N-CSR 1 edg10278_ar.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-6028 ALLIANCEBERNSTEIN NEW EUROPE FUND, INC. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley Alliance Capital Management L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: July 31, 2004 Date of reporting period: July 31, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. ------------------------------------------------------------------------------- European Large Cap ------------------------------------------------------------------------------- AllianceBernstein [LOGO](SM) Investment Research and Management AllianceBernstein New Europe Fund Annual Report -- July 31, 2004 Investment Products Offered --------------------------- o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed --------------------------- The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or Alliance at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com (click on Investors/ Products & Services/ Mutual Funds). This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit Alliance Capital's web site at www.alliancebernstein.com (click on Investors, then the "Proxy voting policies" link or "Proxy voting records" link on the left side of the page), or go to the Securities and Exchange Commission's, (The "Commission") web site at www.sec.gov, or call Alliance Capital at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. Alliance publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com. AllianceBernstein Investment Research and Management, Inc., is an affiliate of Alliance Capital Management L.P., the manager of the funds, and is a member of the NASD. September 20, 2004 Annual Report This report provides management's discussion of fund performance for AllianceBernstein New Europe Fund (the "Fund") for the annual reporting period ended July 31, 2004. Investment Objectives and Policies This Fund seeks long-term capital appreciation through investments primarily in equity securities of companies based in Europe. Investment Results The table on page 4 shows the Fund's performance compared to its benchmark, the Standard & Poor's (S&P)/Citigroup Europe PMI Growth Index, for the six- and 12-month periods ended July 31, 2004. In addition, performance data for the Lipper European Region Funds Average (the "Lipper Average") is also included. Funds in the Lipper Average have generally similar investment objectives to the Fund, although some may have different investment policies and sales and management fees. For the six- and 12-month periods ended July 31, 2004, the Fund's Class A shares underperformed the benchmark. Generally speaking, growth as an investment style underperformed during this period, as did high quality and large-capitalization stocks. This backdrop was largely unfavorable given our style of large-cap growth investing. At the fund-specific level, performance drivers varied between the six- and 12-month periods. For the six-month period, sector allocation detracted from the Fund's returns as a result of an above-benchmark allocation to technology and a below-benchmark allocation to energy stocks. Both sectors performed in the opposite direction to the Fund's positions. Stock selection was positive, offsetting some of the loss from sector allocation. For the 12-month period ended July 31, 2004, the contribution from both sector allocation and stock selection was negative. Sector allocation was affected by the same positioning as during the six-month period while stock selection was driven by a negative return within the financial sector. Currency made a positive contribution to returns in both the six- and 12-month periods. Market Review and Investment Strategy The six- and 12-month periods presented a tale of two halves to investors. During the six-month period ended January 31, 2004, European equities rose continuously as global economic conditions improved and corporate profits began to surprise on the upside. The reduction in risk aversion led investors to favor the most aggressive compartments of the equity markets in the form of emerging markets, smaller capitalization companies, and those with highly volatile fundamentals. In the currency markets, the euro and the pound accelerated their gains against the U.S. dollar as investors favored the relatively higher interest rates and fiscal position of countries in the European markets. During the six-month period ended July 31, 2004, European equity markets consolidated their prior gains and generally moved sideways. Fears over decelerating economic growth, rising interest rates, and surging energy prices _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 1 prompted investors to take a wait and see attitude. Our strategy during these periods reflected similar expectations with increased exposure to economically sensitive issues during the first six-months and then a subsequent return to more defensive, stable growing companies during the most recent six-months. At present, the Fund's portfolio has a slightly more defensive bias than normal. We believe global equity markets are at an important juncture today. In the backdrop are a host of economic and political uncertainties. Growth is likely to remain healthy, but is set to ebb as suggested by the movement in global leading indicators. With expectations having been ratcheted up for growth and earnings over the last 15 months, we believe that we have likely reached a plateau in terms of expectations. In the equity markets, the pronounced rotation by capitalization and investment style now leaves large-cap stocks trading at the low end of their relative price to earnings (P/E) versus small-cap stocks over the last 15 years (the peak premium was reached in 1999). Likewise, growth stocks now trade at below average premiums relative to value stocks. As such, the headwinds against our process and style should continue to diminish. At the stock-specific level, valuations across sectors are compressed by historical standards as are expectations for growth across stocks. We, therefore, believe that only those companies able to deliver quality earnings growth (and selling at reasonable prices) in this more challenging investment environment will find favor with investors. We believe our portfolio reflects a good cross-section of such companies today. _______________________________________________________________________________ 2 o ALLIANCEBERNSTEIN NEW EUROPE FUND Historical Performance ------------------------------------------------------------------------------- HISTORICAL PERFORMANCE An Important Note About the Value of Historical Performance The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com (click on Investors/Products & Services/Mutual Funds). The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or Alliance at (800) 227-4618. You should read the prospectus carefully before you invest. Returns are annualized for periods longer than one year. All fees and expenses related to the operation of the Fund have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Fund's quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for Advisor Class shares will vary due to different expenses associated with this class. Performance assumes reinvestment of distributions and does not account for taxes. Benchmark Disclosure The unmanaged S&P/Citigroup Europe PMI Growth Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index includes those stocks falling within the top 80% of the cumulative available capital level of all developed countries in the European region of the Global S&P/Citigroup Broad Market Index. For the six- and 12-month periods ended July 31, 2004, the Lipper European Region Funds Average consisted of 136 and 132 funds, respectively. The funds in the Lipper European Region Average have generally similar investment objectives to the Fund, although some may have different investment policies and sales and management fees. An investor cannot invest directly in an index or average, and their results are not indicative of the performance for any specific investment, including the Fund. A Word About Risk Substantially all of the Fund's assets will be invested in foreign securities which may magnify fluctuations due to changes in foreign exchange rates and the possibility of substantial volatility due to political and economic uncertainties in foreign countries. