N-CSRS 1 dncsrs.htm ALLIANCEBERNSTEIN TRUST AllianceBernstein Trust

 

 

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:    811-10221

 

 

ALLIANCEBERNSTEIN TRUST

(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)

Joseph J. Mantineo

AllianceBernstein L.P.

1345 Avenue of the Americas

New York, New York 10105

(Name and address of agent for service)

Registrant’s telephone number, including area code:    (800) 221-5672

Date of fiscal year end:    November 30, 2009

Date of reporting period:    May 31, 2009

 

 

 

ITEM 1. REPORTS TO STOCKHOLDERS.

 

2

SEMI-ANNUAL REPORT

 

 

AllianceBernstein Global Value Fund

 

 

LOGO

 

May 31, 2009

 

Semi-Annual Report

 

 

Investment Products Offered

  •  

Are Not FDIC Insured

  •  

May Lose Value

  •  

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® 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. (ABI) is the distributor of the AllianceBernstein family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager of the funds.

AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.

July 13, 2009

 

Semi-Annual Report

This report provides management’s discussion of fund performance for AllianceBernstein Global Value Fund (the “Fund”) for the semi-annual reporting period ended May 31, 2009.

Investment Objective and Policies

The Fund’s investment objective is long-term growth of capital. The Fund will invest primarily in a diversified portfolio of equity securities of established companies selected from more than 40 industries and from more than 40 developed and emerging market countries, including the United States. The Fund normally invests in companies in at least three countries, generally including the United States. Other such countries currently include the developed nations in Europe and the Far East, Canada, Australia and emerging market countries worldwide. The Fund invests in companies that are determined by AllianceBernstein L.P. (the “Adviser”) to be undervalued, using the fundamental value approach of the Adviser’s Bernstein unit (“Bernstein”). In selecting securities for the Fund’s portfolio, Bernstein uses its fundamental and quantitative research to identify companies whose long-term earnings power is not reflected in the current market price of their securities.

To hedge a portion of its currency risk, the Fund may from time to time invest in currency-related derivatives, including forward currency exchange contracts, futures, options on futures, swaps and options. Bernstein may also seek investment opportunities by

taking long or short positions in currencies through the use of currency-related derivatives.

The Fund may invest in depositary receipts, instruments of supranational entities denominated in the currency of any country, securities of multinational companies and “semi-governmental securities” and enter into forward commitments. The Fund may enter into derivatives transactions, such as options, futures, forwards and swap agreements.

Investment Results

The table on page 4 provides performance data for the Fund and its benchmark, the Morgan Stanley Capital International (MSCI) World Index, for the six- and 12-month periods ended May 31, 2009.

The Fund’s Class A shares without sales charges outperformed the benchmark for the six-month period ended May 31, 2009, buoyed by strong security selection, particularly in medical, capital equipment, technology and consumer staples. Sector selection was negative, largely because of the Fund’s overweight in the financial and telecommunication sectors. Nissan Motor and Renault were the largest individual contributors to relative performance. Japanese automaker Nissan climbed due to improved sentiment and expectations that it would gain market share in the US. A large equity stake in Nissan helped French automaker Renault, as did an increase in French car sales. The largest individual detractors were financial holdings Fifth Third and

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   1

 

Bank of America, which came under pressure on capital adequacy concerns amid the global credit crisis. The Fund does not employ leverage.

The Fund’s Class A shares without sales charges underperformed the benchmark for the 12-month period ended May 31, 2009. For the period, the Fund and the benchmark posted negative returns. The Fund’s underperformance was driven by weak security selection, most notably within financials. Sector selection also detracted from relative returns due to the Fund’s overweight of industrial commodity-related stocks and underweight of consumer staples.

Market Review and Investment Strategy

The MSCI World Index declined in January and February 2009 as fears

mounted that the economic contraction would be even worse than expected. The index rebounded sharply in the following three months, as improved sentiment about the global economic outlook caused the market’s extreme aversion to abate.

The extreme anxiety that gripped the markets since last autumn has eased since March 2009. Value stocks have been rebounding from very low levels that were reached as panicked investors fled risk, often indiscriminately. The value opportunity as the Fund’s Global Value Senior Investment Policy Team (the “Team”) measures it remains very attractive and remarkably diverse, spanning all sectors of the economy, not just financials and cyclicals deemed most vulnerable to financial and economic pressures.

 

2   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

HISTORICAL PERFORMANCE

An Important Note About the Value of Historical Performance

The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com.

The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund’s prospectus, which contains this and other information, visit our 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.

Benchmark Disclosure

The unmanaged Morgan Stanley Capital International (MSCI) World Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index is a market capitalization-weighted index that measures the performance of stock markets in 23 developed countries. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Fund.

The MSCI World Index values are calculated using net returns. Net returns approximate the minimum possible dividend reinvestment—the dividend is reinvested after deduction of withholding tax, applying the highest rate possible to non-resident individuals who do not benefit from double taxation treaties.

A Word About Risk

Value investing does not guarantee a profit or eliminate risk. Not all companies whose stocks are considered to be “value” stocks are able to turn their business around or successfully employ corrective strategies, which would result in stock prices that rise as initially expected. A substantial amount of the Fund’s assets may 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. Because the Fund may invest in emerging markets and in developing countries, an investment also has the risk that market changes or other factors affecting emerging markets and developing countries, including political instability and unpredictable economic conditions, may have significant effect on the Fund’s net asset value. Investment in the Fund includes risks not associated with funds that invest exclusively in US issues. Because the Fund will invest in foreign currency denominated securities, these fluctuations may be magnified by changes in foreign exchange rates. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the Fund’s prospectus.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   3

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

        

THE FUND VS. ITS BENCHMARK

PERIODS ENDED MAY 31, 2009

        
  6 Months      12 Months     

AllianceBernstein Global Value Fund

         

Class A

   11.38%      -46.77%  
 

Class B*

   10.89%      -47.22%  
 

Class C

   10.85%      -47.19%  
 

Advisor Class†

   11.46%      -46.64%  
 

Class R†

   11.21%      -46.88%  
 

Class K†

   11.28%      -46.75%  
 

Class I†

   11.65%      -46.52%  
 

MSCI World Index (net)

   10.26%      -34.83%  
 

*  Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. Please see Note A for additional information.

†  Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds.

        

 

See Historical Performance and Benchmark disclosures on previous page.

(Historical Performance continued on next page)

 

4   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2009   
     NAV Returns        SEC Returns  
       
Class A Shares        

1 Year

    -46.77 %       -49.03 % 

5 Years

    -2.57 %       -3.42 % 

Since Inception*

    -0.02 %       -0.55 % 
       
Class B Shares(a)        

1 Year

    -47.22 %       -49.34 % 

5 Years

    -3.29 %       -3.29 % 

Since Inception*

    -0.72 %       -0.72 % 
       
Class C Shares        

1 Year

    -47.19 %       -47.72 % 

5 Years

    -3.26 %       -3.26 % 

Since Inception*

    -0.73 %       -0.73 % 
       
Advisor Class Shares†        

1 Year

    -46.64 %       -46.64 % 

5 Years

    -2.27 %       -2.27 % 

Since Inception*

    0.25 %       0.25 % 
       
Class R Shares†        

1 Year

    -46.88 %       -46.88 % 

Since Inception*

    -7.47 %       -7.47 % 
       
Class K Shares†        

1 Year

    -46.75 %       -46.75 % 

Since Inception*

    -7.27 %       -7.27 % 
       
Class I Shares†        

1 Year

    -46.52 %       -46.52 % 

Since Inception*

    -6.89 %       -6.89 % 

The Fund’s current prospectus fee table shows the Fund’s total annual expense ratios as 1.60%, 2.42%, 2.34%, 1.30%, 1.75%, 1.52% and 1.12% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I, respectively.

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 3/1/05 for Class R, Class K and Class I shares.

 

(a)  

Assumes conversion of Class B shares into Class A shares after eight years.

 

†   These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   5

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)

AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2009)

  

  

                   SEC Returns  
            
Class A Shares             

1 Year

              -44.54 % 

5 Years

              -4.37 % 

Since Inception*

              -0.84 % 
            
Class B Shares(a)             

1 Year

              -44.78 % 

5 Years

              -4.22 % 

Since Inception*

              -1.01 % 
            
Class C Shares             

1 Year

              -43.03 % 

5 Years

              -4.19 % 

Since Inception*

              -1.01 % 
            
Advisor Class Shares†             

1 Year

              -41.90 % 

5 Years

              -3.23 % 

Since Inception*

              -0.05 % 
            
Class R Shares†             

1 Year

              -42.18 % 

Since Inception*

              -7.87 % 
            
Class K Shares†             

1 Year

              -41.99 % 

Since Inception*

              -7.64 % 
            
Class I Shares†             

1 Year

              -41.79 % 

Since Inception*

              -7.30 % 

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 3/1/05 for Class R, Class K and Class I shares.

 

(a)  

Assumes conversion of Class B shares into Class A shares after eight years.

 

†   Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

 

6   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Historical Performance

FUND EXPENSES

(unaudited)

 

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-l) 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
Account Value
December 1, 2008		    Ending
Account Value
May 31, 2009		    Expenses Paid
During Period*
     Actual    Hypothetical    Actual    Hypothetical**    Actual    Hypothetical
Class A    $   1,000    $   1,000    $   1,113.81    $   1,017.05    $     8.33    $     7.95
Class B    $ 1,000    $ 1,000    $ 1,108.86    $ 1,013.06    $ 12.51    $ 11.94
Class C    $ 1,000    $ 1,000    $ 1,108.53    $ 1,013.41    $ 12.14    $ 11.60
Advisor Class    $ 1,000    $ 1,000    $ 1,114.63    $ 1,018.55    $ 6.75    $ 6.44
Class R    $ 1,000    $ 1,000    $ 1,112.14    $ 1,016.21    $ 9.22    $ 8.80
Class K    $ 1,000    $ 1,000    $ 1,112.80    $ 1,017.35    $ 8.01    $ 7.64
Class I    $ 1,000    $ 1,000    $ 1,116.49    $ 1,019.35    $ 5.91    $ 5.64

 

*   Expenses are equal to the classes’ annualized expense ratios of 1.58%, 2.38%, 2.31%, 1.28%, 1.75%, 1.52% and 1.12%, respectively, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

 

**   Assumes 5% return before expenses.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   7

 

Fund Expenses

PORTFOLIO SUMMARY

May 31, 2009 (unaudited)

 

PORTFOLIO STATISTICS

Net Assets ($mil): $193.4

LOGO

LOGO

 

*   All data are as of May 31, 2009. The Fund’s sector and country breakdowns are expressed as a percentage of total investments and may vary over time. “Other” country weightings represent 1.1% or less in the following countries: Belgium, Brazil, China, Czech Republic, Finland, Norway, South Africa, Spain, Taiwan and Thailand.

Please Note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard and Poor’s. The fund components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the Broad Market. 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.

 

8   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Portfolio Summary

TEN LARGEST HOLDINGS*

May 31, 2009 (unaudited)

 

Company    U.S. $ Value      Percent of
Net Assets		  

Royal Dutch Shell PLC (Euronext Amsterdam) – Class A

    $ 4,940,014      2.6 % 

Pfizer, Inc.

      3,843,070      2.0   

Chevron Corp.

      3,546,845      1.8   

News Corp.

      3,516,807      1.8   

Merck & Co., Inc.

      3,422,678      1.8   

AT&T, Inc.

      3,356,566      1.7   

BNP Paribas SA

      3,166,899      1.7   

Vodafone Group PLC

      3,131,937      1.6   

Sanofi-Aventis

      3,048,306      1.6   

ConocoPhillips

      2,963,556      1.5   
   $   34,936,678      18.1 % 

 

*   Long-term investments.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   9

 

Ten Largest Holdings

 

PORTFOLIO OF INVESTMENTS

May 31, 2009 (unaudited)

 

Company    Shares   U.S. $ Value
 
    

COMMON STOCKS – 97.9%

     

Financials – 22.5%

     

Capital Markets – 4.4%

     

Credit Suisse Group AG

    46,000   $ 2,064,544

Deutsche Bank AG

    37,200     2,516,744

The Goldman Sachs Group, Inc.

    12,300     1,778,211

Morgan Stanley

    69,700     2,113,304
        
       8,472,803
        

Commercial Banks – 8.2%

     

Australia & New Zealand Banking Group Ltd.

    101,300     1,309,319

Barclays PLC

    472,800     2,297,324

BNP Paribas SA

    45,700     3,166,899

Credit Agricole SA

    139,853     2,065,871

HSBC Holdings PLC

    162,350     1,470,571

Intesa Sanpaolo SpA(a)

    275,900     986,200

Itau Unibanco Holding SA (ADR)

    16,100     258,405

KB Financial Group, Inc.(a)

    22,400     715,990

Lloyds Banking Group PLC

    870,471     958,620

Standard Bank Group Ltd.

    49,423     514,878

Sumitomo Mitsui Financial Group, Inc.

    56,500     2,188,390
        
       15,932,467
        

Diversified Financial Services – 1.5%

     

ING Group

    156,600     1,662,650

JP Morgan Chase & Co.

    32,100     1,184,490
        
       2,847,140
        

Insurance – 8.4%

     

Allianz SE

    26,200     2,600,671

Allstate Corp.

    52,600     1,353,398

Aviva PLC

    302,069     1,639,571

Fairfax Financial Holdings Ltd.

    6,100     1,575,803

Genworth Financial, Inc. – Class A

    90,800     537,536

Hartford Financial Services Group, Inc.

    18,100     259,554

Industrial Alliance Insurance and Financial Services, Inc.

    26,200     629,232

MetLife, Inc.

    72,400     2,280,600

Muenchener Rueckversicherungs AG (MunichRe)

    15,271     2,156,757

Sanlam Ltd.

    283,350     612,850

The Travelers Co., Inc.

    56,030     2,278,180

XL Capital Ltd. – Class A

    42,100     426,052
        
       16,350,204
        
       43,602,614
        

Energy – 17.1%

     

Oil, Gas & Consumable Fuels – 17.1%

     

Apache Corp.

    23,200     1,954,832

BP PLC

    255,100     2,108,743

Chevron Corp.

    53,200     3,546,845

China Petroleum & Chemical Corp. – Class H

    680,000     556,267

ConocoPhillips

    64,650     2,963,556

 

10   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Portfolio of Investments

 

Company    Shares   U.S. $ Value
 
    

Devon Energy Corp.

    20,600   $ 1,302,744

ENI SpA

    110,350     2,677,448

Exxon Mobil Corp.

    25,400     1,761,490

LUKOIL (Sponsored ADR)

    34,100     1,807,300

Nexen, Inc.

    38,050     932,299

Petro-Canada

    58,600     2,549,576

PTT PCL

    88,500     567,473

Royal Dutch Shell PLC (Euronext Amsterdam) – Class A

    182,562     4,940,014

StatoilHydro ASA

    96,250     2,032,751

Thai Oil PCL

    633,200     752,052

Total SA

    43,900     2,532,644
        
       32,986,034
        

Consumer Discretionary – 11.0%

     

Automobiles – 2.6%

     

Nissan Motor Co. Ltd.

    403,300     2,432,709

Renault SA(a)

    68,100     2,641,893
        
       5,074,602
        

Hotels, Restaurants & Leisure – 0.3%

     

TUI Travel PLC

    124,900     503,488
        

Household Durables – 1.0%

     

Sharp Corp.

    163,000     1,843,707
        

Media – 5.4%

     

CBS Corp. – Class B

    235,800     1,740,204

Lagardere SCA

    30,713     1,031,397

News Corp. – Class B

    220,500     2,476,215

News Corp. – Class A

    106,400     1,040,592

Time Warner Cable, Inc. – Class A

    21,770     670,298

Time Warner, Inc.

    86,733     2,031,287

Viacom, Inc. – Class B(a)

    68,800     1,525,296
        
       10,515,289
        

Multiline Retail – 1.1%

     

JC Penney Co., Inc.

    42,400     1,106,216

Macy’s, Inc.

    81,700     954,256
        
       2,060,472
        

Specialty Retail – 0.6%

     

Home Depot, Inc.

    38,200     884,712

Lowe’s Cos, Inc.

    18,300     347,883
        
       1,232,595
        
       21,230,153
        

Health Care – 10.4%

     

Health Care Providers & Services – 0.9%

     

Cardinal Health, Inc.

    47,000     1,680,250
        

Pharmaceuticals – 9.5%

     

Bayer AG

    24,100     1,378,060

Bristol-Myers Squibb Co.

    51,000     1,015,920

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   11

 

Portfolio of Investments

 

Company    Shares   U.S. $ Value
 
    

Eli Lilly & Co.

    26,300   $ 909,191

GlaxoSmithKline PLC

    140,000     2,367,556

Merck & Co., Inc.

    124,100     3,422,678

Novartis AG

    15,480     619,450

Pfizer, Inc.

    253,000     3,843,070

Sanofi-Aventis

    47,761     3,048,306

Schering-Plough Corp.

    71,700     1,749,480
        
       18,353,711
        
       20,033,961
        

Consumer Staples – 8.7%

     

Beverages – 1.1%

     

Coca-Cola Enterprises, Inc.

    36,300     604,758

Pepsi Bottling Group, Inc.

    45,500     1,495,130
        
       2,099,888
        

Food & Staples Retailing – 2.4%

     

Delhaize Group

    6,600     486,606

Koninklijke Ahold NV

    157,800     1,922,874

The Kroger Co.

    38,000     866,400

Safeway, Inc.

    66,900     1,355,394
        
       4,631,274
        

Food Products – 2.7%

     

Archer-Daniels-Midland Co.

    92,200     2,537,344

Associated British Foods PLC

    135,700     1,615,460

Bunge Ltd.

    17,300     1,094,571
        
       5,247,375
        

Tobacco – 2.5%

     

Altria Group, Inc.

    148,550     2,538,719

Philip Morris International, Inc.

    55,850     2,381,444
        
       4,920,163
        
       16,898,700
        

Telecommunication Services – 8.0%

     

Diversified Telecommunication Services – 5.6%

     

AT&T, Inc.

    135,400     3,356,566

BCE, Inc.

    79,200     1,809,975

BT Group PLC

    157,070     222,464

Deutsche Telekom AG

    80,300     924,883

France Telecom SA

    73,500     1,792,394

Telecom Italia SpA (ordinary shares)

    884,900     1,253,607

Telecom Italia SpA (savings shares)

    565,000     579,859

Telefonica SA

    45,500     985,637
        
       10,925,385
        

Wireless Telecommunication Services – 2.4%

     

Sprint Nextel Corp.(a)

    275,500     1,418,825

Vodafone Group PLC

    1,664,812     3,131,937
        
       4,550,762
        
       15,476,147
        

 

12   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Portfolio of Investments

 

Company    Shares   U.S. $ Value
 
    

Information Technology – 8.0%

     

Communications Equipment – 3.8%

     

Corning, Inc.

    75,400   $ 1,108,380

Motorola, Inc.

    436,300     2,643,978

Nokia OYJ

    109,700     1,683,517

Telefonaktiebolaget LM Ericsson – Class B

    209,000     1,936,469
        
       7,372,344
        

Computers & Peripherals – 2.1%

     

Fujitsu Ltd.

    524,000     2,716,040

Western Digital Corp.(a)

    53,500     1,329,475
        
       4,045,515
        

Electronic Equipment, Instruments & Components – 0.7%

     

AU Optronics Corp.

    953,000     989,976

Hitachi Ltd.

    121,000     402,441
        
       1,392,417
        

Semiconductors & Semiconductor Equipment – 0.6%

     

Samsung Electronics Co. Ltd.

    1,890     845,146

Siliconware Precision Industries Co.

    192,595     253,918

United Microelectronics Corp.

    142,044     57,738
        
       1,156,802
        

Software – 0.8%

     

Symantec Corp.(a)

    94,500     1,473,255
        
       15,440,333
        

Materials – 5.6%

     

Chemicals – 1.9%

     

BASF SE

    57,300     2,430,054

Mitsubishi Chemical Holdings Corp.

    271,500     1,260,965
        
       3,691,019
        

Metals & Mining – 2.3%

     

ArcelorMittal (Euronext Amsterdam)

    59,322     1,976,560

Hyundai Steel Co.

    12,990     628,690

MMC Norilsk Nickel (ADR)(a)

    102,508     1,168,591

Usinas Siderurgicas de Minas Gerais SA (preference shares) – Class A

    32,775     649,636
        
       4,423,477
        

Paper & Forest Products – 1.4%

     

Svenska Cellulosa AB – Class B(a)

    226,700     2,630,119
        
       10,744,615
        

Utilities – 3.4%

     

Electric Utilities – 1.8%

     

CEZ

    21,000     956,239

E.ON AG

    73,800     2,619,574
        
       3,575,813
        

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   13

 

Portfolio of Investments

 

Company    Shares   U.S. $ Value
 
    

Multi-Utilities – 1.6%

     

Centrica PLC

    508,200   $ 2,029,386

RWE AG

    12,090     1,006,613
        
       3,035,999
        
       6,611,812
        

Industrials – 3.2%

     

Air Freight & Logistics – 0.2%

     

Deutsche Post AG

    34,820     481,060
        

Airlines – 0.9%

     

Deutsche Lufthansa AG

    76,100     1,053,684

Westjet Airlines Ltd.(a)

    56,700     616,988
        
       1,670,672
        

Industrial Conglomerates – 1.0%

     

Koninklijke Philips Electronics NV

    100,390     1,897,920
        

Trading Companies & Distributors – 0.7%

     

Finning International, Inc.

    15,500     210,263

Mitsubishi Corp.

