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: 811-08527
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH 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: July 31, 2007
Date of reporting period: January 31, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
- -------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
- -------------------------------------------------------------------------------
AllianceBernstein International Research Growth Fund
Semi-Annual Report
January 31, 2007
[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.
March 26, 2007
Semi-Annual Report
This report provides management's discussion of Fund performance for
AllianceBernstein International Research Growth Fund (the "Fund") for the
semi-annual reporting period ended January 31, 2007.
Investment Objective and Policies
The Fund's investment objective is long-term growth of capital. The Fund
invests primarily in an international portfolio of equity securities of
companies within various market sectors selected by the Adviser for their
growth potential. Examples of the types of market sectors into which the
Adviser may invest the Fund's assets include, but are not limited to,
telecommunications, information technology, health care, financial services,
infrastructure, energy and natural resources, and consumer growth. Within each
sector, stock selection emphasizes investment in companies representing the
senior sector analyst groups' top picks for their respective sectors. 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 invests in both developed and emerging-market
countries. The Fund may also invest in synthetic foreign equity securities. The
Fund normally invests in approximately 100-125 companies.
Investment Results
The table on page 6 shows the Fund's performance compared to its broad
benchmark, the Morgan Stanley Capital International (MSCI) All Country (AC)
World (ex-U.S.) Index and its growth benchmark, the MSCI Europe, Australasia
and Far East (EAFE) Growth Index, for the six- and 12-month periods ended
January 31, 2007.
The Fund outperformed both its benchmarks for the six-month period ended
January 31, 2007. The Fund underperformed the MSCI AC World (ex-U.S.) Index,
and outperformed the MSCI EAFE Growth Index, for the 12-month period ended
January 31, 2007.
During the first half of 2006, the Fund benefited from stocks positively
exposed to increased capital expenditure related to growing demand for and
restricted supply of energy and raw materials. In addition, financial stocks
gained from heightened global market activity, and defensive sectors, such as
health care, telecommunications and consumer staples performed relatively well.
In the latter half of 2006, the health care and information technology sectors
underperformed. In the second quarter, emerging market-exposed stocks suffered
from a general withdrawal from "riskier" markets as interest-rate and
inflationary fears came to the fore.
Conversely, global markets recovered their poise as fears of a U.S. housing
market-induced slowdown subsided, and these markets rallied strongly into
year-end. The Fund was positively exposed to stocks in the financial, energy,
materials, telecommunications and consumer discretionary sectors, which
outperformed the Index during the 12-month period under review.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 1
Market Review and Investment Strategy
The beginning of 2006 was characterized by robust economic growth emanating
from emerging markets and Asia ex-Japan, particularly China. Europe and Japan
also experienced an improving fundamental outlook. Capital markets took comfort
from this, and started 2006 in fine form, encouraged by the benign economic
backdrop. Commodity prices began the year on a strong note, and energy prices
proved to be violatile but at higher-than-recent levels. A consequence of
continued general economic strength and rising commodity prices was growing
Central Bank anxiety about general price levels, so Central Banks continued to
increase interest rates to curb potential future inflationary pressures.
During the second quarter, global markets, particularly the more rate-sensitive
emerging markets, saw marked declines, as investors feared that
inflation-fueled rate hikes would lead to slowing economic growth. Hawkish
comments from the new U.S. Federal Reserve Chairman added to market fears.
These fears subsided during the second half of 2006, and equity markets
rallied; as commodity and energy prices appeared to peak, inflation fears
abated and long-bond yields declined. A weakening U.S. housing market helped
further allay inflation concerns. Corporate cash flows remained robust, and the
year saw increasing incidences of merger and acquisition activity. However,
consumers around the world, and particularly in the U.S., appear to have been
impacted by generally higher global interest rates and the absolute level of
commodity prices. This has some consequence for building suppliers,
restaurants, apparel, vacation and travel and certain other consumer-exposed
stocks.
On a sector level, the Fund started the year overweight in energy, with an
emphasis on emerging oil producers and oil service stocks that benefited from
robust producer exploration and investment spending. The Fund was underweight
its benchmark in metals and mining, chemical and utilities. The Fund's energy
weighting was later reduced, due to warmer-than-usual Northern Hemisphere
weather, and the impact this had on energy demand and pricing. This led to an
underweight in the oil producers in the second half of 2006, due to the Fund's
management team's (the "team's") expectation of a decline in the price of oil.
The Fund's metals and mining exposure was increased because strong economic
growth and demand from China and the emerging world on the margin resulted in
stronger commodity pricing for longer periods of time, particularly for copper,
nickel, zinc and iron ore. Holdings in basic material stocks provided exposure
to these commodities.
In the consumer sectors, the team looked to gain exposure to a recovery in
European consumer confidence and spending, particularly in France, although the
team remained cautious on the United Kingdom. The impact of rising oil prices
and interest rates on consumer spending was of concern, and this kept the team
away from many stocks in this sector.
2 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
In the financial sector, an overweight position was maintained in capital
market-exposed stocks due to an increasingly favorable capital market backdrop,
a healthy merger and acquisition outlook and a benign credit environment. The
Fund remained overweight in European financials, due to an improving economic
environment and the potential benefit to financial stocks. Exposure to emerging
market financials was reduced during the first quarter because the team
continued to have inflationary concerns about the region and a concern about
the consequent interest-rate rises needed to stem these.
In the health care sector, the Fund remained modestly overweight its benchmark
due to attractive valuation, particularly relative to history. The focus has
been on large-market capitalization pharmaceutical stocks, while also
emphasizing dental implants in the medical technology sector and selected
generic plays.
The Fund remained underweight in industrial stocks, where the focus was on
late-cycle businesses that are dependent on heightened construction activity
and capital expenditure by industry, public works and utilities. There was
limited exposure to manufacturing capital expenditure-related companies and
transportation stocks. The auto sector was underrepresented during the first
half of the year, but the team closed this negative position after gasoline
prices stopped rising. Exposure was obtained by owning Japanese original
equipment manufacturers (OEMs) that have been gaining global auto market share
with attractive fuel-efficient models.
Within the technology space, the team focused on stocks exposed to corporations
and corporate-driven expenditure, or software developers, as opposed to those
closely aligned to consumer spending, given the team's concern about the
robustness of consumer spending. In the telecommunications sector, the team
focused on stocks exposed to emerging-market mobile networks, European
broadband plays and specific mid-cap opportunities, while remaining underweight
the large integrated incumbents, where the team feels the operating environment
remains challenging.
The Fund continues to own stocks that the team believes have certain
fundamentally solid characteristics, including earnings growth that is
underappreciated by consensus and attractive rates of return on equity for
their shareholders, while maintaining valuation characteristics that are very
similar to the broad market, in terms of price-to-book and price-to-earnings
ratios.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 3
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
Fund's prospectus, which contains this and other information, visit our website
at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein Investments at 800.227.4618. You should read the prospectus
carefully before you invest.
All fees and expenses related to the operation of the Fund have been deducted.
NAV returns do not reflect sales charges; if sales charges were reflected, the
Fund's quoted performance would be lower. SEC returns reflect the applicable
sales charges for each share class: a 4.25% maximum front-end sales charge for
Class A shares; the applicable contingent deferred sales charge for Class B
shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent
deferred sales charge for Class C shares. Returns for the different share
classes will vary due to different expenses associated with each class.
