greater complexities and time required for investment companies. A portion of the expenses related to these services * This pro-forma expense ratio information shows what would have been the Fund's expense ratio in the indicated fiscal year had the current fee been in effect throughout the fiscal year. 42 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND are reimbursed by the Fund to the Adviser. Managing the cash flow of an investment company may be more difficult than for other accounts, particularly if the Fund is in net redemptions, as the Adviser is forced to sell securities to meet redemptions. Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, the Senior Officer believes it is worth noting the information from the Adviser's ADV regarding the advisory fees charged to institutional accounts in the same asset class as the Fund. Total Net Assets Alliance 03/31/05 Institutional ($MIL) Fee Schedule ------------------------------------------------------------------------------- Growth and Income 6,821 Relative Value Schedule 65 bp on 1st $25 m 50 bp on next $25 m 40 bp on next $50 m 30 bp on next $100 m 25 bp on the balance Minimum account size $10 m The Adviser provides sub-advisory investment services to certain other investment companies managed by other fund families that have similar investment styles as the Fund. Set forth below are the names and fee schedules of the funds sub-advised by the Adviser that have the same investment style as the Fund: Sub-advised Fund Fee Schedule ------------------------------------------------------------------------------- AllianceBernstein Growth AST Alliance Growth 0.30% on first $1 billion and Income Fund, Inc. & Income Portfolio 0.25% on next $500 million 0.20% thereafter Prudential Skandia 0.30% on first $1 billion Equity Income Fund 0.25% on next $500 billion 0.20% thereafter EQ/Alliance 0.30% flat Growth & Income AXA Premier VIP 0.60% on the first $1 billion Large Cap Value 0.55% on next $500 million Equity 0.50% on next $500 million 0.45% on next $500 million 0.40% thereafter AXA/Enterprise 0.30% flat Multi-manager Large Cap Value ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 43 The Adviser also manages and sponsors retail mutual funds organized in jurisdictions outside the United States, generally Luxembourg, and sold to non-United States resident investors. The Adviser charges the following fee for an offshore mutual fund with a similar investment style as the Fund: Asset Class Fee --------------------------------------------------------------------- Equity Value .80% II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc., an analytical service that is not affiliated with the Adviser, compared the fees charged to the Fund with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included the Fund's ranking with respect to the proposed advisory fees relative to the Lipper group median at the approximate current asset level for the Fund.* Lipper Fee Group Median Rank ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. 0.473 0.592 3/10 Lipper also analyzed the expense ratio of the Fund in comparison to its Lipper Expense Group** and Lipper Expense Universe***. Lipper describes a Lipper Expense Group as a representative sample of comparable funds and a Lipper Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the subject Fund. The results of that analysis are set forth below: Lipper Lipper Lipper Lipper Expense Universe Universe Group Group Ratio Median Rank Rank Median ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. 1.024 1.215 18/73 5/10 1.048 Based on this analysis, the Fund has a more favorable ranking on an advisory fee basis than on a total expense ratio basis. The Fund has a more favorable expense ratio ranking among funds in the Lipper universe compared to funds in the Lipper group. * A ranking of "1" means that the AllianceBernstein Fund has the lowest effective fee rate in the Lipper peer group. ** Lipper uses the following criteria in screening funds to be included in the Fund's expense group: fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes. An expense group will typically consist of seven to twenty funds. *** Except for asset (size) comparability, Lipper uses the same criteria for selecting an expense group when selecting an expense universe. Unlike an expense group, an expense universe allows for the same adviser to be represented by more than just one fund. 44 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY AGREEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. The profitability information for the Fund prepared by the Adviser for the Board of the Directors was reviewed by the Senior Officer. An independent consultant is working with the Adviser's personnel on a new system to produce profitability information at the Fund level which will reflect the Adviser's management reporting approach. It is possible that future Fund profitability information may differ from previously reviewed information due to changes in methodologies and allocations. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The Adviser's profitability for the Fund decreased during calendar 2004 relative to 2003 primarily as a result of the reduction in the advisory fee schedule implemented early in 2004. In addition to the Adviser's direct profits from managing the Fund pursuant to the investment advisory agreement, certain of the Adviser's affiliates have business relationships with the Fund and may earn a profit from providing other services to the Fund. These affiliates provide transfer agency and distribution related services and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC") and commissions for providing brokerage services. