N-CSRS 1 edg151171_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, 2007 Date of reporting period: April 30, 2007 ITEM 1. REPORTS TO STOCKHOLDERS. AllianceBernstein Growth & Income Fund April 30, 2007 SEMI-ANNUAL REPORT [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 AllianceBernstein 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 21, 2007 SEMI-ANNUAL REPORT This report provides management's discussion of fund performance for AllianceBernstein Growth & Income Fund (the "Fund") for the semi-annual reporting period ended April 30, 2007. INVESTMENT OBJECTIVE AND POLICIES This open-end Fund's investment objective is long-term growth of capital. The Fund invests primarily in the equity securities of U.S. companies that the Adviser believes are undervalued. The Adviser believes that, over time, a company's stock price will come to reflect its intrinsic economic value. The Adviser uses a disciplined investment process to evaluate the investment opportunity of the companies in the Adviser's extensive research universe. The Fund may invest in companies of any size and in any industry. The Fund also invests in high-quality securities of non-U.S. issuers. The Fund may enter into derivatives transactions, such as options, futures, forwards and swap agreements. 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, 2007. 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's Class A shares, although some may have different investment policies and sales and management fees. The Fund's Class A shares underperformed the benchmark for the six- and 12-month periods ended April 30, 2007, but outperformed the Lipper Average for the same time periods. The Fund's sector selection was weak for both time periods, as many of the strong and large--but increasingly expensive--subsets of the benchmark continued to outperform. For both periods, the Fund's underweight positions in energy and utilities hurt performance. At the stock level, strong overall performance, particularly in health care and financials, wasn't enough to offset the Fund's sector allocation performance drag. The Fund's security selection was strong for both periods, as much of the investment style (intense value preference) and market capitalization (intense small company preference) drag appears to be abating. The Fund's underweight position in financials also contributed positively to performance. During the period ended April 30, 2007, and in response to the Independent Directors' request, the Adviser made a payment to the Fund in connection with an error made by the Adviser in processing a claim for class action settlement proceeds on behalf of the Fund. This payment positively impacted the Fund's relative performance for both the six- and 12-month periods. The Fund's Relative Value Investment Team's (the "Team's") relative valuation analysis concludes that there is very little value left in the benchmark's holdings after an unprecedented seven-year period of strong performance. While the Fund's sector allocation is a residual of stock selection, it reflects the Team's basic view that the benchmark's major sectors have become very expensive. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 1 MARKET REVIEW AND INVESTMENT STRATEGY Equity markets in the United States and around the world plunged in late February and remained volatile through much of March, buffeted first by a huge drop in Chinese stocks and then by news of rising delinquency rates for U.S. subprime mortgages. Investors, lulled into complacency of solid economic and corporate-profit growth and rising stock prices, were reminded that financial markets are not without risk. Investor risk-taking appears to have been much higher than normal over the past few years; the best performing asset classes have been emerging markets, commodities and small value, which are all typically associated with high risk. Investor risk-taking has been particularly relevant to the Fund's investment approach. The Team's relative value discipline seeks to invest in companies whose valuations appear low relative to the quality of their assets and business models. Consequently, the Fund is typically tilted toward stocks with valuations that are in line with the Russell 1000 Value Index, but with higher earnings growth and return on equity, and with positive earnings revisions. The Fund tends to have a higher median market cap than the Russell 1000 Value Index, and also tends to be less sensitive to the economic cycle. The degree of the Fund's tilt to all of these traits varies with market conditions: the tilt was smaller than usual four years ago; it is larger than usual today. The negative performance of the Fund's stock-selection criteria in recent years appears to be the result of market complacency. During the past few years, investors have enjoyed strong global economic growth with low inflation, strong market returns with low volatility and exceptionally strong and widespread corporate profitability. Indeed, corporate earnings have exceeded expectations by a wide margin for quite some time: this was one of only two periods--and the longest period--on record when actual earnings have surpassed forecasts. Investors expecting companies to maintain profitability at this extraordinarily high level are pricing all stocks very similarly, regardless of sector, risk or future earnings growth potential. Thus, stocks with superior fundamentals and proven track records are being priced at discounts and stocks with earnings at cyclical peaks are being priced at a premium. These market distortions have persisted for longer than the Team has expected, as distortions based on sentiment sometimes do. While no one can know when sentiment will change, the brief spikes in volatility in the second quarter of 2006 and again in the first quarter of 2007 show how aggressively complacent investors can react to the suggestion that market conditions will not remain benign. History suggests that, as overall earnings growth falls and strong earnings growth becomes harder to find, valuation spreads will widen between companies with strong long-term earnings growth prospects and those trading at cyclical peaks. How long that will take is unclear. Increased global capital spending--a typical response to high corporate returns--is already beginning to add capacity to many industries and is putting downward pressure on earnings. ________________________________________________________________________________ 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 WEBSITE 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. 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 comprises 1000 of the largest capitalized companies that are traded in the United States. For the six- and 12-month periods ended April 30, 2007, the Lipper Large-Cap Value Funds Average consisted of 513 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) Returns THE FUND VS. ITS BENCHMARK ================================ PERIODS ENDED APRIL 30, 2007 6 Months 12 Months ------------------------------------------------------------------------- AllianceBernstein Growth & Income Fund Class A 9.58% 16.90% Class B 9.09% 15.98% Class C 9.30% 16.19% Advisor Class* 9.80% 17.39% Class R* 9.67% 16.78% Class K* 9.79% 17.13% Class I* 9.81% 17.43% Russell 1000 Value Index 9.79% 18.15% Lipper Large-Cap Value Funds Average 9.17% 15.67% * Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealer and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. 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, 2007 ================================================================================ NAV Returns SEC Returns CLASS A SHARES 1 Year 16.90% 11.91% 5 Years 7.79% 6.87% 10 Years 9.89% 9.42% CLASS B SHARES 1 Year 15.98% 11.98% 5 Years 6.98% 6.98% 10 Years(a) 9.22% 9.22% CLASS C SHARES 1 Year 16.19% 15.19% 5 Years 7.01% 7.01% 10 Years 9.06% 9.06% ADVISOR CLASS SHARES+ 1 Year 17.39% 17.39% 5 Years 8.07% 8.07% 10 Years 10.18% 10.18% CLASS R SHARES+ 1 Year 16.78% 16.78% Since Inception* 12.61% 12.61% CLASS K SHARES+ 1 Year 17.13% 17.13% Since Inception* 11.41% 11.41% CLASS I SHARES+ 1 Year 17.43% 17.43% Since Inception* 11.70% 11.70% THE FUND'S TOTAL ANNUAL OPERATING EXPENSE RATIOS ARE 1.01%, 1.76%, 1.74%, 0.74%, 1.29%, 0.97%, AND 0.67% FOR CLASS A, CLASS B, CLASS C, ADVISOR CLASS, CLASS R, CLASS K AND CLASS I RESPECTIVELY, PER THE PROSPECTUS, GROSS OF ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS. (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 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 accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. 