UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-00204 ALLIANCEBERNSTEIN MID-CAP GROWTH FUND, INC. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley Alliance Capital Management L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: July 31, 2006 Date of reporting period: January 31, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund Semi-Annual Report January 31, 2006 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS Investment Products Offered o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernsteinR at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission's (the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com. AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the funds, and is a member of the NASD. AllianceBernstein(R) and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. March 27, 2006 Semi-Annual Report This report provides management's discussion of fund performance for AllianceBernstein Mid-Cap Growth Fund (the "Fund") for the semi-annual reporting period ended January 31, 2006. Investment Objective and Policies The Fund is an open-end, diversified investment company that seeks long-term growth of capital and income primarily through investments in common stocks that AllianceBernstein believes will appreciate in value. The Fund invests predominantly in the stocks of mid-capitalization companies. This Fund can also invest in foreign securities. Investment Results The table on page 4 shows the Fund's performance compared to its benchmark, the Russell MidCap Growth Index, for the six- and 12-month periods ended January 31, 2006. The Fund outperformed its benchmark during both periods under review. During both the six- and 12-month periods ended January 31, 2006, the Fund's significant overweighted position in the technology sector made the largest contribution to its outperformance relative to its benchmark. A slight underweight in the producer durables sector also contributed to performance in both periods. The Fund's large underweighted position in the energy sector was the largest detractor from performance, followed by the impact of an overweighted position in the consumer discretionary sector. Stock selection was a contributor to performance during both the six- and 12-month periods ended January 31, 2006. Market Review and Investment Strategy Over the past year, the equity markets produced relatively strong returns, helped by a fourth quarter rally that carried into 2006. Energy prices rose for much of 2005, declining modestly from September to November before resuming their uptrend. Despite the rise in the price of oil and other commodities, core inflation, as measured by the Consumer Price Index (CPI), excluding food and energy, remained at a relatively low historical level, approximately 2%. The U.S. Federal Reserve, for its part, continued to raise interest rates in steady 25 basis point increments. Economic growth remained strong for much of the year, both domestically and abroad, although a preliminary estimate of the U.S. fourth quarter gross domestic product (GDP) was decidedly weaker. Corporate profit growth in the U.S. continued at a healthy pace, further adding to already impressive cash levels. Final demand in the technology sector continued to rise from depressed levels of a few years prior, driven by strong demand for consumer electronics and broadband-enabling equipment. Over the 12-month period ended January 31, 2006, the Fund maintained an underweight position in the energy sector in response to continued indications of ample supply and increasing reports that demand had declined. The Fund's portfolio manager (the "man- ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 1 ager") decreased the Fund's underweight in financials during the 12-month period, increasing exposure in the form of select electronic financial exchanges, which benefited from a migration of volume from floor-based trading pits to electronic venues. The Fund continued to hold a significant overweight position in technology, taking encouragement from data indicating underlying demand remained quite healthy. The Fund also continued to be overweight in the consumer discretionary sector with a focus on internet-related companies. At the onset of the six-month period ended January 31, 2006, the market environment was characterized by equity markets which posted muted returns, as commodities prices rose and the U.S. Federal Reserve continued to raise interest rates. The markets turned decidedly higher as oil prices retreated from their highs, falling approximately $10 in a two month period. The markets also had to digest President Bush's selection of Ben Bernanke as his nominee to succeed Alan Greenspan as Chairman of the Federal Reserve Board. Certain economic indicators weakened over the course of this period, including money growth, durable goods orders and housing prices. This was in contrast to the continued strength seen in many commodities, U.S. payrolls and the Institute for Supply Management (ISM) Index, among others. In response to this environment over the six-month period, the manager maintained the Fund's underweighted position in the energy sector, as supply continued to rise and demand continued to decelerate in many areas around the world. As energy prices rose, consumer-related stocks underperformed, particularly traditional retail stocks, creating a buying opportunity which the manager took advantage of. The Fund continues to emphasize companies in its investment portfolio that are exposed to such themes as the broadband revolution, productivity super-cycle and personalized medicine. The Fund's holdings are classified throughout this report according to AllianceBernstein's sector classification scheme (for a visual representation of the Fund's sector breakdown, please see the pie chart on page 8). For readers specifically interested in the Russell sector classification of this Fund, the sector breakdown according to Russell's classification scheme is as follows: Technology 35.2%, Consumer Discretionary 24.3%, Health Care 14.1%, Financial Services 9.6%, Utilities 6.5%, Producer Durables 6.2%, Autos & Transportation 1.2%, Energy 1.0%, Materials & Processing 0.9% and Cash 1.0%. 2 o ALLIANCEBERNSTEIN MID-CAP GROWTH 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 the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes. Benchmark Disclosure The unmanaged Russell MidCap Growth Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index measures the performance of those Russell mid-cap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Investors cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Fund. A Word About Risk The Fund can invest in foreign securities. Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments. In addition, fluctuations in the value of investments in foreign currency denominated securities may be magnified by changes in foreign exchange rates. Please note, mid-cap stocks may have limited marketability and may be subject to more abrupt or erratic market movements than large-cap stocks. