UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-09687
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: November 30, 2006
Date of reporting period: November 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
- -------------------------------------------------------------------------------
ANNUAL REPORT
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth & Income Fund
Annual Report
November 30, 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
AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes
full portfolio holdings for the Fund monthly at www.alliancebernstein.com.
AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P.,
the manager of the AllianceBernstein funds, and is a member of the NASD.
AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.
January 29, 2007
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Focused Growth & Income Fund (the "Fund") for the annual
reporting period ended November 30, 2006.
Investment Objective and Policies
The Fund's investment objective is long-term growth of capital. The Fund
invests primarily in the equity securities of U.S. companies that the Adviser
believes are undervalued. The Adviser uses a disciplined investment process to
evaluate the companies in the Adviser's extensive research universe and to
identify the stocks of companies that offer the best combination of value and
potential for price appreciation. The Fund may invest in companies of any size
and in any industry. The Fund may invest in securities of non-U.S. issuers.
Investment Results
The table on page 5 provides performance data for the Fund and its benchmark,
the Russell 1000 Value Index, for the six- and 12-month periods ended November
30, 2006. Also included in the table are returns for the Fund's peer group, as
represented by the Lipper Large-Cap Core Funds Average (the "Lipper Average").
Funds in the Lipper Average have generally similar investment objectives to the
Fund, although some may have different investment policies and sales and
management fees.
Despite delivering attractive absolute performance, the Fund underperformed its
value style benchmark for both the six- and 12-month periods ended November 30,
2006. The Fund outperformed its Lipper Average for the six-month period, and
underperformed its Lipper Average for the 12-month period ended November 30,
2006.
Weak relative performance versus the benchmark during the 12-month reporting
period was primarily due to disappointing stock selection. The Fund's exposure
to housing-related securities, health care services and technology hurt
performance. The Fund's almost zero exposure to the energy sector also hurt.
Importantly, in this environment where the Fund's Relative Value Investment
Team (the "Team") believes that the market has bifurcated along the lines of
big and high quality companies versus all else, the Fund has not owned as many
big winners as the Team would normally expect to. Indeed, the Team believes
that the Fund's recent relative performance difficulties have been more an
error of omission--where the Team's preference for high quality business
characteristics have gone unrewarded--than an error of commission, where the
Team has made an abnormally high number of forecast mistakes in its fundamental
analysis.
During the six-month period ended November 30, 2006, the Fund's performance was
strong versus the Lipper Average but behind its benchmark. Versus the
benchmark, sector selection was weak and stock selection was strong. Large
underweights in the strongly performing energy, utilities and financial sectors
had greater impact than otherwise positive stock selection during the six-month
period. Generally, the Team sees these subsets of the market as having
demonstrated
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 1
strong multi-year price momentum and, as a result, they have become quite
expensive. The Team had negligible interest in them as value investors. More
recently, larger, higher-quality companies--which dominate the Fund's
investments--have fared better than the rest of the market and the Fund's peer
and benchmark relative results have improved from their recent low levels.
Market Review and Investment Strategy
U.S. stocks performed well in the six-month period and even better during the
12-month reporting period, as investors seemed satisfied that the current level
of historically strong corporate earnings performance could be sustained in the
face of slowing U.S. economic growth. Indeed, two consecutive U.S. Federal
Reserve meetings without an interest rate hike appeared to bolster investor
optimism that U.S. economic weakness would be contained to the housing and auto
sectors.
As they have for the duration of the post-Technology bubble period, value style
and small-capitalization stocks performed best as investors continue to price
large, sustainable growth companies at a significant discount to their long
term earnings power, according to the Team. The persistent outperformance of
low-quality, cyclical and smaller-cap stocks continues to run counter to the
Team's current strategy of purchasing high-quality mega cap stocks and stocks
with relatively strong long-term growth prospects at exceptionally low relative
valuations.
Corporate profitability hasn't merely been high overall--it has been unusually
high in almost all sectors. As a result, most stocks are being priced alike.
Businesses with highly variable historical earnings have benefited most as
investors have paid much higher multiples than usual for their peak cyclical
earnings. Meanwhile, investors have refused to pay a normal premium for
companies with more stable earnings and higher long-term growth potential.
As active managers seeking to buy companies priced at low relative valuations
versus their earnings prospects, the Team has been frustrated by the similarity
in valuations across the market in recent years--and excited by the unusual
opportunity it has presented to buy high quality companies with strong
long-term growth potential at unusually low relative valuations.
History shows that as the economy slows, corporate profitability tends to
become far more differentiated, and the multiples that investors will pay for
earnings become far more differentiated, too. The Team's bottom-up research
continues to lead it to emphasize high-quality and mega-cap stocks, and stocks
with earnings less dependent on a strong economy.
The opportunity remains particularly large in mega-capitalization stocks,
defined here as the 50 largest in the U.S. market. Over the last 30 years,
mega-caps have traded on average at a premium to the forward P/E of the rest of
the U.S. large-cap market (defined as the next 450 largest stocks). Yet despite
their outperformance over the last six months, mega-caps are still trading at a
close to their lowest relative valua-
2 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
tions ever: a 10% discount to the rest of the large-cap market.
In the Team's opinion, mega-caps' normal premium is well deserved: their
earnings tend to be more stable because their more diverse product sets and
more global customer base makes them less vulnerable to adverse developments
for any one product and to a slowdown in the U.S. economy. Mega-caps' stronger
balance sheets, meanwhile, generally let them weather a storm better, and their
higher cash levels allow them both to return more cash to shareholders via
dividends and share repurchases.
The Fund continues to maintain a lower-than-benchmark and lower-than-peer group
profile in recently winning "value" sectors like commodities (e.g., energy and
basic materials). The Team believes that prices have detached from fundamentals
in many of these areas as speculators have become more involved in the
short-term direction of stock prices.
It is often difficult to grasp the magnitude of a major pricing distortion
while it is occurring, because such distortions are generally driven by
widespread market beliefs. During the technology and telecommunications bubble
of the 1990s, for example, investors were so excited about how new technologies
could change the world in the distant future that they purchased many stocks
with little or no proven earnings power at very high multiples of their
forecast earnings--and they ignored stocks with reliable current earnings
because they were dull. In their excitement about tomorrow, investors acted as
if there were no today.
For most of the last four years, by contrast, investors have been so excited
about today that they have acted as if there were no tomorrow. Strong global
economic growth and a mortgage-financed consumer-spending binge in the
U.S.--both triggered in large part by low interest rates intended to ward off
the shock of the bursting technology bubble--unleashed an extraordinary
earnings boom. Prolonged strong economic growth in combination with low
inflation helped foster the illusion that cyclical earnings could persist
indefinitely.
But the technology bubble did burst, and today's global commodities and U.S.
housing bubbles appear to be losing air as well. U.S. earnings growth appears
to the Team to have moderated, and it is likely to slow to below its long-term
average if earnings growth in the energy, housing-related, utilities and
regional bank sectors flatten or decline, as the Team anticipates.
The Team's philosophy has always been centered on the notion of buying
high-quality businesses that are undervalued. It is the cornerstone of a
disciplined investment process that has served the Fund's shareholders well
over the long-term. The Team remains fully committed to executing on its
strategy and believes that recent underperformance is mostly a function of the
market's unusual appetite for the types of companies to which the Team
generally limits the Fund's exposure. As the global economic and corporate
profit cycles mature, the Team expects investor appetites for risk-taking to
approach more historically normal levels.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 3
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our
website at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein Investments at 800.227.4618. You should read the prospectus
carefully before you invest.
All fees and expenses related to the operation of the Fund have been deducted.
NAV returns do not reflect sales charges; if sales charges were reflected, the
Fund's quoted performance would be lower. SEC returns reflect the applicable
sales charges for each share class: a 4.25% maximum front-end sales charge for
Class A shares; the applicable contingent deferred sales charge for Class B
shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent
deferred sales charge for Class C shares. Returns for different share classes
will vary due to different expenses associated with each class. Performance
assumes reinvestment of distributions and does not account for taxes.
Benchmark Disclosure
The unmanaged Russell 1000 Value Index does not reflect fees and expenses
associated with the active management of a mutual fund portfolio. The Index
contains those securities in the Russell 1000 Index with a less-than-average
growth orientation. The Russell 1000 Index is composed of 1000 of the largest
capitalized companies that are traded in the United States. For the six- and
12-month periods ended November 30, 2006, the Lipper Large-Cap Core Funds
Average consisted of 843 and 812 funds, respectively. Funds in the Lipper
Average have generally similar investment objectives to AllianceBernstein
Focused Growth & Income Fund, although some may have different investment
policies and sales and management fees. An investor cannot invest directly in
an index or average, and their results are not indicative of the performance
for any specific investment, including the Fund.
A Word About Risk
The Fund can invest in foreign securities, which may magnify fluctuations due
to changes in foreign exchange rates and the possibility of substantial
volatility due to political and economic uncertainties in foreign countries.
The Fund can invest in small- to mid-capitalization companies. These
investments may be more volatile than investments in large-capitalization
companies. The Fund may at times be concentrated in a particular sector or
industry group and, therefore, may be subject to greater risk. While the Fund
invests principally in common stocks and other equity securities, in order to
achieve its investment objectives, the Fund may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in the Fund's prospectus.
(Historical Performance continued on next page)
4 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARK -----------------------------
PERIODS ENDED NOVEMBER 30, 2006 6 Months 12 Months
- -------------------------------------------------------------------------------
AllianceBernstein Focused Growth & Income Fund
Class A 12.56% 11.20%
Class B 12.14% 10.41%
Class C 12.15% 10.42%
Class R* 12.39% 10.94%
Class K* 12.61% 11.39%
Class I* 12.77% 11.64%
Russell 1000 Value Index 12.92% 20.28%
Lipper Large-Cap Core Funds Average 10.07% 12.26%
* Please note that these share classes are for investors purchasing shares
through accounts established under certain fee-based programs sponsored and
maintained by certain broker-dealers and financial intermediaries,
institutional pension plans and/or investment advisory clients of, and certain
other persons associated with, the Adviser and its affiliates or the Funds.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
12/22/99* to 11/30/06
AllianceBernstein Focused Growth & Income Fund Class A: $16,803
Russell 1000 Value Index: $16,892
[THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL]
AllianceBernstein Focused Russell 1000
Growth & Income Fund Class A Value Index
- -------------------------------------------------------------------------------
12/22/99 $ 9,575 $ 10,000
11/30/00 $ 10,935 $ 10,403
11/30/01 $ 12,619 $ 10,076
11/30/02 $ 10,460 $ 9,108
11/30/03 $ 12,792 $ 10,671
11/30/04 $ 14,161 $ 12,770
11/30/05 $ 15,105 $ 14,045
11/30/06 $ 16,803 $ 16,892
* Since inception of the Fund's Class A shares on 12/22/99.
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Focused Growth & Income Fund Class A shares (from 12/22/99*
to 11/30/06) as compared to the performance of its benchmark. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains distributions.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 5
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF NOVEMBER 30, 2006
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 11.20% 6.50%
5 Years 5.89% 4.97%
Since Inception* 8.43% 7.76%
Class B Shares
1 Year 10.41% 6.41%
5 Years 5.13% 5.13%
Since Inception* 7.68% 7.68%
Class C Shares
1 Year 10.42% 9.42%
5 Years 5.13% 5.13%
Since Inception* 7.67% 7.67%
Class R Shares+
1 Year 10.94% 10.94%
Since Inception* 9.34% 9.34%
Class K Shares+
1 Year 11.39% 11.39%
Since Inception* 6.99% 6.99%
Class I Shares+
1 Year 11.64% 11.64%
Since Inception* 7.29% 7.29%
* Inception dates: 12/22/99 for Class A, Class B and Class C shares; 11/3/03
for Class R shares; 3/1/05 for Class K and Class I shares.