Performance assumes reinvestment of distributions and does not account for
taxes. During the reporting period the Adviser waived a portion of its advisory
fee or reimbursed the Fund for a portion of its expenses to the extent
necessary to limit its expenses on annual basis to 1.65%, 2.35%, 2.35% and
1.35% of the average daily net assets of Class A, Class B, Class C and Advisor
Class shares, respectively. These waivers extend through the Fund's current
fiscal year and may be extended by the Advisor for additional one-year terms.
Without the waivers, the Fund's expenses would have been higher and their
performance would have been lower than that shown.
Benchmark Disclosure
Neither the unmanaged Morgan Stanley Capital International (MSCI) All Country
(AC) World (ex-U.S.) Index nor the unmanaged MSCI Europe, Australasia and Far
East (EAFE) Growth Index reflects fees and expenses associated with the active
management of a mutual Fund portfolio. The MSCI AC World (ex-U.S.) Index is a
free float-adjusted market capitalization index that is designed to measure
equity market performance in the global developed and emerging markets,
excluding the U.S. The MSCI EAFE Growth Index is a free float-adjusted market
capitalization index that is designed to measure developed market growth equity
performance in 21 countries, excluding the U.S. and Canada. 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 EAFE Growth Index values are calculated using net returns. The MSCI AC
World (ex-U.S.) Index values are calculated using both net and gross returns.
In calculating gross returns, the amount of the dividend reinvested is the
dividend distributed to individuals resident in the country of the company, but
does not include tax credits. In calculating net returns, the dividend is
reinvested after deduction of withholding tax, applying the rate to
non-resident individuals (Luxembourg holding companies) who do not benefit from
double taxation treaties. Net returns approximate the minimum possible dividend
reinvestment.
(Historical Performance continued on next page)
4 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
HISTORICAL PERFORMANCE
(continued from previous page)
A Word About Risk
Substantially all of the Fund's assets will be invested in foreign securities.
Foreign markets can be more volatile than the U.S. market due to increased
risks of adverse issuer, political, regulatory, market or economic
developments. In addition, because the Fund will invest in foreign currency
denominated securities, fluctuations in the value of the Fund's investments may
be magnified by changes in foreign exchange rates. The Fund concentrates its
investments in a limited number of issues and an investment in the Fund is
therefore subject to greater risk and volatility than investments in a more
diversified portfolio. The Fund may invest in securities of emerging market
nations. These investments have additional risks, such as illiquid 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. The Fund invests in
small-cap and mid-cap companies, which may be more volatile than investments in
large-cap companies. Investments in small-cap companies tend to be more
volatile than investments in mid- or large-cap companies. A Fund's investments
in smaller capitalization companies may have additional risks because these
companies often have limited product lines, markets or financial resources.
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 or 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 RESEARCH GROWTH FUND o 5
HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARKS ---------------------------
PERIODS ENDED JANUARY 31, 2007 6 Months 12 Months
- -------------------------------------------------------------------------------
AllianceBernstein International Research
Growth Fund
Class A 16.51% 17.70%
Class B 16.12% 16.89%
Class C 16.12% 16.89%
Advisor Class* 16.68% 18.12%
MSCI AC World (ex-U.S.) Index (gross) 14.87% 19.31%
MSCI AC World (ex-U.S.) Index (net) 14.74% 18.84%
MSCI EAFE Growth Index 12.31% 16.15%
* Please note that this share class is 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 pages 4-5.
(Historical Performance continued on next page)
6 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF JANUARY 31, 2007
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 17.70% 12.74%
5 Years 13.41% 12.44%
Since Inception* 5.02% 4.52%
Class B Shares
1 Year 16.89% 12.89%
5 Years 12.58% 12.58%
Since Inception*(a) 4.33% 4.33%
Class C Shares
1 Year 16.89% 15.89%
5 Years 12.58% 12.58%
Since Inception* 4.25% 4.25%
Advisor Class Shares+
1 Year 18.12% 18.12%
5 Years 13.71% 13.71%
Since Inception* 5.31% 5.31%
(a) Assumes conversion of Class B shares into Class A shares after eight years.
* Inception dates: 3/3/98 for Class A, Class B, Class C and Advisor Class
shares.
+ This share class is offered at net asset value (NAV) to eligible investors
and its SEC returns are the same as the NAV returns. Please note that this
share class is 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 date for this share
class is listed above.
See Historical Performance disclosures on pages 4-5.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 7
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2006)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 21.86%
5 Years 10.87%
Since Inception* 4.50%
Class B Shares
1 Year 22.41%
5 Years 11.03%
Since Inception*(a) 4.31%
Class C Shares
1 Year 25.41%
5 Years 11.03%
Since Inception* 4.25%
Advisor Class Shares+
1 Year 27.62%
5 Years 12.16%
Since Inception* 5.30%
(a) Assumes conversion of Class B shares into Class A shares after eight years.
* Inception dates: 3/3/98 for Class A, Class B, Class C and Advisor Class
shares.
+ Please note that this share class is 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
date for this share class is listed above.
See Historical Performance disclosures on pages 4-5.
8 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual
expenses. You may use the information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
annual rate of return of 5% before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds by comparing this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the hypothetical example is useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs
would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
August 1, 2006 January 31, 2007 During Period*
------------------------------ ------------------------------- ---------------------------
Actual Hypothetical Actual Hypothetical** Actual Hypothetical
----------- ---------------- ----------- ----------------- ----------- -------------
Class A $1,000 $1,000 $1,165.13 $1,017.14 $ 8.73 $ 8.13
Class B $1,000 $1,000 $1,161.18 $1,013.36 $12.80 $11.93
Class C $1,000 $1,000 $1,161.18 $1,013.46 $12.69 $11.82
Advisor
Class $1,000 $1,000 $1,166.84 $1,018.65 $ 7.10 $ 6.61
* Expenses are equal to the classes' annualized expense ratios of 1.60%,
2.35%, 2.33% and 1.30%, 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 RESEARCH GROWTH FUND o 9
PORTFOLIO SUMMARY
January 31, 2007 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $292.0
SECTOR BREAKDOWN
[ ] 31.6% Finance [PIE CHART OMITTED]
[ ] 10.8% Basic Industry
[ ] 9.6% Consumer Services
[ ] 8.8% Health Care
[ ] 8.6% Consumer Staples
[ ] 8.3% Technology
[ ] 6.5% Consumer Manufacturing
[ ] 4.5% Energy
[ ] 2.5% Capital Goods
[ ] 2.3% Utilities
[ ] 1.4% Aerospace & Defense
[ ] 0.9% Multi-Industry
[ ] 4.2% Short-Term
COUNTRY BREAKDOWN
[ ] 15.8% Japan [PIE CHART OMITTED]
[ ] 15.5% Switzerland
[ ] 13.2% United Kingdom
[ ] 8.5% France
[ ] 7.0% Australia
[ ] 4.9% Italy
[ ] 3.8% Ireland
[ ] 3.6% China
[ ] 3.4% Spain
[ ] 2.9% Brazil
[ ] 2.0% Russia
[ ] 1.8% Germany
[ ] 13.4% Other
[ ] 4.2% Short-Term
* All data are as of January 31, 2007. The Fund's sector and country
breakdowns are expressed as a percentage of total investments and may vary over
time. "Other" country weightings represent less than 1.8% weightings in the
following countries: Austria, Egypt, Finland, Greece, Hong Kong, Hungary,
India, Indonesia, Israel, Mexico, Netherlands, Netherlands Antilles, South
Africa, South Korea, Sweden, 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 the report
reflects more specific industry information and is consistent with the
investment restrictions discussed in the Fund's prospectus.