    58,500     1,114,770
        
       1,325,033
        

Transportation Infrastructure – 0.4%

     

Macquarie Infrastructure Group

    784,100     883,719
        
       6,258,404
        

Total Common Stocks
(cost $245,222,868)

        189,282,773
        
    

RIGHTS – 0.1%

     

Financials – 0.1%

     

Commercial Banks – 0.1%

     

Lloyds Banking Group PLC(a)

    540,824     258,481
        

Diversified Financial Services – 0.0%

     

Fortis(a)

    130,762     0
        

Total Rights
(cost $386,259)

        258,481
        
    

SHORT-TERM INVESTMENTS – 1.9%

     

Investment Companies – 1.9%

     

AllianceBernstein Fixed-Income Shares, Inc. – Government STIF Portfolio(b)
(cost $3,673,416)

    3,673,416     3,673,416
        

Total Investments – 99.9%
(cost $249,282,543)

        193,214,670

Other assets less liabilities – 0.1%

        171,549
        

Net Assets – 100.0%

      $ 193,386,219
        

 

14   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Portfolio of Investments

 

FUTURES CONTRACTS (see Note D)

 

Type   Number of
Contracts		   Expiration
Month		  

Original

Value

  

Value at
May 31,

2009

   Unrealized
Appreciation/
(Depreciation)

Purchased Contracts

          

FTSE 100 Index Futures

   24   June 2009   $     1,462,178   $     1,703,128   $     240,950

FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)

 

    

Contract
Amount

(000)

   U.S. $
Value on
Origination
Date		   U.S. $
Value at
May 31,
2009		   Unrealized
Appreciation/
(Depreciation)		  

Buy Contracts:

        

Australian Dollar settling 6/15/09

   5,673   $ 3,654,263   $ 4,539,175   $ 884,912   

Australian Dollar settling 6/15/09

   4,034     2,822,670     3,227,751     405,081   

Australian Dollar settling 8/17/09

   10,180     7,159,289     8,108,311     949,022   

Australian Dollar settling 8/17/09

   14,263     11,033,857     11,360,397     326,540   

British Pound settling 6/15/09

   941     1,348,321     1,520,873     172,552   

British Pound settling 6/15/09

   10,014     15,671,910     16,184,935     513,025   

Canadian Dollar settling 6/15/09

   625     532,187     572,525     40,338   

Canadian Dollar settling 6/15/09

   7,998     6,997,131     7,326,490     329,359   

Euro settling 6/15/09

   9,973         13,513,614         14,097,483          583,869   

Euro settling 6/15/09

   442     585,266     624,796     39,530   

Euro settling 6/15/09

   1,658     2,147,276     2,343,691     196,415   

Euro settling 6/15/09

   6,351     8,748,629     8,977,551     228,922   

Japanese Yen settling 6/15/09

   1,633,263     16,657,450     17,144,370     486,920   

Japanese Yen settling 6/15/09

   93,578     952,254     982,289     30,035   

Japanese Yen settling 8/17/09

   138,484     1,394,925     1,454,680     59,755   

Japanese Yen settling 8/17/09

   1,769,881     18,582,403     18,591,396     8,993   

New Zealand Dollar settling 6/15/09

   7,771     3,902,208     4,974,523     1,072,315   

New Zealand Dollar settling 8/17/09

   9,834     5,962,944     6,271,534     308,590   

Norwegian Krone settling 6/15/09

   49,251     7,190,767     7,810,463     619,696   

Swedish Krona settling 6/15/09

   6,277     685,843     829,483     143,640   

Swedish Krona settling 6/15/09

   26,163     3,464,931     3,457,349     (7,582 ) 

Swiss Franc settling 6/15/09

   630     554,953     590,077     35,124   

Swiss Franc settling 6/15/09

   921     787,550     862,638     75,088   

Swiss Franc settling 6/15/09

   3,060     2,782,653     2,866,092     83,439   

Sale Contracts:

        

Australian Dollar settling 6/15/09

   9,707     7,543,018     7,766,925     (223,907 ) 

British Pound settling 6/15/09

   1,820     2,528,035     2,941,540     (413,505 ) 

British Pound settling 6/15/09

   8,480     12,306,176     13,705,637     (1,399,461 ) 

British Pound settling 6/15/09

   655     941,916     1,058,631     (116,715 ) 

British Pound settling 8/17/09

   731     1,093,502     1,181,165     (87,663 ) 

British Pound settling 8/17/09

   8,659     13,545,533     13,991,397     (445,864 ) 

Canadian Dollar settling 6/15/09

   6,648     5,213,709     6,089,835     (876,126 ) 

Canadian Dollar settling 6/15/09

   838     681,806     767,642     (85,836 ) 

Canadian Dollar settling 6/15/09

   1,137     897,339     1,041,538     (144,199 ) 

Canadian Dollar settling 8/17/09

   7,083     6,198,477     6,490,949     (292,472 ) 

Euro settling 6/15/09

   13,059     16,640,300     18,459,745     (1,819,445 ) 

Euro settling 6/15/09

   4,344     5,557,714     6,140,526     (582,812 ) 

Euro settling 6/15/09

   1,021     1,328,505     1,443,250     (114,745 ) 

Euro settling 8/17/09

   10,860     14,949,333     15,343,348     (394,015 ) 

Japanese Yen settling 6/15/09

   402,346     4,089,505     4,223,428     (133,923 ) 

Japanese Yen settling 6/15/09

   1,324,495     13,897,435     13,903,231     (5,796 ) 

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   15

 

Portfolio of Investments

 

    

Contract
Amount

(000)

   U.S. $
Value on
Origination
Date		   U.S. $
Value at
May 31,
2009		   Unrealized
Appreciation/
(Depreciation)		  

New Zealand Dollar settling 6/15/09

   6,116   $ 3,519,574   $ 3,915,092   $ (395,518 ) 

New Zealand Dollar settling 6/15/09

   1,655     916,125     1,059,430     (143,305 ) 

Norwegian Krone settling 6/15/09

   49,251     7,236,409     7,810,463     (574,054 ) 

Swedish Krona settling 6/15/09

   32,440     3,702,605     4,286,832     (584,227 ) 

Swedish Krona settling 8/17/09

   30,295     4,011,254     4,002,734              8,520   

Swiss Franc settling 6/15/09

   3,535     3,076,802     3,310,991     (234,189 ) 

Swiss Franc settling 6/15/09

   1,076     911,710     1,007,815     (96,105)   

Swiss Franc settling 8/17/09

   3,068         2,791,629         2,875,704     (84,075)   

 

 

 

(a)   Non-income producing security.

 

(b)   Investment in affiliated money market mutual fund.

Glossary:

ADR – American Depositary Receipt

See notes to financial statements.

 

16   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Portfolio of Investments

STATEMENT OF ASSETS & LIABILITIES

May 31, 2009 (unaudited)

 

Assets   

Investments in securities, at value

   

Unaffiliated issuers (cost $245,609,127)

    $ 189,541,254   

Affiliated issuers (cost $3,673,416)

      3,673,416   

Cash

      157,125 (a) 

Foreign currencies, at value (cost $1,958,030)

      1,999,129   

Unrealized appreciation of forward currency exchange contracts

      7,601,680   

Dividends receivable

      1,046,953   

Receivable for investment securities sold and foreign currency transactions

      831,907   

Receivable for shares of beneficial interest sold

      341,694   

Receivable for variation margin on futures contracts

      13,256   
        

Total assets

      205,206,414   
        
Liabilities   

Unrealized depreciation of forward currency exchange contracts

      9,255,539   

Payable for investment securities purchased

      1,920,092   

Payable for shares of beneficial interest redeemed

      286,712   

Advisory fee payable

      119,317   

Distribution fee payable

      27,889   

Administrative fee payable

      20,996   

Transfer Agent fee payable

      11,533   

Accrued expenses and other liabilities

      178,117   
        

Total liabilities

      11,820,195   
        

Net Assets

    $ 193,386,219   
        
Composition of Net Assets   

Paid-in capital

    $ 349,714,323   

Undistributed net investment income

      21,511,541   

Accumulated net realized loss on investment
and foreign currency transactions

      (120,414,459 ) 

Net unrealized depreciation on investments
and foreign currency denominated assets and liabilities

      (57,425,186 ) 
        
   $     193,386,219   
        

Net Asset Value Per Share—unlimited shares authorized, without par value

 

Class   Net Assets      Shares
Outstanding		      Net Asset
Value		  
A   $   59,099,537      8,050,299      $   7.34 * 
   
B   $ 5,709,950      800,402      $ 7.13   
   
C   $ 8,069,600      1,127,952      $ 7.15   
   
Advisor   $ 84,408,055      11,419,017      $ 7.39   
   
R   $ 3,593,484      496,184      $ 7.24   
   
K   $ 1,115,957      152,799      $ 7.30   
   
I   $ 31,389,636      4,254,251      $ 7.38   
   

 

(a)   An amount of $157,125 has been segregated to collateralize margin requirements for open futures contracts outstanding at May 31, 2009.

 

*   The maximum offering price per share for Class A shares was $7.67 which reflects a sales charge of 4.25%.

See notes to financial statements.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   17

 

Statement of Assets & Liabilities

STATEMENT OF OPERATIONS

Six Months Ended May 31, 2009 (unaudited)

 

Investment Income     

Dividends

     

Unaffiliated issuers (net of foreign taxes withheld of $353,522)

    $     3,970,366     

Affiliated issuers

      20,046     

Interest

      1,481      $ 3,991,893   
          
Expenses     

Advisory fee (see Note B)

      711,252     

Distribution fee—Class A

      83,410     

Distribution fee—Class B

      28,273     

Distribution fee—Class C

      39,452     

Distribution fee—Class R

      8,011     

Distribution fee—Class K

      942     

Transfer agency—Class A

      54,899     

Transfer agency—Class B

      9,032     

Transfer agency—Class C

      9,477     

Transfer agency—Advisor Class

      73,620     

Transfer agency—Class R

      2,418     

Transfer agency—Class K

      649     

Transfer agency—Class I

      4,131     

Custodian

      136,338     

Registration fees

      52,200     

Administrative

      41,496     

Audit

      28,423     

Trustees’ fees

      24,286     

Legal

      20,904     

Printing

      18,080     

Miscellaneous

      9,778     
          

Total expenses

      1,357,071     

Less: expenses waived and reimbursed by the Adviser (see Note B)

      (11,991 )   
          

Net expenses

        1,345,080   
          

Net investment income

        2,646,813   
          
Realized and Unrealized Gain (Loss) on Investment and Foreign Currency
Transactions		     

Net realized loss on:

     

Investment transactions

        (83,182,197 ) 

Futures contracts

        (440,296 ) 

Foreign currency transactions

        (22,658,245 ) 

Net change in unrealized appreciation/
depreciation of:

     

Investments

            101,997,294 (a) 

Futures contracts

        443,143   

Foreign currency denominated assets and liabilities

        17,378,267   
          

Net gain on investment and foreign currency transactions

        13,537,966   
          

Net Increase in Net Assets from Operations

      $ 16,184,779   
          

 

(a)   Net of decrease in accrued foreign capital gains taxes of $24,585.

See notes to financial statements.

 

18   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Statement of Operations

STATEMENT OF CHANGES IN NET ASSETS

 

    Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		  
Increase (Decrease) in Net Assets from Operations    

Net investment income

   $ 2,646,813      $ 7,827,325   

Net realized loss on investment and foreign currency transactions

     (106,280,738 )      (14,205,021 ) 

Net change in unrealized
appreciation/depreciation of investments and foreign currency denominated assets and liabilities

     119,818,704        (248,199,026 ) 
               

Net increase (decrease) in net assets from operations

     16,184,779        (254,576,722 ) 
Dividends and Distributions
to Shareholders from		    

Net investment income

    

Class A

     – 0  –      (1,153,480 ) 

Class B

     – 0  –      (136,168 ) 

Class C

     – 0  –      (144,317 ) 

Advisor Class

     – 0  –      (2,846,515 ) 

Class R

     – 0  –      (89,330 ) 

Class K

     – 0  –      (14,983 ) 

Class I

     – 0  –      (926,685 ) 

Net realized gain on investment transactions

    

Class A

     – 0  –      (7,918,314 ) 

Class B

     – 0  –      (1,987,743 ) 

Class C

     – 0  –      (2,106,693 ) 

Advisor Class

     – 0  –      (14,121,380 ) 

Class R

     – 0  –      (613,239 ) 

Class K

     – 0  –      (89,755 ) 

Class I

     – 0  –      (4,407,826 ) 
Transactions in Shares of Beneficial Interest    

Net increase (decrease)

     (37,336,983 )      11,385,979   
               

Total decrease

     (21,152,204 )      (279,747,171 ) 
Net Assets    

Beginning of period

     214,538,423        494,285,594   
               

End of period (including undistributed net investment income of $21,511,541 and $18,864,728, respectively)

   $     193,386,219      $     214,538,423   
               

See notes to financial statements.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   19

 

Statement of Changes in Net Assets

NOTES TO FINANCIAL STATEMENTS

May 31, 2009 (unaudited)

 

NOTE A

Significant Accounting Policies

AllianceBernstein Trust (the “Trust”) was organized as a Massachusetts business trust on December 12, 2000 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of the following four funds: the AllianceBernstein Global Value Fund, the AllianceBernstein International Value Fund, the AllianceBernstein Small/Mid Cap Value Fund and the AllianceBernstein Value Fund (the “Funds”). Each Fund is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the AllianceBernstein Global Value Fund (the “Fund”). The Fund offers Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Effective January 31, 2009, sales of Class B shares of the Fund to new investors were suspended. Class B shares will only be issued (i) upon the exchange of Class B shares from another AllianceBernstein Fund, (ii) for purposes of dividend reinvestment, (iii) through the Fund’s Automatic Investment Program (the “Program”) for accounts that established the Program prior to January 31, 2009, and (iv) for purchases of additional shares by Class B shareholders as of January 31, 2009. The ability to establish a new Automatic Investment Program for accounts containing Class B shares was suspended as of January 31, 2009. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, 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

 

20   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

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 Trustees.

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 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. (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. Investments in money market funds are valued at their net asset value each day.

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 (see Note A.2).

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   21

 

Notes to Financial Statements

 

2. Fair Value Measurements

The Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective December 1, 2007. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

 

  •  

Level 1—quoted prices in active markets for identical investments

  •  

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

  •  

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of May 31, 2009:

 

Level

    Investments in
Securities		      Other
Financial
Instruments*		  

Level 1

    $ 87,649,411       $         240,950   

Level 2

          104,245,734 +       (1,653,859 ) 

Level 3

      1,319,525         – 0  – 
                 

Total

    $ 193,214,670       $ (1,412,909 ) 
                 

 

*   Other financial instruments are derivative instruments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

 

+   The earlier close of the foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred between the close of the foreign markets and the time at which the Fund values its securities which may materially affect the value of securities trading in such markets. 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. Accordingly, a significant portion of the Fund’s investments are categorized as Level 2 investments.

 

22   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

 

      Investments in
Securities		  

Balance as of 11/30/08

    $ 713,443   

Accrued discounts/premiums

      – 0  – 

Realized gain (loss)

      – 0  – 

Change in unrealized appreciation/depreciation

      606,082   

Net purchases (sales)

      – 0  – 

Net transfers in and/or out of Level 3

      – 0  – 
        

Balance as of 5/31/09

    $     1,319,525   
        

Net change in unrealized appreciation/depreciation from investments held as of 5/31/09

    $ 606,082 * 
        

 

*   The unrealized appreciation/depreciation is included in net change in unrealized appreciation/depreciation of investments and other financial instruments in the accompanying statement of operations.

3. 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 investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities.

4. 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.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   23

 

Notes to Financial Statements

 

In accordance with FASB Interpretation No. 48, “Accounting for Uncertainties in Income Taxes” (“FIN 48”), management has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements.

5. 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 the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income.

6. 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. Expenses of the Trust are charged to each Fund in proportion to each Fund’s respective net assets. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.

7. Dividends and Distributions

Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification.

8. Recent Accounting Pronouncements

During the period ended May 31, 2009, the Fund adopted FASB Statement of Financial Accounting Standards No. 161 (“FAS 161”), “Disclosures about Derivative Instruments and Hedging Activities.” FAS 161 requires enhanced disclosure about an entity’s derivative and hedging activities including qualitative disclosures about the objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements (see Note D.1).

On April 9, 2009, FASB issued FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with FAS 157, when the volume and level of activity for

 

24   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP 157-4 and believes the adoption of FSP 157-4 will have no material impact on the Fund’s financial statements.

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. The Adviser had agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis to 1.50%, 2.20%, 2.20%, 1.20%, 1.70%, 1.45% and 1.20% of the daily average net assets for the Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively (the “Expense Caps”). The Expense Caps expired on January 1, 2009. For the six months ended May 31, 2009, such reimbursement amounted to $11,991.

Pursuant to the investment advisory agreement, the Fund paid $41,496 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the six months ended May 31, 2009.

The Fund compensates AllianceBernstein Investor Services, Inc. (“ABIS”), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $64,674 for the six months ended May 31, 2009.

AllianceBernstein Investments, 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 $511 from the sale of Class A shares and received $260, $7,157 and $513 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 May 31, 2009.

The Fund may invest in the AllianceBernstein Fixed-Income Shares, Inc. – Government STIF Portfolio, an open-end management investment company managed by the Adviser. The Government STIF Portfolio is offered as a cash management option to mutual funds and other institutional accounts of the Adviser, and is not available for direct purchase by members of the public. The Government STIF Portfolio pays no investment management fees but does bear

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   25

 

Notes to Financial Statements

 

its own expenses. A summary of the Fund’s transactions in shares of the Government STIF Portfolio for the six months ended May 31, 2009 is as follows:

 

Market Value

November 30, 2008

(000)

   Purchases
at Cost
(000)		   Sales
Proceeds
(000)		   Dividend
Income
(000)		   Market Value
May 31, 2009
(000)
$    21,095   $     52,122   $     69,544   $     20   $     3,673

Brokerage commissions paid on investment transactions for the six months ended May 31, 2009 amounted to $92,195, of which $0 and $0, respectively, was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser.

NOTE C

Distribution Services Agreement

The Fund has adopted a Distribution Services Agreement (the “Agreement”) pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Fund’s average daily net assets attributable to Class A shares, 1% of the Fund’s average daily net assets attributable to both Class B and Class C shares, .50% of the Fund’s average daily net assets attributable to Class R shares and .25% of the Fund’s average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. The fees are accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amounts of $148,663, $456,484, $122,476 and $10,081 for Class B, Class C, Class R and Class K shares, respectively. While such costs may be recovered from the Fund in future periods so long as the Agreement is in effect, the rate of the distribution and servicing fees payable under the Agreement may not be increased without a shareholder vote. 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 May 31, 2009 were as follows:

 

     Purchases     Sales  

Investment securities (excluding
U.S. government securities)

    $     37,569,257      $     72,402,578   

U.S. government securities

      – 0  –      – 0  – 

 

26   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

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 futures and foreign currency transactions) are as follows:

 

Gross unrealized appreciation

    $      11,220,310   

Gross unrealized depreciation

      (67,288,183 ) 
        

Net unrealized depreciation

    $ (56,067,873 ) 
        

1. Derivative Financial Instruments

The Fund may use derivatives to earn income and enhance returns, to hedge or adjust the risk profile of its portfolio, to replace more traditional direct investments, or to obtain exposure to otherwise inaccessible markets. The Fund may also use derivatives for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.

The principal types of derivatives utilized by the Fund, as well as the methods in which they may be used are:

 

  •  

Futures Contracts

The Fund may buy or sell futures contracts for the purpose of hedging its portfolio against adverse effects of anticipated movements in the market. The Fund bears the market risk that arises from changes in the value of these instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. The Fund may also purchase or sell futures contracts for foreign currencies or options thereon for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.

At the time the Fund enters into a futures contract, the Fund deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. The credit/counterparty risk for futures contracts is generally less than privately negotiated futures contracts, since the clearinghouse, which is the issuer or counterparty to each exchange-traded future, provides a guarantee of performance. This guarantee is supported by a daily payment system (i.e., margin requirements). When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   27

 

Notes to Financial Statements

 

  •  

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 non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions.”

A forward currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Fund. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars reflects the total exposure the Fund has in that particular currency contract.

At May 31, 2009, the Fund had entered into the following derivatives (not designated as hedging instruments under FAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”):

 

   

Asset Derivatives

    

Liability Derivatives

Derivatives Not
Accounted
for as Hedging
Instruments
under
Statement 133

  

Statement of
Assets and
Liabilities
Location

   Fair Value    

Statement of
Assets and
Liabilities
Location

   Fair Value

Foreign exchange contracts

  

Unrealized appreciation of forward currency exchange contracts

  

$

7,601,680

  

  

Unrealized depreciation of forward currency exchange contracts

  

$

9,255,539

Equity contracts

   Receivable for variation margin on futures contracts     240,950 *     
                 

Total

     $     7,842,630        $     9,255,539
                 

 

*   Includes cumulative appreciation/(depreciation) of futures contracts as reported in portfolio of investments. Only variation margin received at period end is reported within the statement of assets & liabilities.

 

28   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

The effect of derivative instruments on the Statement of Operations for the six months ended May 31, 2009:

 

Derivatives Not
Accounted for as
Hedging Instruments
under Statement 133

   

Location of Gain
or (Loss) on
Derivatives

   Realized
Gain or
(Loss) on
Derivatives 		    Change in
Unrealized
Appreciation or
(Depreciation)

Foreign exchange contracts

   

Net realized gain (loss) on foreign currency transactions; change in unrealized appreciation/(depreciation) of foreign currency denominated assets and liabilities

   

$

(22,739,935

) 

  

$

17,210,869

Equity contracts

    Net realized gain (loss) on futures contracts; change in unrealized appreciation (depreciation) of futures contracts      (440,296 )      443,143
                 

Total

       $ (23,180,231)      $     17,654,012
                 

2. Currency Transactions

The Fund may invest in non-U.S. Dollar securities on a currency hedged or unhedged basis. The Fund may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and options. The Fund may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Fund and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Fund may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   29

 

Notes to Financial Statements

 

NOTE E

Shares of Beneficial Interest

Transactions in shares of beneficial interest for each class were as follows:

 

            
     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
        
Class A             

Shares sold

    1,409,462      5,644,721        $ 8,711,533      $ 68,050,283     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    603,561          – 0  –      8,636,958     
     

Shares converted from Class B

    70,524      251,061          446,406        3,066,004     
     

Shares redeemed

    (2,644,388 )    (8,568,137 )        (16,641,365 )      (121,688,885 )   
     

Net decrease

    (1,164,402 )    (2,068,794 )      $ (7,483,426 )    $ (41,935,640 )   
     
 
Class B             

Shares sold

    50,667      95,603        $ 312,229      $ 1,146,388     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    133,768          – 0  –      1,880,785     
     

Shares converted to Class A

    (72,446 )    (256,248 )        (446,406 )      (3,066,004 )   
     

Shares redeemed

    (204,010 )    (523,006 )        (1,222,162 )      (6,077,961 )   
     

Net decrease

    (225,789 )    (549,883 )      $ (1,356,339 )    $ (6,116,792 )   
     
 
Class C             

Shares sold

    264,212      251,530        $ 1,675,470      $ 2,729,617     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    151,368          – 0  –      2,132,770     
     

Shares redeemed

    (506,770 )    (705,363 )        (3,042,915 )      (8,072,586 )   
     

Net decrease

    (242,558 )    (302,465 )      $ (1,367,445 )    $ (3,210,199 )   
     
 
Advisor Class             

Shares sold

    2,767,904      3,491,173        $ 17,630,494      $ 41,583,560     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    1,177,708          – 0  –      16,888,339     
     

Shares redeemed

    (3,791,129 )    (4,195,175 )        (23,415,234 )      (52,155,711 )   
     

Net increase (decrease)

    (1,023,225 )    473,706        $ (5,784,740 )    $ 6,316,188     
     

 

30   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

            
     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
        
Class R             

Shares sold

    106,951      190,199        $ 656,304      $ 2,330,179     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    49,616          – 0  –      702,563     
     

Shares redeemed

    (160,568 )    (159,667 )        (1,013,116 )      (1,747,555 )   
     

Net increase (decrease)

    (53,617 )    80,148        $ (356,812 )    $ 1,285,187     
     
 
Class K             

Shares sold

    79,461      42,178        $ 512,266      $ 513,737     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    7,274          – 0  –      103,582     
     

Shares redeemed

    (18,044 )    (28,041 )        (107,129 )      (295,555 )   
     

Net increase

    61,417      21,411        $ 405,137      $ 321,764     
     
 
Class I             

Shares sold

    16,533      4,070,525        $ 101,350      $ 50,322,324     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    373,307          – 0  –      5,334,554     
     

Shares redeemed

    (3,591,330 )    (85,907 )        (21,494,708 )      (931,407 )   
     

Net increase (decrease)

    (3,574,797 )    4,357,925        $ (21,393,358 )    $ 54,725,471     
     

NOTE F

Risks Involved in Investing in the Fund

Foreign Securities Risk—Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of 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.

