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: 811-08426
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
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: June 30, 2007
Date of reporting period: December 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
AllianceBernstein International
Growth Fund
December 31, 2006
SEMI-ANNUAL REPORT
[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.
February 22, 2007
Semi-Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein International Growth Fund (the "Fund") for the semi-annual
reporting period ended December 31, 2006.
Investment Objective and Policies
This open-end Fund's investment objective is long-term growth of capital. The
Fund invests primarily in an international portfolio of equity securities of
companies located in both developed and emerging countries. The Fund's
portfolio normally consists of approximately 100-130 stocks. The Fund invests,
under normal circumstances, in the equity securities of companies located in at
least three countries (and normally substantially more) other than the United
States. The Fund's investments include companies that are established as a
result of privatizations of state enterprises.
Investment Results
The table on page 4 provides the performance results for the Fund and its
benchmarks, the Morgan Stanley Capital International (MSCI) All Country (AC)
World (ex-U.S.) Index and the MSCI World (ex-U.S.) Index for the six- and
12-month periods ended December 31, 2006.
Over the six-month period ended December 31, 2006, the Fund outperformed its
benchmarks. Stock selection was the primary contributor to positive investment
results, while sector selection made a moderately positive contribution to the
relative return. Looking first at stock selection, holdings in Asia (with the
exception of Japan), Europe and Latin America made significant contributions to
the Fund's performance. Several telecommunication holdings were among the key
contributors to performance, including a number of emerging-market cellular
operators. European utility companies held by the Fund also made notable
contributions. In terms of sector selection, the Fund's relative underweight
position in Japan had a positive impact on the Fund's relative return, as did
its relative overweight position within emerging markets. Cash holdings, which
were higher than usual, had a negative impact on the investment results.
Over the 12-month period ended December 31, 2006, the Fund underperformed its
benchmarks, principally due to the negative relative impact of cash balances
held by the Fund. Again, consistent cash inflows resulted in cash balances that
were larger than usual. As a result, the Fund's portfolio was regularly
rebalanced and associated transaction fees were incurred. Also, cash balances
were typically held in the U.S. Dollar, which, overall, was weak relative to
other international currencies over both the six- and 12-month periods. The
Fund's European stock selection detracted from performance, but was largely
offset by solid stock selection results in the other geographical regions.
Market Review and Investment Strategy
Despite bouts of investor anxiety--first regarding inflation, then regarding
the outlook that economic growth would decline--the 12-month period ended
December 31, 2006 was another
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 1
year in which international equity markets posted strong positive returns.
During the period under review, and following reserved U.S. economic expansion,
the global economy entered a relatively moderate and stable phase in which
growth began to slow. Emerging-market economies continued to provide powerful
support for growth, although there were signs of moderation in some
emerging-market economies, such as China. Japan and Europe experienced notable
revitalization in their respective economic performances. Corporate earnings
remained strong, and positive-earnings were a surprising and widespread feature
of the market. Mergers and acquisitions also helped to strengthen equity
markets, as strong corporate cash flow and global liquidity levels prompted
corporate and private equity activity. Even as the strength in energy and
commodity prices continued to exert some inflationary pressure on the global
economy, efforts by central banks to keep inflation under control seemed to be
successful.
The European markets, boosted by improved economic data and strong corporate
earnings, were among the strongest performers during the 12-month period. In
contrast, the Japanese market was the weakest relative performer: it failed to
match the strong performance it posted in 2005. Emerging markets continued to
generate strong returns, most notably Latin America, which was bolstered by
impressive economic performance and supportive election results. The Eastern
Europe, Middle East and Africa (EMEA) region was a relative laggard compared to
its emerging-market peers. Countries within the region with account deficits,
such as Turkey and South Africa, experienced currency pressure. Overall,
emerging-market returns were particularly strong in the second half of 2006,
recovering from a correction witnessed in the middle part of the year that was
catalyzed by a temporary rise in global risk aversion.
Sectors that posted relatively strong returns for the 12-month period ended
December 31, 2006 included utilities, which was bolstered by strong mergers and
acquisitions activity, and materials, which was driven by strong commodity
prices. Traditional growth sectors, including technology and health care, were
the weakest performers, as investors failed to reward the potential future
earnings power of companies within these sectors with any premium.
The Fund's overall investment strategy remains intact, and the Fund continues
to focus on research-driven stock selection. The Fund's International Growth
Portfolio Oversight Group (the "Group") continues to place emphasis on
companies whose future growth rates the Group expects will exceed the market's
expectations. The Fund remains well-diversified, with strong representation in
both developed and emerging markets, and in a wide array of economic sectors.
2 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein 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
Neither the unmanaged Morgan Stanley Capital International (MSCI) World
(ex-U.S.) Index (net) nor the unmanaged MSCI All Country (AC) World (ex-U.S.)
Index (net) reflects fees and expenses associated with the active management of
a mutual fund portfolio. The MSCI AC World (ex-U.S.) Index (net) is a free
float-adjusted market capitalization index that is designed to measure global
developed market equity performance in 22 developed market countries, excluding
the U.S. The MSCI World (ex-U.S.) Index is a free float-adjusted market
capitalization index that is designed to measure global developed market equity
performance in 22 developed market countries, excluding the U.S. An investor
cannot invest directly in an index, and its results are not indicative of the
performance for any specific investment, including the Fund.
The MSCI World (ex-U.S.) Index and the MSCI AC World (ex-U.S.) Index values are
calculated using net returns. Net returns approximate the minimum possible
dividend reinvestment (the dividend is reinvested after deduction of
withholding tax, applying the highest rate applicable to non-resident
individuals (Luxembourg holding companies) who do not benefit from double
taxation treaties).
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. Growth investing does not guarantee a
profit or eliminate risk. The stocks of these companies can have relatively
high valuations. Because of these high valuations, an investment in a growth
stock can be more risky than an investment in a company with more modest growth
expectations. If a growth stock company should fail to meet these high earnings
expectations, the price of these stocks can be severely negatively affected.
The Fund may invest in securities of emerging market nations. These investments
have additional risks, such as those presented by illiquid securities or thinly
traded markets, company management risk, heightened political instability and
currency volatility. Accounting standards and market regulations in emerging
market nations are not the same as those in the U.S. While the Fund invests
principally in common stocks and other equity securities, in order to achieve
its investment objectives, the Fund may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in the Fund's prospectus.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARKS Returns
PERIODS ENDED DECEMBER 31, 2006 6 Months 12 Months
-------- ---------
AllianceBernstein International Growth Fund
Class A 17.14% 25.04%
Class B 16.73% 24.11%
Class C 16.71% 24.16%
Advisor Class* 17.27% 25.42%
Class R* 17.00% 24.68%
Class K* 17.10% 24.99%
Class I* 17.32% 25.53%
MSCI All Country (AC) World (ex-U.S.) Index 15.48% 26.65%
MSCI World (ex-U.S.) Index 14.22% 25.71%
* 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.
See Historical Performance and Benchmark Disclosures on previous page.
