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)
Edmund P. Bergan, Jr.
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, 2003
Date of reporting period: July 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] AllianceBernstein(SM)
Investment Research and Management
AllianceBernstein Mid-Cap Growth Fund
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Mid-Cap Blend Annual Report--July 31, 2003
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Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
---------------------------
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,
without charge, upon request by visiting Alliance Capital's web site at
www.investor.alliancecapital.com or on the Securities and Exchange Commision's
web site at http://www.sec.gov, or by calling Alliance Capital at (800)
227-4618.
AllianceBernstein Investment Research and Management, Inc., the principal
underwriter of the AllianceBernstein mutual funds and an affiliate of Alliance
Capital Management L.P., the manager of the funds, is a member of the NASD.
September 30, 2003
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, 2003.
Investment Objective and Policies
AllianceBernstein Mid-Cap Growth 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.
Investment Results
The following table provides the Fund's investment results for the six- and
12-month periods ended July 31, 2003. For comparison, we have also provided
performance for the Fund's benchmark, the Russell MidCap Growth Index, which is
a measure of mid-cap stock performance.
INVESTMENT RESULTS*
Periods Ended July 31, 2003
---------------------
Returns
---------------------
6 Months 12 Months
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AllianceBernstein Mid-Cap Growth Fund
Class A 37.23% 32.74%
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Class B 36.75% 31.19%
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Class C 37.23% 31.63%
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Russell MidCap Growth Index 24.20% 23.15%
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* The Fund's investment results are for the periods shown and are based on
the net asset value (NAV) of each class of shares as of July 31, 2003.
Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. All fees and
expenses related to the operation of the Fund have been deducted, but no
adjustment has been made for sales charges that may apply when shares are
purchased or redeemed. Returns for Advisor Class shares will vary due to
different expenses associated with this class. Returns for the Fund
include the reinvestment of any distributions paid during each period.
Past performance is no guarantee of future results.
The unmanaged Russell MidCap Growth 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. An investor cannot invest directly in an index,
and its results are not indicative of any specific investment, including
AllianceBernstein Mid-Cap Growth Fund.
Additional investment results appear on page 5.
For the six- and 12-month periods ended July 31, 2003, the Fund outperformed its
benchmark, the Russell MidCap Growth Index, due to an overweight position and
strong stock selection in technology, internet and telecommunication stocks. In
technology, with a weighting of almost twice the benchmark, contributions came
from a number of holdings such as Juniper Networks, Inc., Marvell
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ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 1
Technology Group Ltd. and Network Appliance, Inc. Despite an underweight
position in consumer discretionary stocks, strong stock selection benefited the
Fund's performance. Internet holdings such as Amazon.com, Inc., Yahoo, Inc.,
eBay, Inc. and Expedia, Inc. contributed the bulk of upside performance for the
Fund. XM Satellite Radio Holdings, Inc was a standout performer for the period.
The Fund's two wireless telecommunication stocks, Nextel Communications, Inc.
and Sprint Corp., were also especially strong contributors to yearly results.
Detractors from performance included an underweight position in health care.
Specifically, biotechnology stocks such as Cerus Corp., which was the Fund's
leading underperformer, suffered from a delay of several new product
introductions. The Fund's exposure to energy stocks, an area where we carried
less exposure than the benchmark, hindered results. The Fund's two defense
holdings, Alliant Techsystems, Inc. and Northrop Grumman Corp., failed to keep
pace with the market immediately before the onset of the conflict with Iraq.
Market Review and Investment Strategy
After a sharp rise in the equity markets in October and November of 2002, stocks
took a turn for the worse by year-end, and hit a low in early March as the
economy went on high alert for the conflict in Iraq. Before the onset of war,
stocks began their rally with most of the major equity indices hitting new highs
during July.
The Fund's overweight position in technology stocks helped performance as
technology stocks outperformed the overall market, as represented by the NASDAQ
Composite Index, during the period. The Fund's internet holdings were also large
contributors to performance. We maintained the Fund's underweight position in
health care, but we added selectively to existing biotechnology holdings on
their pullbacks. We also increased the energy exposure of the Fund, and
continued to lower our exposure to the financial services sector where we remain
underweight.
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2 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Performance Update
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PERFORMANCE UPDATE
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
GROWTH OF A $10,000 INVESTMENT
7/31/93 TO 7/31/03
[THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
AllianceBernstein
Mid-Cap Growth Russell MidCap
Fund Class A Growth Index
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7/31/93 $ 9,575 $10,000
7/31/94 $10,055 $10,524
7/31/95 $12,837 $13,761
7/31/96 $13,616 $14,758
7/31/97 $20,761 $20,616
7/31/98 $21,149 $22,334
7/31/99 $24,379 $27,179
7/31/00 $26,034 $39,073
7/31/01 $20,094 $26,643
7/31/02 $13,423 $19,001
7/31/03 $17,817 $23,400
Russell MidCap Growth Index: $23,400
AllianceBernstein Mid-Cap Growth Fund Class A: $17,817
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Mid-Cap Growth Fund Class A shares (from 7/31/93 to 7/31/03) as
compared to the performance of an appropriate broad-based index. Returns do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The chart reflects the deduction
of the maximum 4.25% sales charge from the initial $10,000 investment in the
Fund and assumes the reinvestment of dividends and capital gains. Performance
for Class B, Class C and Advisor Class shares will vary from the results shown
above due to differences in expenses charged to these classes. Past performance
is not indicative of future results, and is not representative of future gain or
loss in capital value or dividend income.
The unmanaged Russell MidCap Growth Index measures the performance of those
Russell mid-cap companies with higher price-to-book ratios and higher forecasted
growth values. The stocks are also members of the Russell 1000 Growth Index.
When comparing AllianceBernstein Mid-Cap Growth Fund to the index shown above,
you should note that no charges or expenses are reflected in the performance of
the index. An investor cannot invest directly in an index, and its results are
not indicative of any specific investment, including AllianceBernstein Mid-Cap
Growth Fund.
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ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 3
Portfolio Summary
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PORTFOLIO SUMMARY
July 31, 2003
INCEPTION DATES PORTFOLIO STATISTICS
Class A Shares Net Assets ($mil): $630.0
7/7/38
Class B Shares
3/4/91
Class C Shares
5/3/93
SECTOR BREAKDOWN
41.8% Technology
18.1% Consumer Services
16.2% Health Care
6.6% Energy
5.2% Capital Goods [PIE CHART OMITTED]
3.8% Finance
3.4% Consumer Manufacturing
2.6% Aerospace & Defense
1.7% Basic Industry
0.6% Consumer Staples
All data as of July 31, 2003. The Fund's sector breakdown is expressed as a
percentage of total investments and may vary over time.