+ These share classes are offered at net asset value (NAV) to eligible
investors and their SEC returns are the same as the NAV returns. Please note
that these share classes are for investors purchasing shares through accounts
established under certain fee-based programs sponsored and maintained by
certain broker-dealers and financial intermediaries, institutional pension
plans and/or investment advisory clients of, and certain other persons
associated with, the Adviser and its affiliates or the Funds. The inception
dates for these share classes are listed above.
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
6 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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, 2006)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 10.46%
5 Year 5.72%
Since Inception* 8.19%
Class B Shares
1 Year 10.59%
5 Year 5.89%
Since Inception* 8.11%
Class C Shares
1 Year 13.51%
5 Year 5.89%
Since Inception* 8.10%
Class R Shares+
1 Year 15.11%
Since Inception* 10.27%
Class K Shares+
1 Year 15.55%
Since Inception* 8.70%
Class I Shares+
1 Year 15.91%
Since Inception* 9.00%
* Inception dates: 12/22/99 for Class A, Class B and Class C shares; 11/3/03
for Class R shares; 3/1/05 for Class K and Class I shares.
+ Please note that these share classes are for investors purchasing shares
through accounts established under certain fee-based programs sponsored and
maintained by certain broker-dealers and financial intermediaries,
institutional pension plans and/or investment advisory clients of, and certain
other persons associated with, the Adviser and its affiliates or the Funds. The
inception dates for these share classes are listed above.
See Historical Performance disclosures on page 4.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 7
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual
expenses. You may use the information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
annual rate of return of 5% before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds by comparing this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the hypothetical example is useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs
would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
June 1, 2006 November 30, 2006 During Period*
------------------------------ ------------------------------- ---------------------------
Actual Hypothetical Actual Hypothetical** Actual Hypothetical
----------- ---------------- ----------- ----------------- ----------- -------------
Class A $1,000 $1,000 $1,125.62 $1,019.30 $ 6.13 $5.82
Class B $1,000 $1,000 $1,121.36 $1,015.64 $10.00 $9.50
Class C $1,000 $1,000 $1,121.45 $1,015.74 $ 9.89 $9.40
Class R $1,000 $1,000 $1,123.86 $1,017.85 $ 7.67 $7.28
Class K $1,000 $1,000 $1,126.05 $1,020.05 $ 5.33 $5.06
Class I $1,000 $1,000 $1,127.69 $1,021.36 $ 3.95 $3.75
* Expenses are equal to the classes' annualized expense ratios of 1.15%,
1.88%, 1.86%, 1.44%, 1.00% and 0.74%, respectively, multiplied by the average
account value over the period, multiplied by 183/365 (to reflect the one-half
year period).
** Assumes 5% return before expenses.
8 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
PORTFOLIO SUMMARY
November 30, 2006
PORTFOLIO STATISTICS
Net Assets ($mil): $304.6
SECTOR BREAKDOWN*
[ ] 24.0% Finance [PIE CHART OMITTED]
[ ] 20.1% Health Care
[ ] 16.9% Consumer Staples
[ ] 10.9% Technology
[ ] 9.3% Consumer Services
[ ] 5.9% Capital Goods
[ ] 3.9% Utilities
[ ] 2.4% Energy
[ ] 1.8% Basic Industry
[ ] 1.7% Multi Industry Companies
[ ] 0.5% Transportation
[ ] 2.6% Short-Term
TEN LARGEST HOLDINGS
November 30, 2006
Percent of
Company U.S. $ Value Net Assets
- -------------------------------------------------------------------------------
Axis Capital Holdings Ltd. $ 17,286,150 5.7%
Loews Corp.-Carolina Group &
Loews Corp. 16,528,450 5.6
American International Group, Inc. 13,009,200 4.3
Caremark Rx, Inc. 13,007,500 4.3
Wyeth 12,519,004 4.1
Procter & Gamble Co. 12,244,050 4.0
JPMorgan Chase & Co. 11,773,632 3.9
Sun Microsystems, Inc. 11,653,000 3.8
Time Warner, Inc. 11,580,500 3.8
Emerson Electric Co. 10,837,500 3.5
$ 130,438,986 43.0%
* All data are as of November 30, 2006. The Fund's sector breakdown is
expressed as a percentage of total investments and may vary over time.
Please Note: The sector classifications presented herein are based on the
sector categorization methodology of the Adviser. These sector classifications
are broadly defined. The "Portfolio of Investments" section of the report
reflects more specific industry information and is consistent with the
investment restrictions discussed in the Fund's prospectus.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 9
PORTFOLIO OF INVESTMENTS
November 30, 2006
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
COMMON STOCKS-94.6%
Finance-23.4%
Banking-Money Center-4.7%
The Bank of New York Co., Inc. 75,000 $ 2,665,500
JPMorgan Chase & Co. 254,400 11,773,632
-------------
14,439,132
Banking-Regional-4.4%
Bank of America Corp. 160,000 8,616,000
Northern Trust Corp. 34,100 1,942,336
Wells Fargo & Co. 77,400 2,727,576
-------------
13,285,912
Brokerage & Money Management-0.9%
Merrill Lynch & Co., Inc. 30,000 2,622,900
Insurance-13.4%
ACE, Ltd. 90,000 5,115,600
Allstate Corp. 40,000 2,539,200
American International Group, Inc. 185,000 13,009,200
Axis Capital Holdings Ltd. 505,000 17,286,150
Willis Group Holdings Ltd. 71,000 2,858,460
-------------
40,808,610
-------------
71,156,554
Health Care-19.5%
Drugs-8.3%
Eli Lilly & Co. 100,000 5,359,000
Merck & Co. Inc. 58,300 2,594,933
Schering-Plough Corp. 225,000 4,952,250
Wyeth 259,300 12,519,004
-------------
25,425,187
Medical Products-1.8%
Alcon, Inc. 50,000 5,481,000
Medical Services-9.4%
Caremark Rx, Inc. 275,000 13,007,500
Medco Health Solutions, Inc.(a) 100,000 5,021,000
Quest Diagnostics, Inc. 90,000 4,785,300
WellPoint, Inc.(a) 75,000 5,675,250
-------------
28,489,050
-------------
59,395,237
Consumer Staples-16.4%
Beverages-1.5%
PepsiCo, Inc. 75,000 4,647,750
Household Products-4.0%
Procter & Gamble Co. 195,000 12,244,050
10 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Retail - Food & Drug-3.7%
CVS Corp. 210,000 $ 6,041,700
Walgreen Co. 125,000 5,061,250
-------------
11,102,950
Tobacco-7.2%
Altria Group, Inc. 65,000 5,473,650
Loews Corp. 125,000 4,990,000
Loews Corp.-Carolina Group 185,000 11,538,450
-------------
22,002,100
-------------
49,996,850
Technology-10.6%
Communication Equipment-2.6%
Cisco Systems, Inc.(a) 300,000 8,064,000
Computer Hardware/Storage-3.8%
Sun Microsystems, Inc.(a) 2,150,000 11,653,000
Computer Services-0.8%
Fiserv, Inc.(a) 45,000 2,299,950
Internet Media-0.8%
Yahoo! Inc.(a) 90,000 2,429,100
Software-2.6%
Amdocs Ltd.(a) 70,000 2,698,500
Microsoft Corp. 175,000 5,132,750
-------------
7,831,250
-------------
32,277,300
Consumer Services-9.0%
Broadcasting & Cable-6.4%
News Corp.--Class A 384,400 7,918,640
Time Warner, Inc. 575,000 11,580,500
-------------
19,499,140
Entertainment & Leisure-1.1%
Walt Disney Co. 100,000 3,305,000
Restaurants & Lodging-1.5%
Hilton Hotels Corp. 71,500 2,347,345
McDonald's Corp. 57,500 2,413,275
-------------
4,760,620
-------------
27,564,760
Capital Goods-5.7%
Electrical Equipment-3.5%
Emerson Electric Co. 125,000 10,837,500
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 11
Shares or
Principal
Amount
Company (000) U.S. $ Value
- -------------------------------------------------------------------------------
Miscellaneous-2.2%
General Electric Co. 115,000 $ 4,057,200
United Technologies Corp. 40,000 2,581,200
-------------
6,638,400
-------------
17,475,900
Utilities-3.8%
Electric & Gas Utility-0.8%
The AES Corp.(a) 100,000 2,337,000
Telephone Utility-3.0%
AT&T, Inc. 250,000 8,477,500
Citizens Communications Co. 50,000 708,500
-------------
9,186,000
-------------
11,523,000
Energy-2.3%
Oil Service-2.3%
Baker Hughes, Inc. 35,000 2,570,050
BJ Services Co. 50,000 1,688,500
Halliburton Co. 82,700 2,790,298
-------------
7,048,848
Basic Industry-1.8%
Chemicals-1.8%
Air Products & Chemicals, Inc. 77,500 5,358,350
Multi-Industry Companies-1.6%
Multi-Industry Companies-1.6%
Honeywell International, Inc. 115,000 4,942,700
Transportation-0.5%
Air Freight-0.5%
United Parcel Service, Inc.--Class B 20,000 1,558,400
Total Common Stocks
(cost $237,573,504) 288,297,899
SHORT-TERM INVESTMENT-2.5%
Time Deposit-2.5%
State Street Euro Dollar
4.60%, 12/01/06
(cost $7,547,000) $ 7,547 7,547,000
Total Investments-97.1%
(cost $245,120,504) 295,844,899
Other assets less liabilities-2.9% 8,713,232
Net Assets-100.0% $ 304,558,131
(a) Non-income producing security.
See notes to financial statements.
12 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
STATEMENT OF ASSETS & LIABILITIES
November 30, 2006
Assets
Investments in securities, at value (cost $245,120,504) $ 295,844,899
Cash 152
Receivable for investment securities sold 11,560,313
Receivable for capital stock sold 864,106
Dividends and interest receivable 591,905
Total assets 308,861,375
Liabilities
Payable for investment securities purchased 1,979,028
Payable for capital stock redeemed 1,723,172
Distribution fee payable 175,266
Advisory fee payable 141,521
Transfer Agent fee payable 62,081
Administrative fee payable 46,751
Accrued expenses 175,425
Total liabilities 4,303,244
Net Assets $ 304,558,131
Composition of Net Assets
Capital stock, at par $ 19,356
Additional paid-in capital 223,994,649
Undistributed net investment income 632,419
Accumulated net realized gain on investment transactions 29,187,312
Net unrealized appreciation of investments 50,724,395
$ 304,558,131
Net Asset Value Per Share--18 billion shares of capital stock authorized, $.001
par value
Shares Net Asset
Class Net Assets Outstanding Value
- -------------------------------------------------------------------------
A $ 134,079,286 8,311,227 $ 16.13*
B $ 118,436,888 7,676,437 $ 15.43
C $ 49,794,346 3,228,334 $ 15.42
R $ 1,665,347 103,685 $ 16.06
K $ 334,810 20,703 $ 16.17
I $ 247,454 15,228 $ 16.25
* The maximum offering price per share for Class A shares was $16.85 which
reflects a sales charge of 4.25%.