(Historical Performance continued on next page)
4 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2006
NAV Returns SEC Returns
Class A Shares
1 Year 25.04% 19.76%
5 Years 20.29% 19.24%
10 Years 11.49% 11.01%
Class B Shares
1 Year 24.11% 20.11%
5 Years 19.39% 19.39%
10 Years(a) 10.83% 10.83%
Class C Shares
1 Year 24.16% 23.16%
5 Years 19.42% 19.42%
10 Years 10.68% 10.68%
Advisor Class Shares+
1 Year 25.42% 25.42%
5 Years 20.70% 20.70%
10 Years 11.83% 11.83%
Class R Shares+
1 Year 24.68% 24.68%
Since Inception* 21.20% 21.20%
Class K Shares+
1 Year 24.99% 24.99%
Since Inception* 21.49% 21.49%
Class I Shares+
1 Year 25.53% 25.53%
Since Inception* 21.89% 21.89%
(a) Assumes conversion of Class B shares into Class A shares after eight years.
* Inception Date: 3/1/05 for Class R, Class K and Class I shares.
+ These share classes are offered at net asset value (NAV) to eligible
investors and their SEC returns are the same as the NAV returns. Please note
that 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 Class R shares, Class K shares and Class I shares are listed above.
See Historical Performance disclosures on page 3.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 5
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2006)
Class A Shares
1 Year 19.76%
5 Years 19.24%
10 Years 11.01%
Class B Shares
1 Year 20.11%
5 Years 19.39%
10 Years(a) 10.83%
Class C Shares
1 Year 23.16%
5 Years 19.42%
10 Years 10.68%
Advisor Class Shares+
1 Year 25.42%
5 Years 20.70%
10 Years 11.83%
Class R Shares+
1 Year 24.68%
Since Inception* 21.20%
Class K Shares+
1 Year 24.99%
Since Inception* 21.49%
Class I Shares+
1 Year 25.53%
Since Inception* 21.89%
(a) Assumes conversion of Class B shares into Class A shares after eight years.
* Inception date: 3/1/05 for Class R, 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 Class R shares, Class K shares and Class I shares are
listed above.
See Historical Performance disclosures on page 3.
6 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual
expenses. You may use the information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
annual rate of return of 5% before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds by comparing this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the hypothetical example is useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs
would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
July 1, 2006 December 31, 2006 During Period*
---------------------- ------------------------ -----------------------
Actual Hypothetical Actual Hypothetical** Actual Hypothetical
----- ------------ -------- ----------- ------ ------------
Class A $1,000 $1,000 $1,171.40 $1,018.75 $ 7.01 $ 6.51
Class B $1,000 $1,000 $1,167.33 $1,015.07 $10.98 $10.21
Class C $1,000 $1,000 $1,167.08 $1,015.17 $10.87 $10.11
Advisor
Class $1,000 $1,000 $1,172.69 $1,020.21 $ 5.42 $ 5.04
Class R $1,000 $1,000 $1,170.04 $1,017.19 $ 8.70 $ 8.08
Class K $1,000 $1,000 $1,171.01 $1,019.06 $ 6.68 $ 6.21
Class I $1,000 $1,000 $1,173.24 $1,020.52 $ 5.09 $ 4.74
* Expenses are equal to the classes' annualized expense ratios of 1.28%,
2.01%, 1.99%, 0.99%, 1.59%, 1.22% and 0.93%, respectively, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
** Assumes 5% return before expenses.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 7
PORTFOLIO SUMMARY
December 31, 2006 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $1,805.3
[PIE CHART OMITTED]
SECTOR BREAKDOWN*
o 27.7% Finance
o 17.4% Consumer Services
o 8.9% Consumer Staples
o 7.7% Health Care
o 7.1% Energy
o 6.8% Consumer Manufacturing
o 5.0% Technology
o 5.0% Basic Industry
o 3.5% Utilities
o 2.2% Transportation
o 1.8% Capital Goods
o 1.1% Multi Industry Companies
o 1.0% Aerospace & Defense
o 4.8% Short-Term
[PIE CHART OMITTED]
COUNTRY BREAKDOWN*
o 14.5% Japan
o 9.6% Switzerland
o 8.6% France
o 8.4% United Kingdom
o 7.0% Italy
o 4.8% Brazil
o 4.4% China
o 3.7% Germany
o 3.7% Ireland
o 3.6% South Africa
o 3.0% Spain
o 2.5% Mexico
o 21.4% Other
o 4.8% Short-Term
* All data are as of December 31, 2006. The Fund's country and sector
breakdowns are expressed as a percentage of total investments and may vary over
time. "Other" country weightings represent less than 2.5% weightings in the
following countries: Australia, Austria, Chile, Egypt, Finland, Greece, Hong
Kong, Hungary, India, Indonesia, Israel, Luxembourg, Netherlands, Norway,
Russia, South Korea, Taiwan and Turkey.
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 this report
reflects more specific industry information and is consistent with the
investment restrictions discussed in the Fund's prospectus.