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4 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Investment Results
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INVESTMENT RESULTS
AVERAGE ANNUAL RETURNS AS OF JULY 31, 2003
Class A Shares
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Without Sales Charge With Sales Charge
1 Year 32.74% 27.07%
5 Years -3.37% -4.21%
10 Years 6.40% 5.95%
Class B Shares
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Without Sales Charge With Sales Charge
1 Year 31.19% 27.19%
5 Years -4.22% -4.22%
10 Years(a) 5.68% 5.68%
Class C Shares
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Without Sales Charge With Sales Charge
1 Year 31.63% 30.63%
5 Years -4.24% -4.24%
10 Years 5.50% 5.50%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT QUARTER-END (JUNE 30, 2003)
Class A Class B Class C
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1 Year 8.70% 8.50% 11.50%
5 Years -6.39% -6.40% -6.42%
10 Years 5.38% 5.10%(a) 4.92%
The Fund's investment results represent average annual returns. Returns do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The returns reflect reinvestment
of dividends and/or capital gains distributions in additional shares without and
with the effect of the 4.25% maximum front-end sales charge for Class A or
applicable contingent deferred sales charge for Class B (4% year 1, 3% year 2,
2% year 3, 1% year 4); and for Class C shares (1% year 1). Returns for Class A
shares do not reflect the imposition of the 1 year, 1% contingent deferred sales
charge for accounts over $1,000,000. Returns for Advisor Class shares will vary
due to different expenses associated with this class.
The Fund can invest in foreign securities which may magnify fluctuations due to
changes in foreign exchange rates and the possibility of substantial volatility
due to political and economic uncertainties in foreign countries.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
(a) Assumes conversion of Class B shares into Class A shares after eight
years.
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ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 5
Ten Largest Holdings
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TEN LARGEST HOLDINGS
July 31, 2003
Percent of
Company Value Net Assets
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Sprint Corp. (PCS Group) $ 25,263,770 4.0%
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PeopleSoft, Inc. 25,179,535 4.0
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Applera Corp.--
Applied Biosystems Group 23,225,795 3.7
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IDEC Pharmaceuticals Corp. 18,926,035 3.0
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Juniper Networks, Inc. 18,577,904 2.9
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Affymetrix, Inc. 17,794,200 2.8
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Overture Services, Inc. 17,605,133 2.8
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Network Appliance, Inc. 17,466,220 2.8
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KLA-Tencor Corp. 16,991,817 2.7
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Northrop Grumman Corp. 16,425,177 2.6
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$197,455,586 31.3%
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6 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Portfolio of Investments
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PORTFOLIO OF INVESTMENTS
July 31, 2003
Company Shares Value
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COMMON STOCKS-99.5%
Technology-41.6%
Communication Equipment-4.9%
Corning, Inc.(a) .................................. 1,547,460 $ 12,596,324
Juniper Networks, Inc.(a) ......................... 1,287,450 18,577,904
------------
31,174,228
------------
Computer Peripherals-2.8%
Network Appliance, Inc.(a) ........................ 1,093,005 17,466,220
------------
Computer Software-13.1%
BEA Systems, Inc.(a) .............................. 583,665 7,704,378
Documentum, Inc.(a) ............................... 473,150 8,114,522
Electronic Arts, Inc.(a) .......................... 182,666 15,343,944
Intuit, Inc.(a) ................................... 357,208 15,367,088
NetScreen Technologies, Inc.(a) ................... 492,155 10,645,313
PeopleSoft, Inc.(a) ............................... 1,510,470 25,179,535
------------
82,354,780
------------
Contract Manufacturing-0.3%
Sanmina-SCI Corp.(a) .............................. 208,600 1,656,284
------------
Internet Infrastructure-2.2%
eBay, Inc.(a) ..................................... 129,252 13,855,814
------------
Internet Media-4.8%
Overture Services, Inc.(a) ........................ 743,460 17,605,133
Yahoo, Inc.(a) .................................... 408,320 12,711,001
------------
30,316,134
------------
Semi-Conductor Capital Equipment-2.7%
KLA-Tencor Corp.(a) ............................... 328,980 16,991,817
------------
Semi-Conductor Components-10.8%
Broadcom Corp. Cl.A(a) ............................ 417,300 8,458,671
Marvell Technology Group, Ltd. (Bermuda)(a) ...... 393,120 13,822,099
Micron Technology, Inc.(a) ........................ 1,032,805 15,120,265
NVIDIA Corp.(a) ................................... 815,305 15,588,632
Silicon Laboratories, Inc.(a) ..................... 415,350 15,247,499
------------
68,237,166
------------
262,052,443
------------
Consumer Services-18.0%
Airlines-1.8%
Southwest Airlines Co. ............................ 694,750 11,400,847
------------
Broadcasting & Cable-1.8%
XM Satellite Radio Holdings, Inc. Cl.A(a) ......... 830,455 11,418,756
------------
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ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 7
Portfolio of Investments
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Company Shares Value
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Cellular Communications-5.7%
Nextel Communications, Inc. Cl.A(a) ............... 574,340 $ 10,487,448
Sprint Corp. (PCS Group)(a) ....................... 4,107,930 25,263,770
------------
35,751,218
------------
Entertainment & Leisure-1.3%
Expedia, Inc.(a) .................................. 100,970 7,896,864
------------
Gaming-1.1%
Wynn Resorts, Ltd.(a) ............................. 415,290 7,080,695
------------
Restaurants & Lodging-1.6%
Starbucks Corp.(a) ................................ 368,745 10,077,801
------------
Retail-General Merchandise-4.7%
Amazon.com, Inc.(a) ............................... 331,990 13,850,623
Tiffany & Co. ..................................... 293,150 10,072,634
Williams-Sonoma, Inc.(a) .......................... 208,705 5,895,916
------------
29,819,173
------------
113,445,354
------------
Health Care-16.1%
Biotechnology-11.9%
Affymetrix, Inc.(a) ............................... 741,425 17,794,200
Applera Corp.-Applied Biosystems Group ............ 1,072,785 23,225,795
Compugen, Ltd. (Israel)(a) ........................ 651,300 3,054,597
IDEC Pharmaceuticals Corp.(a) ..................... 559,280 18,926,035
Millennium Pharmaceuticals, Inc.(a) ............... 942,930 11,843,201
------------
74,843,828
------------
Drugs-2.2%
Forest Laboratories, Inc.(a) ...................... 290,095 13,889,749
------------
Medical Products-2.0%
Boston Scientific Corp.(a) ........................ 51,870 3,279,740
Cerus Corp.(a) .................................... 1,291,990 9,741,605
------------
13,021,345
------------
101,754,922
------------
Energy-6.5%
Domestic Producers-3.9%
Devon Energy Corp. ................................ 256,765 12,162,958
Kerr-McGee Corp. .................................. 72,640 3,196,160