See notes to financial statements.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 13
STATEMENT OF OPERATIONS
Year Ended November 30, 2006
Investment Income
Dividends $ 5,823,304
Interest 356,940 $ 6,180,244
Expenses
Advisory fee 1,886,375
Distribution fee--Class A 449,202
Distribution fee--Class B 1,361,081
Distribution fee--Class C 556,589
Distribution fee--Class R 6,305
Distribution fee--Class K 341
Transfer agency--Class A 312,012
Transfer agency--Class B 318,159
Transfer agency--Class C 121,263
Transfer agency--Class R 3,060
Transfer agency--Class K 143
Transfer agency--Class I 55
Custodian 174,010
Administrative 90,835
Legal 84,337
Registration 61,315
Audit 61,200
Directors' fees 34,055
Printing 32,603
Miscellaneous 21,912
Total expenses 5,574,852
Less: expense offset arrangement
(see Note B) (27,027)
Net expenses 5,547,825
Net investment income 632,419
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain on investment
transactions 35,150,443
Net change in unrealized
appreciation/depreciation
of investments (3,367,915)
Net gain on investment transactions 31,782,528
Net Increase in Net Assets
from Operations $ 32,414,947
See notes to financial statements.
14 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
November 30, November 30,
2006 2005
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income (loss) $ 632,419 $ (218,678)
Net realized gain on investment
transactions 35,150,443 22,464,325
Net change in unrealized
appreciation/depreciation
of investments (3,367,915) 5,926,478
Net increase in net assets
from operations 32,414,947 28,172,125
Dividends and Distributions to
Shareholders from
Net investment income
Class A -0- (1,514,182)
Class R -0- (1,155)
Net realized gain on
investment transactions
Class A (10,387,971) (2,195,466)
Class B (10,014,550) (2,044,514)
Class C (4,131,885) (831,037)
Class R (55,743) (2,393)
Class K (610) -0-
Class I (606) -0-
Capital Stock Transactions
Net decrease (111,314,707) (122,923,053)
Total decrease (103,491,125) (101,339,675)
Net Assets
Beginning of period 408,049,256 509,388,931
End of period (includes undistributed
net investment income of $632,419
and $0, respectively) $ 304,558,131 $ 408,049,256
See notes to financial statements.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 15
NOTES TO FINANCIAL STATEMENTS
November 30, 2006
NOTE A
Significant Accounting Policies
AllianceBernstein Focused Growth & Income Fund, Inc. (the "Fund"), organized as
a Maryland corporation on July 6, 1999, is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund offers Class A, Class B, Class C, Class R, Class K and Class I shares.
Class A shares are sold with a front-end sales charge of up to 4.25% for
purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or
more, Class A shares redeemed within one year of purchase may be subject to a
contingent deferred sales charge of 1%. Class B shares are currently sold with
a contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Class R and Class
K shares are sold without an initial or contingent deferred sales charge. Class
I shares are sold without any initial or contingent deferred sales charge and
are not subject to ongoing distribution expenses. All six classes of shares
have identical voting, dividend, liquidation and other rights, except that the
classes bear different distribution and transfer agency expenses. Each class
has exclusive voting rights with respect to its distribution plan. The
financial statements have been prepared in conformity with U.S. generally
accepted accounting principles which require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange (other than securities listed on the NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities listed only on NASDAQ are valued in
accordance with the NASDAQ Official Closing Price; listed put or call options
are valued at the last sale price. If there
16 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
has been no sale on that day, such securities will be valued at the closing bid
prices on that day; open futures contracts and options thereon are valued using
the closing settlement price or, in the absence of such a price, the most
recent quoted bid price. If there are no quotations available for the day of
valuation, the last available closing settlement price is used; securities
traded in the over-the-counter market, ("OTC") are valued at the mean of the
current bid and asked prices as reported by the National Quotation Bureau or
other comparable sources; U.S. government securities and other debt instruments
having 60 days or less remaining until maturity are valued at amortized cost if
their original maturity was 60 days or less; or by amortizing their fair value
as of the 61st day prior to maturity if their original term to maturity
exceeded 60 days; fixed-income securities, including mortgage backed and asset
backed securities, may be valued on the basis of prices provided by a pricing
service or at a price obtained from one or more of the major broker/dealers. In
cases where broker/dealer quotes are obtained, AllianceBernstein L.P. (prior to
February 24, 2006 known as Alliance Capital Management L.P.) (the "Adviser")
may establish procedures whereby changes in market yields or spreads are used
to adjust, on a daily basis, a recently obtained quoted price on a security;
and OTC and other derivatives are valued on the basis of a quoted bid price or
spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities. To account for this, the Fund may frequently value
many of its foreign equity securities using fair value prices based on third
party vendor modeling tools to the extent available.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward currency exchange contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 17
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation or depreciation of investments
and foreign currency denominated assets and liabilities.
3. Taxes
It is the policy of the Fund to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the trade date securities are purchased or
sold. Investment gains and losses are determined on the identified cost basis.
The Fund amortizes premiums and accretes discounts as adjustments to interest
income.
5. Class Allocations
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except for class
specific expenses which are allocated to the respective class. Realized and
unrealized gains and losses are allocated among the various share classes based
on their respective 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
18 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
accounts based on their federal tax basis treatment; temporary differences do
not require such reclassification.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .55% of the first $2.5 billion, .45% of
the next $2.5 billion and .40% in excess of $5 billion, of the Fund's average
daily net assets. Prior to September 7, 2004, the Fund paid the Adviser an
advisory fee at an annual rate of .75% of the Fund's average daily net assets.
The fee is accrued daily and paid monthly. The Adviser has agreed to waive its
fees and bear certain expenses to the extent necessary to limit total operating
expenses on an annual basis to 2.50%, 3.20%, 3.20%, 2.70%, 2.45% and 2.20% of
the daily average net assets for the Class A, Class B, Class C, Class R, Class
K and Class I shares, respectively. For the year ended November 30, 2006, there
were no fees waived by the Adviser.
Pursuant to the advisory agreement, the Fund paid $90,835 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended November 30, 2006.
The Fund compensates AllianceBernstein Investor Services, Inc. (prior to
February 24, 2006 known as Alliance Global Investor Services, Inc.) ("ABIS"), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. ABIS may make payments to intermediaries that provide omnibus account
services, sub-accounting services and/or networking services. Such compensation
retained by ABIS amounted to $387,936 for the year ended November 30, 2006.
For the year ended November 30, 2006, the Fund's expenses were reduced by
$27,027 under an expense offset arrangement with ABIS.
AllianceBernstein Investments, Inc. (prior to February 24, 2006 known as
AllianceBernstein Investment Research and Management, Inc.) (the
"Distributor"), a wholly-owned subsidiary of the Adviser, serves as the
distributor of the Fund's shares. The Distributor has advised the Fund that it
has retained front-end sales charges of $5,056 from the sale of Class A shares
and received $5,743, $158,274 and $6,641 in contingent deferred sales charges
imposed upon redemptions by shareholders of Class A, Class B and Class C
shares, respectively, for the year ended November 30, 2006.
Brokerage commissions paid on investment transactions for the year ended
November 30, 2006, amounted to $1,140,758, of which $114,879 and $0,
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 19
respectively, was paid to Sanford C. Bernstein & Co. LLC and Sanford C.
Bernstein Limited, affiliates of the Adviser.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .30% of the Fund's average daily net assets
attributable to Class A shares, 1% of the Fund's average daily net assets
attributable to both Class B and Class C shares, .50% of the Fund's average
daily net assets attributable to Class R shares and .25% of the Fund's average
daily net assets attributable to Class K shares. There are no distribution and
servicing fees on Class I shares. The fees are accrued daily and paid monthly.
The Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amounts of $212,932, $1,296,968, $38,160 and
$4,064 for Class B, Class C, Class R and Class K shares, respectively; such
costs may be recovered from the Fund in future periods so long as the Agreement
is in effect. In accordance with the Agreement, there is no provision for
recovery of unreimbursed distribution costs incurred by the Distributor beyond
the current fiscal year for Class A shares. The Agreement also provides that
the Adviser may use its own resources to finance the distribution of the Fund's
shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended November 30, 2006, were as follows:
Purchases Sales
-------------- --------------
Investment securities (excluding
U.S. government securities) $ 444,135,920 $ 588,099,648
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation are as follows:
Cost $ 245,985,844
Gross unrealized appreciation $ 52,193,397
Gross unrealized depreciation (2,334,342)
Net unrealized appreciation $ 49,859,055
20 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
1. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse effects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments and the imperfect correlation between movements in the
price of the futures contracts and movements in the price of the securities
hedged or used for cover.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin with the broker, as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in the value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized gains or
losses. Risks may arise from the potential inability of a counterparty to meet
the terms of the contract. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the time it was closed.
NOTE E
Securities Lending
The Fund has entered into a securities lending agreement with UBS Securities
LLC (formerly UBS Warburg LLC) Warburg (the"Lending Agent"). Under the terms of
the agreement, the Lending Agent, on behalf of the Fund, administers the
lending of portfolio securities to certain broker-dealers. In return, the Fund
receives fee income from the lending transactions or it retains a portion of
interest on the investment of any cash received as collateral. The Fund also
continues to receive dividends or interest on the securities loaned. Unrealized
gain or loss on the value of the securities loaned that may occur during the
term of the loan will be reflected in the accounts of the Fund. All loans are
continuously secured by collateral exceeding the value of the securities
loaned. All collateral consists of either cash or U.S. government securities.
The Lending Agent may invest the cash collateral received in an eligible money
market vehicle in accordance with the investment restrictions of the Fund. The
Lending Agent will indemnify the Fund for any loss resulting from a borrower's
failure to return a loaned security when due. As of November 30, 2006, the Fund
had no securities on loan. For the year ended November 30, 2006, the Fund
earned fee income of $2,580 which is included in interest income in the
accompanying statement of operations.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 21
NOTE F
Capital Stock
Each class consists of 3,000,000,000 authorized shares. Transactions in capital
shares for each class were as follows:
Shares Amount
-------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
2006 2005 2006 2005
------------ ------------ -------------- --------------
Class A
Shares sold 1,819,917 3,146,956 $ 27,329,929 $ 47,329,068
Shares issued in
reinvestment of
dividends and
distributions 633,054 226,157 9,261,571 3,412,711
Shares converted
from Class B 412,389 300,476 6,203,485 4,509,940
Shares redeemed (5,920,150) (7,580,567) (88,556,790) (113,693,130)
Net decrease (3,054,790) (3,906,978) $ (45,761,805) $ (58,441,411)
Class B
Shares sold 386,800 945,079 $ 5,516,164 $ 13,737,539
Shares issued in
reinvestment of
distributions 585,469 114,511 8,249,255 1,679,878
Shares converted
to Class A (429,960) (310,682) (6,203,485) (4,509,940)
Shares redeemed (3,894,373) (3,980,552) (55,554,441) (57,816,219)
Net decrease (3,352,064) (3,231,644) $ (47,992,507) $ (46,908,742)
Class C
Shares sold 195,987 456,930 $ 2,801,342 $ 6,649,779
Shares issued in
reinvestment of
distributions 233,067 44,538 3,281,581 652,931
Shares redeemed (1,744,641) (1,758,535) (24,794,968) (25,543,365)
Net decrease (1,315,587) (1,257,067) $ (18,712,045) $ (18,240,655)
Class R
Shares sold 54,723 49,008 $ 793,370 $ 725,512
Shares issued in
reinvestment of
dividends and
distributions 2,781 26 40,611 385
Shares redeemed (14,128) (5,184) (208,454) (78,278)
Net increase 43,376 43,850 $ 625,527 $ 647,619
22 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Shares Amount
-------------------------- ------------------------------
March 1, March 1,
Year Ended 2005(a) to Year Ended 2005(a) to
November 30, November 30, November 30, November 30,
2006 2005 2006 2005
------------ ------------ -------------- --------------
Class K
Shares sold 23,711 661 $ 362,874 $ 10,100
Shares issued in
reinvestment of
distributions -0-(b) -0- 3 -0-
Shares redeemed (3,669) -0- (54,709) -0-
Net increase 20,042 661 $ 308,168 $ 10,100
Class I
Shares sold 14,571 657 $ 217,953 $ 10,036
Shares issued in
reinvestment of
distributions -0-(b) -0- 2 -0-
Net increase 14,571 657 $ 217,955 $ 10,036
(a) Commencement of distribution.