8 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
TEN LARGEST HOLDINGS
December 31, 2006 (unaudited)
Percent of
Company U.S. $ Value Net Assets
- -------------------------------------------------------------------------------
Credit Suisse Group $48,011,881 2.7%
ENI SpA 46,745,256 2.6
Mitsubishi UFJ Financial Group, Inc. 46,546,555 2.6
Nomura Holdings, Inc. 43,977,514 2.4
Toyota Motor Corp. 42,853,359 2.4
Banco Bilbao Vizcaya Argentaria, SA 38,890,791 2.1
ING Groep NV 34,169,218 1.9
Vinci, SA 33,223,079 1.8
UniCredito Italiano SpA 30,820,901 1.7
Industrial & Commercial Bank of China-
Class H 30,354,666 1.7
$395,593,220 21.9%
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 9
PORTFOLIO OF INVESTMENTS
December 31, 2006 (unaudited)
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-94.8%
Finance-27.6%
Banking - Money Center-11.8%
Anglo Irish Bank Corp. PLC 694,704 $14,302,952
Banco Bilbao Vizcaya Argentaria SA 1,618,725 38,890,791
Banco Santander Chile, SA (ADR) 92,600 4,459,616
Bank Central Asia Tbk PT 15,569,000 9,018,281
Bank Hapoalim BM 1,440,300 6,720,922
BNP Paribas SA 266,149 28,953,982
Commerzbank AG 422,154 15,908,115
Credit Suisse Group 688,659 48,011,881
Mitsubishi UFJ Financial Group, Inc. 3,752 46,546,555
------------
212,813,095
Banking - Regional-6.4%
Allied Irish Banks PLC 785,264 23,428,749
Industrial & Commercial Bank of
China-Class H(a) 48,682,000 30,354,666
Macquarie Bank Ltd. 278,200 17,291,740
Turkiye Is Bankasi-Class C 3,168,192 14,349,190
UniCredito Italiano SpA 3,525,706 30,820,901
------------
116,245,246
Brokerage & Money Management-2.4%
Nomura Holdings, Inc. 2,331,200 43,977,514
Insurance-2.8%
ING Groep NV 773,262 34,169,218
Swiss Reinsurance 191,590 16,237,429
------------
50,406,647
Real Estate-0.4%
Urbi Desarrollos Urbanos SA de C.V(a) 1,857,100 6,704,332
Miscellaneous-3.8%
3i Group PLC 889,413 17,536,261
FirstRand Ltd. 5,794,005 18,281,653
Investimentos Itau, SA pfd 5,164,870 26,398,493
ORIX Corp. 20,890 6,057,935
------------
68,274,342
------------
498,421,176
Consumer Services-17.4%
Advertising-0.5%
WPP Group PLC 672,176 9,071,230
Airlines-1.2%
B.W.I.A. International Airways Ltd.(a)(b) 2,727,272 3
easyJet PLC(a) 1,178,916 14,114,669
Gol Linhas Aereas Inteligentes SA (ADR) 241,400 6,920,938
------------
21,035,610
10 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Apparel-1.0%
Geox SpA 1,216,303 $18,819,815
Broadcasting & Cable-2.2%
Grupo Televisa, SA (ADR) 314,400 8,491,944
SES FDR 522,858 9,291,800
Societe Television Francaise 1 611,092 22,646,348
------------
40,430,092
Cellular Communications-5.8%
America Movil SA de CV Series L (ADR) 513,918 23,239,372
Bharti Tele-Ventures(a) 786,302 11,194,053
China Mobile Ltd.(a) 2,368,000 20,412,055
MTN Group Ltd. 945,195 11,464,929
Orascom Telecom Holding SAE (GDR)(c) 217,049 14,325,234
Turkcell Iletisim Hizmet AS 1,605,207 7,867,384
Vimpel-Communications (ADR)(a) 207,200 16,358,440
------------
104,861,467
Entertainment & Leisure-1.6%
OPAP, SA 732,261 28,278,211
Miscellaneous-1.0%
Capita Group PLC 1,454,153 17,241,980
Printing & Publishing-1.0%
Naspers Ltd.-Class N 719,685 17,059,539
Restaurants & Lodging-1.5%
Accor, SA 357,925 27,676,916
Retail - General Merchandise-1.6%
Esprit Holdings Ltd. 1,867,000 20,795,509
GOME Electrical Appliances Holdings Ltd. 11,017,000 8,630,972
------------
29,426,481
------------
313,901,341
Consumer Staples-8.9%
Beverages-2.9%
Fomento Economico Mexicano SA de CV
(ADR) 52,600 6,088,976
Pernod-Ricard, SA 94,384 21,638,321
SABMiller PLC 1,049,087 24,088,370
------------
51,815,667
Food-1.7%
Nestle, SA 85,306 30,258,651
Retail - Food & Drug-0.6%
Carrefour SA(a) 180,363 10,916,414
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 11
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Tobacco-3.0%
Altadis SA 187,093 $9,774,391
British American Tobacco PLC 646,285 18,096,984
Japan Tobacco, Inc. 5,638 27,251,015
------------
55,122,390
Miscellaneous-0.7%
Lotte Shopping Co. Ltd. 31,223 12,985,251
------------
161,098,373
Health Care-7.6%
Drugs-6.9%
Chugai Pharmaceutical Co. Ltd. 848,500 17,468,707
CSL Ltd. 446,232 22,967,086
Merck KGaA(a) 170,461 17,690,817
Novartis AG 384,442 22,084,765
Richter Gedeon Nyrt. 30,831 7,017,982
Roche Holding AG 106,264 19,012,073
Sanofi-Aventis 100,732 9,287,592
Teva Pharmaceutical Industries Ltd. (ADR) 299,595 9,311,413
------------
124,840,435
Medical Products-0.7%
Nobel Biocare Holding AG(a) 44,546 13,139,597
------------
137,980,032
Energy-7.0%
Domestic Integrated-0.4%
MOL Hungarian Oil and Gas Nyrt.(a) 66,957 7,572,857
International-4.6%
ENI SpA 1,389,769 46,745,256
LUKOIL (ADR) 144,969 12,645,356
Petroleo Brasileiro SA (ADR) 260,900 24,201,084
------------
83,591,696
Oil Service-2.0%
PetroChina Co., Ltd.-Class H 6,694,000 9,434,407
Statoil ASA 1,012,889 26,669,803
------------
36,104,210
------------
127,268,763
Consumer Manufacturing-6.8%
Auto & Related-3.4%
Denso Corp. 316,400 12,545,507
Tata Motors Ltd. 287,069 5,829,361
Toyota Motor Corp. 640,300 42,853,359
------------
61,228,227
Building & Related-3.4%
CRH PLC 681,402 28,332,509
Vinci, SA 260,671 33,223,079
------------
61,555,588
------------
122,783,815
12 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Basic Industry-5.0%
Gold-0.5%
Gold Fields Ltd. 461,670 $8,673,853
Mining & Metals-3.3%
China Shenhua Energy Co. Ltd.-Class H 7,429,000 17,859,667
Cia Vale do Rio Doce (ADR) 390,900 11,625,366
Cia Vale do Rio Doce (Sponsored ADR) 426,100 11,185,125
Mechel (ADR) 172,400 4,392,752
Rio Tinto PLC 279,209 14,797,127
------------
59,860,037
Miscellaneous-1.2%
RWE AG(a) 199,646 21,884,691
------------
90,418,581
Technology-4.9%
Computer Hardware/Storage-0.4%
NEC Corp. 1,559,000 7,475,675
Computer Peripherals-0.2%
High Tech Computer Corp. 194,000 3,826,406
Computer Services-0.3%
Indra Sistemas SA 236,605 5,797,571
Electronic Components-0.3%
AU Optronics Corp. (ADR) 413,300 5,707,673
Internet Infrastructure-1.6%
Fastweb 507,636 28,963,073
Semiconductor Components-1.6%
Advanced Semiconductor Engineering,Inc.(a) 5,477,945 6,149,823
Novatek Microelectronics Ltd 967,000 4,355,542
Taiwan Semiconductor Manufacturing Co.