Noble Energy, Inc. ................................ 256,350 9,356,775
------------
24,715,893
------------
Oil Service-1.0%
BJ Services Co.(a) ................................ 187,750 6,430,438
------------
Miscellaneous-1.6%
Valero Energy Corp. ............................... 273,635 9,960,314
------------
41,106,645
------------
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8 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Portfolio of Investments
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Company Shares Value
- --------------------------------------------------------------------------------
Capital Goods-5.2%
Electrical Equipment-3.4%
Alliant Techsystems, Inc.(a) ...................... 270,620 $ 14,857,038
Johnson Controls, Inc. ............................ 66,115 6,387,370
------------
21,244,408
------------
Machinery-1.8%
Navistar International Corp.(a) ................... 288,260 11,247,905
------------
32,492,313
------------
Finance-3.8%
Banking-Money Center-1.0%
SLM Corp. ......................................... 151,605 6,285,543
------------
Brokerage & Money Management-2.0%
Legg Mason, Inc. .................................. 177,525 12,426,750
------------
Insurance-0.8%
XL Capital, Ltd. Cl.A ............................. 64,980 5,165,910
------------
23,878,203
------------
Consumer Manufacturing-3.4%
Building & Related-3.4%
D.R. Horton, Inc. ................................. 456,135 12,840,200
Lennar Corp. ...................................... 132,990 8,669,618
------------
21,509,818
------------
Aerospace & Defense-2.6%
Aerospace-2.6%
Northrop Grumman Corp. ............................ 178,070 16,425,177
------------
Basic Industry-1.7%
Paper & Forest Products-1.7%
Smurfit-Stone Container Corp.(a) .................. 697,760 10,445,467
------------
Consumer Staples-0.6%
Retail-Food & Drug-0.6%
Whole Foods Market, Inc.(a) ....................... 74,600 3,802,810
------------
Total Investments*-99.5%
(cost $470,634,221) ............................ 626,913,152
Other assets less liabilities-0.5% ................ 3,056,948
------------
Net Assets-100% ................................... $629,970,100
============
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ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 9
Portfolio of Investments
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* SECURITIES LENDING INFORMATION
The Fund participates in a securities lending arrangement (see Note E) in which
cash collateral is invested by the lending agent. Such investments, representing
11.8% of net assets, were as follows as of July 31, 2003:
Current
Yield Shares Value
========== =========== ===========
UBS Private Money Market Fund LLC 1.02% 74,403,610 $74,403,610
(a) Non-income producing security.
See notes to financial statements.
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10 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Statement of Assets & Liabilities
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
July 31, 2003
Assets
Investments in securities, at value (cost $470,634,221) .... $ 626,913,152(a)
Cash ....................................................... 2,284,979
Collateral held for securities loaned ...................... 74,403,610
Receivable for investment securities sold .................. 6,753,457
Receivable for capital stock sold .......................... 995,842
Dividends and interest receivable .......................... 44,973
-------------
Total assets ............................................... 711,396,013
-------------
Liabilities
Payable for collateral received on securities loaned ....... 74,403,610
Payable for investment securities purchased ................ 5,186,319
Payable for capital stock redeemed ......................... 888,511
Advisory fee payable ....................................... 313,691
Distribution fee payable ................................... 230,301
Accrued expenses and other liabilities ..................... 403,481
-------------
Total liabilities .......................................... 81,425,913
-------------
Net Assets ................................................. $ 629,970,100
=============
Composition of Net Assets
Capital stock, at par ...................................... $ 1,434,029
Additional paid-in capital ................................. 774,916,997
Accumulated net realized loss on investment transactions ... (302,659,857)
Net unrealized appreciation of investments ................. 156,278,931
-------------
$ 629,970,100
=============
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($540,843,026 / 121,169,736 shares of capital stock
issued and outstanding) ................................. $4.46
Sales charge--4.25% of public offering price ............... .20
-----
Maximum offering price ..................................... $4.66
=====
Class B Shares
Net asset value and offering price per share
($53,461,441 / 13,802,262 shares of capital stock
issued and outstanding) ................................. $3.87
=====
Class C Shares
Net asset value and offering price per share
($14,414,854 / 3,727,780 shares of capital stock
issued and outstanding) ................................. $3.87
=====
Advisor Class Shares
Net asset value, redemption and offering price per share
($21,250,779 / 4,703,160 shares of capital stock
issued and outstanding) ................................. $4.52
=====
(a) Includes securities on loan with a value of $71,435,905 (see Note E).
See notes to financial statements.
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ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 11
Statement of Operations
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
December 1, 2002 Year Ended
to November 30,
July 31, 2003* 2002
================ =============
Investment Income
Dividends ................................. $ 998,757 $ 1,682,668
Interest .................................. 188,650 506,342
------------- -------------
1,187,407 2,189,010
Expenses
Management fee ............................ 2,602,989 5,196,305
Distribution fee--Class A ................. 670,063 1,207,156
Distribution fee--Class B ................. 276,743 492,016
Distribution fee--Class C ................. 69,998 122,197
Transfer agency ........................... 1,135,763 2,176,732(a)
Printing .................................. 156,351 215,864
Custodian ................................. 122,542 206,891
Audit and legal ........................... 101,866 75,619
Administrative ............................ 92,600 139,400
Registration .............................. 62,173 44,488
Directors' fees ........................... 13,750 19,600
Miscellaneous ............................. 29,119 9,868
------------- -------------
Total expenses ............................ 5,333,957 9,906,136
Less: expense offset arrangement
(see Note B) ........................... (412) (6,902)(a)
------------- -------------
Net expenses .............................. 5,333,545 9,899,234
------------- -------------
Net investment loss ....................... (4,146,138) (7,710,224)
------------- -------------
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on investment
transactions ........................... 40,130,756 (186,108,624)
Net change in unrealized
appreciation/depreciation
of investments ......................... 69,827,646 (24,491,326)
------------- -------------
Net gain (loss) on investment
transactions ........................... 109,958,402 (210,599,950)
------------- -------------
Net Increase (Decrease) in Net Assets
from Operations ........................ $ 105,812,264 $(218,310,174)
============= =============
* The Fund changed its fiscal year end from November 30 to July 31.
