-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VpldPbXnan3ndij0n/zvo4E4oVaQPHk51lPo+hg78f475SNiEjFtcS0pRi/UTb0O Uy4tZ2hKl2F8LQyhGkKY2w== 0000936772-05-000197.txt : 20051011 0000936772-05-000197.hdr.sgml : 20051010 20051011095807 ACCESSION NUMBER: 0000936772-05-000197 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050731 FILED AS OF DATE: 20051011 DATE AS OF CHANGE: 20051011 EFFECTIVENESS DATE: 20051011 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCEBERNSTEIN MID CAP GROWTH FUND INC CENTRAL INDEX KEY: 0000019614 IRS NUMBER: 136021421 STATE OF INCORPORATION: NY FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-00204 FILM NUMBER: 051131097 BUSINESS ADDRESS: STREET 1: 500 PLAZA DRIVE CITY: SECAUCUS STATE: NJ ZIP: 07094 BUSINESS PHONE: 2013194105 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS 31ST FL CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: ALLIANCE MID CAP GROWTH FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CHEMICAL FUND INC DATE OF NAME CHANGE: 19870415 N-CSR 1 edg11260_ar.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: 811-00204 AllianceBernstein Mid-Cap Growth 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 Alliance Capital Management 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: July 31, 2005 Date of reporting period: July 31, 2005 ITEM 1. REPORTS TO STOCKHOLDERS. [LOGO] ALLIANCEBERNSTEIN (R) Investment Research and Management AllianceBernstein Mid-Cap Growth Fund Annual Report July 31, 2005 ANNUAL REPORT 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 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 Investment Research and Management, Inc. is an affiliate of Alliance Capital Management L.P., the manager of the funds, and is a member of the NASD. September 16, 2005 Annual Report This report provides management's discussion of fund performance for AllianceBernstein Mid-Cap Growth Fund (the "Fund") for the annual reporting period ended July 31, 2005. Investment Objective and Policies The Fund is an open-end, diversified investment company that seeks long-term growth of capital and income primarily through investments in common stocks that Alliance Capital believes will appreciate in value. The Fund invests predominantly in the stocks of mid-capitalization companies. This Fund can also invest in foreign securities. Investment Results The table on page 4 shows the Fund's performance compared to its benchmark, the Russell MidCap Growth Index, for the six- and 12-month periods ended July 31, 2005. The Fund underperformed the benchmark for both periods under review. During both periods, sector weightings contributed both positively and negatively to the Fund's performance, while stock selection detracted from performance. During the 12-month reporting period, the Fund's underweighted position in the energy sector was the leading contributor to underperformance versus the benchmark. The Fund's large overweighted position in the technology sector also detracted from performance. A modest overweighted position in utilities, in addition to an underweighted position in the auto & transportation sector, contributed positively to the Fund's performance during the annual reporting period. Stock selection also detracted from the Fund's performance over this time frame. The Fund's underweighted position in the energy sector was also the leading contributor to the Fund's underperformance over the six-month period ended July 31, 2005. A large overweighted position in the technology sector also detracted from the Fund's performance. An underweighted position in the auto & transportation sector, in addition to a modest overweighted position in the utilities sector, contributed to the Fund's performance during the six-month period. Stock selection also detracted from performance during this time frame. Market Review and Investment Strategy The past year has been a busy one for the financial markets. The markets began the period concerned over the winner of the U.S. presidential election, contemplating the implications of a tightening U.S. Federal Reserve (the "Fed") which had just begun to raise interest rates, worrying about higher oil prices which had increased 36% from July 31, 2003, and struggling with a surprising rise in inventories in the technology sector. Since that time, the Fed has continued to tighten monetary policy, raising rates one quarter point every meeting since June 30, 2004. The price of crude oil has risen from $43.80 on July 31, 2004 to $60.75 one year later, which is an increase of another 39%, and this despite crude oil inventories in the United States being at multi-year highs. The technology inventories have been cleaned out, with some areas of technology experiencing shortages of product. Finally, the U.S. economy continued to expand at a generous clip, leaving some investors to wonder why such concerns existed just a year ago. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 1 In response to these and other inputs, the Fund's portfolio manager has shifted the Fund's position in the energy sector from a large overweighted position it enjoyed just 12 months ago, to a markedly underweighted position as the fundamentals, namely inventories, continue to deteriorate. The portfolio manager has maintained the Fund's underweighted position in financials with the assumption that tightening monetary policy and a flattening yield curve should impact the earnings of the sector. The Fund's position in technology was expanded as the sector suffered through last summer's inventory correction. This correction benefited the Fund in the two months after President Bush's re-election but has detracted from it since. Finally, the portfolio manager has continued to purchase stocks for the Fund that should benefit the most from big themes evolving in the U.S. and global economies. These themes included broadband, the productivity super-cycle and deverticalization, personalized medicine, and the development of the middle class in emerging markets. During the six-month period ended July 31, 2005, the financial markets have been dominated by one sector and topic, energy. Energy has been by far the strongest sector of any benchmark, which has been especially true in the high beta Russell MidCap Growth Index. Over the period stretching from January 31, 2005 through July 31, 2005, the price of crude oil was up 26%, with the energy sector up a corresponding amount, and this despite crude oil inventories in the U.S. being at multi-year highs. Over the same period, the Fed has increased interest rates 0.25% four times, bringing the Fed Funds rate to 3.25%. Similar to the 12-month period, technology inventories, which had been built last summer, have been cleaned out, with some areas of technology experiencing shortages of product. The portfolio manager continued to shift the Fund's overweighted position in energy to a markedly underweight position as the fundamentals, namely inventories, continued to deteriorate during the six-month period. The Fund has maintained its underweighted position in financials. An overweighted position in the technology sector has been maintained as the fundamentals of two of the Fund's major themes, namely the broadband revolution and the productivity super-cycle, seem to be intact. Finally, though the Fund is underweighted in health care, companies addressing personalized medicine in health care continue to be emphasized. The Fund's holdings are classified throughout this report according to Alliance Capital's sector classification (for a visual representation of the Fund's sector breakdown, please see the pie chart on page 7). For readers specifically interested in the Russell sector classification of this Fund, the sector breakdown according to Russell's classification is as follows: Technology 36.2%, Consumer Discretionary 27.7%, Health Care 14.0%, Producer Durables 8.6%, Financial Services 7.1%, Utilities 3.9%, Autos & Transportation 0.9% and Cash 1.6%. _______________________________________________________________________________ 2 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Historical Performance - ------------------------------------------------------------------------------- HISTORICAL PERFORMANCE An Important Note About the Value of Historical Performance The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein at (800) 227-4618. You should read the prospectus carefully before you invest. Returns are annualized for periods longer than one year. All fees and expenses related to the operation of the Fund have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Fund's quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for Advisor Class, Class R, Class K and Class I shares will vary due to different expenses associated with these classes. Performance assumes reinvestment of distributions and does not account for taxes. Benchmark Disclosure The unmanaged Russell MidCap Growth Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index measures the performance of those Russell mid-cap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Investors cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Fund. A Word About Risk The Fund can invest in foreign securities. Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments. In addition, fluctuations in the value of investments in foreign currency denominated securities may be magnified by changes in foreign exchange rates. Please note, mid-cap stocks may have limited marketability and may be subject to more abrupt or erratic market movements than large-cap stocks. 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 MID-CAP GROWTH FUND o 3 Historical Performance - ------------------------------------------------------------------------------- HISTORICAL PERFORMANCE (continued from previous page) Returns THE FUND VS. ITS BENCHMARK ------------------------- PERIODS ENDED JULY 31, 2005 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund Class A 5.91% 19.89% - ------------------------------------------------------------------------------- Class B 5.56% 19.01% - ------------------------------------------------------------------------------- Class C 5.57% 19.05% - ------------------------------------------------------------------------------- Advisor Class 6.15% 20.37% - ------------------------------------------------------------------------------- Class R** 6.61%* - ------------------------------------------------------------------------------- Class K** 6.61%* - ------------------------------------------------------------------------------- Class I** 6.78%* - ------------------------------------------------------------------------------- Russell MidCap Growth Index 10.60% 25.65% - ------------------------------------------------------------------------------- * Since Inception. (See inception dates below.) ** Please note that this is a new share class offering for investors purchasing shares through institutional pension plans. The inception date for Class R, Class K and Class I shares is 3/1/05. GROWTH OF A $10,000 INVESTMENT IN THE FUND 7/31/95 TO 7/31/05 AllianceBernstein Mid-Cap Growth Fund Class A: $19,220 Russell MidCap Growth Index: $24,527 [THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] AllianceBernstein Russell MidCap Mid-Cap Growth Fund Class A Growth Index - ------------------------------------------------------------------------------- 7/31/95 $ 9,575 $ 10,000 7/31/96 $ 10,156 $ 10,725 7/31/97 $ 15,486 $ 14,982 7/31/98 $ 15,776 $ 16,230 7/31/99 $ 18,185 $ 19,750 7/31/00 $ 19,419 $ 28,393 7/31/01 $ 14,988 $ 19,361 7/31/02 $ 10,012 $ 13,808 7/31/03 $ 13,290 $ 17,005 7/31/04 $ 16,032 $ 19,520 7/31/05 $ 19,220 $ 24,527 This chart illustrates the total value of an assumed $10,000 investment in AllianceBernstein Mid-Cap Growth Fund Class A shares (from 7/31/95 to 7/31/05) as compared to the performance of the Fund's benchmark. The chart reflects the deduction of the maximum 4.25% sales charge from the initial $10,000 investment in the Fund and assumes the reinvestment of dividends and capital gains. See Historical Performance and Benchmark disclosures on previous page. (Historical Performance continued on next page) _______________________________________________________________________________ 4 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Historical Performance - ------------------------------------------------------------------------------- HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF JULY 31, 2005 - -------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 19.89% 14.77% 5 Years -0.21% -1.06% 10 Years 7.22% 6.75% Class B Shares 1 Year 19.01% 15.01% 5 Years -1.04% -1.04% 10 Years(a) 6.47% 6.47% Class C Shares 1 Year 19.05% 18.05% 5 Years -1.01% -1.01% 10 Years 6.29% 6.29% Advisor Class Shares 1 Year 20.37% 5 Years 0.01% Since Inception* 6.88% Class R Shares+ Since Inception* 6.61% Class K Shares+ Since Inception* 6.61% Class I Shares+ Since Inception* 6.78% SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2005) - -------------------------------------------------------------- Class A Shares 1 Year -3.05% 5 Years -1.71% 10 Years 6.47% Class B Shares 1 Year -3.61% 5 Years -1.72% 10 Years(a) 6.20% Class C Shares 1 Year -0.61% 5 Years -1.68% 10 Years 6.01% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 10/1/96 for Advisor Class shares; 3/1/05 for Class R, Class K and Class I shares. + Please note that this is a new share class offering for investors purchasing shares through institutional pension plans. The inception dates for these share classes are listed above. See Historical Performance disclosures on page 3. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 5 Fund Expenses - ------------------------------------------------------------------------------- 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 February 1, 2005 July 31, 2005 During Period* ------------------------------- ------------------------------- --------------------------- Actual Hypothetical Actual Hypothetical** Actual Hypothetical ----------- ----------------- ----------- ----------------- ----------- ------------- Class A $1,000 $1,000 $1,059.12 $1,018.50 $ 6.48 $ 6.36 - --------------------------------------------------------------------------------------------------------------- Class B $1,000 $1,000 $1,055.56 $1,014.43 $10.65 $10.44 - --------------------------------------------------------------------------------------------------------------- Class C $1,000 $1,000 $1,055.66 $1,014.53 $10.55 $10.34 - --------------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,000 $1,061.49 $1,019.59 $ 5.37 $ 5.26 - --------------------------------------------------------------------------------------------------------------- Class R + $1,000 $1,000 $1,066.11 $1,014.91 $ 6.11 $ 5.96 - --------------------------------------------------------------------------------------------------------------- Class K + $1,000 $1,000 $1,066.11 $1,016.07 $ 4.90 $ 4.79 - --------------------------------------------------------------------------------------------------------------- Class I + $1,000 $1,000 $1,067.77 $1,016.99 $ 3.96 $ 3.86 - ---------------------------------------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 1.27%, 2.09%, 2.07%, 1.05%, 1.42%, 1.14% and 0.92%, respectively, multiplied by the average account value over the period, multiplied by the number of days in the period/365. ** Assumes 5% return before expenses. + The account value and expenses for Class R, Class K and Class I shares are based on the period from March 1, 2005 (commencement of distribution) through July 31, 2005. _______________________________________________________________________________ 6 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Portfolio Summary and Ten Largest Holdings - ------------------------------------------------------------------------------- PORTFOLIO SUMMARY July 31, 2005 PORTFOLIO STATISTICS Net Assets ($mil): $816.5 SECTOR BREAKDOWN* 45.2% Technology 29.9% Consumer Services 16.4% Health Care [PIE CHART OMITTED] 5.6% Finance 1.5% Consumer Manufacturing 0.4% Transportation 1.0% Short-Term TEN LARGEST HOLDINGS July 31, 2005 Percent of Company U.S. $ Value Net Assets _______________________________________________________________________________ Amazon.com, Inc. $ 39,698,106 4.9% - ------------------------------------------------------------------------------- Applera Corp. 38,417,639 4.7 - ------------------------------------------------------------------------------- KLA-Tencor Corp. 34,710,191 4.3 - ------------------------------------------------------------------------------- Juniper Networks, Inc. 34,269,571 4.2 - ------------------------------------------------------------------------------- CNET Networks, Inc. 34,237,568 4.2 - ------------------------------------------------------------------------------- Apollo Group, Inc. Cl.A 32,288,949 4.0 - ------------------------------------------------------------------------------- Broadcom Corp. Cl.A 32,270,821 3.9 - ------------------------------------------------------------------------------- Silicon Laboratories, Inc. 31,417,042 3.8 - ------------------------------------------------------------------------------- Network Appliance, Inc. 31,196,307 3.8 - ------------------------------------------------------------------------------- Wynn Resorts, Ltd. 30,992,587 3.8 - ------------------------------------------------------------------------------- $ 339,498,781 41.6% * All data are as of July 31, 2005. The Fund's sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Fund's sector breakdown is classified in the above pie chart and throughout this report according to Alliance Capital's sector classification. For readers specifically interested in the Russell sector classification of this Fund, the sector breakdown according to Russell's classification is as follows: Technology 36.2%, Consumer Discretionary 27.7%, Health Care 14.0%, Producer Durables 8.6%, Financial Services 7.1%, Utilities 3.9%, Autos & Transportation 0.9% and Cash 1.6%. Please Note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 7 Portfolio of Investments - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS July 31, 2005 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-98.5% Technology-45.0% Communication Equipment-8.2% Corning, Inc.(a)* 734,750 $ 13,996,987 JDS Uniphase Corp.(a)* 12,108,270 18,283,488 Juniper Networks, Inc.(a) 1,428,494 34,269,571 ------------- 66,550,046 ------------- Communication Services-3.2% Level 3 Communications, Inc.(a)* 12,663,270 26,086,336 ------------- Computer Hardware/Storage-1.6% Palm, Inc.(a)* 450,340 12,852,704 ------------- Computer Peripherals-3.8% Network Appliance, Inc.(a) 1,222,905 31,196,307 ------------- Internet Infrastructure-3.4% Akamai Technologies, Inc.(a)* 709,780 10,838,341 VeriSign, Inc.(a) 648,750 17,068,612 ------------- 27,906,953 ------------- Internet Media-3.0% RealNetworks, Inc.(a)* 4,996,210 24,831,164 ------------- Semiconductor Capital Equipment-6.0% KLA-Tencor Corp.* 671,377 34,710,191 Novellus Systems, Inc.(a) 506,380 14,609,063 ------------- 49,319,254 ------------- Semiconductor Components-11.2% Advanced Micro Devices, Inc.(a)* 535,150 10,745,812 Broadcom Corp. Cl.A(a) 754,520 32,270,821 PMC-Sierra, Inc.(a) 1,711,280 16,821,882 Silicon Laboratories, Inc.(a) 1,073,353 31,417,042 ------------- 91,255,557 ------------- Software-3.0% Adobe Systems, Inc.* 273,280 8,100,019 NAVTEQ(a) 363,130 15,966,826 ------------- 24,066,845 ------------- Miscellaneous-1.6% Itron, Inc.(a) 273,670 13,259,311 ------------- 367,324,477 ------------- Consumer Services-29.8% Advertising-3.0% Audible, Inc.(a)* 892,872 16,062,767 Getty Images, Inc.(a)* 102,810 8,301,908 ------------- 24,364,675 ------------- Broadcasting & Cable-3.4% XM Satellite Radio Holdings, Inc. Cl.A(a)* 784,995 27,969,372 ------------- _______________________________________________________________________________ 8 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Portfolio of Investments - ------------------------------------------------------------------------------- Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Cellular Communications-0.7% NeuStar, Inc. Cl.A(a) 196,035 $ 5,488,980 ------------- Entertainment & Leisure-3.8% Wynn Resorts, Ltd.(a)* 550,490 30,992,587 ------------- Retail-General Merchandise-6.0% Amazon.com, Inc.(a) 878,860 39,698,106 Bed Bath & Beyond, Inc.(a) 87,510 4,016,709 Williams-Sonoma, Inc.(a) 117,000 5,166,720 ------------- 48,881,535 ------------- Miscellaneous-12.9% Apollo Group, Inc. Cl.A(a) 429,660 32,288,949 CNET Networks, Inc.(a)* 2,674,810 34,237,568 HomeStore, Inc.(a) 4,734,430 12,498,895 Shanda Interactive Entertainment, Ltd. (Cayman Islands)(ADR)(a)* 444,800 14,549,363 SINA Corp. (Cayman Islands)(a) 434,170 12,074,268 ------------- 105,649,043 ------------- 243,346,192 ------------- Health Care-16.3% Biotechnology-8.6% Affymetrix, Inc.(a)* 522,265 24,384,553 Applera Corp.-Applied Biosystems Group 888,765 18,504,087 Applera Corp.-Celera Genomics Group(a) 1,613,740 19,913,552 Compugen, Ltd. (Israel)(a) 1,715,350 6,020,878 deCODE GENETICS, Inc. (Iceland)(a)* 100,900 988,820 ------------- 69,811,890 ------------- Medical Products-4.6% Cerus Corp.(a) 1,785,798 12,179,142 Given Imaging, Ltd. (Israel)(a)* 732,831 15,975,716 Kinetic Concepts, Inc.(a)* 162,800 9,763,116 ------------- 37,917,974 ------------- Medical Services-3.1% Cepheid, Inc.(a) 2,236,120 19,185,910 Covance, Inc.(a) 123,500 6,119,425 ------------- 25,305,335 ------------- 133,035,199 ------------- Finance-5.5% Brokerage & Money Management-4.5% Ameritrade Holding Corp.(a) 1,004,750 19,622,768 Calamos Asset Management, Inc. Cl.A 465,820 13,434,249 International Securities Exchange, Inc. Cl.A(a)* 157,300 3,762,616 ------------- 36,819,633 ------------- _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 9 Portfolio of Investments - ------------------------------------------------------------------------------- Shares or Principal Amount Company (000) U.S. $ Value - ------------------------------------------------------------------------------- Miscellaneous-1.0% Chicago Mercantile Exchange Holdings, Inc. 28,380 $ 8,543,799 ------------- 45,363,432 ------------- Consumer Manufacturing-1.5% Auto & Related-0.5% Autoliv, Inc. (Sweden) 89,500 3,987,225 ------------- Building & Related-1.0% D.R. Horton, Inc. 196,339 8,065,606 ------------- 12,052,831 ------------- Transportation-0.4% Air Freight-0.4% UTI Worldwide, Inc. (British Virgin Islands) 47,100 3,361,056 ------------- Total Common Stocks (cost $668,469,991) 804,483,187 ------------- SHORT-TERM INVESTMENT-1.0% Time Deposit-1.0% State Street Euro Dollar 2.60%, 8/01/05 (cost $7,908,000) $ 7,908 7,908,000 ------------- Total Investments Before Security Lending Collateral-99.5% (cost $676,377,991) 812,391,187 ------------- INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-22.9% Short-Term Investment UBS Private Money Market Fund, LLC, 3.20% (cost $186,957,689) 186,957,689 186,957,689 ------------- Total Investments-122.4% (cost $863,335,680) 999,348,876 Other assets less liabilities-(22.4%) (182,874,608) ------------- Net Assets-100% $ 816,474,268 ============= * Represents entire or partial securities out on loan. See Note E for securities lending information. (a) Non-income producing security. Glossary: ADR - American Depositary Receipt See notes to financial statements. _______________________________________________________________________________ 10 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Statement of Assets & Liabilities - ------------------------------------------------------------------------------- STATEMENT OF ASSETS & LIABILITIES July 31, 2005 ASSETS Investments in securities, at value (cost $863,335,680-- including investment of cash collateral for securities loaned of $186,957,689) $ 999,348,876(a) Cash 815 Receivable for investment securities sold 22,273,243 Receivable for capital stock sold 1,198,492 Dividends and interest receivable 337,917 -------------- Total assets 1,023,159,343 -------------- LIABILITIES Payable for collateral on securities loaned 186,957,689 Payable for investment securities purchased 16,910,966 Payable for capital stock redeemed 1,828,137 Advisory fee payable 483,426 Distribution fee payable 198,420 Transfer Agent fee payable 95,506 Administrative fee payable 7,172 Accrued expenses and other liabilities 203,759 -------------- Total liabilities 206,685,075 -------------- Net Assets $ 816,474,268 ============== COMPOSITION OF NET ASSETS Capital stock, at par $ 1,288,844 Additional paid-in capital 677,770,461 Accumulated net realized gain on investment transactions 1,401,767 Net unrealized appreciation of investments 136,013,196 -------------- $ 816,474,268 ============== CALCULATION OF MAXIMUM OFFERING PRICE PER SHARE