(b) Share amounts less than one full share.
NOTE G
Risks Involved in Investing in the Fund
Foreign Securities Risk--Investing in securities of foreign companies or
foreign governments involves special risks which include changes in foreign
currency exchange rates and the possibility of the future political and
economic developments which could adversely affect the value of such
securities. Moreover, securities of many foreign companies or foreign
governments and their markets may be less liquid and their prices more volatile
than those of comparable U.S. companies or of the U.S. government.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE H
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $250 million revolving credit facility (the "Facility")
intended to provide short-term financing, if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended November 30, 2006.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 23
NOTE I
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended November
30, 2006 and November 30, 2005 were as follows:
2006 2005
-------------- --------------
Distributions paid from:
Ordinary income $ 13,442,727 $ 1,515,337
Net long-term capital gains 11,148,638 5,073,410
Total taxable distributions 24,591,365 6,588,747
Total distributions paid $ 24,591,365 $ 6,588,747
As of November 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed long term capital gain $ 18,047,710
Undistributed ordinary income 12,637,361
Unrealized appreciation/(depreciation) 49,859,055(a)
Total accumulated earnings/(deficit) $ 80,544,126
(a) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
NOTE J
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of New York Attorney General ("NYAG") have
been investigating practices in the mutual fund industry identified as "market
timing" and "late trading" of mutual fund shares. Certain other regulatory
authorities have also been conducting investigations into these practices
within the industry and have requested that the Adviser provide information to
them. The Adviser has been cooperating and will continue to cooperate with all
of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based
24 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
on (i) their aliquot share of losses suffered by the fund due to market timing,
and (ii) a proportionate share of advisory fees paid by such fund during the
period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, directed and oversaw an internal investigation and a
comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have conducted an investigation of the above-mentioned matters with
the advice of an independent economic consultant and independent counsel.
On October 2, 2003, a purported class action complaint entitled Hindo, et al.
v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges
that certain of the Alliance defendants failed to disclose that they improperly
allowed certain hedge funds and other unidentified parties to engage in "late
trading" and "market timing" of AllianceBernstein Fund securities, violating
Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the
Exchange Act and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an
unspecified amount of compen-
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 25
satory damages and rescission of their contracts with the Adviser, including
recovery of all fees paid to the Adviser pursuant to such contracts.
Since October 2, 2003, 43 additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. 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 actions to the
United States District Court for the District of Maryland (the "Mutual Fund
MDL").
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual allegations, which appear to be based in large part on the SEC Order
and the NYAG Order.
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual
fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing
their agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The derivative claims brought on behalf of Alliance Holding remain
pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commissioner") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Holding, and various other defendants not
affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court
of Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the
26 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Hindo Complaint. On October 19, 2005, the WVAG Complaint was transferred to the
Mutual Fund MDL.
On August 30, 2005, the West Virginia Securities Commissioner signed a Summary
Order to Cease and Desist, and Notice of Right to Hearing addressed to the
Adviser and Alliance Holding. The Summary Order claims that the Adviser and
Alliance Holding violated the West Virginia Uniform Securities Act, and makes
factual allegations generally similar to those in the Commission Order and the
NYAG Order. On January 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 court denied the writ and in September
2006 the Supreme Court of Appeals declined the defendants' petition for appeal.
On September 22, 2006, Alliance and Alliance Holding filed an answer and motion
to dismiss the Summary Order with the Securities Commissioner.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA
Financial, Inc., AllianceBernstein Investment Research & Management, Inc.,
certain current and former directors of the AllianceBernstein Mutual Funds, and
unnamed Doe defendants. The Aucoin Complaint names certain of the
AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was
filed in the United States District Court for the Southern District of New York
by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin
Complaint alleges, among other things, (i) that certain of the defendants
improperly authorized the payment of excessive commissions and other fees from
fund assets to broker-dealers in exchange for preferential marketing services,
(ii) that certain of the defendants misrepresented and omitted from
registration statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as control
persons of other defendants. The Aucoin Complaint asserts claims for violation
of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206
and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding
and abetting breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amount of compensatory damages and punitive damages, rescission of
their contracts with the Adviser, including recovery of all fees paid to the
Adviser pursuant to such contracts, an accounting of all fund-related fees,
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York,
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 27
(ii) assert claims substantially identical to the Aucoin Complaint, and (iii)
are brought on behalf of shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs' claim under Section 36(b) of the Investment Company Act. On January
11, 2006, the District Court granted defendants' motion for reconsideration and
dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court
denied plaintiffs' motion for leave to file an amended complaint. On July 5,
2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was
withdrawn by stipulation, with plaintiffs reserving the right to reinstate it
at a later date.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell
investments held by those funds to provide for sufficient liquidity and could
also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds. However, the Adviser believes that these
matters are not likely to have a material adverse effect on its ability to
perform advisory services relating to the AllianceBernstein Mutual Funds.
NOTE K
Recent Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in
the course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded in the current period. Adoption of FIN 48 is required for
fiscal years beginning after December 15, 2006 and is to be applied to all open
tax years as of the effective date. At this time, management is evaluating the
implications of FIN 48 and its impact on the financial statements has not yet
been determined.
28 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
On September 20, 2006, the FASB released Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an
authoritative definition of fair value, sets out a framework for measuring fair
value, and requires additional disclosures about fair-value measurements. The
application of FAS 157 is required for fiscal years beginning after November
15, 2007 and interim periods within those fiscal years. At this time,
management is evaluating the implications of FAS 157 and its impact on the
financial statements has not yet been determined.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 29
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $15.42 $14.69 $13.27 $10.85 $13.09
Income From Investment
Operations
Net investment income
(loss)(a) .09 .05 .10(b) (.01) (.01)
Net realized and unrealized
gain (loss) on investment
transactions 1.54 .93 1.32 2.43 (2.23)
Net increase (decrease) in
net asset value from
operations 1.63 .98 1.42 2.42 (2.24)
Less: Dividends and
Distributions
Dividends from net investment
income -0- (.10) -0- -0- -0-
Distributions from net realized
gain on investment
transactions (.92) (.15) -0- -0- -0-
Total dividends and
distributions (.92) (.25) -0- -0- -0-
Net asset value,
end of period $16.13 $15.42 $14.69 $13.27 $10.85
Total Return
Total investment return based
on net asset value(c) 11.20% 6.67% 10.70% 22.30% (17.11)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $134,079 $175,285 $224,377 $163,169 $75,413
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.21%(d) 1.27% 1.19% 1.51% 1.59%
Expenses, before waivers/
reimbursements 1.21%(d) 1.27% 1.34% 1.51% 1.59%
Net investment
income (loss) .59%(d) .36% .73%(b) (.12)% (.10)%
Portfolio turnover rate 133% 152% 132% 159% 218%
See footnote summary on page 35.
30 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
------------------------------------------------------------------
Year Ended November 30,
------------------------------------------------------------------
2006 2005 2004 2003 2002
----------- ------------ ------------- ----------- -----------
Net asset value,
beginning of period $14.89 $14.20 $12.92 $10.64 $12.93
Income From Investment
Operations
Net investment loss(a) (.02) (.05) -0-(b)(e) (.10) (.10)
Net realized and unrealized
gain (loss) on investment
transactions 1.48 .89 1.28 2.38 (2.19)
Net increase (decrease) in
net asset value from
operations 1.46 .84 1.28 2.28 (2.29)
Less: Distributions
Distributions from net realized
gain on investment
transactions (.92) (.15) -0- -0- -0-
Net asset value,
end of period $15.43 $14.89 $14.20 $12.92 $10.64
Total Return
Total investment return based
on net asset value(c) 10.41% 5.90% 9.91% 21.43% (17.71)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $118,437 $164,194 $202,459 $183,098 $110,968
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.94%(d) 2.00% 1.92% 2.25% 2.32%
Expenses, before waivers/
reimbursements 1.94%(d) 2.00% 2.07% 2.25% 2.32%
Net investment loss (.14)%(d) (.37)% (.03)%(b) (.87)% (.84)%
Portfolio turnover rate 133% 152% 132% 159% 218%
See footnote summary on page 35.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 31
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
-----------------------------------------------------------------
Year Ended November 30,
-----------------------------------------------------------------
2006 2005 2004 2003 2002
----------- ----------- ------------- ----------- -----------
Net asset value,
beginning of period $14.88 $14.19 $12.91 $10.63 $12.92
Income From Investment
Operations
Net investment loss(a) (.02) (.05) -0-(b)(e) (.10) (.10)
Net realized and unrealized
gain (loss) on investment
transactions 1.48 .89 1.28 2.38 (2.19)
Net increase (decrease) in
net asset value from
operations 1.46 .84 1.28 2.28 (2.29)
Less: Distributions
Distributions from net realized
gain on investment
transactions (.92) (.15) -0- -0- -0-
Net asset value,
end of period $15.42 $14.88 $14.19 $12.91 $10.63
Total Return
Total investment return based
on net asset value(c) 10.42% 5.90% 9.91% 21.45% (17.72)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $49,794 $67,622 $82,312 $71,348 $37,810
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.92%(d) 1.99% 1.90% 2.22% 2.30%
Expenses, before waivers/
reimbursements 1.92%(d) 1.99% 2.05% 2.22% 2.30%
Net investment loss (.12)%(d) (.36)% (.01)%(b) (.84)% (.82)%
Portfolio turnover rate 133% 152% 132% 159% 218%
See footnote summary on page 35.
32 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class R
--------------------------------------------------
November 3,
Year Ended November 30, 2003(f) to
------------------------------------- November 30,
2006 2005 2004 2003
----------- ----------- ----------- -----------
Net asset value, beginning of period $15.39 $14.66 $13.27 $13.16
Income From Investment Operations
Net investment income (loss)(a) .06 .03 .18(b) -0-(e)
Net realized and unrealized gain on
investment transactions 1.53 .92 1.21 .11
Net increase in net asset value from
operations 1.59 .95 1.39 .11
Less: Dividends and Distributions
Dividends from net investment income -0- (.07) -0- -0-
Distributions from net realized gain on
investment transactions (.92) (.15) -0- -0-
Total dividends and distributions (.92) (.22) -0- -0-
Net asset value, end of period $16.06 $15.39 $14.66 $13.27
Total Return
Total investment return based on net
asset value(c) 10.94% 6.47% 10.48% .84%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $1,665 $928 $241 $10
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.44%(d) 1.60% 1.45% 1.83%(g)
Expenses, before waivers/
reimbursements 1.44%(d) 1.60% 1.59% 1.83%(g)
Net investment income (loss) .42%(d) .19% 1.25%(b) (.26)%(g)
Portfolio turnover rate 133% 152% 132% 159%
See footnote summary on page 35.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 33
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class K
-----------------------
Year Ended March 1,
November 2005(f) to
30, November 30,
2006 2005
---------- ----------
Net asset value, beginning of period $15.43 $15.27
Income From Investment Operations
Net investment income(a) .15 .05
Net realized and unrealized gain on
investment transactions 1.51 .11
Net increase in net asset value from
operations 1.66 .16
Less: Distributions
Distributions from net realized gain on
investment transactions (.92) -0-
Net asset value, end of period $16.17 $15.43
Total Return
Total investment return based on net asset
value(c) 11.39% 1.05%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $335 $10
Ratio to average net assets of:
Expenses 1.04%(d) 1.23%(g)
Net investment income .96%(d) .48%(g)
Portfolio turnover rate 133% 152%
See footnote summary on page 35.