(a) Amounts have been reclassified to conform to the current period's
presentation.
See notes to financial statements.
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12 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
December 1,
2002 Year Ended Year Ended
to November 30, November 30,
July 31, 2003* 2002 2001
============== ============= =============
Increase (Decrease) in
Net Assets from Operations
Net investment loss ........... $ (4,146,138) $ (7,710,224) $ (6,864,966)
Net realized gain (loss) on
investment transactions ..... 40,130,756 (186,108,624) (155,586,913)
Net change in unrealized
appreciation/depreciation
of investments .............. 69,827,646 (24,491,326) 38,112,753
------------- ------------- -------------
Net increase (decrease) in net
assets from operations ...... 105,812,264 (218,310,174) (124,339,126)
Distributions to Shareholders
from
Net realized gain on investment
transactions
Class A ..................... -0- -0- (42,928,524)
Class B ..................... -0- -0- (4,596,657)
Class C ..................... -0- -0- (1,132,196)
Advisor Class ............... -0- -0- (448,612)
Capital Stock Transactions
Net increase (decrease) ....... (10,459,807) (141,756,741) 101,232,253
------------- ------------- -------------
Total increase (decrease) ..... 95,352,457 (360,066,915) (72,212,862)
Net Assets
Beginning of period ........... 534,617,643 894,684,558 966,897,420
------------- ------------- -------------
End of period ................. $ 629,970,100 $ 534,617,643 $ 894,684,558
============= ============= =============
* The Fund changed its fiscal year end from November 30 to July 31.
See notes to financial statements.
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ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 13
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
July 31, 2003
NOTE A
Significant Accounting Policies
The AllianceBernstein Mid-Cap Growth Fund, Inc. (the "Fund"), formerly Alliance
Mid-Cap Growth Fund, Inc., 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 and Advisor Class shares. Class A shares are sold with
a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000.
With respect to purchases of $1,000,000 or more, Class A shares redeemed within
one year of purchase may be subject to a contingent deferred sales charge of 1%.
Class B shares are currently sold with a contingent deferred sales charge which
declines from 4% to zero depending on the period of time the shares are held.
Class B shares will automatically convert to Class A shares eight years after
the end of the calendar month of purchase. Class C shares are subject to a
contingent deferred sales charge of 1% on redemptions made within the first year
after purchase. Advisor Class shares are sold without an initial or contingent
deferred sales charge and are not subject to ongoing distribution expenses.
Advisor Class shares are offered to investors participating in fee-based
programs and to certain retirement plan accounts. All four 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 accounting principles generally accepted in the United States
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
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to the Adviser, subject to the Board's continuing oversight, certain
responsibilities with respect to the implementation of the Pricing Policies.
Pursuant to the Pricing Policies, securities for which market quotations are
readily available are valued at their current market value. In general, the
market value of these securities is 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. If no bid or asked prices are quoted on such day, then the security is
valued in good faith at fair value in accordance with the Pricing Policies.
Securities listed on more than
- --------------------------------------------------------------------------------
14 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 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 valuations, the last available closing settlement price is used;
securities traded in the over-the-counter market, (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, the Pricing Policies provide that the Adviser may establish procedures
whereby changes in market yields or spreads are used to adjust, on a daily
basis, a recently obtained quoted price on a security; and OTC and other
derivatives are valued on the basis of a quoted bid price or spread from a major
broker/dealer in such security. Securities for which market quotations are not
readily available are valued at fair value in accordance with the Pricing
Policies.
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.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains, 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.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 15
Notes to Financial Statements
- --------------------------------------------------------------------------------
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.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts as 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 and Advisor Class shares. Advisor Class shares have no distribution
fees.
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the
ex-dividend date. Income dividends and capital gains distributions are
determined in accordance with federal tax regulations and may differ from those
determined in accordance with accounting principles generally accepted in the
United States. 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.
7. Change of Fiscal Year End
The Fund changed its fiscal year end from November 30 to July 31. Accordingly,
the statement of operations, the statement of changes in net assets and
financial highlights reflect the period from December 1, 2002 to July 31, 2003.
NOTE B
Management Fee and Other Transactions With Affiliates
Under the terms of the management agreement, the Fund pays Alliance Capital
Management L.P. (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 $92,600 and $139,400,
respectively, to the Manager representing the cost of certain legal and
accounting services provided to the Fund by the Manager for the period ended
July 31, 2003 and the year ended November 30, 2002.
- --------------------------------------------------------------------------------
16 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 $900,713 and $1,784,796, respectively, for
the period ended July 31, 2003 and the year ended November 30, 2002.
For the period ended July 31, 2003 and the year ended November 30, 2002, the
Fund's expenses were reduced by $412 and $6,902, respectively, under an expense
offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc., (the "Distributor"),
formerly Alliance Fund Distributors, Inc., 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 $6,920 and
$7,066 from the sales of Class A shares and received $1,691 and $8,159, $64,829
and $77,973, and $1,027 and $1,396, respectively, in contingent deferred sales
charges imposed upon redemptions by shareholders of Class A, Class B and Class C
shares for the period ended July 31, 2003 and the year ended November 30, 2002.
Brokerage commissions paid on investment transactions for the period ended July
31, 2003 and the year ended November 30, 2002 amounted to $1,741,418 and
$4,915,112 of which $35,875 and $58,170, respectively, was paid to Sanford C.
Bernstein & Co. LLC, an affiliate 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 and 1% of the average daily net assets attributable to both
Class B and Class C shares. There are no distribution and servicing fees on the
Advisor Class shares. The fees are accrued daily and paid monthly. The Agreement
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities. The Distributor has advised
the Fund that it has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $7,032,599 and $1,902,278, for Class B
and Class C shares, respectively; such costs may be recovered from the Fund in
future periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution costs
incurred by the Distributor beyond the current fiscal year for Class A shares.