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. These risks are more fully discussed in the prospectus. (Historical Performance continued on next page) _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 3 Historical Performance ------------------------------------------------------------------------------- HISTORICAL PERFORMANCE (continued from previous page) Returns THE FUND VS. ITS BENCHMARKS ------------------------- PERIODS ENDED JULY 31, 2004 6 Months 12 Months ------------------------------------------------------------------------------- AllianceBernstein New Europe Fund Class A -2.25% 16.37% ------------------------------------------------------------------------------- Class B -2.60% 15.48% ------------------------------------------------------------------------------- Class C -2.59% 15.61% ------------------------------------------------------------------------------- Advisor Class -2.09% 16.83% ------------------------------------------------------------------------------- S&P/Citigroup Europe PMI Growth Index -1.53% 21.43% ------------------------------------------------------------------------------- Lipper European Region Funds Average -2.52% 22.51% ------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT IN THE FUND 7/31/94 TO 7/31/04 AllianceBernstein New Europe Fund Class A: $18,170 S&P/Citigroup Europe PMI Growth Index: $22,065 [THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.] AllianceBernstein S&P/Citigroup Europe New Europe Fund Class A PMI Growth Index ------------------------------------------------------------------------------- 7/31/94 $ 9,575 $ 10,000 7/31/95 $ 11,511 $ 12,316 7/31/96 $ 12,455 $ 13,411 7/31/97 $ 16,040 $ 18,897 7/31/98 $ 21,206 $ 24,736 7/31/99 $ 20,597 $ 25,109 7/31/00 $ 24,511 $ 29,402 7/31/01 $ 18,501 $ 21,275 7/31/02 $ 14,982 $ 16,736 7/31/03 $ 15,614 $ 18,172 7/31/04 $ 18,170 $ 22,065 This chart illustrates the total value of an assumed $10,000 investment in AllianceBernstein New Europe Fund Class A shares (from 7/31/94 to 7/31/04) as compared to the performance of the Fund's benchmark and Lipper Average. See Historical Performance and Benchmark disclosures on previous page. (Historical Performance continued on next page) _______________________________________________________________________________ 4 o ALLIANCEBERNSTEIN NEW EUROPE FUND Historical Performance ------------------------------------------------------------------------------- HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF JULY 31, 2004 -------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 16.37% 11.41% 5 Years -2.48% -3.32% 10 Years 6.62% 6.16% Class B Shares 1 Year 15.48% 11.48% 5 Years -3.29% -3.29% 10 Years(a) 5.99% 5.99% Class C Shares 1 Year 15.61% 14.61% 5 Years -3.24% -3.24% 10 Years 5.83% 5.83% Advisor Class Shares 1 Year 16.83% 5 Years -2.29% Since Inception* 4.82% SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (June 30, 2004) -------------------------------------------------------------- Class A Shares 1 Year 16.50% 5 Years -2.68% 10 Years 6.96% Class B Shares 1 Year 16.68% 5 Years -2.64% 10 Years(a) 6.79% Class C Shares 1 Year 19.81% 5 Years -2.59% 10 Years 6.64% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Date: 10/1/96 for Advisor Class shares. See Historical Performance disclosures on page 3. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 5 Fund Expenses ------------------------------------------------------------------------------- FUND EXPENSES As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Account Value Account Value Expenses Paid February 1, 2004 July 31, 2004 During Period* ------------------------------------------------------------------------------- Class A Actual $ 1,000 $ 977.54 $ 9.98 Hypothetical (5% return before expenses) $ 1,000 $ 1,014.77 $ 10.17 ------------------------------------------------------------------------------- Class B Actual $ 1,000 $ 974.05 $ 13.79 Hypothetical (5% return before expenses) $ 1,000 $ 1,010.89 $ 14.05 ------------------------------------------------------------------------------- Class C Actual $ 1,000 $ 974.15 $ 13.55 Hypothetical (5% return before expenses) $ 1,000 $ 1,011.14 $ 13.80 ------------------------------------------------------------------------------- Advisor Class Actual $ 1,000 $ 979.08 $ 8.51 Hypothetical (5% return before expenses) $ 1,000 $ 1,016.26 $ 8.67 ------------------------------------------------------------------------------- * Expenses are equal to the classes' annualized expense ratios of 2.03%, 2.81%, 2.76% and 1.73%, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year/366 (to reflect the one-half year period). _______________________________________________________________________________ 6 o ALLIANCEBERNSTEIN NEW EUROPE FUND Portfolio Summary ------------------------------------------------------------------------------- PORTFOLIO SUMMARY July 31, 2004 PORTFOLIO STATISTICS Net Assets ($mil): $133.7 SECTOR BREAKDOWN* 25.5% Finance 18.0% Healthcare 16.6% Consumer Staples 15.2% Consumer Services 7.5% Technology 6.1% Consumer Manufacturing [PIE CHART OMITTED] 6.1% Energy 3.5% Utilities 1.5% Capital Goods COUNTRY BREAKDOWN* 43.4% United Kingdom 16.4% Switzerland 15.6% France 7.6% Germany 5.9% Spain [PIE CHART OMITTED] 4.7% Ireland 3.6% Sweden 2.2% Italy 0.6% Russia * All data as of July 31, 2004. The Fund's sector and country breakdowns are expressed as a percentage of total investments and may vary over time. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 7 Ten Largest Holdings ------------------------------------------------------------------------------- TEN LARGEST HOLDINGS July 31, 2004 Percent of Company U.S. $ Value Net Assets _______________________________________________________________________________ Total, SA $ 6,613,766 4.9% ------------------------------------------------------------------------------- Tesco Plc. 6,298,227 4.7 ------------------------------------------------------------------------------- HSBC Holdings Plc. 6,012,595 4.5 ------------------------------------------------------------------------------- Royal Bank of Scotland Group Plc. 5,361,999 4.0 ------------------------------------------------------------------------------- SAP AG 5,152,897 3.9 ------------------------------------------------------------------------------- Roche Holding AG-Genusschein 4,886,370 3.7 ------------------------------------------------------------------------------- Reckitt Benckiser Plc. 4,804,201 3.6 ------------------------------------------------------------------------------- Ericsson LM Cl.B 4,758,806 3.6 ------------------------------------------------------------------------------- AstraZeneca Plc. 4,647,491 3.5 ------------------------------------------------------------------------------- Carnival Plc. 4,458,859 3.3 ------------------------------------------------------------------------------- $ 52,995,211 39.7% _______________________________________________________________________________ 8 o ALLIANCEBERNSTEIN NEW EUROPE FUND Portfolio of Investments ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS July 31, 2004 Company Shares U.S. $ Value ------------------------------------------------------------------------------- COMMON & PREFERRED STOCKS-99.1% France-15.4% BNP Paribas, SA 45,644 $ 2,658,628 Essilor International, SA 36,373 2,235,543 L'Oreal, SA 36,640 2,626,911 LVMH Moet Hennessy Louis Vuitton, SA 38,621 2,636,420 Sanofi-Synthelabo, SA 11,010 730,377 Schneider Electric, SA 32,291 2,054,634 Total, SA 34,057 6,613,766 Vinci, SA 10,147 1,032,903 ------------- 20,589,182 ------------- Germany-7.5% Altana AG 18,141 985,022 E.ON AG 18,415 1,308,072 Porsche AG pfd. 4,052 2,619,701 SAP AG 32,108 5,152,897 ------------- 10,065,692 ------------- Ireland-4.7% Anglo Irish Bank Corp. Plc. 118,535 1,878,065 CRH Plc. 194,315 4,386,475 ------------- 6,264,540 ------------- Italy-2.1% Alleanza Assicurazioni S.p.A. 135,454 1,451,409 Eni S.p.A. 68,532 1,410,904 ------------- 2,862,313 ------------- Russia-0.6% Mobile Telesystems (ADR) 6,900 807,645 ------------- Spain-5.9% Banco Bilbao Vizcaya Argentaria, SA 253,990 3,382,048 Industria de Diseno Textil, SA (Inditex) 77,539 1,775,574 Telefonica, SA(a) 185,516 2,704,790 ------------- 7,862,412 ------------- Sweden-3.6% LM Ericsson Cl.B(a) 1,781,395 4,758,806 ------------- Switzerland-16.3% Alcon, Inc. 22,800 1,746,480 Nestle, SA 16,842 4,304,791 Nobel Biocare Holding AG 11,843 1,619,983 Novartis AG 83,672 3,744,262 Roche Holding AG-Genusschein 49,418 4,886,370 Swiss Reinsurance Co. 25,570 1,494,007 UBS AG 59,406 3,974,795 ------------- 21,770,688 ------------- _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 9 Portfolio of Investments ------------------------------------------------------------------------------- Company Shares U.S. $ Value ------------------------------------------------------------------------------- United Kingdom-43.0% AstraZeneca Plc. 103,850 $ 4,647,491 Capita Group Plc. 119,187 663,210 Carnival Plc. 91,153 4,458,859 Centrica Plc. 144,261 620,413 Compass Group Plc. 135,706 789,060 Enterprise Inns Plc. 139,118 1,348,376 GUS Plc. 240,513 3,765,669 HBOS Plc. 55,351 717,151 Hilton Group Plc. 441,664 2,094,193 HSBC Holdings Plc. 409,467 6,012,595 Legal & General Group Plc. 1,129,588 1,992,472 Man Group Plc. 47,361 1,126,495 Reckitt Benckiser Plc. 175,660 4,804,201 Royal Bank of Scotland Group Plc. 190,729 5,361,999 Smith & Nephew Plc. 318,743 3,216,875 Standard Chartered Plc. 228,381 3,777,141 Tesco Plc. 1,360,912 6,298,227 Vodafone Group Plc. 2,046,704 4,438,272 WPP Group Plc. 143,831 1,329,977 ------------- 57,462,676 ------------- Total Investments-99.1% (cost $106,653,474) 132,443,954 Other assets less liabilities-0.9% 1,212,288 ------------- Net Assets-100% $ 133,656,242 ============= (a) Non-income producing security. Glossary: ADR - American Depositary Receipt Pfd - Preferred Stock See notes to financial statements. _______________________________________________________________________________ 10 o ALLIANCEBERNSTEIN NEW EUROPE FUND Statement of Assets & Liabilities ------------------------------------------------------------------------------- STATEMENT OF ASSETS & LIABILITIES July 31, 2004 ASSETS Investments in securities, at value (cost $106,653,474) $ 132,443,954 Cash 233,361 Foreign cash, at value (cost $1,146,384) 1,146,672 Receivable for capital stock sold 362,510 Receivable for investment securities sold and foreign currency contracts 337,471 Dividends receivable 324,157 ------------- Total assets 134,848,125 ------------- LIABILITIES Payable for capital stock redeemed 618,827 Payable for investment securities purchased and foreign currency contracts 150,639 Advisory fee payable 86,981 Distribution fee payable 73,383 Transfer agent fee payable 46,152 Accrued expenses 215,901 ------------- Total liabilities 1,191,883 ------------- Net Assets $ 133,656,242 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 98,614 Additional paid-in capital 197,724,795 Accumulated net investment loss (26,080) Accumulated net realized loss on investment and foreign currency transactions (89,943,413) Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 25,802,326 ------------- $ 133,656,242 ============= CALCULATION OF MAXIMUM OFFERING PRICE Class A Shares Net asset value and redemption price per share ($66,252,996/4,612,759 shares of capital stock issued and outstanding) $14.36 Sales charge--4.25% of public offering price .64 ------ Maximum offering price $15.00 ====== Class B Shares Net asset value and offering price per share ($49,465,577/3,875,844 shares of capital stock issued and outstanding) $12.76 ====== Class C Shares Net asset value and offering price per share ($14,959,579/1,167,557 shares of capital stock issued and outstanding) $12.81 ====== Advisor Class Shares Net asset value, redemption and offering price per share ($2,978,090/205,206 shares of capital stock issued and outstanding) $14.51 ====== See notes to financial statements. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 11 Statement of Operations ------------------------------------------------------------------------------- STATEMENT OF OPERATIONS Year Ended July 31, 2004 INVESTMENT INCOME Dividends (net of foreign taxes withheld of $325,764) $ 2,927,545 EXPENSES Advisory fee $ 1,573,507 Distribution fee--Class A 214,340 Distribution fee--Class B 572,503 Distribution fee--Class C 178,095 Transfer agency 911,924 Custodian 249,711 Audit and legal 147,393 Administrative 117,000 Printing 70,943 Registration 67,294 Directors' fees 54,463 Miscellaneous 17,296 ------------ Total expenses 4,174,469 Less: expenses waived and reimbursed by the Adviser and the Transfer Agent (see Note B) (293,922) Less: expense offset arrangement (see Note B) (80) ------------ Net expenses 3,880,467 ------------ Net investment loss (952,922) ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain on: Investment transactions 20,578,411 Foreign currency transactions 17,369 Net change in unrealized appreciation/depreciation of: Investments 3,756,164 Foreign currency denominated assets and liabilities (5,617) ------------ Net gain on investment and foreign currency transactions 24,346,327 ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $ 23,393,405 ============ See notes to financial statements. _______________________________________________________________________________ 12 o ALLIANCEBERNSTEIN NEW EUROPE FUND Statement of Changes in Net Assets ------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS Year Ended Year Ended July 31, July 31, 2004 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (952,922) $ (1,527,620) Net realized gain (loss) on investment and foreign currency transactions 20,595,780 (29,506,727) Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities 3,750,547 36,275,491 ------------- ------------- Net increase in net assets from operations 23,393,405 5,241,144 CAPITAL STOCK TRANSACTIONS Net decrease (40,248,631) (39,462,507) ------------- ------------- Total decrease (16,855,226) (34,221,363) NET ASSETS Beginning of period 150,511,468 184,732,831 ------------- ------------- End of period (including accumulated net investment loss of $26,080 and $0, respectively) $ 133,656,242 $ 150,511,468 ============= ============= See notes to financial statements. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 13 Notes to Financial Statements ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS July 31, 2004 NOTE A Significant Accounting Policies AllianceBernstein New Europe Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as a diversified, open-end management investment company. The Fund offers Class A, Class B, Class C and Advisor Class shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Advisor Class shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. Advisor Class shares are offered to investors participating in fee based programs and to certain retirement plan accounts. All four classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Fund. 1. Security Valuation In accordance with Pricing Policies adopted by the Board of Directors of the Fund (the "Pricing Policies") and applicable law, portfolio securities are valued at current market value or at fair value. The Board of Directors has delegated to Alliance Capital Management, L.P. (the "Adviser"), subject to the Board's continuing oversight, certain responsibilities with respect to the implementation of the Pricing Policies. Pursuant to the Pricing Policies, securities for which market quotations are readily available are valued at their current market value. In general, the market value of these securities is determined as follows: Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. If no bid or asked prices are quoted on such day, then the security is valued in good faith at fair value in accordance with the Pricing Policies. Securities listed on more than one exchange are valued by reference to the principal exchange on which _______________________________________________________________________________ 14 o ALLIANCEBERNSTEIN NEW EUROPE FUND Notes to Financial Statements ------------------------------------------------------------------------------- the securities are traded; securities not listed on an exchange but traded on The Nasdaq Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuations, the last available closing settlement price is used; securities traded in the over-the-counter market, (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, the Pricing Policies provide that the Adviser may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available are valued at fair value in accordance with the Pricing Policies. 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward exchange currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued. Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation and depreciation of investments and foreign currency denominated assets and liabilities. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 15 Notes to Financial Statements ------------------------------------------------------------------------------- 3. Taxes It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned. 4. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date or as soon as the Fund is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Fund accretes discounts as adjustments to interest income. 5. Income and Expenses All income earned and expenses incurred by the Fund are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the net assets of such class, except that the Fund's Class B and Class C shares bear higher distribution and transfer agent fees than Class A and Advisor Class shares. Advisor Class shares have no distribution fees. 6. Dividends and Distributions Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. NOTE B Advisory Fee and Other Transactions with Affiliates Under the terms of an investment advisory agreement, the Fund pays the Adviser an advisory fee equal to the annualized rate of 1.10% of the Fund's average daily net assets up to $100 million, .95% of the next $100 million of the Fund's average daily net assets and .80% of the Fund's average daily net assets over $200 million. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Fund at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the average daily net assets of the Fund. Through July 31, 2004, such waiver amounted to $259,888. The waiver was made in contemplation of the final _______________________________________________________________________________ 16 o ALLIANCEBERNSTEIN NEW EUROPE FUND Notes to Financial Statements ------------------------------------------------------------------------------- agreement with the Office of the New YorkAttorney General ("NYAG") described in "Legal Proceedings" below. For the year ended July 31, 2004, the Adviser voluntarily agreed to reimburse a portion of certain audit fees related to the investigations described under "Legal Proceedings" below in the amount of $1,125. Pursuant to the advisory agreement, the Adviser provides certain legal and accounting services to the Fund. For the year ended July 31, 2004 such fees amounted to $117,000. The Fund compensates Alliance Global Investor Services, Inc. (AGIS), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. Such compensation amounted to $590,044 for the year ended July 31, 2004. During the period, AGIS voluntarily agreed to waive a portion of its fees for such services. Such waiver amounted to $32,909. For the year ended July 31, 2004, the Fund's expenses were reduced by $80 under an expense offset arrangement with AGIS. AllianceBernstein Investment Research and Management, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Fund's shares. The Distributor has advised the Fund that it has retained front-end sales charges of $1,438 from the sales of Class A shares and received $2,460, $49,511 and $2,833in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the year ended July 31, 2004. Brokerage commissions paid on investment transactions for the year ended July 31, 2004, amounted to $704,615, none of which was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. NOTE C Distribution Services Agreement The Fund has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Fund's average daily net assets attributable to the Class A shares and 1% of the Fund's average daily net assets attributable to both Class B and Class C shares. There are no distribution and servicing fees on the Advisor Class shares. The fees are accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has advised the Fund that it has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amount of $5,088,188 and $1,208,578 for Class B _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 17 Notes to Financial Statements ------------------------------------------------------------------------------- and C shares, respectively; such costs may be recovered from the Fund in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Fund's shares. NOTE D Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the year ended July 31, 2004, were as follows: Purchases Sales ============= ============= Investment securities (excluding U.S. government securities) $ 