34 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class I
-----------------------
Year Ended March 1,
November 2005(f) to
30, November 30,
2006 2005
---------- ----------
Net asset value, beginning of period $15.47 $15.27
Income From Investment Operations
Net investment income(a) .19 .09
Net realized and unrealized gain on
investment transactions 1.51 .11
Net increase in net asset value from
operations 1.70 .20
Less: Distributions
Distributions from net realized gain on
investment transactions (.92) -0-
Net asset value, end of period $16.25 $15.47
Total Return
Total investment return based on net asset
value(c) 11.64% 1.31%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $248 $10
Ratio to average net assets of:
Expenses .73%(d) .96%(g)
Net investment income 1.34%(d) .77%(g)
Portfolio turnover rate 133% 152%
(a) Based on average shares outstanding.
(b) Net of fees and expenses waived by the Adviser and Transfer Agent.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
defered sales charge is not reflected in the calculation of the total
investment return. Total return does not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
Total investment return calculated for a period of less than one year is not
annualized.
(d) The ratio includes expenses attributable to costs of proxy solicitation.
(e) Amount is less than $0.005.
(f) Commencement of distributions.
(g) Annualized.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
AllianceBernstein Focused Growth & Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
AllianceBernstein Focused Growth & Income Fund, Inc. (the "Fund"), including
the portfolio of investments, as of November 30, 2006, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of November 30, 2006 by correspondence with
the custodian and others, or by other appropriate auditing procedures where
replies from others were not received. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
AllianceBernstein Focused Growth & Income Fund, Inc. at November 30, 2006, and
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated periods, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
January 22, 2007
36 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
TAX INFORMATION
(unaudited)
For the fiscal year ended November 30, 2006, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided for by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. The Fund designates a maximum
amount of $5,823,304 as qualified dividend income, which is taxed at a maximum
rate of 15%.
In addition, the Fund designates $13,442,727 from distributions paid in the
fiscal year ended November 30, 2006 as long-term capital gain dividends.
For corporate shareholders, 44.99% of the total ordinary income distribution
paid during the current fiscal year ended November 30, 2006 qualifies for the
corporate dividends received deduction.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns, will be included
with your Form 1099-DIV which will be sent to you separately in January 2007.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 37
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President and Chief Executive Officer
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Marshall C. Turner, Jr.(1)
Earl D. Weiner(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Frank V. Caruso(2), Senior Vice President
Paul C. Rissman, Senior Vice President
Stephen Pelensky, Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and Chief Financial Officer
Vincent S. Noto, Controller
Custodian
State Street Bank & Trust Company
One Lincoln Street
Boston, MA 02111
Principal Underwriter
AllianceBernstein Investments, Inc.
1345 Avenue of the Americas
New York, NY 10105
Transfer Agent
AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-free (800) 221-5672
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee, the Governance and Nominating Committee and
the Independent Directors Committee.
(2) The management of and investment decisions for the Fund are made by the
Adviser's Relative Value Investment Team. While the members of the team work
jointly to determine the investment strategy, including security selection, for
the Fund, Mr. Frank Caruso, CIO of the Adviser's Relative Value Investment
Team, is primarily responsible for the day-to-day management of the Fund.
38 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS,* PRINCIPAL COMPLEX DIRECTORSHIPS
AGE, OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED**) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ---------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr., # Investment Adviser and an 110 None
Chairman of the Board Independent Consultant. He
74 was formerly Senior Manager
(1999) of Barrett Associates, Inc., a
registered investment adviser,
with which he had been
associated since prior to 2002.
He was formerly Deputy
Comptroller and Chief Investment
Officer of the State of New York
and, prior thereto, Chief
Investment Officer of the
New York Bank for Savings.
David H. Dievler, # Independent Consultant. Until 109 None
77 December 1994 he was Senior
(1999) Vice President of AllianceBernstein
Corporation ("AB Corp.") (formerly
Alliance Capital Management
Corporation) responsible for mutual
fund administration. Prior to joining
AB Corp. in 1984, he was Chief
Financial Officer of Eberstadt Asset
Management since 1968. Prior to
that, he was a Senior Manager at
Price Waterhouse & Co. Member
of American Institute of Certified
Public Accountants since 1953.
John H. Dobkin, # Consultant. Formerly President 108 None
64 of Save Venice, Inc. (preservation
(1999) organization) from 2001-2002;
Senior Advisor from June
1999 - June 2000 and President
of Historic Hudson Valley (historic
preservation) from December
1989 - May 1999. Previously,
Director of the National Academy
of Design and during 1988-1992,
Director and Chairman of the Audit
Committee of AB Corp. (formerly
Alliance Capital Management
Corporation).
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 39
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS,* PRINCIPAL COMPLEX DIRECTORSHIPS
AGE, OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED**) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ---------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS (continued)
Michael J. Downey, # Consultant since January 2004. 108 Asia Pacific
63 Formerly managing partner of Fund, Inc.,
(2005) Lexington Capital, LLC (investment and The
advisory firm) from December 1997 Merger Fund.
until December 2003. Prior thereto,
Chairman and CEOof Prudential
Mutual Fund Management from
1987 to 1993.
D. James Guzy, # Chairman of the Board of PLX 108 Intel
70 Technology (semi-conductors) Corporation
(2005) and of SRC Computers, Inc. (semi-
with which he has been associated conductors)
since prior to 2002. He is also and Cirrus
President of the Arbor Company Logic
(private family investments). Corporation
(semi-
conductors).
Nancy P. Jacklin, # Formerly U.S. Executive Director 108 None
58 of the International Monetary Fund
(2006) (December 2002-May 2006); partner,
Clifford Chance (1992-2002); Senior
Counsel, International Banking and
Finance, and Associate General
Counsel, Citicorp (1985-1992);
Assistant General Counsel
(International), Federal Reserve
Board of Governors (1982-1985);
and Attorney Advisor, U.S. Department
of the Treasury (1973-1982). Member
of the Bar of the District of Columbia
and of New York; member of the
Council on Foreign Relations.
40 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS,* PRINCIPAL COMPLEX DIRECTORSHIPS
AGE, OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED**) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ---------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS (continued)
Marshall C. Turner, Jr., # Principal of Turner Venture 108 The
65 Associates (venture capital George
(2005) and consulting) since prior to Lucas
2002. From 2003 until May 31 Educational
2006, he was CEO of Toppan, Foundation,
Photomasks, Inc., Austin, and
Texas. (semi-conductor National
manufacturing services). Datacast,
Inc.
Earl D. Weiner, # Of Counsel, and partner from 107 None
67 1976-2006, of the law firm
(2007) Sullivan & Cromwell LLP, special-
izing in investment management,
corporate and securities law.
INTERESTED DIRECTOR
Marc O. Mayer,+ Executive Vice President of 108 SCB Partners,
1345 Avenue of the the Adviser since prior to 2002, and Inc. and
Americas Executive Managing Director of SCB, Inc.
New York, NY 10105 AllianceBernstein Investments,
49 Inc. ("ABI") since 2003; prior thereto,
(2003) he was head of AllianceBernstein
Institutional Investments, a unit of
the Adviser from 2001-2003. Prior
thereto, Chief Executive Officer of
Sanford C. Bernstein & Co., LLC
(institutional research and brokerage
arm of Bernstein & Co. LLC) ("SCB
& Co.") and its predecessor since
prior to 2002.
* The address for each of the Fund's Independent Directors is c/o
AllianceBernstein L.P. Attn: Philip L. Kirstein, 1345 Avenue of the Americas,
New York, NY10105.
** There is no stated term of office for the Fund's Directors.
+ Mr. Mayer is an "interested person," as defined in the 1940 Act, due to his
position as an Executive Vice President of the Advisor.
# Member of the Audit Committee, Governance and Nominating Committee and the
Independent Directors Committee.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 41
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND AGE HELD WITH FUND DURING PAST 5 YEARS**
- --------------------------------------------------------------------------------------------------------------
Marc O. Mayer President and Chief See biography above.
49 Executive Officer
Frank V. Caruso Senior Vice President Senior Vice President of the Adviser,**
50 with which he has been associated
since prior to 2002.
Paul C. Rissman Senior Vice President Executive Vice President of the
50 Adviser** with which he has been
associated since prior to 2002.
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
61 and Independent Compliance Officerof the Alliance-
Compliance Officer Bernstein Funds with which he has
been associated since October 2004.
Prior thereto, he was Of Counsel to
Kirkpatrick & Lockhart, LLP from
October 2003 to October 2004, and
General Counsel of Merrill Lynch
Investment Managers L.P. since prior
to 2002 until March 2003.
Stephen W. Pelensky Vice President Senior Vice President of the Adviser,**
51 with which he has been associated
since prior to 2002.
Emilie D. Wrapp Secretary Senior Vice President, Assistant
51 General Counsel and Assistant
Secretary of AllianceBernstein
Investments Inc. ("ABI")** with which
she has been associated since prior
to 2002.
Joseph J. Mantineo Treasurer and Chief Senior Vice President of
47 Financial Officer AllianceBernstein Investor Services
("ABIS")**, with which he has been
associated since prior to 2002.
Vincent S. Noto Controller Vice President of ABIS,** with which
42 he has been associated since prior to
2002.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** The Adviser, ABI, ABIS and SCB & Co. are affiliates of the Fund.
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative or AllianceBernstein
at (800) 227-4618 for a free prospectus or SAI.
42 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Information Regarding the Review and Approval of the Fund's Advisory Agreement
The Fund's disinterested directors (the "directors") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser at a
meeting held on June 14, 2006.
In preparation for the meeting, the directors had requested from the Adviser
and received and evaluated extensive materials, including performance and
expense information for other investment companies with similar investment
objectives as the Fund derived from data compiled by Lipper Inc. ("Lipper"),
which is not affiliated with the Adviser. The directors also reviewed an
independent evaluation from the Fund's Senior Officer (who is also the Fund's
Independent Compliance Officer) of the reasonableness of the advisory fees in
the Fund's Advisory Agreement (as contemplated by the September 2004 Assurance
of Discontinuance between the Adviser and the New York Attorney General)
wherein the Senior Officer concluded that such fees were reasonable. In
addition, the directors received a presentation from the Adviser and had an
opportunity to ask representatives of the Adviser various questions relevant to
the proposed approval. The directors noted that the Senior Officer's evaluation
considered the following factors: management fees charged to institutional and
other clients of the Adviser for like services; management fees charged by
other mutual fund companies for like services; cost to the Adviser and its
affiliates of supplying services pursuant to the Advisory Agreement, excluding
any intra-corporate profit; profit margins of the Adviser and its affiliates
from supplying such services; possible economies of scale as the Fund grows
larger; and nature and quality of the Adviser's services including the
performance of the Fund.