The Agreement also provides that the Manager may use its own resources to
finance the distribution of the Fund's shares.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 17
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the period ended July 31, 2003, were as follows:
Purchases Sales
============ ============
Investment securities (excluding
U.S. government securities) ........... $392,339,706 $411,072,951
U.S. government securities ............... -0- -0-
At July 31, 2003, the cost of investments for federal income tax purposes, gross
unrealized appreciation and unrealized depreciation are as follows:
Cost .................................................. $ 516,684,663
=============
Gross unrealized appreciation ......................... $ 170,498,726
Gross unrealized depreciation ......................... (60,270,237)
-------------
Net unrealized appreciation ........................... $ 110,228,489
=============
NOTE E
Securities Lending
The Fund has entered into a securities lending agreement with UBS Warburg LLC
(the "Lending Agent"), formerly UBS/PaineWebber, Inc. 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 earns 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
in 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, 2003, the Fund had loaned
securities with a value of $71,435,905 and received cash collateral which was
invested in a money market fund valued at $74,403,610 as included in the
footnotes to the accompanying portfolio of investments. For the period ended
July 31, 2003, the Fund earned fee income of $179,493 which is included in
interest income in the accompanying statement of operations.
- --------------------------------------------------------------------------------
18 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE F
Capital Stock
There are 12,000,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
---------------------------------------------------------
Shares
---------------------------------------------------------
December 1,
2002 Year Ended Year Ended
to November 30, November 30,
July 31, 2003(a) 2002 2001
---------------------------------------------------------
Class A
Shares sold 94,001,095 666,869,479 87,593,423
- ----------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 5,905,352
- ----------------------------------------------------------------------------------------
Shares converted from Class B 338,320 699,555 698,616
- ----------------------------------------------------------------------------------------
Shares redeemed (99,957,041) (684,023,732) (97,974,422)
- ----------------------------------------------------------------------------------------
Net decrease (5,617,626) (16,454,698) (3,777,031)
========================================================================================
Class B
Shares sold 3,585,069 3,266,084 4,406,011
- ----------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 848,201
- ----------------------------------------------------------------------------------------
Shares converted to Class A (294,203) (796,739) (789,835)
- ----------------------------------------------------------------------------------------
Shares redeemed (2,204,819) (4,391,919) (5,477,977)
- ----------------------------------------------------------------------------------------
Net increase (decrease) 1,086,047 (1,922,574) (1,013,600)
========================================================================================
Class C
Shares sold 2,054,344 1,153,569 1,110,053
- ----------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 213,714
- ----------------------------------------------------------------------------------------
Shares redeemed (1,694,149) (1,440,877) (1,530,817)
- ----------------------------------------------------------------------------------------
Net increase (decrease) 360,195 (287,308) (207,050)
========================================================================================
Advisor Class
Shares sold 1,513,917 24,749,469 26,019,320
- ----------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 76,966
- ----------------------------------------------------------------------------------------
Shares redeemed (309,352) (48,366,425) (397,001)
- ----------------------------------------------------------------------------------------
Net increase (decrease) 1,204,565 (23,616,956) 25,699,285
========================================================================================
(a) The Fund changed its fiscal year end from November 30 to July 31.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 19
Notes to Financial Statements
- --------------------------------------------------------------------------------
-------------------------------------------------------------
Amount
-------------------------------------------------------------
December 1,
2002 Year Ended Year Ended
to November 30, November 30,
July 31, 2003(a) 2002 2001
-------------------------------------------------------------
Class A
Shares sold $ 338,227,909 $ 2,604,234,397 $ 397,463,411
- ---------------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 33,837,884
- ---------------------------------------------------------------------------------------------
Shares converted from Class B 1,115,899 2,861,398 3,557,374
- ---------------------------------------------------------------------------------------------
Shares redeemed (360,496,511) (2,681,824,281) (454,064,871)
- ---------------------------------------------------------------------------------------------
Net decrease $ (21,152,703) $ (74,728,486) $ (19,206,202)
=============================================================================================
Class B
Shares sold $ 12,225,807 $ 11,857,211 $ 20,104,999
- ---------------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 4,317,356
- ---------------------------------------------------------------------------------------------
Shares converted to Class A (1,115,899) (2,861,398) (3,557,374)
- ---------------------------------------------------------------------------------------------
Shares redeemed (6,817,276) (14,731,968) (24,486,832)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) $ 4,292,632 $ (5,736,155) $ (3,621,851)
=============================================================================================
Class C
Shares sold $ 6,777,317 $ 4,071,203 $ 5,068,336
- ---------------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 1,085,666
- ---------------------------------------------------------------------------------------------
Shares redeemed (5,137,129) (4,987,444) (6,838,213)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) $ 1,640,188 $ (916,241) $ (684,211)
=============================================================================================
Advisor Class
Shares sold $ 5,862,285 $ 112,428,321 $ 126,344,114
- ---------------------------------------------------------------------------------------------
Shares issued in reinvestment
of distributions -0- -0- 444,098
- ---------------------------------------------------------------------------------------------
Shares redeemed (1,102,209) (172,804,180) (2,043,695)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) $ 4,760,076 $ (60,375,859) $ 124,744,517
=============================================================================================
(a) The Fund changed its fiscal year end from November 30 to July 31.
NOTE G
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended July 31,
2003, November 30, 2002 and November 30, 2001 were as follows:
2003 2002 2001
======== ======== ===========
Distributions paid from:
Ordinary income ........................ $ -0- $ -0- $28,558,139
Long term capital gains ................ -0- -0- 20,547,850
-------- -------- -----------
Total taxable distributions .............. -0- -0- 49,105,989
-------- -------- -----------
Total distributions paid ................. $ -0- $ -0- $49,105,989
-------- -------- -----------
- --------------------------------------------------------------------------------
20 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Notes to Financial Statements
- --------------------------------------------------------------------------------
As of July 31, 2003, the components of accumulated earnings/(deficit) on a tax
basis were as follows:
Accumulated capital and other losses .................. $(256,609,415)(a)
Unrealized appreciation/(depreciation) ................ 110,228,489(b)
-------------
Total accumulated earnings/(deficit) .................. $(146,380,926)
=============
(a) On July 31, 2003, the Fund had a net capital loss carryforward of
$256,609,415 of which $148,929,597 expires in the year 2009 and
$107,679,818 expires in the year 2010. To the extent future capital gains
are offset by capital loss carryforward, such gains will not be
distributed. The Fund utilized $2,695,059 of capital loss carryforward
during the year.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral
of losses on wash sales.