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. Additional information regarding distribution related fees can be found in the prospectus of the Fund. Different classes of shares are charged different types of distribution fees. The Adviser's affiliate, AllianceBernstein Investment Research and Management Inc. ("ABIRM"), is the Fund's principal underwriter. ABIRM and the Adviser may make payments* from their own resources, in addition to sales loads and Rule 12b-1 fees, to firms that sell shares of the Fund. In 2004, ABIRM paid from its own resources approximately .04% of the average monthly assets of the Fund for distribution services and educational support. For 2005, it is anticipated that ABIRM will pay approximately .04% of average monthly assets of the Fund for such purposes. * The total amount paid to the financial intermediary in connection with the sale of shares will generally not exceed the sum of (a) 0.25% of the current year's Fund sales by that firm and (b) .10% of the average daily net assets attributable to that firm over the year. ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 45 After payments to third party intermediaries, ABIRM retained the following amount in Class A front-end load sales charge from sales of the Fund's shares in the Fund's most recent fiscal year: Amount Received ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. $38,793 ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for the Fund during the Fund's most recent fiscal year. A significant percentage of such amounts were paid out to third party intermediaries by ABIRM. 12b-1 Fee Received* CDSC Received ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. $42,271,588 $356,395 Fees and reimbursements for out of pocket expenses charged by Alliance Global Investor Services, Inc. ("AGIS"), the affiliated transfer agent, are based on the level of the network account and the class of share held by the account. AGIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. AGIS' after-tax profitability decreased in 2004 in comparison to 2003. AGIS received the following fee from the Fund in the most recent fiscal year: AGIS Fee ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. $8,977,000 The Fund effected brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB"), and paid commissions during the Fund's recent fiscal year. The Adviser represented that SCB's profitability from business conducted with the Fund is comparable to the profitability of SCB's dealings with other third party clients. V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule for the Fund reflect a sharing of economies of scale to the extent they exist. Based on some of the professional literature that have considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide improved * 12b-1 amounts are gross amounts paid to ABIRM. 46 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND services, there may be a sharing of economies of scale without a reduction in advisory fees. An independent consultant made a presentation to the Board of Directors and the Senior Officer regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to lack of cost data which forced the researchers to infer facts about the costs from the behavior of fund expenses; there was a lack of consensus among researchers as to whether economies of scale were being passed on to the shareholders. It is contemplated that additional work will be performed to determine if the benefits of economies of scale or scope are being passed to shareholders by the Adviser. In the meantime, it is clear that to the extent the Fund's assets exceed the initial breakpoint its shareholders benefit from a lower fee rate. VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF THE FUND. With assets under management of $534.4 billion as of March 31, 2005, the Adviser has the investment experience and resources necessary to effectively manage the Fund and provide non-investment services (described in Section II) to the Fund. The information prepared by Lipper showed the 1, 3, 5 and 10 year performance ranking of the Fund relative to its Lipper universe: Performance Year Rank in Performance Universe for Periods Ended March 31, 2005 ------------------------------------------------------------------------------- 1 3 5 10 ------------------------------------------------------------------------------- AllianceBernstein Growth and Income Fund, Inc. 73/92 71/81 27/63 4/38 CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed fee for the Fund is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of the Fund is based on an evaluation of all of these factors and no single factor was dispositive. Dated: July 22, 2005 ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 47 NOTES 48 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND ALLIANCEBERNSTEIN GROWTH & INCOME FUND 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS GI-0152-0406 ITEM 2. CODE OF ETHICS. Not applicable when filing a semi-annual report to shareholders. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable when filing a semi-annual report to shareholders. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable when filing a semi-annual report to shareholders. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. SCHEDULE OF INVESTMENTS. Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the registrant. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Directors since the Fund last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no changes in the registrant's internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT ----------- ---------------------- 12 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein Growth and Income Fund, Inc. By: /s/ Marc O. Mayer ----------------- Marc O. Mayer President Date: June 28, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer ----------------- Marc O. Mayer President Date: June 28, 2006 By: /s/ Mark D. Gersten ----------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: June 28, 2006