Prior to voting, the directors reviewed the proposed continuance of the
Advisory Agreement with management and with experienced counsel who are
independent of the Adviser and received a memorandum from such counsel
discussing the legal standards for their consideration of the proposed
continuance. The directors also discussed the proposed continuance in two
private sessions at which only the directors, their independent counsel and the
Fund's Independent Compliance Officer were present. In reaching their
determinations relating to continuance of the Advisory Agreement, the directors
considered all factors they believed relevant, including the following:
1. information comparing the performance of the Fund to other investment
companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance, administrative
and other services rendered by the Adviser;
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 43
3. payments received by the Adviser from all sources in respect of the Fund
and all investment companies in the AllianceBernstein Funds complex;
4. the costs borne by, and profitability of, the Adviser and its affiliates in
providing services to the Fund and to all investment companies in the
AllianceBernstein Funds complex;
5. comparative fee and expense data for the Fund and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the extent the
Fund grows and whether fee levels reflect any economies of scale for the
benefit of investors;
7. the Adviser's policies and practices regarding allocation of portfolio
transactions of the Fund, including the extent to which the Adviser benefits
from soft dollar arrangements;
8. information about "revenue sharing" arrangements that the Adviser has
entered into in respect of the Fund;
9. portfolio turnover rates for the Fund compared to other investment
companies with similar investment objectives;
10. fall-out benefits that the Adviser and its affiliates receive from their
relationships with the Fund;
11. information about fees charged by the Adviser to other clients with a
substantially similar investment style as the Fund;
12. the Senior Officer's evaluation of the reasonableness of the fee payable
to the Adviser in the Advisory Agreement;
13. the professional experience and qualifications of the Fund's portfolio
management team and other senior personnel of the Adviser; and
14. the terms of the Advisory Agreement.
The directors also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Fund gained from their experience as
directors or trustees of most of the registered investment companies advised by
the Adviser, their overall confidence in the Adviser's integrity and competence
they have gained from that experience and the Adviser's responsiveness to
concerns raised by them in the past, including the Adviser's willingness to
consider
44 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
and implement organizational and operational changes designed to improve
investment results and the services provided to the AllianceBernstein Funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and different directors may
have attributed different weights to the various factors.
The directors determined that the overall arrangements between the Fund and the
Adviser, as provided in the Advisory Agreement, were fair and reasonable in
light of the services performed, expenses incurred and such other matters as
the directors considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the directors
reaching their determinations to approve the continuance of the Advisory
Agreement (including their determinations that the Adviser should continue to
be the investment adviser for the Fund, and that the fees payable to the
Adviser pursuant to the Advisory Agreement are appropriate) were separately
discussed by the directors.
Nature, Extent and Quality of Services Provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser, subject to
the oversight of the directors, administers the Fund's business and other
affairs. The Adviser manages the investment of the assets of the Fund,
including making purchases and sales of portfolio securities consistent with
the Fund's investment objective and policies. Under the Advisory Agreement, the
Adviser also provides the Fund with such office space, administrative and other
services (exclusive of, and in addition to, any such services provided by any
others retained by the Fund) and executive and other personnel as are necessary
for the Fund's operations. The Adviser pays all of the compensation of
directors of the Fund who are affiliated persons of the Adviser and of the
officers of the Fund.
The directors also considered that the Advisory Agreement provides that the
Fund will reimburse the Adviser for the cost of certain clerical, accounting,
administrative and other services provided at the Fund's request by employees
of the Adviser or its affiliates. Requests for these "at no more than cost"
reimbursements are approved by the directors on a quarterly basis and (to the
extent requested and paid) result in a higher rate of total compensation from
the Fund to the Adviser than the fee rates stated in the Fund's Advisory
Agreement.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided by advisers of funds had expanded over time as a result of regulatory
and other developments. The directors noted, for example, that the Adviser is
responsible for maintaining and monitoring its own and, to varying degrees, the
Fund's compliance programs, and that these compliance programs have recently
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 45
been refined and enhanced in light of new regulatory requirements. The
directors considered the quality of the in-house investment research
capabilities of the Adviser and the other resources it has dedicated to
performing services for the Fund. The quality of administrative and other
services, including the Adviser's role in coordinating the activities of the
Fund's other service providers, also were considered. The directors also
considered the Adviser's response to recent regulatory compliance issues
affecting a number of the investment companies in the AllianceBernstein Funds
complex. The directors concluded that, overall, they were satisfied with the
nature, extent and quality of services provided to the Fund under the Advisory
Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues, expenses and related notes
indicating the profitability of the Fund to the Adviser for calendar years 2004
and 2005 that had been prepared with an updated expense allocation methodology.
The directors noted that the updated expense allocation methodology differed in
various respects from the methodology used in prior years. The directors
reviewed the assumptions and methods of allocation used by the Adviser in
preparing fund-specific profitability data, and noted the Adviser's
representation to them that it believed that the methods of allocation used in
preparing the profitability information were reasonable and appropriate and
that the Adviser had previously discussed with the directors that there is no
generally accepted allocation methodology for information of this type.
The directors recognized that it is difficult to make comparisons of
profitability from fund advisory contracts because comparative information is
not generally publicly available and is affected by numerous factors, including
the structure of the particular adviser, the types of funds it manages, its
business mix, numerous assumptions regarding allocations and the adviser's
capital structure and cost of capital. In considering profitability
information, the directors considered the effect of fall-out benefits on the
Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser
has entered into with certain entities that distribute shares of the Fund. The
directors focused on the profitability of the Adviser's relationship with the
Fund before taxes and distribution expenses. The directors recognized that the
Adviser should generally be entitled to earn a reasonable level of profits for
the services it provides to the Fund and, based on their review, concluded that
they were satisfied that the Adviser's level of profitability from its
relationship with the Fund was not excessive.
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many of
the brokers and dealers that execute purchases and sales of securities on
behalf of its clients on an agency basis. They noted that the Adviser makes
annual presentations to the directors regarding its trading practices and
brokerage allocation policies,
46 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
including its policies with respect to soft dollar arrangements. The directors
noted that the Adviser has represented to them that all of its soft dollar
arrangements are consistent with applicable legal requirements including the
achievement of best execution.
The directors also considered that the Distributor, which is a wholly-owned
subsidiary of the Adviser, receives 12b-1 fees from the Fund in respect of
classes of shares of the Fund that are subject to the Fund's 12b-1 plan and
retains a portion of such 12b-1 fees, and receives all or a portion of the
sales charges on sales or redemptions of certain classes of shares. The
directors also noted that certain affiliates of the Adviser distribute shares
of the Fund and receive compensation in that connection, that a subsidiary of
the Adviser provides transfer agency services to the Fund and receives
compensation from the Fund for such services, and that brokers who are
affiliated with the Adviser are permitted to execute brokerage transactions for
the Fund subject to satisfaction of certain requirements and receive brokerage
commissions from the Fund and liquidity rebates from electronic communication
networks in connection with certain of such transactions.
The directors recognized that the Adviser's profitability would be somewhat
lower if it did not receive research for soft dollars or if the Adviser's
affiliates did not receive the other benefits described above. The directors
understood that the Adviser also might derive reputational and other benefits
from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the
meeting, the directors receive detailed comparative performance information for
the Fund at each regular Board meeting during the year. At the meeting, the
directors reviewed information from a report prepared by Lipper showing
performance of the Class A Shares of the Fund as compared to a group of 12 to
10 funds (depending on the year) in its Lipper category selected by Lipper (the
"Performance Group") and as compared to a universe of 170 to 84 funds
(depending on the year) in its Lipper category selected by Lipper (the
"Performance Universe") for periods ended December 31, 2005 over the 1-, 3- and
5-year periods and information prepared by the Adviser showing performance of
the Class A Shares of the Fund as compared to the Russell 1000 Value Index (the
"Index") for periods ended December 31, 2005 over the 1-, 3- and 5-year and
since inception periods (December 1999 inception). The directors noted that in
the Performance Group and Performance Universe comparisons the Fund was in the
5th quintile in the 1-year period, 3rd quintile in the 3-year period and 2nd
quintile in the 5-year period. The comparative information showed that the Fund
outperformed the Index in the since inception period and underperformed the
Index in all other periods reviewed. Based on their review and discussion of
the reasons for the Fund's recent underperformance with the Adviser, the
directors retained confidence in the Adviser's ability to continue to
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 47
advise the Fund and concluded that the Fund's investment performance was
understandable. The directors informed the Adviser that they planned to closely
monitor the Fund's performance.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by the Fund to the Adviser
and information prepared by Lipper concerning fee rates paid by other funds in
the same Lipper category as the Fund at a common asset level. The directors
recognized that it is difficult to make comparisons of advisory fees because
there are variations in the services that are included in the fees paid by
other funds.
The directors also considered the fees the Adviser charges other clients with a
substantially similar investment style as the Fund. For this purpose, they
reviewed information in the Adviser's Form ADV and a chart prepared by the
Adviser disclosing the institutional fee schedule for institutional products
managed by it that have a substantially similar investment style as the Fund.
They had previously received an oral presentation from the Adviser that
supplemented such information. The directors noted that the institutional fee
schedule for clients with a substantially similar investment style as the Fund
had breakpoints at much lower asset levels than those in the fee schedule
applicable to the Fund and that the application of such fee schedule to the
level of assets of the Fund would result in a fee rate that would be
significantly lower than that in the Fund's Advisory Agreement. The directors
noted that the Adviser may, in some cases, negotiate fee rates with large
institutional clients that are lower than those reviewed by the directors and
that they had previously discussed with the Adviser its policies in respect of
such negotiated arrangements. The directors also reviewed information that
indicated that the Adviser sub-advises a registered investment company that has
investment strategies similar to the Fund at lower fee rates than those paid by
the Fund. The directors also noted that the Adviser advises two other
AllianceBernstein Funds with a substantially similar investment style as the
Fund for the same fee schedule as the Fund.
The Adviser reviewed with the directors the significant differences in the
scope of services it provides to institutional clients and sub-advised funds
and to the Fund. For example, the Advisory Agreement requires the Adviser to
provide, in addition to investment advice, office facilities and officers
(including officers to provide required certifications). The Adviser also
coordinates the provision of services to the Fund by non-affiliated service
providers and is responsible for the compensation of the Fund's Independent
Compliance Officer and certain related expenses. The provision of these
non-advisory services involves costs and exposure to liability. The Adviser
explained that many of these services normally are not provided to
non-investment company clients or to investment company clients when the
Adviser acts in a pure sub-advisory capacity, and that fees charged to the Fund
reflect the costs and risks of the additional obligations. The Adviser also
noted that since the Fund is constantly issuing and redeeming its
48 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
shares, it is more difficult to manage than an institutional account, where the
assets are relatively stable. In light of these facts, the directors did not
place significant weight on these fee comparisons.
The directors also considered the total expense ratio of the Class A shares of
the Fund in comparison to the fees and expenses of funds within two comparison
groups created by Lipper: an Expense Group and an Expense Universe. Lipper
described an Expense Group as a representative sample of comparable funds and
an Expense Universe as a broader group, consisting of all funds in the
investment classification/objective with a similar load type as the Fund. The
Class A expense ratio of the Fund was based on the Fund's latest fiscal year
expense ratio. The directors recognized that the expense ratio information for
the Fund potentially reflected on the Adviser's provision of services, as the
Adviser is responsible for coordinating services provided to the Fund by
others. The directors noted that it was likely that the expense ratios of some
funds in the Fund's Lipper category also were lowered by waivers or
reimbursements by those funds' investment advisers, which in some cases were
voluntary and perhaps temporary.
