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: 811-09687
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
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: November 30, 2005
Date of reporting period: November 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
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ANNUAL REPORT
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[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
AllianceBernstein Focused
Growth & Income Fund
Annual Report
November 30, 2005
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.
January 24, 2006
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Focused Growth & Income Fund (the "Fund") for the annual
reporting period ended November 30, 2005.
Investment Objective and Policies
This open-end fund invests primarily in the equity securities of U.S. companies
that Alliance believes are undervalued. The Fund's investment objective is
long-term growth of capital through the application of a disciplined
value-oriented investment process. The Fund expects, under normal
circumstances, to invest primarily in equity securities of approximately 75
U.S. companies. The Fund may also invest up to 15% of its total assets in
non-U.S. companies.
Investment Results
The table on page 4 provides performance data for the Fund and its benchmark,
the Russell 1000 Value Index, for the six- and 12-month periods ended November
30, 2005. Also included in the table are returns for the Fund's peer group, as
represented by the Lipper Multi-Cap Core Funds Average (the "Lipper Average").
Funds in the Lipper Average have generally similar investment objectives to the
Fund, although some may have different investment policies and sales and
management fees.
The Fund underperformed its benchmark and the Lipper Average during both the
six- and 12-month periods ended November 30, 2005. During the six-month period,
disappointing relative performance was due equally to stock and sector
selection. From a sector perspective, the Fund's underweight position in
traditional value sectors like energy and financials hurt performance, while
from a stock perspective, selection in the media and health care sectors was
weak. During the 12-month period, disappointing relative performance was
primarily due to stock selection.
At the stock level, weak stock selection in the health care and underperforming
"old" media holdings were primarily responsible for the Fund's underperformance
versus the benchmark during the six- and 12-month reporting periods.
Underperformance was due, in part, to the Fund's large investments in American
International Group and Boston Scientific, which did not perform well.
The Fund continues to maintain a lower-than-benchmark and lower-than-peer group
profile in winning "value" sectors like commodities (e.g., energy and basic
materials) and financials (e.g., real estate investment trusts and regional
banks). The Fund's Relative Value Investment Team (the "Team") believes that
both areas of the market, large exposures in the benchmark, are expensive and
prices have detached from fundamentals as speculators have become more involved
in the short-term direction of stock prices.
Market Review and Investment Strategy
U.S. stocks rose during the six- and 12-month periods ended November 30, 2005
as the economy and corporate profits remained buoyant despite
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 1
record energy prices, rising interest rates and one of the worst hurricane
seasons in U.S. history. Energy stocks dominated returns for the 12-month
reporting period, climbing more than 30%.
The relative value opportunity that is seen today in high-quality and mega-cap
stocks is the result of five years of massive outperformance by value stocks
and small-cap stocks since the technology bubble burst in early 2000. The value
rally has taken valuation spreads between the cheapest and most expensive
stocks from extremely wide to extremely narrow within the large-cap market
overall and within the value index.
In addition, the massive outperformance by smaller-cap stocks has narrowed the
valuation premium usually accorded to large-cap stocks--and erased the premium
for mega caps. Indeed, the largest 50 U.S. stocks, which usually sell at a
significant valuation premium to the U.S. market overall, are now selling at a
discount, although they remain significantly more profitable than the market as
a whole. The Team has taken advantage of this anomaly over the past two years
by buying an unusually large number of mega-cap stocks.
Today's tight valuation spreads largely reflect the compression in the range of
corporate profitability. After a sustained period of strong global economic
growth, traditional value stocks that are the biggest beneficiaries of low
interest rates and high economic growth are delivering very strong profits
(particularly energy and metals producers); few industries are in distress.
Thus, returns on equity (ROE) are not only unusually high on average in the
U.S. and around the world--but high ROEs are unusually widespread. In this
setting, investors are willing to pay a higher valuation than usual for
cyclicals and other traditional value stocks and are less willing to pay
sizable valuation premiums for superior growth and stability.
However, high ROEs should not remain so broadly distributed. As profitability
diverges, so, too, will valuations. In the Team's view, investors are
overpaying for improved fundamental performance that is likely to prove to be
cyclical. The Team built the Fund's current emphasis on very large,
high-quality and non-cyclical companies as their relative valuations fell.
_______________________________________________________________________________
2 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein 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 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 1000 Value Index does not reflect fees and expenses
associated with the active management of a mutual fund portfolio. The Index
contains those securities in the Russell 1000 Index with a less-than-average
growth orientation. The Russell 1000 Index is composed of 1000 of the largest
capitalized companies that are traded in the United States. For the six- and
12-month periods ended November 30, 2005, the Lipper Multi-Cap Core Funds
Average consisted of 913 and 825 funds, respectively. Funds in the Lipper
Average have generally similar investment objectives to AllianceBernstein
Focused Growth & Income Fund, although some may have different investment
policies and sales and management fees. An investor cannot invest directly in
an index or average, and their results are not indicative of the performance
for any specific investment, including the Fund.
A Word About Risk
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.
The Fund can invest in small- to mid-capitalization companies. These
investments may be more volatile than investments in large-capitalization
companies. The Fund may at times be concentrated in a particular sector or
industry group and, therefore, may be subject to greater risk. 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)
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ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARK -------------------------
PERIODS ENDED NOVEMBER 30, 2005 6 Months 12 Months
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AllianceBernstein Focused Growth & Income Fund
Class A 3.08% 6.67%
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Class B 2.69% 5.90%
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Class C 2.69% 5.90%
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Class R 3.01% 6.47%
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Class K** 3.07% 1.05%*
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Class I** 3.27% 1.31%*
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Russell 1000 Value Index 5.72% 9.98%
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Lipper Multi-Cap Core Funds Average 7.01% 9.31%
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* 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 K and
Class I shares is 3/1/05.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
12/22/99* TO 11/30/05
AllianceBernstein Focused Growth & Income Fund Class A: $15,105
Russell 1000 Value Index: $14,045
[THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL]
AllianceBernstein
Focused Growth & Income Russell 1000
Fund Class A Value Index
- -------------------------------------------------------------------------------
12/22/99* $ 9,575 $10,000
11/30/00 $10,935 $10,403
11/30/01 $12,619 $10,077
11/30/02 $10,460 $ 9,108
11/30/03 $12,792 $10,671
11/30/04 $14,161 $12,770
11/30/05 $15,105 $14,045
* Since inception of the Fund's Class A shares on 12/22/99.
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Focused Growth & Income Fund Class A shares (from 12/22/99*
to 11/30/05) as compared to the performance of its 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)
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4 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF NOVEMBER 30, 2005
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 6.67% 2.15%
5 Years 6.68% 5.75%
Since Inception* 7.97% 7.19%
Class B Shares
1 Year 5.90% 1.90%
5 Years 5.91% 5.91%
Since Inception* 7.23% 7.23%
Class C Shares
1 Year 5.90% 4.90%
5 Years 5.94% 5.94%
Since Inception* 7.22% 7.22%
Class R Shares
1 Year 6.47%
Since Inception* 8.58%
Class K Shares#
Since Inception* 1.05%
Class I Shares#
Since Inception* 1.31%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2005)
- --------------------------------------------------------------
Class A Shares
1 Year -3.08%
5 Year 4.08%
Since Inception* 7.05%
Class B Shares
1 Year -3.35%
5 Year 4.24%
Since Inception* 7.07%
Class C Shares
1 Year -0.46%
5 Year 4.27%
Since Inception* 7.07%
* Inception dates: 12/22/99 for Class A, Class B and Class C shares; 11/3/03
for Class R shares; 3/1/05 for 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 FOCUSED GROWTH & INCOME FUND o 5
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
June 1, 2005 November 30, 2005 During Period*
------------------------------- ------------------------------- ---------------------------
Actual Hypothetical Actual Hypothetical** Actual Hypothetical
----------- ----------------- ----------- ----------------- ----------- -------------
Class A $1,000 $1,000 $1,030.75 $1,018.05 $7.13 $7.08
- ---------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,000 $1,026.90 $1,014.39 $10.82 $10.76
- ---------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,000 $1,026.91 $1,014.49 $10.72 $10.66
- ---------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,000 $1,030.11 $1,016.55 $8.65 $8.59
- ---------------------------------------------------------------------------------------------------------------
Class K $1,000 $1,000 $1,030.72 $1,018.15 $7.03 $6.98
- ---------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,000 $1,032.72 $1,019.70 $5.45 $5.42
- ---------------------------------------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 1.40%,
2.13%, 2.11%, 1.70%, 1.38% and 1.07%, respectively, multiplied by the average
account value over the period, multiply by the number of days in the period/365.