115,440,232 $ 157,752,581 U.S. government securities -0- -0- The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation (excluding foreign currency transactions) are as follows: Cost $ 108,422,137 ============= Gross unrealized appreciation $ 26,766,584 Gross unrealized depreciation (2,744,767) ------------- Net unrealized appreciation $ 24,021,817 ============= Forward Exchange Currency Contracts The Fund may enter into forward exchange currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to hedge certain firm purchase and sale commitments denominated in foreign currencies and for investment purposes. A forward exchange currency contract is a commitment to purchase or sell a foreign currency on a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation by the Fund. The Fund's custodian will place and maintain cash not available for investment or other liquid assets in a separate account of the Fund having a value at least equal to the aggregate amount of the Fund's commitments under forward exchange currency contracts entered into with respect to position hedges. Risks may arise from the potential inability of the counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars reflects the total exposure the Fund has in that particular currency contract. _______________________________________________________________________________ 18 o ALLIANCEBERNSTEIN NEW EUROPE FUND Notes to Financial Statements ------------------------------------------------------------------------------- NOTE E Capital Stock There are 12,000,000,000 shares of $.01 par value capital stock authorized, divided into four classes, designated Class A, Class B, Class C and Advisor Class shares. Each class consists of 3,000,000,000 authorized shares. Transactions in capital stock were as follows: Shares Amount --------------------------- ------------------------------ Year Ended Year Ended Year Ended Year Ended July 31, July 31, July 31, July 31, 2004 2003 2004 2003 ------------ ------------ -------------- -------------- Class A Shares sold 1,336,031 15,542,158 $ 17,406,657 $ 171,821,750 ------------------------------------------------------------------------------- Shares converted from Class B 170,857 232,927 2,426,624 2,412,260 ------------------------------------------------------------------------------- Shares redeemed (2,596,194) (16,931,720) (35,198,950) (188,327,796) ------------------------------------------------------------------------------- Net decrease (1,089,306) (1,156,635) $(15,365,669) $ (14,093,786) =============================================================================== Class B Shares sold 318,796 1,496,664 $ 3,843,377 $ 14,968,222 ------------------------------------------------------------------------------- Shares converted to Class A (191,359) (218,122) (2,426,624) (2,412,260) ------------------------------------------------------------------------------- Shares redeemed (1,487,869) (2,952,704) (18,520,410) (29,502,468) ------------------------------------------------------------------------------- Net decrease (1,360,432) (1,674,162) $(17,103,657) $ (16,946,506) =============================================================================== Class C Shares sold 970,511 7,882,363 $ 10,916,903 $ 78,376,624 ------------------------------------------------------------------------------- Shares redeemed (1,519,808) (8,487,703) (17,861,137) (85,223,164) ------------------------------------------------------------------------------- Net decrease (549,297) (605,340) $ (6,944,234) $ (6,846,540) =============================================================================== Advisor Class Shares sold 223,177 976,543 $ 2,854,946 $ 11,084,443 ------------------------------------------------------------------------------- Shares redeemed (282,721) (1,098,786) (3,690,017) (12,660,118) ------------------------------------------------------------------------------- Net decrease (59,544) (122,243) $ (835,071) $ (1,575,675) =============================================================================== NOTE F Risks Involved in Investing in the Fund Concentration of Risk--Investing in securities of foreign companies involves special risks which include changes in foreign exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies and their markets may be less liquid and their prices more volatile than those of comparable United States companies. The Fund has invested approximately 43% of its net assets in United Kingdom equity securities. Political, social or economic changes in this market may have a greater impact on the value of the Fund's portfolio due to this concentration. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 19 Notes to Financial Statements ------------------------------------------------------------------------------- In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE G Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $500 million revolving credit facility (the "Facility") intended to provide for short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the year ended July 31, 2004. NOTE H Components of Accumulated Earnings (Deficit) As of July 31, 2004, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $ (88,200,830)(a) Unrealized appreciation/(depreciation) 24,033,663(b) ------------- Total accumulated earnings/(deficit) $ (64,167,167) ============= (a) On July 31, 2004, the Fund had a net capital loss carryforward of $88,174,750, of which $53,936,454 expires in the year 2010 and $34,238,296 expires in the year 2011. The Fund utilized capital loss carryforwards of $3,650,378. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. For the year ended July 31, 2004, the Fund deferred to August 1, 2004 post October currency losses of $26,080. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales. During the current fiscal year, permanent differences primarily due to foreign currency gains and net investment loss, resulted in a net decrease in accumulated net investment loss, a net increase in accumulated net realized loss on investment and foreign currency transactions and a corresponding decrease in additional paid-in capital. This reclassification had no effect on net assets. NOTE I Legal Proceedings As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been con- _______________________________________________________________________________ 20 o ALLIANCEBERNSTEIN NEW EUROPE FUND Notes to Financial Statements ------------------------------------------------------------------------------- ducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized in an Assurance of Discontinuance dated September 1, 2004 ("NYAGOrder"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation of the NYAGOrder and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For more information on this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 21 Notes to Financial Statements ------------------------------------------------------------------------------- the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. The Adviser and approximately twelve other investment management firms were publicly mentioned in connection with the settlement by the SEC of charges that Morgan Stanley violated federal securities laws relating to its receipt of compensation for selling specific mutual funds and the disclosure of such compensation. The SEC has indicated publicly that, among other things, it is