Ltd. (ADR) 878,248 9,599,251
Taiwan Semiconductor Manufacturing Co.Ltd. 3,806,255 7,814,930
------------
27,919,546
Miscellaneous-0.5%
Hoya Corp. 245,900 9,584,407
------------
89,274,351
Utilities-3.5%
Electric & Gas Utility-2.0%
Fortum Oyj 579,815 16,467,024
National Grid PLC 1,299,305 18,805,538
Scottish Power PLC 1,334 19,507
------------
35,292,069
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 13
Shares or
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Telephone Utility-1.5%
Hellenic Telecommunications Organization SA(a) 124,870 $3,735,763
Nippon Telegraph & Telephone Corp. 1,828 9,014,759
Telekom Austria AG(a) 379,417 10,131,282
Telekomunikasi Indonesia Tbk PT 4,386,500 4,943,974
------------
27,825,778
------------
63,117,847
Transportation-2.2%
Railroad-1.5%
All America Latina Logistica(c) 651,200 6,762,126
Central Japan Railway Co. 1,977 20,376,322
------------
27,138,448
Miscellaneous-0.7%
Fraport AG Frankfurt Airport Services
Worldwide 166,758 11,924,492
------------
39,062,940
Capital Goods-1.8%
Engineering & Construction-1.4%
ABB Ltd. 1,322,140 23,676,343
China Communications Construction Co. Ltd.-
Class H(a) 754,000 744,471
------------
24,420,814
Miscellaneous-0.4%
Nitto Denko Corp. 144,200 7,203,372
------------
31,624,186
Multi-Industry Companies-1.1%
Multi-Industry Companies-1.1%
Barloworld Ltd. 424,555 9,912,458
Mitsui & Co. Ltd. 675,000 10,114,117
------------
20,026,575
Aerospace & Defense-1.0%
Aerospace-1.0%
BAE Systems PLC 2,084,540 17,330,174
Total Common & Preferred Stocks
(cost $1,370,115,953) 1,712,308,154
SHORT-TERM INVESTMENT-4.8%
Time Deposit-4.8%
ING Bank Grand Cayman
5.28%, 1/02/07
(cost $86,200,000) $86,200 86,200,000
------------
Total Investments-99.6%
(cost $1,456,315,953) 1,798,508,154
Other assets less liabilities-0.4% 6,779,605
------------
Net Assets-100.0% $1,805,287,759
14 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
(a) Non-income producing security.
(b) Illiquid security, valued at fair value (see Note A).
(c) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At December 31, 2006, the aggregate market value of these securities
amounted to $51,346,011 or 2.8% of net assets.
Glossary of Terms:
ADR - American Depositary Receipt
GDR - Global Depositary Reciept
See notes to financial statements.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 15
STATEMENT OF ASSETS & LIABILITIES
December 31, 2006 (unaudited)
Assets
Investments in securities, at value (cost $1,456,315,953) $1,798,508,154
Cash 114,503
Foreign cash, at value (cost $907,792) 910,990
Receivable for capital stock sold 10,283,195
Dividends and interest receivable 1,911,327
Total assets 1,811,728,169
Liabilities
Payable for capital stock redeemed 3,488,205
Advisory fee payable 1,117,278
Distribution fee payable 647,211
Payable for India capital gains tax 442,269
Custodian fee payable 409,831
Transfer Agent fee payable 47,043
Administrative fee payable 17,592
Accrued expenses 270,981
Total liabilities 6,440,410
Net Assets $1,805,287,759
Composition of Net Assets
Capital stock, at par $97,250
Additional paid-in capital 1,429,491,648
Distributions in excess of net investment income (570,071)
Accumulated net realized gain on investment and foreign
currency transactions 34,497,469
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 341,771,463
$1,805,287,759
Net Asset Value Per Share--21 billion shares of capital stock authorized, $.001
par value
Shares Net Asset
Class Net Assets Outstanding Value
- ---------------------------------------------------------
A $1,131,274,746 59,824,020 $18.91*
B $125,789,687 7,214,557 $17.44
C $298,006,500 17,069,205 $17.46
Advisor $222,578,073 11,677,264 $19.06
R $17,812,470 945,085 $18.85
K $4,123,421 218,345 $18.88
I $5,702,862 301,152 $18.94
* The maximum offering price per share for Class A shares was $19.75 which
reflects a sales charge of 4.25%.
See notes to financial statements.
16 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Six Months Ended December 31, 2006 (unaudited)
Investment Income
Dividends (net of foreign taxes withheld
of $852,061) $12,156,959
Interest 1,834,499 $13,991,458
Expenses
Advisory fee 5,886,999
Distribution fee--Class A 1,574,696
Distribution fee--Class B 583,476
Distribution fee--Class C 1,237,180
Distribution fee--Class R 34,166
Distribution fee--Class K 2,409
Transfer agency--Class A 629,742
Transfer agency--Class B 86,520
Transfer agency--Class C 156,050
Transfer agency--Advisor Class 88,108
Transfer agency--Class R 15,696
Transfer agency--Class K 1,100
Transfer agency--Class I 1,140
Custodian 579,595
Registration 105,720
Printing 64,668
Administrative 49,598
Audit 33,196
Legal 31,995
Directors' fees 16,760
Miscellaneous 20,298
Total expenses 11,199,112
Less: expense offset arrangement
(see Note B) (16,448)
Net expenses 11,182,664
Net investment income 2,808,794
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain on:
Investment transactions 46,840,462(a)
Foreign currency transactions 252,246
Net change in unrealized
appreciation/depreciation of:
Investments 205,065,132
Foreign currency denominated assets
and liabilities (236,887)
Net gain on investment and foreign
currency transactions 251,920,953
Contribution from Adviser (see Note B) 5,492
Net Increase in Net Assets from
Operations $254,735,239
(a) Net of foreign capital gain taxes of $131,886.
See notes to financial statements.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 17
STATEMENT OF CHANGES IN NET ASSETS
Six Months
Ended
December 31, Year Ended
2006 June 30,
(unaudited) 2006
- -------------------------------------------------------------------------------
Increase in Net Assets from Operations
Net investment income $2,808,794 $9,349,757
Net realized gain on investment and
foreign currency transactions 47,092,708 61,098,210
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities 204,828,245 45,624,260
Contribution from Adviser 5,492 -0-
Net increase in net assets from
operations 254,735,239 116,072,227
Dividends to Shareholders from
Net investment income
Class A (8,713,979) (2,646,195)
Class B (427,133) (59,506)
Class C (955,463) (41,448)
Advisor Class (1,535,108) (204,829)
Class R (131,568) (4,496)
Class K (30,376) (67)
Class I (32,759) (91)
Net realized gain on investment and
foreign currency transactions
Class A (42,264,075) (3,489,438)
Class B (5,028,642) (649,198)
Class C (11,223,425) (452,161)
Advisor Class (5,712,288) (198,221)
Class R (629,771) (6,499)
Class K (113,595) (86)
Class I (115,299) (85)
Capital Stock Transactions
Net increase 237,113,699 866,955,725
Total increase 414,935,457 975,275,632
Net Assets
Beginning of period 1,390,352,302 415,076,670
End of period (including
undistributed/(distributions in excess)
of net investment income of $(570,071)
and $8,447,521, respectively) $1,805,287,759 $1,390,352,302
See notes to financial statements.
18 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein International Growth Fund, Inc. (the "Fund"), organized as a
Maryland corporation on March 16, 1994, is registered under the Investment
Company Act of 1940 as an open-end management investment company. The Fund
offers Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 4% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Class 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. Advisor Class and Class I shares are sold without an initial or
contingent deferred sales charge and are not subject to ongoing distribution
expenses. All seven classes of shares have identical voting, dividend,
liquidation and other rights, and the same terms and conditions, 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
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 19
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.