10 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
TEN LARGEST HOLDINGS
January 31, 2007 (unaudited)
Percent of
Company U.S. $ Value Net Assets
- -------------------------------------------------------------------------------
Credit Suisse Group $ 11,547,303 4.0%
UBS AG 8,208,905 2.8
Nomura Holdings, Inc. 6,236,242 2.1
Rio Tinto PLC 5,797,323 2.0
Xstrata PLC 5,666,175 1.9
Novartis AG 5,626,653 1.9
QBE Insurance Group, Ltd. 5,604,196 1.9
Banco Bilbao Vizcaya Argentaria SA 5,561,498 1.9
Roche Holding AG 5,444,606 1.9
UniCredito Italiano SpA 5,373,759 1.9
$ 65,066,660 22.3%
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 11
PORTFOLIO OF INVESTMENTS
January 31, 2007 (unaudited)
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
COMMON STOCKS-95.6%
Finance-31.7%
Banking - Money Center-12.2%
Anglo Irish Bank Corp. PLC
(London Exchange) 232,585 $ 4,724,341
Banco Bilbao Vizcaya Argentaria SA 222,443 5,561,498
Bank Mandiri Persero Tbk PT 5,452,500 1,549,912
BNP Paribas SA 38,169 4,274,823
Credit Suisse Group 162,834 11,547,303
Mitsubishi UFJ Financial Group, Inc. 409 4,962,777
Standard Chartered PLC 103,896 2,997,343
-------------
35,617,997
Banking - Regional-6.7%
Allied Irish Banks PLC 139,979 4,055,750
China Construction Bank-Class H 5,482,000 3,222,546
Macquarie Bank Ltd. 83,814 5,279,178
Turkiye Is Bankasi-Class C 376,357 1,839,293
UniCredito Italiano SpA 578,485 5,373,759
-------------
19,770,526
Brokerage & Money Management-4.9%
BlueBay Asset Management/
United Kingdom(a) 220,757 1,691,513
Man Group PLC 298,336 3,146,872
Nomura Holdings, Inc. 304,700 6,236,242
Partners Group(a) 28,171 3,174,230
-------------
14,248,857
Insurance-2.6%
QBE Insurance Group, Ltd. 233,488 5,604,196
Swiss Reinsurance 25,250 2,109,710
-------------
7,713,906
Miscellaneous-4.9%
Investimentos Itau, SA 295,500 1,634,672
ORIX Corp. 15,200 4,386,723
UBS AG (Swiss Virt-X) 130,587 8,208,905
-------------
14,230,300
Real Estate-0.4%
Urbi Desarrollos Urbanos SA de C.V.(a) 307,100 1,099,706
-------------
92,681,292
Basic Industry-10.8%
Chemicals-1.3%
Bayer AG 30,441 1,803,523
Hitachi Chemical Co., Ltd. 89,100 2,071,385
-------------
3,874,908
12 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Mining & Metals-9.5%
China Shenhua Energy Co. Ltd.-Class H 1,681,000 $ 4,115,867
Cia Vale do Rio Doce (Sponsored) (ADR) 185,600 5,332,288
Minara Resources Ltd. 546,000 2,669,523
MMC Norilsk Nickel (ADR) 9,666 1,599,723
Rio Tinto PLC 107,404 5,797,323
Xstrata PLC 120,612 5,666,175
Zinifex Ltd. 194,523 2,523,918
-------------
27,704,817
-------------
31,579,725
Consumer Services-9.6%
Advertising-0.7%
WPP Group PLC 131,531 1,937,393
Airlines-0.4%
easyJet PLC(a) 85,402 1,098,349
Apparel-1.1%
Geox SpA 200,155 3,230,091
Broadcasting & Cable-0.6%
Grupo Televisa, SA (ADR) 63,200 1,861,872
Cellular Communications-2.2%
America Movil SAB de CV Series L (ADR) 35,800 1,588,088
Bharti Tele-Ventures(a) 84,666 1,356,396
China Mobile Ltd. 187,000 1,722,722
Orascom Telecom Holding SAE (GDR)(b) 13,424 926,256
Vimpel-Communications (ADR)(a) 11,300 965,359
-------------
6,558,821
Entertainment & Leisure-1.0%
OPAP, SA 25,685 962,812
ProSiebenSat.1 Media AG 57,364 1,937,044
-------------
2,899,856
Gaming-0.5%
IG Group Holdings PLC 268,026 1,444,280
Miscellaneous-0.5%
Michael Page International PLC 149,065 1,405,093
Printing & Publishing-0.3%
Naspers Ltd.-Class N 29,883 754,747
Restaurants & Lodging-1.6%
Accor, SA 34,662 2,883,797
Ctrip.com International Ltd. (ADR) 25,900 1,841,749
-------------
4,725,546
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 13
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Retail - General Merchandise-0.7%
Esprit Holdings Ltd. 215,500 $ 2,191,862
-------------
28,107,910
Consumer Staples-8.6%
Beverages-2.3%
Cia de Bebidas das Americas (ADR) 31,200 1,613,976
Pernod-Ricard, SA 15,807 3,245,464
SABMiller PLC 86,087 1,957,993
-------------
6,817,433
Cosmetics-0.6%
Kose Corp. 60,200 1,750,195
Food-2.5%
Barry Callebaut AG(a) 2,142 1,177,669
China Mengniu Dairy Co. Ltd. 491,000 1,469,324
Nestle, SA(b) 12,394 4,554,029
-------------
7,201,022
Miscellaneous-1.7%
Lotte Shopping Co. Ltd. 2,966 1,155,912
Punch Taverns PLC 164,695 3,718,700
-------------
4,874,612
Tobacco-1.5%
Altadis SA 35,443 1,906,425
British American Tobacco PLC 86,687 2,639,270
-------------
4,545,695
-------------
25,188,957
Technology-8.4%
Communication Equipment-0.8%
Nokia OYJ 108,355 2,396,622
Communication Services-0.9%
Fastweb 22,641 1,247,803
Iliad SA 9,268 912,384
Neuf Cegetel(a) 13,693 497,032
-------------
2,657,219
Computer Hardware/Storage-0.2%
NEC Corp. 115,000 583,472
Computer Services-1.6%
CapGemini, SA 51,084 3,264,274
Otsuka Corp. 15,300 1,430,103
-------------
4,694,377
Miscellaneous-2.0%
Canon, Inc. 69,400 3,662,433
Hoya Corp. 62,300 2,270,685
-------------
5,933,118
14 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Semiconductor Capital Equipment-0.4%
ASML Holding NV(a) 40,472 $ 1,028,403
Semiconductor Components-1.3%
Advanced Semiconductor Engineering, Inc.(a) 8,000 9,144
Novatek Microelectronics Ltd. 407,000 2,022,131
Radiant Opto-Electronics Corp. 1,064,000 1,697,136
-------------
3,728,411
Software-1.2%
Infosys Technologies, Ltd. 46,133 2,350,019
LogicaCMG PLC 329,964 1,113,616
-------------
3,463,635
-------------
24,485,257
Health Care-8.3%
Drugs-6.6%
Chugai Pharmaceutical Co. Ltd. 43,700 984,186
Daiichi Sankyo Co. Ltd. 39,400 1,099,378
Novartis AG 97,588 5,626,653
Richter Gedeon Nyrt. 5,679 1,146,825
Roche Holding AG 28,907 5,444,606
Sanofi-Aventis 31,699 2,793,436
Shionogi & Co. Ltd. 41,000 729,399