Currency Risk—This is the risk that changes in foreign currency exchange rates may negatively affect the value of the Fund’s investments or reduce the returns of the Fund. For example, the value of the Fund’s investments in foreign currency-denominated securities or currencies may decrease if the U.S. Dollar is strong (i.e., gaining value relative to other currencies) and other currencies are weak (i.e., losing value relative to the U.S. Dollar). Currency markets are

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   31

 

Notes to Financial Statements

 

generally not as regulated as securities markets. Independent of the Fund’s investments denominated in foreign currencies, the Fund’s positions in various foreign currencies may cause the Fund to experience investment losses due to the changes in exchange rates and interest rates.

Derivatives Risk—The Fund may invest in derivatives such as forwards, options, futures and swaps. These investments may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Fund, and subject to counterparty risk to a greater degree than more traditional investments.

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”) intended to provide short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended May 31, 2009. Effective July 16, 2009, the Facility will be reduced to $140 million.

NOTE H

Distributions to Shareholders

The tax character of distributions to be paid for the year ending November 30, 2009 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended November 30, 2008 and November 30, 2007 were as follows:

 

     2008    2007

Distributions paid from:

      

Ordinary income

    $     11,507,666    $ 8,053,447

Long-term capital gains

      25,048,762      28,792,942
             

Total taxable distributions

      36,556,428      36,846,389
             

Total distributions paid

    $ 36,556,428    $     36,846,389
             

As of November 30, 2008, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Accumulated capital and other losses

    $ (14,232,223 )(a) 

Unrealized appreciation/(depreciation)

      (158,280,660 )(b) 
        

Total accumulated earnings/(deficit)

    $     (172,512,883 ) 
        

 

(a)  

On November 30, 2008, the Fund had a net capital loss carryforward for federal income tax purposes of $14,232,223 of which $14,232,223 expires in the year 2016. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed.

 

32   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

(b)  

The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales, and the realization for tax purposes of gains/losses on certain derivative instruments.

NOTE I

Legal Proceedings

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 (“AllianceBernstein defendants”), and certain other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the AllianceBernstein 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.

Following 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. 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 Order of the SEC dated December 18, 2003 as amended and restated January 15, 2004 (“SEC Order”) and the New York State Attorney General Assurance of Discontinuance dated September 1, 2004 (“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 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 settlement amount ($30 million), which the Adviser previously accrued and disclosed, has been disbursed. The derivative claims brought on behalf of Alliance Holding, in which plaintiffs seek an unspecified amount of damages, remain pending.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   33

 

Notes to Financial Statements

 

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.

 

34   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class A  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  6.59      $  16.19      $  16.72      $  13.87      $  12.61      $  10.52   
     

Income From Investment Operations

            

Net investment income(a)

   .09 (b)    .23      .23      .21      .15 (b)    .11 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   .66      (8.37 )    .89      3.30      1.68      2.09   
     

Net increase (decrease) in net asset value from operations

   .75      (8.14 )    1.12      3.51      1.83      2.20   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.19 )    (.27 )    (.14 )    (.16 )    (.11 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (1.27 )    (1.38 )    (.52 )    (.41 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.46 )    (1.65 )    (.66 )    (.57 )    (.11 ) 
     

Net asset value, end of period

   $  7.34      $  6.59      $  16.19      $  16.72      $  13.87      $  12.61   
     

Total Return

            

Total investment return based on net asset value(d)

   11.38 %    (55.16 )%*    7.08  %    26.37  %    15.09  %    21.09  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $59,099      $60,737      $182,644      $67,102      $34,632      $23,536   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   1.58 %(e)    1.40  %    1.30  %(f)    1.33  %(f)    1.45  %    1.41  % 

Expenses, before waivers/reimbursements

   1.60 %(e)    1.40  %    1.30  %(f)    1.33  %(f)    1.46  %    1.65  % 

Net investment income

   2.74 %(b)(e)    2.09  %    1.35  %(f)    1.39  %(f)    1.17  %(b)    .97  %(b)(c) 

Portfolio turnover rate

   20 %    54  %    25  %    29  %    25  %    38  % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   35

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class B  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  6.43      $  15.84      $  16.42      $  13.66      $  12.45      $  10.39   
     

Income From Investment Operations

            

Net investment income(a)

   .06 (b)    .16      .08      .10      .05 (b)    .03 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   .64      (8.21 )    .90      3.25      1.66      2.07   
     

Net increase (decrease) in net asset value from operations

   .70      (8.05 )    .98      3.35      1.71      2.10   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.09 )    (.18 )    (.07 )    (.09 )    (.04 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (1.27 )    (1.38 )    (.52 )    (.41 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.36 )    (1.56 )    (.59 )    (.50 )    (.04 ) 
     

Net asset value, end of period

   $  7.13      $  6.43      $  15.84      $  16.42      $  13.66      $  12.45   
     

Total Return

            

Total investment return based on net asset value(d)

   10.89 %    (55.49 )%*    6.28  %    25.42  %    14.24  %    20.22  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $5,710      $6,599      $24,966      $27,368      $16,180      $9,007   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   2.38 %(e)    2.14  %    2.03  %(f)    2.05  %(f)    2.19  %    2.15  % 

Expenses, before waivers/reimbursements

   2.42 %(e)    2.14  %    2.03  %(f)    2.05  %(f)    2.20  %    2.39  % 

Net investment income

   1.84 %(b)(e)    1.32  %    .51  %(f)    .67  %(f)    .38  %(b)    .23  %(b)(c) 

Portfolio turnover rate

   20 %    54  %    25  %    29  %    25  %    38  % 

See footnote summary on page 42.

 

36   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class C  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  6.45      $  15.87      $  16.45      $  13.67      $  12.46      $  10.40   
     

Income From Investment Operations

            

Net investment income(a)

   .06 (b)    .17      .09      .11      .05 (b)    .03 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   .64      (8.23 )    .89      3.26      1.66      2.07   
     

Net increase (decrease) in net asset value from operations

   .70      (8.06 )    .98      3.37      1.71      2.10   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.09 )    (.18 )    (.07 )    (.09 )    (.04 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (1.27 )    (1.38 )    (.52 )    (.41 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.36 )    (1.56 )    (.59 )    (.50 )    (.04 ) 
     

Net asset value, end of period

   $  7.15      $  6.45      $  15.87      $  16.45      $  13.67      $  12.46   
     

Total Return

            

Total investment return based on net asset value(d)

   10.85 %    (55.44 )%*    6.27  %    25.55  %    14.22  %    20.20  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $8,070      $8,835      $26,554      $19,439      $8,648      $5,218   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   2.31 %(e)    2.11  %    2.00  %(f)    2.03  %(f)    2.16  %    2.12  % 

Expenses, before waivers/reimbursements

   2.34 %(e)    2.11  %    2.00  %(f)    2.03  %(f)    2.18  %    2.36  % 

Net investment income

   1.88 %(b)(e)    1.41  %    .58  %(f)    .71  %(f)    .42  %(b)    .26  %(b)(c) 

Portfolio turnover rate

   20 %    54  %    25  %    29  %    25  %    38  % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   37

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Advisor Class  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  6.63      $  16.30      $  16.81      $  13.93      $  12.66      $  10.56   
     

Income From Investment Operations

            

Net investment income(a)

   .10 (b)    .30      .26      .26      .19 (b)    .14 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   .66      (8.44 )    .91      3.32      1.68      2.10   
     

Net increase (decrease) in net asset value from operations

   .76      (8.14 )    1.17      3.58      1.87      2.24   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.26 )    (.30 )    (.18 )    (.19 )    (.14 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (1.27 )    (1.38 )    (.52 )    (.41 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.53 )    (1.68 )    (.70 )    (.60 )    (.14 ) 
     

Net asset value, end of period

   $  7.39      $  6.63      $  16.30      $  16.81      $  13.93      $  12.66   
     

Total Return

            

Total investment return based on net asset value(d)

   11.46 %    (55.00 )%*    7.38  %    26.80  %    15.40  %    21.47  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $84,408      $82,449      $195,043      $203,212      $156,874      $131,710   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   1.28 %(e)    1.09  %    .99  %(f)    1.03  %(f)    1.14  %    1.11  % 

Expenses, before waivers/reimbursements

   1.30 %(e)    1.09  %    .99  %(f)    1.03  %(f)    1.16  %    1.35  % 

Net investment income

   3.09 %(b)(e)    2.48  %    1.57  %(f)    1.70  %(f)    1.44  %(b)    1.26  %(b)(c) 

Portfolio turnover rate

   20 %    54  %    25  %    29  %    25  %    38  % 

See footnote summary on page 42.

 

38   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class R  
   

Six Months

Ended

May 31,

2009

(unaudited)

     Year Ended November 30,    

March 1,

2005(g) to

November 30,

2005

  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  6.51      $  16.04      $  16.62      $  13.86      $  12.90   
     

Income From Investment Operations

          

Net investment income(a)

   .08      .22      .17      .19      .01 (b) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   .65      (8.29 )    .89      3.26      .95   
     

Net increase (decrease) in net asset value from operations

   .73      (8.07 )    1.06      3.45      .96   
     

Less: Dividends and Distributions

          

Dividends from net investment income

   – 0  –    (.19 )    (.26 )    (.17 )    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.27 )    (1.38 )    (.52 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.46 )    (1.64 )    (.69 )    – 0  – 
     

Net asset value, end of period

   $  7.24      $  6.51      $  16.04      $  16.62      $  13.86   
     

Total Return

          

Total investment return based on net asset value(d)

   11.21 %    (55.24 )%*    6.71  %    26.01  %    7.44 % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $3,593      $3,578      $7,533      $3,596      $364   

Ratio to average net assets of:

          

Expenses, net of waivers/reimbursements

   1.75 %(e)    1.68  %    1.59  %(f)    1.60  %(f)    1.70 %(e) 

Expenses, before waivers/reimbursements

   1.75 %(e)    1.68  %    1.59  %(f)    1.60  %(f)    1.96 %(e) 

Net investment income

   2.60 %(e)    1.90  %    1.02  %(f)    1.22  %(f)    .06 %(b)(e) 

Portfolio turnover rate

   20 %    54  %    25  %    29  %    25 % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   39

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class K  
   

Six Months
Ended

May 31,

2009

(unaudited)

     Year Ended November 30,    

March 1,

2005(g) to

November 30,

2005

  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  6.56      $  16.14      $  16.72      $  13.88      $  12.90   
     

Income From Investment Operations

          

Net investment income(a)

   .11 (b)    .26      .21      .18      .14 (b) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   .63      (8.36 )    .89      3.32      .84   
     

Net increase (decrease) in net asset value from operations

   .74      (8.10 )    1.10      3.50      .98   
     

Less: Dividends and Distributions

          

Dividends from net investment income

   – 0  –    (.21 )    (.30 )    (.14 )    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.27 )    (1.38 )    (.52 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.48 )    (1.68 )    (.66 )    – 0  – 
     

Net asset value, end of period

   $  7.30      $  6.56      $  16.14      $  16.72      $  13.88   
     

Total Return

          

Total investment return based on net asset value(d)

   11.28 %    (55.13 )%*    6.95  %    26.29  %    7.60 % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $1,116      $599      $1,129      $592      $11   

Ratio to average net assets of:

          

Expenses, net of waivers/reimbursements

   1.52 %(e)    1.43  %    1.35  %(f)    1.41  %(f)    1.45 %(e) 

Expenses, before waivers/reimbursements

   1.52 %(e)    1.43  %    1.35  %(f)    1.41  %(f)    1.55 %(e) 

Net investment income

   3.32 %(b)(e)    2.23  %    1.30  %(f)    1.40  %(f)    1.34 %(b)(e) 

Portfolio turnover rate

   20 %    54  %    25  %    29  %    25 % 

See footnote summary on page 42.

 

40   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class I  
   

Six Months

Ended

May 31,

2009

(unaudited)

     Year Ended November 30,    

March 1,

2005(g) to

November 30,

2005

  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  6.61      $  16.25      $  16.76      $  13.90      $  12.90   
     

Income From Investment Operations

          

Net investment income(a)

   .08      .28      .27      .26      .04 (b) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   .69      (8.38 )    .91      3.30      .96   
     

Net increase (decrease) in net asset value from operations

   .77      (8.10 )    1.18      3.56      1.00   
     

Less: Dividends and Distributions

          

Dividends from net investment income

   – 0  –    (.27 )    (.31 )    (.18 )    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.27 )    (1.38 )    (.52 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.54 )    (1.69 )    (.70 )    – 0  – 
     

Net asset value, end of period

   $  7.38      $  6.61      $  16.25      $  16.76      $  13.90   
     

Total Return

          

Total investment return based on net asset value(d)

   11.65 %    (54.95 )%*    7.42  %    26.79  %    7.75 % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $31,390      $51,741      $56,417      $39,566      $26,796   

Ratio to average net assets of:

          

Expenses, net of waivers/reimbursements

   1.12 %(e)    1.01  %    .95  %(f)    1.01  %(f)    1.20 %(e) 

Expenses, before waivers/reimbursements

   1.12 %(e)    1.01  %    .95  %(f)    1.01  %(f)    1.44 %(e) 

Net investment income

   2.63 %(e)    2.47  %    1.67  %(f)    1.72  %(f)    .41 %(b)(e) 

Portfolio turnover rate

   20 %    54  %    25  %    29  %    25 % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   41

 

Financial Highlights

 

(a)   Based on average shares outstanding.

 

(b)   Net of fees and expenses waived/reimbursed by the Adviser.

 

(c)   Net of fees and expenses waived/reimbursed by the Transfer Agent.

 

(d)   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 charges 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.

 

(e)   Annualized.

 

(f)   The ratio includes expenses attributable to costs of proxy solicitation.

 

(g)   Commencement of distributions.

 

*   Includes the impact of proceeds received and credited to the Fund resulting from class action settlements, which enhanced the Fund’s performance for the year ended November 30, 2008 by 0.01%.

 

 

See notes to financial statements.

 

42   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Financial Highlights

 

BOARD OF TRUSTEES

 

William H. Foulk, Jr.(1), Chairman    Nancy P. Jacklin(1)
John H. Dobkin(1)    Garry L. Moody(1)
Michael J. Downey(1)    Marshall C. Turner, Jr.(1)
D. James Guzy(1)    Earl D. Weiner(1)

OFFICERS

Robert M. Keith,

President and Chief Executive Officer

Philip L. Kirstein,

Senior Vice President and Independent Compliance Officer

Sharon E. Fay(2), Senior Vice President

Kevin F. Simms(2), Senior Vice President

   

Joseph G. Paul(2), Senior Vice President

Henry S. D’Auria(2), Vice President

Eric J. Franco(2), Vice President

Emilie D. Wrapp, Secretary

Joseph J. Mantineo, Treasurer and Chief Financial Officer

Phyllis J. Clarke, Controller

 

Custodian and Accounting Agent

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111

 

Principal Underwriter

AllianceBernstein Investments, Inc.

1345 Avenue of the Americas

New York, NY 10105

 

Transfer Agent

AllianceBernstein Investor
Services, Inc.

P.O. Box 786003

San Antonio, TX 78278-6003

Toll-free (800) 221-5672

   

Independent Registered Public Accounting Firm

Ernst & Young LLP

5 Times Square

New York, NY 10036

 

Legal Counsel

Seward & Kissel LLP

One Battery Park Plaza

New York, NY 10004

 

(1) Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. Mr. Foulk is the sole member of the Fair Value Pricing Committee.

 

(2) Management of, and investment decisions for, the Fund’s portfolio are made by the Global Value Senior Investment Management Team. Ms. Fay and Messrs. D’Auria, Franco, Paul and Simms are the investment professionals with the most significant responsibility for the day-to-day management of the Fund’s portfolio.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   43

 

Board of Trustees

 

Information Regarding the Review and Approval of the Fund’s Advisory Agreement

The disinterested trustees (the “trustees”) of AllianceBernstein Trust (the “Trust”) unanimously approved the continuance of the Advisory Agreement with the Adviser in respect of AllianceBernstein Global Value Fund (the “Fund”) at a meeting held on May 5-7, 2009.

Prior to approval of the continuance of the Advisory Agreement, the trustees had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The trustees also reviewed an independent evaluation prepared by the Trust’s Senior Officer (who is also the Trust’s Independent Compliance Officer) of the reasonableness of the advisory fee in the Advisory Agreement wherein the Senior Officer concluded that the contractual fee for the Fund was reasonable. The trustees also discussed the proposed continuance in private sessions with counsel and the Trust’s Senior Officer.

The trustees considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as trustees or directors of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the trustees and its responsiveness, frankness and attention to concerns raised by the trustees in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. The trustees noted that they have four regular meetings each year, at each of which they receive presentations from the Adviser on the investment results of the Fund and review extensive materials and information presented by the Adviser.

The trustees also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the trustees did not identify any particular information that was all-important or controlling, and different trustees may have attributed different weights to the various factors. The trustees determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the trustees considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the trustees’ determinations included the following:

 

44   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Nature, Extent and Quality of Services Provided

The trustees considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The trustees also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services provided at the Fund’s request by employees of the Adviser or its affiliates. Requests for these reimbursements are approved by the trustees on a quarterly basis and, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Fund’s Advisory Agreement. The trustees noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Trust’s Senior Officer. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Trust’s other service providers, also were considered. The trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.

Costs of Services Provided and Profitability

The trustees reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2007 and 2008 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant retained by the Trust’s Senior Officer. The trustees reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and noted that there are a number of potentially acceptable allocation methodologies for information of this type. The trustees noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries which provide transfer agency, distribution and brokerage services to the Fund. The trustees recognized that it is difficult to make comparisons of profitability between fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors. The trustees focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The trustees concluded that they were satisfied that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.

Fall-Out Benefits

The trustees considered the benefits to the Adviser and its affiliates from their relationships with the Fund other than the fees and expense reimbursements payable under the Advisory Agreement, including but not limited to benefits relating to soft dollar arrangements (whereby the Adviser receives brokerage and

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   45

 

research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis), 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of certain classes of the Fund’s shares, transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser, and brokerage commissions paid by the Fund to brokers affiliated with the Adviser. The trustees recognized that the Adviser’s profitability would be somewhat lower without these benefits. The trustees understood that the Adviser also might derive reputational and other benefits from its association with the Fund.

Investment Results

In addition to the information reviewed by the trustees in connection with the meeting, the trustees receive detailed performance information for the Fund at each regular Board meeting during the year. At the May 2009 meeting, the trustees reviewed information prepared by Lipper showing the performance of the Class A Shares of the Fund as compared with that of a group of similar funds selected by Lipper (the “Performance Group”) and as compared with that of a broader array of funds selected by Lipper (the “Performance Universe”), and information prepared by the Adviser showing performance of the Class A Shares as compared with the Morgan Stanley Capital International World Index (Net) (the “Index”), in each case for the 1-, 3- and 5-year periods ended January 31, 2009 and (in the case of comparisons with the Index) the since inception period (March 2001 inception). The trustees noted that the Fund was 4th out of 4 of the Performance Group and in the 5th quintile of the Performance Universe for the 1-, 3- and 5-year periods, and that the Fund substantially underperformed the Index in all periods reviewed. The trustees also reviewed performance information for periods ended March 31, 2009, and noted that relative investment performance in 2009 had been stronger than in the immediately prior periods. Based on their review and their discussion of the reasons for the Fund’s performance with the Adviser, the trustees retained confidence in the Adviser’s ability to advise the Fund and concluded that the Fund’s performance was acceptable. The trustees determined to closely monitor the Fund’s performance.

Advisory Fees and Other Expenses

The trustees considered the advisory fee rate paid by the Fund to the Adviser and information prepared by Lipper concerning advisory fee rates paid by other funds in the same Lipper category as the Fund at a common asset level. The trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds.

The trustees noted that in light of the Fund’s historical investment performance, they had asked the Adviser to address the continued appropriateness of the Fund’s fee rate. In response the Adviser informed the trustees that the Adviser

 

46   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

had begun to implement changes and enhancements to address investment performance and discussed the new leadership for the Adviser effective December 2008. The Adviser further noted, among other things, that while it would take time to realize the benefits of these changes, relative investment performance in 2009 had generally shown improvement. The trustees noted that they had discussed their concerns about the relative performance of a number of the AllianceBernstein equity funds with senior management of the Adviser.

The trustees also considered the fees the Adviser charges other clients with an investment style substantially similar to that of the Fund. For this purpose, they reviewed the relevant fee information in the Adviser’s Form ADV and the evaluation from the Trust’s Senior Officer disclosing the institutional fee schedule for institutional products managed by the Adviser that have an investment style substantially similar to that of the Fund. The trustees noted that the institutional fee schedule for clients with an investment style substantially similar to that of the Fund had breakpoints at lower asset levels than those in the fee schedule applicable to the Fund and that the application of the institutional fee schedule to the level of assets of the Fund would result in a fee rate that would be lower than that in the Fund’s Advisory Agreement. The trustees noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the trustees and that they had previously discussed with the Adviser its policies in respect of such arrangements. The trustees also reviewed information that indicated that the Fund pays a higher fee rate than a registered investment company with an investment style similar to that of the Fund that is sub-advised by the Adviser.

The Adviser reviewed with the trustees the significantly greater scope of the services it provides to the Fund relative to institutional clients and sub-advised funds. The Adviser also noted that because mutual funds are constantly issuing and redeeming shares, they are more difficult to manage than an institutional account, where the assets tend to be relatively stable. In light of these facts, the trustees did not place significant weight on these fee comparisons.

The trustees also considered the total expense ratio of the Class A shares of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of funds similar to the Fund and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the Fund. The trustees noted that because of the small number of funds in the Fund’s Lipper category, at the request of the Adviser and the Trust’s Senior Officer, Lipper had expanded the Expense Group of the Fund to include peers that had a similar (but not the same) Lipper investment objective/classification. The Expense Universe for the Fund had also been expanded by Lipper pursuant to Lipper’s standard guidelines and not at the request of the Adviser or the Fund’s Senior

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   47

 

Officer. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The trustees view the expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The trustees noted that it was likely that the expense ratios of some funds in the Fund’s Lipper category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases were voluntary and perhaps temporary.