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the Fund's prospectus. (Historical Performance continued on next page) ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 3 HISTORICAL PERFORMANCE (continued from previous page) THE FUND VS. ITS BENCHMARK PERIODS ENDED JANUARY 31, 2006 Returns 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund Class A 18.52% 25.53% Class B 17.86% 24.41% Class C 17.87% 24.43% Advisor Class 18.52% 25.81% Class R** 18.20% 26.01%* Class K** 18.52% 26.36%* Class I** 18.66% 26.70%* Russell Mid Cap Growth Index 10.38% 22.08% * Since Inception. (See inception dates below.) ** Please note that this is a new share class offering for investors purchasing shares through institutional pension plans. The inception date for Class R, Class K and Class I shares is 3/1/05. See Historical Performance and Benchmark disclosures on previous page. (Historical Performance continued on next page) 4 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF JANUARY 31, 2006 - ------------------------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 25.53% 20.20% 5 Years 5.10% 4.21% 10 Years 8.17% 7.69% Class B Shares 1 Year 24.41% 20.41% 5 Years 4.23% 4.23% 10 Years(a) 7.43% 7.43% Class C Shares 1 Year 24.43% 23.43% 5 Years 4.23% 4.23% 10 Years 7.22% 7.22% Advisor Class Shares# 1 Year 25.81% 25.81% 5 Years 5.32% 5.32% Since Inception* 8.45% 8.45% Class R Shares# Since Inception* 26.01% 26.01% Class K Shares# Since Inception* 26.36% 26.36% Class I Shares# Since Inception* 26.70% 26.70% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 10/1/96 for Advisor Class shares; 3/1/05 for Class R, Class K and Class I shares. # These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that Class R, Class K and Class I shares are new share class offerings for investors purchasing shares through institutional pension plans. The inception dates for these share classes are listed above. See Historical Performance disclosures on page 3. (Historical Performance continued on next page) ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 5 HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2005) - ------------------------------------------------------------------------------- SEC Returns Class A Shares 1 Year 2.16% 5 Years 2.20% 10 Years 6.91% Class B Shares 1 Year 2.03% 5 Years 2.15% 10 Years(a) 6.64% Class C Shares 1 Year 4.89% 5 Years 2.19% 10 Years 6.44% Advisor Class Shares 1 Year 6.92% 5 Years 3.29% Since Inception* 7.42% Class R Shares# Since Inception* 14.48% Class K Shares# Since Inception* 14.82% Class I Shares# Since Inception* 14.99% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 10/1/96 for Advisor Class shares; 3/1/05 for Class R, Class K and Class I shares. # Please note that this is a new share class offering for investors purchasing shares through institutional pension plans. The inception dates for these share classes are listed above. See Historical Performance disclosures on page 3. 6 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND FUND EXPENSES As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses The table below provides information about actual account values and actual expenses. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the hypothetical example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Account Value Account Value Expenses Paid August 31, 2005 January 31, 2006 During Period* ------------------------------ ------------------------------ ------------------------------ Actual Hypothetical Actual Hypothetical** Actual Hypothetical -------------- -------------- -------------- -------------- -------------- -------------- Class A $1,000 $1,000 $1,185.23 $1,018.70 $ 7.11 $ 6.56 Class B $1,000 $1,000 $1,178.59 $1,014.62 $11.53 $10.66 Class C $1,000 $1,000 $1,178.72 $1,014.72 $11.42 $10.56 Advisor Class $1,000 $1,000 $1,185.20 $1,019.81 $ 5.89 $ 5.45 Class R $1,000 $1,000 $1,182.00 $1,016.99 $ 8.96 $ 8.29 Class K $1,000 $1,000 $1,185.23 $1,018.65 $ 7.16 $ 6.61 Class I $1,000 $1,000 $1,186.62 $1,020.62 $ 5.02 $ 4.63 * Expenses are equal to the classes' annualized expense ratios of 1.29%, 2.10%, 2.08%, 1.07%, 1.63%, 1.30% and 0.91%, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). ** Assumes 5% return before expenses. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 7 PORTFOLIO SUMMARY January 31, 2006 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): $936.9 SECTOR BREAKDOWN* [ ] 45.8% Technology [PIE CHART OMITTED] [ ] 27.2% Consumer Services [ ] 16.1% Health Care [ ] 7.6% Finance [ ] 1.9% Energy [ ] 1.4% Short-Term TEN LARGEST HOLDINGS January 31, 2006 (unaudited) Percent of Company U.S. $ Value Net Assets - ------------------------------------------------------------------------------- Applera Corp. $ 40,753,019 4.4% Level 3 Communications, Inc. 40,372,504 4.3 KLA-Tencor Corp. 39,518,315 4.2 Silicon Laboratories, Inc. 37,808,049 4.0 Juniper Networks, Inc. 37,034,894 4.0 XM Satellite Radio Holdings, Inc., Cl.A 30,013,983 3.2 Apollo Group, Inc., Cl.A 29,160,614 3.1 NAVTEQ 28,433,554 3.0 JDS Uniphase Corp. 27,875,057 3.0 Amazon.com, Inc. 27,412,136 2.9 $338,382,125 36.1% * All data are as of January 31, 2006. The Fund's sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Fund's sector breakdown is classified in the above pie chart and throughout this report according to AllianceBernstein's sector classification scheme. For readers specifically interested in the Russell sector classification of this Fund, the sector breakdown according to Russell's classification scheme is as follows: technology 35.2%, consumer discretionary 24.3%, health care 14.1%, financial services 9.6%, utilities 6.5%, producer durables 6.2%, autos & transportation 1.2%, energy 1.0%, materials & processing 0.9% and cash 1.0%. 8 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND PORTFOLIO OF INVESTMENTS January 31, 2006 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-99.0% Technology-46.0% Communication Equipment-6.9% JDS Uniphase Corp.(a)* 8,905,769 $ 27,875,057 Juniper Networks, Inc.(a) 2,042,741 37,034,894 ------------ 64,909,951 Communication Services-4.3% Level 3 Communications, Inc.(a) 10,766,001 40,372,504 Computer Hardware/Storage-1.8% Sun Microsystems, Inc.(a)* 3,663,113 16,484,009 Computer Peripherals-2.5% Network Appliance, Inc.(a)* 760,945 23,741,484 Internet Infrastructure-2.5% VeriSign, Inc.(a) 981,617 23,313,404 Internet Media-3.0% Equinix, Inc.(a)* 203,702 9,559,735 RealNetworks, Inc.(a) 2,308,352 18,582,233 ------------ 28,141,968 Semiconductor Capital Equipment-7.3% FormFactor, Inc.(a) 359,419 10,717,874 KLA-Tencor Corp.* 760,260 39,518,315 Lam Research Corp.(a) 392,616 18,229,161 ------------ 68,465,350 Semiconductor Components-10.8% Advanced Micro Devices, Inc.(a) 341,432 14,292,344 Broadcom Corp. Cl.A(a) 276,351 18,847,138 PMC-Sierra, Inc.(a)* 2,237,458 21,166,353 Silicon Laboratories, Inc.(a)* 767,988 37,808,049 Spansion, Inc. Cl.A(a) 677,531 8,807,903 ------------ 100,921,787 Software-4.1% Citrix Systems, Inc.(a) 329,379 10,158,048 NAVTEQ(a)* 633,123 28,433,554 ------------ 38,591,602 Miscellaneous-2.8% Harman International Industries, Inc.* 101,877 11,206,470 Trimble Navigation Ltd.(a) 368,238 14,736,885 ------------ 25,943,355 ------------ 430,885,414 ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 9 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Consumer Services-27.3% Advertising-1.8% Audible, Inc.(a)* 1,040,103 $ 11,399,529 Focus Media Holding, Ltd. (ADR)(a) 101,000 5,513,590 ------------ 16,913,119 Airlines-1.3% Continental Airlines, Inc. Cl.B(a)* 556,409 11,634,512 Broadcasting & Cable-3.2% XM Satellite Radio Holdings, Inc. Cl.A(a)* 1,146,447 30,013,983 Cellular Communications-2.2% NeuStar, Inc. Cl.A(a) 711,319 20,635,364 Entertainment & Leisure-3.5% Eastman Kodak Co. 355,733 8,928,898 Wynn Resorts, Ltd.(a)* 367,374 23,725,013 ------------ 32,653,911 Retail - General Merchandise-6.1% Amazon.com, Inc.(a) 611,605 27,412,136 Bed Bath & Beyond, Inc.(a) 545,509 20,407,492 Williams-Sonoma, Inc.(a)* 242,797 9,658,464 ------------ 57,478,092 Miscellaneous-9.2% Apollo Group, Inc. Cl.A(a)* 523,812 29,160,614 CNET Networks, Inc.(a)* 1,321,936 19,855,479 HomeStore, Inc.(a) 3,102,799 18,740,906 Shanda Interactive Entertainment, Ltd. (ADR)(a)* 1,114,548 18,668,679 ------------ 86,425,678 ------------ 255,754,659 Health Care-16.2% Biotechnology-9.7% Affymetrix, Inc.(a) 567,939 21,683,911 Applera Corp.-Applied Biosystems Group 696,150 19,728,891 Applera Corp.