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: 811-6028
ALLIANCEBERNSTEIN NEW EUROPE FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: July 31, 2004
Date of reporting period: July 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
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European Large Cap
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AllianceBernstein [LOGO](SM)
Investment Research and Management
AllianceBernstein New Europe Fund
Annual Report -- July 31, 2004
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 Alliance 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 (click on Investors/ Products & Services/
Mutual Funds).
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 Alliance Capital's web site at
www.alliancebernstein.com (click on Investors, then the "Proxy voting policies"
link or "Proxy voting records" link on the left side of the page), or go to the
Securities and Exchange Commission's, (The "Commission") web site at
www.sec.gov, or call Alliance Capital 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. Alliance publishes full
portfolio holdings for the Fund monthly at www.alliancebernstein.com.
AllianceBernstein Investment Research and Management, Inc., is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
September 20, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein New Europe Fund (the "Fund") for the annual reporting period
ended July 31, 2004.
Investment Objectives and Policies
This Fund seeks long-term capital appreciation through investments primarily in
equity securities of companies based in Europe.
Investment Results
The table on page 4 shows the Fund's performance compared to its benchmark, the
Standard & Poor's (S&P)/Citigroup Europe PMI Growth Index, for the six- and
12-month periods ended July 31, 2004. In addition, performance data for the
Lipper European Region Funds Average (the "Lipper Average") is also included.
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.
For the six- and 12-month periods ended July 31, 2004, the Fund's Class A
shares underperformed the benchmark. Generally speaking, growth as an
investment style underperformed during this period, as did high quality and
large-capitalization stocks. This backdrop was largely unfavorable given our
style of large-cap growth investing.
At the fund-specific level, performance drivers varied between the six- and
12-month periods. For the six-month period, sector allocation detracted from
the Fund's returns as a result of an above-benchmark allocation to technology
and a below-benchmark allocation to energy stocks. Both sectors performed in
the opposite direction to the Fund's positions. Stock selection was positive,
offsetting some of the loss from sector allocation. For the 12-month period
ended July 31, 2004, the contribution from both sector allocation and stock
selection was negative. Sector allocation was affected by the same positioning
as during the six-month period while stock selection was driven by a negative
return within the financial sector. Currency made a positive contribution to
returns in both the six- and 12-month periods.
Market Review and Investment Strategy
The six- and 12-month periods presented a tale of two halves to investors.
During the six-month period ended January 31, 2004, European equities rose
continuously as global economic conditions improved and corporate profits began
to surprise on the upside. The reduction in risk aversion led investors to
favor the most aggressive compartments of the equity markets in the form of
emerging markets, smaller capitalization companies, and those with highly
volatile fundamentals. In the currency markets, the euro and the pound
accelerated their gains against the U.S. dollar as investors favored the
relatively higher interest rates and fiscal position of countries in the
European markets.
During the six-month period ended July 31, 2004, European equity markets
consolidated their prior gains and generally moved sideways. Fears over
decelerating economic growth, rising interest rates, and surging energy prices
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 1
prompted investors to take a wait and see attitude. Our strategy during these
periods reflected similar expectations with increased exposure to economically
sensitive issues during the first six-months and then a subsequent return to
more defensive, stable growing companies during the most recent six-months. At
present, the Fund's portfolio has a slightly more defensive bias than normal.
We believe global equity markets are at an important juncture today. In the
backdrop are a host of economic and political uncertainties. Growth is likely
to remain healthy, but is set to ebb as suggested by the movement in global
leading indicators. With expectations having been ratcheted up for growth and
earnings over the last 15 months, we believe that we have likely reached a
plateau in terms of expectations. In the equity markets, the pronounced
rotation by capitalization and investment style now leaves large-cap stocks
trading at the low end of their relative price to earnings (P/E) versus
small-cap stocks over the last 15 years (the peak premium was reached in 1999).
Likewise, growth stocks now trade at below average premiums relative to value
stocks. As such, the headwinds against our process and style should continue to
diminish.
At the stock-specific level, valuations across sectors are compressed by
historical standards as are expectations for growth across stocks. We,
therefore, believe that only those companies able to deliver quality earnings
growth (and selling at reasonable prices) in this more challenging investment
environment will find favor with investors. We believe our portfolio reflects a
good cross-section of such companies today.
_______________________________________________________________________________
2 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Historical Performance
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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
(click on Investors/Products & Services/Mutual Funds).
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or Alliance at
(800) 227-4618. You should read the prospectus carefully before you invest.
Returns are annualized for periods longer than one year. All fees and expenses
related to the operation of the Fund have been deducted. NAV returns do not
reflect sales charges; if sales charges were reflected, the Fund's quoted
performance would be lower. SEC returns reflect the applicable sales charges
for each share class: a 4.25% maximum front-end sales charge for Class A
shares; the applicable contingent deferred sales charge for Class B shares (4%
year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales
charge for Class C shares. Returns for Advisor Class shares will vary due to
different expenses associated with this class. Performance assumes reinvestment
of distributions and does not account for taxes.
Benchmark Disclosure
The unmanaged S&P/Citigroup Europe PMI Growth Index does not reflect fees and
expenses associated with the active management of a mutual fund portfolio. The
Index includes those stocks falling within the top 80% of the cumulative
available capital level of all developed countries in the European region of
the Global S&P/Citigroup Broad Market Index. For the six- and 12-month periods
ended July 31, 2004, the Lipper European Region Funds Average consisted of 136
and 132 funds, respectively. The funds in the Lipper European Region Average
have generally similar investment objectives to the 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
Substantially all of the Fund's assets will be invested 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. 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 more fully discussed in the prospectus.