** Assumes 5% return before expenses.
_______________________________________________________________________________
6 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
PORTFOLIO SUMMARY
November 30, 2005
PORTFOLIO STATISTICS
Net Assets ($mil): $408.0
SECTOR BREAKDOWN*
[ ] 23.2% Finance [PIE CHART OMITTED]
[ ] 17.3% Consumer Services
[ ] 15.4% Technology
[ ] 9.9% Capital Goods
[ ] 9.3% Consumer Staples
[ ] 7.6% Health Care
[ ] 5.1% Transportation
[ ] 4.2% Basic Industry
[ ] 3.2% Energy
[ ] 2.8% Consumer Manufacturing
[ ] 2.0% Short-Term
TEN LARGEST HOLDINGS
November 30, 2005
Percent of
Company U.S. $ Value Net Assets
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American International Group $19,544,454 4.8%
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Time Warner, Inc. 17,980,000 4.4
- -------------------------------------------------------------------------------
Citigroup, Inc. 17,745,025 4.4
- -------------------------------------------------------------------------------
Microsoft Corp. 17,230,078 4.2
- -------------------------------------------------------------------------------
Air Products & Chemicals, Inc. 17,218,470 4.2
- -------------------------------------------------------------------------------
JPMorgan Chase & Co. 16,787,925 4.1
- -------------------------------------------------------------------------------
Axis Capital Holdings, Ltd. 16,747,868 4.1
- -------------------------------------------------------------------------------
The Home Depot, Inc. 16,712,000 4.1
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General Electric Co. 16,034,708 3.9
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WellPoint, Inc. 13,445,250 3.3
- -------------------------------------------------------------------------------
$169,445,778 41.5%
* All data are as of November 30, 2005. The Fund's sector breakdown is
expressed as a percentage of total investments (excluding security lending
collateral) and may vary over time.
Please Note: The sector classifications presented herein are based on the
sector categorization methodology of the Adviser.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 7
PORTFOLIO OF INVESTMENTS
November 30, 2005
Company Shares U.S. $ Value
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COMMON STOCKS-98.2%
Finance-23.2%
Banking - Money Center-4.2%
JPMorgan Chase & Co. 438,900 $ 16,787,925
The Bank of New York Co., Inc. 12,800 414,720
-------------
17,202,645
-------------
Banking - Regional-0.1%
Northern Trust Corp. 9,400 495,286
-------------
Brokerage & Money Management-1.7%
Merrill Lynch & Co., Inc. 51,500 3,420,630
The Goldman Sachs Group, Inc. 25,800 3,327,168
-------------
6,747,798
-------------
Insurance-11.3%
ACE, Ltd. 175,000 9,712,500
American International Group 291,100 19,544,454
Axis Capital Holdings, Ltd. 553,100 16,747,868
-------------
46,004,822
-------------
Mortgage Banking-1.6%
Fannie Mae 135,000 6,486,750
-------------
Miscellaneous-4.3%
Citigroup, Inc. 365,500 17,745,025
-------------
94,682,326
-------------
Consumer Services-17.4%
Broadcasting & Cable-10.5%
News Corp. Cl.B 850,000 12,588,500
Time Warner, Inc. 1,000,000 17,980,000
Viacom, Inc. Cl.B 262,400 8,764,160
Westwood One, Inc. 200,000 3,628,000
-------------
42,960,660
-------------
Entertainment & Leisure-1.9%
Carnival Corp. 140,000 7,628,600
-------------
Restaurants & Lodging-0.9%
McDonald's Corp. 103,700 3,510,245
-------------
Retail - General Merchandise-4.1%
The Home Depot, Inc. 400,000 16,712,000
-------------
70,811,505
-------------
Technology-15.4%
Communication Equipment-1.7%
Juniper Networks, Inc.(a) 309,800 6,967,402
-------------
Computer Hardware/Storage-0.5%
International Business Machines Corp. 22,800 2,026,920
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_______________________________________________________________________________
8 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Computer Services-1.9%
Accenture, Ltd. CI.A 125,000 $ 3,555,000
Fiserv, Inc.(a)* 91,200 4,150,512
-------------
7,705,512
-------------
Computer Software-7.3%
Microsoft Corp. 621,800 17,230,078
Oracle Corp.(a) 1,000,000 12,570,000
-------------
29,800,078
-------------
Semi-Conductor Components-1.8%
Silicon Laboratories, Inc.(a) 27,400 1,064,490
Texas Instruments, Inc. 200,000 6,496,000
-------------
7,560,490
-------------
Software-1.4%
McAfee, Inc.(a) 200,000 5,562,000
-------------
Miscellaneous-0.8%
Molex, Inc. 125,000 3,348,750
-------------
62,971,152
-------------
Capital Goods-10.0%
Electrical Equipment-1.9%
Emerson Electric Co. 100,000 7,561,000
-------------
Miscellaneous-8.1%
General Electric Co. 448,900 16,034,708
Illinois Tool Works, Inc. 80,018 7,063,189
United Technologies Corp. 185,000 9,960,400
-------------
33,058,297
-------------
40,619,297
-------------
Consumer Staples-9.3%
Household Products-3.6%
Colgate-Palmolive Co. 135,000 7,360,200
The Procter & Gamble Co. 125,000 7,148,750
-------------
14,508,950
-------------
Tobacco-4.8%
Altria Group, Inc. 95,700 6,966,003
Loews Corp.-Carolina Group 250,000 10,062,500
Reynolds American, Inc. 30,700 2,732,914
-------------
19,761,417
-------------
Miscellaneous-0.9%
Fortune Brands, Inc. 46,900 3,656,324
-------------
37,926,691
-------------
Health Care-7.5%
Drugs-1.8%
Forest Laboratories, Inc.(a)* 190,100 7,427,207
-------------
Medical Products-1.6%
Boston Scientific Corp.(a) 250,000 6,620,000
-------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 9
Shares or
Principal
Amount
Company (000) U.S. $ Value
- -------------------------------------------------------------------------------
Medical Services-4.1%
Health Management Associates, Inc. Cl.A 142,000 $ 3,325,640
WellPoint, Inc.(a) 175,000 13,445,250
-------------
16,770,890
-------------
30,818,097
-------------
Transportation-5.2%
Air Freight-3.3%
United Parcel Service, Inc. Cl.B 170,000 13,243,000
-------------
Railroad-1.9%
Union Pacific Corp. 101,700 7,784,118
-------------
21,027,118
-------------
Basic Industry-4.2%
Chemicals-4.2%
Air Products & Chemicals, Inc. 291,000 17,218,470
-------------
Energy-3.2%
Domestic Producers-0.7%
Noble Energy, Inc. 75,000 2,802,750
-------------
International-1.8%
Chevron Corp. 127,000 7,278,370
-------------
Oil Service-0.7%
Baker Hughes, Inc. 52,900 3,033,815
-------------
13,114,935
-------------
Consumer Manufacturing-2.8%
Building & Related-1.1%
American Standard Cos., Inc. 79,700 3,034,976
Pulte Homes, Inc. 28,600 1,190,618
-------------
4,225,594
-------------
Textile Products-1.7%
Building Materials Holding Corp. 85,800 7,063,914
-------------
11,289,508
-------------
Total Common Stocks
(cost $346,386,789) 400,479,099
-------------
SHORT-TERM INVESTMENT-2.0%
Time Deposit-2.0%
State Street Euro Dollar
3.35%, 12/01/05
(cost $8,266,000) $ 8,266 8,266,000
-------------
Total Investments Before Security Lending
Collateral-100.2%
(cost $354,652,789) 408,745,099
-------------
_______________________________________________________________________________
10 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Shares U.S. $ Value
- -------------------------------------------------------------------------------
INVESTMENT OF CASH COLLATERAL FOR
SECURITIES LOANED-0.5%
Short-Term Investment
UBS Private Money Market Fund, LLC, 3.95%
(cost $2,147,258) 2,147,258 $ 2,147,258
-------------
Total Investments-100.7%
(cost $356,800,047) 410,892,357
Other assets less liabilities-(0.7%) (2,843,101)
-------------
Net Assets-100% $ 408,049,256
-------------
* Represents entire or partial securities out on loan. See Note E for
securities lending information.
(a) Non-income producing security.