20 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of unrealized appreciation and depreciation of investments and
foreign currency denominated assets and liabilities.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the 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 and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with U.S. generally accepted accounting principles. To the extent
these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 21
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 .75% of the first $2.5 billion, .65% of
the next $2.5 billion and .60% 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 1% of the Fund's average daily net assets.
The fee is accrued daily and paid monthly. Effective May 16, 2005, the Adviser
voluntarily agreed to waive its fees and bear certain expenses to the extent
necessary to limit total operating expenses on an annual basis 1.65%, 2.35%,
2.35%, 1.35%, 1.85%, 1.60% and 1.35% of the daily average net assets for the
Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares,
respectively. For the six months ended December 31, 2006, there were no fees
waived by the Adviser.
During the six months ended December 31, 2006, the Adviser reimbursed the Fund
$5,492 for trading losses incurred due to a trade entry error.
Pursuant to the advisory agreement, the Fund paid $49,598 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended December 31, 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. The compensation
retained by ABIS amounted to $451,171 for the six months ended December 31,
2006.
For the six months ended December 31, 2006, the Fund's expenses were reduced by
$16,448 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 $198,029 from the sale of Class A
shares and received $10,691, $84,565 and $57,167 in contingent deferred sales
charges imposed upon redemptions by shareholders of Class A, Class B and Class
C shares, respectively, for the six months ended December 31, 2006.
Brokerage commissions paid on investment transactions for the six months ended
December 31, 2006, amounted to $1,685,823, none of which was paid to
22 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
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 average daily net assets attributable
to the Class B and Class C shares, .50% of the Fund's average daily net assets
attributable to Class R shares and .25% of the Fund's average daily net assets
attributable to Class K shares. There are no distribution and servicing fees on
the Class I and 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 incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amounts of $6,965,825, $2,747,866, $47,166 and
$12,481 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 six months ended December 31, 2006, were as follows:
Purchases Sales
- -------------------------------------------------------------------------------
Investment securities (excluding
U.S. government securities) $610,265,449 $452,558,516
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes was substantially the
same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation and unrealized depreciation (excluding foreign currency
transactions) are as follows:
Gross unrealized appreciation $356,806,913
Gross unrealized depreciation (14,614,712)
Net unrealized appreciation $342,192,201
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 23
Forward Currency Exchange Contracts
The Fund may enter into forward currency exchange 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 sales commitments
denominated in foreign currencies and for investment purposes. A forward
currency exchange contract is a commitment to purchase or sell a foreign
currency at 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 currency exchange 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 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 currency
exchange contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a 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.
NOTE E
Capital Stock
Each class consists of 3,000,000,000 authorized shares. Transactions in capital
shares for each class were as follows:
Shares Amount
---------------------------- ---------------------------------
Six Months Ended Six Months Ended
December 31, December 31,
2006 Year Ended 2006 Year Ended
(unaudited) June 30, 2006 (unaudited) June 30, 2006
----------------- ------------- --------------- ----------------
Class A
Shares sold 15,489,106 41,022,603 $273,688,494 $682,746,447
Shares issued in
reinvestment of
dividends and
distributions 2,335,533 336,352 41,502,420 5,099,103
Shares converted
from Class B 266,604 774,552 4,777,001 12,512,401
Shares redeemed (14,497,685) (8,505,422) (259,309,912) (139,691,136)
Net increase 3,593,558 33,628,085 $60,658,003 $560,666,815
24 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Shares Amount
---------------------------- ---------------------------------
Six Months Ended Six Months Ended
December 31, December 31,
2006 Year Ended 2006 Year Ended
(unaudited) June 30, 2006 (unaudited) June 30, 2006
----------------- ------------- --------------- ----------------
Class B
Shares sold 978,308 3,983,935 $15,936,632 $60,999,552
Shares issued in
reinvestment of
dividends and
distributions 264,879 42,548 4,344,023 599,073
Shares converted
to Class A (288,928) (836,468) (4,777,001) (12,512,401)
Shares redeemed (749,805) (1,417,974) (12,245,902) (21,368,013)
Net increase 204,454 1,772,041 $3,257,752 $27,718,211
Class C
Shares sold 4,022,753 12,017,169 $65,905,083 $187,403,580
Shares issued in
reinvestment of
dividends and
distributions 490,588 24,920 8,055,455 351,158
Shares redeemed (857,034) (983,407) (14,071,134) (14,817,005)
Net increase 3,656,307 11,058,682 $59,889,404 $172,937,733
Advisor Class
Shares sold 6,094,963 6,392,453 $111,313,376 $106,539,577
Shares issued in
reinvestment of
dividends and
distributions 261,686 11,693 4,686,804 178,439
Shares redeemed (1,018,121) (673,422) (17,868,359) (11,451,047)
Net increase 5,338,528 5,730,724 $98,131,821 $95,266,969
Class R
Shares sold 596,619 523,969 $10,370,103 $8,852,315
Shares issued in
reinvestment of
dividends and
distributions 42,849 722 759,277 10,935
Shares redeemed (106,669) (113,122) (1,891,840) (1,843,493)
Net increase 532,799 411,569 $9,237,540 $7,019,757
Class K
Shares sold 181,356 45,977 $3,266,226 $786,155
Shares issued in
reinvestment of
dividends and
distributions 8,115 -0- $143,968 -0-
Shares redeemed (15,980) (1,840) (290,606) (32,363)
Net increase 173,491 44,137 $3,119,588 $753,792
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 25
Shares Amount
---------------------------- ---------------------------------
Six Months Ended Six Months Ended
December 31, December 31,
2006 Year Ended 2006 Year Ended
(unaudited) June 30, 2006 (unaudited) June 30, 2006
----------------- ------------- --------------- ----------------
Class I
Shares sold 151,899 148,208 $2,781,128 $2,624,442
Shares issued in
reinvestment of
dividends and
distributions 3,141 -0- $55,873 -0-
Shares redeemed (1,000) (1,806) (17,410) (31,994)
Net increase 154,040 146,402 $2,819,591 $2,592,448
NOTE F
Risks Involved inInvesting in the Fund
Concentration of 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 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.
The Fund's investments include securities issued by enterprises that are
undergoing, or that have undergone, privatization. Privatization is a process
through which the ownership and control of companies or assets in whole or in
part are transferred from the public sector to the private sector. Through
privatization a government or state divests or transfers all or a portion of
its interest in a state enterprise to some form of private ownership. The Fund
is susceptible to economic factors adversely affecting the economics of these
countries. In certain jurisdictions, the ability of foreign entities, such as
the Fund, to participate in privatizations may be limited by local law, or the
price or terms on which the Fund may be able to participate may be less
advatageous than for local investors. There can be no assurance that proposed
privatizations will be successful or that governments will not re-nationalize
enterprises that have been privatized. Furthermore, large blocks of the stock
of certain of these enterprises may be held by a small group of stockholders,
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise. In addition, these securities created through
privatization may be less liquid and subject to greater volatility than
securities of more developed countries.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum ex-
26 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
posure 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 $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 six months ended December 31, 2006.