(Historical Performance continued on next page)
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ALLIANCEBERNSTEIN NEW EUROPE FUND o 3
Historical Performance
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HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARKS -------------------------
PERIODS ENDED JULY 31, 2004 6 Months 12 Months
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AllianceBernstein New Europe Fund
Class A -2.25% 16.37%
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Class B -2.60% 15.48%
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Class C -2.59% 15.61%
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Advisor Class -2.09% 16.83%
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S&P/Citigroup Europe PMI Growth Index -1.53% 21.43%
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Lipper European Region Funds Average -2.52% 22.51%
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GROWTH OF A $10,000 INVESTMENT IN THE FUND
7/31/94 TO 7/31/04
AllianceBernstein New Europe Fund Class A: $18,170
S&P/Citigroup Europe PMI Growth Index: $22,065
[THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
AllianceBernstein S&P/Citigroup Europe
New Europe Fund Class A PMI Growth Index
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7/31/94 $ 9,575 $ 10,000
7/31/95 $ 11,511 $ 12,316
7/31/96 $ 12,455 $ 13,411
7/31/97 $ 16,040 $ 18,897
7/31/98 $ 21,206 $ 24,736
7/31/99 $ 20,597 $ 25,109
7/31/00 $ 24,511 $ 29,402
7/31/01 $ 18,501 $ 21,275
7/31/02 $ 14,982 $ 16,736
7/31/03 $ 15,614 $ 18,172
7/31/04 $ 18,170 $ 22,065
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein New Europe Fund Class A shares (from 7/31/94 to 7/31/04) as
compared to the performance of the Fund's benchmark and Lipper Average.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
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4 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Historical Performance
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HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF JULY 31, 2004
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 16.37% 11.41%
5 Years -2.48% -3.32%
10 Years 6.62% 6.16%
Class B Shares
1 Year 15.48% 11.48%
5 Years -3.29% -3.29%
10 Years(a) 5.99% 5.99%
Class C Shares
1 Year 15.61% 14.61%
5 Years -3.24% -3.24%
10 Years 5.83% 5.83%
Advisor Class Shares
1 Year 16.83%
5 Years -2.29%
Since Inception* 4.82%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (June 30, 2004)
- --------------------------------------------------------------
Class A Shares
1 Year 16.50%
5 Years -2.68%
10 Years 6.96%
Class B Shares
1 Year 16.68%
5 Years -2.64%
10 Years(a) 6.79%
Class C Shares
1 Year 19.81%
5 Years -2.59%
10 Years 6.64%
(a) Assumes conversion of Class B shares into Class A shares after eight years.
* Inception Date: 10/1/96 for Advisor Class shares.
See Historical Performance disclosures on page 3.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 5
Fund Expenses
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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 first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, 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
in the first line 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 second line of the table below 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 second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
February 1, 2004 July 31, 2004 During Period*
- -------------------------------------------------------------------------------
Class A
Actual $ 1,000 $ 977.54 $ 9.98
Hypothetical
(5% return before expenses) $ 1,000 $ 1,014.77 $ 10.17
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Class B
Actual $ 1,000 $ 974.05 $ 13.79
Hypothetical
(5% return before expenses) $ 1,000 $ 1,010.89 $ 14.05
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Class C
Actual $ 1,000 $ 974.15 $ 13.55
Hypothetical
(5% return before expenses) $ 1,000 $ 1,011.14 $ 13.80
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Advisor Class
Actual $ 1,000 $ 979.08 $ 8.51
Hypothetical
(5% return before expenses) $ 1,000 $ 1,016.26 $ 8.67
- -------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 2.03%,
2.81%, 2.76% and 1.73%, respectively, multiplied by the average account value
over the period, multiplied by the number of days in the most recent fiscal
half-year/366 (to reflect the one-half year period).
_______________________________________________________________________________
6 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Portfolio Summary
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PORTFOLIO SUMMARY
July 31, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $133.7
SECTOR BREAKDOWN*
25.5% Finance
18.0% Healthcare
16.6% Consumer Staples
15.2% Consumer Services
7.5% Technology
6.1% Consumer Manufacturing [PIE CHART OMITTED]
6.1% Energy
3.5% Utilities
1.5% Capital Goods
COUNTRY BREAKDOWN*
43.4% United Kingdom
16.4% Switzerland
15.6% France
7.6% Germany
5.9% Spain [PIE CHART OMITTED]
4.7% Ireland
3.6% Sweden
2.2% Italy
0.6% Russia
* All data as of July 31, 2004. The Fund's sector and country breakdowns are
expressed as a percentage of total investments and may vary over time.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 7
Ten Largest Holdings
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TEN LARGEST HOLDINGS
July 31, 2004
Percent of
Company U.S. $ Value Net Assets
_______________________________________________________________________________
Total, SA $ 6,613,766 4.9%
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Tesco Plc. 6,298,227 4.7
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HSBC Holdings Plc. 6,012,595 4.5
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Royal Bank of Scotland Group Plc. 5,361,999 4.0
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SAP AG 5,152,897 3.9
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Roche Holding AG-Genusschein 4,886,370 3.7
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Reckitt Benckiser Plc. 4,804,201 3.6
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Ericsson LM Cl.B 4,758,806 3.6
- -------------------------------------------------------------------------------
AstraZeneca Plc. 4,647,491 3.5
- -------------------------------------------------------------------------------
Carnival Plc. 4,458,859 3.3
- -------------------------------------------------------------------------------