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, 2007) ================================================================================ SEC Returns CLASS A SHARES 1 Year 9.39% 5 Years 4.86% 10 Years 9.23% CLASS B SHARES 1 Year 9.65% 5 Years 5.00% 10 Years(a) 9.01% CLASS C SHARES 1 Year 12.61% 5 Years 4.98% 10 Years 8.87% ADVISOR CLASS SHARES+ 1 Year 14.84% 5 Years 6.06% 10 Years 10.00% CLASS R SHARES+ 1 Year 14.20% Since Inception* 11.70% CLASS K SHARES+ 1 Year 14.55% Since Inception* 9.91% CLASS I SHARES+ 1 Year 14.86% Since Inception* 10.21% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 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 accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for each class 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, 2006 April 30, 2007 During Period* ==================== ======================== ==================== Actual Hypothetical Actual Hypothetical** Actual Hypothetical -------------------- ------------------------ -------------------- Class A $1,000 $1,000 $1,095.76 $1,019.74 $ 5.30 $ 5.11 Class B $1,000 $1,000 $1,090.88 $1,016.02 $ 9.18 $ 8.85 Class C $1,000 $1,000 $1,093.04 $1,016.12 $ 9.08 $ 8.75 Advisor Class $1,000 $1,000 $1,097.99 $1,021.12 $ 3.85 $ 3.71 Class R $1,000 $1,000 $1,096.66 $1,018.35 $ 6.76 $ 6.51 Class K $1,000 $1,000 $1,097.88 $1,019.84 $ 5.20 $ 5.01 Class I $1,000 $1,000 $1,098.13 $1,021.52 $ 3.43 $ 3.31
* Expenses are equal to the classes' annualized expense ratios of 1.02%, 1.77%, 1.75%, 0.74%, 1.30%, 1.00% and 0.66%, 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, 2007 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): $4,455.7 SECTOR BREAKDOWN* 29.7% Financials [PIE CHART OMITTED] 14.7% Health Care 12.6% Information Technology 11.4% Consumer Staples 7.6% Consumer Discretionary 7.3% Industrials 6.4% Energy 4.4% Telecommunication Services 1.9% Materials 0.9% Utilities 3.1% Short-Term TEN LARGEST HOLDINGS** April 30, 2007 (unaudited) Percent of Company U.S. $ Value Net Assets ================================================================================ American International Group, Inc. $ 201,061,160 4.5% Procter & Gamble Co. 191,328,681 4.3 JPMorgan Chase & Co. 183,589,980 4.1 Emerson Electric Co. 155,518,104 3.5 Time Warner, Inc. 144,410,000 3.2 Microsoft Corp. 142,858,710 3.2 Citigroup, Inc. 142,806,146 3.2 Sun Microsystems, Inc. 142,207,938 3.2 WellPoint, Inc. 140,511,321 3.2 Loews Group 133,694,248 3.0 -------------------------------------------------------------------------------- $ 1,577,125,097 35.4% * All data are as of April 30, 2007. The Portfolio's sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. ** Long-term investments Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard and Poors. The fund components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the Broad Market. The GICS structure consists of 10 sectors, 24 industry groups, 64 industries and 139 sub-industries. 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, 2007 (unaudited) Company Shares U.S. $ Value ======================================================================== COMMON STOCKS-97.9% Financials-30.0% Capital Markets-4.4% The Bank of New York Co., Inc. 1,497,400 $ 60,614,752 Franklin Resources, Inc. 120,500 15,822,855 Lehman Brothers Holdings, Inc. 223,600 16,832,608 Merrill Lynch & Co., Inc. 667,200 60,201,456 Northern Trust Corp. 711,700 44,801,515 -------------- 198,273,186 Commercial Banks-2.6% Wachovia Corp. 410,500 22,799,170 Wells Fargo & Co. 2,125,000 76,266,250 Zions Bancorporation(a) 192,000 15,705,600 -------------- 114,771,020 Diversified Financial Services-9.2% Bank of America Corp. 1,647,500 83,857,750 Citigroup, Inc. 2,663,300 142,806,146 JPMorgan Chase & Co. 3,523,800 183,589,980 -------------- 410,253,876 Insurance-12.4% ACE Ltd. 1,512,200 89,915,412 Allstate Corp. 366,100 22,815,352 American International Group, Inc. 2,876,000 201,061,160 Axis Capital Holdings Ltd. 3,001,600 111,359,360 Hartford Financial Services Group, Inc. 323,700 32,758,440 Loews Corp. 1,288,900 60,990,748 Willis Group Holdings Ltd. 849,800 34,858,796 -------------- 553,759,268 Thrifts & Mortgage Finance-1.4% Federal National Mortgage Association 1,034,300 60,940,956 -------------- 1,337,998,306 Health Care-14.8% Health Care Equipment & Supplies-1.1% Alcon, Inc.(a) 118,600 16,002,698 Becton Dickinson & Co. 420,300 33,073,407 -------------- 49,076,105 Health Care Providers & Services-8.3% Aetna, Inc. 915,000 42,895,200 Laboratory Corp. of America Holdings(b) 175,000 13,814,500 Medco Health Solutions, Inc.(b) 500,000 39,010,000 UnitedHealth Group, Inc. 2,503,450 132,833,057 WellPoint, Inc.(a)(b) 1,779,300 140,511,321 -------------- 369,064,078 Pharmaceuticals-5.4% Eli Lilly & Co. 1,416,300 83,745,819 Merck & Co., Inc. 965,000 49,639,600 ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 9 Company Shares U.S. $ Value ======================================================================== Schering-Plough Corp. 847,300 $ 26,884,829 Wyeth 1,485,800 82,461,900 -------------- 242,732,148 -------------- 660,872,331 Information Technology-12.7% Communications Equipment-1.4% Cisco Systems, Inc.(b) 2,371,600 63,416,584 Computers & Peripherals-4.6% International Business Machines Corp. 625,000 63,881,250 Sun Microsystems, Inc.(a)(b) 27,242,900 142,207,938 -------------- 206,089,188 Internet Software & Services-0.4% Yahoo!, Inc.(b) 613,000 17,188,520 IT Services-2.2% Accenture Ltd.-Class A(a) 1,949,900 76,241,090 Fiserv, Inc.(b) 431,000 22,916,270 -------------- 99,157,360 Semiconductors & Semiconductor Equipment-0.5% International Rectifier Corp.(b) 662,500 23,373,000 Software-3.6% Citrix Systems, Inc.(b) 458,000 14,930,800 Microsoft Corp.(a) 4,771,500 142,858,710 -------------- 157,789,510 -------------- 567,014,162 Consumer Staples-11.5% Beverages-0.9% PepsiCo, Inc. 585,100 38,669,259 Food & Staples Retailing-1.9% CVS Caremark Corp. 1,293,750 46,885,500 Walgreen Co. 842,500 36,985,750 -------------- 83,871,250 Food Products-0.5% Kraft Foods, Inc.-Class A 711,100 23,800,517 Household Products-4.3% Procter & Gamble Co. 2,975,100 191,328,681 Tobacco-3.9% Altria Group, Inc. 1,502,300 103,538,516 Loews Corp.-Carolina Group 950,000 72,703,500 -------------- 176,242,016 -------------- 513,911,723 ________________________________________________________________________________ 10 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Company Shares U.S. $ Value ======================================================================== Consumer Discretionary-7.7% Diversified Consumer Services-0.4% Apollo Group, Inc.-Class A(a)(b) 335,300 $ 15,859,690 Hotels Restaurants & Leisure-1.1% McDonald's Corp. 1,053,100 50,843,668 Household Durables-0.3% Fortune Brands, Inc.(a) 140,500 11,254,050 Media-5.9% News Corp.-Class A 4,152,300 92,969,997 Omnicom Group, Inc.(a) 100,000 10,471,000 Time Warner, Inc. 7,000,000 144,410,000 Viacom, Inc.-Class B(b) 375,000 15,468,750 -------------- 263,319,747 -------------- 341,277,155 Industrials-7.4% Aerospace & Defense-1.3% Honeywell International, Inc.(a) 379,600 20,566,728 United Technologies Corp. 575,000 38,599,750 -------------- 59,166,478 Air Freight & Logistics-0.2% United Parcel Service, Inc.-Class B 94,400 6,648,592 Airlines-0.5% Southwest Airlines Co. 1,456,500 20,900,775 Electrical Equipment-3.5% Emerson Electric Co. 3,309,600 155,518,104 Industrial Conglomerates-1.9% General Electric Co. 2,350,000 86,621,000 -------------- 328,854,949 Energy-6.4% Energy Equipment & Services-0.8% Baker Hughes, Inc. 84,500 6,792,955 BJ Services Co. 189,100 5,419,606 Nabors Industries Ltd.(a)(b) 756,500 24,298,780 -------------- 36,511,341 Oil, Gas & Consumable Fuels-5.6% Chevron Corp. 1,066,400 82,955,256 Exxon Mobil Corp. 1,580,900 125,491,842 Total SA (ADR)(a) 561,347 41,365,661 -------------- 249,812,759 -------------- 286,324,100 ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 11 Company Shares U.S. $ Value ======================================================================== Telecommunication Services-4.5% Diversified Telecommunication Services-4.5% AT&T, Inc. 3,350,000 $ 129,712,000 Verizon Communications, Inc. 1,825,000 69,678,500 -------------- 199,390,500 Materials-2.0% Chemicals-2.0% Air Products & Chemicals, Inc. 1,150,000 87,975,000 Utilities-0.9% Independent Power Producers & Energy Traders-0.9% The AES Corp.