The trustees noted that the Fund’s contractual effective advisory fee rate, at approximate current size, of 75 basis points, plus the 3 basis point impact of the administrative expense reimbursement in the latest fiscal year, was lower than the Expense Group median. The trustees noted that the Fund’s total expense ratio was the same as the Expense Group median and higher than the Expense Universe median. The trustees concluded that the Fund’s expense ratio was satisfactory.

Economies of Scale

The trustees noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The trustees also considered presentations by an independent consultant discussing economies of scale in the mutual fund industry and for the AllianceBernstein Funds, as well as a presentation by the Adviser concerning certain of its views on economies of scale. The trustees believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The trustees noted that there is no established methodology for establishing breakpoints that give effect to fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The trustees observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The trustees also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the trustees concluded that the Fund’s breakpoint arrangements would result in a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.

 

48   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS

SUMMARY OF SENIOR OFFICER’S EVALUATION OF INVESTMENT ADVISORY AGREEMENT1

The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the “Adviser”) and the AllianceBernstein Trust, Inc. (the “Trust”) in respect of AllianceBernstein Global Value Fund (the “Fund”).2 The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund, for the Trustees of the Fund, as required by a September 2004 agreement between the Adviser and the New York State Attorney General (the “NYAG”). The Senior Officer’s evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Trustees 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 Trustees 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. Advisory fees charged to institutional and other clients of the Adviser for like services;

 

  2. Advisory 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, NET ASSETS, & EXPENSE 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 consideration of the Adviser’s settlement with the NYAG in December 2003, is

 

1   It should be noted that the information in the fee summary was completed on April 23, 2009 and presented to the Board of Trustees on May 5-7, 2009.

 

2   Future references to the Fund do not include “AllianceBernstein.” References in the fee summary pertaining to performance and expense ratio rankings refer to the Class A shares of the Fund.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   49

 

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

 

Category  

Advisory Fee Based on % of

Average Daily Net Assets4

  

Net Assets

02/28/09

($MIL)

   Fund
International  

75 bp on 1st $2.5 billion

65 bp on next $2.5 billion

60 bp on the balance

   $ 167.6   Global Value Fund

The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund. During the Fund’s most recently completed fiscal year, the Adviser received $101,853 (0.03% of the Fund’s average daily net assets) for such services.

Set forth below are the Fund’s total expense ratios for the most recently completed fiscal years:

 

Fund   Total Expense
Ratio5		      Fiscal
Year End
Global Value Fund  

Advisor

Class A

Class B

Class C

Class R

Class K

Class I

   1.09

1.40

2.14

2.11

1.68

1.43

1.01

 % 

% 

% 

% 

% 

% 

% 

    November 30

 

I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS

The advisory 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 and sub-advised investment companies 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

 

3   Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser’s settlement with the NYAG.

 

4   The advisor fee is based on the percentage of the Fund’s average daily net assets and is paid on a monthly basis.

 

5   Annualized.

 

50   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

these expenses are 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. The Adviser also believes that it incurs substantial entrepreneurial risk when offering a new mutual fund since establishing a new mutual fund requires a large upfront investment and it may take a long time for the fund to achieve profitability since the fund must be priced to scale from inception in order to be competitive and assets are acquired one account at a time. In addition, managing the cash flow of an investment company may be more difficult than managing that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if a 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 and legal and reputational risks are greater, it is worth considering information regarding the advisory fees charged to institutional accounts with a similar investment style as the Fund.6 In addition to the AllianceBernstein Institutional fee schedule, set forth below is what would have been the effective advisory fee of the Fund had the AllianceBernstein Institutional fee schedule been applicable to the Fund versus the Fund’s advisory fee based on February 28, 2009 net assets:

 

Fund  

Net Assets

02/28/09

($MIL)

  

AllianceBernstein (“AB”)
Institutional (“Inst.”)

Fee Schedule

   Effective
AB Inst.
Adv. Fee		  

Fund

Advisory
Fee

Global Value Fund   $167.6  

Global Value

80 bp on 1st $25 million

60 bp on next $25 million

50 bp on next $50 million

40 bp on the balance

Minimum account size: $25m

   0.519%   0.750%

 

6   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.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   51

 

The Adviser also manages and sponsors retail mutual funds, which are organized in jurisdictions outside the United States, generally Luxembourg and Japan, and sold to non-United States resident investors. The Adviser charges the fees set forth below for Global Value Portfolio, which is a Luxembourg fund that has a somewhat similar investment style as the Fund. It should be noted that Class A shares of the funds are charged an “all-in” fee, which covers investment advisory services and distribution related services, unlike Class I shares, whose fee is for investment advisory services only:

 

Fund   Fee  
Global Value Portfolio  

Class A

   1.50 % 

Class I (Institutional)

   0.70 % 

The AllianceBernstein Investment Trust Management mutual funds (“ITM”), 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 schedules of the ITM mutual funds that have a somewhat similar investment style as certain of the Funds are as follows:

 

Fund    ITM Mutual Fund    Fee7
Global Value Fund    Alliance Global Diversified Value8    0.10%9
   Alliance Global Value Stock8    0.30%10

The Adviser provides sub-advisory services to certain other investment companies managed by other fund families. The Adviser charges the fees set forth below for the following sub-advisory relationship. Also shown is what would have been the effective advisory fee of the Fund had the fee schedule of the

 

7   The Japanese Yen-U.S. dollar currency exchange rate quoted at 4 p.m. on April 8, 2009 by Reuters was ¥99.64 per $1. At that currency exchange rate, every ¥1 billion would be equivalent to approximately $10.3 million.

 

8   This ITM fund is privately placed or institutional.

 

9   In addition to the 0.10%, the Adviser charges the institutional account 0.5175% for the first ¥2.5 billion, 0.375% for the next ¥2.5 billion, 0.3275% for the next ¥2.5 billion, 0.28% for the next ¥10 billion and 0.185% thereafter.

 

10   The fund is offered to two institutional clients that are charged a separate fee for managing their assets in addition to the 0.30%. The first client is charged 0.33% for the first ¥2.5 billion, 0.195% for the next ¥2.5 billion, 0.105% for the next ¥5 billion and 0.06% thereafter. The second client is charged 0.40% for the first ¥2.5 billion, 0.25% for the next ¥2.5 billion, 0.15% for the next ¥5 billion and 0.10% thereafter.

 

52   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

sub-advisory relationship been applicable to the Fund based on February 28, 2009 net assets and the Fund’s advisory fee:

 

Fund        Fee Schedule   Effective
Sub-Adv.
Fee		   Fund
Advisory
Fee
Global Value Fund   Client #1  

0.25% on 1st $500 million

0.225% on next $500 million

0.20% on next $4 billion

0.175% thereafter

+/- Performance Fee11

   0.250%12   0.750%

It is fair to note that the services the Adviser provides pursuant to sub-advisory agreements are generally confined to the services related to the investment process; in other words, they are not as comprehensive as the services provided to the Fund by the Adviser.

 

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 offered by other investment advisers. Lipper’s analysis included the Fund’s ranking with respect to the proposed management fee relative to the median of the Fund’s Lipper Expense Group (“EG”)13 at the approximate current asset level of the Fund.14

Lipper describes an EG as a representative sample of comparable funds. Lipper’s standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset

 

11   The performance fee is calculated by multiplying the Base Fee during the period by an adjustment factor that considers the excess or under performance of the fund versus its benchmark, over a 60 month rolling period. The performance adjustment factor can range from -60% to +60% of the base fee. The performance fee of the fund took effect on March 31, 2007.

 

12   The calculation excludes the performance fee.

 

13   It should be noted that Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratio than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expenses differently.

 

14   The contractual 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” would mean that the Fund had the lowest effective fee rate in the Lipper peer group.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   53

 

(size) comparability, expense components and attributes. An EG will typically consist of seven to twenty funds.

 

Fund   Contractual
Management
Fee (%)15		  

Lipper Exp.

Group

Median (%)

   Rank
Global Value Fund16   0.750   0.900   2/7

However, because Lipper had expanded the EG of the Fund, under Lipper’s standard guidelines, the Lipper Expense Universe (“EU”) was also expanded to include the universe of those peers that had a similar but not the same Lipper investment classification/objective.17 A “normal” EU will include funds that have the same investment classification/objective as the subject Fund.18 It should be noted that Lipper uses expense ratio data from financial statements of the most current fiscal year in their database. This has several implications: the total expense ratio of each fund that Lipper uses in their report is based on each fund’s average net assets during its fiscal year. Since funds have different fiscal year ends, the total expense ratios of the funds may cover different twelve month periods, depending on the funds’ fiscal year ends. This is the process that Lipper utilizes but given market conditions during 2008, especially the last three months of 2008, the effects on the funds’ total expense ratio caused by the differences in fiscal year ends may be more pronounced in 2008 compared to other years under more normal market conditions.19

 

Fund  

Expense

Ratio
(%)20

  

Lipper Exp.

Group

Median
(%)

  

Lipper

Group

Rank

  

Lipper Exp.

Universe

Median
(%)

  

Lipper
Universe

Rank

Global Value Fund21   1.402   1.402   4/7   1.344   9/15

 

15   The contractual management fee does not reflect any expense reimbursements made by the Fund to the Adviser for certain clerical, legal, accounting, administrative and other services.

 

16   The Fund’s EG includes the Fund, three other Global Large-Cap Value Funds (“GLCV”), and three Global Multi-Cap Value Funds (“GMLV”).

 

17   It should be noted that the expansion of the Fund’s EU was not requested by the Adviser or the Senior Officer. They requested that only the EG be expanded.

 

18  

Except for asset (size) comparability, Lipper uses the same criteria for selecting an EG peer when selecting an EU peer. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund.

 

19   To cite an example, the average net assets and total expense ratio of a fund with a fiscal year end of March 31, 2008 will not be reflective of the market declines that occurred in the second half of 2008, in contrast to a fund with a fiscal year end of December 31, 2008.

 

20   The total expense ratios shown are for the Fund’s most recent fiscal year end Class A shares.

 

21   The Fund’s EU includes the Fund, EG and all other GLCV and GMLV funds, excluding outliers.

 

54   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

Based on this analysis, the Fund has a more favorable ranking on a management fee basis than on a total expense ratio basis.

 

III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.

The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Adviser’s profitability in connection with investment advisory services provided to the Fund. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion.

 

IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES.

The Fund’s profitability information, prepared by the Adviser for the Board of Trustees, was reviewed by the Senior Officer and the consultant. The Adviser’s profitability from providing investment advisory services to the Fund decreased during calendar year 2008, relative to 2007.

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 such benefits 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 provided the affiliates’ charges and services are competitive and the relationship otherwise complies with the 40 Act restrictions. 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 brokerage commissions. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur.

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 2008, ABI paid approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $21 million for distribution services and educational support (revenue sharing payments). During the Fund’s most recently completed fiscal year, ABI received from the Fund $3,622, $658,012 and $33,107 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   55

 

Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. (“ABIS”), the affiliated transfer agent for the Fund, are charged on a per account basis, based on the level of service provided 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. During the Fund’s most recently completed fiscal year, ABIS received $149,272 in fees from the Fund.22

The Fund effected brokerage transactions through the Adviser’s affiliate, Sanford C. Bernstein & Co., LLC (“SCB & Co.”) and/or its U.K. affiliate, Sanford C. Bernstein Limited (“SCB Ltd.”), collectively “SCB,” and paid commissions for such transactions. The Adviser represented that SCB’s profitability from any future business conducted with the Fund is comparable to the profitability of SCB’s dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks (“ECNs”) derived from trading for its clients. These credits and charges are not being passed onto any SCB client, including the Fund. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for its clients. These soft dollar benefits reduce the Adviser’s cost of doing business and increase its profitability.

 

V. POSSIBLE ECONOMIES OF SCALE

The Adviser has indicated that economies of scale are being shared with shareholders through fee structures,23 subsidies and enhancement to services. 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 make such investments in their business to provide services, there may be a sharing of economies of scale without a reduction in advisory fees.

 

22   The fees disclosed are net of any expense offsets 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 the transfer agent’s account to the Fund’s account. During the Fund’s most recently completed fiscal year, the fees paid by the Fund to ABIS were reduced by $4,947 under the offset agreement between the Fund and ABIS.

 

23   Fee structures include fee reductions, pricing at scale and breakpoints in advisory fee schedules.

 

56   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

An independent consultant, retained by the Senior Officer, provided the Board of Directors an update of the Deli24 study on advisory fees and various fund characteristics. The independent consultant first reiterated the results of his previous two dimensional comparison analysis (fund size and family size) with the Board of Directors.25 The independent consultant then discussed the results of the regression model that was utilized to study the effects of various factors on advisory fees. The regression model output indicated that the bulk of the variation in fees predicted were explained by various factors, but substantially by fund AUM, family AUM, index fund indicator and investment style. The independent consultant also compared the advisory fees of the AllianceBernstein Mutual Funds to similar funds managed by 19 other large asset managers, regardless of the fund size and each Adviser’s proportion of mutual fund assets to non-mutual fund assets.

 

VI. NATURE AND QUALITY OF THE ADVISER’S SERVICES, INCLUDING THE PERFORMANCE OF THE FUND

With assets under management of approximately $411 billion as of March 31, 2009, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Fund.

The information prepared by Lipper shows the 1, 3 and 5 year performance rankings of the Fund26 relative to its Lipper Performance Group (“PG”) and Lipper Performance Universe (“PU”)27 for the periods ended January 31, 2009.28

 

     Fund Return
(%)		   PG Median
(%)		   PU Median
(%)		   PG Rank   PU Rank

1 year

   -54.85   -46.21   -44.56   4/4   6/6

3 year

   -20.45   -14.34   -14.34   4/4   6/6

5 year

   -6.55   -4.70   -4.43   4/4   6/6

 

24   The Deli study was originally published in 2002 based on 1997 data.

 

25   The two dimensional analysis showed patterns of lower advisory fees for funds with larger asset sizes and funds from larger family sizes compared to funds with smaller asset sizes and funds from smaller family sizes, which according to the independent consultant is indicative of a sharing of economies of scale and scope. However, in less liquid and active markets, such is not the case, as the empirical analysis showed potential for diseconomies of scale in those markets. The empirical analysis also showed diminishing economies of scale and scope as funds surpassed a certain high level of assets.

 

26   The performance rankings are for the Class A shares of the Fund. It should be noted that the performance returns of the Fund shown were provided by the Adviser. Lipper maintains its own database that includes the Fund’s performance returns. Rounding differences may cause the Adviser’s Fund returns to be one or two basis points different from Lipper’s own Fund returns. To maintain consistency, the performance returns of the Fund, as reported by the Adviser, are provided instead of Lipper.

 

27   The Fund’s PG and PU are not identical to the Fund’s respective EG and EU as the criteria for including or excluding a fund in a PG or PU is somewhat different from that of an EG or EU.

 

28   Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of the fund even if a fund had a different investment classification/objective at a different point in time.

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND  •   57

 

Set forth below are the 1, 3, 5 year and since inception performance returns of the Fund (in bold)29 versus its benchmark.30 Fund and benchmark volatility and reward-to-variability ratio (“Sharpe Ratio”) information is also shown.31

 

    

Periods Ending January 31, 2009

Annualized Performance

    1 Year
(%)		   3 Year
(%)		   5 Year
(%)		   Since
Inception
(%)		   Annualized   Risk
Period
(Year)
            

Volatility

(%)

   Sharpe
(%)		  
Global Value Fund   -54.85   -20.45   -6.55   -2.56   18.90   -0.42   5
MSCI World Index (Net)   -41.43   -12.15   -2.63   -1.19   14.83   -0.31   5
Inception Date: March 29, 2001    

CONCLUSION:

Based on the factors discussed above the Senior Officer’s conclusion is that the proposed advisory fee for the Fund is reasonable and within the range of what would have been negotiated at arm’s-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: May 29, 2009

 

29   The performance returns and risk measures shown in the table are for the Class A shares of the Fund.

 

30   The Adviser provided Fund and benchmark performance return information for periods through January 31, 2009.

 

31   Fund and benchmark volatility and Sharpe Ratio information was obtained through Lipper LANA, a database maintained by Lipper. Volatility is a statistical measure of the tendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjusted measure of return that divides a fund’s return in excess of the riskless return by the fund’s standard deviation. A fund with a greater volatility would be seen as more risky than a fund with equivalent performance but lower volatility; for that reason, a greater return would be demanded for the more risky fund. A fund with a higher Sharpe Ratio would be viewed as better performing than a fund with a lower Sharpe Ratio.

 

58   •  ALLIANCEBERNSTEIN GLOBAL VALUE 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

Large Cap Growth Fund

Small Cap Growth Portfolio

Small/Mid Cap Growth Fund*

Global & International

Global Growth Fund*

Global Thematic Growth Fund*

Greater China ‘97 Fund

International 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

Diversified Yield Fund

Global Bond Fund

High Income Fund

Intermediate Bond Portfolio

Short Duration Portfolio

Municipal Bond Funds

 

National

Arizona

California

Massachusetts

Michigan

Minnesota

   

New Jersey

New York

Ohio

Pennsylvania

Virginia

Intermediate Municipal Bond Funds

Intermediate California

Intermediate Diversified

Intermediate New York

Closed-End Funds

AllianceBernstein Global High Income Fund

AllianceBernstein Income Fund

AllianceBernstein National Municipal Income Fund

ACM Managed Dollar Income Fund

Alliance California Municipal Income Fund

Alliance New York Municipal Income Fund

The Spain Fund


Retirement Strategies Funds

 

2000 Retirement Strategy

  

2020 Retirement Strategy

  

2040 Retirement Strategy

2005 Retirement Strategy

  

2025 Retirement Strategy

  

2045 Retirement Strategy

2010 Retirement Strategy

  

2030 Retirement Strategy

  

2050 Retirement Strategy

2015 Retirement Strategy

  

2035 Retirement Strategy

  

2055 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 November 3, 2008, Small/Mid Cap Growth Fund was named Mid-Cap Growth Fund, Global Growth Fund was named Global Research Growth Fund, and Global Thematic Growth Fund was named Global Technology 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 GLOBAL VALUE FUND  •   59

 

AllianceBernstein Family of Funds

 

60   •  ALLIANCEBERNSTEIN GLOBAL VALUE FUND

 

NOTES

 

ALLIANCEBERNSTEIN GLOBAL VALUE FUND

1345 Avenue of the Americas

New York, NY 10105

800.221.5672

LOGO

 

 

GV-0152-0509   LOGO

SEMI-ANNUAL REPORT

 

 

AllianceBernstein

International Value Fund

 

 

LOGO

 

May 31, 2009

 

Semi-Annual Report

 

 

Investment Products Offered

  •  

Are Not FDIC Insured

  •  

May Lose Value

  •  

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® 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. (ABI) is the distributor of the AllianceBernstein family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager of the funds.

AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.

July 13, 2009

 

Semi-Annual Report

This report provides management’s discussion of fund performance for AllianceBernstein International Value Fund (the “Fund”) for the semi-annual reporting period ended May 31, 2009.

Investment Objective and Policies

The Fund’s investment objective is long-term growth of capital. The Fund invests primarily in a diversified portfolio of equity securities of established companies selected from more than 40 industries and from more than 40 developed and emerging market countries. The Fund normally invests in companies in at least three countries other than the United States. These countries currently include the developed nations in Europe and the Far East, Canada, Australia and emerging market countries worldwide. The Fund invests in companies that are determined by the Bernstein research unit (“Bernstein”) to be undervalued, using a fundamental value approach. In selecting securities for the Fund’s portfolio, Bernstein uses its fundamental and quantitative research to identify companies whose long-term earnings power is not reflected in the current market price of their securities.

To hedge a portion of its currency risk, the Fund may from time to time invest in currency-related derivatives, including forward currency exchange contracts, futures, options on futures, swaps and options. The Fund may also seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives.

 

The Fund may invest in depositary receipts, instruments of supranational entities denominated in the currency of any country, securities of multinational companies and “semi-governmental securities” and enter into forward commitments. The Fund may enter into derivatives transactions, such as options, futures, forwards and swap agreements.

Investment Results

The table on page 4 provides performance for the Fund and the benchmark, the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index, for the six- and 12-month periods ended May 31, 2009.

The Fund’s Class A shares without sales charges outperformed the benchmark for the six-month period ended May 31, 2009, buoyed by strong security selection, particularly in technology, energy and capital equipment. Sector selection was also positive, largely because of the Fund’s underweight in the consumer staples sector and overweight in the technology sector. Deutsche Bank and Nissan Motor were the largest individual contributors to relative performance. Japanese automaker Nissan climbed due to improved sentiment and expectations that it would gain market share in the US. Deutsche Bank advanced after forecasting strong earnings for the remainder of 2009. The largest individual detractors from Fund performance were Royal Bank of Scotland—which reported weaker-than-expected operating performance in January 2009—and Stora Enso,

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   1

 

which also reported disappointing results along with a larger-than-expected reduction in its dividend. The Fund does not employ leverage.

The Fund’s Class A shares without sales charges underperformed the benchmark for the 12-month period ended May 31, 2009. For the period, the Fund and the benchmark posted negative returns. The Fund’s underperformance was driven by weak security selection, most notably within financials and transportation. Sector selection also detracted from relative returns due to the Fund’s overweight of industrial commodity-related stocks and underweight of more defensive consumer staple and medical-related stocks.

Market Review and Investment Strategy

The MSCI EAFE Index declined in January and February 2009 as fears

mounted that the economic contraction would be even worse than expected. The index rebounded sharply in the following three months, as improved sentiment about the global economic outlook caused the market’s extreme risk aversion to abate.

The extreme anxiety that gripped the markets since last autumn has eased since March. Value stocks have been rebounding from very low levels that were reached as panicked investors fled risk, often indiscriminately. The value opportunity as the Fund’s International Value Senior Investment Management Team (the “Team”) measures it remains very attractive and remarkably diverse, spanning all sectors of the economy, not just financials and cyclicals deemed most vulnerable to financial and economic pressures.

 

2   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

HISTORICAL PERFORMANCE

An Important Note About the Value of Historical Performance

The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com.

The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund’s prospectus, which contains this and other information, visit our 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.

Benchmark Disclosure

The unmanaged Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Index is a market capitalization weighted index that measures stock performance in 21 countries in Europe, Australasia and the Far East. An investor cannot invest directly in an index, and its results are not indicative for any specific investment, including the Fund.

The MSCI EAFE Index values are calculated using net returns. Net returns approximate the minimum possible dividend reinvestment—the dividend is reinvested after deduction of withholding tax, applying the highest rate applicable to non-resident institutional individuals who do not benefit from double taxation treaties.

A Word About Risk

Value investing does not guarantee a profit or eliminate risk. Not all companies whose stocks are considered to be “value” stocks are able to turn their business around or successfully employ corrective strategies, which would result in stock prices that rise as initially expected. 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. Because the Fund may invest in emerging markets and in developing countries, an investment also has the risk that market changes or other factors affecting emerging markets and developing countries, including political instability and unpredictable economic conditions, may have significant effect on the Fund’s net asset value. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the Fund’s prospectus.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   3

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

        

THE FUND VS. ITS BENCHMARK

PERIODS ENDED MAY 31, 2009

   Returns    
  6 Months      12 Months     

AllianceBernstein International Value Fund

         

Class A

   15.54%      -47.27%  
 

Class B*

   15.08%      -47.67%  
 

Class C

   15.06%      -47.64%  
 

Advisor Class**

   15.76%      -47.11%  
 

Class R**

   15.46%      -47.34%  
 

Class K**

   15.61%      -47.21%  
 

Class I**

   15.77%      -47.02%  
 

MSCI EAFE Index (net)

   15.10%      -36.61%  
 

*       Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. Please see Note A for additional information.