$ 52,995,211 39.7%
_______________________________________________________________________________
8 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Portfolio of Investments
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PORTFOLIO OF INVESTMENTS
July 31, 2004
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-99.1%
France-15.4%
BNP Paribas, SA 45,644 $ 2,658,628
Essilor International, SA 36,373 2,235,543
L'Oreal, SA 36,640 2,626,911
LVMH Moet Hennessy Louis Vuitton, SA 38,621 2,636,420
Sanofi-Synthelabo, SA 11,010 730,377
Schneider Electric, SA 32,291 2,054,634
Total, SA 34,057 6,613,766
Vinci, SA 10,147 1,032,903
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20,589,182
-------------
Germany-7.5%
Altana AG 18,141 985,022
E.ON AG 18,415 1,308,072
Porsche AG pfd. 4,052 2,619,701
SAP AG 32,108 5,152,897
-------------
10,065,692
-------------
Ireland-4.7%
Anglo Irish Bank Corp. Plc. 118,535 1,878,065
CRH Plc. 194,315 4,386,475
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6,264,540
-------------
Italy-2.1%
Alleanza Assicurazioni S.p.A. 135,454 1,451,409
Eni S.p.A. 68,532 1,410,904
-------------
2,862,313
-------------
Russia-0.6%
Mobile Telesystems (ADR) 6,900 807,645
-------------
Spain-5.9%
Banco Bilbao Vizcaya Argentaria, SA 253,990 3,382,048
Industria de Diseno Textil, SA (Inditex) 77,539 1,775,574
Telefonica, SA(a) 185,516 2,704,790
-------------
7,862,412
-------------
Sweden-3.6%
LM Ericsson Cl.B(a) 1,781,395 4,758,806
-------------
Switzerland-16.3%
Alcon, Inc. 22,800 1,746,480
Nestle, SA 16,842 4,304,791
Nobel Biocare Holding AG 11,843 1,619,983
Novartis AG 83,672 3,744,262
Roche Holding AG-Genusschein 49,418 4,886,370
Swiss Reinsurance Co. 25,570 1,494,007
UBS AG 59,406 3,974,795
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21,770,688
-------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 9
Portfolio of Investments
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Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
United Kingdom-43.0%
AstraZeneca Plc. 103,850 $ 4,647,491
Capita Group Plc. 119,187 663,210
Carnival Plc. 91,153 4,458,859
Centrica Plc. 144,261 620,413
Compass Group Plc. 135,706 789,060
Enterprise Inns Plc. 139,118 1,348,376
GUS Plc. 240,513 3,765,669
HBOS Plc. 55,351 717,151
Hilton Group Plc. 441,664 2,094,193
HSBC Holdings Plc. 409,467 6,012,595
Legal & General Group Plc. 1,129,588 1,992,472
Man Group Plc. 47,361 1,126,495
Reckitt Benckiser Plc. 175,660 4,804,201
Royal Bank of Scotland Group Plc. 190,729 5,361,999
Smith & Nephew Plc. 318,743 3,216,875
Standard Chartered Plc. 228,381 3,777,141
Tesco Plc. 1,360,912 6,298,227
Vodafone Group Plc. 2,046,704 4,438,272
WPP Group Plc. 143,831 1,329,977
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57,462,676
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Total Investments-99.1%
(cost $106,653,474) 132,443,954
Other assets less liabilities-0.9% 1,212,288
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Net Assets-100% $ 133,656,242
=============
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
Pfd - Preferred Stock
See notes to financial statements.
_______________________________________________________________________________
10 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Statement of Assets & Liabilities
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STATEMENT OF ASSETS & LIABILITIES
July 31, 2004
ASSETS
Investments in securities, at value (cost $106,653,474) $ 132,443,954
Cash 233,361
Foreign cash, at value (cost $1,146,384) 1,146,672
Receivable for capital stock sold 362,510
Receivable for investment securities sold and foreign
currency contracts 337,471
Dividends receivable 324,157
-------------
Total assets 134,848,125
-------------
LIABILITIES
Payable for capital stock redeemed 618,827
Payable for investment securities purchased and foreign
currency contracts 150,639
Advisory fee payable 86,981
Distribution fee payable 73,383
Transfer agent fee payable 46,152
Accrued expenses 215,901
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Total liabilities 1,191,883
-------------
Net Assets $ 133,656,242
=============
COMPOSITION OF NET ASSETS
Capital stock, at par $ 98,614
Additional paid-in capital 197,724,795
Accumulated net investment loss (26,080)
Accumulated net realized loss on investment and
foreign currency transactions (89,943,413)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 25,802,326
-------------
$ 133,656,242
=============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($66,252,996/4,612,759 shares of capital
stock issued and outstanding) $14.36
Sales charge--4.25% of public offering price .64
------
Maximum offering price $15.00
======
Class B Shares
Net asset value and offering price per share
($49,465,577/3,875,844 shares of capital
stock issued and outstanding) $12.76
======
Class C Shares
Net asset value and offering price per share
($14,959,579/1,167,557 shares of capital
stock issued and outstanding) $12.81
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($2,978,090/205,206 shares of capital
stock issued and outstanding) $14.51
======
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 11
Statement of Operations
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended July 31, 2004
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $325,764) $ 2,927,545
EXPENSES
Advisory fee $ 1,573,507
Distribution fee--Class A 214,340
Distribution fee--Class B 572,503
Distribution fee--Class C 178,095
Transfer agency 911,924
Custodian 249,711
Audit and legal 147,393
Administrative 117,000
Printing 70,943
Registration 67,294
Directors' fees 54,463
Miscellaneous 17,296
------------
Total expenses 4,174,469
Less: expenses waived and reimbursed
by the Adviser and the Transfer
Agent (see Note B) (293,922)
Less: expense offset arrangement
(see Note B) (80)
------------
Net expenses 3,880,467
------------
Net investment loss (952,922)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on:
Investment transactions 20,578,411
Foreign currency transactions 17,369
Net change in unrealized
appreciation/depreciation of:
Investments 3,756,164
Foreign currency denominated
assets and liabilities (5,617)
------------
Net gain on investment and foreign
currency transactions 24,346,327
------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 23,393,405
============
See notes to financial statements.