-Celera Genomics Group(a) 1,787,766 21,024,128 Compugen, Ltd.(a) 1,715,350 8,576,750 deCODE GENETICS, Inc.(a)* 1,080,450 10,307,493 Myriad Genetics, Inc.(a) 205,532 4,406,606 Vertex Pharmaceuticals, Inc.(a) 135,129 4,826,808 ------------ 90,554,587 Medical Products-4.5% Cerus Corp.(a)* 1,469,523 21,014,179 Given Imaging, Ltd.(a)* 801,143 21,254,324 ------------ 42,268,503 Medical Services-2.0% Cepheid, Inc.(a) 1,923,457 18,946,051 ------------ 151,769,141 10 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Shares or Principal Amount Company (000) U.S. $ Value - ------------------------------------------------------------------------------- Finance-7.6% Brokerage & Money Management-3.3% International Securities Exchange, Inc. Cl.A(a) 532,487 $ 19,781,892 TD Ameritrade Holding Corp. 555,233 11,237,916 ------------ 31,019,808 Miscellaneous-4.3% Chicago Mercantile Exchange Holdings, Inc.* 41,986 17,770,575 Nasdaq Stock Market, Inc.(a)* 530,041 22,214,018 ------------ 39,984,593 ------------ 71,004,401 Energy-1.9% Miscellaneous-1.9% Energy Conversion Devices, Inc.(a)* 169,591 8,540,602 Plug Power, Inc.(a)* 1,551,024 9,228,593 ------------ 17,769,195 Total Common Stocks (cost $702,921,717) 927,182,810 SHORT-TERM INVESTMENT-1.3% Time Deposit-1.3% State Street Euro Dollar 3.60%, 2/01/06 (cost $12,666,000) $ 12,666 12,666,000 Total Investments Before Security Lending Collateral-100.3% (cost $715,587,717) 939,848,810 INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-22.1% Short-Term Investment UBS Private Money Market Fund, LLC, 4.35% (cost $207,322,390) 207,322,390 207,322,390 Total Investments-122.4% (cost $922,910,107) 1,147,171,200 Other assets less liabilities-(22.4%) (210,252,522) Net Assets-100% $ 936,918,678 * Represents entire or partial securities out on loan. See Note E for securities lending information. (a) Non-income producing security. Glossary: ADR - American Depositary Receipt See notes to financial statements. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 11 STATEMENT OF ASSETS & LIABILITIES January 31, 2006 (unaudited) Assets Investments in securities, at value (cost $922,910,107-including investment of cash collateral for securities loaned of $207,322,390) $1,147,171,200(a) Cash 972 Receivable for investment securities sold 19,496,678 Receivable for capital stock sold 3,486,254 Dividends and interest receivable 1,267 Total assets 1,170,156,371 Liabilities Payable for collateral on securities loaned 207,322,390 Payable for investment securities purchased 22,494,982 Payable for capital stock redeemed 1,742,648 Advisory fee payable 540,073 Distribution fee payable 217,858 Transfer Agent fee payable 193,056 Administrative fee payable 7,898 Accrued expenses 718,788 Total liabilities 233,237,693 Net Assets $936,918,678 Composition of Net Assets Capital stock, at par $1,363,482 Additional paid-in capital 727,034,794 Accumulated net investment loss (2,400,196) Accumulated net realized loss on investment transactions (13,340,495) Net unrealized appreciation of investments 224,261,093 --------------- $ 936,918,678 Calculation of Maximum Offering Price Per Share Net Asset Value and: --------------------------- Shares Offering Redemption Class Net Assets Outstanding Price Price - ------------------------------------------------------------------------------- A $ 743,376,066 106,075,405 $ 7.32* $ 7.01 B $ 71,820,364 12,250,428 $ 5.86 -- C $ 30,965,847 5,289,843 $ 5.85 -- Advisor $ 78,587,772 11,001,052 $ 7.14 $ 7.14 R $ 189,989 27,194 $ 6.99 $ 6.99 K $ 11,982 1,710 $ 7.01 $ 7.01 I $ 11,966,658 1,702,615 $ 7.03 $ 7.03 * Represents the maximum offering price per share which includes a sales charge of 4.25%. (a) Includes securities on loan with a value of $196,458,088 (see Note E). See notes to financial statements. 12 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND STATEMENT OF OPERATIONS Six Months Ended January 31, 2006 (unaudited) Investment Income Dividends $ 2,721,524 Securities lending income 694,803 Interest 156,336 $ 3,572,663 Expenses Management fee 3,009,033 Distribution fee--Class A 741,527 Distribution fee--Class B 346,548 Distribution fee--Class C 127,658 Distribution fee--Class R 94 Distribution fee--Class K 13 Transfer agency--Class A 698,635 Transfer agency--Class B 83,353 Transfer agency--Class C 28,225 Transfer agency--Advisor Class 73,223 Transfer agency--Class R 48 Transfer agency--Class K 11 Transfer agency--Class I 1,699 Printing 550,147 Custodian 121,691 Registration 58,667 Administrative 45,726 Legal 39,500 Audit 32,230 Directors' fees 12,596 Miscellaneous 17,290 Total expenses 5,987,914 Less: expense offset arrangement (see Note B) (15,055) Net expenses 5,972,859 Net investment loss (2,400,196) Realized and Unrealized Gain on Investment Transactions Net realized gain on investment transactions 60,451,179 Net change in unrealized appreciation/depreciation of investments 88,247,897 Net gain on investment transactions 148,699,076 Net Increase in Net Assets from Operations $146,298,880 See notes to financial statements. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 13 STATEMENT OF CHANGES IN NET ASSETS Six Months Ended Year Ended January 31, 2006 July 31, (unaudited) 2005 ----------------- ------------- Increase (Decrease) in Net Assets from Operations Net investment loss $ (2,400,196) $ (7,585,094) Net realized gain on investment transactions 60,451,179 97,402,126 Net change in unrealized appreciation/depreciation investments and foreign currency of investments 88,247,897 50,931,030 Net increase in net assets from operations 146,298,880 140,748,062 Distributions to Shareholders from Net realized gain on investment transactions Class A (58,655,957) -0- Class B (6,996,484) -0- Class C (2,585,689) -0- Advisor Class (6,024,760) -0- Class R (1,092) -0- Class K (982) -0- Class I (928,477) -0- Capital Stock Transactions Net increase (decrease) 49,338,971 (80,151,890) Total increase 120,444,410 60,596,172 Net Assets Beginning of period 816,474,268 755,878,096 End of period (including accumulated net investment loss of ($2,400,196) and $0, respectively) $936,918,678 $816,474,268 See notes to financial statements. 14 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS January 31, 2006 (unaudited) NOTE A Significant Accounting Policies The AllianceBernstein Mid-Cap Growth Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund offers Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class Cshares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Fund. 1. Security Valuation Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Fund's Board of Directors. In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities not listed on an exchange but traded on The NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing Price; listed put or ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 15 call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market, ("OTC") (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the "Manager") (see Note J) 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 MID-CAP GROWTH 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 Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned. 4. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date or as soon as the Fund is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the trade date securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income. 5. Income and Expenses All income earned and expenses incurred by the Fund are borne on a pro rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Realized and unrealized gains and losses are allocated among the various share classes based on their relative net assets. 