**     Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds.

        

 

See Historical Performance and Benchmark disclosures on previous page.

(Historical Performance continued on next page)

 

4   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2009   
     NAV Returns        SEC Returns  
       
Class A Shares        

1 Year

    -47.27 %       -49.51 % 

5 Years

    0.48 %       -0.39 % 

Since Inception*

    4.65 %       4.10 % 
       
Class B Shares(a)        

1 Year

    -47.67 %       -49.76 % 

5 Years

    -0.24 %       -0.24 % 

Since Inception*

    3.95 %       3.95 % 
       
Class C Shares        

1 Year

    -47.64 %       -48.17 % 

5 Years

    -0.23 %       -0.23 % 

Since Inception*

    3.95 %       3.95 % 
       
Advisor Class Shares†        

1 Year

    -47.11 %       -47.11 % 

5 Years

    0.79 %       0.79 % 

Since Inception*

    5.01 %       5.01 % 
       
Class R Shares†        

1 Year

    -47.34 %       -47.34 % 

5 Years

    0.24 %       0.24 % 

Since Inception*

    2.12 %       2.12 % 
       
Class K Shares†        

1 Year

    -47.21 %       -47.21 % 

Since Inception*

    -5.00 %       -5.00 % 
       
Class I Shares†        

1 Year

    -47.02 %       -47.02 % 

Since Inception*

    -4.71 %       -4.71 % 

The Fund’s current prospectus fee table shows the Fund's total annual operating expense ratios as 1.39%, 2.19%, 2.13%, 1.09, 1.53%, 1.21% and 0.85% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I, respectively, gross of any fee waivers or expense reimbursements.

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares.

 

(a)   Assumes conversion of Class B shares into Class A shares after eight years.

 

†   These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   5

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)

AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2009)

  

  

                   SEC Returns  
            
Class A Shares             

1 Year

              -44.63 % 

5 Years

              -1.21 % 

Since Inception*

              3.77 % 
            
Class B Shares(a)             

1 Year

              -44.92 % 

5 Years

              -1.06 % 

Since Inception*

              3.62 % 
            
Class C Shares             

1 Year

              -43.17 % 

5 Years

              -1.05 % 

Since Inception*

              3.61 % 
            
Advisor Class Shares†             

1 Year

              -41.97 % 

5 Years

              -0.04 % 

Since Inception*

              4.67 % 
            
Class R Shares†             

1 Year

              -42.27 % 

5 Years

              -0.57 % 

Since Inception*

              1.67 % 
            
Class K Shares†             

1 Year

              -42.08 % 

Since Inception*

              -5.40 % 
            
Class I Shares†             

1 Year

              -41.88 % 

Since Inception*

              -5.11 % 

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares.

 

(a)   Assumes conversion of Class B shares into Class A shares after eight years.

 

 

†   Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

 

6   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Historical Performance

FUND EXPENSES

(unaudited)

 

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
Account Value
December 1, 2008		    Ending
Account Value
May 31, 2009		    Expenses Paid
During Period*
     Actual    Hypothetical    Actual    Hypothetical**    Actual    Hypothetical
Class A    $   1,000    $   1,000    $   1,155.41    $   1,018.20    $ 7.25    $ 6.79
Class B    $   1,000    $   1,000    $   1,150.78    $   1,014.31    $   11.42    $ 10.70
Class C    $   1,000    $   1,000    $   1,150.63    $   1,014.51    $ 11.21    $   10.50
Advisor Class    $   1,000    $   1,000    $   1,157.64    $   1,019.70    $ 5.65    $ 5.29
Class R    $   1,000    $   1,000    $   1,154.64    $   1,017.45    $ 8.06    $ 7.54
Class K    $   1,000    $   1,000    $   1,156.05    $   1,019.00    $ 6.40    $ 5.99
Class I    $   1,000    $   1,000    $   1,157.68    $   1,020.69    $ 4.57    $ 4.28
*   Expenses are equal to the classes’ annualized expense ratios of 1.35%, 2.13%,2.09%, 1.05%, 1.50%, 1.19% and 0.85%, respectively, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one half year period).

 

**   Assumes 5% return before expenses.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   7

 

Fund Expenses

PORTFOLIO SUMMARY

May 31, 2009 (unaudited)

 

PORTFOLIO STATISTICS

Net Assets ($mil): $4,467.9

LOGO

LOGO

 

*   All data are as of May 31, 2009. The Fund’s sector and country breakdowns are expressed as a percentage of total investments and may vary over time. “Other” country weightings represent 2.1% or less in the following countries: Belgium, Brazil, China, Czech Republic, Finland, Hong Kong, Israel, Mexico, New Zealand, Norway, Russia, South Africa and Turkey.

Please Note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard and Poor’s. The fund components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the Broad Market. 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.

 

8   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Portfolio Summary

TEN LARGEST HOLDINGS*

May 31, 2009 (unaudited)

 

Company    U.S. $ Value      Percent of
Net Assets		  

Royal Dutch Shell PLC (Euronext Amsterdam) – Class A

    $ 148,747,797      3.3 % 

Vodafone Group PLC

      106,037,829      2.4   

GlaxoSmithKline PLC

      99,985,285      2.2   

Sanofi-Aventis SA

      96,762,686      2.2   

BNP Paribas SA

      92,874,000      2.1   

Telefonica SA

      92,608,770      2.1   

E. ON AG

      89,122,315      2.0   

BP PLC

      88,567,190      2.0   

Samsung Electronics

      86,886,436      1.9   

ENI SpA

      83,785,808      1.9   
   $   985,378,116      22.1 % 

 

 

*   Long-term investments.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   9

 

Ten Largest Holdings

 

PORTFOLIO OF INVESTMENTS

May 31, 2009 (unaudited)

 

Company    Shares   U.S. $ Value
 
    

COMMON STOCKS – 97.2%

     

Financials – 27.4%

     

Capital Markets – 3.2%

     

Credit Suisse Group AG

    1,320,400   $ 59,261,372

Deutsche Bank AG

    1,134,700     76,767,461

Macquarie Group Ltd.

    325,892     8,462,163
        
       144,490,996
        

Commercial Banks – 17.7%

     

ABSA Group Ltd.

    1,499,700     19,244,509

Australia & New Zealand Banking Group Ltd.

    3,830,900     49,515,004

Barclays PLC

    11,777,700     57,227,564

BNP Paribas SA

    1,340,220     92,874,000

Commonwealth Bank of Australia

    781,800     22,060,031

Credit Agricole SA

    4,187,840     61,861,648

Hana Financial Group, Inc.

    886,400     21,256,915

HSBC Holdings PLC

    6,611,550     59,887,629

Intesa Sanpaolo SpA(a)

    12,785,000     45,699,754

Itau Unibanco Holding SA (ADR)

    1,973,434     31,673,616

KB Financial Group, Inc.(a)

    1,301,000     41,584,940

Lloyds Banking Group PLC

    31,091,272     34,239,762

National Australia Bank Ltd.

    1,827,900     32,716,973

National Bank of Canada

    461,500     21,630,369

Nordea Bank AB

    4,263,740     34,268,799

Societe Generale – Class A

    1,206,485     70,789,186

Standard Bank Group Ltd.

    1,536,400     16,005,880

Sumitomo Mitsui Financial Group, Inc.

    1,365,300     52,881,563

Turkiye Garanti Bankasi AS(a)

    4,403,600     11,023,353

Turkiye Vakiflar Bankasi Tao – Class D(a)

    9,164,200     12,629,731
        
       789,071,226
        

Consumer Finance – 0.1%

     

ORIX Corp.

    44,020     2,786,792
        

Diversified Financial Services – 1.1%

     

ING Group

    4,754,002     50,474,089
        

Insurance – 4.5%

     

Allianz SE

    691,345     68,624,465

Aviva PLC

    10,078,226     54,702,618

Fairfax Financial Holdings Ltd.

    55,600     14,363,057

Muenchener Rueckversicherungs AG (MunichRe)

    446,700     63,088,430
        
       200,778,570
        

Real Estate Management & Development – 0.8%

     

Lend Lease Corp. Ltd.

    2,927,600     16,379,751

Mitsui Fudosan Co., Ltd.

    912,000     15,299,907

New World Development Co., Ltd.

    2,575,000     4,888,377
        
       36,568,035
        
       1,224,169,708
        

 

10   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Portfolio of Investments

 

Company        
    
Shares		   U.S. $ Value
 
    

Energy – 14.4%

     

Oil, Gas & Consumable Fuels – 14.4%

     

BP PLC

    10,714,200   $ 88,567,190

China Petroleum & Chemical Corp. – Class H

    27,175,500     22,230,633

ENI SpA

    3,453,200     83,785,808

LUKOIL (Sponsored ADR)

    1,393,200     73,839,600

Nexen, Inc.

    1,280,917     31,384,960

Petro-Canada

    1,344,100     58,479,276

Royal Dutch Shell PLC (Euronext Amsterdam) – Class A

    5,497,078     148,747,497

StatoilHydro ASA

    2,929,600     61,871,666

Total SA

    1,268,700     73,192,829
        
       642,099,459
        

Telecommunication Services – 11.6%

     

Diversified Telecommunication Services – 8.8%

     

BCE, Inc.

    1,183,300     27,042,212

Bezeq Israeli Telecommunication Corp. Ltd.

    7,223,800     13,471,526

Carso Global Telecom SA de CV Series A1(a)

    1,712,200     6,418,800

Deutsche Telekom AG

    4,290,100     49,412,689

France Telecom SA

    2,092,200     51,021,044

Nippon Telegraph & Telephone Corp.

    1,550,200     64,517,557

Telecom Corp. of New Zealand Ltd.

    9,308,777     14,990,129

Telecom Italia SpA (ordinary shares)

    33,251,300     47,105,961

Telecom Italia SpA (savings shares)

    15,850,100     16,266,943

Telefonica SA

    4,275,100     92,608,770

TELUS Corp. – Class A

    339,600     9,798,397
        
       392,654,028
        

Wireless Telecommunication Services – 2.8%

     

KDDI Corp.

    3,906     20,495,295

Vodafone Group PLC

    56,365,465     106,037,829
        
       126,533,124
        
       519,187,152
        

Information Technology – 8.8%

     

Communications Equipment – 1.8%

     

Nokia OYJ

    2,557,800     39,253,420

Telefonaktiebolaget LM Ericsson – Class B

    4,307,000     39,906,092
        
       79,159,512
        

Computers & Peripherals – 3.3%

     

Compal Electronics, Inc. (GDR)(b)

    6,767,167     28,594,664

Fujitsu Ltd.

    12,415,000     64,350,453

Toshiba Corp.

    14,210,000     53,364,045
        
       146,309,162
        

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   11

 

Portfolio of Investments

 

Company        
    
Shares		   U.S. $ Value
 
    

Electronic Equipment, Instruments & Components – 1.3%

     

AU Optronics Corp.

    52,516,000   $ 54,553,577

Hitachi Ltd.

    1,953,000     6,495,595
        
       61,049,172
        

Semiconductors & Semiconductor Equipment – 2.4%

     

Samsung Electronics (Preference Shares)

    88,724     26,201,354

Samsung Electronics Co. Ltd.

    135,710     60,685,082

United Microelectronics Corp.

    47,936,290     19,485,002
        
       106,371,438
        
       392,889,284
        

Health Care – 7.8%

     

Health Care Providers & Services – 0.4%

  

Celesio AG

    792,400     17,987,976
        

Pharmaceuticals – 7.4%

     

AstraZeneca PLC

    335,700     14,007,042

Bayer AG

    711,400     40,678,494

Biovail Corp.

    941,100     11,947,466

GlaxoSmithKline PLC

    5,912,400     99,985,285

Novartis AG

    1,708,010     68,347,984

Sanofi-Aventis

    1,516,082     96,762,686
        
       331,728,957
        
       349,716,933
        

Consumer Discretionary – 7.6%

     

Automobiles – 2.8%

     

Isuzu Motors Ltd.

    9,453,000     16,276,244

Nissan Motor Co. Ltd.

    9,584,100     57,811,373

Renault SA(a)

    1,270,000     49,268,791
        
       123,356,408
        

Hotels, Restaurants & Leisure – 0.7%

     

Thomas Cook Group PLC

    3,554,555     12,812,466

TUI Travel PLC

    4,322,700     17,425,366
        
       30,237,832
        

Household Durables – 2.5%

     

Electrolux AB Series B(a)

    1,725,600     21,931,494

Sharp Corp.

    5,171,000     58,489,624

Sony Corp.

    1,224,700     32,069,615
        
       112,490,733
        

Leisure Equipment & Products – 0.3%

     

Namco Bandai Holdings, Inc.

    1,456,400     15,429,135
        

Media – 1.1%

     

Fairfax Media Ltd.

    2,653,500     2,458,016

Lagardere SCA

    1,395,500     46,863,348
        
       49,321,364
        

 

12   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Portfolio of Investments

 

Company        
    
Shares		   U.S. $ Value
 
    

Textiles, Apparel & Luxury Goods – 0.2%

  

Yue Yuen Industrial Holdings Ltd.

    4,583,000   $ 10,515,746
        
       341,351,218
        

Materials – 5.5%

     

Chemicals – 2.6%

     

BASF SE

    1,762,500     74,746,433

Mitsubishi Chemical Holdings Corp.

    8,643,500     40,144,185
        
       114,890,618
        

Construction Materials – 0.3%

     

Fletcher Building Ltd.

    2,802,400     11,705,382
        

Containers & Packaging – 0.3%

     

Amcor Ltd.

    3,337,578     13,725,413
        

Metals & Mining – 1.9%

     

ArcelorMittal (Euronext Amsterdam)

    1,769,995     58,974,776

BHP Billiton Ltd.

    1,002,000     28,155,866
        
       87,130,642
        

Paper & Forest Products – 0.4%

     

Svenska Cellulosa AB – Class B(a)

    1,506,700     17,480,371
        
       244,932,426
        

Industrials – 5.2%

     

Aerospace & Defense – 0.5%

     

Bombardier, Inc. – Class B

    6,765,900     22,682,110
        

Air Freight & Logistics – 0.7%

     

Deutsche Post AG

    2,243,910     31,000,994
        

Airlines – 0.4%

     

Deutsche Lufthansa AG

    1,371,200     18,985,703
        

Electrical Equipment – 0.3%

     

Furukawa Electric Co. Ltd.

    4,362,000     15,874,984
        

Industrial Conglomerates – 0.6%

     

Bidvest Group Ltd.

    1,130,998     13,312,445

Koninklijke Philips Electronics NV

    658,040     12,440,556
        
       25,753,001
        

Machinery – 0.1%

     

Volvo AB – Class B

    913,950     5,912,100
        

Professional Services – 0.4%

     

Adecco SA

    143,200     6,222,589

Randstad Holding NV(a)

    342,200     10,563,207
        
       16,785,796
        

Trading Companies & Distributors – 2.2%

     

Mitsubishi Corp.

    3,478,300     66,282,137

Mitsui & Co. Ltd.

    2,381,000     30,529,602
        
       96,811,739
        
       233,806,427
        

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   13

 

Portfolio of Investments

 

Company        
    
Shares		   U.S. $ Value
 
    

Utilities – 4.9%

     

Electric Utilities – 3.1%

     

CEZ

    410,000   $ 18,669,431

E.ON AG

    2,510,800     89,122,315

The Tokyo Electric Power Co., Inc.

    1,221,400     30,742,762
        
       138,534,508
        

Independent Power Producers & Energy Traders – 0.1%

     

Drax Group PLC

    538,015     4,281,926
        

Multi-Utilities – 1.7%

     

Centrica PLC

    11,909,800     47,559,198

RWE AG

    334,110     27,817,976
        
       75,377,174
        
       218,193,608
        

Consumer Staples – 4.0%

     

Food & Staples Retailing – 2.7%

     

Aeon Co. Ltd.

    1,322,000     12,270,241

Casino Guichard Perrachon SA

    125,800     9,208,274

Delhaize Group

    265,600     19,582,220

Koninklijke Ahold NV

    5,797,380     70,644,039

Metro AG

    174,300     9,408,172
        
       121,112,946
        

Food Products – 1.3%

     

Associated British Foods PLC

    4,737,800     56,401,803
        
       177,514,749
        

Total Common Stocks
(cost $5,835,154,023)

        4,343,860,964
        
    

RIGHTS – 0.2%

     

Financials – 0.2%

     

Commercial Banks – 0.2%

     

Lloyds Banking Group PLC(a)

    19,317,007     9,232,369
        

Diversified Financial Services – 0.0%

     

Fortis(a)

    3,544,166     5
        

Total Rights
(cost $110,302,758)

        9,232,374
        
    

SHORT-TERM INVESTMENTS – 2.2%

     

Investment Companies – 2.2%

     

AllianceBernstein Fixed-Income Shares,
Inc. – Government STIF Portfolio(c)
(cost $96,337,233)

    96,337,233     96,337,233
        

Total Investments – 99.6%
(cost $6,041,794,014)

       4,449,430,571

Other assets less liabilities – 0.4%

        18,459,309
        

Net Assets – 100.0%

      $ 4,467,889,880
        

 

14   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Portfolio of Investments

 

FINANCIAL FUTURES CONTRACTS (see Note D)

 

Type   Number of
Contracts		   Expiration
Month		   Original
Value		   Value at
May 31,
2009		   Unrealized
Appreciation/
(Depreciation)

Purchased Contracts

          

EURO STOXX 50

   1,422   June 2009   $     39,265,899   $     49,131,254   $ 9,865,355

FTSE 100 Index Futures

   167   June 2009     11,657,058     11,850,930     193,872
             
          $     10,059,227
             

FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)

 

     Contract
Amount
(000)		   U.S. $
Value on
Origination
Date		   U.S. $
Value at
May 31,
2009		   Unrealized
Appreciation/
(Depreciation)		  

Buy Contracts:

        

Australian Dollar settling 6/15/09

   170,292   $     120,175,064   $     136,256,861   $     16,081,797   

Australian Dollar settling 9/15/09

   240,139     183,872,031     190,888,795     7,016,764   

Australian Dollar settling 9/15/09

   38,117     29,689,331     30,299,569     610,238   

Australian Dollar settling 9/15/09

   32,148     25,503,652     25,554,754     51,102   

Canadian Dollar settling 6/15/09

   22,291     18,980,756     20,419,452     1,438,696   

Euro settling 6/15/09

   50,104     64,897,206     70,825,259     5,928,053   

Euro settling 6/15/09

   44,469     58,329,987     62,859,820     4,529,833   

Euro settling 6/15/09

   225,616     305,623,946     318,922,873     13,298,927   

Japanese Yen settling 6/15/09

   40,622,725     414,306,222     426,416,956     12,110,734   

Japanese Yen settling 6/15/09

   4,796,377     53,380,859     50,347,594     (3,033,265 ) 

Japanese Yen settling 6/15/09

   2,478,483     24,727,956     26,016,649     1,288,693   

Norwegian Krone settling 6/15/09

   1,156,952     167,749,082     183,475,076     15,725,994   

Swedish Krona settling 6/15/09

   640,616     85,240,780     84,655,154     (585,626 ) 

Swedish Krona settling 9/15/09

   190,116     25,294,165     25,117,793     (176,372 ) 

Swiss Franc settling 6/15/09

   45,733     38,438,199     42,834,958     4,396,759   

Swiss Franc settling 6/15/09

   36,463     33,159,938     34,152,386     992,448   

Sale Contracts:

        

British Pound settling 6/15/09

   51,481     72,115,100     83,205,174     (11,090,074 ) 

British Pound settling 6/15/09

   112,518     164,512,568     181,855,049     (17,342,481 ) 

British Pound settling 6/15/09

   85,509     125,066,318     138,202,273     (13,135,955 ) 

Canadian Dollar settling 6/15/09

   104,073     81,619,481     95,335,051     (13,715,570 ) 

Canadian Dollar settling 6/15/09

   37,580     30,510,676     34,424,790     (3,914,114 ) 

Canadian Dollar settling 6/15/09

   31,159     25,401,704     28,542,896     (3,141,192 ) 

Canadian Dollar settling 9/15/09

   28,420     24,529,605     26,049,110     (1,519,505 ) 

Canadian Dollar settling 9/15/09

   19,334     17,660,653     17,721,094     (60,441 ) 

Euro settling 6/15/09

   219,925     277,565,143     310,878,274     (33,313,131 ) 

Euro settling 6/15/09

   100,264     128,277,762     141,729,678     (13,451,916 ) 

Euro settling 9/15/09

   59,648     82,151,401     84,253,607     (2,102,206 ) 

Japanese Yen settling 6/15/09

   11,839,212     121,522,541     124,276,270     (2,753,729 ) 

Japanese Yen settling 6/15/09

   4,212,908     44,424,493     44,222,918     201,575   

Norwegian Krone settling 6/15/09

   80,750     11,883,738     12,805,728     (921,990 ) 

Norwegian Krone settling 6/15/09

   1,076,202     167,527,027     170,669,348     (3,142,321 ) 

Swedish Krona settling 6/15/09

   640,616     72,505,602     84,655,154     (12,149,552 ) 

Swedish Krona settling 9/15/09

   190,116     24,539,013     25,117,793     (578,780 ) 

Swiss Franc settling 6/15/09

   82,196     71,541,970     76,987,344     (5,445,374 ) 

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   15

 

Portfolio of Investments

 

(a)   Non-income producing security.

 

(b)   Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security is considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At May 31, 2009, the market value of this security amounted to $28,594,664 or 0.6% of net assets.

 

(c)   Investment in affiliated money market mutual fund.

Glossary:

ADR – American Depositary Receipt

GDR – Global Depositary Receipt

 

 

 

 

See notes to financial statements.