_______________________________________________________________________________
12 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
July 31, July 31,
2004 2003
============= =============
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (952,922) $ (1,527,620)
Net realized gain (loss) on investment and
foreign currency transactions 20,595,780 (29,506,727)
Net change in unrealized
appreciation/depreciation
of investments and foreign
currency denominated assets
and liabilities 3,750,547 36,275,491
------------- -------------
Net increase in net assets
from operations 23,393,405 5,241,144
CAPITAL STOCK TRANSACTIONS
Net decrease (40,248,631) (39,462,507)
------------- -------------
Total decrease (16,855,226) (34,221,363)
NET ASSETS
Beginning of period 150,511,468 184,732,831
------------- -------------
End of period (including accumulated
net investment loss of $26,080 and
$0, respectively) $ 133,656,242 $ 150,511,468
============= =============
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 13
Notes to Financial Statements
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NOTES TO FINANCIAL STATEMENTS
July 31, 2004
NOTE A
Significant Accounting Policies
AllianceBernstein New Europe Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as a diversified, open-end management
investment company. The Fund offers Class A, Class B, Class C and Advisor Class
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge of 1%. Class B shares are sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
to investors participating in fee based programs and to certain retirement plan
accounts. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The financial statements have been prepared in conformity
with U.S. generally accepted accounting principles, which require management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates. Additional information about some of the items discussed in these
Notes to Financial Statements is contained in the Fund's Statement of
Additional Information, which is available upon request. The following is a
summary of significant accounting policies followed by the Fund.
1. Security Valuation
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to Alliance Capital Management, L.P. (the "Adviser"), subject to the
Board's continuing oversight, certain responsibilities with respect to the
implementation of the Pricing Policies. Pursuant to the Pricing Policies,
securities for which market quotations are readily available are valued at
their current market value. In general, the market value of these securities is
determined as follows:
Securities listed on a national securities exchange or on a foreign securities
exchange are valued at the last sale price at the close of the exchange or
foreign securities exchange. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked prices on such
day. If no bid or asked prices are quoted on such day, then the security is
valued in good faith at fair value in accordance with the Pricing Policies.
Securities listed on more than one exchange are valued by reference to the
principal exchange on which
_______________________________________________________________________________
14 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
the securities are traded; securities not listed on an exchange but traded on
The Nasdaq Stock Market, Inc. ("NASDAQ") are valued in accordance with the
NASDAQ Official Closing Price; listed put or call options are valued at the
last sale price. If there has been no sale on that day, such securities will be
valued at the closing bid prices on that day; open futures contracts and
options thereon are valued using the closing settlement price or, in the
absence of such a price, the most recent quoted bid price. If there are no
quotations available for the day of valuations, the last available closing
settlement price is used; securities traded in the over-the-counter market,
(but excluding securities traded on NASDAQ) are valued at the mean of the
current bid and asked prices as reported by the National Quotation Bureau or
other comparable sources; U.S. Government securities and other debt instruments
having 60 days or less remaining until maturity are valued at amortized cost if
their original maturity was 60 days or less, or by amortizing their fair value
as of the 61st day prior to maturity if their original term to maturity
exceeded 60 days; fixed-income securities, including mortgage backed and asset
backed securities, may be valued on the basis of prices provided by a pricing
service or at a price obtained from one or more of the major broker/dealers. In
cases where broker/dealer quotes are obtained, the Pricing Policies provide
that the Adviser may establish procedures whereby changes in market yields or
spreads are used to adjust, on a daily basis, a recently obtained quoted price
on a security; and OTC and other derivatives are valued on the basis of a
quoted bid price or spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available are valued at
fair value in accordance with the Pricing Policies.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains 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 and depreciation of investments
and foreign currency denominated assets and liabilities.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 15
Notes to Financial Statements
- -------------------------------------------------------------------------------
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. 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 date securities are purchased or sold.
Investment gains and losses are determined on the identified cost basis. The
Fund accretes discounts as adjustments to interest income.
5. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A and Advisor Class shares. Advisor Class shares have no
distribution fees.
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the
ex-dividend date. Income and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with U.S. generally accepted accounting principles. To the extent
these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, the Fund pays the Adviser
an advisory fee equal to the annualized rate of 1.10% of the Fund's average
daily net assets up to $100 million, .95% of the next $100 million of the
Fund's average daily net assets and .80% of the Fund's average daily net assets
over $200 million. Such fee is accrued daily and paid monthly.
Effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee so as to charge the Fund at the reduced annual rate of .75% of the first
$2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion,
of the average daily net assets of the Fund. Through July 31, 2004, such waiver
amounted to $259,888. The waiver was made in contemplation of the final
_______________________________________________________________________________
16 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
agreement with the Office of the New YorkAttorney General ("NYAG") described in
"Legal Proceedings" below.
For the year ended July 31, 2004, the Adviser voluntarily agreed to reimburse a
portion of certain audit fees related to the investigations described under
"Legal Proceedings" below in the amount of $1,125.
Pursuant to the advisory agreement, the Adviser provides certain legal and
accounting services to the Fund. For the year ended July 31, 2004 such fees
amounted to $117,000.
The Fund compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. Such compensation amounted to $590,044 for the year ended July 31, 2004.
During the period, AGIS voluntarily agreed to waive a portion of its fees for
such services. Such waiver amounted to $32,909.