(b) 1,783,400 39,216,965 Total Common Stocks (cost $3,396,105,705) 4,362,835,191 SHORT-TERM INVESTMENTS-3.2% Investment Companies-3.2% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(c) (cost $139,844,325) 139,844,325 139,844,325 Total Investments Before Security Lending Collateral-101.1% (cost $3,535,950,030) 4,502,679,516 INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-2.9% Short-Terms-2.9% UBS Private Money Market Fund, LLC (cost $130,057,282) 130,057,282 130,057,282 Total Investments-104.0% (cost $3,666,007,312) 4,632,736,798 Other assets less liabilities-(4.0)% (177,014,591) NET ASSETS-100.0% $4,455,722,207 (a) Represents entire or partial securities out on loan. See Note E for securities lending information. (b) Non-income producing security. (c) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt See notes to financial statements. ________________________________________________________________________________ 12 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND STATEMENT OF ASSETS & LIABILITIES April 30, 2007 (unaudited) ASSETS Investments in securities, at value Unaffiliated issuers (cost $3,526,162,987--including investment of cash collateral for securities loaned of $130,057,282) $4,492,892,473(a) Affiliated issuers (cost $139,844,325) 139,844,325 Receivable for investment securities sold 54,911,844 Receivable for capital stock sold 27,741,410 Interest and dividends receivable 4,385,647 Total assets 4,719,775,699 LIABILITIES Payable for collateral on securities loaned 130,057,282 Payable for investment securities purchased 88,162,705 Payable for capital stock redeemed 40,802,744 Advisory fee payable 1,852,683 Distribution fee payable 552,056 Transfer Agent fee payable 141,546 Administrative fee payable 26,869 Accrued expenses 2,457,607 Total liabilities 264,053,492 Net Assets $4,455,722,207 COMPOSITION OF NET ASSETS Capital stock, at par $ 9,607,081 Additional paid-in capital 3,428,265,596 Undistributed net investment income 17,949,155 Accumulated net realized gain on investment transactions 33,170,889 Net unrealized appreciation of investments 966,729,486 -------------- $4,455,722,207 NET ASSET VALUE PER SHARE--21 BILLION SHARES OF CAPITAL STOCK AUTHORIZED, $.01 PAR VALUE Shares Net Asset Class Net Assets Outstanding Value ============================================================================ A $ 2,472,791,931 529,378,601 $ 4.67* B $ 1,210,434,453 264,146,624 $ 4.58 C $ 569,255,895 123,860,979 $ 4.60 Advisor $ 197,484,049 42,080,728 $ 4.69 R $ 4,152,294 897,279 $ 4.63 K $ 747,428 160,539 $ 4.66 I $ 856,157 183,390 $ 4.67 * The maximum offering price per share for Class A shares was $4.88 which reflects a sales charge of 4.25%. (a) Includes securities on loan with a value of $122,597,765 (see Note E). See notes to financial statements. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 13 STATEMENT OF OPERATIONS Six Months Ended April 30, 2007 (unaudited) INVESTMENT INCOME Dividends $ 47,366,329 Interest Unaffiliated issuers 2,037,484 Affiliated issuers 1,528,571 $ 50,932,384 EXPENSES Advisory fee 11,338,615 Distribution fee--Class A 3,377,648 Distribution fee--Class B 6,485,184 Distribution fee--Class C 2,846,891 Distribution fee--Class R 9,955 Distribution fee--Class K 806 Transfer agency--Class A 2,449,463 Transfer agency--Class B 1,506,790 Transfer agency--Class C 610,201 Transfer agency--Advisor Class 206,646 Transfer agency--Class R 5,364 Transfer agency--Class K 657 Transfer agency--Class I 511 Printing 416,672 Custodian 237,687 Registration fees 60,729 Administrative 43,409 Audit 20,488 Directors' fees 19,043 Legal 6,227 Miscellaneous 46,769 Total expenses 29,689,755 Less: expense offset arrangement (see Note B) (211,742) Net expenses 29,478,013 Net investment income 21,454,371 REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 256,823,685 Net change in unrealized appreciation/depreciation of investments 96,831,789 Net gain on investment transactions 353,655,474 Contribution from Adviser (see Note B) 34,811,103 NET INCREASE IN NET ASSETS FROM OPERATIONS $ 409,920,948 See notes to financial statements. ________________________________________________________________________________ 14 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND STATEMENT OF CHANGES IN NET ASSETS Six Months Ended Year Ended April 30, 2007 October 31, (unaudited) 2006 ================ ============== INCREASE IN NET ASSETS FROM OPERATIONS Net investment income $ 21,454,371 $ 33,184,771 Net realized gain on investment transactions 256,823,685 281,003,270 Net change in unrealized appreciation/ depreciation of investments 96,831,789 407,228,953 Contribution from Adviser 34,811,103 -0- Net increase in net assets from operations 409,920,948 721,416,994 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (27,503,944) (20,532,682) Class B (3,738,628) (5,889,478) Class C (1,600,243) (2,296,026) Advisor Class (2,800,620) (3,827,969) Class R (45,093) (21,113) Class K (10,196) (93) Class I (13,131) (119) CAPITAL STOCK TRANSACTIONS Net decrease (463,173,148) (1,488,727,157) Total decrease (88,964,055) (799,877,643) NET ASSETS Beginning of period 4,544,686,262 5,344,563,905 End of period (including undistributed net investment income of $17,949,155 and $32,206,639, respectively) $4,455,722,207 $4,544,686,262 See notes to financial statements. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 15 NOTES TO FINANCIAL STATEMENTS April 30, 2007 (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 the classes bear different distribution and transfer agency expenses. Each class 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. 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 (other than securities listed on the NASDAQ Stock Market, Inc. ("NASDAQ")) 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 listed only on NASDAQ are valued in accordance with the NASDAQ Official ________________________________________________________________________________ 16 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND 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") 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. (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. 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 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. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 17 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 amortizes premiums and accretes discounts 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 respective 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. During the period ended April 30, 2007, and in response to the Independent Director's request, the Adviser made a payment of $34,811,103 to the Fund in connection with an error made by the Adviser in processing a claim for class action settlement proceeds on behalf of the Fund. Pursuant to the advisory agreement, the Fund paid $43,409 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, 2007. ________________________________________________________________________________ 18 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND The Fund compensates AllianceBernstein 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 $1,940,252 for the six months ended April 30, 2007. For the six months ended April 30, 2007, the Fund's expenses were reduced by $211,742 under an expense offset arrangement with ABIS. AllianceBernstein Investments, 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 charge of $22,565 from the sale of Class A shares and received $29,959, $234,326 and $7,552 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, 2007. The Fund may invest in the AllianceBernstein Fixed-Income Shares, Inc. - Prime STIF Portfolio and the AllianceBernstein Fixed-Income Shares, Inc. - Government STIF Portfolio (collectively, the "STIF Portfolios"), open-end management investment companies managed by the Adviser. The STIF Portfolios are offered as cash management options to mutual funds, trusts, and other accounts managed by the Adviser, and are not available for direct purchase by members of the public. The STIF Portfolios pay no investment management fees. Brokerage commissions paid on investment transactions for the six months ended April 30, 2007 amounted to $2,106,870, of which $79,783 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 both Class B and Class C shares, .50% of the Fund's average daily net assets attributable to Class R shares and .25% of the