considering enforcement action in connection with mutual funds' disclosure of such arrangements and in connection with the practice of considering mutual fund sales in the direction of brokerage commissions from fund portfolio transactions. The SEC has issued subpoenas to the Adviser in connection with this matter and the Adviser has provided documents and other information to the SEC and is cooperating fully with its investigation. _______________________________________________________________________________ 22 o ALLIANCEBERNSTEIN NEW EUROPE FUND Notes to Financial Statements ------------------------------------------------------------------------------- On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P., Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein Mutual Funds, including the Fund, as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by an alleged shareholder of the AllianceBernstein Growth & Income Fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from AllianceBernstein Fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all AllianceBernstein Fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, numerous additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants, and others may be filed. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the Fund's shares or other adverse consequences to the Fund. However, the Adviser believes that these matters are not likely to have a material adverse effect on the Fund or its ability to perform advisory services relating to the Fund. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 23 Financial Highlights ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A --------------------------------------------------------------- Year Ended July 31, --------------------------------------------------------------- 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.34 $11.84 $14.62 $21.11 $18.57 INCOME FROM INVESTMENT OPERATIONS Net investment loss(a) (.03)(b) (.06) (.08) (.04) (.10) Net realized and unrealized gain (loss) on investment and foreign currency transactions 2.05 .56 (2.70) (4.82) 3.55 Net increase (decrease) in net asset value from operations 2.02 .50 (2.78) (4.86) 3.45 LESS: DISTRIBUTIONS Distributions from net realized gain on investment and foreign currency transactions -0- -0- -0- (1.50) (.91) Distributions in excess of net realized gain on investment and foreign currency transactions -0- -0- -0- (.13) -0- Total distributions -0- -0- -0- (1.63) (.91) Net asset value, end of period $14.36 $12.34 $11.84 $14.62 $21.11 TOTAL RETURN Total investment return based on net asset value(c) 16.37% 4.22% (19.02)% (24.45)% 18.89% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $66,253 $70,339 $81,213 $125,402 $170,815 Ratio to average net assets of: Expenses, net of waivers/reimbursements 2.21% 2.54% 2.10% 1.79% 1.65%(d) Expenses, before waivers/reimbursements 2.41% 2.54% 2.10% 1.79% 1.65%(d) Net investment loss (.23)%(b) (.57)% (.60)% (.23)% (.46)% Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28. _______________________________________________________________________________ 24 o ALLIANCEBERNSTEIN NEW EUROPE FUND Financial Highlights ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B --------------------------------------------------------------- Year Ended July 31, --------------------------------------------------------------- 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.05 $10.71 $13.33 $19.56 $17.39 INCOME FROM INVESTMENT OPERATIONS Net investment loss(a) (.13)(b) (.14) (.18) (.16) (.23) Net realized and unrealized gain (loss) on investment and foreign currency transactions 1.84 .48 (2.44) (4.44) 3.31 Net increase (decrease) in net asset value from operations 1.71 .34 (2.62) (4.60) 3.08 LESS: DISTRIBUTIONS Distributions from net realized gain on investment and foreign currency transactions -0- -0- -0- (1.50) (.91) Distributions in excess of net realized gain on investment and foreign currency transactions -0- -0- -0- (.13) -0- Total distributions -0- -0- -0- (1.63) (.91) Net asset value, end of period $12.76 $11.05 $10.71 $13.33 $19.56 TOTAL RETURN Total investment return based on net asset value(c) 15.48% 3.18% (19.66)% (25.10)% 18.01% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $49,465 $57,859 $73,986 $121,639 $181,285 Ratio to average net assets of: Expenses, net of waivers/reimbursements 3.00% 3.35% 2.88% 2.54% 2.38%(d) Expenses, before waivers/reimbursements 3.20% 3.35% 2.88% 2.54% 2.38%(d) Net investment loss (1.07)%(b) (1.38)% (1.41)% (.98)% (1.18)% Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 25 Financial Highlights ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C --------------------------------------------------------------- Year Ended July 31, --------------------------------------------------------------- 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.08 $10.73 $13.35 $19.58 $17.41 INCOME FROM INVESTMENT OPERATIONS Net investment loss(a) (.13)(b) (.14) (.17) (.15) (.23) Net realized and unrealized gain (loss) on investment and foreign currency transactions 1.86 .49 (2.45) (4.45) 3.31 Net increase (decrease) in net asset value from operations 1.73 .35 (2.62) (4.60) 3.08 LESS: DISTRIBUTIONS Distributions from net realized gain on investment and foreign currency transactions -0- -0- -0- (1.50) (.91) Distributions in excess of net realized gain on investment and foreign currency transactions -0- -0- -0- (.13) -0- Total distributions -0- -0- -0- (1.63) (.91) Net asset value, end of period $12.81 $11.08 $10.73 $13.35 $19.58 TOTAL RETURN Total investment return based on net asset value(c) 15.61% 3.26% (19.63)% (25.07)% 17.99% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $14,960 $19,024 $24,924 $41,203 $60,984 Ratio to average net assets of: Expenses, net of waivers/reimbursements 2.95% 3.27% 2.84% 2.51% 2.36%(d) Expenses, before waivers/reimbursements 3.15% 3.27% 2.84% 2.51% 2.36%(d) Net investment loss (1.01)%(b) (1.33)% (1.36)% (.95)% (1.18)% Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28. _______________________________________________________________________________ 26 o ALLIANCEBERNSTEIN NEW EUROPE FUND Financial Highlights ------------------------------------------------------------------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class --------------------------------------------------------------- Year Ended July 31, --------------------------------------------------------------- 2004 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.42 $11.91 $14.68 $21.18 $18.58 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(a) .01(b) (.04) (.05) -0- (.01) Net realized and unrealized gain (loss) on investment and foreign currency transactions 2.08 .55 (2.72) (4.87) 3.52 Net increase (decrease) in net asset value from operations 2.09 .51 (2.77) (4.87) 3.51 LESS: DISTRIBUTIONS Distributions from net realized gain on investment and foreign currency transactions -0- -0- -0- (1.50) (.91) Distributions in excess of net realized gain on investment and foreign currency transactions -0- -0- -0- (.13) -0- Total distributions -0- -0- -0- (1.63) (.91) Net asset value, end of period $14.51 $12.42 $11.91 $14.68 $21.18 TOTAL RETURN Total investment return based on net asset value(c) 16.83% 4.28% (18.87)% (24.42)% 19.21% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $2,978 $3,289 $4,610 $5,729 $9,196 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.92% 2.25% 1.80% 1.48% 1.34%(d) Expenses, before waivers/reimbursements 2.11% 2.25% 1.80% 1.48% 1.34%(d) Net investment income (loss) .09%(b) (.33)% (.36)% .02% (.06)% Portfolio turnover rate 78% 63% 63% 84% 103%