For the year ended July 31, 2004, the Fund's expenses were reduced by $80 under
an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc. (the "Distributor"),
a wholly-owned subsidiary of the Adviser, serves as the distributor of the
Fund's shares. The Distributor has advised the Fund that it has retained
front-end sales charges of $1,438 from the sales of Class A shares and received
$2,460, $49,511 and $2,833in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the year ended July 31, 2004.
Brokerage commissions paid on investment transactions for the year ended July
31, 2004, amounted to $704,615, none of which was paid to Sanford C. Bernstein
& Co. LLC, an affiliate 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 the Class A shares and 1% of the Fund's average daily net
assets attributable to both Class B and Class C shares. There are no
distribution and servicing fees on the Advisor Class shares. The fees are
accrued daily and paid monthly. The Agreement provides that the Distributor
will use such payments in their entirety for distribution assistance and
promotional activities. The Distributor has advised the Fund that it has
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $5,088,188 and $1,208,578 for Class B
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 17
Notes to Financial Statements
- -------------------------------------------------------------------------------
and C shares, respectively; such costs may be recovered from the Fund in future
periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs incurred by the Distributor beyond the current fiscal year for Class A
shares. The Agreement also provides that the 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 July 31, 2004, were as follows:
Purchases Sales
============= =============
Investment securities (excluding
U.S. government securities) $ 115,440,232 $ 157,752,581
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding foreign currency
transactions) are as follows:
Cost $ 108,422,137
=============
Gross unrealized appreciation $ 26,766,584
Gross unrealized depreciation (2,744,767)
-------------
Net unrealized appreciation $ 24,021,817
=============
Forward Exchange Currency Contracts
The Fund may enter into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchase and sale commitments
denominated in foreign currencies and for investment purposes. A forward
exchange currency contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contract and the closing of
such contract would be included in net realized gain or loss on foreign
currency transactions.
Fluctuations in the value of open forward exchange currency contracts are
recorded for financial reporting purposes as unrealized appreciation and
depreciation by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value at
least equal to the aggregate amount of the Fund's commitments under forward
exchange currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of the counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars reflects the total exposure the Fund has in that particular currency
contract.
_______________________________________________________________________________
18 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
NOTE E
Capital Stock
There are 12,000,000,000 shares of $.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
Shares Amount
--------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
July 31, July 31, July 31, July 31,
2004 2003 2004 2003
------------ ------------ -------------- --------------
Class A
Shares sold 1,336,031 15,542,158 $ 17,406,657 $ 171,821,750
- -------------------------------------------------------------------------------
Shares converted
from Class B 170,857 232,927 2,426,624 2,412,260
- -------------------------------------------------------------------------------
Shares redeemed (2,596,194) (16,931,720) (35,198,950) (188,327,796)
- -------------------------------------------------------------------------------
Net decrease (1,089,306) (1,156,635) $(15,365,669) $ (14,093,786)
===============================================================================
Class B
Shares sold 318,796 1,496,664 $ 3,843,377 $ 14,968,222
- -------------------------------------------------------------------------------
Shares converted
to Class A (191,359) (218,122) (2,426,624) (2,412,260)
- -------------------------------------------------------------------------------
Shares redeemed (1,487,869) (2,952,704) (18,520,410) (29,502,468)
- -------------------------------------------------------------------------------
Net decrease (1,360,432) (1,674,162) $(17,103,657) $ (16,946,506)
===============================================================================
Class C
Shares sold 970,511 7,882,363 $ 10,916,903 $ 78,376,624
- -------------------------------------------------------------------------------
Shares redeemed (1,519,808) (8,487,703) (17,861,137) (85,223,164)
- -------------------------------------------------------------------------------
Net decrease (549,297) (605,340) $ (6,944,234) $ (6,846,540)
===============================================================================
Advisor Class
Shares sold 223,177 976,543 $ 2,854,946 $ 11,084,443
- -------------------------------------------------------------------------------
Shares redeemed (282,721) (1,098,786) (3,690,017) (12,660,118)
- -------------------------------------------------------------------------------
Net decrease (59,544) (122,243) $ (835,071) $ (1,575,675)
===============================================================================
NOTE F
Risks Involved in Investing in the Fund
Concentration of Risk--Investing in securities of foreign companies involves
special risks which include changes in foreign exchange rates and the
possibility of future political and economic developments which could adversely
affect the value of such securities. Moreover, securities of many foreign
companies and their markets may be less liquid and their prices more volatile
than those of comparable United States companies.
The Fund has invested approximately 43% of its net assets in United Kingdom
equity securities. Political, social or economic changes in this market may
have a greater impact on the value of the Fund's portfolio due to this
concentration.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 19
Notes to Financial Statements
- -------------------------------------------------------------------------------
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 G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $500 million revolving credit facility (the "Facility")
intended to provide for 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 July 31, 2004.
NOTE H
Components of Accumulated Earnings (Deficit)
As of July 31, 2004, the components of accumulated earnings/(deficit) on a tax
basis were as follows:
Accumulated capital and other losses $ (88,200,830)(a)
Unrealized appreciation/(depreciation) 24,033,663(b)
-------------
Total accumulated earnings/(deficit) $ (64,167,167)
=============
(a) On July 31, 2004, the Fund had a net capital loss carryforward of
$88,174,750, of which $53,936,454 expires in the year 2010 and $34,238,296
expires in the year 2011. The Fund utilized capital loss carryforwards of
$3,650,378. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. Net capital losses incurred
after October 31, and within the taxable year are deemed to arise on the first
business day of the Fund's next taxable year. For the year ended July 31, 2004,
the Fund deferred to August 1, 2004 post October currency losses of $26,080.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales.
During the current fiscal year, permanent differences primarily due to foreign
currency gains and net investment loss, resulted in a net decrease in
accumulated net investment loss, a net increase in accumulated net realized
loss on investment and foreign currency transactions and a corresponding
decrease in additional paid-in capital. This reclassification had no effect on
net assets.