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 11
STATEMENT OF ASSETS & LIABILITIES
November 30, 2005
Assets
Investments in securities, at value
(cost $356,800,047--including investment of
cash collateral for securities loaned of
$2,147,258) $ 410,892,357(a)
Cash 478
Receivable for investment securities sold 2,476,751
Receivable for capital stock sold 692,270
Dividends receivable 664,656
--------------
Total assets 414,726,512
--------------
Liabilities
Payable for capital stock redeemed 2,606,227
Payable for collateral on securities loaned 2,147,258
Payable for investment securities purchased 985,716
Distribution fee payable 235,416
Advisory fee payable 185,624
Transfer Agent fee payable 83,639
Accrued expenses 433,376
--------------
Total liabilities 6,677,256
--------------
Net Assets $ 408,049,256
--------------
Composition of Net Assets
Capital stock, at par $ 27,000
Additional paid-in capital 335,301,712
Accumulated net realized gain on investment transactions 18,628,234
Net unrealized appreciation of investments 54,092,310
--------------
$ 408,049,256
--------------
Calculation of Maximum Offering Price Per Share
Net Asset Value and:
---------------------------- Maximum
Shares Offering Redemption Offering
Class Net Assets Outstanding Price Price Price*
- -------------------------------------------------------------------------------------------------
A $ 175,285,240 11,366,017 -- $15.42 $16.10
- -------------------------------------------------------------------------------------------------
B $ 164,194,038 11,028,501 $14.89 -- --
- -------------------------------------------------------------------------------------------------
C $ 67,621,441 4,543,921 $14.88 -- --
- -------------------------------------------------------------------------------------------------
R $ 928,163 60,309 $15.39 $15.39 --
- -------------------------------------------------------------------------------------------------
K $ 10,208 661.38 $15.43 $15.43 --
- -------------------------------------------------------------------------------------------------
I $ 10,166 657 $15.47 $15.47 --
- -------------------------------------------------------------------------------------------------
* 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 $2,067,959 (see Note E).
See notes to financial statements.
_______________________________________________________________________________
12 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
Year Ended November 30, 2005
Investment Income
Dividends (net of foreign taxes
withheld of $2,100) $ 7,466,501
Interest 264,706 $ 7,731,207
------------
Expenses
Advisory fee 2,607,975
Distribution fee--Class A 631,801
Distribution fee--Class B 1,878,475
Distribution fee--Class C 753,098
Distribution fee--Class R 2,024
Distribution fee--Class K 19
Transfer agency 1,088,993
Printing 394,149
Custodian 219,389
Registration 120,451
Administrative 89,751
Legal 67,899
Audit 51,170
Directors' fees 26,265
Miscellaneous 26,032
------------
Total expenses 7,957,491
Less: expense offset arrangement
(see Note B) (7,606)
------------
Net expenses 7,949,885
------------
Net investment loss (218,678)
------------
Realized and Unrealized Gain
on Investment Transactions
Net realized gain on investment
transactions 22,464,325
Net change in unrealized
appreciation/depreciation
of investments 5,926,478
------------
Net gain on investment transactions 28,390,803
------------
Net Increase in Net Assets
from Operations $ 28,172,125
------------
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 13
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
November 30, November 30,
2005 2004
============== ==============
Increase (Decrease) in Net Assets
from Operations
Net investment income (loss) $ (218,678) $ 1,499,243
Net realized gain on investment
transactions 22,464,325 33,088,053
Net change in unrealized
appreciation/depreciation
of investments 5,926,478 8,255,807
-------------- --------------
Net increase in net assets
from operations 28,172,125 42,843,103
Dividends and Distributions to
Shareholders from
Net investment income
Class A (1,514,182) -0-
Class R (1,155) -0-
Net realized gain on
investment transactions
Class A (2,195,466) -0-
Class B (2,044,514) -0-
Class C (831,037) -0-
Class R (2,393) -0-
Capital Stock Transactions
Net increase (decrease) (122,923,053) 48,919,998
-------------- --------------
Total increase (decrease) (101,339,675) 91,763,101
Net Assets
Beginning of period 509,388,931 417,625,830
-------------- --------------
End of period (includes undistributed
net investment income of $0 and
$1,499,243, respectively) $408,049,256 $509,388,931
-------------- --------------
See notes to financial statements.
_______________________________________________________________________________
14 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 2005
NOTE A
Significant Accounting Policies
AllianceBernstein Focused Growth & Income Fund, Inc. (the "Fund"), organized as
a Maryland corporation on July 6, 1999, 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, Class R, Class K and Class I shares.
Class A shares are sold with a front-end sales charge of up to 4.25% for
purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or
more, Class A shares redeemed within one year of purchase may be subject to a
contingent deferred sales charge of 1%. Class B shares are currently sold with
a contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Class R and Class
K shares are sold without an initial or contingent deferred sales charge. Class
I shares are sold without any initial or contingent deferred sales charge and
are not subject to ongoing distribution expenses. All six 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")
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 15
are valued in accordance with the NASDAQ Official Closing Price; listed put or
call options are valued at the last sale price. If there has been no sale on
that day, such securities will be valued at the closing bid prices on that day;
open futures contracts and options thereon are valued using the closing
settlement price or, in the absence of such a price, the most recent quoted bid
price. If there are no quotations available for the day of valuation, the last
available closing settlement price is used; securities traded in the
over-the-counter market, ("OTC") (but excluding securities traded on NASDAQ)
are valued at the mean of the current bid and asked prices as reported by the
National Quotation Bureau or other comparable sources; U.S. Government
securities and other debt instruments having 60 days or less remaining until
maturity are valued at amortized cost if their original maturity was 60 days or
less; or by amortizing their fair value as of the 61st day prior to maturity if
their original term to maturity exceeded 60 days; fixed-income securities,
including mortgage backed and asset backed securities, may be valued on the
basis of prices provided by a pricing service or at a price obtained from one
or more of the major broker/dealers. In cases where broker/dealer quotes are
obtained, Alliance Capital Management, L.P. (the "Adviser") may establish
procedures whereby changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted price on a security; and OTC and other
derivatives are valued on the basis of a quoted bid price or spread from a
major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities. To account for this, the Fund may frequently value
many of its foreign equity securities using fair value prices based on third
party vendor modeling tools to the extent available.
2. 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.
_______________________________________________________________________________
16 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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 policy of the Fund 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 for class
specific expenses which are allocated to the respective class.
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 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.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 17
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .55% of the first $2.5 billion, .45% of
the next $2.5 billion and .40% in excess of $5 billion, of the Fund's average
daily net assets. Prior to September 7, 2004, the Fund paid the Adviser an
advisory fee at an annual rate of .75% of the Fund's average daily net assets.
The fee is accrued daily and paid monthly. The Adviser has agreed to waive its
fees and bear certain expenses to the extent necessary to limit total operating
expenses on an annual basis to 2.50%, 3.20%, 3.20%, 2.70%, 2.45% and 2.20% of
the daily average net assets for the Class A, Class B, Class C, Class R, Class
K and Class I shares, respectively. For the year ended November 30, 2005, there
were no fees waived by the Adviser.
Effective January 1, 2004 through September 6, 2004, in contemplation of the
final agreement with the Office of New York Attorney General ("NYAG") the
Adviser began waiving a portion of its advisory fee so as to charge the Fund at
the reduced annual rate discussed above. For a more complete discussion of the
Adviser's settlement with the NYAG, please see "Legal Proceedings" below.
Pursuant to the advisory agreement, the Fund paid $89,751 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended November 30, 2005.
The Fund compensates Alliance Global Investor Services, Inc., ("AGIS"), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. AGIS may make payments to intermediaries that provide omnibus account
services, sub-accounting services and/or networking services. Such compensation
retained by AGIS amounted to $492,725 for the year ended November 30, 2005.
For the year ended November 30, 2005, the Fund's expenses were reduced by
$7,606 under an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc. (the "Distributor"),
a wholly-owned subsidiary of the Adviser, serves as the distributor of the
Fund's shares. The Distributor has advised the Fund that it has retained
front-end sales charges of $11,148 from the sale of Class A shares and received
$3,152, $233,276 and $9,916 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the year ended November 30, 2005.
Brokerage commissions paid on investment transactions for the year ended
November 30, 2005, amounted to $1,651,107, of which $284,963 and $0,
_______________________________________________________________________________
18 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
respectively, was paid to Sanford C. Bernstein & Co. LLC, and Sanford C.
Bernstein Limited, affiliates of the Adviser.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .30% of the Fund's average daily net assets
attributable to Class A shares, 1% of the Fund's average daily net assets
attributable to both Class B and Class C shares, .50% of the Fund's average
daily net assets attributable to Class R shares and .25% of the Fund's average
daily net assets attributable to Class K shares. There are no distribution and
servicing fees on Class I shares. The fees are accrued daily and paid monthly.
The Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amounts of $1,051,041, $1,218,047, $13,339 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 Adviser
may use its own resources to finance the distribution of the Fund's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended November 30, 2005, were as follows:
Purchases Sales
============== ==============
Investment securities (excluding
U.S. government securities) $ 700,265,893 $ 801,762,498
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 $ 362,690,692
==============
Gross unrealized appreciation $ 50,677,286
Gross unrealized depreciation (2,475,621)
--------------
Net unrealized appreciation $ 48,201,665
--------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 19
1. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse effects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments and the imperfect correlation between movements in the
price of the futures contracts and movements in the price of the securities
hedged or used for cover.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin as required by the exchange on which
the transaction is affected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
Risks may arise from the potential inability of a counterparty to meet the
terms of the contract. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the time it was closed.
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 November 30, 2005, the Fund had loaned securities with a value
of $2,067,959, and received cash collateral which was invested in a money
market fund valued at $2,147,258 as included in the accompanying portfolio of
investments. For the year ended November 30, 2005, the Fund earned fee income
of $7,820 which is included in interest income in the accompanying statement of
operations.