NOTE H
Distributions to Shareholders
The tax character of distributions to be paid for the fiscal year ending June
30, 2007 will be determined at the end of the current fiscal year. The tax
character of distributions paid for the year ending June 30, 2006 and June 30,
2005 were as follows:
June 30, June 30,
2006 2005
- -------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $2,956,632 $730,733
Long-term gain 4,795,688 -0-
Total taxable distributions $7,752,320 $730,733
Total distributions paid $7,752,320 $730,733
As of June 30, 2006, the components of accumulated earning/(deficit) on a tax
basis were as follows:
Accumulated capital and other gains $48,706,327(a)
Undistributed ordinary income 13,346,905
Unrealized appreciation/(depreciation) 135,829,363(b)
Total accumulated earnings/(deficit) $197,882,595
(a) On June 30, 2006, the Fund utilized a net capital loss carryforward of
$3,737,351.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales and to Passive Foreign Investment Company ("PFIC")
mark-to-market gain recognition.
NOTE I
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
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 27
"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 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.
28 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
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 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, 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
stipu-
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 29
lation 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 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 wih 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
30 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
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, (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.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 31
NOTE J
Recent Accounting Pronouncement
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 a 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. On December 22, 2006, the Securities and
Exchange Commission notified the industry that the implementation of FIN 48 by
registered investment companies could be delayed until the last business day of
the first required financial statement reporting period for fiscal years
beginning after December 15, 2006. At this time, management is evaluating the
implications of FIN 48 and its impact on the financial statements has not yet
been determined.
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.
32 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
----------------------------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
2006 ---------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $16.93 $13.72 $11.15 $8.38 $8.19 $8.76
Income From Investment
Operations
Net investment income (loss)(a) .04 .20 .15(b) .05(b)(c) .02 (.03)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.81 3.22 2.46 2.76 .17 (.54)
Contribution from Adviser -0-(d) -0- -0- -0- -0- -0-
Net increase (decrease) in net
asset value from operations 2.85 3.42 2.61 2.81 .19 (.57)
Less: Dividends and
Distributions
Dividends from net investment
income (.15) (.09) (.04) (.04) -0- -0-
Distributions from net realized
gains on investment and
foreign currency
transactions (.72) (.12) -0- -0- -0- -0-
Total dividends and
distributions (.87) (.21) (.04) (.04) -0- -0-
Net asset value, end of period $18.91 $16.93 $13.72 $11.15 $8.38 $8.19
Total Return
Total investment return based
on net asset value(e) 17.14% 25.11% 23.44% 33.57% 2.32% (6.51)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $1,131,275 $952,036 $310,073 $202,899 $163,406 $183,160
Ratio to average net assets of:
Expenses, net of
waivers/reimbursement 1.28%(f) 1.43%(g) 1.57% 1.89% 2.29% 2.10%
Expenses, before
waivers/reimbursement 1.28%(f) 1.43%(g) 1.61% 2.04% 2.29% 2.10%
Net investment income (loss) .49%(f) 1.26%(g) 1.17%(b) .49%(b)(c) .23% (.40)%
Portfolio turnover rate 30% 59% 47% 50% 29% 43%
See footnote summary on page 39.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 33
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
----------------------------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
2006 ---------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $15.65 $12.72 $10.38 $7.84 $7.72 $8.32
Income From Investment
Operations
Net investment income (loss)(a) (.02) .05 .04(b) (.03)(b)(c) (.04) (.09)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.59 3.01 2.30 2.57 .16 (.51)
Contribution from Adviser -0-(d) -0- -0- -0- -0- -0-
Net increase (decrease) in net
asset value from operations 2.57 3.06 2.34 2.54 .12 (.60)
Less: Dividends and
Distributions
Dividends from net investment
income (.06) (.01) -0- -0- -0- -0-
Distributions from net realized
gains on investment and
foreign currency
transactions (.72) (.12) -0- -0- -0- -0-
Total dividends and
distributions (.78) (.13) -0- -0- -0- -0-
Net asset value, end of period $17.44 $15.65 $12.72 $10.38 $7.84 $7.72
Total Return
Total investment return based
on net asset value(e) 16.73% 24.18% 22.54% 32.40% 1.55% (7.21)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $125,790 $109,706 $66,613 $56,959 $48,183 $65,724
Ratio to average net assets of:
Expenses, net of
waivers/reimbursement 2.01%(f) 2.18%(g) 2.33% 2.67% 3.08% 2.89%
Expenses, before
waivers/reimbursement 2.01%(f) 2.18%(g) 2.37% 2.82% 3.08% 2.89%
Net investment income (loss) (.23)%(f) .33%(g) .33%(b) (.30)%(b)(c) (.61)% (1.19)%
Portfolio turnover rate 30% 59% 47% 50% 29% 43%
See footnote summary on page 39.
34 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
----------------------------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
2006 ---------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $15.67 $12.72 $10.38 $7.84 $7.72 $8.32
Income From Investment
Operations
Net investment income (loss)(a) (.02) .13 .06(b) (.02)(b)(c) (.04) (.09)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.59 2.95 2.28 2.56 .16 (.51)
Contribution from Adviser -0-(d) -0- -0- -0- -0- -0-
Net increase (decrease) in net
asset value from operations 2.57 3.08 2.34 2.54 .12 (.60)
Less: Dividends and
Distributions
Dividends from net investment
income (.06) (.01) -0- -0- -0- -0-
Distributions from net realized
gains on investment
and foreign currency
transactions (.72) (.12) -0- -0- -0- -0-
Total dividends and
distributions (.78) (.13) -0- -0- -0- -0-
Net asset value, end of period $17.46 $15.67 $12.72 $10.38 $7.84 $7.72
Total Return
Total investment return based
on net asset value(e) 16.71% 24.34% 22.54% 32.40% 1.55% (7.21)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $298,007 $210,147 $29,957 $16,005 $12,092 $15,541
Ratio to average net assets of:
Expenses, net of
waivers/reimbursement 1.99%(f) 2.13%(g) 2.29% 2.65% 3.06% 2.85%
Expenses, before
waivers/reimbursement 1.99%(f) 2.13%(g) 2.33% 2.80% 3.06% 2.85%
Net investment income (loss) (.20)%(f) .85%(g) .55%(b) (.26)%(b)(c) (.57)% (1.18)%
Portfolio turnover rate 30% 59% 47% 50% 29% 43%
See footnote summary on page 39.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 35
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
----------------------------------------------------------------------------
Six Months
Ended
December 31, Year Ended June 30,
2006 ---------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $17.08 $13.82 $11.22 $8.44 $8.21 $8.76
Income From Investment
Operations
Net investment income (loss)(a) .07 .29 .22(b) .13(b)(c) .06 (.01)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.82 3.21 2.45 2.72 .17 (.54)
Contribution from Adviser -0-(d) -0- -0- -0- -0- -0-
Net increase (decrease) in net
asset value from operations 2.89 3.50 2.67 2.85 .23 (.55)
Less: Dividends and
Distributions
Dividends from net investment
income (.19) (.12) (.07) (.07) -0- -0-
Distributions from net realized
gains on investment and
foreign currency
transactions (.72) (.12) -0- -0- -0- -0-
Total dividends and
distributions (.91) (.24) (.07) (.07) -0- -0-
Net asset value, end of period $19.06 $17.08 $13.82 $11.22 $8.44 $8.21
Total Return
Total investment return based
on net asset value(e) 17.27% 25.57% 23.86% 33.81% 2.80% (6.28)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $222,578 $108,237 $8,404 $2,817 $744 $808
Ratio to average net assets of:
Expenses, net of
waivers/reimbursement .99%(f) 1.13%(g) 1.25% 1.54% 1.98% 1.80%
Expenses, before
waivers/reimbursement .99%(f) 1.13%(g) 1.29% 1.69% 1.98% 1.80%
Net investment income (loss) .82%(f) 1.81%(g) 1.74%(b) 1.29%(b)(c) .74% (.18)%
Portfolio turnover rate 30% 59% 47% 50% 29% 43%
See footnote summary on page 39.