NOTE I
Legal Proceedings
As has been previously reported in the press, the staff of the U.S. Securities
and Exchange Commission ("SEC") and the NYAG have been investigating practices
in the mutual fund industry identified as "market timing" and "late trading" of
mutual fund shares. Certain other regulatory authorities have also been con-
_______________________________________________________________________________
20 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
ducting 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 ("NYAGOrder"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAGOrder and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. For more information on this waiver, please see "Advisory Fee and Other
Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, is continuing to direct and oversee an internal
investigation and a comprehensive review of the facts and circumstances
relevant to the SEC's and the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have initiated an investigation of the above-mentioned matters with
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 21
Notes to Financial Statements
- -------------------------------------------------------------------------------
the advice of an independent economic consultant and independent counsel. The
Independent Directors have formed a special committee to supervise the
investigation.
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed
against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital
Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein
Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran
(collectively, the "Alliance Capital defendants"); and certain other defendants
not affiliated with the Adviser. 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 Mutual Funds. The Hindo Complaint
alleges that certain of the Alliance Capital defendants failed to disclose that
they improperly allowed certain hedge funds and other unidentified parties to
engage in late trading and market timing of AllianceBernstein Fund securities,
violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of
the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek
an unspecified amount of compensatory damages and rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, numerous additional lawsuits making factual allegations
similar to those in the Hindo Complaint were filed against the Adviser and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages.
As a result of the matters discussed above, investors in the AllianceBernstein
Mutual Funds may choose to redeem their investments. This may require the
AllianceBernstein Mutual Funds to sell investments held by those funds to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the AllianceBernstein Mutual Funds.
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
Morgan Stanley violated federal securities laws relating to its receipt of
compensation for selling specific mutual funds and the disclosure of such
compensation. The SEC has indicated publicly that, among other things, it is
considering enforcement action in connection with mutual funds' disclosure of
such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
_______________________________________________________________________________
22 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein Mutual Funds, including the
Fund, as nominal defendants. The Aucoin Complaint was filed in the United
States District Court for the Southern District of New York by an alleged
shareholder of the AllianceBernstein Growth & Income 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
AllianceBernstein 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
AllianceBernstein Fund-related fees, commissions and soft dollar payments, and
restitution of all unlawfully or discriminatorily obtained fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the Fund's shares or
other adverse consequences to the Fund. However, the Adviser believes that
these matters are not likely to have a material adverse effect on the Fund or
its ability to perform advisory services relating to the Fund.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 23
Financial Highlights
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
---------------------------------------------------------------
Year Ended July 31,
---------------------------------------------------------------
2004 2003 2002 2001 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $12.34 $11.84 $14.62 $21.11 $18.57
INCOME FROM INVESTMENT
OPERATIONS
Net investment loss(a) (.03)(b) (.06) (.08) (.04) (.10)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.05 .56 (2.70) (4.82) 3.55
Net increase (decrease) in
net asset value from
operations 2.02 .50 (2.78) (4.86) 3.45
LESS: DISTRIBUTIONS
Distributions from net realized
gain on investment and
foreign currency
transactions -0- -0- -0- (1.50) (.91)
Distributions in excess of net
realized gain on investment
and foreign currency
transactions -0- -0- -0- (.13) -0-
Total distributions -0- -0- -0- (1.63) (.91)
Net asset value,
end of period $14.36 $12.34 $11.84 $14.62 $21.11
TOTAL RETURN
Total investment return based
on net asset value(c) 16.37% 4.22% (19.02)% (24.45)% 18.89%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $66,253 $70,339 $81,213 $125,402 $170,815
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 2.21% 2.54% 2.10% 1.79% 1.65%(d)
Expenses, before
waivers/reimbursements 2.41% 2.54% 2.10% 1.79% 1.65%(d)
Net investment loss (.23)%(b) (.57)% (.60)% (.23)% (.46)%
Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28.
_______________________________________________________________________________
24 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
---------------------------------------------------------------
Year Ended July 31,
---------------------------------------------------------------
2004 2003 2002 2001 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.05 $10.71 $13.33 $19.56 $17.39
INCOME FROM INVESTMENT
OPERATIONS
Net investment loss(a) (.13)(b) (.14) (.18) (.16) (.23)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 1.84 .48 (2.44) (4.44) 3.31
Net increase (decrease) in
net asset value from
operations 1.71 .34 (2.62) (4.60) 3.08
LESS: DISTRIBUTIONS
Distributions from net realized
gain on investment and
foreign currency
transactions -0- -0- -0- (1.50) (.91)
Distributions in excess of net
realized gain on investment
and foreign currency
transactions -0- -0- -0- (.13) -0-
Total distributions -0- -0- -0- (1.63) (.91)
Net asset value,
end of period $12.76 $11.05 $10.71 $13.33 $19.56
TOTAL RETURN
Total investment return based
on net asset value(c) 15.48% 3.18% (19.66)% (25.10)% 18.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $49,465 $57,859 $73,986 $121,639 $181,285
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 3.00% 3.35% 2.88% 2.54% 2.38%(d)
Expenses, before
waivers/reimbursements 3.20% 3.35% 2.88% 2.54% 2.38%(d)
Net investment loss (1.07)%(b) (1.38)% (1.41)% (.98)% (1.18)%
Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 25
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
---------------------------------------------------------------
Year Ended July 31,
---------------------------------------------------------------
2004 2003 2002 2001 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.08 $10.73 $13.35 $19.58 $17.41
INCOME FROM INVESTMENT
OPERATIONS
Net investment loss(a) (.13)(b) (.14) (.17) (.15) (.23)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 1.86 .49 (2.45) (4.45) 3.31
Net increase (decrease) in
net asset value from
operations 1.73 .35 (2.62) (4.60) 3.08
LESS: DISTRIBUTIONS
Distributions from net realized
gain on investment and
foreign currency
transactions -0- -0- -0- (1.50) (.91)
Distributions in excess of net
realized gain on investment
and foreign currency
transactions -0- -0- -0- (.13) -0-
Total distributions -0- -0- -0- (1.63) (.91)
Net asset value,
end of period $12.81 $11.08 $10.73 $13.35 $19.58
TOTAL RETURN
Total investment return based
on net asset value(c) 15.61% 3.26% (19.63)% (25.07)% 17.99%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $14,960 $19,024 $24,924 $41,203 $60,984
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 2.95% 3.27% 2.84% 2.51% 2.36%(d)
Expenses, before
waivers/reimbursements 3.15% 3.27% 2.84% 2.51% 2.36%(d)
Net investment loss (1.01)%(b) (1.33)% (1.36)% (.95)% (1.18)%
Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28.