During the period ended July 31, 2003, permanent differences, primarily due to a
net operating loss, resulted in a net decrease in accumulated net investment
loss and a corresponding decrease in additional paid-in capital. This
reclassification had no effect on net assets.
NOTE H
Subsequent Events
Alliance Capital Management L.P., (?Alliance Capital?) the Fund?s Adviser, has
been contacted by the Office of the New York State Attorney General (?NYAG?)
and the United States Securities and Exchange Commission (?SEC?) in connection
with their investigation of practices in the mutual fund industry identified as
?market timing? and ?late trading? of mutual fund shares. Alliance Capital has
been providing full cooperation with respect to these investigations.
Based on the preliminary results of its own ongoing internal investigation
concerning mutual fund transactions, Alliance Capital has identified conflicts
of interest in connection with certain market timing transactions. In this
regard, Alliance Capital has suspended two of its employees, neither of which
was a portfolio manager or officer of the Fund. Alliance Capital continues to
review the facts and circumstances relevant to the SEC?s and NYAG?s
investigations, including whether third parties may have engaged in illegal
late trading in the Funds and whether any of its employees knowingly
facilitated such late trading. Consistent with the best interests of the Fund
and its shareholders, Alliance Capital intends to vigorously pursue its rights,
and the rights of the Fund and its shareholders, if it is determined that such
trading occurred. At the present time, management of Alliance Capital is unable
to estimate the impact, if any, that the outcome of these investigations may
have on the Fund or Alliance Capital?s results of operations or financial
condition.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 21
Notes to Financial Statements
- --------------------------------------------------------------------------------
Alliance Capital also announced that its Board of Directors authorized a
special committee, comprised of the members of Alliance Capital?s Audit
Committee and the other independent member of the Board, to direct and oversee
a comprehensive review of the facts and circumstances relevant to the SEC?s and
the NYAG?s investigations.
On October 2, 2003, a class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the ?Hindo Complaint?), was
filed in federal district court in the Southern District of New York against
Alliance Capital Management Holding L.P.; Alliance Capital; Alliance Capital
Management Corporation (collectively, the ?Alliance Capital defendants?);
certain of the AllianceBernstein Mutual Funds, including the Fund, AXA
Financial, Inc.; Gerald Malone; Charles Schaffran; Edward J. Stern; Canary
Capital Partners, LLC; Canary Investment Management LLC; Canary Capital
Partners, Ltd.; and other unnamed defendants. The action, which is brought on
behalf of a putative class of all persons who purchased shares in one or more
of the defendant mutual funds between October 2, 1998 and September 29, 2003,
alleges violations of the Securities Act of 1933, the Securities Exchange Act
of 1934 and the Investment Advisors Act of 1940. The principal allegations of
the Hindo Complaint are that the Alliance Capital defendants entered into
agreements under which certain named and unnamed parties were permitted to
engage in late trading and market timing transactions in the defendant funds.
According to the Complaint, these agreements were fraudulent and a breach of
fiduciary duty to fund shareholders. In addition, plaintiffs allege that the
prospectuses for the named AllianceBernstein mutual funds were false and
misleading because they: (i) failed to disclose the existence of these late
trading and market timing agreements; and (ii) represented that fund
shareholders would be safeguarded against the effects of such agreements.
Plaintiffs seek unspecified damages, the rescission of plaintiffs? contracts
with Alliance Capital, and recovery of any fees paid in connection therewith.
Alliance Capital is evaluating the claims in the Hindo Complaint and intends to
vigorously defend against them. At the present time, management of Alliance
Capital is unable to estimate the impact, if any, that the outcome of this
action may have on the Fund or on Alliance Capital?s results of operations or
financial condition. On October 8, 2003, a similar complaint was filed in
federal district court in the Eastern District of New York in which all
AllianceBernstein Funds are named as nominal defendants. Alliance Capital
understands that additional lawsuits that are similar to these lawsuits have
been filed, and believes that others may be filed, against Alliance Capital
defendants and related parties.
- --------------------------------------------------------------------------------
22 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,
2002 to Year Ended November 30,
July 31, ---------------------------------------------------------------------
2003(a) 2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period .......... $ 3.70 $ 4.79 $ 5.83 $ 7.55 $ 5.97 $ 8.70
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss(b) ......... (.03) (.04) (.04) (.04) (.03) (.02)
Net realized and unrealized
gain (loss) on investment
transactions ................. .79 (1.05) (.71) (1.04) 2.00 (.54)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value from operations . .76 (1.09) (.75) (1.08) 1.97 (.56)
-----------------------------------------------------------------------------------------
Less: Distributions
Distributions from net realized
gain on investment
transactions ................. -0- -0- (.29) (.64) (.39) (2.17)
-----------------------------------------------------------------------------------------
Net asset value, end of period . $ 4.46 $ 3.70 $ 4.79 $ 5.83 $ 7.55 $ 5.97
=========================================================================================
Total Return
Total investment return based
on net asset value(c) ....... 20.54% (22.76)% (13.64)% (15.73)% 35.37% (8.48)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $ 540,843 $ 469,570 $ 686,445 $ 856,956 $1,128,166 $ 953,181
Ratio to average net assets of:
Expenses ..................... 1.45%(d) 1.34% 1.22% 1.04% 1.06% 1.03%
Net investment loss .......... (1.11)%(d) (1.03)% (.69)% (.55)% (.41)% (.36)%
Portfolio turnover rate ........ 75% 183% 226% 86% 97% 106%
See footnote summary on page 26.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 23
Financial Highlights
- --------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
-----------------------------------------------------------------------------------------
Class B
-----------------------------------------------------------------------------------------
December 1,
2002 to Year Ended November 30,
July 31, ---------------------------------------------------------------------
2003(a) 2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period .......... $ 3.23 $ 4.22 $ 5.21 $ 6.87 $ 5.51 $ 8.25
Income From Investment
Operations
Net investment loss(b) ......... (.03) (.07) (.07) (.09) (.07) (.07)
Net realized and unrealized
gain (loss) on investment
transactions ................. .67 (.92) (.63) (.93) 1.82 (.50)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value from operations .. .64 (.99) (.70) (1.02) 1.75 (.57)
-----------------------------------------------------------------------------------------
Less: Distributions
Distributions from net realized
gain on investment
transactions ................. -0- -0- (.29) (.64) (.39) (2.17)
-----------------------------------------------------------------------------------------
Net asset value, end of period . $ 3.87 $ 3.23 $ 4.22 $ 5.21 $ 6.87 $ 5.51
=========================================================================================
Total Return
Total investment return based
on net asset value(c) ....... 19.81% (23.46)% (14.34)% (16.48)% 34.24% (9.27)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $ 53,461 $ 41,096 $ 61,816 $ 81,569 $ 101,858 $ 85,456
Ratio to average net assets of:
Expenses ..................... 2.32%(d) 2.20% 2.08% 1.87% 1.89% 1.84%
Net investment loss .......... (1.98)%(d) (1.89)% (1.54)% (1.39)% (1.23)% (1.17)%
Portfolio turnover rate ........ 75% 183% 226% 86% 97% 106%
See footnote summary on page 26.