Fund's average daily net assets attributable to ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 19 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 $31,723,903, $9,844,063, $59,272 and $14,254 for Class B, Class C, Class R and Class K shares, respectively. Such costs may be recovered from the Fund in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Fund's shares. NOTE D INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended April 30, 2007 were as follows: Purchases Sales =============== =============== Investment securities (excluding U.S. government securities) $ 1,149,973,697 $ 1,488,793,994 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 $ 974,420,354 Gross unrealized depreciation (7,690,868) Net unrealized appreciation $ 966,729,486 1. OPTION TRANSACTIONS For hedging and investment purposes, the Fund may purchase and write (sell) put and call options on U.S. and foreign 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 the premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the ________________________________________________________________________________ 20 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND 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 commissions, 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, 2007, the Fund had no transactions in written options. NOTE E SECURITIES LENDING The Fund has entered into a securities lending agreement with UBS Securities 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 restrictions of the Fund. The Lending Agent will indemnify the Fund for any loss resulting from a borrower's failure to return a loaned security when due. As of April 30, 2007, the Fund had loaned securities with a value of $122,597,765 and received cash collateral which was invested in a money market fund at $130,057,282 as included in the accompanying portfolio of investments. For the six months ended April 30, 2007, the Portfolio earned fee income of $43,046 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 AMOUNT ================================= ================================== Six Months Ended Year Ended Six Months Ended Year Ended April 30, 2007 October 31, April 30, 2007 October 31, (unaudited) 2006 (unaudited) 2006 ================================================================================================ CLASS A Shares sold 27,123,076 62,420,497 $ 121,361,329 $ 247,584,621 Shares issued in reinvestment of dividends 5,330,108 4,536,622 23,612,496 17,647,519 Shares converted from Class B 23,529,072 29,792,828 106,068,926 118,991,430 Shares redeemed (86,431,699) (221,213,693) (386,881,282) (876,908,426) NET DECREASE (30,449,443) (124,463,746) $ (135,838,531) $ (492,684,856) CLASS B Shares sold 3,913,853 9,670,830 $ 17,219,145 $ 37,517,469 Shares issued in reinvestment of dividends 715,869 1,256,304 3,121,195 4,811,657 Shares converted to Class A (23,884,851) (30,420,875) (106,068,926) (118,991,430) Shares redeemed (39,158,276) (130,901,671) (171,540,120) (508,136,041) NET DECREASE (58,413,405) (150,395,412) $ (257,268,706) $ (584,798,345) CLASS C Shares sold 2,316,457 5,143,864 $ 10,219,414 $ 20,150,155 Shares issued in reinvestment of dividends 258,334 421,178 1,128,919 1,617,324 Shares redeemed (15,202,486) (53,318,562) (66,975,350) (207,301,102) NET DECREASE (12,627,695) (47,753,520) $ (55,627,017) $ (185,533,623) ADVISOR CLASS Shares sold 6,151,726 9,819,726 $ 27,599,723 $ 38,931,339 Shares issued in reinvestment of dividends 538,486 472,693 2,396,263 1,843,503 Shares redeemed (9,993,557) (67,837,134) (45,402,159) (268,786,024) NET DECREASE (3,303,345) (57,544,715) $ (15,406,173) $ (228,011,182)
________________________________________________________________________________ 22 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND
SHARES AMOUNT ================================= ================================== Six Months Ended Year Ended Six Months Ended Year Ended April 30, 2007 October 31, April 30, 2007 October 31, (unaudited) 2006 (unaudited) 2006 ================================================================================================ CLASS R Shares sold 113,035 497,779 $ 496,372 $ 1,984,513 Shares issued in reinvestment of dividends 9,135 5,453 40,101 21,104 Shares redeemed (86,239) (78,357) (382,486) (306,881) NET INCREASE 35,931 424,875 $ 153,987 $ 1,698,736 CLASS K Shares sold 142,406 21,020 $ 616,881 $ 87,240 Shares issued in reinvestment of dividends 2,271 -0- 10,016 -0- Shares redeemed (7,815) -0- (34,558) -0- NET INCREASE 136,862 21,020 $ 592,339 $ 87,240 CLASS I Shares sold 59,079 140,031 $ 259,999 $ 553,407 Shares issued in reinvestment of dividends 2,971 -0- 13,131 -0- Shares redeemed (11,733) (9,596) (52,177) (38,534) NET INCREASE 50,317 130,435 $ 220,953 $ 514,873
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 currency 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 indemnification provisions and expects the risk of loss thereunder to be remote. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 23 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") to provide short-term financing if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in the miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended April 30, 2007. NOTE I DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending October 31, 2007 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended October 31, 2006 and October 31, 2005 were as follows: 2006 2005 ============ ============ Distributions paid from: Ordinary income $ 32,567,480 $ 29,742,366 Total taxable distributions $ 32,567,480 $ 29,742,366 As of October 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 32,206,639 Accumulated capital and other losses (209,013,994)(a) Unrealized appreciation/(depreciation) 855,258,895(b) Total accumulated earnings/(deficit) $ 678,451,540 (a) On October 31, 2006, the Fund had a net capital loss carryforward of $209,013,993 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 carryforward of $285,460,073. (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 Office of New York Attorney General ("NYAG") have been investigating practices in the mutual fund industry identified as "market timing" and late trading" of mutual fund shares. Certain other regula- ________________________________________________________________________________ 24 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND tory 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 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. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 25 In addition, the Independent Directors of the Fund ("the Independent Directors") have conducted an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. 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 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. 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. On April 21, 2006, the Adviser 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 agreement 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. The derivative claims brought on behalf of Alliance Holding remain pending. 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 ________________________________________________________________________________ 26 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND 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 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 25, 2006, the Adviser and Alliance Holding moved to vacate the Summary Order. In early September 2006, the court denied this motion, and the Supreme Court of Appeals in West Virginia denied the defendants' petition for appeal. On September 22, 2006, the Adviser and Alliance Holding filed an answer and moved to dismiss the Summary Order with the West Virginia Securities Commissioner. 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 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 ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 27 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. On July 5, 2006, plaintiffs filed a notice of appeal which was subsequently withdrawn subject to plaintiffs' right to reinstate it at a later date. On October 4, 2006 the appeal was withdrawn by stipulation, with plaintiffs reserving the right to reinstate it at a later date. 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. NOTE K RECENT ACCOUNTING PRONOUNCEMENTS On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN ________________________________________________________________________________ 28 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing a fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the current period. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. On December 22, 2006, the Securities and Exchange Commission notified the industry that the implementation of FIN 48 by registered investment companies could be delayed until the last business day of the first required financial statement reporting period for fiscal years beginning after December 15, 2006. At this time, management is evaluating the implications of FIN 48 and its impact on the financial statements has not yet been determined. On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined. ________________________________________________________________________________ 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, 2007 ------------------------------------------------------------------ (unaudited) 2006 2005 2004 2003 2002 ================================================================================================================================ Net asset value, beginning of period $4.31 $3.73 $3.48 $3.15 $2.60 $3.42 INCOME FROM INVESTMENT OPERATIONS Net investment income(a) .03 .04 .04 .03(b) .03 .03 Net realized and unrealized gain (loss) on investment transactions .35 .57 .23 .34 .56 (.71) Contribution from Adviser .03 -0- -0- -0- -0- -0- Net increase (decrease) in net asset value from operations .41 .61 .27 .37 .59 (.68) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.05) (.03) (.02) (.03) (.02) (.02) Tax return of capital -0- -0- -0- -0- (.02) (.02) Distributions from net realized gain on investment transactions -0- -0- -0- (.01) -0- (.10) Total dividends and distributions (.05) (.03) (.02) (.04) (.04) (.14) Net asset value, end of period $4.67 $4.31 $3.73 $3.48 $3.15 $2.60 TOTAL RETURN Total investment return based on net asset value(c) 9.58% 16.47% 7.77% 11.77% 22.89% (20.89)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $2,472,792 $2,411,515 $2,553,632 $2,893,373 $3,003,001 $2,553,700 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.02%(e) 1.00%(d) 1.06% 1.02% 1.22% 1.14% Expenses, before waivers/ reimbursements 1.02%(e) 1.00%(d) 1.06% 1.13% 1.22% 1.14% Net investment income 1.25%(e) .99%(d) 1.19% .85%(b) .94% .83% Portfolio turnover rate 26% 56% 63% 48% 43% 75%
See footnote summary on page 36. ________________________________________________________________________________ 30 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
--------------------------------------------------------------------------------------- CLASS B --------------------------------------------------------------------------------------- Six Months Ended April 30, Year Ended October 31, 2007 -------------------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ================================================================================================================================== Net asset value, beginning of period $4.21 $3.65 $3.42 $3.11 $2.56 $3.37 INCOME FROM INVESTMENT OPERATIONS Net investment income(a) .01 .01 .02 -0-(b)(f) .01 -0-(f) Net realized and unrealized gain (loss) on investment transactions .34 .56 .22 .33 .56 (.69) Contribution from Adviser .03 -0- -0- -0- -0- -0- Net increase (decrease) in net asset value from operations .38 .57 .24 .33 .57 (.69) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.01) (.01) (.01) (.01) (.01) (.01) Tax return of capital -0- -0- -0- -0- (.01) (.01) Distributions from net realized gain on investment transactions -0- -0- -0- (.01) -0- (.10) Total dividends and distributions (.01) (.01) (.01) (.02) (.02) (.12) Net asset value, end of period $4.58 $4.21 $3.65 $3.42 $3.11 $2.56 TOTAL RETURN Total investment return based on net asset value(c) 9.09% 15.73% 6.96% 10.49% 22.19% (21.52)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $1,210,434 $1,356,534 $1,728,375 $2,218,606 $2,555,235 $2,484,499 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.77%(e) 1.76%(d) 1.80% 1.77% 1.97% 1.88% Expenses, before waivers/ reimbursements 1.77%(e) 1.76%(d) 1.80% 1.88% 1.97% 1.88% Net investment income .51%(e) .24%(d) .47% .10%(b) .19% .07% Portfolio turnover rate 26% 56% 63% 48% 43% 75%
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, 2007 ------------------------------------------------------------------ (unaudited) 2006 2005 2004 2003 2002 ================================================================================================================================ Net asset value, beginning of period $4.22 $3.66 $3.43 $3.11 $2.57 $3.37 INCOME FROM INVESTMENT OPERATIONS Net investment income(a) .01 .01 .02 -0-(b)(f) .01 -0-(f) Net realized and unrealized gain (loss) on investment transactions .35 .56 .22 .34 .55 (.68) Contribution from Adviser .03 -0- -0- -0- -0- -0- Net increase (decrease) in net asset value from operations .39 .57 .24 .34 .56 (.68) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.01) (.01) (.01) (.01) (.01) (.01) Tax return of capital -0- -0- -0- -0- (.01) (.01) Distributions from net realized gain on investment transactions -0- -0- -0- (.01) -0- (.10) Total distributions (.01) (.01) (.01) (.02) (.02) (.12) Net asset value, end of period $4.60 $4.22 $3.66 $3.43 $3.11 $2.57 TOTAL RETURN Total investment return based on net asset value(c) 9.30% 15.69% 6.94% 10.82% 21.71% (21.21)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $569,256 $575,678 $675,089 $835,755 $975,038 $960,176 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.75%(e) 1.74%(d) 1.79% 1.75% 1.95% 1.86% Expenses, before waivers/ reimbursements 1.75%(e) 1.74%(d) 1.79% 1.86% 1.95% 1.86% Net investment income .52%(e) .26%(d) .48% .12%(b) .21% .09% Portfolio turnover rate 26% 56% 63% 48% 43% 75%
See footnote summary on page 36. ________________________________________________________________________________ 32 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
--------------------------------------------------------------------------------------- ADVISOR CLASS --------------------------------------------------------------------------------------- Six Months Ended April 30, Year Ended October 31, 2007 -------------------------------------------------------------------- (unaudited) 2006 2005 2004 2003 2002 ================================================================================================================================== Net asset value, beginning of period $4.33 $3.75 $3.49 $3.16 $2.61 $3.43 INCOME FROM INVESTMENT OPERATIONS Net investment income(a) .03 .05 .06 .04(b) .04 .04 Net realized and unrealized gain (loss) on investment transactions .36 .57 .22 .34 .56 (.71) Contribution from Adviser .03 -0- -0- -0- -0- -0- Net increase (decrease) in net asset value from operations .42 .62 .28 .38 .60 (.67) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.06) (.04) (.02) (.04) (.03) (.02) Tax return of capital -0- -0- -0- -0- (.02) (.03) Distributions from net realized gain on investment transactions -0- -0- -0- (.01) -0- (.10) Total distributions (.06) (.04) (.02) (.05) (.05) (.15) Net asset value, end of period $4.69 $4.33 $3.75 $3.49 $3.16 $2.61 TOTAL RETURN Total investment return based on net asset value(c) 9.80% 16.59% 8.15% 12.00% 23.15% (20.62)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $197,484 $196,601 $385,823 $1,067,879 $994,254 $681,620 Ratio to average net assets of: Expenses, net of waivers/ reimbursements .74%(e) .74%(d) .75% .73% .94% .86% Expenses, before waivers/ reimbursements .74%(e) .74%(d) .75% .84% .94% .86% Net investment income 1.53%(e) 1.28%(d) 1.53% 1.13%(b) 1.22% 1.10% Portfolio turnover rate 26% 56% 63% 48% 43% 75%
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 October 31, 2003(g) to 2007 ---------------------- October 31, (unaudited) 2006 2005 2004 ============================================================================================================= Net asset value, beginning of period $4.27 $3.72 $3.48 $3.17 INCOME FROM INVESTMENT OPERATIONS Net investment income(a) .02 .03 .01 .02(b) Net realized and unrealized gain on investment transactions .35 .56 .25 .32 Contribution from Adviser .04 -0- -0- -0- Net increase in net asset value from operations .41 .59 .26 .34 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.05) (.04) (.02) (.02) Distributions from net realized gain on investment transactions -0- -0- -0- (.01) Total dividends and distributions (.05) (.04) (.02) (.03) Net asset value, end of period $4.63 $4.27 $3.72 $3.48 TOTAL RETURN Total investment return based on net asset value(c) 9.67% 16.03% 7.36% 10.81% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $4,152 $3,682 $1,625 $147 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.30%(e) 1.29%(d) 1.42% 1.16%(e) Expenses, before waivers/reimbursements 1.30%(e) 1.29%(d) 1.42% 1.27%(e) Net investment income .96%(e) .68%(d) .56% .67%(b)(e) Portfolio turnover rate 26% 56% 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