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 MID-CAP GROWTH FUND o 17 NOTE B Management Fee and Other Transactions With Affiliates Under the terms of the management agreement, the Fund pays the Manager a fee at an annual rate of .75% on the first $500 million of average daily net assets, ..65% on the next $500 million of average daily net assets and .55% on average daily net assets in excess of $1 billion. Such fee is accrued daily and paid monthly. Pursuant to the management agreement, the Fund paid $45,726 to the Manager representing the cost of certain legal and accounting services provided to the Fund by the Manager for the six months ended January 31, 2006. The Fund compensates Alliance Global Investor Services, Inc., (AGIS) a wholly-owned subsidiary of the Manager, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund (see Note J). 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 $529,694 for the six months ended January 31, 2006. For the six months ended January 31, 2006, the Fund's expenses were reduced by $15,055, under an expense offset arrangement with AGIS. AllianceBernstein Investment Research and Management, Inc., (the "Distributor"), a wholly-owned subsidiary of the Manager, serves as the distributor of the Fund's shares (see Note J). The Distributor has advised the Fund that it has retained front-end sales charges of $7,737 from the sale of Class A shares and received $3,604, $33,781 and $1,669 in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the six months ended January 31, 2006. Brokerage commissions paid on investment transactions for the six months ended January 31, 2006 amounted to $1,795,500 of which $35,713 and $0, respectively, was paid to Sanford C. Bernstein &Co. LLC and Sanford C. Bernstein Limited, affiliates of the Manager. NOTE C Distribution Services Agreement The Fund has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Fund's average daily net assets attributable to Class A shares, 1% of the average daily net assets attributable to both Class B and Class C shares, .50% of the Fund's average daily net assets attributable to Class R shares and .25% of the Fund's average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and 18 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Class I shares. The fees are accrued daily and paid monthly. The directors currently limit payments under the Class A plan to .22% of average daily net assets attributable to Class A shares. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amount of $6,551,500, $2,188,455, $0 and $27, for Class B, Class C, Class R and Class K shares, respectively. Such costs may be recovered from the Fund in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Manager may use its own resources to finance the distribution of the Fund's shares. NOTE D Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the six months ended January 31, 2006, were as follows: Purchases Sales -------------- -------------- Investment securities (excluding U.S. government securities) $551,809,511 $577,536,816 U.S. government securities -0- -0- The cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation are as follows: Gross unrealized appreciation $236,751,979 Gross unrealized depreciation (12,490,886) Net unrealized appreciation $224,261,093 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 ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 19 borrower's failure to return a loaned security when due. As of January 31, 2006, the Fund had loaned securities with a value of $196,458,088 and received cash collateral which was invested in a money market fund valued at $207,322,390 as included in the accompanying portfolio of investments. For the six months ended January 31, 2006, the Fund earned fee income of $694,803 which is included in the accompanying statement of operations. NOTE F Capital Stock There are 21,000,000,000 shares of $0.01 par value capital stock authorized, divided into seven classes, designated Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Each class consists of 3,000,000,000 authorized shares. Transactions in capital stock were as follows: Shares Amount ------------------------- ----------------------------- Six Months Six Months Ended Ended January 31, Year Ended January 31, Year Ended 2006 July 31, 2006 July 31, (unaudited) 2005 (unaudited) 2005 ----------- ----------- -------------- ------------- Class A Shares sold 6,603,837 8,269,711 $ 43,690,270 $ 48,173,433 Shares issued in reinvestment of dividends and distributions 7,517,363 -0- 49,313,899 -0- Shares converted from Class B 552,058 681,544 3,627,677 4,157,589 Shares redeemed (9,899,111) (21,249,735) (64,579,093) (123,888,353) Net increase (decrease) 4,774,147 (12,298,480) $ 32,052,753 $ (71,557,331) Class B Shares sold 705,034 2,187,239 $ 3,918,410 $ 10,967,154 Shares issued in reinvestment of dividends and distributions 1,160,749 -0- 6,372,514 -0- Shares converted to Class A (655,011) (700,062) (3,627,677) (4,157,589) Shares redeemed (1,712,747) (4,844,419) (9,458,742) (23,512,827) Net decrease (501,975) (3,357,242) $ (2,795,495) $ (16,703,262) 20 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Shares Amount ------------------------- ----------------------------- Six Months Six Months Ended Ended January 31, Year Ended January 31, Year Ended 2006 July 31, 2006 July 31, (unaudited) 2005 (unaudited) 2005 ----------- ----------- -------------- ------------- Class C Shares sold 1,104,611 1,244,041 $ 6,184,429 $ 6,279,521 Shares issued in reinvestment of dividends and distributions 403,673 -0- 2,216,165 -0- Shares redeemed (600,427) (2,493,024) (3,319,474) (12,168,120) Net increase (decrease) 907,857 (1,248,983) $ 5,081,120 $ (5,888,599) Advisor Class Shares sold 992,503 3,816,392 $ 6,717,423 $ 22,967,670 Shares issued in reinvestment of dividends and distributions 888,634 -0- 5,936,074 -0- Shares redeemed (1,323,845) (1,519,521) (8,759,557) (9,000,454) Net increase 557,292 2,296,871 $ 3,893,940 $ 13,967,216 March 1, March 1, 2005(a) 2005(a) to July 31, to July 31, 2005 2005 ----------- ------------- Class R Shares sold 25,511 1,667 $ 165,167 $ 10,086 Shares issued in reinvestment of dividends and distributions 16 -0- 107 -0- Shares redeemed -0- -0- (3) -0- Net increase 25,527 1,667 $ 165,271 $ 10,086 Class K Shares sold 57 1,653 $ 391 $ 10,000 Net increase 57 1,653 $ 391 $ 10,000 Class I Shares sold 1,561,444 1,653 $ 10,024,240 $ 10,000 Shares issued in reinvestment of dividends and distributions 141,171 -0- 927,495 -0- Shares redeemed (1,653) -0- (10,744) -0- Net increase 1,700,962 1,653 $ 10,940,991 $ 10,000 (a) Commencement of distribution. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 21 NOTE G Risks Involved in Investing in the Fund Foreign Securities Risk--Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable United States companies or of the United States Government. Indemnification Risk--In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H Components of Accumulated Earnings (Deficit) The tax character of distributions to be paid for the year ending July 31, 2006 will be determined at the end of the current fiscal year. As of July 31, 2005, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed long term capital gain $ 36,377,183(a) Unrealized appreciation/(depreciation) 101,037,780(b) Total accumulated earnings/(deficit) $137,414,963 (a) During the year ended July 31, 2005, the Fund utilized $67,249,702 of capital loss carryforward. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. NOTE I Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized 22 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; however, it is not expected that the Fund will have its fee reduced; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P. ("Alliance Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser ("Alliance defendants"), and certain other defendants not affiliated with the Adviser, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the Alliance defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in "late trading" and "market ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 23 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. All state court actions against the Adviser either were voluntarily dismissed or removed to federal court. On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred all federal actions to the United States District Court for the District of Maryland (the "Mutual Fund MDL"). All of the actions removed to federal court were also transferred to 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 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 24 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND 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. On January 26, 2006, the Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. 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 Holding, Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by an alleged shareholder of an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 25 with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiff's claim under Section 36(b) of the Investment Company Act. On January 11, 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. Plaintiffs have moved for leave to amend their consolidated complaint. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds' shares or other adverse consequences to the AllianceBernstein Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the AllianceBernstein Mutual Funds. NOTE J Subsequent Event Effective February 24, 2006, the names of Alliance Capital Management L.P., AllianceBernstein Investment Research and Management, Inc. and Alliance Global Investor Services, Inc. were changed to AllianceBernstein L.P., AllianceBernstein Investments, Inc. and AllianceBernstein Investor Services, Inc., respectively. 26 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class A --------------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------- July 31, ----------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ------------ ------------ ------------ ----------- ---------- ---------- ----------- Net asset value, beginning of period $ 6.45 $ 5.38 $ 4.46 $ 3.70 $ 4.79 $ 5.83 $ 7.55 Income From Investment Operations Net investment loss(b) (.02) (.05) (.06)(c) (.03) (.04) (.04) (.04) Net realized and unrealized gain (loss) on investment transactions 1.17 1.12 .98 .79 (1.05) (.71) (1.04) Net increase (decrease) in net asset value from operations 1.15 1.07 .92 .76 (1.09) (.75) (1.08) Less: Distributions Distributions from net realized gain on investment transactions (.59) -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $ 7.01 $ 6.45 $ 5.38 $ 4.46 $ 3.70 $ 4.79 $ 5.83 Total Return Total investment return based on net asset value(d) 18.52% 19.89% 20.63% 20.54% (22.76)% (13.64)% (15.73)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $743,376 $653,612 $610,854 $540,843 $469,570 $686,445 $856,956 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.29%(e)(f) 1.25% 1.25% 1.45%(e) 1.34% 1.22% 1.04% Expenses, before waivers/ reimbursements 1.29%(e)(f) 1.25% 1.26% 1.45%(e) 1.34% 1.22% 1.04% Net investment loss (.45)%(e)(f) (.88)% (1.06)%(c) (1.11)%(e) (1.03)% (.69)% (.55)% Portfolio turnover rate 66% 88% 135% 75% 183% 226% 86% See footnote summary on page 33. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 27 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class B --------------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------- July 31, ----------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ------------ ------------ ------------ ----------- ---------- ---------- ----------- Net asset value, beginning of period $ 5.51 $ 4.63 $ 3.87 $ 3.23 $ 4.22 $ 5.21 $ 6.87 Income From Investment Operations Net investment loss(b) (.04) (.09) (.09)(c) (.03) (.07) (.07) (.09) Net realized and unrealized gain (loss) on investment transactions .98 .97 .85 .67 (.92) (.63) (.93) Net increase (decrease) in net asset value from operations .94 .88 .76 .64 (.99) (.70) (1.02) Less: Distributions Distributions from net realized gain on investment transactions (.59) -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $ 5.86 $ 5.51 $ 4.63 $ 3.87 $ 3.23 $ 4.22 $ 5.21 Total Return Total investment return based on net asset value(d) 17.86% 19.01% 19.64% 19.81% (23.46)% (14.34)% (16.48)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $71,820 $70,236 $74,567 $53,461 $41,096 $61,816 $81,569 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.10%(e)(f) 2.07% 2.09% 2.32%(e) 2.20% 2.08% 1.87% Expenses, before waivers/ reimbursements 2.10%(e)(f) 2.07% 2.10% 2.32%(e) 2.20% 2.08% 1.87% Net investment loss (1.29)%(e)(f) (1.71)% (1.90)%(c) (1.98)%(e) (1.89)% (1.54)% (1.39)% Portfolio turnover rate 66% 88% 135% 75% 183% 226% 86% See footnote summary on page 33. 28 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class C --------------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------- July 31, ----------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ------------ ------------ ------------ ----------- ---------- ---------- ----------- Net asset value, beginning of period $ 5.50 $ 4.62 $ 3.87 $ 3.22 $ 4.21 $ 5.20 $ 6.86 Income From Investment Operations Net investment loss(b) (.03) (.08) (.09)(c) (.03) (.06) (.07) (.09) Net realized and unrealized gain (loss) on investment transactions .97 .96 .84 .68 (.93) (.63) (.93) Net increase (decrease) in net asset value from operations .94 .88 .75 .65 (.99) (.70) (1.02) Less: Distributions Distributions from net realized gain on investment transactions (.59) -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $ 5.85 $ 5.50 $ 4.62 $ 3.87 $ 3.22 $ 4.21 $ 5.20 Total Return Total investment return based on net asset value(d) 17.87% 19.05% 19.38% 20.19% (23.52)% (14.37)% (16.51)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $30,966 $24,098 $26,017 $14,415 $10,860 $15,391 $20,068 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.08%(e)(f) 2.05% 2.06% 2.27%(e) 2.16% 2.04% 1.86% Expenses, before waivers/ reimbursements 2.08%(e)(f) 2.05% 2.07% 2.27%(e) 2.16% 2.04% 1.86% Net investment loss (1.21)%(e)(f) (1.68)% (1.87)%(c) (1.94)%(e) (1.85)% (1.51)% (1.34)% Portfolio turnover rate 66% 88% 135% 75% 183% 226% 86% See footnote summary on page 33. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 29 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Advisor Class --------------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------- July 31, ----------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ------------ ------------ ------------ ----------- ---------- ---------- ----------- Net asset value, beginning of period $ 6.56 $ 5.45 $ 4.52 $ 3.74 $ 4.83 $ 5.86 $ 7.58 Income From Investment Operations Net investment loss(b) (.01) (.04) (.05)(c) -0- (.03) (.03) (.02) Net realized and unrealized gain (loss) on investment transactions 1.18 1.15 .98 .78 (1.06) (.71) (1.06) Net increase (decrease) in net asset value from operations 1.17 1.11 .93 .78 (1.09) (.74) (1.08) Less: Distributions Distributions from net realized gain on investment transactions (.59) -0- -0- -0- -0- (.29) (.64) Net asset value, end of period $ 7.14 $ 6.56 $ 5.45 $ 4.52 $ 3.74 $ 4.83 $ 5.86 Total Return Total investment return based on net asset value(d) 18.52% 20.37% 20.58% 20.86% (22.57)% (13.39)% (15.66)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $78,588 $68,495 $44,440 $21,251 $13,092 $131,032 $8,304 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.07%(e)(f) 1.04% 1.04% 1.23%(e) 1.08% 1.08% .83% Expenses, before waivers/ reimbursements 1.07%(e)(f) 1.04% 1.05% 1.23%(e) 1.08% 1.08% .83% Net investment loss (.22)%(e)(f) (.64)% (.85)%(c) (.89)%(e) (.81)% (.64)% (.35)% Portfolio turnover rate 66% 88% 135% 75% 183% 226% 86% See footnote summary on page 33. 