Teva Pharmaceutical Industries Ltd. (ADR) 40,400 1,418,040
-------------
19,242,523
Medical Products-1.7%
Essilor International, SA 29,569 3,323,235
Nobel Biocare Holding AG 5,238 1,737,805
-------------
5,061,040
-------------
24,303,563
Consumer Manufacturing-6.6%
Auto & Related-4.1%
Denso Corp. 49,900 2,006,345
Fiat SpA(a) 83,258 1,818,016
Honda Motor Co. Ltd. 51,400 2,020,041
Tata Motors Ltd. 59,959 1,194,875
Toyota Motor Corp. 72,500 4,772,076
-------------
11,811,353
Building & Related-2.5%
CRH PLC 57,395 2,273,991
Daiwa House Industry Co. Ltd. 79,000 1,343,108
Vinci, SA 26,586 3,676,976
-------------
7,294,075
-------------
19,105,428
Energy-4.5%
International-2.0%
ENI SpA 79,552 2,564,004
LUKOIL (ADR) 41,695 3,333,932
-------------
5,897,936
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 15
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Oil Service-2.5%
Schlumberger, Ltd. 45,000 $ 2,857,050
WorleyParsons Ltd. 264,600 4,444,468
-------------
7,301,518
-------------
13,199,454
Capital Goods-2.5%
Electrical Equipment-1.1%
Atlas Copco AB-Class A 90,400 3,112,195
Engineering & Construction-0.6%
ABB Ltd. 102,321 1,822,057
Miscellaneous-0.8%
NGK Insulators Ltd. 88,000 1,336,192
Nitto Denko Corp. 21,600 1,063,134
-------------
2,399,326
-------------
7,333,578
Utilities-2.3%
Telephone Utility-2.3%
Hellenic Telecommunications Organization SA(a) 42,330 1,264,918
Nippon Telegraph & Telephone Corp. 217 1,085,691
Telefonica SA 113,024 2,479,165
Telekom Austria AG 34,645 949,153
TeliaSonera AB 108,166 870,464
-------------
6,649,391
Aerospace & Defense-1.4%
Aerospace-1.4%
BAE Systems PLC 482,616 3,977,776
Multi-Industry Companies-0.9%
Multi-Industry Companies-0.9%
Mitsui & Co. Ltd. 166,000 2,657,531
Total Common Stocks
(cost $204,181,263) 279,269,862
RIGHTS-0.5%
Health Care-0.5%
Drugs-0.5%
Merck KGaA(a)
(cost $1,242,036) 12,005 1,406,756
SHORT-TERM INVESTMENTS-4.2%
Time Deposit-4.2%
BNP Paribas
5.27%, 2/01/07
(cost $12,300,000) $12,300 12,300,000
16 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
U.S. $ Value
- -------------------------------------------------------------------------------
Total Investments-100.3%
(cost $217,723,299) $ 292,976,618
Other assets less liabilities-(0.3)% (955,671)
Net Assets-100.0% $ 292,020,947
(a) Non-income producing security.
(b) 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 January 31, 2007, the aggregate market value of these securities
amounted to $5,480,285 or 1.9% of net assets.
Glossary:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
See notes to financial statements.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 17
STATEMENT OF ASSETS & LIABILITIES
January 31, 2007 (unaudited)
Assets
Investments in securities, at value (cost $217,723,299) $ 292,976,618
Cash 77,339
Foreign cash, at value (cost $3,970,094) 3,977,482
Receivable for investment securities sold and foreign
currency contracts 8,963,614
Receivable for capital stock sold 1,683,818
Interest and dividends receivable 347,098
Total assets 308,025,969
Liabilities
Payable for investment securities purchased and foreign
currency contracts 10,696,210
Payable for capital stock redeemed 4,525,286
Advisory fee payable 187,721
Distribution fee payable 121,695
Payable for India capital gains tax 108,399
Transfer Agent fee payable 44,453
Administrative fee payable 27,293
Accrued expenses and other liabilities 293,965
Total liabilities 16,005,022
Net Assets $ 292,020,947
Composition of Net Assets
Capital stock, at par $ 19,907
Additional paid-in capital 266,520,294
Accumulated net investment loss (995,528)
Accumulated net realized loss on investment
and foreign currency transactions (48,711,478)
Net unrealized appreciation of investments
and foreign currency denominated assets and liabilities 75,187,752
$ 292,020,947
Net Asset Value Per Share--12 billion shares of capital stock authorized, $.001
par value
Shares Net Asset
Class Net Assets Outstanding Value
- -------------------------------------------------------------------------
A $ 130,419,237 8,718,181 $ 14.96*
B $ 69,974,767 4,994,315 $ 14.01
C $ 33,946,441 2,422,985 $ 14.01
Advisor $ 57,680,502 3,771,628 $ 15.29
* The maximum offering price per share for Class A shares was $15.62 which
reflects a sales charge of 4.25%.
See notes to financial statements.
18 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
STATEMENT OF OPERATIONS
Six Months Ended January 31, 2007 (unaudited)
Investment Income
Dividends (net of foreign taxes withheld
of $124,248) $ 1,804,766
Interest 132,451 $ 1,937,217
Expenses
Advisory fee 1,062,028
Distribution fee--Class A 180,960
Distribution fee--Class B 359,616
Distribution fee--Class C 160,776
Transfer agency--Class A 173,830
Transfer agency--Class B 128,079
Transfer agency--Class C 49,869
Transfer agency--Advisor Class 84,383
Custodian 180,255
Printing 53,758
Administrative 45,154
Registration 28,174
Audit 27,773
Legal 23,917
Directors' fees 16,568
Miscellaneous 15,919
Total expenses 2,591,059
Less: expenses waived and reimbursed
by the Adviser (see Note B) (7,837)
Less: expense offset arrangement
(see Note B) (15,069)
Net expenses 2,568,153
Net investment loss (630,936)
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain on:
Investment transactions 19,548,814(a)
Foreign currency transactions 209,721
Net change in unrealized
appreciation/depreciation of:
Investments 23,934,008
Foreign currency denominated assets
and liabilities (154,965)
Net gain on investment and foreign
currency transactions 43,537,578
Net Increase in Net Assets from
Operations $ 42,906,642
(a) Net of foreign capital gains taxes of $14,630.