----------------------------------------- CLASS K ----------------------------------------- Six Months Ended March 1, April 30, Year Ended 2005(g) to 2007 October 31, October 31, (unaudited) 2006 2005 ==================================================================================================================== Net asset value, beginning of period $4.31 $3.74 $3.79 INCOME FROM INVESTMENT OPERATIONS Net investment income(a) .03 .04 .03 Net realized and unrealized gain (loss) on investment transactions .35 .57 (.07) Contribution from Adviser .04 -0- -0- Net increase (decrease) in net asset value from operations .42 .61 (.04) LESS: DIVIDENDS Dividends from net investment income (.07) (.04) (.01) Net asset value, end of period $4.66 $4.31 $3.74 TOTAL RETURN Total investment return based on net asset value(c) 9.79% 16.28% (1.02)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $747 $102 $10 Ratio to average net assets of: Expenses 1.00%(e) .96%(d) 1.03%(e) Net investment income 1.22%(e) 1.02%(d) .79%(e) Portfolio turnover rate 26% 56% 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, Year Ended 2005(g) to 2007 October 31, October 31, (unaudited) 2006 2005 ==================================================================================================================== Net asset value, beginning of period $4.32 $3.74 $3.79 INCOME FROM INVESTMENT OPERATIONS Net investment income(a) .04 .05 .04 Net realized and unrealized gain (loss) on investment transactions .34 .58 (.08) Contribution from Adviser .04 -0- -0- Net increase (decrease) in net asset value from operations .42 .63 (.04) LESS: DIVIDENDS Dividends from net investment income (.07) (.05) (.01) Net asset value, end of period $4.67 $4.32 $3.74 TOTAL RETURN Total investment return based on net asset value(c) 9.81% 16.84% (.97)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $856 $574 $10 Ratio to average net assets of: Expenses .66%(e) .67%(d) .74%(e) Net investment income 1.58%(e) 1.27%(d) 1.08%(e) Portfolio Turnover Rate 26% 56% 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) The ratio includes expenses attributable to costs of proxy solicitation. (e) Annualized. (f) Amount is less than $.005. (g) Commencement of distributions. ________________________________________________________________________________ 36 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President 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) Earl D. Weiner(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 Aryeh Glatter, Vice President Emilie D. Wrapp, Secretary Joseph J. Mantineo, 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 37 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1) The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the "Adviser") and the AllianceBernstein Growth & Income Fund, Inc. (the "Fund").(2) The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund, for the Directors of the Fund, as required by an August 2004 agreement between the Adviser and the New York State Attorney General (the "NYAG"). The Senior Officer's evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Directors of the Fund to perform its 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 proposed to be paid by the Fund which was provided to the Directors in connection with their review of the proposed approval of the continuance of the Investment Advisory Agreement. The Senior Officer's evaluation considered the following factors: 1. Advisory fees charged to institutional and other clients of the Adviser for like services; 2. Advisory 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 supplying such services; 5. Possible economies of scale as the Fund grows larger; and 6. Nature and quality of the Adviser's services including the performance of the Fund. FUND ADVISORY FEES, REIMBURSEMENTS & RATIOS The Adviser proposed that the Fund pay the advisory fee set forth in the table below for receiving the services to be provided pursuant to the Investment Advisory Agreement. The fee schedule below, implemented in January 2004 in consideration of the Adviser's settlement with the NYAG in December 2003, is (1) It should be noted that the information in the fee summary was completed on April 23, 2007 and presented to the Board of Directors on May 1-3, 2007. (2) Future references to the Fund do not include "AllianceBernstein." References in the fee summary pertaining to performance and expense ratios refer to the Class A shares of the Fund. ________________________________________________________________________________ 38 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND based on a master schedule that contemplates eight categories of funds with almost all funds in each category having the same advisory fee schedule.(3) Advisory Fee Based Net Assets on % of Average 02/28/07 Category Daily Net Assets ($MIL) Fund ================================================================================ Value 55 bp on 1st $2.5 billion $4,435.6 Growth & Income 45 bp on next $2.5 billion Fund, Inc. 40 bp on the balance The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund. During the Fund's most recently completed fiscal year, the Adviser received $90,000 (0.002% of the Fund's average daily net assets) for such services. Set forth below are the Fund's total expense ratios, for the Fund's most recently completed fiscal year: Fund Total Expense Ratio Fiscal Year ================================================================================ Growth & Income Fund, Inc. Class A 1.00% October 31 Class B 1.76% Class C 1.74% Class R 1.29% Class K 0.96% Class I 0.67% Adv. Class 0.74% I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS The advisory fees charged to investment companies which the Adviser manages and sponsors are normally higher than those charged to similar sized 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 and sub-advised investment companies include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, 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, legal and compliance requirements for the Fund are more costly than those for institutional assets due to the greater complexities and time required for investment companies, although as previously noted, a portion of these expenses are reimbursed by the Fund to the Adviser. Also, retail mutual funds managed by the Adviser are widely held. Servicing the Fund's investors is more time consuming (3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser's settlement with the NYAG. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 39 and labor intensive compared to institutional clients since the Adviser needs to communicate with a more extensive network of financial intermediaries and shareholders. In addition, managing the cash flow of an investment company may be more difficult than managing that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if a fund is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry. Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different and legal and reputational risks are greater, it is worth considering information regarding the advisory fees charged to institutional accounts with a substantially similar investment style as the Fund.