 

16   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Portfolio of Investments

STATEMENT OF ASSETS & LIABILITIES

May 31, 2009 (unaudited)

 

Assets   

Investments in securities, at value

   

Unaffiliated issuers (cost $5,945,456,781)

    $ 4,353,093,338   

Affiliated issuers (cost $96,337,233)

      96,337,233   

Cash

      5,185,317 (a) 

Foreign currencies, at value (cost $35,395,001)

      35,717,546   

Unrealized appreciation of forward currency exchange contracts

      83,671,613   

Receivable for investment securities sold and foreign currency transactions

      80,049,353   

Dividends receivable

      31,273,798   

Receivable for shares of beneficial interest sold

      8,623,452   

Contributions from Adviser (see Note B)

      710,079   

Receivable for variation margin on futures contracts

      28,815   
        

Total assets

      4,694,690,544   
        
Liabilities   

Unrealized depreciation of forward currency exchange contracts

      141,573,594   

Payable for investment securities purchased and foreign currency transactions

      60,890,708   

Payable for shares of beneficial interest redeemed

      18,664,762   

Advisory fee payable

      2,599,077   

Distribution fee payable

      949,997   

Transfer Agent fee payable

      362,476   

Administrative fee payable

      16,182   

Accrued expenses

      1,743,868   
        

Total liabilities

      226,800,664   
        

Net Assets

    $ 4,467,889,880   
        
Composition of Net Assets   

Paid-in capital

    $ 9,758,815,920   

Undistributed net investment income

      378,430,166   

Accumulated net realized loss on investment and foreign currency transactions

      (4,030,617,280 ) 

Net unrealized depreciation on investments and foreign currency denominated assets and liabilities

      (1,638,738,926 ) 
        
   $      4,467,889,880   
        

Net Asset Value Per Share—unlimited shares authorized, without par value

 

Class   Net Assets      Shares
Outstanding		      Net Asset
Value		  
A   $   1,928,640,408      170,683,764      $   11.30 * 
   
B   $ 85,989,513      7,825,388      $ 10.99   
   
C   $ 356,554,265      32,419,146      $ 11.00   
   
Advisor   $ 1,189,916,238      103,222,605      $ 11.53   
   
R   $ 189,588,023      16,930,880      $ 11.20   
   
K   $ 176,521,803      15,673,530      $ 11.26   
   
I   $ 540,679,630      47,496,451      $ 11.38   
   

 

(a)   An amount of $5,185,317 has been segregated to collateralize margin requirements for open futures contracts outstanding at May 31, 2009.

 

*   The maximum offering price per share for Class A shares was $11.80 which reflects a sales charge of 4.25%.

See notes to financial statements.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   17

 

Statement of Assets & Liabilities

STATEMENT OF OPERATIONS

Six Months Ended May 31, 2009 (unaudited)

 

Investment Income    

Dividends

    

Unaffiliated issuers (net of foreign taxes withheld of $12,083,422)

   $     91,583,604     

Affiliated issuers

     314,021     

Interest

     26,986      $ 91,924,611   
         
Expenses    

Advisory fee (see Note B)

     15,352,053     

Distribution fee—Class A

     2,762,473     

Distribution fee—Class B

     405,595     

Distribution fee—Class C

     1,717,462     

Distribution fee—Class R

     424,797     

Distribution fee—Class K

     197,628     

Transfer agency—Class A

     2,647,703     

Transfer agency—Class B

     155,783     

Transfer agency—Class C

     564,698     

Transfer agency—Advisor Class

     1,702,337     

Transfer agency—Class R

     189,487     

Transfer agency—Class K

     120,780     

Transfer agency—Class I

     134,519     

Custodian

     1,215,329     

Printing

     502,175     

Registration fees

     172,931     

Administrative

     48,602     

Audit

     32,583     

Trustees’ fees

     24,945     

Legal

     20,180     

Miscellaneous

     115,159     
         

Total expenses

     28,507,219     

Less: expenses waived and reimbursed by the Adviser (see Note B)

     (737,564 )   
         

Net expenses

       27,769,655   
         

Net investment income

       64,154,956   
         
Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions    

Net realized loss on:

    

Investment transactions

       (2,758,528,676 )(a) 

Futures contracts

       (5,199,127 ) 

Foreign currency transactions

       (332,509,678 ) 

Net change in unrealized appreciation/depreciation of:

    

Investments

           3,278,420,946   

Futures contracts

       10,759,107   

Foreign currency denominated assets and liabilities

       258,083,656   
         

Net gain on investment and foreign currency transactions

       451,026,228   
         

Contributions from Adviser (see Note B)

       710,079   
         

Net Increase in Net Assets from Operations

     $ 515,891,263   
         

 

(a)   On December 31, 2008, the Fund had a redemption-in-kind with total proceeds in the amount of $24,662,741. The loss on investments of $25,948,930 will not be realized for tax purposes.

See notes to financial statements.

 

18   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Statement of Operations

STATEMENT OF CHANGES IN NET ASSETS

 

    Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		  
Increase (Decrease) in Net Assets from Operations    

Net investment income

   $ 64,154,956      $ 267,708,058   

Net realized loss on investment and foreign currency transactions

     (3,096,237,481 )      (1,042,181,414 ) 

Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities

     3,547,263,709        (6,641,325,325 ) 

Contributions from Adviser (see Note B)

     710,079        – 0  – 
               

Net increase (decrease) in net assets from operations

     515,891,263        (7,415,798,681 ) 
Dividends and Distributions
to Shareholders from		    

Net investment income

    

Class A

     – 0  –      (87,084,220 ) 

Class B

     – 0  –      (2,737,561 ) 

Class C

     – 0  –      (11,375,185 ) 

Advisor Class

     – 0  –      (61,742,936 ) 

Class R

     – 0  –      (2,316,081 ) 

Class K

     – 0  –      (5,283,006 ) 

Class I

     – 0  –      (25,783,235 ) 

Net realized gain on investment transactions

    

Class A

     – 0  –      (261,502,906 ) 

Class B

     – 0  –      (14,595,674 ) 

Class C

     – 0  –      (60,648,288 ) 

Advisor Class

     – 0  –      (158,140,603 ) 

Class R

     – 0  –      (7,470,043 ) 

Class K

     – 0  –      (15,042,891 ) 

Class I

     – 0  –      (63,696,172 ) 
Transactions in Shares of Beneficial Interest    

Net decrease

     (1,089,907,059 )      (152,234,641 ) 
Capital Contributions    

Proceeds from third party regulatory settlement (see Note E)

     190,023        – 0  – 
               

Total decrease

     (573,825,773 )      (8,345,452,123 ) 
Net Assets    

Beginning of period

     5,041,715,653            13,387,167,776   
               

End of period (including undistributed net investment income of $378,430,166 and $314,275,210, respectively)

   $      4,467,889,880      $ 5,041,715,653   
               

See notes to financial statements.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   19

 

Statement of Changes in Net Assets

NOTES TO FINANCIAL STATEMENTS

May 31, 2009 (unaudited)

 

NOTE A

Significant Accounting Policies

AllianceBernstein Trust (the “Trust”) was organized as a Massachusetts business trust on December 12, 2000 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of the following four funds: the AllianceBernstein Global Value Fund, the AllianceBernstein International Value Fund, the AllianceBernstein Small/Mid Cap Value Fund and the AllianceBernstein Value Fund (the “Funds”). Each Fund is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the AllianceBernstein International Value Fund (the “Fund”). The Fund offers Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Effective January 31, 2009, sales of Class B shares of the Fund to new investors were suspended. Class B shares will only be issued (i) upon the exchange of Class B shares from another AllianceBernstein Fund, (ii) for purposes of dividend reinvestment, (iii) through the Fund’s Automatic Investment Program (the “Program”) for accounts that established the Program prior to January 31, 2009, and (iv) for purchases of additional shares by Class B shareholders as of January 31, 2009. The ability to establish a new Automatic Investment Program for accounts containing Class B shares was suspended as of January 31, 2009. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, 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

 

20   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

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 Trustees.

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 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. (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. Investments in money market funds are valued at their net asset value each day.

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 (see Note A.2).

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   21

 

Notes to Financial Statements

 

2. Fair Value Measurements

The Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective December 1, 2007. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

 

  •  

Level 1—quoted prices in active markets for identical investments

  •  

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

  •  

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of May 31, 2009:

 

Level

    Investments in
Securities		      Other
Financial
Instruments*		  

Level 1

    $ 392,010,910       $      10,059,227   

Level 2

      4,057,419,661 +       (57,901,981 ) 

Level 3

      – 0  –       – 0  – 
                 

Total

    $     4,449,430,571       $ (47,842,754 ) 
                 

 

*   Other financial instruments are derivative instruments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

 

+   The earlier close of the foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred between the close of the foreign markets and the time at which the Fund values its securities which may materially affect the value of securities trading in such markets. 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. Accordingly, a significant portion of the Fund’s investments are categorized as Level 2 investments.

 

22   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

3. 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 investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities.

4. 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.

In accordance with FASB Interpretation No. 48, “Accounting for Uncertainties in Income Taxes” (“FIN 48”), management has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements.

5. 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 the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income.

6. 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

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   23

 

Notes to Financial Statements

 

the Fund represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Expenses of the Trust are charged to each Fund in proportion to each Fund’s respective net assets. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.

7. Dividends and Distributions

Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification.

8. Recent Accounting Pronouncements

During the period ended May 31, 2009, the Fund adopted FASB Statement of Financial Accounting Standards No. 161 (“FAS 161”), “Disclosures about Derivative Instruments and Hedging Activities.” FAS 161 requires enhanced disclosure about an entity’s derivative and hedging activities including qualitative disclosures about the objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements (see Note D.1).

On April 9, 2009, FASB issued FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with FAS 157, when the volume and level of activity for the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP 157-4 and believes the adoption of FSP 157-4 will have no material impact on the Fund’s financial statements.

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. The fee is accrued daily and paid monthly. The Adviser had agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis to 1.20%, 1.90%, 1.90%, .90%, 1.40%, 1.15% and .90% of the daily average net assets for the Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively (the “Expense

 

24   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

Caps”). The Expense Caps expired on January 1, 2009. For the six months ended May 31, 2009, such reimbursement amounted to $737,564.

During the six months ended May 31, 2009, the Adviser reimbursed the Fund $710,079 for trading losses incurred due to a trade entry error.

Pursuant to the investment advisory agreement, the Fund paid $48,602 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the six months ended May 31, 2009.

The Fund compensates AllianceBernstein Investor Services, Inc. (“ABIS”), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $1,637,231 for the six months ended May 31, 2009.

AllianceBernstein Investments, 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 $6,184 from the sale of Class A shares and received $45,690, $113,472 and $47,622 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 May 31, 2009.

The Fund may invest in the AllianceBernstein Fixed-Income Shares, Inc.—Government STIF Portfolio, an open-end management investment company managed by the Adviser. The Government STIF Portfolio is offered as a cash management option to mutual funds and other institutional accounts of the Adviser, and is not available for direct purchase by members of the public. The Government STIF Portfolio pays no investment management fees but does bear its own expenses. A summary of the Fund’s transactions in shares of the Government STIF Portfolio for the six months ended May 31, 2009 is as follows:

 

Market Value

November 30, 2008

(000)

   Purchases
at Cost
(000)		   Sales
Proceeds
(000)		   Dividend
Income
(000)		   Market Value
May 31, 2009
(000)
$     348,793   $     999,738   $     1,252,194   $     314   $     96,337

Brokerage commissions paid on investment transactions for the six months ended May 31, 2009 amounted to $3,450,398, of which $0 and $52,860, respectively, was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   25

 

Notes to Financial Statements

 

NOTE C

Distribution Services Agreement

The Fund has adopted a Distribution Services Agreement (the “Agreement”) pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Fund’s average daily net assets attributable to Class A shares, 1% of the Fund’s average daily net assets attributable to both Class B and Class C shares, .50% of the Fund’s average daily net assets attributable to Class R shares and .25% of the Fund’s average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. The fees are accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amounts of $3,158,236, $5,728,384, $1,545,498 and $1,825,119 for Class B, Class C, Class R and Class K shares, respectively. While such costs may be recovered from the Fund in future periods so long as the Agreement is in effect, the rate of the distribution and servicing fees payable under the Agreement may not be increased without a shareholder vote. 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 May 31, 2009 were as follows:

 

     Purchases     Sales  

Investment securities (excluding U.S. government securities)

    $     1,141,280,569      $     2,190,574,912   

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 futures and foreign currency transactions) are as follows:

 

Gross unrealized appreciation

    $ 176,736,040   

Gross unrealized depreciation

          (1,769,099,483 ) 
        

Net unrealized depreciation

    $ (1,592,363,443 ) 
        

1. Derivative Financial Instruments

The Fund may use derivatives to earn income and enhance returns, to hedge or adjust the risk profile of its portfolio, to replace more traditional direct

 

26   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

investments, or to obtain exposure to otherwise inaccessible markets. The Fund may also use derivatives for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.

The principal types of derivatives utilized by the Fund, as well as the methods in which they may be used are:

 

  •  

Futures Contracts

The Fund may buy or sell futures contracts for the purpose of hedging its portfolio against adverse effects of anticipated movements in the market. The Fund bears the market risk that arises from changes in the value of these instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. The Fund may also purchase or sell futures contracts for foreign currencies or options thereon for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.

At the time the Fund enters into a futures contract, the Fund deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. The credit/counterparty risk for futures contracts is generally less than privately negotiated futures contracts, since the clearinghouse, which is the issuer or counterparty to each exchange-traded future, provides a guarantee of performance. This guarantee is supported by a daily payment system (i.e., margin requirements). When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed.

 

  •  

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 non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions.”

A forward currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   27

 

Notes to Financial Statements

 

foreign currency transactions. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Fund. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars reflects the total exposure the Fund has in that particular currency contract.

At May 31, 2009, the Fund had entered into the following derivatives (not designated as hedging instruments under FAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”):

 

   

Asset Derivatives

    

Liability Derivatives

Derivatives Not
Accounted
for as Hedging
Instruments
under
Statement 133

  

Statement of
Assets and
Liabilities
Location

   Fair Value    

Statement of
Assets and
Liabilities
Location

   Fair Value

Foreign exchange contracts

  

Unrealized appreciation of forward currency exchange contracts

  

$

83,671,613

  

  

Unrealized depreciation of forward currency exchange contracts

  

$

141,573,594

Equity contracts

  

Receivable for variation margin on futures contracts

  

 

10,059,227

* 

    
                 

Total

     $     93,730,840        $     141,573,594
                 

 

*   Includes cumulative appreciation/(depreciation) of futures contracts as reported in portfolio of investments. Only variation margin received at period end is reported within the statement of assets & liabilities.

 

28   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

The effect of derivative instruments on the Statement of Operations for the six months ended May 31, 2009:

 

Derivatives Not
Accounted for as
Hedging Instruments
under Statement 133

   

Location of Gain
or (Loss) on
Derivatives

   Realized
Gain or
(Loss) on
Derivatives 		    Change in
Unrealized
Appreciation or
(Depreciation)

Foreign exchange contracts

   

Net realized gain (loss) on foreign currency transactions; change in unrealized appreciation/(depreciation) of foreign currency denominated assets and liabilities

   

$

(331,235,900

) 

  

$

    256,373,226

Equity contracts

   

Net realized gain (loss) on futures contracts; change in unrealized appreciation (depreciation) of futures contracts

          (5,199,127 )      10,759,107
                 

Total

       $ (336,435,027 )    $ 267,132,333
                 

2. Currency Transactions

The Fund may invest in non-U.S. Dollar securities on a currency hedged or unhedged basis. The Fund may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and options. The Fund may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Fund and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Fund may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   29

 

Notes to Financial Statements

 

NOTE E

Shares of Beneficial Interest

Transactions in shares of beneficial interest for each class were as follows:

 

      
     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
        
Class A             

Shares sold

    37,954,453      82,415,077        $ 356,640,421      $ 1,500,308,885     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    14,811,789          – 0  –      324,822,519     
     

Shares converted from Class B

    369,910      1,251,538          3,536,522        23,451,550     
     

Shares redeemed

    (84,183,857 )    (132,420,786 )        (767,881,242 )      (2,292,777,602 )   
     

Net decrease

    (45,859,494 )    (33,942,382 )      $ (407,704,299 )    $ (444,194,648 )   
     
            
Class B             

Shares sold

    152,124      640,826        $ 1,409,692      $ 12,321,007     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    742,459          – 0  –      16,007,418     
     

Shares converted to Class A

    (379,775 )    (1,276,719 )        (3,536,522 )      (23,451,550 )   
     

Shares redeemed

    (1,846,201 )    (4,244,791 )        (16,600,120 )      (72,037,975 )   
     

Net decrease

    (2,073,852 )    (4,138,225 )      $ (18,726,950 )    $ (67,161,100 )   
     
            
Class C             

Shares sold

    1,594,614      8,361,931        $ 14,804,114      $ 161,348,139     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    2,070,287          – 0  –      44,656,098     
     

Shares redeemed

    (13,055,613 )    (24,608,181 )        (118,141,627 )      (409,417,112 )   
     

Net decrease

    (11,460,999 )    (14,175,963 )      $ (103,337,513 )    $ (203,412,875 )   
     
            
Advisor Class             

Shares sold

    22,663,363      73,445,830        $ 217,884,646      $ 1,349,381,775     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    9,255,953          – 0  –      206,222,629     
     

Shares redeemed

    (61,746,753 )    (91,005,502 )        (574,674,369 )      (1,569,607,247 )   
     

Net decrease

    (39,083,390 )    (8,303,719 )      $ (356,789,723 )    $ (14,002,843 )   
     

 

30   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

      
     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
        
Class R             

Shares sold

    5,011,779      16,733,599        $ 46,431,563      $ 290,468,540     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    448,828          – 0  –      9,784,455     
     

Shares redeemed

    (6,374,891 )    (5,766,397 )        (60,333,106 )      (88,547,473 )   
     

Net increase (decrease)

    (1,363,112 )    11,416,030        $ (13,901,543 )    $ 211,705,522     
     
            
Class K             

Shares sold

    2,509,568      6,686,518        $ 23,441,647      $ 123,897,064     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    930,813          – 0  –      20,328,949     
     

Shares redeemed

    (3,619,842 )    (4,948,632 )        (34,131,019 )      (88,976,493 )   
     

Net increase (decrease)

    (1,110,274 )    2,668,699        $ (10,689,372 )    $ 55,249,520     
     
            
Class I             

Shares sold

    6,479,623      34,675,164        $ 61,908,620      $ 667,623,678     
     

Shares issued in reinvestment of dividends and distributions

    – 0  –    3,791,926          – 0  –      83,270,705     
     

Shares redeemed

    (25,172,718 )    (30,576,483 )        (240,666,279 )      (441,312,600 )   
     

Net increase (decrease)

    (18,693,095 )    7,890,607        $ (178,757,659 )    $ 309,581,783     
     

For the six months ended May 31, 2009, the Fund received $190,023 related to a third-party’s settlement of regulatory proceedings involving allegations of improper trading. This amount is presented in the Fund’s statement of changes in net assets. Neither the Fund nor its affiliates were involved in the proceedings or the calculation of the payment.

NOTE F

Risks Involved in Investing in the Fund

Foreign Securities Risk—Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of 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.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   31

 

Notes to Financial Statements

 

Currency Risk—This is the risk that changes in foreign currency exchange rates may negatively affect the value of the Fund’s investments or reduce the returns of the Fund. For example, the value of the Fund’s investments in foreign currency-denominated securities or currencies may decrease if the U.S. Dollar is strong (i.e., gaining value relative to other currencies) and other currencies are weak (i.e., losing value relative to the U.S. Dollar). Currency markets are generally not as regulated as securities markets. Independent of the Fund’s investments denominated in foreign currencies, the Fund’s positions in various foreign currencies may cause the Fund to experience investment losses due to the changes in exchange rates and interest rates.

Derivatives Risk—The Fund may invest in derivatives such as forwards, options, futures and swaps. These investments may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Fund, and subject to counterparty risk to a greater degree than more traditional investments.

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”) intended to provide short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended May 31, 2009. Effective July 16, 2009, the Facility will be reduced to $140 million.

NOTE H

Distributions to Shareholders

The tax character of distributions to be paid for the year ending November 30, 2009 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended November 30, 2008 and November 30, 2007 were as follows:

 

     2008    2007

Distributions paid from:

      

Ordinary income

    $ 246,454,041    $ 186,589,422

Long-term capital gains

      530,964,760      293,122,571
             

Total taxable distributions

      777,418,801      479,711,993
             

Total distributions paid

    $     777,418,801    $     479,711,993
             

 

32   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

As of November 30, 2008, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Accumulated capital and other losses

    $ (934,289,460 )(a) 

Unrealized appreciation/(depreciation)

      (4,871,817,766 )(b) 
        

Total accumulated earnings/(deficit)

    $     (5,806,107,226 ) 
        

 

(a)  

On November 30, 2008, the Fund had a net capital loss carryforward for federal income tax purposes of $934,289,460 of which $24,027,449 expires in the year 2009 and $910,262,011 expires in the year 2016. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Based on certain provisions in the Internal Revenue Code, various limitations regarding the future utilization of these carryforwards, brought forward as a result of the Fund’s merger with Alliance International Fund, Inc. may apply.

 

(b)  

The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of gains/losses on certain derivative instruments.

NOTE I

Legal Proceedings

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 (“AllianceBernstein defendants”), and certain other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the AllianceBernstein 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.

Following 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. 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 Order of the SEC dated December 18, 2003 as amended and restated January 15, 2004

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   33

 

Notes to Financial Statements

 

(“SEC Order”) and the New York State Attorney General Assurance of Discontinuance dated September 1, 2004 (“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 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 settlement amount ($30 million), which the Adviser previously accrued and disclosed, has been disbursed. The derivative claims brought on behalf of Alliance Holding, in which plaintiffs seek an unspecified amount of damages, remain pending.

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.

 

34   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class A  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  9.78      $  24.18      $  23.05      $  18.10      $  16.22      $  12.82   
     

Income From Investment Operations

            

Net investment income(a)

   .14 (b)    .45      .50      .39 (b)    .26 (b)    .16 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   1.38      (13.46 )    2.18      5.80      2.15      3.37   

Contributions from Adviser

   .00 (d)    – 0  –    – 0  –    – 0  –    – 0  –    – 0  – 
     

Net increase (decrease) in net asset value from operations

   1.52      (13.01 )    2.68      6.19      2.41      3.53   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.34 )    (.40 )    (.23 )    (.17 )    (.13 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (1.05 )    (1.15 )    (1.01 )    (.36 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.39 )    (1.55 )    (1.24 )    (.53 )    (.13 ) 
     

Net asset value, end of period

   $  11.30      $  9.78      $  24.18      $  23.05      $  18.10      $  16.22   
     

Total Return

            

Total investment return based on net asset value(e)

   15.54 %    (56.98 )%    12.23  %    36.20  %    15.31  %    27.77  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $1,928,640      $2,118,101      $6,056,019      $3,285,006      $1,262,495      $455,933   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   1.35 %(f)    1.14  %    1.11  %    1.19  %(g)    1.20  %    1.20  % 

Expenses, before waivers/reimbursements

   1.39 %(f)    1.14  %    1.11  %    1.19  %(g)    1.37  %    1.64  % 

Net investment income

   2.91 %(b)(f)    2.45  %    2.11  %    1.92  %(b)(g)    1.57  %(b)    1.12  %(b)(c) 

Portfolio turnover rate

   27 %    38  %    21  %    23  %    26  %    22  % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   35

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class B  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  9.55      $  23.65      $  22.63      $  17.81      $  15.99      $  12.67   
     

Income From Investment Operations

            

Net investment income(a)

   .10 (b)    .30      .30      .25 (b)    .16 (b)    .07 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   1.34      (13.16 )    2.16      5.70      2.11      3.32   

Contributions from
Adviser

   .00 (d)    – 0  –    – 0  –    – 0  –    – 0  –    – 0  – 
     

Net increase (decrease) in net asset value from operations

   1.44      (12.86 )    2.46      5.95      2.27      3.39   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.19 )    (.29 )    (.12 )    (.09 )    (.07 ) 

Distributions from net realized gain on
investment
transactions

   – 0  –    (1.05 )    (1.15 )    (1.01 )    (.36 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.24 )    (1.44 )    (1.13 )    (.45 )    (.07 ) 
     

Net asset value, end of period

   $  10.99      $  9.55      $  23.65      $  22.63      $  17.81      $  15.99   
     

Total Return

            

Total investment return based on net asset value(e)

   15.08 %    (57.30 )%    11.38  %    35.22  %    14.52  %    26.83  % 

Ratios/Supplemental
Data

            

Net assets, end of period (000’s omitted)

   $85,990      $94,538      $331,999      $302,072      $192,192      $136,980   

Ratio to average net assets of:

            

Expenses, net of
waivers/
reimbursements

   2.13 %(f)    1.88  %    1.84  %    1.90  %(g)    1.90  %    1.90  % 

Expenses, before
waivers/
reimbursements

   2.19 %(f)    1.88  %    1.84  %    1.90  %(g)    2.09  %    2.39  % 

Net investment income

   2.16 %(b)(f)    1.66  %    1.30  %    1.22  %(b)(g)    .98  %(b)    .47  %(b)(c) 

Portfolio turnover rate

   27 %    38  %    21  %    23  %    26  %    22  % 

See footnote summary on page 42.