See notes to financial statements.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 19
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended Year Ended
January 31, 2007 July 31,
(unaudited) 2006
-------------- --------------
Increase (Decrease) in Net Assets
from Operations
Net investment income (loss) $ (630,936) $ 279,759
Net realized gain on investment and
foreign currency transactions 19,758,535 38,202,811
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities 23,779,043 17,670,916
Net increase in net assets from
operations 42,906,642 56,153,486
Dividends and Distributions to
shareholders from:
Net investment income
Class A (94,895) -0-
Class B (27,183) -0-
Class C (12,233) -0-
Advisor Class (210,039) -0-
Capital Stock Transactions
Net decrease (23,987,909) (18,943,153)
Total increase 18,574,383 37,210,333
Net Assets
Beginning of period 273,446,564 236,236,231
End of period (including accumulated
net investment loss of $995,528
and $20,242, respectively) $ 292,020,947 $ 273,446,564
See notes to financial statements.
20 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
January 31, 2007 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein International Research Growth Fund, Inc. (the "Fund"), was
incorporated as a Maryland Corporation on November 24, 1997 and is registered
under the Investment Company Act of 1940, as a diversified, open-end management
investment company. The Fund offers Class A, Class B, Class C and Advisor Class
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge of 1%. Class B shares are 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.
Advisor Class shares are sold without an initial or contingent deferred sales
charge and are not subject to ongoing distribution expenses. All four classes
of shares have identical voting, dividend, liquidation and other rights, except
that the classes bear different distribution and transfer agency expenses. Each
class has exclusive voting rights with respect to its distribution plan. The
financial statements have been prepared in conformity with U.S. generally
accepted accounting principles, which require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange (other than securities listed on the NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities listed only on NASDAQ are valued in
accordance with the NASDAQ Official Closing Price; listed put or call options
are valued at the last sale price. If there has been no sale on that day, such
securities will be valued at the closing bid
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 21
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.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
22 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation and depreciation of investments
and foreign currency denominated assets and liabilities.
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 RESEARCH GROWTH FUND o 23
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. Until May 9, 2005, the Adviser
waived its fees and bore certain expenses to the extent necessary to limit
total operating expenses on an annual basis to 2.50%, 3.20%, 3.20%, and 2.20%
of the average daily net assets for Class A, Class B, Class C and Advisor Class
shares, respectively. Effective May 10, 2005, the Adviser has agreed to waive
its fees and bear certain expenses to the extent necessary to limit total
operating expenses on an annual basis to 1.65%, 2.35%, 2.35% and 1.35% of the
average daily net assets for Class A, Class B, Class C and Advisor Class
shares, respectively. For the six months ended January 31, 2007, such waivers
and reimbursements amounted to $7,837.
Pursuant to the advisory agreement, the Adviser provides certain legal and
accounting services to the Fund. For the six months ended January 31, 2007,
such fees amounted to $45,154.
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 $240,054 for the six months ended January 31, 2007.
For the six months ended January 31, 2007, the Fund's expenses were reduced by
$15,069 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 $2,417 from the sales of Class A shares
and received $2,810, $15,488 and $2,320 in contingent deferred sales charges
imposed upon redemptions by shareholders of Class A, Class B and Class C
shares, respectively, for the six months ended January 31, 2007.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 2007, amounted to $372,624, none of which was paid to Sanford C.
Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser.
24 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .30% of the Fund's average daily net assets
attributable to Class A shares, 1% of the Fund's average daily net assets
attributable to the Class B and Class C shares. There are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amounts of $4,682,413 and $1,359,624 for Class B
and Class C shares, respectively. Such costs may be recovered from the Fund in
future periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs incurred by the Distributor beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended January 31, 2007, were as follows:
Purchases Sales
-------------- --------------
Investment securities (excluding
U.S. government securities) $ 104,851,233 $ 132,913,468
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 $ 75,707,735
Gross unrealized depreciation (454,416)
Net unrealized appreciation $ 75,253,319
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 sale commitments
denominated in foreign currencies and for investment purposes. A forward
currency exchange contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss
arising from the
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 25
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 other liquid assets in a separate account of the Fund having a value at
least equal to the aggregate amount of the Fund's commitments under forward
currency exchange contracts entered into with respect to position hedges.
Risks may arise from the potential inability of the counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount in U.S.
dollars reflects the total exposure the Fund has in that particular currency
contract.
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 Six Months
Ended Year Ended Year
January 31, Ended January 31, Ended
2007 July 31, 2007 July 31,
(unaudited) 2006 (unaudited) 2006
------------ ------------ -------------- --------------
Class A
Shares sold 613,508 1,635,288 $ 8,500,484 $ 19,818,874
Shares converted
from Class B 409,722 785,298 5,751,182 9,873,072
Shares issued in
reinvestment of
dividends and
distributions 6,118 -0- 84,793 -0-
Shares redeemed (1,193,677) (2,499,177) (16,306,026) (30,034,379)
Net decrease (164,329) (78,591) $ (1,969,567) $ (342,433)
Class B
Shares sold 119,687 436,583 $ 1,556,936 $ 5,030,345
Shares converted
to Class A (436,363) (832,440) (5,751,182) (9,873,072)
Shares issued in
reinvestment of
dividends and
distributions 1,853 -0- 24,082 -0-
Shares redeemed (717,516) (2,087,937) (9,220,522) (23,466,464)
Net decrease (1,032,339) (2,483,794) $(13,390,686) $(28,309,191)
26 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
Shares Amount
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Year
January 31, Ended January 31, Ended
2007 July 31, 2007 July 31,
(unaudited) 2006 (unaudited) 2006
------------ ------------ -------------- --------------
Class C
Shares sold 153,749 333,856 $ 2,031,564 $ 3,885,051
Shares issued in
reinvestment of
dividends and
distributions 758 -0- 9,851 -0-
Shares redeemed (286,476) (653,444) (3,691,744) (7,247,436)
Net decrease (131,969) (319,588) $ (1,650,329) $ (3,362,385)
Advisor Class
Shares sold 470,891 2,297,949 $ 6,899,665 $ 28,954,456
Shares issued in
reinvestment of
dividends and
distributions 13,750 -0- 194,698 -0-
Shares redeemed (951,828) (1,282,619) (14,071,690) (15,883,600)
Net increase
(decrease) (467,187) 1,015,330 $ (6,977,327) $ 13,070,856
NOTE F
Risks Involved in Investing 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.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these indemnification provisions and expects
the risk of loss thereunder to be remote.
NOTE 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")
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 27
intended to provide for short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the six months ended January 31, 2007.
NOTE H
Components of Accumulated Earnings (Deficit)
The tax character of distributions to be paid for the fiscal year ending July
31, 2007 will be determined at the end of the current fiscal year. As of July
31, 2006, the components of accumulated earnings/(deficit) on a tax basis were
as follows:
Accumulated capital and other losses $ (68,176,215)(a)
Unrealized appreciation/(depreciation) 51,094,673(b)
Total accumulated earnings/(deficit) $ (17,081,542)
(a) On July 31, 2006, the Fund had a net capital loss carryforward of
$68,155,975 (of which approximately $3,983,570 and $33,920,000, respectively,
were attributable to the purchases of net assets of AllianceBernstein All-Asia
Investment Fund, Inc. and AllianceBernstein New Europe Fund, Inc.), of which
$232,411 expires in the year 2008, $6,639,293 expires in the year 2009,
$53,808,061 expires in the year 2010 and $7,476,210 expires in the year 2011.