The directors noted that the Fund's at approximate current size contractual
effective fee rate of 55 basis points was significantly lower than the Expense
Group median, and that the latest fiscal year administrative expense
reimbursement by the Fund pursuant to the Advisory Agreement was two basis
points. The directors also noted that the Fund's total expense ratio, which had
been capped by the Adviser (although the expense ratio was currently
significantly lower than the cap), was the same as the Expense Group median and
slightly lower than the Expense Universe median. The directors concluded that
the Fund's expense ratio was satisfactory.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains
breakpoints so that, if assets were to increase over the breakpoint levels, the
fee rates would be reduced on the incremental assets. The directors also
considered a presentation by an independent consultant discussing economies of
scale issues in the mutual fund industry. The directors believe that economies
of scale are realized (if at all) by the Adviser across a variety of products
and services, and not only in respect of a single fund. The directors noted
that there is no uniform methodology for establishing breakpoints that give
effect to fund-specific services provided by the Adviser and to the economies
of scale that the Adviser may realize in its overall mutual fund business or
those components of it which directly or indirectly affect the Fund's
operations. The directors observed that in the mutual fund industry as a whole,
as well as among funds similar to the Fund, there is no uniformity or pattern
in the fees and asset levels at which breakpoints (if any) apply. Depending on
the age and size of a particular fund and its adviser's cost structure,
different conclusions can be drawn as to whether there are economies of scale
to be realized at any particular level of assets, notwithstanding
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 49
the intuitive conclusion that such economies exist, or will be realized at some
level of total assets. Moreover, because different advisers have different cost
structures and service models, it is difficult to draw meaningful conclusions
from the comparison of a fund's advisory fee breakpoints with those of
comparable funds. The directors also noted that the advisory agreements for
many funds do not have breakpoints at all. Having taken these factors into
account, the directors concluded that the Fund's breakpoint arrangements would
result in a sharing of economies of scale in the event of a very significant
increase in the Fund's net assets.
50 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICER'S EVALUATION OF
INVESTMENT ADVISORY AGREEMENT(1)
The following is a summary of the evaluation of the Investment Advisory
Agreement between AllianceBernstein L.P. (the "Adviser") and AllianceBernstein
Focused Growth & Income Fund, Inc. (the "Fund"), prepared by Philip L.
Kirstein, the Senior Officer of the Fund for the Directors of the Fund, as
required by an August 2004 agreement between the Adviser and the New York State
Attorney General (the "NYAG").(2) The Senior Officer's evaluation of the
Investment Advisory Agreement is not meant to diminish the responsibility or
authority of the Board of Directors of the Fund to perform its duties pursuant
to Section 15 of the Investment Company Act of 1940 (the "40 Act") and
applicable state law. The purpose of the summary is to provide shareholders
with a synopsis of the independent evaluation of the reasonableness of the
advisory fees proposed to be paid by the Fund which was provided to the
Directors in connection with their review of the proposed approval of the
continuance of the Investment Advisory Agreement. The Senior Officer's
evaluation considered the following factors:
1. Management fees charged to institutional and other clients of the Adviser
for like services;
2. Management fees charged by other mutual fund companies for like services;
3. Costs to the Adviser and its affiliates of supplying services pursuant to
the advisory agreement, excluding any intra-corporate profit;
4. Profit margins of the Adviser and its affiliates from supplying such
services;
5. Possible economies of scale as the Fund grows larger; and
6. Nature and quality of the Adviser's services including the performance of
the Fund.
FUND ADVISORY FEES, EXPENSE CAPS, REIMBURSEMENTS & RATIOS
The Adviser proposed that the Fund pay the advisory fee set forth in the table
below for receiving the services to be provided pursuant to the Investment
Advisory Agreement. The fee schedule below, implemented in January 2004 in
connection with the Adviser's settlement with the NYAG in December 2003, is
(1) It should be noted that the information in the fee summary was completed
on June 2, 2006 and presented to the Board of Directors on June 14, 2006 in
accordance with the Assurance of Discontinuance between the NYAG and the
Adviser. It also should be noted that references in the fee summary pertaining
to performance and expense ratios refer to Class A shares of the Fund.
(2) Future references to the Fund do not include "AllianceBernstein."
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 51
based on a master schedule that contemplates eight categories of funds with
almost all funds in each category having the same advisory fee schedule.(3)
Net Assets Advisory Fee
02/28/06 Based on % of Average
Category (million) Daily Net Assets Fund
- -------------------------------------------------------------------------------
Value $373.5 55 bp on 1st $2.5 billion Focused Growth
45 bp on next $2.5 billion & Income Fund, Inc.
40 bp on the balance
The Adviser is reimbursed as specified in the Investment Advisory Agreement for
certain clerical, legal, accounting, administrative and other services provided
to the Fund. Indicated below is the reimbursement amount, which the Adviser
received from the Fund in the Fund's most recently completed fiscal year,
expressed in dollars and as a percentage of average daily net assets:
As a % of Average
Fund Amount Daily Net Assets
- -------------------------------------------------------------------------------
Focused Growth & Income Fund, Inc. $89,751 0.02%
The Adviser agreed to waive that portion of its management fees and/or
reimburse the Fund for that portion of its total operating expenses to the
degree necessary to limit the Fund's expense ratios to the amounts set forth
below for the Fund's fiscal year. The waiver is terminable by the Adviser at
the end of the Fund's fiscal year upon at least 60 days written notice prior to
the termination date of the undertaking. It should be noted that the Fund was
operating below its expense cap as of its most recent fiscal year end;
accordingly the expense limitation undertaking of the Fund was of no effect.
Expense Cap
Pursuant to
Expense Gross
Limitation Expense Fiscal
Fund Undertaking Ratio Year End
- -------------------------------------------------------------------------------
Focused Growth & Income Class A-2.50% 1.27% November 30
Fund, Inc. Class B-3.20% 2.00%
Class C-3.20% 1.99%
Class R-2.70% 1.60%
Class K-2.45% 1.23%
Class I-2.20% 0.96%
(3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages,
were affected by the Adviser's settlement with the NYAG.
52 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The management fees charged to investment companies which the Adviser manages
and sponsors are normally higher than those charged to similar sized
institutional accounts, including pension plans and sub-advised investment
companies. The fee differential reflects, among other things, different
services provided to such clients, and different liabilities assumed. Services
provided by the Adviser to the Fund that are not provided to non-investment
company clients include providing office space and personnel to serve as Fund
Officers, who among other responsibilities make the certifications required
under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the
Fund's third party service providers such as Fund counsel, auditors,
custodians, transfer agents and pricing services. The accounting,
administrative, legal and compliance requirements for the Fund are more costly
than those for institutional assets due to the greater complexities and time
required for investment companies, although as previously noted, a portion of
these expenses is reimbursed by the Fund to the Adviser. Also, retail mutual
funds managed by the Adviser are widely held. Servicing the Fund's investors is
more time consuming and labor intensive compared to institutional clients since
the Adviser needs to communicate with a more extensive network of financial
intermediaries and shareholders. In addition, managing the cash flow of an
investment company may be more difficult than that of a stable pool of assets,
such as an institutional account with little cash movement in either direction,
particularly, if the Fund is in net redemption and the Adviser is frequently
forced to sell securities to raise cash for redemptions. However, managing a
fund with positive cash flow may be easier at times than managing a stable pool
of assets. Finally, in recent years, investment advisers have been sued by
institutional clients and have suffered reputational damage both by the
attendant publicity and outcomes other than complete victories. Accordingly,
the legal and reputational risks associated with institutional accounts are
greater than previously thought, although still not equal to those related to
the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, it is worth considering information regarding the
advisory fees charged to institutional accounts with a substantially similar
investment style as the Fund. It should be noted that the Adviser has indicated
that with respect to institutional accounts with assets greater than $300
million, it will negotiate a fee schedule. Discounts that are negotiated vary
based upon each client relationship. In addition to the AllianceBernstein
Institutional fee schedule, set forth below is what would have been the
effective advisory fee of the Fund had the
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 53
AllianceBernstein Institutional fee schedule been applicable to the Fund versus
the Fund's advisory fee:
Net Assets AllianceBernstein ("AB") Effective Fund
02/28/06 Institutional ("Inst.") AB Inst. Advisory
Fund ($MIL) Fee Schedule Adv. Fee Fee(4)
- -------------------------------------------------------------------------------
Focused Growth & $ 373.5 Relative Value 0.327% 0.550%
Income Fund, Inc. 65 bp on 1st $25 million
50 bp on next $25 million
40 bp on next $50 million
30 bp on next $100 million
25 bp on the balance
Minimum Account Size: $10 m
The AllianceBernstein Variable Products Series Fund, Inc. ("AVPS"), which is
managed by the Adviser and is available through variable annuity and variable
life contracts offered by other financial institutions, offers investors the
option to invest in a portfolio that has a similar investment style as the
Fund. The following table shows the fee schedule of such AVPS portfolio:
Fund AVPS Portfolio Fee Schedule
- -------------------------------------------------------------------------------
Focused Growth Growth & Income 0.55% on first $2.5 billion
& Income Fund, Inc. Portfolio 0.45% on next $2.5 billion
0.40% on the balance
The Adviser also manages and sponsors retail mutual funds, which are organized
in jurisdictions outside the United States, generally Luxembourg and Japan, and
sold to non-United States resident investors. The Adviser charges the following
"all-in" fee(5) for the Luxembourg fund that has a somewhat similar investment
strategy as the Fund:
Fund Fee
- -------------------------------------------------------------------------------
Equity Value 1.50%
The Adviser provides sub-advisory investment services to certain other
investment companies managed by other fund families. The Adviser charges the
following fees for each of these sub-advisory relationships.
(4) Fund advisory fee information was provided by Lipper. See Section II for
additional discussion.
(5) The "all-in" fee shown is for the class A shares of Equity Value. This
includes a fee for investment advisory services and a separate fee for
distribution related services.
54 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
Fund Sub-advised Fund Fee Schedule
- -------------------------------------------------------------------------------
Focused Growth & Client # 1 0.30% on first $1 billion
Income Fund, Inc. 0.25% on next $500 million
0.20% thereafter
Client # 2 0.60% on first $1 billion
0.55% thereafter
Client # 3(6) 0.60% on first $1 billion
0.55% on next $500 million
0.50% on next $500 million
0.45% on next $500 million
0.40% thereafter
Client # 4(6) 0.30%
It is fair to note that the services the Adviser provides pursuant to
sub-advisory agreements are generally confined to the services related to the
investment process; in other words, they are not as comprehensive as the
services provided to the Fund by the Adviser. In addition, to the extent that
certain of these sub-advisory relationships are with affiliates of the Adviser,
the fee schedules may not reflect arms-length bargaining or negotiations.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES.
Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the
Adviser, compared the fees charged to the Fund with fees charged to other
investment companies for similar services by other investment advisers.