- --------------------------------------------------------------------------------
24 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Financial Highlights
- --------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
-----------------------------------------------------------------------------------------
Class C
-----------------------------------------------------------------------------------------
December 1,
2002 to Year Ended November 30,
July 31, ---------------------------------------------------------------------
2003(a) 2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period .......... $ 3.22 $ 4.21 $ 5.20 $ 6.86 $ 5.50 $ 8.26
Income From Investment
Operations
Net investment loss(b) ......... (.03) (.06) (.07) (.09) (.08) (.07)
Net realized and unrealized
gain (loss) on investment
transactions ................. .68 (.93) (.63) (.93) 1.83 (.52)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value from operations .. .65 (.99) (.70) (1.02) 1.75 (.59)
-----------------------------------------------------------------------------------------
Less: Distributions
Distributions from net realized
gain on investment
transactions ................. -0- -0- (.29) (.64) (.39) (2.17)
-----------------------------------------------------------------------------------------
Net asset value, end of period . $ 3.87 $ 3.22 $ 4.21 $ 5.20 $ 6.86 $ 5.50
=========================================================================================
Total Return
Total investment return based
on net asset value(c) ....... 20.19% (23.52)% (14.37)% (16.51)% 34.31% (9.58)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $ 14,415 $ 10,860 $ 15,391 $ 20,068 28,025 $ 21,231
Ratio to average net assets of:
Expenses ..................... 2.27%(d) 2.16% 2.04% 1.86% 1.86% 1.84%
Net investment loss .......... (1.94)%(d) (1.85)% (1.51)% (1.34)% (1.22)% (1.18)%
Portfolio turnover rate ........ 75% 183% 226% 86% 97% 106%
See footnote summary on page 26.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 25
Financial Highlights
- --------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
-----------------------------------------------------------------------------------------
Advisor Class
-----------------------------------------------------------------------------------------
December 1,
2002 to Year Ended November 30,
July 31, ---------------------------------------------------------------------
2003(a) 2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period .......... $ 3.74 $ 4.83 $ 5.86 $ 7.58 $ 5.98 $ 8.69
Income From Investment
Operations
Net investment loss(b) ......... -0- (.03) (.03) (.02) (.01) (.01)
Net realized and unrealized
gain (loss) on investment
transactions ................. .78 (1.06) (.71) (1.06) 2.00 (.53)
-----------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value from operations .. .78 (1.09) (.74) (1.08) 1.99 (.54)
-----------------------------------------------------------------------------------------
Less: Distributions
Distributions from net realized
gain on investment
transactions ................. -0- -0- (.29) (.64) (.39) (2.17)
-----------------------------------------------------------------------------------------
Net asset value, end of period . $ 4.52 $ 3.74 $ 4.83 $ 5.86 $ 7.58 $ 5.98
=========================================================================================
Total Return
Total investment return based
on net asset value(c) ....... 20.86% (22.57)% (13.39)% (15.66)% 35.66% (8.19)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $ 21,251 $ 13,092 $ 131,032 $ 8,304 $ 9,970 $ 11,305
Ratio to average net assets of:
Expenses ..................... 1.23%(d) 1.08% 1.08% .83% .85% .83%
Net investment loss .......... (.89)%(d) (.81)% (.64)% (.35)% (.20)% (.16)%
Portfolio turnover rate ........ 75% 183% 226% 86% 97% 106%
(a) The Fund changed its fiscal year end from November 30 to July 31.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total return does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption
of Fund shares. Total investment return calculated for a period of less
than one year is not annualized.
(d) Annualized.
- --------------------------------------------------------------------------------
26 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Report of Independent Auditors
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
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., formerly Alliance Mid-Cap Growth Fund, Inc., (the "Fund") at July
31, 2003 the results of its operations for the period December 1, 2002 through
July 31, 2003 and for the year ended November 30, 2002, the changes in its net
assets for the period December 1, 2002 through July 31, 2003 and for each of the
two years in the period ended November 30, 2002 and the financial highlights for
the period December 1, 2002 through July 31, 2003 and for each of the five years
in the period ended November 30, 2002, 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 auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at July
31, 2003 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
September 12, 2003, except for Note H which is as of October 9, 2003.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 27
Board of Directors
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
William H. Foulk, Jr.(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Thomas J. Bardong, Vice President
John L. Blundin, Vice President
Alan E. Levi, Vice President
Catherine Wood, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & 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 Auditors
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036-2714
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
- --------------------------------------------------------------------------------
28 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
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, AGE OF DIRECTOR, OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS DURING OVERSEEN BY HELD BY
(YEARS OF SERVICE*) PAST 5 YEARS DIRECTOR DIRECTOR
- ---------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
John D. Carifa,**, 58 President, Chief Operating Officer 116 None
1345 Avenue of and a Director of Alliance Capital
the Americas Management Corporation ("ACMC"),
New York, NY 10105 with which he has been associated
(15) since prior to 1998.
DISINTERESTED DIRECTORS
Ruth Block,#+, 72 Formerly Executive Vice President 97 None
P.O. Box 4623 and Chief Insurance Officer of The
Stamford, CT 06903 Equitable Life Assurance Society
(13) of the United States; Chairman and
Chief Executive Officer of Evlico;
Director of Avon, BP (oil and gas),
Ecolab Incorporated (specialty
chemicals), Tandem Financial Group,
and Donaldson Lufkin & Jenrette
Securities Corporation; former
Governor at Large-National
Association of Securities Dealers, Inc.