30 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class R ------------------------ Six Months Ended March 1, January 31, 2005(g) to 2006 July 31, (unaudited) 2005 ----------- ---------- Net asset value, beginning of period $ 6.45 $ 6.05 Income From Investment Operations Net investment income (loss)(b) .03 (.02) Net realized and unrealized gain on investment transactions 1.10 .42 Net increase in net asset value from operations 1.13 .40 Less: Distributions Distributions from net realized gain on investment transactions (.59) -0- Net asset value, end of period $ 6.99 $ 6.45 Total Return Total investment return based on net asset value(d) 18.20% 6.61% Ratios/Supplemental Data Net assets, end of period (000's omitted) $190 $11 Ratio to average net assets of: Expenses(e) 1.63%(f) 1.42% Net investment income (loss)(e) 1.10%(f) (.86)% Portfolio turnover rate 66% 88% See footnote summary on page 33 ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 31 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class K ------------------------ Six Months Ended March 1, January 31, 2005(g) to 2006 July 31, (unaudited) 2005 ----------- ---------- Net asset value, beginning of period $ 6.45 $ 6.05 Income From Investment Operations Net investment loss(b) (.02) (.01) Net realized and unrealized gain on investment transactions 1.17 .41 Net increase in net asset value from operations 1.15 .40 Less: Distributions Distributions from net realized gain on investment transactions (.59) -0- Net asset value, end of period $ 7.01 $ 6.45 Total Return Total investment return based on net asset value(d) 18.52% 6.61% Ratios/Supplemental Data Net assets, end of period (000's omitted) $12 $11 Ratio to average net assets of: Expenses(e) 1.30%(f) 1.14% Net investment loss(e) (.46)%(f) (.58)% Portfolio turnover rate 66% 88% See footnote summary on page 33. 32 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class I ------------------------ Six Months Ended March 1, January 31, 2005(g) to 2006 July 31, (unaudited) 2005 ----------- ---------- Net asset value, beginning of period $ 6.46 $ 6.05 Income From Investment Operations Net investment loss(b) -0-(h) (.01) Net realized and unrealized gain on investment transactions 1.16 .42 Net increase in net asset value from operations 1.16 .41 Less: Distributions Distributions from net realized gain on investment transactions (.59) -0- Net asset value, end of period $ 7.03 $ 6.46 Total Return Total investment return based on net asset value(d) 18.66% 6.78% Ratios/Supplemental Data Net assets, end of period (000's omitted) $11,967 $11 Ratio to average net assets of: Expenses(e) .91%(f) .92% Net investment loss(e) .07%(f) (.35)% Portfolio turnover rate 66% 88% (a) The Fund changed its fiscal year end from November 30 to July 31. (b) Based on average shares outstanding. (c) Net of expenses waived/reimbursed by the Adviser and the Transfer Agent. (d) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total investment return calculated for a period of less than one year is not annualized. (e) Annualized. (f) The ratio includes expenses attributable to estimated costs of proxy solicitation. (g) Commencement of distributions. (h) Amount is less than $.005. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 33 RESULTS OF SHAREHOLDERS MEETING (unaudited) The Annual Meeting of Stockholders of AllianceBernstein Mid-Cap Growth Fund (the "Fund") was held on November 15, 2005 and adjourned until December 6, 2005. At the November 15, 2005 Meeting, with respect to the first item of business, the election of Directors, and the third item of business, elimination or reclassification as non-fundamental of certain investment restrictions, the required number of outstanding shares were voted in favor of the proposals, and the proposals were approved. At the December 6, 2005 Meeting, the required number of outstanding shares voted in favor of the second item of business, the amendment and restatement of the Fund's charter, and the fourth item of business, the reclassification of the Fund's investment objective as non-fundamental with changes to the Fund's investment objectives, and the proposals were approved. A description of each proposal and number of shares voted at the Meeting are as follows (the proposal numbers shown below correspond to the proposal numbers in the Fund's proxy statement): 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. Voted For Withheld Authority - ------------------------------------------------------------------------------- Ruth Block 77,989,413 3,346,614 David H. Dievler 78,057,710 3,278,317 John H. Dobkin 78,009,348 3,326,679 Michael J. Downey 78,175,282 3,160,745 William H. Foulk, Jr. 78,114,184 3,221,842 D. James Guzy 77,654,176 3,681,851 Marc O. Mayer 78,171,625 3,164,401 Marshall C. Turner, Jr. 78,014,683 3,321,344 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. Voted Broker Voted For Against Abstained Non-Votes - ----------------------------------------------------------------------------------------------------- 68,846,696 3,662,939 2,875,065 0 3. The amendment, elimination, or Reclassification as non-fundamental of the fundamental investment restrictions regarding: Voted Broker Voted For Against Abstained Non-Votes - ----------------------------------------------------------------------------------------------------- 3.A. Diversification 64,950,181 3,313,435 1,969,049 11,317,225 3.B. Issuing Senior Securities 64,129,924 4,186,547 1,916,195 11,317,225 and Borrowing Money 3.C. Underwriting Securities 64,207,298 3,966,373 2,058,993 11,317,225 3.D. Concentration of Investments 64,787,421 3,417,247 2,027,997 11,317,225 34 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Voted Broker Voted For Against Abstained Non-Votes - ----------------------------------------------------------------------------------------------------- 3.E. Real Estate and 64,946,475 3,337,131 1,949,059 11,317,225 Companies that Deal in Real Estate 3.F. Commodities, 63,813,802 4,487,105 1,931,758 11,317,225 Commodity Contracts and Futures Contracts 3.G. Loans 63,896,205 4,364,278 1,972,182 11,317,225 3.K. Oil, Gas, and Other 64,574,372 3,658,939 1,999,354 11,317,225 Types of Minerals or Mineral Leases 3.L. Purchases of Securities 63,272,270 5,003,674 1,956,721 11,317,225 on Margin 3.M. Short Sales 63,411,732 4,809,842 2,011,091 11,317,225 3.N. Pledging, 63,521,290 4,771,945 1,939,430 11,317,225 Hypothecating, Mortgaging, or Otherwise Encumbering Assets 3.P. Warrants 63,636,107 4,377,351 2,219,208 11,317,225 3.Q. UnSeasoned 63,784,096 4,533,640 1,914,928 11,317,225 Companies 3.T. Securities of Issuers in 63,503,813 4,751,215 1,977,637 11,317,225 which Officers, Directors, or Partners Have an Interest 3.U. Purchasing or Selling 63,616,465 4,761,641 1,854,559 11,317,225 Securities Through Interested Parties 3.W. Purchasing Voting or 64,469,997 3,678,129 2,084,539 11,317,225 Other Securities of Issuers 4.B. The reclassification as 62,832,266 4,406,408 2,993,990 11,317,225 non-fundamental and with changes to the Fund's investment objectives. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 35 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 Marc O. Mayer, President Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Thomas J. Bardong, Vice President Catherine Wood(2), Vice President Emilie D. Wrapp, Secretary Mark D. Gersten, Treasurer and Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company One Lincoln Street Boston, MA 02111 Principal Underwriter AllianceBernstein Investments, Inc. 1345 Avenue of the Americas New York, NY 10105 Transfer Agent AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, Texas 78278-6003 Toll-Free (800) 221-5672 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 300 Madison Avenue New York, NY 10017 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 (1) Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. (2) Ms. Wood is the person primarily responsible for the day-to-day management of the Fund's investment portfolio. 