During the fiscal year, the Fund utilized capital loss carryforwards of
$37,494,879. To the extent future capital gains are offset by capital loss
carryforwards, such gains will not be distributed. As a result of the mergers
with AllianceBernstein All-Asia Investment Fund, Inc. and AllianceBernstein New
Europe Fund, Inc., into the Fund, various limitations and reductions regarding
the future utilization of certain capital loss carryforwards were applied,
based on certain provisions in the Internal Revenue Code. In addition, the Fund
deferred $20,238 in post-October foreign currency losses into the next fiscal
year.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
NOTE I
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of New York Attorney General ("NYAG") have
been investigating practices in the mutual fund industry identified as "market
timing" and "late trading" of mutual fund shares. Certain other regulatory
authorities have also been conducting investigations into these practices
within the industry and have requested that the Adviser provide information to
them. The Adviser has been cooperating and will continue to cooperate with all
of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized
28 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among
the key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, directed and oversaw an internal investigation and a
comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have conducted an investigation of the above-mentioned matters with
the advice of an independent economic consultant and independent counsel.
On October 2, 2003, a purported class action complaint entitled Hindo, et al.
v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. The Hindo Complaint was filed in the United
States District
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 29
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
stipulation of settlement and will be submitted for court approval at a later
date. The derivative claims brought on behalf of Alliance Holding remain
pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commissioner") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
30 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
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
NYAGOrder. On January 26, 2006, the Adviser, Alliance Holding, and various
unaffiliated defendants filed a Petition for Writ of Prohibition and Order
Suspending Proceedings in West Virginia state court seeking to vacate the
Summary Order and for other relief. The 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
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
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 31
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.
NOTE J
Recent Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in
the course of preparing 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
32 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
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.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 33
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
-------------------------------------------------------------------------------------------------------
Six Months
Ended December 1, Year Ended
January 31, Year Ended July 31, 2002 to November 30,
2007 ------------------------------------------- July 31, ----------------------------
(unaudited) 2006 2005 2004 2003(a) 2002 2001
------------- ------------- ------------- ------------- ------------- ------------- -------------
Net asset value,
beginning of period $12.85 $10.26 $8.50 $7.54 $7.31 $8.36 $10.50
Income From
Investment
Operations
Net investment
income (loss)(b) (.02) .04(c) (.03)(c) (.07)(c)(d) (.03)(c) (.09) (.10)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 2.14 2.55 1.79 1.03 .26 (.96) (2.04)
Net increase (decrease)
in net asset value
from operations 2.12 2.59 1.76 .96 .23 (1.05) (2.14)
Less: Dividends and
Distributions
Dividends from net
investment income (.01) -0- -0- -0- -0- -0- -0-
Total dividends and
distributions (.01) -0- -0- -0- -0- -0- -0-
Net asset value,
end of period $14.96 $12.85 $10.26 $8.50 $7.54 $7.31 $8.36
Total Return
Total investment
return based on
net asset value(e) 16.51% 25.24% 20.71% 12.73% 3.15% (12.56)% (20.38)%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) $130,419 $114,117 $91,949 $22,001 $23,851 $27,456 $40,555
Ratio to average
net assets of:
Expenses, net
of waivers/
reimbursements 1.61%(f)(g) 1.65%(h) 1.94%(g) 2.23% 2.50%(f) 2.47% 2.17%
Expenses,
before waivers/
reimbursements 1.61%(f) 1.73%(h) 2.09% 2.46% 2.99%(f) 2.47% 2.17%
Net investment
income (loss) (.24)%(f) .36%(c)(h) (.29)%(c) (.81)%(c)(d) (.68)%(c)(f) (1.17)% (1.06)%
Portfolio turnover rate 38% 88% 136% 84% 56% 75% 171%
See footnote summary on page 38.
34 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
--------------------------------------------------------------------------------------------------------
Six Months
Ended December 1, Year Ended
January 31, Year Ended July 31, 2002 to November 30,
2007 -------------------------------------------- July 31, ----------------------------
(unaudited) 2006 2005 2004 2003(a) 2002 2001
------------- ------------- -------------- ------------- ------------- ------------- -------------
Net asset value,
beginning of period $12.07 $9.71 $8.10 $7.25 $7.06 $8.12 $10.29
Income From
Investment
Operations
Net investment loss(b) (.06)(c) (.04)(c) (.09)(c) (.13)(c)(d) (.06)(c) (.14)(c) (.17)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 2.01 2.40 1.70 .98 .25 (.92) (2.00)
Net increase (decrease)
in net asset value
from operations 1.95 2.36 1.61 .85 .19 (1.06) (2.17)
Less: Dividends and
Distributions
Dividends from net
investment income (.01) -0- -0- -0- -0- -0- -0-
Total dividends and
distributions (.01) -0- -0- -0- -0- -0- -0-
Net asset value,
end of period $14.01 $12.07 $9.71 $8.10 $7.25 $7.06 $8.12
Total Return
Total investment
return based on
net asset value(e) 16.12% 24.31% 19.88% 11.72% 2.69% (13.05)% (21.09)%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) $69,975 $72,759 $82,622 $38,430 $45,815 $52,744 $80,353
Ratio to average
net assets of:
Expenses, net
of waivers/
reimbursements 2.36%(f)(g) 2.35%(h) 2.76%(g) 2.99% 3.20%(f) 3.20% 2.92%
Expenses,
before waivers/
reimbursements 2.38%(f) 2.50%(h) 2.92% 3.26% 3.79%(f) 3.25% 2.92%
Net investment loss (.97)%(c)(f) (.39)%(c)(h) (1.01)%(c) (1.57)%(c)(d) (1.38)%(c)(f) (1.88)%(c) (1.84)%
Portfolio turnover rate 38% 88% 136% 84% 56% 75% 171%
See footnote summary on page 38.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 35
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
-------------------------------------------------------------------------------------------------------
Six Months
Ended December 1, Year Ended
January 31, Year Ended July 31, 2002 to November 30,
2007 -------------------------------------------- July 31, ----------------------------
(unaudited) 2006 2005 2004 2003(a) 2002 2001
------------- ------------- -------------- ------------- ------------- ------------- -------------
Net asset value,
beginning of period $12.07 $9.71 $8.10 $7.25 $7.06 $8.13 $10.29
Income From
Investment
Operations
Net investment loss(b) (.06) (.04)(c) (.08)(c) (.13)(c)(d) (.06)(c) (.14)(c) (.16)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 2.01 2.40 1.69 .98 .25 (.93) (2.00)
Net increase (decrease)
in net asset value
from operations 1.95 2.36 1.61 .85 .19 (1.07) (2.16)
Less: Dividends and
Distributions
Dividends from net
investment income (.01) -0- -0- -0- -0- -0- -0-
Total dividends and
distributions (.01) -0- -0- -0- -0- -0- -0-
Net asset value,
end of period $14.01 $12.07 $9.71 $8.10 $7.25 $7.06 $8.13
Total Return
Total investment
return based on
net asset value(e) 16.12% 24.31% 19.88% 11.72% 2.69% (13.16)% (20.99)%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) $33,946 $30,841 $27,911 $12,417 $15,257 $17,942 $28,990
Ratio to average
net assets of:
Expenses, net
of waivers/
reimbursements 2.34%(f)(g) 2.35%(h) 2.70%(g) 2.97% 3.20%(f) 3.20% 2.88%
Expenses,
before waivers/
reimbursements 2.34%(f) 2.45%(h) 2.86% 3.21% 3.73%(f) 3.20% 2.88%
Net investment loss (.96)%(f) (.36)%(c)(h) (.96)%(c) (1.54)%(c)(d) (1.37)%(c)(f) (1.90)%(c) (1.80)%
Portfolio turnover rate 38% 88% 136% 84% 56% 75% 171%
See footnote summary on page 38.