NOTE F
Capital Stock
There are 18,000,000,000 shares of $0.001 par value capital stock authorized,
divided into six classes, designated Class A, Class B, Class C, Class R, Class
K and
_______________________________________________________________________________
20 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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
November 30, November 30, November 30, November 30,
2005 2004 2005 2004
------------ ------------ -------------- --------------
Class A
Shares sold 3,146,956 7,238,856 $ 47,329,068 $ 103,148,985
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 226,157 -0- 3,412,711 -0-
- -------------------------------------------------------------------------------
Shares converted
from Class B 300,476 484,538 4,509,940 6,986,924
- -------------------------------------------------------------------------------
Shares redeemed (7,580,567) (4,744,089) (113,693,130) (67,118,770)
- -------------------------------------------------------------------------------
Net increase
(decrease) (3,906,978) 2,979,305 $(58,441,411) $ 43,017,139
- -------------------------------------------------------------------------------
Class B
Shares sold 945,079 4,135,410 $13,737,539 $ 57,249,878
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 114,511 -0- 1,679,878 -0-
- -------------------------------------------------------------------------------
Shares converted
to Class A (310,682) (499,813) (4,509,940) (6,986,924)
- -------------------------------------------------------------------------------
Shares redeemed (3,980,552) (3,545,993) (57,816,219) (48,720,045)
- -------------------------------------------------------------------------------
Net increase
(decrease) (3,231,644) 89,604 $(46,908,742) $ 1,542,909
- -------------------------------------------------------------------------------
Class C
Shares sold 456,930 2,001,187 $6,649,779 $27,743,251
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 44,538 -0- 652,931 -0-
- -------------------------------------------------------------------------------
Shares redeemed (1,758,535) (1,726,540) (25,543,365) (23,603,007)
- -------------------------------------------------------------------------------
Net increase
(decrease) (1,257,067) 274,647 $ (18,240,655) $ 4,140,244
- -------------------------------------------------------------------------------
Class R
Shares sold 49,008 19,114 $ 725,512 $266,911
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 26 -0- 385 -0-
- -------------------------------------------------------------------------------
Shares redeemed (5,184) (3,415) (78,278) (47,205)
- -------------------------------------------------------------------------------
Net increase 43,850 15,699 $ 647,619 $ 219,706
===============================================================================
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 21
Shares Amount
------------------------ --------------------
March 1, March 1, 2005(a)
2005(a) to 2005(a) to
November 30, to November 30,
2005 2005
---------------------------------------------
Class K
Shares sold 661 $ 10,100
- ---------------------------------------------------------------------
Net increase 661 $ 10,100
=====================================================================
Class I
Shares sold 657 $ 10,036
- ---------------------------------------------------------------------
Net increase 657 $ 10,036
=====================================================================
(a) Commencement of distribution.
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 the future political and economic
developments which could adversely affect the value of such securities.
Moreover, securities of many foreign companies or foreign governments and their
markets may be less liquid and their prices more volatile than those of
comparable U.S. companies or of the U.S. Government.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE H
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $250 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended November 30, 2005.
_______________________________________________________________________________
22 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
NOTE I
Distributions to Shareholders
The tax character of distributions paid during the fiscal year ended November
30, 2005 was as follows:
2005
==============
Distributions paid from:
Ordinary income $ 1,515,337
Net long-term capital gains 5,073,410
--------------
Total taxable distributions 6,588,747
--------------
Total distributions paid $ 6,588,747
--------------
As of November 30, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed Long Term Capital Gain $ 11,110,815
Undistributed ordinary income 13,408,064
Unrealized appreciation/(depreciation) 48,201,665(a)
--------------
Total accumulated earnings/(deficit) $ 72,720,544
--------------
(a) 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 current fiscal year, permanent differences, primarily due to net
investment loss and reclassification of distributions resulted in a decrease in
accumulated net investment loss and accumulated net realized gain on investment
transactions. This reclassification had no effect on net assets.
NOTE J
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the NYAG have been investigating practices in the mutual
fund industry identified as "market timing" and "late trading" of mutual fund
shares. Certain other regulatory authorities have also been conducting
investigations into these practices within the industry and have requested that
the Adviser provide information to them. The Adviser has been cooperating and
will continue to cooperate with all of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 23
in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among
the key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the
"Reimbursement Fund") to compensate mutual fund shareholders for the adverse
effects of market timing attributable to market timing relationships described
in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be
paid, in order of priority, to fund investors based on (i) their aliquot share
of losses suffered by the fund due to market timing, and (ii) a proportionate
share of advisory fees paid by such fund during the period of such market
timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds until December 31,
2008; and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order and the NYAG Order
contemplate that the Adviser's registered investment company clients, including
the Fund, will introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement , please see "Advisory
Fee and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, 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"),
_______________________________________________________________________________
24 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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. The plaintiffs in such lawsuits have asserted a variety of
theories for recovery including, but not limited to, violations of the
Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
certain state securities laws and common law. On February 20, 2004, the
Judicial Panel on Multidistrict Litigation transferred all federal actions, and
removed all state court actions, to the United States District Court for the
District of Maryland (the "Mutual Fund MDL"). The plaintiffs in the removed
actions have since moved for remand, and that motion is pending.
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual allegations, which appear to be based in large part on the SEC Order
and the NYAG Order. The claims in the mutual fund derivative consolidated
amended complaint are generally based on the theory that all fund advisory
agreements, distribution agreements and 12b-1 plans between the Adviser and the
AllianceBernstein Funds should be invalidated, regardless of whether market
timing occurred in each individual fund, because each was approved by fund
trustees on the basis of materially misleading information with respect to the
level of market timing permitted in funds managed by the Adviser. The claims
asserted in the other three consolidated amended complaints are similar to
those that the respective plaintiffs asserted in their previous federal
lawsuits. All of these lawsuits seek an unspecified amount of damages. 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
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 25
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. On October 19, 2005, the
WVAG Complaint was transferred to the Mutual Fund MDL.
On August 30, 2005, the deputy commissioner of securities of the West Virginia
Securities 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 Commission Order and the NYAGOrder. The Adviser intends to
vigorously defend against the allegations in the WVAG Complaint.
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
_______________________________________________________________________________
26 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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. On October 19,
2005, the District Court granted in part, and denied in part, defendants'
motion to dismiss the Aucoin Complaint and as a result the only claim remaining
is plaintiffs' Section 36(b) claim. On January 11, 2006, the District Court
dismissed the remaining claim.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell
investments held by those funds to provide for sufficient liquidity and could
also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds. However, the Adviser believes that these
matters are not likely to have a material adverse effect on its ability to
perform advisory services relating to the AllianceBernstein Mutual Funds.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 27
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.69 $13.27 $10.85 $13.09 $11.42
---------------------------------------------------------------
Income From Investment
Operations
Net investmen income (loss)(a) .05 .10(b) (.01) (.01) (.07)(b)
Net realized and unrealized
gain (loss) on investment
transactions .93 1.32 2.43 (2.23) 1.82
---------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations .98 1.42 2.42 (2.24) 1.75
---------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net investment
income (.10) -0- -0- -0- -0-
Distributions from net realized
gain on investment
transactions (.15) -0- -0- -0- -0-
Distributions in excess
of net realized gain on
investment transactions -0- -0- -0- -0- (.08)
---------------------------------------------------------------
Total dividends and distributions (.25) -0- -0- -0- (.08)
---------------------------------------------------------------
Net asset value,
end of period $15.42 $14.69 $13.27 $10.85 $13.09
---------------------------------------------------------------
Total Return
Total investment return based
on net asset value(c) 6.67% 10.70% 22.30% (17.11)% 15.40%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $175,285 $224,377 $163,169 $75,413 $76,617
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.27% 1.19% 1.51% 1.59% 1.85%
Expenses, before waivers/
reimbursements 1.27% 1.34% 1.51% 1.59% 1.88%
Net investment
income (loss) .36% .73%(b) (.12)% (.10)% (.55)%(b)
Portfolio turnover rate 152% 132% 159% 218% 299%
See footnote summary on page 33.