See footnote summary on page 28. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 27 Financial Highlights ------------------------------------------------------------------------------- (a) Based on average shares outstanding. (b) Net of expenses waived by the Adviser and Transfer Agent. (c) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charge or contingent deferred sales charge is not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Total investment return calculated for a period of less than one year is not annualized. (d) Ratios reflect expenses grossed up for expense offset arrangement with the Transfer Agent. For the period shown below, the net expense ratios were as follows: Year Ended July 31, 2000 ----------------- Class A 1.64% Class B 2.36% Class C 2.35% Advisor Class 1.33% _______________________________________________________________________________ 28 o ALLIANCEBERNSTEIN NEW EUROPE FUND Report of Independent Registered Public Accounting Firm ------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of AllianceBernstein New Europe Fund, Inc. We have audited the accompanying statement of assets and liabilities of AllianceBernstein New Europe Fund, Inc. (the "Fund"), including the portfolio of investments, as of July 31, 2004, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of July 31, 2004, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AllianceBernstein New Europe Fund, Inc. at July 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP New York, New York September 10, 2004 _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 29 Board of Directors ------------------------------------------------------------------------------- BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman David H. Dievler(1) John H. Dobkin(1) Alan J. Stoga(1) OFFICERS Marc O. Mayer, President Thomas J. Bardong, Vice President Stephen M. Beinhacker(2), Vice President Russell Brody, Vice President Mark D. Gersten, Treasurer & Chief Financial Officer Mark R. Manley, Secretary Vincent S. Noto, Controller Custodian The Bank of New York One Wall Street New York, NY 10286 Principal Underwriter AllianceBernstein Investment Research and Management, Inc. 1345 Avenue of the Americas New York, NY 10105 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York, NY 10036 Transfer Agent Alliance Global Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-free (800) 221-5672 (1) Member of the Audit Committee. (2) Mr. Beinhacker is the person primarily responsible for the day-to-day management of the Fund's investment portfolio. _______________________________________________________________________________ 30 o ALLIANCEBERNSTEIN NEW EUROPE FUND Management of the Fund ------------------------------------------------------------------------------- MANAGEMENT OF THE FUND Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund's Directors is set forth below.
PORTFOLIOS IN FUND OTHER NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR -------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS William H. Foulk, Jr.,#+ Investment Adviser and an 113 None 72, Independent Consultant. He 2 Sound View Drive, was formerly Senior Manager Suite 100, of Barrett Associates, Inc., Greenwich, CT 06830 a registered investment adviser, (Elected on with which he had been January 14, 2004) associated since prior to 1999. (Chairman of the Board) He was formerly Deputy Comptroller andChief Investment Officer of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings. David H. Dievler, #+, 74 Independent Consultant. Until 98 None P.O. Box 167 December 1994, he was Senior Vice Spring Lake, NJ 07762 President of ACMC responsible (14) for mutual fund administration. Prior to joining ACMC in 1984, he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that, he was a Senior Manager at Price Waterhouse & Co. Member of the American Institute of Certified Public Accountants since 1953. John H. Dobkin, #+, 62 Consultant. He was formerly 96 None P.O. Box 12 President of Save Venice, Inc. Annandale, NY 12504 (preservation organization) from (11) 2001-2002, Senior Advisor from June 1999-June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989-May 1999. Previously, Director of the National Academy of Design and during 1988-1992, he was Director and Chairman of the Audit Committee of ACMC.
_______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 31 Management of the Fund -------------------------------------------------------------------------------
PORTFOLIOS IN FUND OTHER NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR -------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) Alan Stoga, #+, 52 President of Zemi Communications, 2 None Zemi Communications L.L.C. since prior to 1999. He is a 99 Madison Avenue member of the Board of Directors New York, NY 10016 (12) of Tinker Foundation, the Americas Society (Vice Chairman), Council of the Americas, Claremont Graduate University School of Politics and Economics, the Center for Global Finance of the Lubin School of Business and Argentine American Chamber of Commerce (President). He was formerly President of Zemi Investments from 1995 through 1998 and Managing Director of Kissinger Associates, Inc. from 1984 through 1996.
* There is no stated term of office for the Fund's Directors. # Member of the Audit Committee. + Member of the Nominating Committee. _______________________________________________________________________________ 32 o ALLIANCEBERNSTEIN NEW EUROPE FUND Management of the Fund ------------------------------------------------------------------------------- Officer Information Certain information concerning the Fund's Officers is listed below.
NAME, POSITION(S) PRINCIPAL OCCUPATION ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS** -------------------------------------------------------------------------------------------------------------- Marc O. Mayer, 46 President Executive Vice President of ACMC** since 2001; prior thereto, Chief Executive Officer of Sanford C. Bernstein & Co., LLC ("SCB & Co.") and its predecessor since prior to 1999. Thomas J. Bardong, 59 Vice President Senior Vice President of ACMC,** with which he has been associated since prior to 1999. Stephen M. Beinhacker, 39 Vice President Senior Vice President of ACMC,** with which he has been associated since prior to 1999. Russell Brody, 37 Vice President Vice President of ACMC,** with which he has been associated since prior to 1999. Mark D. Gersten, 53 Treasurer and Chief Senior Vice President of Alliance Financial Officer Global Investor Services, Inc. ("AGIS") and Vice President of AllianceBernstein Investment Research and Management, Inc. ("ABIRM"),** with which he has been associated since prior to 1999. Mark R. Manley, 41 Secretary Senior Vice President and Chief Compliance Officer of ACMC,** with which he has been associated since prior to 1999. Vincent S. Noto, 39 Controller Vice President of AGIS,** with which he has been associated since prior to 1999.