Net Asset Value and: ---------------------------- Maximum Shares Offering Redemption Offering Class Net Assets Outstanding Price Price Price* - ------------------------------------------------------------------------------------------------- A $653,612,009 101,301,258 -- $6.45 $6.74 - ------------------------------------------------------------------------------------------------- B $ 70,236,721 12,752,403 $5.51 -- -- - ------------------------------------------------------------------------------------------------- C $ 24,098,417 4,381,986 $5.50 -- -- - ------------------------------------------------------------------------------------------------- Advisor $ 68,495,039 10,443,760 $6.56 $6.56 -- - ------------------------------------------------------------------------------------------------- R $ 10,746 1,667 $6.45 $6.45 -- - ------------------------------------------------------------------------------------------------- K $ 10,666 1,653 $6.45 $6.45 -- - ------------------------------------------------------------------------------------------------- I $ 10,670 1,652.89 $6.46 $6.46 -- - -------------------------------------------------------------------------------------------------
* The maximum offering price per share for Class A shares includes a sales charge of 4.25%. (a) Includes securities on loan with a value of $166,896,355 (see Note E). See notes to financial statements. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 11 Statement of Operations - ------------------------------------------------------------------------------- STATEMENT OF OPERATIONS Year Ended July 31, 2005 INVESTMENT INCOME Securities lending income $ 1,942,733 Dividends 892,199 Interest 72,024 $ 2,906,956 ------------ EXPENSES Management fee 5,595,917 Distribution fee -- Class A 1,390,901 Distribution fee -- Class B 731,804 Distribution fee -- Class C 246,300 Distribution fee -- Class R 21 Distribution fee -- Class K 10 Transfer agency 1,674,746 Printing 259,777 Custodian 222,347 Registration 111,107 Administrative 83,335 Legal 64,024 Audit 58,031 Directors' fees 23,783 Miscellaneous 36,317 ------------ Total expenses 10,498,420 Less: expense offset arrangement (see Note B) (6,370) ------------ Net expenses 10,492,050 ------------ Net investment loss (7,585,094) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 97,402,126 Net change in unrealized appreciation/depreciation of investments 50,931,030 ------------ Net gain on investment transactions 148,333,156 ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $140,748,062 ============ See notes to financial statements. _______________________________________________________________________________ 12 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Statement of Changes in Net Assets - ------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS Year Ended Year Ended July 31, July 31, 2005 2004 ============== ============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (7,585,094) $ (9,093,219) Net realized gain on investment transactions 97,402,126 206,659,498 Net change in unrealized appreciation/depreciation of investments 50,931,030 (71,196,765) -------------- -------------- Net increase in net assets from operations 140,748,062 126,369,514 CAPITAL STOCK TRANSACTIONS Net decrease (80,151,890) (461,518) -------------- -------------- Total increase 60,596,172 125,907,996 NET ASSETS Beginning of period 755,878,096 629,970,100 -------------- -------------- End of period (including accumulated net investment loss of ($0) and ($0), respectively) $ 816,474,268 $ 755,878,096 ============== ============== See notes to financial statements. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 13 Notes to Financial Statements - ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS July 31, 2005 NOTE A Significant Accounting Policies The AllianceBernstein Mid-Cap Growth 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 Cshares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Fund. 1. Security Valuation Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Fund's Board of Directors. In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities not listed on an exchange but traded on The NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing Price; listed put or _______________________________________________________________________________ 14 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Notes to Financial Statements - ------------------------------------------------------------------------------- call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market, ("OTC") (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the "Manager") may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer's financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because, most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward exchange currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 15 Notes to Financial Statements - ------------------------------------------------------------------------------- Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities. 3. Taxes It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if 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. 4. 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 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. 5. Income and Expenses 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 that the Fund's Class B and Class C shares bear higher distribution and transfer agent fees than Class A, Advisor Class, Class R, Class K and Class I shares. Advisor Class and Class I shares have no distribution fees. 6. Dividends and Distributions Dividends and distributions to shareholders, if any, are recorded on the exdividend 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. _______________________________________________________________________________ 16 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Notes to Financial Statements - ------------------------------------------------------------------------------- NOTE B Management Fee and Other Transactions With Affiliates Under the terms of the management agreement, the Fund pays the Manager a fee at an annual rate of .75% on the first $500 million of average daily net assets, ..65% on the next $500 million of average daily net assets and .55% on average daily net assets in excess of $1 billion. Such fee is accrued daily and paid monthly. Pursuant to the management agreement, the Fund paid $83,335 to the Manager representing the cost of certain legal and accounting services provided to the Fund by the Manager for the year ended July 31, 2005. The Fund compensates Alliance Global Investor Services, Inc., (AGIS) a wholly-owned subsidiary of the Manager, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. Such compensation amounted to $1,140,662 for the year ended July 31, 2005. For the year ended July 31, 2005, the Fund's expenses were reduced by $6,370, under an expense offset arrangement with AGIS. AllianceBernstein Investment Research and Management, Inc., (the "Distributor"), a wholly-owned subsidiary of the Manager, serves as the distributor of the Fund's shares. The Distributor has advised the Fund that it has retained front-end sales charges of $13,103 from the sale of Class A shares and received $6,259, $93,144 and $7,539 in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the year ended July 31, 2005. Brokerage commissions paid on investment transactions for the year ended July 31, 2005 amounted to $2,495,800 of which $1,525 and $0, respectively, was paid to Sanford C. Bernstein &Co. LLC and Sanford C. Bernstein Limited, affiliates of the Manager. 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 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 Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. The fees are accrued daily and paid monthly. The directors currently limit payments under the Class A plan to .22% of average daily net assets _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 17 Notes to Financial Statements - ------------------------------------------------------------------------------- attributable to Class A shares. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amount of $6,709,620, $2,127,279, $0 and $0, 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 Manager 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 period ended July 31, 2005, were as follows: Purchases Sales ============== ============== Investment securities (excluding U.S. government securities) $ 687,742,847 $ 780,452,747 U.S. government securities -0- -0- The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows: Cost $ 898,311,096 ============== Gross unrealized appreciation $ 162,226,342 Gross unrealized depreciation (61,188,562) -------------- Net unrealized appreciation $ 101,037,780 ============== NOTE E Securities Lending The Fund has entered into a securities lending agreement with UBS Warburg 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 July 31, 2005, the _______________________________________________________________________________ 18 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Notes to Financial Statements - ------------------------------------------------------------------------------- Fund had loaned securities with a value of $166,896,355 and received cash collateral which was invested in a money market fund valued at $186,957,689 as included in the accompanying portfolio of investments. For the year ended July 31, 2005, the Fund earned fee income of $1,942,733 which is included in the accompanying statement of operations. NOTE F Capital Stock There are 21,000,000,000 shares of $0.01 par value capital stock authorized, divided into seven classes, designated Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Each class consists of 3,000,000,000 authorized shares. Transactions in capital stock were as follows: Shares Amount --------------------------- ------------------------------ Year Ended Year Ended Year Ended Year Ended July 31, July 31, July 31, July 31, 2005 2004 2005 2004 ------------ ------------ -------------- -------------- Class A Shares sold 8,269,711 22,242,280 $ 48,173,433 $121,051,440 - ------------------------------------------------------------------------------- Shares converted from Class B 681,544 811,000 4,157,589 4,498,313 - ------------------------------------------------------------------------------- Shares redeemed (21,249,735) (30,623,278) (123,888,353) (163,486,244) - ------------------------------------------------------------------------------- Net decrease (12,298,480) (7,569,998) $(71,557,331) $(37,936,491) =============================================================================== Class B Shares sold 2,187,239 8,239,640 $ 10,967,154 $ 38,206,484 - ------------------------------------------------------------------------------- Shares converted to Class A (700,062) (816,813) (4,157,589) (4,498,313) - ------------------------------------------------------------------------------- Shares redeemed (4,844,419) (5,115,444) (23,512,827) (23,593,092) - ------------------------------------------------------------------------------- Net increase (decrease) (3,357,242) 2,307,383 $(16,703,262) $ 10,115,079 =============================================================================== Class C Shares sold 1,244,041 3,654,996 $ 6,279,521 $ 17,059,128 - ------------------------------------------------------------------------------- Shares redeemed (2,493,024) (1,751,807) (12,168,120) (8,317,397) - ------------------------------------------------------------------------------- Net increase (decrease) (1,248,983) 1,903,189 $ (5,888,599) $ 8,741,731 =============================================================================== Advisor Class Shares sold 3,816,392 6,376,822 $ 22,967,670 $ 34,878,865 - ------------------------------------------------------------------------------- Shares redeemed (1,519,521) (2,933,093) (9,000,454) (16,260,702) - ------------------------------------------------------------------------------- Net increase 2,296,871 3,443,729 $ 13,967,216 $ 18,618,163 =============================================================================== _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 19 Notes to Financial Statements - ------------------------------------------------------------------------------- Shares Amount --------------------------- ------------------------------ March 1, March 1, 2005(a) to 2005(a) to July 31, July 31, 2005 2005 ------------ -------------- Class R Shares sold 1,667 $ 10,086 - --------------------------------------------------------------- Net increase 1,667 $ 10,086 =============================================================== Class K Shares sold 1,653 $ 10,000 - --------------------------------------------------------------- Net increase 1,653 $ 10,000 =============================================================== Class I Shares sold 1,653 $ 10,000 - --------------------------------------------------------------- Net increase 1,653 $ 10,000 =============================================================== (a) Commencement of distributions. NOTE G Risks Involved in Investing in the Fund Foreign Securities Risk--Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable United States companies or of the United States 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. NOTE H Components of Accumulated Earnings (Deficit) As of July 31, 2005, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed long term capital gain $ 36,377,183(a) Unrealized appreciation/(depreciation) 101,037,780(b) -------------- Total accumulated earnings/(deficit) $ 137,414,963 ============== (a) During the year ended July 31, 2005, the Fund utilized $67,249,702 of capital loss carryforward. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. _______________________________________________________________________________ 20 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Notes to Financial Statements - ------------------------------------------------------------------------------- During the current fiscal year, permanent differences, primarily due to net operating loss, resulted in a decrease in accumulated net investment loss and a corresponding decrease in additional paid-in capital. This reclassification had no effect on net assets. NOTE I Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein 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; however, it is not expected that the Fund will have its fee reduced; 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. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 21 Notes to Financial Statements - ------------------------------------------------------------------------------- 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, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P. ("Alliance 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, numerous 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, and others may be filed. On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred all federal actions, and all removed state court actions, to the United States District Court for the District of Maryland. On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Alliance Holding; and claims brought under ERISA by participants in the Profit Sharing Plan for Employees of the Adviser. All four complaints include substantially identical factual allegations, which appear to be based in large part on the SEC Order and the NYAG Order. The claims in the mutual fund derivative consolidated amended complaint are generally based on the theory that all fund advisory agreements, distribution agreements and 12b-1 plans between the Adviser and the _______________________________________________________________________________ 22 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Notes to Financial Statements - ------------------------------------------------------------------------------- AllianceBernstein Funds should be invalidated, regardless of whether market timing occurred in each individual fund, because each was approved by fund trustees on the basis of materially misleading information with respect to the level of market timing permitted in funds managed by the Adviser. The claims asserted in the other three consolidated amended complaints are similar to those that the respective plaintiffs asserted in their previous federal lawsuits. All of these lawsuits seek an unspecified amount of damages. The Alliance defendants have moved to dismiss the complaints, and those motions are 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 for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commission") (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 May 31, 2005, defendants removed the WVAG Complaint to the United States District Court for the Northern District of West Virginia. On July 12, 2005, plaintiff moved to remand. That motion is pending. On August 30, 2005, the deputy commissioner of securities of the West Virginia Securities Commission 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 Hindo Complaint. The time for the Adviser and Alliance Holding to respond to the Summary Order has been extended. The Adviser intends to vigorously defend against the allegations in the WVAG Complaint and the Summary Order. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. 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. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 23 Notes to Financial Statements - ------------------------------------------------------------------------------- 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 Capital Management Holding L.P., 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 an alleged shareholder 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 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, numerous additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants, and others may be filed. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the Fund's shares or other adverse consequences to the Fund. 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 Fund. _______________________________________________________________________________ 24 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Financial Highlights - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A ---------------------------------------------------------------------------- December 1, Year Ended July 31, 2002 to Year Ended November 30, ------------------------ July 31, ------------------------------------- 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $5.38 $4.46 $3.70 $4.79 $5.83 $7.55 INCOME FROM INVESTMENT OPERATIONS Net investment loss(b) (.05) (.06)(c) (.03) (.04) (.04) (.04) Net realized and unrealized gain (loss) on investment transactions 1.12 .98 .79 (1.05) (.71) (1.04) Net increase (decrease) in net asset value from operations 1.07 .92 .76 (1.09) (.75) (1.08) LESS: DISTRIBUTIONS Distributions from net realized gain on investment transactions -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $6.45 $5.38 $4.46 $3.70 $4.79 $5.83 TOTAL RETURN Total investment return based on net asset value(d) 19.89% 20.63% 20.54% (22.76)% (13.64)% (15.73)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $653,612 $610,854 $540,843 $469,570 $686,445 $856,956 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.25% 1.25% 1.45%(e) 1.34% 1.22% 1.04% Expenses, before waivers/ reimbursements 1.25% 1.26% 1.45%(e) 1.34% 1.22% 1.04% Net investment loss (.88)% (1.06)%(c) (1.11)%(e) (1.03)% (.69)% (.55)% Portfolio turnover rate 88% 135% 75% 183% 226% 86%
See footnote summary on page 31. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 25 Financial Highlights - ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B ---------------------------------------------------------------------------- December 1, Year Ended July 31, 2002 to Year Ended November 30, ------------------------ July 31, ------------------------------------- 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $4.63 $3.87 $3.23 $4.22 $5.21 $6.87 INCOME FROM INVESTMENT OPERATIONS Net investment loss(b) (.09) (.09)(c) (.03) (.07) (.07) (.09) Net realized and unrealized gain (loss) on investment transactions .97 .85 .67 (.92) (.63) (.93) Net increase (decrease) in net asset value from operations .88 .76 .64 (.99) (.70) (1.02) LESS: DISTRIBUTIONS Distributions from net realized gain on investment transactions -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $5.51 $4.63 $3.87 $3.23 $4.22 $5.21 TOTAL RETURN Total investment return based on net asset value(d) 19.01% 19.64% 19.81% (23.46)% (14.34)% (16.48)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $70,236 $74,567 $53,461 $41,096 $61,816 $81,569 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.07% 2.09% 2.32%(e) 2.20% 2.08% 1.87% Expenses, before waivers/ reimbursements 2.07% 2.10% 2.32%(e) 2.20% 2.08% 1.87% Net investment loss (1.71)% (1.90)%(c) (1.98)%(e) (1.89)% (1.54)% (1.39)% Portfolio turnover rate 88% 135% 75% 183% 226% 86%
See footnote summary on page 31. _______________________________________________________________________________ 26 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Financial Highlights - ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C ---------------------------------------------------------------------------- December 1, Year Ended July 31, 2002 to Year Ended November 30, ------------------------ July 31, ------------------------------------- 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $4.62 $3.87 $3.22 $4.21 $5.20 $6.86 INCOME FROM INVESTMENT OPERATIONS Net investment loss(b) (.08) (.09)(c) (.03) (.06) (.07) (.09) Net realized and unrealized gain (loss) on investment transactions .96 .84 .68 (.93) (.63) (.93) Net increase (decrease) in net asset value from operations .88 .75 .65 (.99) (.70) (1.02) LESS: DISTRIBUTIONS Distributions from net realized gain on investment transactions -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $5.50 $4.62 $3.87 $3.22 $4.21 $5.20 TOTAL RETURN Total investment return based on net asset value(d) 19.05% 19.38% 20.19% (23.52)% (14.37)% (16.51)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $24,098 $26,017 $14,415 $10,860 $15,391 $20,068 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.05% 2.06% 2.27%(e) 2.16% 2.04% 1.86% Expenses, before waivers/ reimbursements 2.05% 2.07% 2.27%(e) 2.16% 2.04% 1.86% Net investment loss (1.68)% (1.87)%(c) (1.94)%(e) (1.85)% (1.51)% (1.34)% Portfolio turnover rate 88% 135% 75% 183% 226% 86%