36 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
-------------------------------------------------------------------------------------------------------
Six Months
Ended December 1, Year Ended
January 31, Year Ended July 31, 2002 to November 30,
2007 ------------------------------------------- July 31, ----------------------------
(unaudited) 2006 2005 2004 2003(a) 2002 2001
------------- ------------- ------------- ------------- ------------- ------------- -------------
Net asset value,
beginning of period $13.15 $10.47 $8.65 $7.66 $7.41 $8.44 $10.58
Income From
Investment
Operations
Net investment
income (loss)(b) .00 .09(c) .03(c) (.03)(c)(d) (.01)(c) (.07) (.07)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 2.19 2.59 1.79 1.02 .26 (.96) (2.07)
Net increase (decrease)
in net asset value
from operations 2.19 2.68 1.82 .99 .25 (1.03) (2.14)
Less: Dividends and
Distributions
Dividends from net
investment income (.05) -0- -0- -0- -0- -0- -0-
Total dividends and
distributions (.05) -0- -0- -0- -0- -0- -0-
Net asset value,
end of period $15.29 $13.15 $10.47 $8.65 $7.66 $7.41 $8.44
Total Return
Total investment
return based on
net asset value(e) 16.68% 25.60% 21.04% 12.92% 3.37% (12.20)% (20.23)%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted) $57,681 $55,730 $33,754 $14,407 $12,629 $11,437 $14,116
Ratio to average
net assets of:
Expenses, net
of waivers/
reimbursements 1.32%(f)(g) 1.35%(h) 1.67%(g) 1.90% 2.20%(f) 2.18% 1.86%
Expenses,
before waivers/
reimbursements 1.32%(g) 1.40%(h) 1.85% 2.13% 2.70%(f) 2.18% 1.86%
Net investment
income (loss) .07%(f) .75%(c)(h) .30%(c) (.37)%(c)(d) (.32)%(c)(f) (.85)% (.78)%
Portfolio turnover rate 38% 88% 136% 84% 56% 75% 171%
See footnote summary on page 38.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 37
(a) The Fund changed its fiscal year end from November 30 to July 31.
(b) Based on average shares outstanding.
(c) Net of expenses waived/reimbursed by the Adviser.
(d) Net of expenses waived/reimbursed by the Transfer Agent.
(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 charges are not reflected in the calculation of total investment
return. Total return does not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. Total
investment return calculated for a period of less than one year is not
annualized.
(f) Annualized.
(g) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. for the periods shown below, the net expense ratios were as
follows:
Six Months Ended Year Ended
January 31, 2006 July 31, 2005
----------------- -----------------
Class A 1.60% 1.94%
Class B 2.35% 2.75%
Class C 2.33% 2.70%
Advisor Class 1.30% 1.67%
(h) The ratio includes expenses attributable to costs of proxy solicitation.
38 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President and Chief Executive Officer
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Marshall C. Turner, Jr.(1)
Earl D. Weiner(1)
OFFICERS(2)
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Hiromitsu Agata, Vice President
Michael R. Baldwin, Vice President
Isabel Buccellati, Vice President
William Johnston, Vice President
Siobhan McManus, Vice President
Michele Patri, Vice President
Paul C. Rissman, Vice President
Robert W. Scheetz, Vice President
Thomas A. Schmitt, Vice President
Valli Srikanthapalan, Vice President
Christopher M. Toub, Vice President
Atsushi Yamamoto, Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and 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 76278-6003
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 Governance and Nominating Committee and
the Independent Directors Committee.
(2) The day-to-day management of and investment decisions for the Fund's
portfolio are made by the Adviser's International Research Growth research
sector heads, with oversight by the Adviser's International Research Growth
Portfolio Oversight Group. Hiromitsu Agata, Isabel Buccellati, William
Johnston, Michele Patri, Thomas A. Schmitt, Valli Srikanthapalan and Atsushi
Yamamoto are the sector analyst managers with the most significant
responsibility for the day-to-day management of the Fund's portfolio.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 39
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 Research 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.
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
(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."
40 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
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)
Advisory Fee
Net Assets Based on %
02/28/06 of Average
Category (million) Daily Net Assets Fund
- -------------------------------------------------------------------------------
International $281.7 75 bp on 1st $2.5 billion International Research
65 bp on next $2.5 billion Growth 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 a % of Average
Fund Amount Daily Net Assets
- -------------------------------------------------------------------------------
International Research Growth Fund, Inc. $84,000 0.09%
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.
Expense Cap
Pursuant to Gross Fiscal
Expense Limitation Expense Year
Fund Undertaking Ratio(4) End
- -------------------------------------------------------------------------------
International Research Class A 1.65% 1.97% July 31
Growth Fund, Inc.(5) Class B 2.35% 2.71% (ratios as of
Class C 2.35% 2.69% January 31,
Adv. Class 1.35% 1.67% 2006)
(3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages,
were affected by the Adviser's settlement with the NYAG.
(4) Annualized.
(5) The stated caps were implemented on May 10, 2005 with respect to Class A,
Class B, Class C and Advisor Class shares. Prior thereto, with respect to Class
A, Class B and Class C, and Advisor Class shares, the caps were 2.50%, 3.20%,
3.20% and 2.20%, respectively.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 41
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The management fees charged to investment companies which the Adviser manages
and sponsors are normally higher than those charged to similar sized
institutional accounts, including pension plans and sub-advised investment
companies. The fee differential reflects, among other things, different
services provided to such clients, and different liabilities assumed. Services
provided by the Adviser to the Fund that are not provided to non-investment
company clients include providing office space and personnel to serve as Fund
Officers, who among other responsibilities make the certifications required
under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the
Fund's third party service providers such as Fund counsel, auditors,
custodians, transfer agents and pricing services. The accounting,
administrative, legal and compliance requirements for the Fund are more costly
than those for institutional assets due to the greater complexities and time
required for investment companies, although as previously noted, a portion of
these expenses is reimbursed by the Fund to the Adviser. Also, retail mutual
funds managed by the Adviser are widely held. Servicing the Fund's investors is
more time consuming and labor intensive compared to institutional clients since
the Adviser needs to communicate with a more extensive network of financial
intermediaries and shareholders. In addition, managing the cash flow of an
investment company may be more difficult than that of a stable pool of assets,
such as an institutional account with little cash movement in either direction,
particularly, if the Fund is in net redemption and the Adviser is frequently
forced to sell securities to raise cash for redemptions. However, managing a
fund with positive cash flow may be easier at times than managing a stable pool
of assets. Finally, in recent years, investment advisers have been sued by
institutional clients and have suffered reputational damage both by the
attendant publicity and outcomes other than complete victories. Accordingly,
the legal and reputational risks associated with institutional accounts are
greater than previously thought, although still not equal to those related to
the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, it is worth considering information regarding the
advisory fees charged to institutional accounts with a substantially similar
investment style as the Fund. It should be noted that the Adviser has indicated
that with respect to institutional accounts with assets greater than $300
million, it will negotiate a fee schedule. Discounts that are negotiated vary
based upon each client relationship. 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
42 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
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 Research International Research 75 bp on first $2.5 billion
Growth Fund, Inc. Growth Portfolio 65 bp on next $2.5 billion
60 bp on the balance
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 Research Alliance International Research 0.30%
Growth Fund, Inc. Growth--International Blend(6)
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.(7)
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.(8) The expanded Lipper Expense
Group of the Fund has peers which have a similar size, load type and
(6) This ACITM fund is privately placed or institutional.