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas, New York, NY 10105. ** ACMC, ABIRM and AGIS are affiliates of the Fund. The Fund's Statement of AdditionalInformation ("SAI") has additional information about the Fund's Directors and Officers and is available without charge upon request. Contact your financial representative or Alliance Capital at 800-227-4618 for a free prospectus or SAI. _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 33 Alliancebernstein Family of Funds ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN FAMILY OF FUNDS -------------------------------------------- Wealth Strategies Funds -------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy* Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy** -------------------------------------------- Blended Style Funds -------------------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio -------------------------------------------- Growth Funds -------------------------------------------- Domestic Growth Fund Health Care Fund Mid-Cap Growth Fund Premier Growth Fund Small Cap Growth Fund Technology Fund Global & International All-Asia Investment Fund Global Research Growth Fund Global Small Cap Fund Greater China '97 Fund International Premier Growth Fund New Europe Fund Worldwide Privatization Fund Select Investor Series Biotechnology Portfolio Premier Portfolio Technology Portfolio -------------------------------------------- Value Funds -------------------------------------------- Domestic Balanced Shares Disciplined Value Fund Growth & Income Fund Real Estate Investment Fund Small Cap Value Fund Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund -------------------------------------------- Taxable Bond Funds -------------------------------------------- Americas Government Income Trust Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio Short Duration Portfolio U.S. Government Portfolio -------------------------------------------- Municipal Bond Funds -------------------------------------------- National Insured National Arizona California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania Virginia -------------------------------------------- Intermediate Municipal Bond Funds -------------------------------------------- Intermediate California Intermediate Diversified Intermediate New York -------------------------------------------- Closed-End Funds -------------------------------------------- All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II We also offer Exchange Reserves,+ which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our web site at www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus. Please read the prospectus carefully before you invest or send money. * Formerly Growth Investors Fund. ** Formerly Conservative Investors Fund. + An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. _______________________________________________________________________________ 34 o ALLIANCEBERNSTEIN NEW EUROPE FUND NOTES _______________________________________________________________________________ ALLIANCEBERNSTEIN NEW EUROPE FUND o 35 NOTES _______________________________________________________________________________ 36 o ALLIANCEBERNSTEIN NEW EUROPE FUND ALLIANCEBERNSTEIN NEW EUROPE FUND 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 AllianceBernstein [LOGO](SM) Investment Research and Management (SM) This service mark used under license from the owner, Alliance Capital Management L.P. EURAR0704 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant's code of ethics is filed herewith as Exhibit 11(a)(1). (b) During the period covered by this report, no material amendments were made to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors has determined that independent director David H. Dievler qualifies as an audit committee financial expert. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. The following table sets forth the aggregate fees billed by the independent auditor, Ernst & Young LLP, for the Fund's last two fiscal years for professional services rendered for: (i) the audit of the Fund's annual financial statements included in the Fund's annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Fund's financial statements and are not reported under (i), which include multi-class distribution testing, advice and education on accounting and auditing issues, and consent letters; (iii) tax compliance, tax advice and tax return preparation; and (iv) aggregate non-audit services provided to the Fund, the Fund's Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund ("Service Affiliates"), which include conducting an annual internal control report pursuant to Statement on Auditing Standards No. 70. No other services were provided to the Fund during this period. All Fees for Non-Audit Services Provided to the Portfolio, the Adviser Audit-Related and Service Audit Fees Fees Tax Fees Affiliates ------------------------------------------------------------------------------ 2003: $46,125 $9,382 $13,330 $710,127 2004: $47,000 $9,222 $16,000 $862,823 Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Fund's Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Fund's independent auditors. The Fund's Audit Committee policies and procedures also require pre-approval of all audit and non-audit services provided to the Adviser and Service Affiliates to the extent that these services are directly related to the operations or financial reporting of a Fund. Accordingly, all of the amounts in the table for Audit Fees, Audit-Related Fees and Tax Fees for the entire period ended 2003 and 2004 are for services pre-approved by the Fund's Audit Committee. The amounts of the Fees for Non-Audit Services provided to the Fund, the Adviser and Service Affiliates in the table for the Fund, that were subject to pre-approval by the Audit Committee for the entire period ended 2003 and 2004 were as follows: Non-Audit Services Pre-Approved by the Audit Committee ---------------------------------- Audit Related Tax Fees Fees Total -------- --------- -------- 2003 $293,282 $13,330 $306,612 2004 $255,967 $16,000 $271,967 The Audit Committee of the Fund has considered whether the provision of any non-audit services not pre-approved by the Audit Committee provided by the Fund's independent auditor to the Adviser and Service Affiliates is compatible with maintaining the auditor's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. SCHEDULE OF INVESTMENTS. Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the registrant. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On April 7, 2004 the Fund adopted procedures by which shareholders may recommend nominees to the Fund's Board of Directors. Prior thereto, the Fund's Board did not accept shareholder recommendations for nominees to the Fund's Board. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant's internal controls that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 11. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT ----------- ----------------------- 11 (a) (1) Code of ethics that is subject to the disclosure of Item 2 hereof 11 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein New Europe Fund, Inc. By: /s/ Marc O. Mayer ------------------- Marc O. Mayer President Date: September 29, 2004 ------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer ------------------- Marc O. Mayer President Date: September 29, 2004 ------------------- By: /s/ Mark D. Gersten -------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: September 29, 2004 -------------------- 00250.0073 #462870v4