See footnote summary on page 31. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 27 Financial Highlights - ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class ---------------------------------------------------------------------------- December 1, Year Ended July 31, 2002 to Year Ended November 30, ------------------------ July 31, ------------------------------------- 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $5.45 $4.52 $3.74 $4.83 $5.86 $7.58 INCOME FROM INVESTMENT OPERATIONS Net investment loss(b) (.04) (.05)(c) -0- (.03) (.03) (.02) Net realized and unrealized gain (loss) on investment transactions 1.15 .98 .78 (1.06) (.71) (1.06) Net increase (decrease) in net asset value from operations 1.11 .93 .78 (1.09) (.74) (1.08) LESS: DISTRIBUTIONS Distributions from net realized gain on investment transactions -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $6.56 $5.45 $4.52 $3.74 $4.83 $5.86 TOTAL RETURN Total investment return based on net asset value(d) 20.37% 20.58% 20.86% (22.57)% (13.39)% (15.66)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $68,495 $44,440 $21,251 $13,092 $131,032 $8,304 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.04% 1.04% 1.23%(e) 1.08% 1.08% .83% Expenses, before waivers/ reimbursements 1.04% 1.05% 1.23%(e) 1.08% 1.08% .83% Net investment loss (.64)% (.85)%(c) (.89)%(e) (.81)% (.64)% (.35)% Portfolio turnover rate 88% 135% 75% 183% 226% 86%
See footnote summary on page 31. _______________________________________________________________________________ 28 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Financial Highlights - ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout The Period Class R ---------- March 1, 2005(f) to July 31, 2005 ---------- Net asset value, beginning of period $6.05 INCOME FROM INVESTMENT OPERATIONS Net investment loss(b) (.02) Net realized and unrealized gain on investment transactions .42 Net increase in net asset value from operations .40 Net asset value, end of period $6.45 TOTAL RETURN Total investment return based on net asset value(d) 6.61% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $11 Ratio to average net assets of: Expenses(e) 1.42% Net investment loss(e) (.86)% Portfolio turnover rate 88% See footnote summary on page 31. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 29 Financial Highlights - ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout The Period Class K ---------- March 1, 2005(f) to July 31, 2005 ---------- Net asset value, beginning of period $6.05 INCOME FROM INVESTMENT OPERATIONS Net investment loss(b) (.01) Net realized and unrealized gain on investment transactions .41 Net increase in net asset value from operations .40 Net asset value, end of period $6.45 TOTAL RETURN Total investment return based on net asset value(d) 6.61% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $11 Ratio to average net assets of: Expenses(e) 1.14% Net investment loss(e) (.58)% Portfolio turnover rate 88% See footnote summary on page 31. _______________________________________________________________________________ 30 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Financial Highlights - ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout The Period Class I ---------- March 1, 2005(f) to July 31, 2005 ---------- Net asset value, beginning of period $6.05 INCOME FROM INVESTMENT OPERATIONS Net investment loss(b) (.01) Net realized and unrealized gain on investment transactions .42 Net increase in net asset value from operations .41 Net asset value, end of period $6.46 TOTAL RETURN Total investment return based on net asset value(d) 6.78% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $11 Ratio to average net assets of: Expenses(e) .92% Net investment loss(e) (.35)% Portfolio turnover rate 88% (a) The Fund changed its fiscal year end from November 30 to July 31. (b) Based on average shares outstanding. (c) Net of expenses waived/reimbursed by the Adviser and the Transfer Agent. (d) 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. (e) Annualized. (f) Commencement of distributions. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 31 Report of Independent Registered Public Accounting Firm - ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of AllianceBernstein Mid-Cap Growth Fund, Inc. In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AllianceBernstein Mid-Cap Growth Fund, Inc. (the "Fund") at July 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at July 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York September 16, 2005 _______________________________________________________________________________ 32 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Board of Directors - ------------------------------------------------------------------------------- BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman Ruth Block(1) David H. Dievler(1) John H. Dobkin(1) OFFICERS Marc O. Mayer, President Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Thomas J. Bardong, Vice President Catherine Wood(2), Vice President Mark R. Manley, Secretary Mark D. Gersten, Treasurer and Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company 225 Franklin Street Boston, MA 02110 Principal Underwriter AllianceBernstein Investment Research and Management, Inc. 1345 Avenue of the Americas New York, NY 10105 Transfer Agent Alliance Global Investor Services, Inc. P.O. Box 786003 San Antonio, Texas 78278-6003 Toll-Free (800) 221-5672 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 300 Madison Avenue New York, NY 10017 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 (1) Member of the Audit Committee, the Governance and Nominating Committee and Independent Directors Committee. (2) Ms. Wood is the person primarily responsible for the day-to-day management of the Fund's investment portfolio. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 33 Management of the Fund - ------------------------------------------------------------------------------- MANAGEMENT OF THE FUND Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund's Directors is set forth below.
PORTFOLIOS PRINCIPAL IN FUND OTHER NAME, ADDRESS, OCCUPATION(S) COMPLEX DIRECTORSHIPS AND DATE OF BIRTH DURING OVERSEEN BY HELD BY (YEAR ELECTED*) PAST 5 YEARS DIRECTOR DIRECTOR - --------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS William H. Foulk, Jr., # Investment Adviser and an 108 None 2 Sound View Drive Independent Consultant. He was Suite 100 formerly Senior Manager of Barrett Greenwich, CT 06830 Associates, Inc., a registered (Chairman of the Board) investment adviser, with which he 9/7/32 had been associated since prior to (1993) 2000. He was formerly Deputy Comptroller and Chief Investment Officer of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings. Ruth Block, #** Formerly: Executive Vice President 105 None 500 S.E. Mizner Blvd. and Chief Insurance Officer of The Boca Raton, FL 33432 Equitable Life Assurance Society of 11/7/30 the United States; Chairman and (1990) Chief Executive Officer of Evlico (insurance). A Director of Avon, BP (oil and gas), Ecolab Incorporated (specialty chemicals), Tandem Financial Group and Donaldson, Lufkin & Jenrette Securities Corporation and Governor at Large, National Association of Securities Dealers, Inc. David H. Dievler, # Independent Consultant. Until 107 None P.O. Box 167 December 1994, he was Senior Vice Spring Lake, NJ 07762 President of Alliance Capital 10/23/29 Management Corporation ("ACMC") (1982) responsible for mutual fund administration. Prior to joining ACMC in 1984, he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that, he was a Senior Manager at Price Waterhouse & Co. Member of the American Institute of Certified Public Accountants since 1953.
_______________________________________________________________________________ 34 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Management of the Fund - -------------------------------------------------------------------------------
PORTFOLIOS PRINCIPAL IN FUND OTHER NAME, ADDRESS, OCCUPATION(S) COMPLEX DIRECTORSHIPS AND DATE OF BIRTH DURING OVERSEEN BY HELD BY (YEAR ELECTED*) PAST 5 YEARS DIRECTOR DIRECTOR - --------------------------------------------------------------------------------------------------------------- John H. Dobkin, # Consultant. He was formerly 105 None P.O. Box 12 President of Save Venice, Inc. Annandale, NY 12504 (preservation organization) from 2/19/42 2001-2002, Senior Advisor from (1992) June 1999-June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989-May 1999. Previously, Director of the National Academy of Design and during 1988-1992, he was Director and Chairman of the Audit Committee of ACMC.
* There is no stated term of office for the Fund's Directors. # Member of the Audit Committee, Governance and Nominating Committee and Independent Directors Committee. ** Ms. Block was an "interested person", as defined in the 1940 Act, from July 22, 1992 until October 21, 2004 by reason of her ownership of securities of a control person of the Adviser. Ms. Block received shares of The Equitable Companies Incorporated ("Equitable") as part of the demutualization of The Equitable Life Assurance Society of the United States in 1992. Ms. Block's Equitable shares were subsequently converted through a corporate action into American Depositary Shares of AXA, which were sold for approximately $2,400 on October 21, 2004. Equitable and AXA are control persons of the Adviser. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 35 Management of the Fund - ------------------------------------------------------------------------------- Officer Information Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* AND POSITION(S) PRINCIPAL OCCUPATION DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS** - ------------------------------------------------------------------------------------------------------------------- Marc O. Mayer President Executive Vice President of ACMC 10/2/57 since 2001; prior thereto, Chief Executive Officer of Sanford C. Bernstein & Co., LLC ("SCB & Co.") and its predecessor since prior to 2000. Philip L. Kirstein Senior Vice President Senior Vice President and Independent 5/29/45 and Independent Compliance Officer of the Compliance Officer AllianceBernstein Funds with which he has been associated since October 2004. Prior thereto, he was Of Counsel to Kirkpatrick & Lockhart, LLP from October 2003 to October 2004, and General Counsel of Merrill Lynch Investment Managers, L.P. since prior to 2000 until March 2003. Thomas J. Bardong Vice President Senior Vice President of ACMC,** with 4/28/45 which he has been associated since prior to 2000. Catherine Wood Vice President Senior Vice President of ACMC,** 11/26/55 and Chief Investment Officer, Regent Investor Services, a division of Alliance Capital since 2001. Previously she was a General Partner, co-managing global equity-oriented portfolios at Tupelo Capital Management since prior to 2000. Mark R. Manley Secretary Senior Vice President, Deputy General 10/23/62 Counsel and Chief Compliance Officer of ACMC,** with which he has been associated since prior to 2000.
_______________________________________________________________________________ 36 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Management of the Fund - -------------------------------------------------------------------------------
NAME, ADDRESS* AND POSITION(S) PRINCIPAL OCCUPATION DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS** - ------------------------------------------------------------------------------------------------------------------- Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance Global 10/4/50 Financial Officer Investor Services, Inc. ("AGIS")** and Vice President of AllianceBernstein Investment Research and Management, Inc. ("ABIRM"),** with which he has been associated since prior to 2000. Vincent S. Noto Controller Vice President of AGIS,** with which 12/14/64 he has been associated since prior to 2000.