(4) In addition to the AllianceBernstein Institutional fee schedule, set forth below is what would have been the effective advisory fee of the Fund had the AllianceBernstein institutional fee schedule been applicable to the Fund versus the Fund's advisory fees based on February 28, 2007 net assets: Net Assets AllianceBernstein ("AB") Effective Fund 02/28/07 Institutional ("Inst.") AB Inst. Advisory Fund ($MIL) Fee Schedule Adv. Fee Fee ================================================================================ Growth & Income $4,435.6 Relative Value 0.256% 0.506% Fund, Inc. 65 bp on 1st $25 million 50 bp on next $25 million 40 bp on next $50 million 30 bp on next $100 million 25 bp on the balance Minimum Account Size: $10 m The AllianceBernstein Variable Products Series Fund, Inc. ("AVPS"), which is managed by the Adviser and is available through variable annuity and variable life contracts offered by other financial institutions, offers investors the option to invest in a portfolio with a substantially similar investment style as the Fund. The (4) The Adviser has indicated that with respect to institutional accounts with assets greater than $300 million, it will negotiate a fee schedule. Discounts that are negotiated vary based upon each client relationship. ________________________________________________________________________________ 40 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND following table shows the fee schedule of the AVPS portfolio that has a substantially similar investment style as the Fund.(5) Effective AVPS Fund AVPS Portfolio Fee Schedule Adv. Fee ================================================================================ Growth & Income Growth & Income 0.55% on first $2.5 billion 0.506% Fund, Inc. Portfolio 0.45% on next $2.5 billion 0.40% on the balance The Adviser also manages and sponsors retail mutual funds, which are organized in jurisdictions outside the United States, generally Luxembourg and Japan, and sold to non-United States resident investors. The Adviser charges the following fees for American Value Portfolio, which is a Luxembourg fund that has a somewhat similar investment style as the Fund: Fund Fee ================================================================================ American Value Portfolio Class A(6) 1.50% Class I (Institutional) 0.70% The Adviser provides sub-advisory services to certain other investment companies managed by other fund families. The Adviser charges the fees set forth below for each of these sub-advisory relationships: Fund Sub-advised Fund Fee Schedule ================================================================================ Growth & Income Client #1 0.30% on 1st $1 billion Fund, Inc. 0.25% on next $500 million 0.20% thereafter Client #2(7) 0.30% Client #3(7) 0.60% on 1st $1 billion 0.55% on next $500 million 0.50% on next $500 million 0.45% on next $500 million 0.40% thereafter It is fair to note that the services the Adviser provides pursuant to sub-advisory agreements are generally confined to the services related to the investment process; in other words, they are not as comprehensive as the services provided to the Funds by the Adviser. In addition, to the extent that certain of these sub-advisory relationships are with affiliates of the Adviser, the fee schedules may not reflect arm's-length bargaining or negotiations. (5) It should be noted that the AVPS portfolio was also affected by the settlement between the Adviser and the NYAG. As a result, the Fund has the same breakpoints in its advisory fee schedule as the AVPS portfolio. (6) Class A shares of the funds are charged an "all-in" fee, which covers investment advisory services and distribution related services. (7) This is the fee schedule of a fund managed by an affiliate of the Adviser. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 41 II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc. ("Lipper"), 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 offered by other investment advisers. Lipper's analysis included the Fund's ranking with respect to the proposed management fee relative to the median of the Fund's Lipper Expense Group ("EG")(8) at the approximate current asset level of the Fund.(9) Lipper describes an EG as a representative sample of comparable funds. Lipper's standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, expense components and attributes. An EG will typically consist of seven to twenty funds. Contractual Lipper Management Group Fund Fee(10) Median Rank ================================================================================ Growth & Income Fund, Inc. 0.504 0.543 6/15 Lipper also analyzed the Fund's most recently completed fiscal year total expense ratio in comparison to the Fund's EG and Lipper Expense Universe ("EU"). The EU(11) is a broader group compared to the EG, consisting of all funds that have the same investment classification/objective and load type as the subject Fund. Expense Lipper Lipper Lipper Lipper Ratio Group Group Universe Universe Fund (%)(12) Median (%) Rank Median (%) Rank ================================================================================ Growth & Income Fund, Inc. 1.004 1.038 6/15 1.182 21/92 (8) It should be noted that Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratio than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expenses differently. (9) The contractual management fee is calculated by Lipper using the Fund's contractual management fee rate at a hypothetical asset level. The hypothetical asset level is based on the combined net assets of all classes of the Fund, rounded up to the next $25 million. Lipper's total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of "1" would mean that the Fund had the lowest effective fee rate in the Lipper peer group. (10) The contractual management fee does not reflect any expense reimbursements made by the Fund to the Adviser for certain clerical, legal, accounting, administrative and other services. (11) Except for asset (size) comparability, Lipper uses the same criteria for selecting an EG when selecting an EU. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund. (12) Most recently completed fiscal year end Class A total expense ratio. ________________________________________________________________________________ 42 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND Based on this analysis, the Fund has equally favorable rankings on a management fee basis and on a total expense ratio basis. III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Adviser's profitability in connection with investment advisory services provided to the Fund. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The Fund's profitability information, prepared by the Adviser for the Board of Directors, was reviewed by the Senior Officer and the consultant. The Adviser's profitability from providing investment advisory services to the Fund decreased during calendar year 2006, relative to 2005. In addition to the Adviser's direct profits from managing the Fund, certain of the Adviser's affiliates have business relationships with the Fund and may earn a profit from providing other services to the Fund. The courts have referred to this type of business opportunity as "fall-out benefits" to the Adviser and indicated that such benefits should be factored into the evaluation of the total relationship between the Fund and the Adviser. Neither case law nor common business practice precludes the Adviser's affiliates from earning a reasonable profit on this type of relationship provided the affiliates' charges and services are competitive. These affiliates provide transfer agent, distribution and brokerage related services to the Fund and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC"), and brokerage commissions. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is the Fund's principal underwriter. ABI and the Adviser have disclosed in the Fund's prospectus that they may make revenue sharing payments from their own resources, in addition to resources derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Fund. In 2006, ABI paid approximately 0.044% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $20.4 million for distribution services and educational support (revenue sharing payments). For 2007, it is anticipated, ABI will pay approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approx- ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 43 imately $20 million.(13) During the Fund's most recently completed fiscal year, ABI received from the Fund $38,638, $28,507,695 and $877,585 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively. Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. ("ABIS"), the affiliated transfer agent for the Fund, are charged on a per account basis, based on the level of service provided and the class of share held by the account. ABIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. ABIS' after-tax profitability decreased in 2006 in comparison to 2005. During the Fund's most recently completed fiscal year, ABIS received $4,512,426 in fees from the Fund.