_______________________________________________________________________________
28 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.20 $12.92 $10.64 $12.93 $11.36
---------------------------------------------------------------
Income From Investment
Operations
Net investment loss(a) (.05) -0-(b)(d) (.10) (.10) (.16)(b)
Net realized and unrealized
gain (loss) on investment
transactions .89 1.28 2.38 (2.19) 1.81
---------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations .84 1.28 2.28 (2.29) 1.65
---------------------------------------------------------------
Less: Distributions
Distributions from net realized
gain on investment
transactions (.15) -0- -0- -0- -0-
Distributions in excess
of net realized gain on
investment transactions -0- -0- -0- -0- (.08)
---------------------------------------------------------------
Total distributions (.15) -0- -0- -0- (.08)
---------------------------------------------------------------
Net asset value,
end of period $14.89 $14.20 $12.92 $10.64 $12.93
---------------------------------------------------------------
Total Return
Total investment return based
on net asset value(c) 5.90% 9.91% 21.43% (17.71)% 14.60%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $164,194 $202,459 $183,098 $110,968 $98,204
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 2.00% 1.92% 2.25% 2.32% 2.55%
Expenses, before waivers/
reimbursements 2.00% 2.07% 2.25% 2.32% 2.60%
Net investment loss (.37)% (.03)%(b) (.87)% (.84)% (1.28)%(b)
Portfolio turnover rate 152% 132% 159% 218% 299%(b)
See footnote summary on page 33.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 29
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $14.19 $12.91 $10.63 $12.92 $11.34
---------------------------------------------------------------
Income From Investment
Operations
Net investment loss(a) (.05) -0-(b)(d) (.10) (.10) (.16)(b)
Net realized and unrealized
gain (loss) on investment
transactions .89 1.28 2.38 (2.19) 1.82
---------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations .84 1.28 2.28 (2.29) 1.66
---------------------------------------------------------------
Less: Distributions
Distributions from net realized
gain on investment
transactions (.15) -0- -0- -0- -0-
Distributions in excess
of net realized gain on
investment transactions -0- -0- -0- -0- (.08)
---------------------------------------------------------------
Total distributions (.15) -0- -0- -0- (.08)
---------------------------------------------------------------
Net asset value,
end of period $14.88 $14.19 $12.91 $10.63 $12.92
---------------------------------------------------------------
Total Return
Total investment return based
on net asset value(c) 5.90% 9.91% 21.45% (17.72)% 14.71%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $67,622 $82,312 $71,348 $37,810 $35,790
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.99% 1.90% 2.22% 2.30% 2.56%
Expenses, before waivers/
reimbursements 1.99% 2.05% 2.22% 2.30% 2.60%
Net investment loss (.36)% (.01)%(b) (.84)% (.82)% (1.28)%(b)
Portfolio turnover rate 152% 132% 159% 218% 299%(b)
See footnote summary on page 33.
_______________________________________________________________________________
30 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class R
-----------------------------------------
Year Ended November 3,
November 30, 2003(e) to
------------------------ November 30,
2005 2004 2003
----------- ----------- -----------
Net asset value, beginning of period $14.66 $13.27 $13.16
-----------------------------------------
Income From Investment Operations
Net investment income (loss)(a) .03 .18(b) -0-(d)
Net realized and unrealized gain on investment
transactions .92 1.21 .11
-----------------------------------------
Net increase in net asset value from operations .95 1.39 .11
-----------------------------------------
Less: Dividends and Distributions
Dividends from net investment income (.07) -0- -0-
Distributions from net realized gain on investment
transactions (.15) -0- -0-
-----------------------------------------
Total dividends and distributions (.22) -0- -0-
-----------------------------------------
Net asset value, end of period $15.39 $14.66 $13.27
-----------------------------------------
Total Return
Total investment return based on net asset value(c) 6.47% 10.48% .84%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $928 $241 $10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.60% 1.45% 1.83%(f)
Expenses, before waivers/reimbursements 1.60% 1.59% 1.83%(f)
Net investment income (loss) .19% 1.25%(b) (.26)%(f)
Portfolio turnover rate 152% 132% 159%
See footnote summary on page 33.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 31
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class K
------------
March 1,
2005(e) to
November 30,
2005
------------
Net asset value, beginning of period $15.27
------------
Income From Investment Operations
Net investment income(a) .05
Net realized and unrealized gain on investment
transactions .11
------------
Net increase in net asset value from operations .16
------------
Net asset value, end of period $15.43
------------
Total Return
Total investment return based on net asset value(c) 1.05%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $10
Ratio to average net assets of:
Expenses(f) 1.23%
Net investment income(f) .48%
Portfolio turnover rate 152%
See footnote summary on page 33.
_______________________________________________________________________________
32 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class I
------------
March 1,
2005(e) to
November 30,
2005
------------
Net asset value, beginning of period $15.27
------------
Income From Investment Operations
Net investment income(a) .09
Net realized and unrealized gain on investment
transactions .11
------------
Net increase in net asset value from operations .20
------------
Net asset value, end of period $15.47
------------
Total Return
Total investment return based on net asset value(c) 1.31%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $10
Ratio to average net assets of:
Expenses(f) .96%
Net investment income(f) .77%
Portfolio turnover rate 152%
(a) Based on average shares outstanding.
(b) Net of fees and expenses waived by the Adviser and Transfer Agent.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
defered sales charge is not reflected in the calculation of the 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) Amount is less than $0.005.
(e) Commencement of distributions.
(f) Annualized.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 33
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
AllianceBernstein Focused Growth & Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
AllianceBernstein Focused Growth & Income Fund, Inc., formerly
AllianceBernstein Disciplined Value Fund, Inc. (the "Fund"), including the
portfolio of investments, as of November 30, 2005 and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits 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 and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of November 30, 2005 by correspondence with
the custodian and others, or by other appropriate auditing procedures where
replies from others were not received. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
AllianceBernstein Focused Growth & Income Fund, Inc. at November 30, 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 indicated periods, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
January 11, 2006
_______________________________________________________________________________
34 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
TAX INFORMATION
(unaudited)
For the fiscal year ended November 30, 2005, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided for by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. The Fund designates a maximum
amount of $1,515,337 as qualified dividend income, which is taxed at a maximum
rate of 15%.
For corporate shareholders, 48% of the total ordinary income distribution paid
during the current fiscal year ended November 30, 2005 qualifies for the
corporate dividends received deduction.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns, will be included
with your Form 1099-DIV which will be sent to you separately in January 2006.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 35
RESULTS OF SHAREHOLDERS MEETING
(unaudited)
A Special Meeting of the AllianceBernstein Focused Growth and Income Fund (the
"Fund") was held on November 15, 2005 and adjourned until December 6, 2005,
December 19, 2005, December 21, 2005 and December 22, 2005. At the November 15,
2005 Meeting, with respect to the first item of business, the election of
Directors, the required number of outstanding shares were voted in favor of the
proposal, and the proposal was approved. At the December 6, 2005 Meeting, with
respect to the third item of business, the amendment, elimination, or
reclassification as non-fundamental of the fundamental investment restrictions,
and the fourth item of business, the reclassification of the Fund's fundamental
investment objective as non-fundamental with changes to the Fund's investment
objectives, the required number of outstanding shares voted in favor of each
proposal, and each proposal was approved. With respect to the second item of
business, the approval to amend and restate the Charter of the Fund, an
insufficient number of required outstanding shares voted in favor of the
proposal and, therefore the proposal was not approved. A description of each
proposal and number of shares voted at the Meetings are as follows (the
proposal numbers shown below correspond to the proposal numbers in the Funds
proxy statement):
Withheld
Voted For Authority
--------------------------------
1. The election of the Directors, each such Director
to serve a term of an indefinite duration and until
his or her successor is duly elected and qualifies.
Ruth Block 14,646,059 429,352
David H. Dievler 14,636,207 439,204
John H. Dobkin 14,678,380 397,031
Michael J. Downey 14,685,637 389,774
William H. Foulk, Jr. 14,662,699 412,712
D. James Guzy 14,525,469 549,942
Marc O. Mayer 14,671,604 403,807
Marshall C. Turner, Jr. 14,677,076 398,335
Voted Broker
Voted For Against Abstained Non-Votes
- ---------------------------------------------------------------------------------------------
2. The amendment and
restatement of the Fund's
charter, which repealed
in its entirety all currently
existing charter provisions
and substituted in lieu thereof
new provisions set forth in
the Form of Articles of
Amendment and Restatement
attached to the Fund's Proxy
Statement as Appendix D. 14,266,177 386,033 533,804 0
- ---------------------------------------------------------------------------------------------
_______________________________________________________________________________
36 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Voted Broker
Voted For Against Abstained Non-Votes
- ---------------------------------------------------------------------------------------------
3. The amendment, elimination,
or reclassification as non-
fundamental of the
fundamental investment
restrictions regarding:
- ---------------------------------------------------------------------------------------------
3.A. Diversification 13,081,218 481,644 176,938 4,739,907
- ---------------------------------------------------------------------------------------------
3.B. Issuing Senior Securities
and Borrowing Money 13,045,727 519,826 174,247 4,739,907
- ---------------------------------------------------------------------------------------------
3.C. Underwriting Securities 13,054,474 510,382 174,943 4,739,907
- ---------------------------------------------------------------------------------------------
3.D. Concentration of
Investments 13,057,817 508,206 173,776 4,739,907
- ---------------------------------------------------------------------------------------------
3.E. Real Estate and Companies
that Deal in Real Estate 13,080,093 489,502 170,204 4,739,907
- ---------------------------------------------------------------------------------------------
3.F. Commodity Contracts and
Futures Contracts 13,063,782 501,034 174,984 4,739,907
- ---------------------------------------------------------------------------------------------
3.G. Loans 13,061,432 507,543 170,824 4,739,907
- ---------------------------------------------------------------------------------------------
3.I. Exercising Control 13,064,952 498,728 176,120 4,739,907
- ---------------------------------------------------------------------------------------------
3.N. Pledging, Hypothecating,
Mortgaging, or Otherwise
Encumbering Assets 13,072,384 482,419 184,997 4,739,907
- ---------------------------------------------------------------------------------------------
4. The reclassification of
the Fund's fundamental
investment objective as
non-fundamental with
changes to the Fund's
investment objectives. 12,644,165 542,759 552,876 4,739,907
- ---------------------------------------------------------------------------------------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 37
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Marshall C. Turner, Jr(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Frank V. Caruso,(2) Senior Vice President
Paul C. Rissman,(2) Senior Vice President
Thomas J. Bardong, Vice President
Emilie D. Wrapp, 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, TX 78278-6003
Toll-free (800) 221-5672
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
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
the Independent Directors Committee.