* The address for each of the Fund's officers is 1345 Avenue of the Americas, New York, NY 10105. ** ACMC, ABIRM, and AGIS are affiliates of the Fund. The Fund's Statement of Additional Information (SAI) has additional information about the Fund's Directors and Officers and is available without charge upon request. Contact your financial representative or Alliance Capital at (800) 227-4618 for a free prospectus or SAI. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 37 INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND'S ADVISORY AGREEMENT The Fund's disinterested directors (the "directors") unanimously approved the continuance of the Advisory Agreement between the Fund and the Adviser at a meeting held on June 15, 2005. In preparation for the meeting, the directors had requested from the Adviser and evaluated extensive materials, including performance and expense information for other investment companies with similar investment objectives derived from data compiled by Lipper Inc. ("Lipper"), which is not affiliated with the Adviser. The directors also reviewed an independent evaluation from the Fund's Senior Officer (who is also the Fund's Independent Compliance Officer) of the reasonableness of the advisory fees (as contemplated by the Assurance of Discontinuance between the Adviser and the New York Attorney General) in the Fund's Advisory Agreement wherein the Senior Officer concluded that such fees were reasonable. In addition, the directors received a presentation from the Adviser and had an opportunity to ask representatives of the Adviser various questions relevant to the proposed approval. The directors noted that the Senior Officer's evaluation considered the following factors: management fees charged to institutional and other clients of the Adviser for like services; management fees charged by other mutual fund companies for like services; cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreement, excluding any intra-corporate profit; profit margins of the Adviser and its affiliates from supplying such services; possible economies of scale as the Fund grows larger; and nature and quality of the Adviser's services including the performance of the Fund. Prior to voting, the directors reviewed the proposed continuance of the Advisory Agreement with management and with experienced counsel who are independent of the Adviser and received a memorandum from such counsel discussing the legal standards for their consideration of the proposed continuance. The directors also discussed the proposed continuance in three private sessions at which only the directors, their independent counsel and the Fund's Independent Compliance Officer were present. In reaching their determinations relating to continuance of the Advisory Agreement, the directors considered all factors they believed relevant, including the following: 1. information comparing the performance of the Fund to other investment companies with similar investment objectives and to an index; 2. the nature, extent and quality of investment, compliance, administrative and other services rendered by the Adviser; 3. payments received by the Adviser from all sources in respect of the Fund and all investment companies in the AllianceBernstein Fund complex; _______________________________________________________________________________ 38 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND 4. the costs borne by, and profitability of, the Adviser and its affiliates in providing services to the Fund and to all investment companies in the AllianceBernstein Fund complex; 5. comparative fee and expense data for the Fund and other investment companies with similar investment objectives; 6. the extent to which economies of scale would be realized to the extent the Fund grows and whether fee levels reflect any economies of scale for the benefit of investors; 7. the Adviser's policies and practices regarding allocation of portfolio transactions of the Fund, including the extent to which the Adviser benefits from soft dollar arrangements; 8. information about "revenue sharing" arrangements that the Adviser has entered into in respect of the Fund; 9. portfolio turnover rates for the Fund compared to other investment companies with similar investment objectives; 10. fall-out benefits which the Adviser and its affiliates receive from their relationships with the Fund; 11. information about fees charged by the Adviser to other clients with similar investment objectives; 12. the Senior Officer's evaluation of the reasonableness of the fee payable to the Adviser in the Advisory Agreement; 13. the professional experience and qualifications of the Fund's portfolio management team and other senior personnel of the Adviser; and 14. the terms of the Advisory Agreement. The directors also considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the funds advised by the Adviser, their overall confidence in the Adviser's integrity and competence they have gained from that experience and the Adviser's responsiveness to concerns raised by them in the past, including the Adviser's willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 39 In their deliberations, the directors did not identify any particular information that was all-important or controlling, and each director attributed different weights to the various factors. The directors determined that the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors reaching their determinations to approve the continuance of the Advisory Agreement (including their determinations that the Adviser should continue to be the investment adviser for the Fund, and that the fees payable to the Adviser pursuant to the Advisory Agreement are appropriate) were separately discussed by the directors. Nature, extent and quality of services provided by the Adviser The directors noted that, under the Advisory Agreement, the Adviser, subject to the control of the directors, administers the Fund's business and other affairs. The Adviser manages the investment of the assets of the Fund, including making purchases and sales of portfolio securities consistent with the Fund's investment objective and policies. Under the Advisory Agreement, the Adviser also provides the Fund with such office space, administrative and other services (exclusive of, and in addition to, any such services provided by any others retained by the Fund) and executive and other personnel as are necessary for the Fund's operations. The Adviser pays all of the compensation of directors of the Fund who are affiliated persons of the Adviser and of the officers of the Fund. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost of certain clerical, accounting, administrative and other services provided at the Fund's request by employees of the Adviser or its affiliates. Requests for these "at no more than cost" reimbursements are approved by the directors on a quarterly basis and (to the extent requested and paid) result in a higher rate of total compensation from the Fund to the Adviser than the stated fee rates in the Fund's Advisory Agreement. The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement and noted that the scope of services provided by advisers of funds had expanded over time as a result of regulatory and other developments. The directors noted, for example, that the Adviser is responsible for maintaining and monitoring its own and, to varying degrees, the Fund's compliance programs, and that these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The directors considered the quality of the in-house investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the _______________________________________________________________________________ 40 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Fund. The quality of administrative and other services, including the Adviser's role in coordinating the activities of the Fund's other service providers, also were considered. The directors also considered the Adviser's response to recent regulatory compliance issues affecting a number of the investment companies in the AllianceBernstein Fund complex. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement. Costs of Services Provided and Profitability to the Adviser The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2003 and 2004. The directors reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data, and noted the Adviser's representation to them that it believed that the methods of allocation used in preparing the profitability information were reasonable and appropriate and that the Adviser had previously discussed with the directors that there is no generally accepted allocation methodology for information of this type. The directors also noted that the methodology for preparing fund-by-fund profitability information was being reviewed and that it was expected that an updated methodology would be implemented later in the year, and that it would differ in various respects from the methodology used previously. The directors recognized that it is difficult to make comparisons of profitability from fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser's capital structure and cost of capital. In considering profitability information, the directors considered the effect of fall-out benefits on the Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser has entered into with certain entities that distribute shares of the Fund. The directors focused on the profitability of the Adviser's relationship with the Fund before taxes and distribution expenses. The directors recognized that the Adviser should generally be entitled to earn a reasonable level of profits for the services it provides to the Fund and, based on their review, concluded that they were satisfied that the Adviser's level of profitability from its relationship with the Fund was not excessive. Fall-Out Benefits The directors considered that the Adviser benefits from soft dollar arrangements whereby it receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients, including the Fund. They noted that the Adviser makes presentations to the directors regarding its trading practices and brokerage allocation policies, including its policies with respect to soft dollar arrangements, from time to time and had made a special presentation to the directors in May 2005 on this subject. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 41 The directors noted that the Adviser has represented to them that all of its soft dollar arrangements are consistent with applicable legal requirements including the achievement of best execution. At the special presentation, the directors received and reviewed information concerning the Adviser's soft dollar arrangements, which included a description of the Adviser's policies and procedures with respect to allocating portfolio transactions for brokerage and research services, data on the dollar amount of commissions allocated for third-party research and brokerage services and for proprietary research and brokerage services, and a list of firms providing third-party research and brokerage to the Adviser. The directors also considered that the Distributor, which is a wholly-owned subsidiary of the Adviser: receives 12b-1 fees from the Fund in respect of classes of shares of the Fund that are subject to the Fund's 12b-1 plan; retains a portion of the 12b-1 fees from the Fund; and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The directors also noted that certain affiliates of the Adviser distribute shares of the Fund and receive compensation in that connection, that a subsidiary of the Adviser provides transfer agency services to the Fund and receives compensation from the Fund for such services, and that brokers who are affiliated with the Adviser are permitted to execute brokerage transactions for the Fund subject to satisfaction of certain requirements. The directors recognized that the Adviser's profitability would be somewhat lower if it did not receive research for soft dollars or if the Adviser's affiliates did not receive the other benefits described above. The directors believe that the Adviser derives reputational and other benefits from its association with the Fund. Investment Results In addition to the information reviewed by the directors in connection with the meeting, the directors receive detailed comparative performance information for the Fund at each regular Board meeting during the year. At the meeting, the directors reviewed information prepared by the Adviser based on information obtained from Lipper showing performance for Class A shares of the Fund as compared to other funds in the Lipper Mid-Cap Growth Funds Average for periods ending March 31, 2005 over the year to date ("YTD"), 1-, 3-, 5- and 10-year periods and for each of the last ten calendar years and compared to the Russell MidCap Growth Index. The directors also reviewed information from a report prepared by Lipper showing performance for Class A shares of the Fund as compared to a group of 15 to 6 funds (depending on the year) in its Lipper category selected by Lipper (the "Performance Group") and as compared to a universe of 115 to 35 funds (depending on the year) in its Lipper category selected by Lipper (the "Performance Universe") for periods ended March 31, 2005 over the 1-, 3-, 5- and 10-year periods. The directors noted that the Lipper category data showed the Fund's performance for the periods ending March 31, 2005 was significantly below the Lipper medians in the YTD and 1-year periods, _______________________________________________________________________________ 42 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND somewhat below the Lipper median in the 10-year period and significantly above the Lipper medians in the 3- and 5-year periods, and that the Fund's calendar year performance was significantly above the Lipper medians in 2004, 2003 and 1997, somewhat above the Lipper medians in 2001, 1996 and 1995, and in all other periods reviewed the Fund's performance was somewhat below or significantly below the Lipper medians. The directors further noted that in the Performance Group comparison, the Fund was in the fifth quintile in the 1-year period and second quintile for all other periods reviewed, and in the Performance Universe comparison, the Fund was in the fifth quintile in the 1-year period, first quintile in the 3-year period, second quintile in the 5-year period and fourth quintile in the 10-year period. Based on their review and their discussions of the reasons for the Fund's recent underperformance with the Adviser, the directors retained confidence in the Adviser's ability to continue to advise the Fund and concluded that the Fund's investment performance was understandable. The directors informed the Adviser that they planned to closely monitor the Fund's performance. Advisory Fees and Other Expenses The directors considered the advisory fee rate paid by the Fund to the Adviser and information prepared by Lipper concerning fee rates paid by other funds in the same Lipper category as the Fund at a common asset level. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors also considered the fees the Adviser charges other clients with investment objectives similar to those of the Fund. For this purpose, they reviewed information in the Adviser's Form ADV and a chart prepared by the Adviser disclosing the institutional fee schedule for institutional products that have a substantially similar investment style as the Fund. They also received an oral presentation from the Adviser that supplemented such information. The Adviser manages accounts for institutional clients with a comparable investment style to the Fund. The directors noted that the institutional fee schedule for these accounts had much lower breakpoints than the fee schedule in the Fund's Advisory Agreement. The directors also noted that the application of such fee schedule to the level of assets of the Fund would result in a fee rate that would be significantly lower than that in the Fund's Advisory Agreement. The directors noted that the Adviser may, in some cases, negotiate fee rates with large institutional clients that are lower than those reviewed by the directors and discussed with the Adviser the level of such negotiated fees for strategies similar to those of the Fund. The directors also reviewed information that indicated that the Adviser sub-advises a registered investment company that has investment strategies similar to the Fund at lower fee rates than those paid by the Fund. The Adviser reviewed with the directors the significant differences in the scope of services it provides to institutional clients and to the Fund. For example, the _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 43 Advisory Agreement requires the Adviser to provide, in addition to investment advice, office facilities and officers (including officers to provide required certifications). The Adviser also coordinates the provision of services to the Fund by non-affiliated service providers and is responsible for the compensation of the Fund's Independent Compliance Officer and certain related expenses. The provision of these non-advisory services involves costs and exposure to liability. The Adviser explained that many of these services normally are not provided to non-investment company clients or to investment company clients when the Adviser acts in a pure sub-advisory capacity, and that fees charged to the Fund reflect the costs and risks of the additional obligations. The Adviser also noted that since the Fund is constantly issuing and redeeming its shares, it is more difficult to manage than an institutional account, where the assets are relatively stable. In light of these facts, the directors did not place significant weight on these fee comparisons. The directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of comparable funds and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the subject Fund. The Class A expense ratio of the Fund was based on the Fund's latest fiscal year expense ratio. The directors recognized that the expense ratio information for the Fund potentially reflected on the Adviser's provision of services, as the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that it was likely that the expense ratios of some funds in the Fund's Lipper category also were lowered by waivers or reimbursements by those funds' investment advisers, which in some cases were voluntary and perhaps temporary. The directors noted that the Fund's at approximate current size contractual effective fee rate of 71.5 basis points was the same as the median for the Expense Group. The directors noted that the latest fiscal year administrative expense reimbursement by the Fund pursuant to the Advisory Agreement was 1 basis point, and recognized that the Adviser's total compensation from the Fund pursuant to the Advisory Agreement was slightly above the median for the Expense Group as a result. The directors noted that the Fund's expense ratio was close to the median for the Expense Group and somewhat lower than the median for the Expense Universe. The directors concluded that the Fund's expense ratio was satisfactory. Economies of Scale The directors noted that the advisory fee schedule for the Fund contains breakpoints so that, if assets were to increase over the breakpoint levels, the fee rates would be reduced on the incremental assets. The directors also considered a presentation by an independent consultant discussing economies of scale issues in _______________________________________________________________________________ 44 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND the mutual fund industry. The directors believe that economies of scale are realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no uniform methodology for establishing breakpoints that give effect to fund-specific services provided by the Adviser and to the economies of scale that the Adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect the Fund's operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. Depending on the age and size of a particular fund and its adviser's cost structure, different conclusions can be drawn as to whether there are economies of scale to be realized at any particular level of assets, notwithstanding the intuitive conclusion that such economies exist, or will be realized at some level of total assets. Moreover, because different advisers have different cost structures and service models, it is difficult to draw meaningful conclusions from the comparison of a fund's advisory fee breakpoints with those of comparable funds. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund's breakpoint arrangements would result in a sharing of economies of scale in the event of a very significant increase in the Fund's net assets. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 45 AllianceBernstein Family of Funds - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN FAMILY OF FUNDS - -------------------------------------------- Wealth Strategies Funds - -------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy - -------------------------------------------- Blended Style Funds - -------------------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio - -------------------------------------------- Growth Funds - -------------------------------------------- Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund* Small Cap Growth Portfolio Global & International Global Health Care Fund* Global Research Growth Fund Global Technology Fund* Greater China '97 Fund International Growth Fund* International Research Growth Fund* - -------------------------------------------- Value Funds - -------------------------------------------- Domestic Balanced Shares Focused Growth & Income Fund* Growth & Income Fund Real Estate Investment Fund Small/Mid-Cap Value Fund* Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund - -------------------------------------------- Taxable Bond Funds - -------------------------------------------- Americas Government Income Trust Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio Short Duration Portfolio U.S. Government Portfolio - -------------------------------------------- Municipal Bond Funds - -------------------------------------------- National Insured National Arizona California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania Virginia - -------------------------------------------- Intermediate Municipal Bond Funds - -------------------------------------------- Intermediate California Intermediate Diversified Intermediate New York - -------------------------------------------- Closed-End Funds - -------------------------------------------- All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our web site at www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus. You should read the prospectus carefully before you invest. * Prior to December 15, 2004, these Funds were named as follows: Global Health Care Fund was Health Care Fund; Large Cap Growth Fund was Premier Growth Fund; Global Technology Fund was Technology Fund; and Focused Growth & Income Fund was Disciplined Value Fund. Prior to February 1, 2005, Small/Mid-Cap Value Fund was named Small Cap Value Fund. Prior to May 16, 2005, International Growth Fund was named Worldwide Privatization Fund and International Research Growth Fund was named International Premier Growth Fund. On June 24, 2005, All-Asia Investment Fund merged into International Research GrowthFund. On July 8, 2005, New Europe Fund merged into International Research Growth 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. _______________________________________________________________________________ 46 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT* The following is a summary of the evaluation of the investment advisory agreement between Alliance Capital Management L.P., (the "Adviser") and the AllianceBernstein Mid-Cap Growth Fund, Inc., (the "Fund"), prepared by Philip L. Kirstein, the Senior Officer, for the independent directors of the Fund, as required by the Assurance of Discontinuance between the New York State Attorney General and the Adviser. The Senior Officer's evaluation of the investment advisory agreement is not meant to diminish the responsibility or authority of the Boards of Directors to perform their duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees which was provided to the independent directors in connection with their review of the proposed continuance of the investment advisory agreement. The Senior Officer's evaluation considered the following factors: 1. Management fees charged to institutional and other clients of the Adviser for like services. 2. Management fees charged by other mutual fund companies for like services. 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit. 4. Profit margins of the Adviser and its affiliates from providing such services. 5. Possible economies of scale as the Fund grows larger. 6. Nature and quality of the Adviser's services, including the performance of the Fund. * It should be noted that the information in the fee summary was completed on June 8, 2005 and presented to the Board of Directors and Trustees on June 15, 2005 in accordance with the Assurance of Discontinuance with the New York State Attorney General. It also should be noted that references in the fee summary pertaining to performance and expense ratios refer to Class A shares of the Fund. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 47 FUND ADVISORY FEES, EXPENSE REIMBURSEMENTS & RATIOS The table below describes the Fund's advisory fee pursuant to the Investment Advisory Agreement.
Advisory Fee Based on % of Average Daily Net Assets - ------------------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. First $500 million .75% Excess over $500 million Up to $1 billion .65% Excess over $1 billion .55%
The table below shows expense ratio information for the Fund for its most recent fiscal year.
Fiscal Expense Ratio Year End - ------------------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. Advisor - 1.01% July 31, 2004 Class A - 1.23% Class B - 2.05% Class C - 2.03%
The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund as indicated below:
Latest Fiscal Year As % of Average Amount Daily Net Assets - ------------------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $ 106,500.00 .01
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS OF THE ADVISER The management fees charged to investment companies which the Adviser manages and sponsors may be higher than those charged to institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Fund that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers and coordinating with and monitoring the Fund's third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative and legal/compliance requirements for the Fund are more costly than those for institutional assets due to the greater complexities and time required for investment companies. A portion of the expenses related to these services are reimbursed by the Fund to the Adviser. Managing the cash flow of an investment company may be more difficult than for other accounts, particularly if the Fund is in net redemptions, as the Adviser is forced to sell securities to meet redemptions. _______________________________________________________________________________ 48 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, the Senior Officer believes it is worth noting the information from the Adviser's ADV regarding the advisory fees charged to institutional accounts in the same asset class as the Fund.
Total Net Assets Alliance 03/31/05 Institutional ($MIL) Fee Schedule - ---------------------------------------------------------------------------------------- AllianceBernstein Mid-Cap 757 Mid-Cap Growth Schedule Growth Fund, Inc. 90 bp on 1st $25 m 70 bp on next $25 m 60 bp on next $50 m 50 bp on the balance Minimum account size $10 m
The Adviser provides sub-advisory investment services to certain other investment companies managed by other fund families that have similar investment styles as the Fund. Set forth below is the name and fee schedule of the only fund sub-advised by the Adviser that has the same investment style as the Fund:
Sub-advised Fund Fee Schedule - ------------------------------------------------------------------------------------------------ AllianceBernstein Mid- ING Alliance Mid-Cap Growth 0.75% on first $10 million Cap Growth Fund, Inc. Portfolio 0.625% on next $10 million 0.50% on next $20 million 0.375% on next $20 million 0.25% thereafter
The Adviser also manages and sponsors retail mutual funds organized in jurisdictions outside the United States, generally Luxembourg, and sold to non-United States investors. With respect to the Fund, the Adviser represented that there are no offshore retail mutual funds of similar investment style. II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc., an analytical service that is not affiliated with the Adviser, compared the fees charged to the Fund with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included the _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 49 Fund's ranking with respect to the proposed advisory fees relative to the Lipper group median at the approximate current asset level for the Fund.*
Lipper Group Fee Median Rank - ---------------------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. 0.715 0.715 8/15
Lipper also analyzed the expense ratio of the Fund in comparison to its Lipper Expense Group** and Lipper Expense Universe***. Lipper describes a Lipper Expense Group as a representative sample of comparable funds and a Lipper Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the subject Fund. The results of that analysis are set forth below:
Lipper Lipper Lipper Expense Universe Universe Lipper Group Ratio Median Rank Group Rank Median - ------------------------------------------------------------------------------------------------------ AllianceBernstein Mid-Cap 1.251 1.470 18/87 6/15 1.266 Growth Fund, Inc.