(14) The Fund effected brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co., LLC ("SCB & Co.") and/or its U.K. affiliate, Sanford C. Bernstein Limited ("SCB Ltd."), collectively "SCB," and paid commissions for such transactions during the Portfolios' most recently completed 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 similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks ("ECNs") derived from trading for its clients, including the Fund. These credits and charges are not being passed onto any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for the Fund and other clients. These soft dollar benefits reduce the Adviser's cost of doing business and increase its profitability. V. POSSIBLE ECONOMIES OF SCALE An independent consultant, retained by the Senior Officer, made a presentation to the Board of Directors regarding economies of scale and/or scope. Based on the independent consultant's initial survey, there was a consensus that fund management companies benefited from economies of scale. However, due to the lack of cost data, researchers had 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. (13) ABI currently inserts the "Advance" in quarterly account statements and pays the incremental costs associated with the mailing. The incremental cost is less than what an "independent mailing" would cost. (14) The fees disclosed are net of any expense offsets with ABIS. An expense offset is created by the interest earned on the positive cash balance that occurs within the transfer agent account as there is a one day lag with regards to money movement from the shareholder's account to the transfer agent's account and then the transfer agent's account to the Fund's account. During the Fund's most recently completed fiscal year, the fees paid by the Fund to ABIS were reduced by $265,630 under the offset agreement between the Fund and ABIS. ________________________________________________________________________________ 44 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND The independent consultant conducted further studies of the Adviser's operations to determine the existence of economies of scale and/or scope within the Adviser. The independent consultant also analyzed patterns related to advisory fees at the industry level. In a recent presentation to the Board of Directors, the independent consultant noted the potential for economies of scale and/or scope through the use of "pooling portfolios" and blend products. The independent consultant also remarked that there may be diseconomies as assets grow in less liquid and active markets. It was also observed that various factors, including fund size, family size, asset class, and investment style, had an impact on advisory fees. VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES, INCLUDING THE PERFORMANCE OF THE FUND With assets under management of approximately $742 billion as of March 31, 2007, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Fund. The information prepared by Lipper shows the 1, 3, 5, and 10 year performance rankings of the Fund(15) relative to its Lipper Performance Group ("PG") and Lipper Performance Universe ("PU")(16) for the periods ended December 31, 2006.(17) Growth & Income Fund PG PU PG PU Fund, Inc. Return Median Median Rank Rank ================================================================================ 1 year 16.93 17.63 17.99 9/15 66/104 3 year 10.74 12.41 12.26 13/15 75/96 5 year 5.61 8.37 7.62 15/15 71/76 10 year 9.76 9.03 8.48 4/14 11/41 (15) The performance rankings are for the Class A shares of the Fund. It should be noted that the performance returns of the Fund shown were provided by the Adviser. Lipper maintains its own database that includes the Fund's performance returns. Rounding differences may cause the Adviser's Fund returns to be one or two basis points different from Lipper's own Fund returns. To maintain consistency, the performance returns of the Fund, as reported by the Adviser, are provided instead of Lipper. (16) The Fund's PG is identical to the Fund's EG. The Fund's PU is not identical to the Fund's EU as the criteria for including or excluding a fund in a PU is somewhat different from that of an EU. (17) Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of the fund even if a fund had a different investment classification/objective at a different point in time. ________________________________________________________________________________ ALLIANCEBERNSTEIN GROWTH & INCOME FUND o 45 Set forth below are the 1, 3, 5, 10 year and since inception performance returns of the Fund (in bold)(18) versus its benchmark.(19) Fund and benchmark volatility and reward-to-variability ratio ("Sharpe Ratio") information is also shown.(20) Periods Ending December 31, 2006 Annualized Performance ================================================================================ 1 3 5 10 Since Annualized Risk Year Year Year Year Inception Volatility Sharpe Period (%) (%) (%) (%) (%) (%) (%) (Year) ================================================================================ Growth & Income Fund, Inc. 16.93 10.74 5.61 9.76 10.6 16.08 0.43 10 Russell 1000 Value Index 22.25 15.09 10.86 11.00 N/A 14.21 0.54 10 Inception Date: July 1, 1932 CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed advisory fee for the Fund is reasonable and within the range of what would have been negotiated at arm's-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: June 4, 2007 (18) The performance returns and risk measures shown in the table are for the Class A shares of the Fund. (19) The Adviser provided Fund and benchmark performance return information for periods through December 31, 2006. It should be noted that the "since inception" performance returns of the Fund's benchmark goes back only through the nearest month-end after inception date. In contrast, the Fund's since inception return goes back to the Fund's actual inception date. (20) Fund and benchmark volatility and Sharpe Ratio information was obtained through Lipper LANA, a database maintained by Lipper. Volatility is a statistical measure of the tendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjusted measure of return that divides a fund's return in excess of the riskless return by the fund's standard deviation. A fund with a greater volatility would be seen as more risky than a fund with equivalent performance but lower volatility; for that reason, a greater return would be demanded for the more risky fund. A fund with a higher Sharpe Ratio would be viewed as better performing than a fund with a lower Sharpe Ratio. ________________________________________________________________________________ 46 o ALLIANCEBERNSTEIN GROWTH & INCOME FUND THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS 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 Small/Mid Cap Value Fund Utility Income Fund Value Fund GLOBAL & INTERNATIONAL Global Real Estate Investment Fund* 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 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 AllianceBernstein Global High Income Fund* AllianceBernstein Income Fund* AllianceBernstein National Municipal Income Fund* ACMManaged Dollar Income Fund ACM Managed Income Fund California Municipal Income Fund New York Municipal Income Fund The Spain Fund ================================================== 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. You should consider the investment objectives, risks, charges and expenses of any AllianceBernstein fund/portfolio carefully before investing. For free copies of our prospectuses, which contain this and other information, visit us online at www.alliancebernstein.com or contact your financial advisor. Please read the prospectus carefully before investing. * Prior to January 26, 2007, AllianceBernstein Global High Income Fund was named Alliance World Dollar Government Fund II and AllianceBernstein Income Fund was named ACM Income Fund. Prior to March 1, 2007, Global Real Estate Investment Fund was named Real Estate Investment Fund. Prior to May 18, 2007, AllianceBernstein National Municipal Income Fund was named National Municipal Income Fund. ** 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. ________________________________________________________________________________ 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-0152-0407 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 29, 2007 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 29, 2007 By: /s/ Joseph J. Mantineo ---------------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer Date: June 29, 2007