 

36   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class C  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  9.56      $  23.66      $  22.63      $  17.81      $  15.99      $  12.67   
     

Income From Investment Operations

            

Net investment income(a)

   .10 (b)    .32      .33      .25 (b)    .16 (b)    .06 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   1.34      (13.18 )    2.14      5.70      2.11      3.33   

Contributions from
Adviser

   .00 (d)    – 0  –    – 0  –    – 0  –    – 0  –    – 0  – 
     

Net increase (decrease) in net asset value from operations

   1.44      (12.86 )    2.47      5.95      2.27      3.39   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.19 )    (.29 )    (.12 )    (.09 )    (.07 ) 

Distributions from net realized gain on
investment
transactions

   – 0  –    (1.05 )    (1.15 )    (1.01 )    (.36 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.24 )    (1.44 )    (1.13 )    (.45 )    (.07 ) 
     

Net asset value, end of period

   $  11.00      $  9.56      $  23.66      $  22.63      $  17.81      $  15.99   
     

Total Return

            

Total investment return based on net asset value(e)

   15.06 %    (57.27 )%    11.43  %    35.22  %    14.52  %    26.83  % 

Ratios/Supplemental
Data

            

Net assets, end of period (000’s omitted)

   $356,554      $419,340      $1,373,558      $775,322      $315,390      $143,067   

Ratio to average net assets of:

            

Expenses, net of
waivers/reimbursements

   2.09 %(f)    1.86  %    1.82  %    1.89  %(g)    1.90  %    1.90  % 

Expenses, before
waivers/reimbursements

   2.13 %(f)    1.86  %    1.82  %    1.89  %(g)    2.07  %    2.35  % 

Net investment income

   2.13 %(b)(f)    1.72  %    1.40  %    1.22  %(b)(g)    .95  %(b)    .46  %(b)(c) 

Portfolio turnover rate

   27 %    38  %    21  %    23  %    26  %    22  % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   37

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Advisor Class  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  9.96      $  24.60      $  23.41      $  18.34      $  16.41      $  12.96   
     

Income From Investment Operations

            

Net investment income(a)

   .15 (b)    .52      .58      .46 (b)    .37 (b)    .21 (b)(c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   1.42      (13.71 )    2.20      5.89      2.12      3.40   

Contributions from Adviser

   .00 (d)    – 0  –    – 0  –    – 0  –    – 0  –    – 0  – 
     

Net increase (decrease) in net asset value from operations

   1.57      (13.19 )    2.78      6.35      2.49      3.61   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.40 )    (.44 )    (.27 )    (.20 )    (.16 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (1.05 )    (1.15 )    (1.01 )    (.36 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.45 )    (1.59 )    (1.28 )    (.56 )    (.16 ) 
     

Net asset value, end of period

   $  11.53      $  9.96      $  24.60      $  23.41      $  18.34      $  16.41   
     

Total Return

            

Total investment return based on net asset value(e)

   15.76 %    (56.87 )%    12.52  %    36.65  %    15.66  %    28.10  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $1,189,916      $1,417,977      $3,704,600      $1,851,774      $712,775      $1,082,517   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   1.05 %(f)    .84  %    .82  %    .89  %(g)    .90  %    .90  % 

Expenses, before waivers/reimbursements

   1.09 %(f)    .84  %    .82  %    .89  %(g)    1.04  %    1.34  % 

Net investment income

   3.10 %(b)(f)    2.77  %    2.41  %    2.21  %(b)(g)    2.21  %(b)    1.48  %(b)(c) 

Portfolio turnover rate

   27 %    38  %    21  %    23  %    26  %    22  % 

See footnote summary on page 42.

 

38   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class R  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  9.70      $  24.02      $  22.98      $  18.09      $  16.23      $  12.82   
     

Income From Investment Operations

            

Net investment income(a)(b)

   .14      .35      .45      .30      .22      .02 (c) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   1.36      (13.30 )    2.15      5.83      2.16      3.48   

Contributions from
Adviser

   .00 (d)    – 0  –    – 0  –    – 0  –    – 0  –    – 0  – 
     

Net increase (decrease) in net asset value from operations

   1.50      (12.95 )    2.60      6.13      2.38      3.50   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   – 0  –    (.32 )    (.41 )    (.23 )    (.16 )    (.09 ) 

Distributions from net realized gain on
investment
transactions

   – 0  –    (1.05 )    (1.15 )    (1.01 )    (.36 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.37 )    (1.56 )    (1.24 )    (.52 )    (.09 ) 
     

Net asset value, end of period

   $  11.20      $  9.70      $  24.02      $  22.98      $  18.09      $  16.23   
     

Total Return

            

Total investment return based on net asset value(e)

   15.46 %    (57.08 )%    11.88  %    35.87  %    15.09  %    27.46  % 

Ratios/Supplemental
Data

            

Net assets, end of period (000’s omitted)

   $189,588      $177,471      $165,221      $44,196      $4,115      $960   

Ratio to average net assets of:

            

Expenses, net of
waivers/
reimbursements

   1.50 %(f)    1.40  %    1.40  %    1.40  %(g)    1.40  %    1.40  % 

Expenses, before
waivers/
reimbursements

   1.53 %(f)    1.46  %    1.41  %    1.50  %(g)    1.66  %    1.84  % 

Net investment income(b)

   2.98 %(f)    2.10  %    1.89  %    1.47  %(g)    1.30  %    .12  %(c) 

Portfolio turnover rate

   27 %    38  %    21  %    23  %    26  %    22  % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   39

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class K  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,     March 1,
2005(g) to
November 30,
2005		  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  9.74      $  24.10      $  23.02      $  18.11      $  17.14   
     

Income From Investment Operations

          

Net investment income(a)

   .16 (b)    .46 (b)    .53      .27 (b)    .11 (b) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   1.36      (13.41 )    2.15      5.93      .86   

Contributions from Adviser

   .00 (d)    – 0  –    – 0  –    – 0  –    – 0  – 
     

Net increase (decrease) in net asset value from operations

   1.52      (12.95 )    2.68      6.20      .97   
     

Less: Dividends and Distributions

          

Dividends from net investment income

   – 0  –    (.36 )    (.45 )    (.28 )    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.05 )    (1.15 )    (1.01 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.41 )    (1.60 )    (1.29 )    – 0  – 
     

Net asset value, end of period

   $  11.26      $  9.74      $  24.10      $  23.02      $  18.11   
     

Total Return

          

Total investment return based on net asset value(e)

   15.61 %    (56.97 )%    12.24  %    36.30  %    5.66 % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $176,522      $163,512      $340,196      $72,884      $106   

Ratio to average net assets of:

          

Expenses, net of waivers/reimbursements

   1.19 %(f)    1.15  %    1.10  %    1.13  %(g)    1.15 %(f) 

Expenses, before waivers/reimbursements

   1.21 %(f)    1.16  %    1.10  %    1.13  %(g)    1.42 %(f) 

Net investment income

   3.29 %(b)(f)    2.50  %(b)    2.19  %    1.40  %(b)(g)    1.07 %(b)(f) 

Portfolio turnover rate

   27 %    38  %    21  %    23  %    26 % 

See footnote summary on page 42.

 

40   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class I  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,     March 1,
2005(h) to
November 30,
2005		  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  9.83      $  24.28      $  23.12      $  18.14      $  17.14   
     

Income From Investment Operations

          

Net investment income(a)

   .16      .54      .58      .47 (b)    .09 (b) 

Net realized and unrealized gain (loss) on investment and foreign currency transactions

   1.39      (13.52 )    2.18      5.81      .91   

Contributions from Adviser

   .00 (d)    – 0  –    – 0  –    – 0  –    – 0  – 
     

Net increase (decrease) in net asset value from operations

   1.55      (12.98 )    2.76      6.28      1.00   
     

Less: Dividends and Distributions

          

Dividends from net investment income

   – 0  –    (.42 )    (.45 )    (.29 )    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.05 )    (1.15 )    (1.01 )    – 0  – 
     

Total dividends and distributions

   – 0  –    (1.47 )    (1.60 )    (1.30 )    – 0  – 
     

Net asset value, end of period

   $  11.38      $  9.83      $  24.28      $  23.12      $  18.14   
     

Total Return

          

Total investment return based on net asset value(e)

   15.77 %    (56.81 )%    12.60  %    36.73  %    5.83 % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $540,680      $650,777      $1,415,575      $638,419      $180,185   

Ratio to average net assets of:

          

Expenses, net of waivers/reimbursements

   .85 %(f)    .76  %    .75  %    .82  %(g)    .90 %(f) 

Expenses, before waivers/reimbursements

   .85 %(f)    .76  %    .75  %    .82  %(g)    1.00 %(f) 

Net investment income

   3.32 %(f)    2.93  %    2.43  %    2.27  %(b)(g)    .75 %(b)(f) 

Portfolio turnover rate

   27 %    38  %    21  %    23  %    26 % 

See footnote summary on page 42.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   41

 

Financial Highlights

 

(a)   Based on average shares outstanding.

 

(b)   Net of fees and expenses waived/reimbursed by the Adviser.

 

(c)   Net of fees and expenses waived/reimbursed by the Transfer Agent.

 

(d)   Amount is less than $.005.

 

(e)   Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges 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)   The ratio includes expenses attributable to costs of proxy solicitation.

 

(h)   Commencement of distributions.

 

 

See notes to financial statements.

 

42   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Financial Highlights

 

BOARD OF TRUSTEES

William H. Foulk, Jr.(1), Chairman

John H. Dobkin(1)

Michael J. Downey(1)

D. James Guzy(1)

Nancy P. Jacklin(1)

Garry L. Moody(1)

Marshall C. Turner, Jr.(1)

Earl D. Weiner(1)

OFFICERS

Robert M. Keith, President and Chief Executive Officer

Philip L. Kirstein, Senior Vice President and Independent Compliance Officer

Sharon E. Fay(2), Senior Vice President

Joseph G. Paul(2), Senior Vice President

Kevin F. Simms(2), Senior Vice President

Henry S. D’Auria(2), Vice President

Eric J. Franco(2), Vice President

Emilie D. Wrapp, Secretary

Joseph J. Mantineo, Treasurer and Chief Financial Officer

Phyllis J. Clarke, Controller

 

Custodian and Accounting Agent

State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111

 

Principal Underwriter

AllianceBernstein Investments, Inc.
1345 Avenue of the Americas
New York, NY 10105

 

Legal Counsel

Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004

   

Transfer Agent

AllianceBernstein Investor
Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-free (800) 221-5672

 

Independent Registered Public Accounting Firm

Ernst & Young LLP
5 Times Square
New York, NY 10036

 

(1) Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. Mr. Foulk is the sole member of the Fair Value Pricing Committee.

 

(2) The day-to-day management of and investment decisions for the Fund’s portfolio are made by the International Value Senior Investment Management Team. Ms. Fay and Messrs. D’Auria, Franco, Paul and Simms are the investment professionals with the most significant responsibility for the day-to-day management of the Fund’s portfolio.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   43

 

Board of Trustees

 

Information Regarding the Review and Approval of the Fund’s Advisory Agreement

The disinterested trustees (the “trustees”) of AllianceBernstein Trust (the “Trust”) unanimously approved the continuance of the Advisory Agreement with the Adviser in respect of AllianceBernstein International Value Fund (the “Fund”) at a meeting held on May 5-7, 2009.

Prior to approval of the continuance of the Advisory Agreement, the trustees had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The trustees also reviewed an independent evaluation prepared by the Trust’s Senior Officer (who is also the Trust’s Independent Compliance Officer) of the reasonableness of the advisory fee in the Advisory Agreement wherein the Senior Officer concluded that the contractual fee for the Fund was reasonable. The trustees also discussed the proposed continuance in private sessions with counsel and the Trust’s Senior Officer.

The trustees considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as trustees or directors of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the trustees and its responsiveness, frankness and attention to concerns raised by the trustees in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. The trustees noted that they have four regular meetings each year, at each of which they receive presentations from the Adviser on the investment results of the Fund and review extensive materials and information presented by the Adviser.

The trustees also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the trustees did not identify any particular information that was all-important or controlling, and different trustees may have attributed different weights to the various factors. The trustees determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the trustees considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the trustees’ determinations included the following:

Nature, Extent and Quality of Services Provided

The trustees considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research

 

44   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The trustees also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services provided at the Fund’s request by employees of the Adviser or its affiliates. Requests for these reimbursements are approved by the trustees on a quarterly basis and, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Fund’s Advisory Agreement. The trustees noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Trust’s Senior Officer. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Trust’s other service providers, also were considered. The trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.

Costs of Services Provided and Profitability

The trustees reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2007 and 2008 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant retained by the Trust’s Senior Officer. The trustees reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and noted that there are a number of potentially acceptable allocation methodologies for information of this type. The trustees noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries which provide transfer agency, distribution and brokerage services to the Fund. The trustees recognized that it is difficult to make comparisons of profitability between fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors. The trustees focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The trustees concluded that they were satisfied that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.

Fall-Out Benefits

The trustees considered the benefits to the Adviser and its affiliates from their relationships with the Fund other than the fees and expense reimbursements payable under the Advisory Agreement, including but not limited to benefits relating to soft dollar arrangements (whereby the Adviser receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis), 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   45

 

owned subsidiary of the Adviser) in respect of certain classes of the Fund’s shares, transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser, and brokerage commissions paid by the Fund to brokers affiliated with the Adviser. The trustees recognized that the Adviser’s profitability would be somewhat lower without these benefits. The trustees understood that the Adviser also might derive reputational and other benefits from its association with the Fund.

Investment Results

In addition to the information reviewed by the trustees in connection with the meeting, the trustees receive detailed performance information for the Fund at each regular Board meeting during the year. At the May 2009 meeting, the trustees reviewed information prepared by Lipper showing the performance of the Class A Shares of the Fund as compared with that of a group of similar funds selected by Lipper (the “Performance Group”) and as compared with that of a broader array of funds selected by Lipper (the “Performance Universe”), and information prepared by the Adviser showing performance of the Class A Shares as compared with the Morgan Stanley Capital International Europe, Australasia and Far East Index (Net) (the “Index”), in each case for the 1-, 3- and 5-year periods ended January 31, 2009 and (in the case of comparisons with the Index) the since inception period (March 2001 inception). The trustees noted that the Fund was 3rd out of 3 of the Performance Group and in the 5th quintile of the Performance Universe for the 1-, 3- and 5-year periods, and that while the Fund outperformed the Index in the since inception period, it underperformed the Index in the 1-, 3- and 5-year periods. The trustees also reviewed performance information for periods ended March 31, 2009, and noted that relative investment performance in 2009 had been stronger than in the immediately prior periods. Based on their review and their discussion of the reasons for the Fund’s performance with the Adviser, the trustees retained confidence in the Adviser’s ability to advise the Fund and concluded that the Fund’s performance was acceptable. The trustees determined to closely monitor the Fund’s performance.

Advisory Fees and Other Expenses

The trustees considered the advisory fee rate paid by the Fund to the Adviser and information prepared by Lipper concerning advisory fee rates paid by other funds in the same Lipper category as the Fund at a common asset level. The trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds.

The trustees noted that in light of the Fund’s historical investment performance, they had asked the Adviser to address the continued appropriateness of the Fund’s fee rate. In response the Adviser informed the trustees that the Adviser had begun to implement changes and enhancements to address investment performance and discussed the new leadership for the Adviser effective December

 

46   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

2008. The Adviser further noted, among other things, that while it would take time to realize the benefits of these changes, relative investment performance in 2009 had generally shown improvement. The trustees noted that they had discussed their concerns about the relative performance of a number of the AllianceBernstein equity funds with senior management of the Adviser.

The trustees also considered the fees the Adviser charges other clients with an investment style substantially similar to that of the Fund. For this purpose, they reviewed the relevant fee information in the Adviser’s Form ADV and the evaluation from the Trust’s Senior Officer disclosing the institutional fee schedule for institutional products managed by the Adviser that have an investment style substantially similar to that of the Fund. The trustees noted that the institutional fee schedule for clients with an investment style substantially similar to that of the Fund had breakpoints at lower asset levels than those in the fee schedule applicable to the Fund and that the application of the institutional fee schedule to the level of assets of the Fund would result in a fee rate that would be lower than that in the Fund’s Advisory Agreement. The trustees noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the trustees and that they had previously discussed with the Adviser its policies in respect of such arrangements. The trustees also reviewed information provided by the Adviser that indicated that the Fund pays a higher fee rate than certain registered investment companies with an investment style substantially similar to that of the Fund that are sub-advised by the Adviser. The trustees also noted that the Adviser advises a portfolio of another AllianceBernstein fund with an investment style substantially similar to that of the Fund for the same fee schedule as the Fund.

The Adviser reviewed with the trustees the significantly greater scope of the services it provides to the Fund relative to institutional clients and sub-advised funds. The Adviser also noted that because mutual funds are constantly issuing and redeeming shares, they are more difficult to manage than an institutional account, where the assets tend to be relatively stable. In light of these facts, the trustees did not place significant weight on these fee comparisons.

The trustees also considered the total expense ratio of the Class A shares of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of funds similar to the Fund and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the Fund. The trustees noted that because of the small number of funds in the Fund’s Lipper category, at the request of the Adviser and the Trust’s Senior Officer, Lipper had expanded the Expense Group of the Fund to include peers that had a similar

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   47

 

(but not the same) Lipper investment objective/classification. The Expense Universe for the Fund had also been expanded by Lipper pursuant to Lipper’s standard guidelines and not at the request of the Adviser or the Fund’s Senior Officer. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The trustees view the expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The trustees noted that it was likely that the expense ratios of some funds in the Fund’s Lipper category also were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases were voluntary and perhaps temporary.

The trustees noted that the Fund’s contractual effective advisory fee rate, at approximate current size, of 70.6 basis points, plus the 0.1 basis point impact of the administrative expense reimbursement in the latest fiscal year, was lower than the Expense Group median. The trustees noted that the Fund’s total expense ratio was lower than the Expense Group and the Expense Universe medians. The trustees concluded that the Fund’s expense ratio was satisfactory.

Economies of Scale

The trustees noted that the advisory fee schedule for the Fund contains breakpoints and that the Fund’s net assets were in excess of the first breakpoint level. Accordingly, the Fund’s current effective advisory fee rate reflected a reduction due to the effect of the breakpoints and would be further reduced to the extent the net assets of the Fund increase further. The trustees also considered presentations by an independent consultant discussing economies of scale in the mutual fund industry and for the AllianceBernstein Funds, as well as a presentation by the Adviser concerning certain of its views on economies of scale. The trustees believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The trustees noted that there is no established methodology for establishing breakpoints that give effect to fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The trustees observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The trustees also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the trustees concluded that the Fund’s breakpoint arrangements were acceptable and were resulting in a sharing of economies of scale.

 

48   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS

SUMMARY OF SENIOR OFFICER’S EVALUATION OF INVESTMENT ADVISORY AGREEMENT1

The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the “Adviser”) and the AllianceBernstein Trust, Inc. (the “Trust”) in respect of AllianceBernstein International Value Fund (the “Fund”).2 The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund, for the Trustees of the Fund, as required by a September 2004 agreement between the Adviser and the New York State Attorney General (the “NYAG”). The Senior Officer’s evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Trustees 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 Trustees 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. Advisory fees charged to institutional and other clients of the Adviser for like services;

 

  2. Advisory 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, NET ASSETS, & EXPENSE 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 consideration of the Adviser’s settlement with the NYAG in December 2003, is

 

1   It should be noted that the information in the fee summary was completed on April 23, 2009 and presented to the Board of Trustees on May 5-7, 2009.

 

2   Future references to the Fund do not include “AllianceBernstein.” References in the fee summary pertaining to performance and expense ratio rankings refer to the Class A shares of the Fund.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   49

 

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

 

Category   Advisory Fee Based on % of
Average Daily Net Assets4		   Net Assets
02/28/09
($MIL)		   Fund
International  

75 bp on 1st $2.5 billion

65 bp on next $2.5 billion

60 bp on the balance

   $ 3,753.4   International Value Fund

The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund. During the Fund’s most recently completed fiscal year, the Adviser received $108,208 (0.001% of the Fund’s average daily net assets) for such services.

Set forth below are the Fund’s total expense ratios, for the most recently completed fiscal year:

 

Fund   Total Expense
Ratio5		      Fiscal
Year End
International Value Fund   Advisor   0.84 %     November 30
  Class A   1.14 %    
  Class B   1.88 %    
  Class C   1.86 %    
  Class R   1.46 %    
  Class K   1.16 %    
  Class I   0.76 %    

 

I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS

The advisory 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 and sub-advised investment companies 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,

 

3   Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser’s settlement with the NYAG.

 

4   The advisory fee is based on a percentage of the Fund’s net assets and is paid on a monthly basis.

 

5  

Annualized.

 

50   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

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 are 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. The Adviser also believes that it incurs substantial entrepreneurial risk when offering a new mutual fund since establishing a new mutual fund requires a large upfront investment and it may take a long time for the fund to achieve profitability since the fund must be priced to scale from inception in order to be competitive and assets are acquired one account at a time. In addition, managing the cash flow of an investment company may be more difficult than managing that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if a 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 and legal and reputational risks are greater, it is worth considering information regarding the advisory fees charged to institutional accounts with a substantially similar investment style as the Fund.6 In addition to the AllianceBernstein Institutional fee schedule, set forth below is what would have been the effective advisory fee of the Fund had the AllianceBernstein Institutional fee schedule been applicable to the Fund versus the Fund’s advisory fee based on February 28, 2009 net assets:

 

Fund  

Net Assets

02/28/09

($MIL)

  

AllianceBernstein (“AB”)
Institutional (“Inst.”)