_______________________________________________________________________________
26 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
---------------------------------------------------------------
Year Ended July 31,
---------------------------------------------------------------
2004 2003 2002 2001 2000
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $12.42 $11.91 $14.68 $21.18 $18.58
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(loss)(a) .01(b) (.04) (.05) -0- (.01)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.08 .55 (2.72) (4.87) 3.52
Net increase (decrease) in
net asset value from
operations 2.09 .51 (2.77) (4.87) 3.51
LESS: DISTRIBUTIONS
Distributions from net realized
gain on investment and
foreign currency
transactions -0- -0- -0- (1.50) (.91)
Distributions in excess of net
realized gain on investment
and foreign currency
transactions -0- -0- -0- (.13) -0-
Total distributions -0- -0- -0- (1.63) (.91)
Net asset value,
end of period $14.51 $12.42 $11.91 $14.68 $21.18
TOTAL RETURN
Total investment return based
on net asset value(c) 16.83% 4.28% (18.87)% (24.42)% 19.21%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $2,978 $3,289 $4,610 $5,729 $9,196
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements 1.92% 2.25% 1.80% 1.48% 1.34%(d)
Expenses, before
waivers/reimbursements 2.11% 2.25% 1.80% 1.48% 1.34%(d)
Net investment
income (loss) .09%(b) (.33)% (.36)% .02% (.06)%
Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 27
Financial Highlights
- -------------------------------------------------------------------------------
(a) Based on average shares outstanding.
(b) Net of 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
deferred sales charge is not reflected in the calculation of total investment
return. Total return does not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. Total
investment return calculated for a period of less than one year is not
annualized.
(d) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the period shown below, the net expense ratios were as
follows:
Year Ended
July 31, 2000
-----------------
Class A 1.64%
Class B 2.36%
Class C 2.35%
Advisor Class 1.33%
_______________________________________________________________________________
28 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Report of Independent Registered Public Accounting Firm
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of AllianceBernstein New Europe
Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
AllianceBernstein New Europe Fund, Inc. (the "Fund"), including the portfolio
of investments, as of July 31, 2004, 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 five years in the period then ended. 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. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of July
31, 2004, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. 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 New Europe Fund, Inc. at July 31, 2004, 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 five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
September 10, 2004
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 29
Board of Directors
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
David H. Dievler(1)
John H. Dobkin(1)
Alan J. Stoga(1)
OFFICERS
Marc O. Mayer, President
Thomas J. Bardong, Vice President
Stephen M. Beinhacker(2), Vice President
Russell Brody, Vice President
Mark D. Gersten, Treasurer & Chief Financial Officer
Mark R. Manley, Secretary
Vincent S. Noto, Controller
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Principal Underwriter
AllianceBernstein Investment Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
Transfer Agent
Alliance Global Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-free (800) 221-5672
(1) Member of the Audit Committee.
(2) Mr. Beinhacker is the person primarily responsible for the day-to-day
management of the Fund's investment portfolio.
_______________________________________________________________________________
30 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Management of the Fund
- -------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr.,#+ Investment Adviser and an 113 None
72, Independent Consultant. He
2 Sound View Drive, was formerly Senior Manager
Suite 100, of Barrett Associates, Inc.,
Greenwich, CT 06830 a registered investment adviser,
(Elected on with which he had been
January 14, 2004) associated since prior to 1999.
(Chairman of the Board) He was formerly Deputy
Comptroller andChief
Investment Officer of the State of
New York and, prior thereto,
Chief Investment Officer of the
New York Bank for Savings.
David H. Dievler, #+, 74 Independent Consultant. Until 98 None
P.O. Box 167 December 1994, he was Senior Vice
Spring Lake, NJ 07762 President of ACMC responsible
(14) for mutual fund administration.
Prior to joining ACMC in 1984, he
was Chief Financial Officer of
Eberstadt Asset Management
since 1968. Prior to that, he was a
Senior Manager at Price Waterhouse
& Co. Member of the American
Institute of Certified Public
Accountants since 1953.
John H. Dobkin, #+, 62 Consultant. He was formerly 96 None
P.O. Box 12 President of Save Venice, Inc.
Annandale, NY 12504 (preservation organization) from
(11) 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, he was
Director and Chairman of the Audit
Committee of ACMC.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 31
Management of the Fund
- -------------------------------------------------------------------------------
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
Alan Stoga, #+, 52 President of Zemi Communications, 2 None
Zemi Communications L.L.C. since prior to 1999. He is a
99 Madison Avenue member of the Board of Directors
New York, NY 10016 (12) of Tinker Foundation, the Americas
Society (Vice Chairman), Council
of the Americas, Claremont
Graduate University School of
Politics and Economics, the Center
for Global Finance of the Lubin
School of Business and Argentine
American Chamber of Commerce
(President). He was formerly
President of Zemi Investments
from 1995 through 1998 and
Managing Director of Kissinger
Associates, Inc. from 1984 through
1996.