36 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class R
------------------------------------
Six Months
Ended March 1,
December 31, Year Ended 2005(h) to
2006 June 30, June 30,
(unaudited) 2006 2005
------------ ----------- -----------
Net asset value, beginning of period $16.90 $13.72 $14.08
Income From Investment Operations
Net investment income(a) .02 .29 .12
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions 2.80 3.09 (.48)
Contribution from Adviser -0-(d) -0- -0-
Net increase (decrease) in net asset value
from operations 2.82 3.38 (.36)
Less: Dividends and Distributions
Dividends from net investment income (.15) (.08) -0-
Distributions from net realized gains on
investment and foreign currency
transactions (.72) (.12) -0-
Total dividends and distributions (.87) (.20) -0-
Net asset value, end of period $18.85 $16.90 $13.72
Total Return
Total investment return based on
net asset value(e) 17.00% 24.83% (2.56) %
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $17,812 $6,969 $10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.59%(f) 1.67%(g) 1.58%(f)
Expenses, before waivers/reimbursements 1.59%(f) 1.67%(g) 1.58%(f)
Net investment income .23%(f) 1.76%(g) 2.59%(f)
Portfolio turnover rate 30% 59% 47%
See footnote summary on page 39.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 37
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class K
------------------------------------
Six Months
Ended March 1,
December 31, Year Ended 2005(h) to
2006 June 30, June 30,
(unaudited) 2006 2005
------------ ----------- -----------
Net asset value, beginning of period $16.95 $13.73 $14.08
Income From Investment Operations
Net investment income(a) .05 .34 .13
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions 2.79 3.09 (.48)
Contribution from Adviser -0-(d) -0- -0-
Net increase (decrease) in net asset value
from operations 2.84 3.43 (.35)
Less: Dividends and Distributions
Dividends from net investment income (.19) (.09) -0-
Distributions from net realized gains on
investment and foreign currency
transactions (.72) (.12) -0-
Total dividends and distributions (.91) (.21) -0-
Net asset value, end of period $18.88 $16.95 $13.73
Total Return
Total investment return based on
net asset value(e) 17.10% 25.18% (2.49) %
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $4,123 $760 $10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.22%(f) 1.41%(g) 1.32%(f)
Expenses, before waivers/reimbursements 1.22%(f) 1.41%(g) 1.32%(f)
Net investment income .55%(f) 2.05%(g) 2.85%(f)
Portfolio turnover rate 30% 59% 47%
See footnote summary on page 39.
38 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Financial Highlights
Class I
------------------------------------
Six Months
Ended March 1,
December 31, Year Ended 2005(h) to
2006 June 30, June 30,
(unaudited) 2006 2005
------------ ----------- -----------
Net asset value, beginning of period $16.98 $13.74 $14.08
Income From Investment Operations
Net investment income(a) .07 .48 .14
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions 2.81 3.01 (.48)
Contribution from Adviser -0-(d) -0- -0-
Net increase (decrease) in net asset value
from operations 2.88 3.49 (.34)
Less: Dividends and Distributions
Dividends from net investment income (.20) (.13) -0-
Distributions from net realized gains on
investment and foreign currency
transactions (.72) (.12) -0-
Total dividends and distributions (.92) (.25) -0-
Net asset value, end of period $18.94 $16.98 $13.74
Total Return
Total investment return based on
net asset value(e) 17.32% 25.61% (2.41)%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $5,703 $2,497 $10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .93%(f) 1.09%(g) 1.04%(f)
Expenses, before waivers/reimbursements .93%(f) 1.09%(g) 1.04%(f)
Net investment income .83%(f) 2.81%(g) 3.13%(f)
Portfolio turnover rate 30% 59% 47%
(a) Based on average shares outstanding.
(b) Net of expenses waived/reimbursed by the Adviser.
(c) Net of expenses waived by the Transfer Agent.
(d) Amount is less than $.005
(e) 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 investment 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 for a period of less than one year is not annualized.
(f) Annualized.
(g) The ratio includes expenses attributable to costs of proxy solicitation.
(h) Commencement of distributions.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 39
BOARD OF DIRECTORS
William H. Foulk, Jr.,(1) Chairman
Marc O. Mayer, President
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(2)
Philip L. Kirstein,
Senior Vice President and Independent Compliance Officer
Edward D. Baker, III, Vice President
Gregory Eckersley, Vice President
Michael Levy, Vice President
Siobhan McManus, Vice President
Paul C. Rissman, Vice President
Robert Scheetz, Vice President
Christopher M. Toub, Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Custodian
Brown Brothers Harriman & Company
40 Water Street
Boston, MA 02109-3661
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
IndependentRegistered Public Accounting Firm
KPMG LLP
345 Park Avenue
New York, NY 10154
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee, the Independent Directors Committee and the
Governance and Nominating Committee.
(2) The management of, and investment decisions for, the AllianceBernstein
International Growth Fund's portfolio are made by the International Growth
Portfolio Oversight Group, comprised of senior members of the Global Emerging
Growth Investment Team and the International Large Cap Growth Investment Team.
40 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH 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
International Growth 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.
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 INTERNATIONAL GROWTH FUND o 41
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
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
- -------------------------------------------------------------------------------
International $985.4 75 bp on 1st $2.5 billion International Growth
65 bp on next $2.5 billion Fund, Inc.
60 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 % of Average
Fund Amount Daily Net Assets
- -------------------------------------------------------------------------------
International Growth Fund, Inc. $83,901 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 semi-annual period;
accordingly the expense limitation undertaking of the Fund was of no effect.
3 Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were
affected by the Adviser's settlement with the NYAG.
42 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
Expense Cap
Pursuant to
Expense
Limitation Gross Fiscal
Fund Undertaking Expense Ratio(4) Year End
- ------------------------------------------------------------------------------------
International Growth Fund, Inc.(5) Class A-1.65% 1.47% June 30
Class B-2.35% 2.22% (ratios as of
Class C-2.35% 2.19% December 31,
Class R-1.85% 1.65% 2005)
Class K-1.60% 1.46%
Class I-1.35% 1.13%
Adv. Class-1.35% 1.18%
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.