(2) The management of and investment decisions for the Fund are made by the
Adviser's Relative Value Investment Team. While the members of the team work
jointly to determine the investment strategy, including security selection, for
the Fund, Mr. Frank Caruso, CIO of the Adviser's Relative Value Investment
Team, is primarily responsible for the day-to-day management of the Fund.
_______________________________________________________________________________
38 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME 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
IN FUND OTHER
NAME ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr., #, ## Investment Adviser and an 108 None
2 Sound View Drive Independent Consultant. He
Suite 100, was formerly Senior Manager
Greenwich, CT 06830 of Barrett Associates, Inc., a
Chairman of the Board registered investment adviser,
9/7/32 with which he had been
(1999) associated since prior to 2001.
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 106 None
500 S.E. Mizner Blvd. and Chief Insurance Officer of
Boca Raton, FL 33432 The Equitable Life Assurance
11/7/30 Society of the United States;
(1999) Chairman and Chief Executive
Officer of Evlico (insurance);
Director of Avon, BP (oil and gas),
Ecolab Incorporated (specialty
chemicals), Tandem Financial
Group and Donaldson, Lufkin &
Jenrette Securities Corporation;
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
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation ("ACMC")
(1999) 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 American Institute of Certified
Public Accountants since 1953.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 39
PORTFOLIOS
IN FUND OTHER
NAME ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin, # Consultant. Formerly President 106 None
P.O. Box 12, of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002;
2/19/42 Senior Advisor from June
(1999) 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,
Director and Chairman of the Audit
Committee of ACMC.
Michael J. Downey, # Consultant since January 2004. 106 Asia Pacific
c/o Alliance Capital Formerly managing partner of Fund, Inc.,
Management L.P. Lexington Capital, LLC (investment and The
Attn: Philip L. Kirstein advisory firm) from December 1997 Merger Fund.
1345 Avenue of the until December 2003. Prior thereto,
Americas Chairman and CEOof Prudential
New York, NY 10105 Mutual Fund Management from
1/24/44 1987 to 1993.
(2005)
D. James Guzy, # Chairman of the Board of PLX 106 Intel
P.O. Box 128 Technology (semi-conductors) Corporation
Glenbrook, NV 89413 and of SRC Computers, Inc. (semi-
3/7/36 with which he has been associated conductors),
(2005) since prior to 2001. He is also Cirrus Logic
President of the Arbor Company Corporation
(private family investments). (semi-
conductors),
Novellus
Corporation
(semi-
conductor
equipment),
Micro
Component
Technology
(semi-
conductor
equipment),
the Davis
Selected
Advisers
Group of
Mutual Funds
and
LogicVision.
_______________________________________________________________________________
40 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
PORTFOLIOS
IN FUND OTHER
NAME ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
DATE OF BIRTH OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
Marshall C. Turner, Jr., # Principal of Turner Venture 106 Toppan
220 Montgomery Street Associates (venture capital Photomasks
Penthouse 10 and consulting) since prior to Inc., the
San Francisco, CA 2001. Chairman and CEO, George Lucas
94104 DuPont Photomasks, Inc., Educational
10/10/41 Austin, Texas, 2003-2005, Foundation,
(2005) and President and CEO Chairman of
since company acquired, and the Board
name changed to Toppan of the
Photomasks, Inc. in 2005 Smithsonian's
(semiconductor manufacturing National
services). Museum of
Natural
History.
INTERESTED DIRECTOR
Marc O. Mayer,+ Executive Vice President of 106 None
1345 Avenue of the ACMC since 2001 and Chairman
Americas of the Board of AllianceBernstein
New York, NY 10105 Investment Research and
10/2/57 Management, Inc. ("ABIRM") since
(2003) prior to 2001; prior thereto, Chief
Executive Officer of Sanford C.
Bernstein & Co., LLC (institutional
research and brokerage arm of
Bernstein & Co., LLC ("SCB & Co.")
and its predecessor since prior to
2001.
* There is no stated term of office for the Fund's Directors.
** Ms. Block was an "interested person," as defined in the 1940 Act, until
October 21, 2004 by reason of her ownership of equity securities of a
controlling person of the Adviser. Such securities were sold for
approximately $2,400 on October 21, 2004. Ms. Block received shares of The
Equitable Companies Incorporated as part of the demutualization of The
Equitable Life Assurance Society of the United States. Her Equitable shares
were subsequently converted through a corporate action into 116 American
Depositary Shares of AXA.
+ Mr. Mayer is an "interested person," as defined in the 1940 Act, due to his
position as an Executive Vice President of ACMC.
# Member of the Audit Committee, Governance and Nominating Committee and the
Independent Directors Committee.
## Member of the Fair Value Pricing Committee.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 41
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------
Marc O. Mayer President and Chief See biography above.
10/2/57 Executive Officer
Paul C. Rissman Senior Vice President Executive Vice President of ACMC,**
11/10/56 with which he has been associated
since prior to 2001.
Frank V. Caruso Senior Vice President Senior Vice President of ACMC,** with
10/28/56 which he has been associated since
prior to 2001.
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
5/29/45 and Independent Compliance Officerof the Alliance-
Compliance Officer Bernstein 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 2001 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 2001.
Emilie D. Wrapp Secretary Senior Vice President, Assistant
11/13/55 General Counsel and Assistant
Secretary of ABIRM,** with which
she has been associated since prior to
2001.
Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance
10/4/50 Financial Officer Global Investor Services, Inc.
("AGIS"),** and a Vice President of
ABIRM,** with which he has been
associated since prior to 2001.
Vincent S. Noto Controller Vice President of AGIS,** with which
12/14/64 he has been associated since prior to
2001.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM, AGIS and SCB & Co. 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.
_______________________________________________________________________________
42 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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 October 31 and November 1, 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
as the Fund 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 in the Fund's
Advisory Agreement (as contemplated by the Assurance of Discontinuance between
the Adviser and the New York Attorney General) 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 Advisory 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 Funds complex;
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 43
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 Funds 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.
_______________________________________________________________________________
44 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 45
the 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 Funds 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 also reviewed information in respect of 2004 that had
been prepared with an updated methodology. The directors noted that the updated
methodology would be used in 2005, and that it differed in various respects
from the methodology used in prior years. 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 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 on an agency basis. 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. The directors
_______________________________________________________________________________
46 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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 and receive brokerage
commissions from the Fund and liquidity rebates from electronic communication
networks ("ECNs") in connection with such transactions. The directors noted
that the Adviser had made a recent presentation to the directors detailing
liquidity rebates that Sanford C. Bernstein & Co. LLC receives in respect of
transactions effected through ECNs.
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 from a report prepared by Lipper showing
performance of the Class A Shares of the Fund as compared to a group of 14 to
11 funds (depending on the year) in its Lipper category selected by Lipper (the
"Performance Group") and as compared to a universe of 155 to 83 funds
(depending on the year) in its Lipper category selected by Lipper (the
"Performance Universe") for periods ending September 30, 2005 over the 1-, 3-
and 5-year periods. The directors also considered the Fund's performance as
compared to the Russell 1000 Value Index for periods ending September 30, 2005
over the YTD, 1-, 3- and 5-year and since inception periods (December 1999
inception).
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 47
The directors noted that in the Performance Group and Performance Universe
comparisons the Fund was in the 5th quintile in the 1-year period, in the 3rd
quintile in the 3-year period and in the 1st quintile in the 5-year period
(adjusted to 2nd quintile in the 5-year period Performance Group comparison by
the Senior Officer who uses a different methodology than Lipper for assigning
performance to quintiles). The comparative information showed that the Fund
significantly outperformed the index in the since inception period,
significantly underperformed the index in the YTD and 1-year periods,
materially underperformed the index in the 3-year period, and somewhat
underperformed the index in the 5-year period. Based on their review and
discussion of the reasons for the Fund's recent underperformance with the
Adviser and of the investment process being used by the Adviser to manage the
Fund, the directors retained confidence in the Adviser's ability to continue to
advise the Fund and concluded that the Fund's investment performance over time
was acceptable. 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 that they had previously discussed with the
Adviser its policies in respect of such negotiated arrangements. The directors
also reviewed information that indicated that the Adviser sub-advises certain
registered investment companies that have 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 sub-advised funds
and to the Fund.