(7) The effective management fee is calculated by Lipper using the Fund's
contractual management fee rate at a hypothetical asset level. The hypothetical
asset level is based on the combined net assets of all classes of the Fund,
rounded up to the next $25 million. Lipper's total expense ratio information is
based on the most recent annual report except as otherwise noted. A ranking of
"1" means that the Fund has the lowest effective fee rate in the Lipper peer
group.
(8) 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.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 43
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 growth or core (blend).(9)
Effective Lipper
Management Group
Fund Fee(10) Median Rank
- -------------------------------------------------------------------------------
International Research Growth Fund, Inc. 0.750 0.915 1/4
0.750 0.851 1/14
Lipper also analyzed the total expense ratio of the Fund in comparison to its
Lipper Expense Group(11) and Lipper Expense Universe.(12) 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 certain of the Funds is also provided (shown in bold and
italicized).(13)
Expense Lipper Lipper Lipper Lipper
Ratio Group Group Universe Universe
Fund (%)(14) Median(%) Rank Median(%) Rank
- -------------------------------------------------------------------------------
International Research 1.940 1.699 4/4 1.650 8/8
Growth Fund, Inc.(15) 1.940 1.816 11/14 N/A N/A
(9) The Fund's Lipper investment classification/objective is International
Large-Cap Growth (ILCG). The Fund's expanded Lipper Expense Group, including
the Fund, consists of 2 funds with the investment classification/objective of
ILCG, 6 funds of International Multi-Cap Growth ("IMLG") and 6 funds of
International Large-Cap Core ("ILCC").
(10) 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.
(11) 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.
(12) 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.
(13) See footnote 9.
(14) The total expense ratios shown are for the Fund's most recent fiscal year
end Class A shares.
(15) The total expense ratio that is shown is for the Fund's Class A shares as
of end of the most recently completed fiscal year (July 31, 2005). Effective
May 10, 2005, the Adviser agreed to waive its fees and bear certain expenses to
the extent necessary to limit the Fund's total operating expenses on an annual
basis. Had the expense cap been in effect for the full fiscal year, the Fund
would have had a pro-forma total expense ratio of 1.650, group expense ratio
ranking of 2/4 and universe expense ranking of 5/8.
44 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
Based on this analysis, the Fund has a more favorable ranking on a management
fee basis than it does on a total expense ratio basis.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
A consultant was retained by the Senior Officer to work with the Adviser's
personnel to align the Adviser's two profitability reporting systems. The
alignment, which now has been completed, allows the Adviser's management and
the Directors to receive consistent presentations of the financial results and
profitability although the two profitability reporting systems operate
independently. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The profitability information for the Fund prepared by the Adviser for the
Board of Directors was reviewed by the Senior Officer. The Adviser's
profitability from providing investment advisory services to the Fund increased
during calendar year 2005 relative to 2004.
In addition to the Adviser's direct profits from managing the Fund, certain of
the Adviser's affiliates have business relationships with the Fund and may earn
a profit from providing other services to the Fund. The courts have referred to
this type of business opportunity as "fall-out benefits" to the Adviser and
indicated 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%
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 45
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 Research Growth Fund, Inc. $2,311
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 Research Growth Fund, Inc. $600,249 $37,839
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 2005 in comparison to 2004. ABIS received the
following fee from the Fund in the most recent fiscal year:
Fund ABIS Fee(17)
- -------------------------------------------------------------------------------
International Research Growth Fund, Inc. $273,518
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.
(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.
(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.
46 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule in the
Investment Advisory Agreement reflect a sharing of economies of scale to the
extent the breakpoints are reached. Based on some of the professional
literature that has considered economies of scale in the mutual fund industry
it is thought that to the extent economies of scale exist, they may more often
exist across a fund family as opposed to a specific fund. This is because the
costs incurred by the Adviser, such as investment research or technology for
trading or compliance systems can be spread across a greater asset base as the
fund family increases in size. It is also possible that as the level of
services required to operate a successful investment company has increased over
time, and advisory firms have made such investments in their business to
provide improved services, there may be a sharing of economies of scale without
a reduction in advisory fees.
An independent consultant made a presentation to the Board of Directors and the
Senior Officer regarding possible economies of scale or scope in the mutual
fund industry. Based on the presentation, it was evident that fund management
companies benefit from economies of scale. However, due to lack of cost data,
researchers had to infer facts about the costs from the behavior of fund
expenses; there was a lack of consensus among researchers as to whether
economies of scale were being passed on to the shareholders. It is contemplated
that additional work will be performed to determine if the benefits of
economies of scale or scope are being passed to shareholders by the Adviser. In
the meantime, it is clear that to the extent a fund's assets exceeds its
initial breakpoint its shareholders benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE FUND.
With assets under management of $635 billion as of April 30, 2006, the Adviser
has the investment experience to manage and provide non-investment services
(described in Section I) to the Fund.
The information below, which was prepared by Lipper, shows the 1, 3, and 5 year
performance rankings of the Fund(18) relative to its Lipper Performance
Group(19) and Lipper Performance Universe(20) for the periods ended December
31, 2005:
International Research Growth Fund, Inc. Group Universe
- --------------------------------------------------------------------------
1 year 2/4 2/10
3 year 2/4 7/10
5 year 1/4 3/9
(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.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 47
Set forth below are the 1, 3, 5 year and since inception performance returns of
the Fund (in bold)(21) versus its benchmark:(22)
Periods Ending December 31, 2005
Annualized Performance
- -----------------------------------------------------------------------------
1 3 5 Since
Fund Year Year Year Inception
- -----------------------------------------------------------------------------
International Research
Growth Fund, Inc. 17.71 19.02 1.88 2.06
MSCI All Country World
ex US Index (Net) 16.62 25.69 6.27 N/A
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
(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.
48 o ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
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
Small/Mid-Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Real Estate Investment Fund*
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 Global High Income 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
- --------------------------------------------
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. Prior to March 1, 2007, Global Real Estate
Investment Fund was named Real Estate Investment Fund.
** An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND o 49
ALLIANCEBERNSTEIN INTERNATIONAL RESEARCH GROWTH FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
IRG-0152-0107
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 Research Growth Fund, Inc.
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: March 30, 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: March 30, 2007
By: /s/ Joseph J. Mantineo
----------------------
Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: March 30, 2007