* There is no stated term of office for the Fund's Directors.
# Member of the Audit Committee.
+ Member of the Nominating Committee.
_______________________________________________________________________________
32 o ALLIANCEBERNSTEIN NEW EUROPE FUND
Management of the Fund
- -------------------------------------------------------------------------------
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, POSITION(S) PRINCIPAL OCCUPATION
ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS**
- --------------------------------------------------------------------------------------------------------------
Marc O. Mayer, 46 President Executive Vice President of
ACMC** since 2001; prior thereto,
Chief Executive Officer of Sanford
C. Bernstein & Co., LLC ("SCB &
Co.") and its predecessor since
prior to 1999.
Thomas J. Bardong, 59 Vice President Senior Vice President of ACMC,**
with which he has been
associated since prior to 1999.
Stephen M. Beinhacker, 39 Vice President Senior Vice President of ACMC,**
with which he has been
associated since prior to 1999.
Russell Brody, 37 Vice President Vice President of ACMC,** with
which he has been associated
since prior to 1999.
Mark D. Gersten, 53 Treasurer and Chief Senior Vice President of Alliance
Financial Officer Global Investor Services, Inc.
("AGIS") and Vice President of
AllianceBernstein Investment
Research and Management, Inc.
("ABIRM"),** with which he has
been associated since prior
to 1999.
Mark R. Manley, 41 Secretary Senior Vice President and Chief
Compliance Officer of ACMC,**
with which he has been
associated since prior to 1999.
Vincent S. Noto, 39 Controller Vice President of AGIS,** with
which he has been associated
since prior to 1999.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM and AGIS are affiliates of the Fund.
The Fund's Statement of AdditionalInformation ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at 800-227-4618 for a free prospectus or SAI.
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 33
Alliancebernstein Family of Funds
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- --------------------------------------------
Wealth Strategies Funds
- --------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy*
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy**
- --------------------------------------------
Blended Style Funds
- --------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- --------------------------------------------
Growth Funds
- --------------------------------------------
Domestic
Growth Fund
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Small Cap Growth Fund
Technology Fund
Global & International
All-Asia Investment Fund
Global Research Growth Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
- --------------------------------------------
Value Funds
- --------------------------------------------
Domestic
Balanced Shares
Disciplined Value Fund
Growth & Income Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- --------------------------------------------
Taxable Bond Funds
- --------------------------------------------
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
- --------------------------------------------
Municipal Bond Funds
- --------------------------------------------
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
- --------------------------------------------
Intermediate Municipal Bond Funds
- --------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- --------------------------------------------
Closed-End Funds
- --------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
We also offer Exchange Reserves,+ which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current
prospectus. Please read the prospectus carefully before you invest or send
money.
* Formerly Growth Investors Fund.
** Formerly Conservative Investors Fund.
+ An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
_______________________________________________________________________________
34 o ALLIANCEBERNSTEIN NEW EUROPE FUND
NOTES
_______________________________________________________________________________
ALLIANCEBERNSTEIN NEW EUROPE FUND o 35
NOTES
_______________________________________________________________________________
36 o ALLIANCEBERNSTEIN NEW EUROPE FUND
ALLIANCEBERNSTEIN NEW EUROPE FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
AllianceBernstein [LOGO](SM)
Investment Research and Management
(SM) This service mark used under license from the owner, Alliance Capital
Management L.P.
EURAR0704
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 11(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 director
David H. Dievler qualifies as an audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following table sets forth the aggregate fees billed by the independent
auditor, 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 multi-class distribution testing, advice and education on
accounting and auditing issues, and consent letters; (iii) tax compliance, tax
advice and tax return preparation; and (iv) 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 ("Service Affiliates"), which include conducting an annual
internal control report pursuant to Statement on Auditing Standards No. 70. No
other services were provided to the Fund during this period.
All Fees for
Non-Audit Services
Provided to the
Portfolio, the
Adviser
Audit-Related and Service
Audit Fees Fees Tax Fees Affiliates
- ------------------------------------------------------------------------------
2003: $46,125 $9,382 $13,330 $710,127
2004: $47,000 $9,222 $16,000 $862,823
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 auditors. 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 a
Fund. Accordingly, all of the amounts in the table for Audit Fees,
Audit-Related Fees and Tax Fees for the entire period ended 2003 and 2004
are for services pre-approved by the Fund's Audit Committee. The amounts of
the Fees for Non-Audit Services provided to the Fund, the Adviser and Service
Affiliates in the table for the Fund, that were subject to pre-approval by the
Audit Committee for the entire period ended 2003 and 2004 were as follows:
Non-Audit Services Pre-Approved
by the Audit Committee
----------------------------------
Audit
Related Tax
Fees Fees Total
-------- --------- --------
2003 $293,282 $13,330 $306,612
2004 $255,967 $16,000 $271,967
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 auditor 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. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 7, 2004 the Fund adopted procedures by which shareholders may
recommend nominees to the Fund's Board of Directors. Prior thereto, the Fund's
Board did not accept shareholder recommendations for
nominees to the Fund's Board.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no significant changes in the registrant's internal controls
that could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- -----------------------
11 (a) (1) Code of ethics that is subject to the disclosure of
Item 2 hereof
11 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (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 New Europe Fund, Inc.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: September 29, 2004
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: September 29, 2004
-------------------
By: /s/ Mark D. Gersten
--------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: September 29, 2004
--------------------
00250.0073 #462870v4