_______________________________________________________________________________
48 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
For example, the 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 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 55 basis points was significantly lower than the Expense
Group median, and that the latest fiscal year administrative expense
reimbursement by the Fund pursuant to the Advisory Agreement was two basis
points. The directors also noted that the Adviser advises two other
AllianceBernstein funds with a similar investment objective and strategies as
the Fund for the same fee rate as the Fund. The directors further noted that
the Fund's total expense ratio, which had been capped by the Adviser (although
the expense ratio was currently significantly less than the cap), was somewhat
lower than the medians for the Expense Group and 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 pre-
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 49
sentation by an independent consultant discussing economies of scale issues in
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.
_______________________________________________________________________________
50 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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 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. On February 1, 2006, Americas
Government Income Trust will be renamed Global Government Income Trust and
Quality Bond Portfolio will be renamed Intermediate Bond Portfolio.
** An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 51
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICER'S EVALUATION OF
INVESTMENT ADVISORY AGREEMENT (1)
The following is a summary of the evaluation of the investment advisory
agreement between Alliance Capital Management L.P. (the "Adviser") and
AllianceBernstein Focused Growth & Income Fund, Inc. (the "Fund"), prepared by
Philip L. Kirstein, the Senior Officer, for the independent directors of the
Fund, as required by the Assurance of Discontinuance between the New York State
Attorney General and the Adviser. The Senior Officer's evaluation of the
investment advisory agreement is not meant to diminish the responsibility or
authority of the Board of Directors of the Fund to perform its duties pursuant
to Section 15 of the Investment Company Act of 1940 (the "40 Act") and
applicable state law. The purpose of the summary is to provide shareholders
with a synopsis of the independent evaluation of the reasonableness of the
advisory fees 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 supplying 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.
FUND ADVISORY FEES, EXPENSE CAPS, REIMBURSEMENTS & RATIOS
The table below describes the Fund's advisory fee pursuant to the Investment
Advisory Agreement. This is the fee schedule the Adviser implemented in
(1) It should be noted that the information in the fee summary was completed
on October 25, 2005 and presented to the Board of Directors on October 31, 2005
in accordance with the Assurance of Discontinuance between the New York State
Attorney General and the Adviser. 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.
_______________________________________________________________________________
52 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
January 2004 as a result of the settlement with the New York State Attorney
General.(2)
Advisory Fee Based on %
Fund of Average Daily Net Assets
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth First $2.5 billion 0.55%
& Income Fund, Inc. Next $2.5 billion 0.45%
Excess of $5 billion 0.40%
The Fund's net assets as of September 30, 2005 were $416.1 million. The
effective advisory fee at this asset level is 0.55%.
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:
As a % of average
Fund Amount daily net assets
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth
& Income Fund, Inc. $ 88,511 0.02
The Adviser has agreed to waive that portion of its management fees and/or
reimburse the Fund for that portion of its total operating expenses to the
degree necessary to limit the Fund's expense ratio to the amounts set forth
below for the Fund's current fiscal year. The waiver agreement is terminable by
the Adviser at the end of the Fund's fiscal year upon at least 60 days written
notice. However, it should be noted that the Fund was operating below its
expense cap as of May 31, 2005; accordingly, that undertaking was of no effect.
The Fund's expense ratio is also set forth below.
Expense Cap
pursuant to
Expense
Limitation Expense Fiscal
Fund Undertaking Ratio(3) Year End
- -------------------------------------------------------------------------------
AllianceBernstein Focused Class A-2.50% 1.16% November 30
Growth & Income Fund, Inc. Class B-3.20% 1.89%
Class C-3.20% 1.87%
Class R-2.70% 1.39%
Class K-2.45% 0.94%
Class I-2.20% 0.74%
(2) The advisory fee schedule implemented in January 2004 contemplates eight
categories of the AllianceBernstein Mutual Funds with almost all funds in each
category having the same advisory fee schedule.
(3) The Fund's expense ratio is calculated from the beginning of the Fund's
current fiscal year through May 31, 2005.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 53
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The management fees charged to investment companies which the Adviser manages
and sponsors is normally higher than those charged to similar sized
institutional accounts, including pension plans and sub-advised investment
companies. The fee differential reflects, among other things, different
services provided to such clients, and different liabilities assumed. Services
provided by the Adviser to the Fund that are not provided to non-investment
company clients include providing office space and personnel to serve as Fund
Officers, who among other responsibilities make the certifications required
under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the
Fund's third party service providers such as Fund counsel, auditors,
custodians, transfer agents and pricing services. The accounting,
administrative, legal and compliance requirements for the Fund are more costly
than those for institutional assets due to the greater complexities and time
required for investment companies, although as previously noted, a portion of
these expenses are reimbursed by the Fund to the Adviser. In addition, managing
the cash flow of an investment company may be more difficult than that of a
stable pool of assets, such as an institutional account with little cash
movement in either direction, particularly, if the Fund is in net redemption
and the Adviser is frequently forced to sell securities to raise cash for
redemptions. However, managing a fund with positive cash flow may be easier at
times than managing a stable pool of assets. Finally, in recent years,
investment advisers have been sued by institutional clients and have suffered
reputational damage both by the attendant publicity and outcomes other than
complete victories. Accordingly, the legal and reputational risks associated
with institutional accounts are greater than previously thought, although still
not equal to those related to the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, it is worth considering information regarding the
advisory fees charged to institutional accounts with substantially similar
investment styles as the Fund. Set forth below is also what would have been the
effective advisory fee of the Fund had the institutional account fee schedule
been applied to the Fund.
Effective
Net Assets Alliance Alliance
09/30/05 Institutional Institutional
Fund ($MIL) Fee Schedule Advisory Fee
- -------------------------------------------------------------------------------
AllianceBernstein $416.1 Relative Value Schedule 0.319%
Focused Growth 65 bp on 1st $25 m
& Income Fund, Inc. 50 bp on next $25 m
40 bp on next $50 m
30 bp on next $100 m
25 bp on the balance
Minimum account size $10 m
_______________________________________________________________________________
54 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
The Adviser manages AllianceBernstein Growth and Income Fund, Inc., an open-end
investment company with a comparable investment approach as the Fund, which has
the following advisory fee schedule in place:(4)
Advisory Fee Based on % of
Fund Average Daily Net Assets
- -------------------------------------------------------------------------------
AllianceBernstein Growth & Income First $2.5 billion 0.55%
Fund, Inc. Next $2.5 billion 0.45%
Excess of $5 billion 0.40%
The Adviser also manages and sponsors retail mutual funds which are organized
in jurisdictions outside the United States, generally Luxembourg, and sold to
non-United States resident investors. The Adviser charges the following fee for
an offshore mutual fund with a somewhat similar investment style as the Fund:
Asset Class Fee(5)
- -------------------------------------------------------------------------------
Equity Value 0.80%
The Adviser provides sub-advisory investment services to certain other
investment companies managed by other fund families whose investment style is
similar to the Fund. Set forth below are the various fee schedules of these
sub-advisory relationships.
Fund Fee Schedules
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth & - 0.30% on first $1 billion
Income Fund, Inc. 0.25% on next $500 million
0.20% thereafter
- 0.60% on first $1 billion
0.55% thereafter
- 0.30%6
- 0.60% on first $1 billion(6)
0.55% on next $500 million
0.50% on next $500 million
0.45% on next $500 million
0.40% thereafter
(4) This is the same fee schedule as the one applicable to the Fund since
AllianceBernstein Growth & Income Fund, Inc. is in the same category as the
Fund (see footnote 2).
(5) The fee charged to the fund includes a 0.10% fee for administrative
services provided by the Adviser or its affiliates.
(6) This is the fee schedule of a fund managed by an affiliate of the Adviser.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 55
It is fair to note that the services the Adviser provides pursuant to
sub-advisory agreements are generally confined to the services related to the
investment process; in other words, they are not as comprehensive as the
services provided to the Fund by the Adviser. In addition, to the extent that
certain of these sub-advisory relationships are with affiliates of the Adviser,
the fee schedules may not reflect arms-length bargaining or negotiations.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES.