36 o ALLIANCEBERNSTEIN MID-CAP GROWTH 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 - ---------------------------------------- Global Government Income Trust* Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Intermediate Bond Portfolio* Short Duration Portfolio U.S. Government Portfolio - ---------------------------------------- Municipal Bond Funds - ---------------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts Virginia - ---------------------------------------- Intermediate Municipal Bond Funds - ---------------------------------------- Intermediate California Intermediate Diversified Intermediate New York - ---------------------------------------- Closed-End Funds - ---------------------------------------- All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II - ---------------------------------------- Retirement Strategies Funds - ---------------------------------------- 2000 Retirement Strategy 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our 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 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. Prior to February 1, 2006, Global Government Income Trust was named Americas Government Income Trust and Intermediate Bond Portfolio was named Quality Bond Portfolio. ** An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 37 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT* The following is a summary of the evaluation of the investment advisory agreement between Alliance Capital Management L.P., (the "Adviser") and the AllianceBernstein Mid-Cap Growth Fund, Inc., (the "Fund"), prepared by Philip L. Kirstein, the Senior Officer, for the independent directors of the Fund, as required by the Assurance of Discontinuance between the New York State Attorney General and the Adviser. The Senior Officer's evaluation of the investment advisory agreement is not meant to diminish the responsibility or authority of the Boards of Directors to perform their duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees which was provided to the independent directors in connection with their review of the proposed continuance of the investment advisory agreement. The Senior Officer's evaluation considered the following factors: 1. Management fees charged to institutional and other clients of the Adviser for like services. 2. Management fees charged by other mutual fund companies for like services. 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit. 4. Profit margins of the Adviser and its affiliates from providing such services. 5. Possible economies of scale as the Fund grows larger. 6. Nature and quality of the Adviser's services, including the performance of the Fund. * It should be noted that the information in the fee summary was completed on June 8, 2005 and presented to the Board of Directors and Trustees on June 15, 2005 in accordance with the Assurance of Discontinuance with the New York State Attorney General. It also should be noted that references in the fee summary pertaining to performance and expense ratios refer to Class A shares of the Fund. 38 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND FUND ADVISORY FEES, EXPENSE REIMBURSEMENTS & RATIOS The table below describes the Fund's advisory fee pursuant to the Investment Advisory Agreement. Advisory Fee Based on % of Average Daily Net Assets - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. First $500 million .75% Excess over $500 million Up to $1 billion .65% Excess over $1 billion .55% The table below shows expense ratio information for the Fund for its most recent fiscal year. Fiscal Expense Ratio Year End - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. Advisor-1.01% July 31, 2004 Class A-1.23% Class B-2.05% Class C-2.03% The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund as indicated below: Latest Fiscal Year As % of Average Amount Daily Net Assets - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $ 106,500.00 .01 I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS OF THE ADVISER The management fees charged to investment companies which the Adviser manages and sponsors may be higher than those charged to institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Fund that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers and coordinating with and monitoring the Fund's third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative and legal/compliance requirements for the Fund are more costly than those for institutional assets due to the greater complexities and time required for investment companies. A portion of the expenses related to these services are reimbursed by the Fund to the Adviser. Managing the cash flow of an investment company may be more difficult than for other accounts, particularly if the Fund is in net redemptions, as the Adviser is forced to sell securities to meet redemptions. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 39 Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, the Senior Officer believes it is worth noting the information from the Adviser's ADV regarding the advisory fees charged to institutional accounts in the same asset class as the Fund. Total Net Assets Alliance 03/31/05 Institutional ($MIL) Fee Schedule - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap 757 Mid-Cap Growth Schedule Growth Fund, Inc. 90 bp on 1st $25 m 70 bp on next $25 m 60 bp on next $50 m 50 bp on the balance Minimum account size $10 m The Adviser provides sub-advisory investment services to certain other investment companies managed by other fund families that have similar investment styles as the Fund. Set forth below is the name and fee schedule of the only fund sub-advised by the Adviser that has the same investment style as the Fund: Sub-advised Fund Fee Schedule - ------------------------------------------------------------------------------- AllianceBernstein Mid- ING Alliance Mid-Cap 0.75% on first $10 million Cap Growth Fund, Inc. Growth Portfolio 0.625% on next $10 million 0.50% on next $20 million 0.375% on next $20 million 0.25% thereafter The Adviser also manages and sponsors retail mutual funds organized in jurisdictions outside the United States, generally Luxembourg, and sold to non-United States investors. With respect to the Fund, the Adviser represented that there are no offshore retail mutual funds of similar investment style. II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc., an analytical service that is not affiliated with the Adviser, compared the fees charged to the Fund with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included the 40 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND Fund's ranking with respect to the proposed advisory fees relative to the Lipper group median at the approximate current asset level for the Fund.* Lipper Group Fee Median Rank - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. 