4 Annualized.
5 The stated caps were effective on May 16, 2005.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 43
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. However, in respect to the Fund, the
Adviser represented that there is no institutional product that has a
substantially similar investment style as the Fund.
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
- ------------------------------------------------------------------------------------------------
International Growth Fund, Inc. International Growth Portfolio 0.75% on first $2.5 billion
0.65% on next $2.5 billion
0.60% 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(6) for the Luxembourg fund that has a somewhat similar investment
strategy as the Fund:
Fund Fee
- -----------------------------
Global Growth 1.70%
The Alliance Capital Investment Trust Management mutual funds ("ACITM"), which
are offered to investors in Japan, have an "all-in" fee to compensate the
Adviser for investment advisory as well as fund accounting and administrative
related services. The fee schedule of the ACITM mutual fund with a similar
investment style as the Fund is as follows:
Fund ACITM Mutual Fund Fee
- ---------------------------------------------------------------------------------------
International Growth Fund, Inc. Alliance Global Growth Opportunities 1.00%
Alliance Global Growth Opportunities H / P(7) 1.00%
Alliance Global Growth Opportunities P3(7) 0.85%
Alliance Global Growth Opportunities P2(7) 0.80%
6 The "all-in" fee shown is for the class A shares of Global Growth. This
includes a fee for investment advisory services and a separate fee for
distribution related services.
7 This ACITM fund is privately placed or institutional.
44 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
The Adviser represented that it does not sub-advise any registered investment
company with a substantially similar investment style as the Fund.
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.(8)
At the request of the Senior Officer, independent counsel for the Independent
Directors and the Adviser, Lipper provided supplemental information (shown in
bold and italicized), which compared the Fund's management fee against it's
peers within an expanded Lipper Expense Group.(9) The expanded Lipper Expense
Group of the Fund has peers which have a similar size, load type and 12b-1
service/non 12b-1 service fee; the difference between a "normal" and expanded
Lipper Expense Group is that the peers of the expanded group, which invest in
international equity securities, can either be large cap or multi-cap and have
an investment style of value or core (blend).(10)
Effective Lipper
Management Group
Fund Fee(11) Median Rank
- -------------------------------------------------------------------
International Growth Fund, Inc. 0.750 0.976 1/6
0.750 1.056 4/17
8 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.
9 For a "normal" Lipper Expense Group, 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 The Fund's Lipper investment classification/objective is International
Multi-Cap Core ("IMLC'). The Fund's expanded Lipper Expense Group, including
the Fund, consists of 8 funds with the investment classification/objective of
IMLC, 7 funds of International Large-Cap Core ("ILCC") and 2 funds of
International Multi-Cap Value ("IMLV").
11 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. In addition, the
effective management fee does not reflect any waivers or expense reimbursements
for expense caps that effectively reduce the contractual fee rate.
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 45
Lipper also analyzed the total expense ratio of the Fund in comparison to its
Lipper Expense Group(12) and Lipper Expense Universe.(13) 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. Supplemental Lipper
information for the Fund is also provided (shown in bold and italicized).(14)
Expense Lipper Lipper Lipper Lipper
Ratio Group Group Universe Universe
Fund (%)(15) Median (%) Rank Median (%) Rank
- -------------------------------------------------------------------------------
International Growth 1.571 1.676 2/6 1.640 14/40
Fund, Inc. 1.571 1.571 9/17 N/A N/A
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
12 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.
13 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.
14 See footnote 10.
15 The total expense ratio shown is for the Fund's Class A shares.
46 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
type of business opportunity as "fall-out benefits" to the Adviser and
indicated 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.(16)
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
- -------------------------------------------------------------
International Growth Fund, Inc. $18,862
ABI received the amounts set forth below in Rule 12b-1 fees and CDSC for the
Fund during the Fund's most recent fiscal year:
Fund 12b-1 Fees Received CDSC Received
- -------------------------------------------------------------------------------
International Growth Fund, Inc. $1,580,827 $61,083
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 increased in
16 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 INTERNATIONAL GROWTH FUND o 47
2005 in comparison to 2004. ABIS received the following fee from the Fund in
the most recent fiscal year:
Fund ABIS Fee(17)
- -----------------------------------------------------
International Growth Fund, Inc. $449,396
The Fund may effect brokerage transactions through the Adviser's affiliate,
Sanford C. Bernstein & Co. LLC ("SCB") and/or its U.K. affiliate, Sanford C.
Bernstein Limited ("SCB Ltd."), collectively "SCB," and pay commissions for
such transactions during the Fund's fiscal year. The Adviser represented that
SCB's profitability from any business conducted with the Fund would be
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. 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 Adviser's 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 will be performed to determine if the benefits of
economies of scale or scope are
17 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.
48 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
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, 5 and 10
year performance ranking of the Fund(18) relative to its Lipper Performance
Group(19) and Lipper Performance Universe(20) for the periods ended December
31, 2005:
International Growth Fund, Inc. Group Universe
- -----------------------------------------------------------------
1 year 1/6 5/51
3 year 1/6 1/42
5 year 1/5 1/35
10 year 1/4 2/15
Set forth below are the 1, 3, 5, 10 year and since inception performance
returns of the Fund (in bold)(21) versus its benchmarks:(22)
Periods Ending December 31, 2005
Annualized Performance
- -------------------------------------------------------------------------------
1 3 5 10 Since
Fund Year Year Year Year Inception
- -------------------------------------------------------------------------------
International Growth Fund, Inc. 19.83 29.02 10.52 11.32 10.45
MSCI All Country World ex US Index (Net) 16.62 25.69 6.27 N/A N/A
MSCI World ex US Index (Net) 14.47 24.32 4.92 6.22 6.33
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
18 The performance rankings are for the Class A shares of the Fund.
19 The Lipper Performance Group is identical to the Lipper Expense Group.
20 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.
21 The performance returns shown are for the Class A shares of the Fund.
22 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 INTERNATIONAL GROWTH FUND o 49
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
AllianceBernstein Income 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
AllianceBernstein Global High Income Fund*
- -----------------------------------------------
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.
You should consider the investment objectives, risks, charges and expenses of
any AllianceBernstein fund/portfolio carefully before investing. For free
copies of our prospectuses, which contain this and other information, visit us
online at www.alliancebernstein.com or contact your financial advisor. Please
read the prospectus carefully before investing.
* Prior to January 26, 2007, AllianceBernstein Income Fund was named ACM Income
Fund and AllianceBernstein Global High Income Fund was named Alliance World
Dollar Government Fund II.
** 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.
50 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
NOTES
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND o 51
NOTES
52 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
ALLIANCEBERNSTEIN INTERNATIONAL GROWTH FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
IG-0152-1206
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-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 (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 International Growth Fund, Inc.
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: February 28, 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: February 28, 2007
By: /s/ Joseph J. Mantineo
----------------------
Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: February 28, 2007