Although the Fund has a favorable ranking on a total expense ratio basis the directors are still interested in lowering non-management expenses. III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY AGREEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. The profitability information for the Fund prepared by the Adviser for the Board of the Directors was reviewed by the Senior Officer. An independent consultant is working with the Adviser's personnel on a new system to produce profitability information at the Fund level which will reflect the Adviser's management reporting approach. It is possible that future Fund profitability information may differ from previously reviewed information due to changes in methodologies and allocations. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The Adviser's profitability for the Fund decreased during calendar 2004 relative to 2003 primarily as a result of the reduction in the advisory fee schedule implemented early in 2004. * A ranking of "1" means that the AllianceBernstein Fund has the lowest effective fee rate in the Lipper peer group. ** Lipper uses the following criteria in screening funds to be included in each Fund's expense group: fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes. An expense group will typically consist of seven to twenty funds. *** Except for asset (size) comparability, Lipper uses the same criteria for selecting an expense group when selecting an expense universe. Unlike an expense group, an expense universe allows for the same advisor to be represented by more than just one fund. _______________________________________________________________________________ 50 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND In addition to the Adviser's direct profits from managing the Fund pursuant to the investment advisory agreement, certain of the Adviser's affiliates have business relationships with the Fund and may earn a profit from providing other services to the Fund. These affiliates provide transfer agency and distribution related services and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC") and commissions for providing brokerage services. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. Additional information regarding distribution related fees can be found in the prospectus of the Fund. Different classes of shares are charged different types of distribution fees. The Adviser's affiliate, AllianceBernstein Investment Research and Management Inc. ("ABIRM"), is the Fund's principal underwriter. ABIRM and the Adviser may make payments* from their own resources, in addition to sales loads and Rule 12b-1 fees, to firms that sell shares of the Fund. In 2004, ABIRM paid from its own resources approximately .04% of the average monthly assets of the Fund for distribution services and educational support. For 2005, it is anticipated that ABIRM will pay approximately .04% of average monthly assets of the Fund for such purposes. After payments to third party intermediaries, ABIRM retained the following amount in Class A front-end load sales charges from sales of the Fund's shares in the Fund's most recent fiscal year: Amount Received - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $28,688 ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for the Fund during the Fund's most recent fiscal year. A significant percentage of such amounts were paid out to third party intermediaries by ABIRM. 12b-1Fee Received** CDSC Received - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $2,419,070 $171,273 Fees and reimbursements for out of pocket expenses charged by Alliance Global Investor Services, Inc. ("AGIS"), the affiliated transfer agent, are based on the level of the network account and the class of share held by the account. AGIS also * The total amount paid to the financial intermediary in connection with the sale of shares will generally not exceed the sum of (a) .25% of the current year's Fund sales by that firm and (b) .10% of the average daily net assets attributable to that firm over the year. ** 12b-1 amounts are gross amounts paid to ABIRM. _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 51 receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. AGIS' after-tax profitability decreased in 2004 in comparison to 2003. AGIS received the following fee from the Fund in the most recent fiscal year: AGIS Fee - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $1,344,000 The Fund effected brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB"), and paid commissions during the Fund's recent fiscal year. The Adviser represented that SCB's profitability from business conducted with the Fund is comparable to the profitability of SCB's dealings with other third party clients. V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule for the Fund reflect a sharing of economies of scale to the extent they exist. Based on some of the professional literature that have considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide improved services, there may be a sharing of economies of scale without a reduction in advisory fees. An independent consultant made a presentation to the Board of Directors and the Senior Officer regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to the lack of cost data which forced the researchers to infer facts about the costs from the behavior of fund expenses, there was a lack of consensus among researchers as to whether economies of scale were being passed on to the shareholders. It is contemplated that additional work will be performed to determine if the benefits of economies of scale or scope are being passed to shareholders by the Adviser. In the meantime, it is clear that to the extent the Fund's assets exceed the initial breakpoint its shareholders benefit from a lower fee rate. _______________________________________________________________________________ 52 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING PERFORMANCE OF THE FUND. With assets under management of $534.4 billion as of March 31, 2005, the Adviser has the investment experience and resources necessary to effectively manage the Fund and provide non-investment services (described in Section II) to the Fund. The information prepared by Lipper showed the 1, 3, 5 and 10 year performance ranking of the Fund relative to its Lipper universe:
Performance Year Rank in Performance Universe for Periods Ended March 31, 2005 - ---------------------------------------------------------------------------------------------- 1 3 5 10 - ---------------------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. 110/115 14/96 21/69 23/35
CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed fee for the Fund is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of the Fund is based on an evaluation of all of these factors and no single factor was dispositive. Dated: July 22, 2005 _______________________________________________________________________________ ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 53 ALLIANCEBERNSTEIN MID-CAP GROWTH FUND 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN (R) Investment Research and Management ALLAR0705 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant's code of ethics is filed herewith as Exhibit 12(a)(1). (b) During the period covered by this report, no material amendments were made to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors has determined that independent directors David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial experts. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) - (c) The following table sets forth the aggregate fees billed by the independent registered public accounting firm PricewaterhouseCoopers LLP, for the Fund's last two fiscal years for professional services rendered for: (i) the audit of the Fund's annual financial statements included in the Fund's annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Fund's financial statements and are not reported under (i), which include advice and education on accounting and auditing issues, quarterly press release review (for those Funds that issue quarterly press releases), and preferred stock maintenance testing (for those Funds that issue preferred stock); and (iii) tax compliance, tax advice and tax return preparation. Audit Audit-Related Tax Fees Fees Fees --------- ------------- -------- 2004 $ 39,000 $ 1,560 $ 14,790 2005 $ 42,000 $ 3,680 $ 6,100 (d) Not applicable. (e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Fund's Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Fund's independent registered public accounting firm. The Fund's Audit Committee policies and procedures also require pre-approval of all audit and non-audit services provided to the Adviser and Service Affiliates to the extent that these services are directly related to the operations or financial reporting of the Fund. (e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in the table under Item 4 (a) - (c) are for services pre-approved by the Fund's Audit Committee. (f) Not applicable. (g) The following table sets forth the aggregate non-audit services provided to the Fund, the Fund's Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund, which include conducting an annual internal control report pursuant to Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of Foregoing Column Pre- approved by the Audit All Fees for Committee Non-Audit Services (Portion Comprised of Provided to the Audit Related Fees) Portfolio, the Adviser (Portion Comprised of and Service Affiliates Tax Fees) - ------------------------------------------------------------------------------------------------------------- 2004 $ 743,424 [ $16,350 ] ( $1,560 ) ( $14,790 ) 2005 $ 812,555 [ $9,780 ] ( $3,680 ) ( $6,100 )
(h) The Audit Committee of the Fund has considered whether the provision of any non-audit services not pre-approved by the Audit Committee provided by the Fund's independent registered public accounting firm to the Adviser and Service Affiliates is compatible with maintaining the independent registered public accounting firm's independence. 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 significant changes in the registrant's internal controls over financial reporting during the second fiscal quarter of the period that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2 hereof 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 Mid-Cap Growth Fund, Inc. By: /s/ Marc O. Mayer ----------------- Marc O. Mayer President Date: September 28, 2005 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: September 28, 2005 By: /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: September 28, 2005 EX-99.CODE ETH 2 edg11260-ethics.txt Exhibit 11(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code The AllianceBernstein Mutual Fund Complex's code of ethics (this "Code") for the investment companies within the complex (collectively, the "Funds" and each, a "Company") applies to each Company's Principal Executive Officer, Principal Financial and Accounting Officer and Controller (the "Covered Officers," each of whom is set forth in Exhibit A) for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. For the purposes of this Code, members of the Covered Officer's family include his or her spouse, children, stepchildren, financial dependents, parents and stepparents. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The Company's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Company's Board of Directors or Trustees (the "Directors") that the Covered Officers may also be officers or employees of one or more of the other Funds or of other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. Each Covered Officer must: o not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Company whereby the Covered Officer would benefit personally to the detriment of the Company; o not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Company; o not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; There are some conflict of interest situations, whether involving a Covered Officer directly or a member of his family, that should always be discussed with the General Counsel of Alliance Capital Management L.P.(the "General Counsel"), if material. Examples of these include: o service as a director on the board of directors or trustees of any public or private company (other than a not-for-profit organization); o the receipt of any non-nominal gifts; o the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance o Each Covered Officer should familiarize himself with the disclosure requirements and disclosure controls and procedures generally applicable to the Company; o each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; o each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the General Counsel that he has received, read, and understands the Code; o annually thereafter affirm to the General Counsel that he has complied with the requirements of the Code; o complete at least annually a questionnaire relating to affiliations or other relationships that may give rise to conflicts of interest; o not retaliate against any other Covered Officer or any employee of the Company or their affiliated persons for reports of potential violations that are made in good faith; and o notify the General Counsel promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, waivers sought by a Covered Officer will be considered by the Company's Audit Committee (the "Committee"). The Company will follow these procedures in investigating and enforcing this Code: o the General Counsel will take all appropriate action to investigate any potential violations reported to him; o if, after such investigation, the General Counsel believes that no material violation has occurred, the General Counsel is not required to take any further action; o any matter that the General Counsel believes is a material violation will be reported to the Committee; o if the Committee concurs that a material violation has occurred, it will inform and make a recommendation to the Directors, who will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; o the Committee will be responsible for granting waivers, as appropriate; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Company, the Company's adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, it is understood that this Code is in all respects separate and apart from, and operates independently of, any such policies and procedures. In particular, the Company's and its investment adviser's and principal underwriter's codes of ethics under Rule 17j-l under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Directors, including a majority of independent directors. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Directors, the investment adviser, their counsel, counsel to the Company and, if deemed appropriate by the Directors of the Company, to the Directors of the other Funds. VIII. Internal Use The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. Date: July 22, 2003, as amended March 17, 2004 - ---------------------------------------------- Exhibit A Persons Covered by this Code of Ethics -------------------------------------- Marc O. Mayer, Principal Executive Officer Mark Gersten, Principal Financial and Accounting Officer Vince Noto, Controller EX-99.CERT 3 edg11260-ex11b_302.txt Exhibit 11(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, President of AllianceBernstein Mid-Cap Growth Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of AllianceBernstein Mid-Cap Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 28, 2005 /s/ Marc O. Mayer ----------------- Marc O. Mayer President Exhibit 11(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Mark D. Gersten, Treasurer and Chief Financial Officer of AllianceBernstein Mid-Cap Growth Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of AllianceBernstein Mid-Cap Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 28, 2005 /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer EX-99.906 CERT 4 edg11260-ex11c_906.txt CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of AllianceBernstein Mid-Cap Growth Fund, Inc. (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended July 31, 2005 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: September 28, 2005 By: /s/ Marc O. Mayer ----------------- Marc O. Mayer President By: /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----