0.715 0.715 8/15 Lipper also analyzed the expense ratio of the Fund in comparison to its Lipper Expense Group** and Lipper Expense Universe***. Lipper describes a Lipper Expense Group as a representative sample of comparable funds and a Lipper Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the subject Fund. The results of that analysis are set forth below: Lipper Lipper Lipper Expense Universe Universe Lipper Group Ratio Median Rank Group Rank Median - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap 1.251 1.470 18/87 6/15 1.266 Growth Fund, Inc. Although the Fund has a favorable ranking on a total expense ratio basis the directors are still interested in lowering non-management expenses. III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY AGREEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. The profitability information for the Fund prepared by the Adviser for the Board of the Directors was reviewed by the Senior Officer. An independent consultant is working with the Adviser's personnel on a new system to produce profitability information at the Fund level which will reflect the Adviser's management reporting approach. It is possible that future Fund profitability information may differ from previously reviewed information due to changes in methodologies and allocations. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The Adviser's profitability for the Fund decreased during calendar 2004 relative to 2003 primarily as a result of the reduction in the advisory fee schedule implemented early in 2004. * A ranking of "1" means that the AllianceBernstein Fund has the lowest effective fee rate in the Lipper peer group. ** Lipper uses the following criteria in screening funds to be included in each Fund's expense group: fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes. An expense group will typically consist of seven to twenty funds. *** Except for asset (size) comparability, Lipper uses the same criteria for selecting an expense group when selecting an expense universe. Unlike an expense group, an expense universe allows for the same advisor to be represented by more than just one fund. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 41 In addition to the Adviser's direct profits from managing the Fund pursuant to the investment advisory agreement, certain of the Adviser's affiliates have business relationships with the Fund and may earn a profit from providing other services to the Fund. These affiliates provide transfer agency and distribution related services and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC") and commissions for providing brokerage services. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. Additional information regarding distribution related fees can be found in the prospectus of the Fund. Different classes of shares are charged different types of distribution fees. The Adviser's affiliate, AllianceBernstein Investment Research and Management Inc. ("ABIRM"), is the Fund's principal underwriter. ABIRM and the Adviser may make payments* from their own resources, in addition to sales loads and Rule 12b-1 fees, to firms that sell shares of the Fund. In 2004, ABIRM paid from its own resources approximately .04% of the average monthly assets of the Fund for distribution services and educational support. For 2005, it is anticipated that ABIRM will pay approximately .04% of average monthly assets of the Fund for such purposes. After payments to third party intermediaries, ABIRM retained the following amount in Class A front-end load sales charges from sales of the Fund's shares in the Fund's most recent fiscal year: Amount Received - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $28,688 ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for the Fund during the Fund's most recent fiscal year. A significant percentage of such amounts were paid out to third party intermediaries by ABIRM. 12b-1Fee Received** CDSC Received - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $2,419,070 $171,273 Fees and reimbursements for out of pocket expenses charged by Alliance Global Investor Services, Inc. ("AGIS"), the affiliated transfer agent, are based on the level of the network account and the class of share held by the account. AGIS also * The total amount paid to the financial intermediary in connection with the sale of shares will generally not exceed the sum of (a) .25% of the current year's Fund sales by that firm and (b) .10% of the average daily net assets attributable to that firm over the year. ** 12b-1 amounts are gross amounts paid to ABIRM. 42 o ALLIANCEBERNSTEIN MID-CAP GROWTH 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: AGIS Fee - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. $1,344,000 The Fund effected brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB"), and paid commissions during the Fund's recent fiscal year. The Adviser represented that SCB's profitability from business conducted with the Fund is comparable to the profitability of SCB's dealings with other third party clients. V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule for the Fund reflect a sharing of economies of scale to the extent they exist. Based on some of the professional literature that have considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide improved services, there may be a sharing of economies of scale without a reduction in advisory fees. An independent consultant made a presentation to the Board of Directors and the Senior Officer regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to the lack of cost data which forced the researchers to infer facts about the costs from the behavior of fund expenses, there was a lack of consensus among researchers as to whether economies of scale were being passed on to the shareholders. It is contemplated that additional work will be performed to determine if the benefits of economies of scale or scope are being passed to shareholders by the Adviser. In the meantime, it is clear that to the extent the Fund's assets exceed the initial breakpoint its shareholders benefit from a lower fee rate. ALLIANCEBERNSTEIN MID-CAP GROWTH FUND o 43 VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING PERFORMANCE OF THE FUND. With assets under management of $534.4 billion as of March 31, 2005, the Adviser has the investment experience and resources necessary to effectively manage the Fund and provide non-investment services (described in Section II) to the Fund. The information prepared by Lipper showed the 1, 3, 5 and 10 year performance ranking of the Fund relative to its Lipper universe: Performance Year Rank in Performance Universe for Periods Ended March 31, 2005 - ------------------------------------------------------------------------------- 1 3 5 10 - ------------------------------------------------------------------------------- AllianceBernstein Mid-Cap Growth Fund, Inc. 110/115 14/96 21/69 23/35 CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed fee for the Fund is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of the Fund is based on an evaluation of all of these factors and no single factor was dispositive. Dated: July 22, 2005 44 o ALLIANCEBERNSTEIN MID-CAP GROWTH FUND ALLIANCEBERNSTEIN MID-CAP GROWTH FUND 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS MCG-0152-0106 ITEM 2. CODE OF ETHICS. Not applicable when filing a semi-annual report to shareholders. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable when filing a semi-annual report to shareholders. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable when filing a semi-annual report to shareholders. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. SCHEDULE OF INVESTMENTS. Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the registrant. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Directors since the Fund last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no changes in the registrant's internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT ----------- ---------------------- 12 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein Mid-Cap Growth Fund, Inc. By: /s/ Marc O. Mayer ------------------- Marc O. Mayer President Date: March 31, 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: March 31, 2006 By: /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: March 31, 2006