David H. Dievler,#+, 73 Independent consultant. Until 101 None
P.O. Box 167 December 1994, Senior Vice
Spring Lake, NJ 07762 President of ACMC responsible
(21) for mutual fund administration.
Prior to joining ACMC in 1984,
Chief Financial Officer of Eberstadt
Asset Management since 1968.
Prior to that, Senior Manager at
Price Waterhouse & Co. Member
of American Institute of Certified
Public Accountants since 1953.
John H. Dobkin,#+, 61 Consultant. Formerly President of 98 None
P.O. Box 12 Save Venice, Inc. from 2001-2002,
Annandale, NY 12504 and Senior Advisor from June
(10) 1999 - June 2000 and President
(December 1989 - May 1999) of
Historic Hudson Valley (historic
preservation). Previously, Director
of the National Academy of Design.
During 1988-92, Director and
Chairman of the Audit Committee
of ACMC.
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 29
Management of the Fund
- --------------------------------------------------------------------------------
PORTFOLIOS
PRINCIPAL IN FUND OTHER
NAME, AGE OF DIRECTOR, OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS DURING OVERSEEN BY HELD BY
(YEARS OF SERVICE*) PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
William H. Foulk, Jr.,#+, 71 Investment Adviser and an 113 None
2 Sound View Drive independent consultant. Formerly
Suite 100 Senior Manager of Barrett
Greenwich, CT 06830 Associates, Inc., a registered
(10) investment adviser, with which he
had been associated since prior to
1998. Formerly Deputy Comptroller
of the State of New York and, prior
thereto, Chief Investment Officer
of the New York Bank for Savings.
Clifford L. Michel,#+, 64 Senior Counsel of the law firm of 97 Placer Dome,
15 St. Bernard's Road Cahill Gordon & Reindel since Inc.
Gladstone, NJ 07934 February 2001 and a partner of
(18) that firm for more than 25 years
prior thereto. President and
Chief Executive Officer of Wenonah
Development Company (investments)
and a Director of the Placer Dome
Inc. (mining).
Donald J. Robinson,#+ 69 Senior Counsel to the law firm of 96 None
98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP
Weston, VT 05161 since prior to 1998. Formerly a
(6) senior partner and a member of
the Executive Committee of that
firm. Formerly a member and
Chairman of the Municipal Securities
Rulemaking Board and a Trustee
of the Museum of the City of New York.
* There is no stated term of office for the Fund's Directors.
** Mr. Carifa is an "interested director", as defined in the 1940 Act, due to
his position as President and Chief Operating Officer of ACMC, the Fund's
investment adviser.
# Member of the Audit Committee.
+ Member of the Nominating Committee.
- --------------------------------------------------------------------------------
30 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
Management of the Fund
- --------------------------------------------------------------------------------
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, POSITION(S) PRINCIPAL OCCUPATION
ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS**
- --------------------------------------------------------------------------------------------------------
John D. Carifa, 58 Chairman & President See biography above.
Thomas J. Bardong, 58 Vice President Senior Vice President of ACMC**, with
which he has been associated since
prior to 1998.
John L. Blundin, 61 Senior Vice President Senior Vice President of Alliance Capital
Management Corporation ("ACMC")**,
with which he has been associated
since prior to 1998.
Alan E. Levi, 54 Vice President Senior Vice President of ACMC**, with
which he has been associated since
prior to 1998.
Catherine Wood, 47 Vice President Senior Vice President of ACMC**, with
which she has been associated since
prior to 1998.
Edmund P. Bergan, Jr., 53 Secretary Senior Vice President and the General
Counsel of AllianceBernstein
Investment Research and
Management, Inc. ("ABIRM")** and
Alliance Global Investor Services Inc.
("AGIS")**, with which he has been
associated since prior to 1998.
Mark D. Gersten, 52 Treasurer and Chief Senior Vice President of AGIS** and
Financial Officer Vice President of ABIRM**, with which
he has been associated since prior to
1998.
Vincent S. Noto, 38 Controller Vice President of AGIS**, with which he
has been associated since prior to
1998.
* 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 31
AllianceBernstein Family of Funds
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN FAMILY OF FUNDS
Wealth Strategies Funds
Balanced Wealth Strategy
Wealth Appreciation
Wealth Preservation
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation
Tax-Managed Wealth Preservation
U.S. Growth Funds
Growth Fund
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Quasar Fund
Select Investor Series Biotechnology Portfolio
Select Investor Series Premier Portfolio
Select Investor Series Technology Portfolio
Technology Fund
U.S. Value Funds
Balanced Shares
Disciplined Value Fund
Growth & Income Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Blended Style Series
U.S. Large Cap Portfolio
Global & International Growth Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Global & International Value Funds
Global Value Fund
International Value Fund
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
U.S. Government Portfolio
Municipal Income Funds
Intermediate California
Intermediate Diversified
Intermediate New York
Arizona
California
Insured California
Insured National
Florida
Massachusetts
Michigan
Minnesota
National
New Jersey
New York
Ohio
Pennsylvania
Virginia
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
AllianceBernstein also offers AllianceBernstein Exchange Reserves, which serves
as the money market fund exchange vehicle for the AllianceBernstein mutual
funds.
To obtain a prospectus for any AllianceBernstein fund, call your investment
professional, or call AllianceBernstein at (800) 227-4618 or visit our web site
at www.alliancebernstein.com.
- --------------------------------------------------------------------------------
32 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
ALLIANCEBERNSTEIN MID-CAP GROWTH FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] AllianceBernstein(SM)
Investment Research and Management
(SM) This service mark used under license from the owner, Alliance Capital
Management L.P.
ALLAR0703
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 10(a)(1).
(b) During the period covered by this report, no 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
Messrs. David H. Dievler and William H. Foulk qualify as audit committee
financial experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. [RESERVED]
ITEM 9. 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 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 10. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
Exhibit No. DESCRIPTION OF EXHIBIT
10 (a) (1) Code of ethics that is subject to the disclosure of Item 2
hereof
10 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
10 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
10 (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/John D. Carifa
---------------------------------
John D. Carifa
President
Date: October 9, 2003
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/John D. Carifa
---------------------------------
John D. Carifa
President
Date: October 9, 2003
By: /s/Mark D. Gersten
-------------------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: October 9, 2003