Lipper, Inc., an analytical service that is not affiliated with the Adviser,
compared the fees charged to the Fund with fees charged to other investment
companies for similar services by other investment advisers. Lipper's analysis
included the Fund's ranking with respect to the proposed management fees
relative to the Lipper group median at the approximate current asset level of
the Fund.(7)
Effective Lipper
Management Group
Fund Fee(8) Median Rank
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth &
Income Fund, Inc. 0.550 0.750 1/14
Lipper also analyzed the total expense ratio of the Fund in comparison to the
Fund's Lipper Expense Group9 and Lipper Expense Universe10. Lipper describes a
Lipper Expense Group as a representative sample of comparable funds and a
Lipper Expense Universe as a broader group, consisting of all funds in the same
(7) It should be noted that "effective management fee" is calculated by Lipper
using the Fund's contractual management fee rate at a hypothetical asset level.
The hypothetical asset level is based on the combined net assets of all classes
of the Fund, rounded up to the next $25 million. Lipper's total expense ratio
information is based on the most recent annual report except as otherwise
noted. A ranking of "1" means that the Fund has the lowest effective fee rate
in the Lipper peer group.
(8) It should be noted that the "effective management fee" rate for the Fund
does not reflect the payments by the Fund to the Adviser for certain clerical,
legal, accounting, administrative and other services. The dollar amount and
basis point impact of such payments on the Fund is discussed in Section I.
(9) Lipper uses the following criteria in screening funds to be included in
the Fund's expense group: fund type, investment classification/objective, load
type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and
expense components and attributes. A Lipper Expense Group will typically
consist of seven to twenty funds.
(10) Except for asset (size) comparability and load type, Lipper uses the same
criteria for selecting a Lipper Expense Group when selecting a Lipper Expense
Universe. Unlike the Lipper Expense Group, the Lipper Expense Universe allows
for the same adviser to be represented by more than just one fund.
_______________________________________________________________________________
56 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
investment classification/objective(11) with a similar load type as the subject
Fund. The results of that analysis are set forth below:
Lipper Lipper Lipper Lipper
Expense Universe Universe Group Group
Fund Ratio(12) Median Rank Median Rank
- --------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
AllianceBernstein Focused
Growth & Income Fund, Inc. 1.195 1.301 22/82 1.271 3/14
Based on this analysis, the Fund has a more favorable ranking on a management
fee basis than on a total expense ratio basis, although the Fund compares well
to its peers for management fees and total expenses. Despite the Fund's
favorable rankings, the directors are still interested in lowering
non-management expenses.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
Members of the Adviser's Controller's Office presented to the Board of
Directors the Adviser's revenue and expenses associated with providing services
to the Fund. The presentation included an update on the Adviser's work with an
independent consultant to align the Adviser's two profitability systems. The
alignment, which now is complete, produces profitability information at the
Fund level which reflects the Adviser's management reporting approach. See
discussion below in Section IV.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The profitability information for the Fund prepared by the Adviser for the
Board of Directors was reviewed by the Senior Officer. Based on the information
provided, the Adviser's profitability from providing investment advisory
services to the Fund decreased during calendar 2004 relative to 2003 primarily
as a result of the reduction of fees in the advisory fee schedule implemented
early in 2004.
(11) The Lipper investment classification/objective of the Fund is Lipper
Multi-Cap Core ("MLCE"). A MLCE fund will typically have 25% to 75% of its
assets invested in companies with market capitalizations (on a three-year
weighted basis) above 300% of the dollar-weighted median market capitalization
of the middle 1,000 securities of the S&P SuperComposite 1500 Index. The
typical equity portfolio holding of a MLCE fund will have an average
price-to-earnings ratio, price-to-book ratio, and three year sales-per-share
growth value, compared to the S&P SuperComposite 1500 Index. Prior to the
fourth quarter of 2004, the Fund was given an investment
classification/objective of Lipper Multi-Cap Value ("MLVE") by Lipper. The
difference between MLCE and MLVE is that the normal equity portfolio holding of
a MLVE fund will have a below average price-to-earnings ratio, price-to-book
ratio, and three year sales-per-share growth value, compared to the S&P
SuperComposite 1500 Index. A change to the Fund's investment
classification/objective is determined by Lipper depending on Lipper's
quarterly review of the overall composition of the Fund's portfolio holdings.
(12) Most recent fiscal year end Class A share total expense ratio.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 57
In addition to the Adviser's direct profits from managing the Fund, certain of
the Adviser's affiliates have business relationships with the Fund and may earn
a profit from providing other services to the Fund. The courts have referred to
this type of business opportunity as "fall-out benefits" to the Adviser and
should be factored into the evaluation of the total relationship between the
Fund and the Adviser. Neither case law nor common business practice precludes
the Adviser's affiliates from earning a reasonable profit on this type of
relationship. These affiliates provide transfer agent, distribution, and
brokerage related services to the Fund and receive transfer agent fees, Rule
12b-1 payments, front-end sales loads, contingent deferred sales charges
("CDSC") and 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.
The Adviser's affiliate, AllianceBernstein Investment Research and Management,
Inc. ("ABIRM"), is the Fund's principal underwriter. ABIRM and the Adviser have
disclosed in the Fund's prospectus that they may make payments(13) from their
own resources, in addition to resources derived from sales loads and Rule 12b-1
fees, to firms that sell shares of the Fund. In 2004, ABIRM paid approximately
0.04% of the average monthly assets of the AllianceBernstein Mutual Funds for
distribution services and educational support. For 2005, it is anticipated,
ABIRM will pay approximately 0.04% of the 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 charge from sales of the Fund's shares
in the Fund's most recent fiscal year.
Fund Amount Received
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth & Income Fund, Inc. $28,254
ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for the
Fund during the Fund's most recent fiscal year. A significant percentage of
such amounts were paid out to third party intermediaries by ABIRM.
12b-1 Fee
Fund Received CDSC Received
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth & Income
Fund, Inc. $3,577,373 $334,746
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
(13) The total amount paid to the financial intermediary in connection with the
sale of shares will generally not exceed the sum of (a) 0.25% of the current
year's Fund sales by that firm and (b) 0.10% of the average daily net assets
attributable to that firm over the year.
_______________________________________________________________________________
58 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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:
Fund AGIS Fee(14)
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth & Income Fund, Inc. $624,959
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 similar third party clients. In the ordinary course of
business, SCB receives and pays liquidity rebates from electronic
communications networks ("ECNs") derived from trading for its clients,
including the Fund. These credits and charges are not being passed on to any
SCB client.
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule in the
Investment Advisory Agreement reflect a sharing of economies of scale to the
extent the breakpoints are reached. Based on some of the professional
literature that has 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 lack of cost data,
researchers had to infer facts about the costs from the behavior of fund
expenses; there was a lack of consensus among researchers as to whether
economies of scale were being passed on to the shareholders. 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
(14) During the period, AGIS voluntarily agreed to waive a portion of its fees
for such services. Such waiver amounted to $34,369. In addition, the Fund's
expenses were reduced by $52 under an expense offset arrangement with AGIS.
_______________________________________________________________________________
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 59
the extent the Fund's assets exceed the initial breakpoint its shareholders
benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE FUND.
With assets under management of $543 billion as of August 31, 2005, the Adviser
has the investment experience to manage and provide non-investment services
(described in Section II) to the Fund.
The information prepared by Lipper showed the 1, 3, and 5 year performance
ranking of the Fund(15) relative to its Lipper group and universe for the
periods ended September 30, 2005:
AllianceBernstein Focused
Growth & Income Fund, Inc. Group Universe
- -------------------------------------------------------------------------------
1 year 14/14 150/155
3 year 8/14 51/115
5 year 3/11 15/83
Set forth below are the 1, 3, 5 year and since inception performance returns of
the Fund (in bold)(16) versus its benchmark(17).
Periods Ending September 30, 2005
Annualized Performance (%)
- -------------------------------------------------------------------------------
Since
Funds 1 Year 3 Year 5 Year Inception
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth
& Income Fund, Inc. 7.88 17.01 5.29 6.90
Russell 1000 Value Index 16.69 20.48 5.76 5.58
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: December 7, 2005
(15) The performance rankings are for the Class A shares of the Fund.
(16) The Fund's performance returns are for the Class A shares of the Fund.
(17) The Adviser provided Fund and benchmark performance return information for
periods through September 30, 2005 in order to maintain consistency with
Lipper's performance rankings in the analysis.
_______________________________________________________________________________
60 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
ALLIANCEBERNSTEIN FOCUSED GROWTH &INCOME
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
ACBVIDVFAR1105
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 Ernst & Young 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 related to accounting
and auditing issues and quarterly press release review (for those Funds which
issue 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-Related
Audit Fees Fees Tax Fees
---------- ------------- --------
2004 $38,000 $4,130 $19,335
2005 $40,000 $3,697 $14,692
(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 preparing an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column
Pre-approved by the
All Fees for Audit 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 $1,161,565 [$173,465 ]
($154,130 )
($ 19,335 )
2005 $ 897,385 [$186,092 ]
($171,400 )
($ 14,692 )
(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 auditor'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 changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
12 (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 Focused Growth & Income Fund, Inc.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: January 27, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: January 27, 2006
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: January 27, 2006