Lipper's analysis included the Fund's ranking with respect to the proposed
management fee relative to the Lipper group median at the approximate current
asset level of the Fund.(7)
Effective Lipper
Management Group
Fund Fee(8) Median Rank
- -------------------------------------------------------------------------------
Focused Growth & Income Fund, Inc. 0.550 0.750 1/12
(6) This is the fee schedule of a fund managed by an affiliate of the Adviser
(7) The effective management fee is calculated by Lipper using the Fund's
contractual management fee rate at a hypothetical asset level. The hypothetical
asset level is based on the combined net assets of all classes of the Fund,
rounded up to the next $25 million. Lipper's total expense ratio information is
based on the most recent annual report except as otherwise noted. A ranking of
"1" means that the Fund has the lowest effective fee rate in the Lipper peer
group.
(8) The effective management fee rate for the Fund does not reflect the
aforementioned payments made by the Fund to the Adviser for certain clerical,
legal, accounting, administrative, and other services.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 55
Lipper also analyzed the total expense ratio of the Fund in comparison to its
Lipper Expense Group(9) and Lipper Expense Universe.(10) Lipper describes a
Lipper Expense Group as a representative sample of comparable funds and a
Lipper Expense Universe as a broader group, consisting of all funds in the same
investment classification/objective with a similar load type as the subject
Fund. The result of that analysis is set forth below:
Expense Lipper Lipper Lipper Lipper
Ratio Group Group Universe Universe
Fund (%)(11) Median(%) Rank Median(%) Rank
- -------------------------------------------------------------------------------
Focused Growth &
Income Fund, Inc. 1.277 1.276 7/12 1.302 37/79
Based on this analysis, the Fund has a more favorable ranking on a management
fee basis than it does on a total expense ratio basis.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
A consultant was retained by the Senior Officer to work with the Adviser's
personnel to align the Adviser's two profitability reporting systems. The
alignment, which now has been completed, allows the Adviser's management and
the Directors to receive consistent presentations of the financial results and
profitability although the two profitability reporting systems operate
independently. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The profitability information for the Fund prepared by the Adviser for the
Board of Directors was reviewed by the Senior Officer. The Adviser's
profitability from providing investment advisory services to the Fund increased
during calendar year 2005 relative to 2004.
In addition to the Adviser's direct profits from managing the Fund, certain of
the Adviser's affiliates have business relationships with the Fund and may earn
a profit from providing other services to the Fund. The courts have referred to
this type of business opportunity as "fall-out benefits" to the Adviser and
indicated
(9) Lipper uses the following criteria in screening funds to be included in
the Fund's expense group: fund type, investment classification/objective, load
type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and
expense components and attributes. A Lipper Expense Group will typically
consist of seven to twenty funds.
(10) Except for asset (size) comparability, Lipper uses the same criteria for
selecting a Lipper Expense Group when selecting a Lipper Expense Universe.
Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the
same adviser to be represented by more than just one fund.
(11) The total expense ratios shown are for the Fund's Class A shares.
56 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
that they should be factored into the evaluation of the total relationship
between the Fund and the Adviser. Neither case law nor common business practice
precludes the Adviser's affiliates from earning a reasonable profit on this
type of relationship. These affiliates provide transfer agent, distribution,
and brokerage related services to the Fund and receive transfer agent fees,
Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges
("CDSC") and commissions for providing brokerage services. In addition, the
Adviser benefits from soft dollar arrangements which offset expenses the
Adviser would otherwise incur. Additional information regarding distribution
related fees can be found in the prospectus of the Fund.
AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is
the Fund's principal underwriter. ABI and the Adviser have disclosed in the
Fund's prospectus that they may make revenue sharing payments from their own
resources, in addition to resources derived from sales loads and Rule 12b-1
fees, to firms that sell shares of the Fund. In 2005, ABI paid approximately
0.042% of the average monthly assets of the AllianceBernstein Mutual Funds or
approximately $18.0 million for distribution services and educational support
(revenue sharing payments). For 2006, it is anticipated, ABI will pay
approximately 0.04% of the average monthly assets of the AllianceBernstein
Mutual Funds or approximately $17.5 million.(12)
After payments to third party intermediaries, ABI retained the following
amounts for Class A front-end load sales charges from sales of the Fund's Class
A shares during the Fund's most recently completed fiscal year:
Fund Amount Received
- -------------------------------------------------------------------------------
Focused Growth & Income Fund, Inc. $11,148
ABI received the amounts set forth below in Rule 12b-1 fees and CDSC for the
Fund during Fund's most recent fiscal year:
12b-1 Fees CDSC
Fund Received Received
- -------------------------------------------------------------------------------
Focused Growth & Income Fund, Inc. $3,265,417 $246,344
Fees and reimbursements for out of pocket expenses charged by AllianceBernstein
Investor Services, Inc. ("ABIS"), the affiliated transfer agent, are based on
the level of the network account and the class of share held by the account.
ABIS also receives a fee per shareholder sub-account for each account
maintained by an intermediary on an omnibus basis. ABIS' after-tax
profitability
(12) ABI currently inserts the "Advance" in quarterly account statements and
pays the incremental costs associated with the mailing. The incremental cost is
less than what an "independent mailing" would cost.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 57
increased in 2005 in comparison to 2004. ABIS received the following fee from
the Fund in the most recent fiscal year:
Fund ABIS Fee(13)
- -------------------------------------------------------------------------------
Focused Growth & Income Fund, Inc. $492,725
The Fund effected brokerage transactions through the Adviser's affiliate,
Sanford C. Bernstein & Co. LLC ("SCB & Co.") and/or its U.K. affiliate, Sanford
C. Bernstein Limited ("SCB Ltd."), collectively "SCB," and paid commissions for
such transactions during the Fund's most recently completed fiscal year. The
Adviser represented that SCB's profitability from business conducted with the
Fund is comparable to the profitability of SCB's dealings with other similar
third party clients. In the ordinary course of business, SCB receives and pays
liquidity rebates from electronic communications networks ("ECNs") derived from
trading for its clients, including the Fund. These credits and charges are not
being passed on to any SCB client. The Adviser also receives certain soft
dollar benefits from brokers that execute agency trades for the Fund and other
clients. These soft dollar benefits reduce the Adviser's cost of doing business
and increase its profitability.
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule in the
Investment Advisory Agreement reflect a sharing of economies of scale to the
extent the breakpoints are reached. Based on some of the professional
literature that has considered economies of scale in the mutual fund industry
it is thought that to the extent economies of scale exist, they may more often
exist across a fund family as opposed to a specific fund. This is because the
costs incurred by the Adviser, such as investment research or technology for
trading or compliance systems can be spread across a greater asset base as the
fund family increases in size. It is also possible that as the level of
services required to operate a successful investment company has increased over
time, and advisory firms have made such investments in their business to
provide improved services, there may be a sharing of economies of scale without
a reduction in advisory fees.
An independent consultant made a presentation to the Board of Directors and the
Senior Officer regarding possible economies of scale or scope in the mutual
fund industry. Based on the presentation, it was evident that fund management
companies benefit from economies of scale. However, due to lack of cost data,
researchers had to infer facts about the costs from the behavior of fund
expenses; there was a lack of consensus among researchers as to whether
economies of scale were being passed on to the shareholders. It is contemplated
that additional work
(13) The fee disclosed is net of any waivers or any other expense offset
arrangement with ABIS. An expense offset is created by the interest earned on
the positive cash balance that occurs within the transfer agent account as
there is a one day lag with regards to money movement from the shareholder's
account to the transfer agent's account and then from the transfer agent's
account to the Fund's account.
58 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
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 a fund's assets exceeds its initial breakpoint its
shareholders benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE FUND.
With assets under management of $635 billion as of April 30, 2006, the Adviser
has the investment experience to manage and provide non-investment services
(described in Section I) to the Fund.
The information below, which was prepared by Lipper, shows the 1, 3, and 5 year
performance ranking of the Fund(14) relative to its Lipper Performance
Group(15) and Lipper Performance Universe(16) for the periods ended December
31, 2005:
Focused Growth & Income Fund, Inc. Group Universe
- -------------------------------------------------------------------------------
1 year 11/12 162/170
3 year 7/12 54/116
5 year 3/10 18/84
Set forth below are the 1, 3, and 5 year and since inception performance
returns of the Fund (in bold)(17) versus its benchmark:(18)
Periods Ending December 31, 2005
Annualized Performance
- -------------------------------------------------------------------------------
1 3 5 Since
Fund Year Year Year Inception
- -------------------------------------------------------------------------------
Focused Growth & Income
Fund, Inc. 1.20 15.41 4.98 7.27
Russell 1000 Value Index 7.05 17.49 5.28 5.57
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 17, 2006
(14) The performance rankings are for the Class A shares of the Fund.
(15) The Lipper Performance Group is identical to the Lipper Expense Group.
(16) For the Lipper Performance Universe, Lipper included the Fund and all of
the funds of the same Lipper Classification/Objective and load type, regardless
of asset size.
(17) The performance returns shown are for the Class A shares of the Fund.
(18) The Adviser provided Fund and benchmark performance return information
for periods through December 31, 2005 in order to maintain consistency with
Lipper's performance rankings in the analysis.
ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND o 59
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- --------------------------------------------
Wealth Strategies Funds
- --------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- --------------------------------------------
Blended Style Funds
- --------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- --------------------------------------------
Growth Funds
- --------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China '97 Fund
International Growth Fund
International Research Growth Fund
- --------------------------------------------
Value Funds
- --------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
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
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 website at
www.alliancebernstein.com or call us at 800.227.4618 for a current prospectus.
You should read the prospectus carefully before you invest.
* Prior to February 1, 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.
60 o ALLIANCEBERNSTEIN FOCUSED GROWTH & INCOME FUND
ALLIANCEBERNSTEIN FOCUSED GROWTH &INCOME
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
FGI-0151-1106
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant's code of ethics is filed herewith as
Exhibit 12(a)(1).
(b) During the period covered by this report, no material amendments were
made to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent registered public accounting firm Ernst & Young LLP, for the Fund's
last two fiscal years for professional services rendered for: (i) the audit of
the Fund's annual financial statements included in the Fund's annual report to
stockholders; (ii) assurance and related services that are reasonably related
to the performance of the audit of the Fund's financial statements and are not
reported under (i), which include advice and education related to accounting
and auditing issues and quarterly press release review (for those Funds which
issue press releases), and preferred stock maintenance testing (for those Funds
that issue preferred stock); and (iii) tax compliance, tax advice and tax
return preparation.
Audit-Related
Audit Fees Fees Tax Fees
---------- ------------- --------
2005 $40,000 $3,697 $14,692
2006 $42,000 $5,126 $15,450
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or
after May 6, 2003, the Fund's Audit Committee policies and procedures require
the pre-approval of all audit and non-audit services provided to the Fund by
the Fund's independent registered public accounting firm. The Fund's Audit
Committee policies and procedures also require pre-approval of all audit and
non-audit services provided to the Adviser and Service Affiliates to the extent
that these services are directly related to the operations or financial
reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to
the Fund, the Fund's Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the
Fund, which include preparing an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column Pre-
approved by the Audit
All Fees for Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates Tax Fees)
---------------------- ----------------------
2005 $897,385 [ $186,092 ]
( $171,400 )
( $14,692 )
2006 $1,051,898 [ $152,091 ]
( $136,641 )
( $15,450 )
(h) The Audit Committee of the Fund has considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent registered public accounting firm to the Adviser and Service
Affiliates is compatible with maintaining the auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-3 (c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2
hereof
12 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Focused Growth & Income Fund, Inc.
By: /s/ Marc O. Mayer
------------------
Marc O. Mayer
President
Date: January 29, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
------------------
Marc O. Mayer
President
Date: January 29, 2007
By: /s/ Joseph J. Mantineo
------------------
Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: January 29, 2007