Fee Schedule

   Effective
AB Inst.
Adv. Fee		  

Fund

Advisory
Fee

International Value Fund   $3,753.4  

International Strategic Value 90 bp on 1st $25 million

70 bp on next $25 million

60 bp on next $50 million

50 bp on the balance

Minimum account size: $25m

   0.505%   0.717%

 

6   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.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   51

 

The adviser also manages the AllianceBernstein Variable Products Series Fund, Inc. (“AVPS”), which is available through variable annuity and variable life contracts offered by other financial institutions and offers policyholders the option to utilize certain AVPS portfolios as the investment option underlying their insurance contracts. Set forth below is the fee schedule of the AVPS portfolio that has a similar investment style as the Fund.7 Also shown is what would have been the effective advisory fee of the Fund had the AVPS fee schedule been applicable to the Fund:

 

Fund   AVPS
Portfolio		   Fee Schedule   Effective
AVPS
Adv. Fee		   Fund
Advisory
Fee
International Value Fund   International Value Portfolio   0.75% on first $2.5 billion 0.65% on next $2.5 billion 0.60% on the balance   0.717%   0.717%

The AllianceBernstein Investment Trust Management mutual funds (“ITM”), 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 ITM mutual fund that has a somewhat similar investment style as the Fund is as follows:

 

Fund    ITM Mutual Fund    Fee8
International Value Fund    Bernstein Kokusai Strategic Value9   

0.95% on first ¥1 billion

0.85% on next ¥1.5 billion

0.75% on next ¥2.5 billion

0.60% on next ¥5 billion

0.50% thereafter

The Adviser provides sub-advisory services to certain other investment companies managed by other fund families. The Adviser charges the fees set forth below for the following sub-advisory relationships. Also shown are what would have been the effective advisory fees of the Fund had the fee schedule of the sub-advisory relationships been applicable to the Fund based on February 29, 2008 net assets and the Fund’s advisory fee:

 

Fund       

Fee Schedule

   Effective
Sub-Adv.
Fee		   Fund
Advisory
Fee
International Value Fund   Client #1  

0.65% on 1st $75 million

0.50% on next $25 million

0.40% on next $200 million

0.35% on next $450 million

0.30% thereafter

   0.320%   0.717%

 

7   It should be noted that the AVPS portfolio was also affected by the settlement between the Adviser and the NYAG. As a result, the Fund has the same breakpoints in its advisory fee schedule as the AVPS portfolio.

 

8   The Japanese Yen-U.S. dollar currency exchange rate quoted at 4 p.m. on April 8, 2009 by Reuters was ¥99.64 per $1. At that currency exchange rate, every ¥1 billion would be equivalent to approximately $10.3 million.

 

9   This ITM fund is privately placed or institutional.

 

52   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Fund       

Fee Schedule

   Effective
Sub-Adv.
Fee		     Fund
Advisory
Fee
  Client #210,11  

0.60% on 1st $1 billion

0.55% on next $500 million

0.50% on next $500 million

0.45% on next $500 million

0.40% thereafter

   0.493%      0.717%
       
  Client #3  

0.45% on 1st $200 million

0.36% on next $300 million

0.32% thereafter

   0.330%      0.717%
       
  Client #4  

0.55% on 1st $150 million

0.50% on next $150 million

0.45% thereafter

   0.456%      0.717%
       
  Client #5   0.50%   0.500%      0.717%
       
  Client #6   0.30%   0.300%      0.717%
       
  Client #7  

0.22% on 1st $1 billion

0.18% on next $1.5 billion

0.16% thereafter

+/- Performance Fee12

   0.184% 13    0.717%
       
  Client #8  

0.60% on 1st $50 million

0.40% on next $50 million

0.30% on next $300 million

0.25% thereafter

   0.261%      0.717%
       
  Client #9  

0.50% on 1st $100 million

0.46% on next $300 million

0.41% thereafter

   0.416%      0.717%
       
  Client #10  

0.72% on 1st $25 million

0.54% on next $25 million

0.45% on next $50 million

0.36% on the balance

   0.365%      0.717%
       
  Client #11  

0.35% on 1st $1 billion

0.30% on next $1 billion

0.25% thereafter

   0.290%      0.717%
       
  Client #12   0.35% on 1st $1 billion 0.325% on the balance   0.332%      0.717%

 

10   Assets are aggregated with other similar managed accounts of the client for purposes of calculating the investment advisory fee.

 

11   The Client is an affiliate of the Adviser.

 

12   The performance fee is calculated by multiplying the Base Fee during the period by an adjustment factor that considers the excess or under performance of the fund versus its benchmark over a 60 month rolling period. The performance adjustment factor can range from -60% to +60% of the base fee.

 

13   The calculation excludes the performance fee.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   53

 

It is fair to note that the services the Adviser provides pursuant to sub-advisory agreements are generally confined to the services related to the investment process; in other words, they are not as comprehensive as the services provided to the Funds by the Adviser. In addition, to the extent that certain of these sub-advisory relationships are with affiliates of the Adviser, the fee schedules may not reflect arm’s-length bargaining or negotiations.

 

II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES.

Lipper, Inc. (“Lipper”), an analytical service that is not affiliated with the Adviser, compared the fees charged to the Fund with fees charged to other investment companies for similar services offered by other investment advisers. Lipper’s analysis included the Fund’s ranking with respect to the proposed management fee relative to the median of the Fund’s Lipper Expense Group (“EG”)14 at the approximate current asset level of the Fund.15

Lipper describes an EG as a representative sample of comparable funds. Lipper’s standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, expense components and attributes. An EG will typically consist of seven to twenty funds.

The Fund’s original EG had an insufficient number of peers in the view of the Senior Officer and the Adviser. Consequently, at the request of the Senior Officer and the Adviser, Lipper expanded the Fund’s EG to include peers that have similar but not the same Lipper investment classification/objective.

 

Fund   Contractual
Management
Fee (%)16		  

Lipper Exp.

Group

Median (%)

   Rank
International Value Fund17   0.706   0.859   4/15

 

14   It should be noted that Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratio than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expenses differently.

 

15   The contractual 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” would mean that the Fund had the lowest effective fee rate in the Lipper peer group.

 

16   The contractual management fee does not reflect any expense reimbursements made by the Fund to the Adviser for certain clerical, legal, accounting, administrative and other services.

 

17   The Fund’s EG includes the Fund, two other International Large-Cap Value Fund (“ILCV”), one International Large-Cap Core Fund (“ILCC”), six International Multi-Cap Growth Funds (“IMLG”) and four International Multi-Cap Value Funds (“IMLV”) and one International Large-Cap Growth Fund (ILCG).

 

54   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

However, because Lipper had expanded the EG of the Fund, under Lipper’s standard guidelines, the Lipper Expense Universe (“EU”) was also expanded to include the universes of those peers that had a similar but not the same Lipper investment classification/objective.18 A “normal” EU will include funds that have the same investment classification/objective as the subject Fund.19 It should be noted that Lipper uses expense ratio data from financial statements of the most current fiscal year in their database. This has several implications: the total expense ratio of each fund that Lipper uses in their report is based on each fund’s average net assets during its fiscal year. Since funds have different fiscal year ends, the total expense ratios of the funds may cover different twelve month periods, depending on the funds’ fiscal year ends. This is the process that Lipper utilizes but given market conditions during 2008, especially the last three months of 2008, the effects on the funds’ total expense ratio caused by the differences in fiscal year ends may be more pronounced in 2008 compared to other years under more normal market conditions.20

 

Fund  

Expense

Ratio
(%)21

  

Lipper Exp.

Group

Median
(%)

  

Lipper

Group

Rank

  

Lipper Exp.

Universe

Median
(%)

  

Lipper
Universe

Rank

International Value Fund22   1.140   1.369   2/15   1.456   7/62

Based on this analysis, the Fund has a more favorable ranking on a total expense ratio basis than on a management fee basis.

 

III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.

The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Adviser’s profitability in connection with investment advisory services provided to the Fund. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion.

 

18   It should be noted that the expansion of the Fund’s EU was not requested by the Adviser or the Senior Officer. They requested that only the EG be expanded.

 

19   Except for asset (size) comparability, Lipper uses the same criteria for selecting an EG peer when selecting an EU peer. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund.

 

20   To cite an example, the average net assets and total expense ratio of a fund with a fiscal year end of March 31, 2008 will not be reflective of the market declines that occurred in the second half of 2008, in contrast to a fund with a fiscal year end of December 31, 2008.

 

21   The total expense ratios shown are for the Fund’s most recent fiscal year end Class A shares.

 

22   The Fund’s EU includes the Fund, EG and all other ILCV, IMLG, IMLV, ILCC and ILCG funds, excluding outliers.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   55

 

IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES.

The Fund’s profitability information, prepared by the Adviser for the Board of Trustees, was reviewed by the Senior Officer and the consultant. The Adviser’s profitability from providing investment advisory services to the Fund decreased during calendar year 2008, relative to 2007.

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 such benefits 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 provided the affiliates’ charges and services are competitive and the relationship otherwise complies with the 40 Act restrictions. 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 brokerage commissions. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur.

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 2008, ABI paid approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $21 million for distribution services and educational support (revenue sharing payments). During the Fund’s most recently completed fiscal year, ABI received from the Fund $73,095, $27,843,661 and $795,654 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively.

Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. (“ABIS”), the affiliated transfer agent for the Fund, are charged on a per account basis, based on the level of service provided 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. During the Fund’s most recently completed fiscal year, ABIS received $4,634,813 in fees from the Fund.23

 

23   The fees disclosed are net of any expense offsets 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 the transfer agent’s account to the Fund’s account. During the Fund’s most recently completed fiscal year, the fees paid by the Fund to ABIS were reduced by $148,907 under the offset agreement between the Fund and ABIS.

 

56   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

The Fund effected brokerage transactions through the Adviser’s affiliate, Sanford C. Bernstein & Co., LLC (“SCB & Co.”) and/or its U.K. affiliate, Sanford C. Bernstein Limited (“SCB Ltd.”), collectively “SCB,” and paid commissions for such transactions during the Portfolios’ most recently completed fiscal year. The Adviser represented that SCB’s profitability from business conducted with the Fund is comparable to the profitability of SCB’s dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks (“ECNs”) derived from trading for its clients, including the Fund. These credits and charges are not being passed onto any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for the Fund and other clients. These soft dollar benefits reduce the Adviser’s cost of doing business and increase its profitability.

 

V. POSSIBLE ECONOMIES OF SCALE

The Adviser has indicated that economies of scale are being shared with shareholders through fee structures,24 subsidies and enhancement to services. 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 make such investments in their business to provide services, there may be a sharing of economies of scale without a reduction in advisory fees.

An independent consultant, retained by the Senior Officer, provided the Board of Trustees an update of the Deli25 study on advisory fees and various fund characteristics. The independent consultant first reiterated the results of his previous two dimensional comparison analysis (fund size and family size) with the Board of Trustees.26 The independent consultant then discussed the results of the regression model that was utilized to study the effects of various factors on advisory fees. The regression model output indicated that the bulk of the variation in fees predicted were explained by various factors, but substantially by fund AUM,

 

24   Fee structures include fee reductions, pricing at scale and breakpoints in advisory fee schedules.

 

25   The Deli study was originally published in 2002 based on 1997 data.

 

26   The two dimensional analysis showed patterns of lower advisory fees for funds with larger asset sizes and funds from larger family sizes compared to funds with smaller asset sizes and funds from smaller family sizes, which according to the independent consultant is indicative of a sharing of economies of scale and scope. However, in less liquid and active markets, such is not the case, as the empirical analysis showed potential for diseconomies of scale in those markets. The empirical analysis also showed diminishing economies of scale and scope as funds surpassed a certain high level of assets.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   57

 

family AUM, index fund indicator and investment style. The independent consultant also compared the advisory fees of the AllianceBernstein Mutual Funds to similar funds managed by 19 other large asset managers, regardless of the fund size and each Adviser’s proportion of mutual fund assets to non-mutual fund assets.

 

VI. NATURE AND QUALITY OF THE ADVISER’S SERVICES, INCLUDING THE PERFORMANCE OF THE FUND

With assets under management of approximately $411 billion as of March 31, 2009, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Fund.

The information prepared by Lipper shows the 1, 3 and 5 year performance rankings of the Fund27 relative to its Lipper Performance Group (“PG”) and Lipper Performance Universe (“PU”)28 for the periods ended January 31, 2009.29

 

    

Fund

Return
(%)

   PG Median
(%)		   PU Median
(%)		   PG Rank   PU Rank

1 year

   -55.63   -47.55   -45.16   3/3   13/13

3 year

   -19.02   -15.22   -13.21   3/3   8/8

5 year

   -3.89   -2.51   -1.58   3/3   8/8

 

27   The performance rankings are for the Class A shares of the Fund. It should be noted that the performance returns of the Fund shown were provided by the Adviser. Lipper maintains its own database that includes the Fund’s performance returns. Rounding differences may cause the Adviser’s Fund returns to be one or two basis points different from Lipper’s own Fund returns. To maintain consistency, the performance returns of the Fund, as reported by the Adviser, are provided instead of Lipper.

 

28   The Fund’s PG and PU are not identical to the Fund’s respective EG and EU as the criteria for including or excluding a fund in a PG or PU is somewhat different from that of an EG or EU.

 

29   Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of the fund even if a fund had a different investment classification/objective at a different point in time.

 

58   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

Set forth below are the 1, 3, 5 year and since inception performance returns of the Fund (in bold)30 versus its benchmark.31 Fund and benchmark volatility and reward-to-variability ratio (“Sharpe Ratio”) information is also shown.32

 

    

Periods Ending January 31, 2009

Annualized Performance

    1 Year
(%)		   3 Year
(%)		   5 Year
(%)		   Since
Inception
(%)		   Annualized   Risk
Period
(Year)
             Volatility
(%)		   Sharpe
(%)		  
International Value Fund   -55.63   -19.02   -3.89   1.83   20.46   -0.24   5
MSCI EAFE Index (Net)   -43.74   -12.25   -0.70   0.47   16.92   -0.14   5
Inception Date: March 29, 2001    

CONCLUSION:

Based on the factors discussed above the Senior Officer’s conclusion is that the proposed advisory fee for the Fund is reasonable and within the range of what would have been negotiated at arm’s-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: May 29, 2009

 

30   The performance returns and risk measures shown in the table are for the Class A shares of the Fund.

 

31   The Adviser provided Fund and benchmark performance return information for periods through January 31, 2009.

 

32   Fund and benchmark volatility and Sharpe Ratio information was obtained through Lipper LANA, a database maintained by Lipper. Volatility is a statistical measure of the tendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjusted measure of return that divides a fund’s return in excess of the riskless return by the fund’s standard deviation. A fund with a greater volatility would be seen as more risky than a fund with equivalent performance but lower volatility; for that reason, a greater return would be demanded for the more risky fund. A fund with a higher Sharpe Ratio would be viewed as better performing than a fund with a lower Sharpe Ratio.

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND  •   59

THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS

ALLIANCEBERNSTEIN FAMILY OF FUNDS

 

Wealth Strategies Funds

Balanced Wealth Strategy

Wealth Appreciation Strategy

Wealth Preservation Strategy

Tax-Managed Balanced Wealth Strategy

Tax-Managed Wealth Appreciation Strategy

Tax-Managed Wealth Preservation Strategy

Blended Style Funds

U.S. Large Cap Portfolio

International Portfolio

Tax-Managed International Portfolio

Growth Funds

Domestic

Growth Fund

Large Cap Growth Fund

Small Cap Growth Portfolio

Small/Mid Cap Growth Fund*

Global & International

Global Growth Fund*

Global Thematic Growth Fund*

Greater China ‘97 Fund

International 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

Diversified Yield Fund

Global Bond Fund

High Income Fund

Intermediate Bond Portfolio

Short Duration Portfolio

Municipal Bond Funds

 

National

Arizona

California

Massachusetts

Michigan

Minnesota

   

New Jersey

New York

Ohio

Pennsylvania

Virginia

Intermediate Municipal Bond Funds

Intermediate California

Intermediate Diversified

Intermediate New York

Closed-End Funds

AllianceBernstein Global High Income Fund

AllianceBernstein Income Fund

AllianceBernstein National Municipal Income Fund

ACM Managed Dollar Income Fund

Alliance California Municipal Income Fund

Alliance New York Municipal Income Fund

The Spain Fund


Retirement Strategies Funds

 

2000 Retirement Strategy

  

2020 Retirement Strategy

  

2040 Retirement Strategy

2005 Retirement Strategy

  

2025 Retirement Strategy

  

2045 Retirement Strategy

2010 Retirement Strategy

  

2030 Retirement Strategy

  

2050 Retirement Strategy

2015 Retirement Strategy

  

2035 Retirement Strategy

  

2055 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 November 3, 2008, Small/Mid Cap Growth Fund was named Mid-Cap Growth Fund, Global Growth Fund was named Global Research Growth Fund, and Global Thematic Growth Fund was named Global Technology 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.

 

60   •  ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

 

AllianceBernstein Family of Funds

 

ALLIANCEBERNSTEIN INTERNATIONAL VALUE FUND

1345 Avenue of the Americas

New York, NY 10105

800.221.5672

LOGO

 

 

IV-0152-0509

   LOGO

SEMI-ANNUAL REPORT

 

 

AllianceBernstein

Small/Mid Cap Value Fund

 

 

LOGO

 

May 31, 2009

 

Semi-Annual Report

 

 

Investment Products Offered

  •  

Are Not FDIC Insured

  •  

May Lose Value

  •  

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® 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. (ABI) is the distributor of the AllianceBernstein family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein, L.P., the manager of the funds.

AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.

July 15, 2009

 

Semi-Annual Report

This report provides management’s discussion of fund performance for AllianceBernstein Small/Mid Cap Value Fund (the “Fund”) for the semi-annual reporting period ended May 31, 2009.

Investment Objective and Policies

The Fund’s investment objective is long-term growth of capital. The Fund invests primarily in a diversified portfolio of equity securities of small- to mid-capitalization US companies, generally representing 60 to 125 companies. Under normal circumstances, the Fund invests at least 80% of its net assets in securities of small- to mid-capitalization companies. For purposes of this policy, small- to mid-capitalization companies are those that, at the time of investment, fall within the capitalization range between the smallest company in the Russell 2500 Value Index and the greater of $5 billion or the market capitalization of the largest company in the Russell 2500 Value Index.

Because the Fund’s definition of small- to mid-capitalization companies is dynamic, the lower and upper limits on market capitalization will change with the markets. The Fund invests in companies that are determined by AllianceBernstein L.P. (the “Adviser”) to be undervalued, using the fundamental value approach of the Adviser’s Bernstein unit (“Bernstein”). In selecting securities for the Fund’s portfolio, Bernstein uses its fundamental research to identify companies whose long-term earnings power is not reflected in the current market price of their securities. The Fund may

invest in securities issued by non-US companies and may enter into forward commitments. The Fund may enter into derivatives transactions, such as options, futures, forwards and swap agreements.

Investment Results

The table on page 4 shows the Fund’s performance compared to the benchmark, the Russell 2500 Value Index, for the six- and 12-month periods ended May 31, 2009. For additional comparison, returns for the Russell 2500 Index are shown for the same time periods.

The Fund’s Class A shares without sales charges outperformed the benchmark for the six-month period ended May 31, 2009. The Fund’s relative outperformance resulted from strong sector and security selection; the Fund’s technology and consumer staples holdings and its underweight of the financial sector specifically contributed to performance. The Fund’s tilt toward economically sensitive stocks paid off handsomely. The Fund was deeply underweight in the weak financial sector and avoided many of the hardest-hit banks, although Washington Federal and South Financial were significant individual detractors. The Fund was significantly overweight in the technology sector, and held several technology stocks that considerably outperformed during the period. The Fund also outperformed the Russell 2500 Index during the six-month period.

The Fund’s Class A shares without sales charges outperformed the benchmark for the 12-month period

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   1

 

ended May 31, 2009. For the period, the Fund and the benchmark posted negative returns. Both stock and sector selection contributed to the Fund’s premium to its value benchmark. Broadly speaking, the Fund’s positioning in financials and technology helped most. Western Digital and Siliconware Precision again led individual contributors, while RRI Energy and ArvinMeritor were the largest individual detractors from Fund performance.

Market Review and Investment Strategy

US smaller-cap markets, like equity markets globally, declined in January and February 2009 as fears mounted that the economic contraction would be even worse than expected. In January and February, the Russell 2500 Index fell more than 20%. The index rebounded sharply in the following three months, as optimism about the global economic outlook caused the extreme risk aversion that had previously gripped the markets to abate.

Investor behavior over the past few months suggests that they are gaining

confidence that the recovery will occur, but remain uncertain about the pace and scale of the rebound. In the meantime, economic data remains mixed and this uncertainty will likely persist for a while. Further, likelihood of continued government intervention in the economy adds to this uncertainty. The Fund’s Small/Mid Cap Value Senior Investment Management Team’s (the “Team’s”) investment approach focuses on long-term valuation, while weighing near- term risks. Given today’s acute short-term risks, guarding the Fund against near-term perils on the path to an economic and earnings recovery takes on greater importance than usual. Currently the Team is placing greater value on near-term cash flows that enable companies to withstand financial stresses and reduced demand. The Team is also keeping a close eye on short-term risk indicators, such as short interest and refinancing needs. In the first quarter, the Team bought several attractively valued stocks of companies with strong balance sheets and returns on equity.

 

2   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

HISTORICAL PERFORMANCE

An Important Note About the Value of Historical Performance

The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com.

The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund’s prospectus, which contains this and other information, visit our 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.

Benchmark Disclosure

Neither the unmanaged Russell 2500 Value Index nor the unmanaged Russell 2500 Index reflects fees and expenses associated with the active management of a mutual fund portfolio. The Russell 2500 Value Index contains those securities in the Russell 2500 Index with a less-than-average growth orientation. The Russell 2500 Index is a capitalization-weighted index that includes 2,500 small- and mid-capitalization US stocks. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Fund.

A Word About Risk

Value investing does not guarantee a profit or eliminate risk. Not all companies whose stocks are considered to be value stocks are able to turn their business around or successfully employ corrective strategies which would result in stock prices that rise as initially expected. The Fund concentrates its investments in the stocks of small- to mid- capitalization companies, which tend to be more volatile than large-cap companies. Small- and mid-cap stocks may have additional risks because small- and mid-cap companies tend to have limited product lines, markets or financial resources. The Fund can invest in foreign securities, which may magnify these fluctuations due to changes in foreign exchange rates and the possibility of substantial volatility due to political and economic uncertainties in foreign countries. Because the Fund may invest in emerging markets and in developing countries, an investment also has the risk that market changes or other factors affecting emerging markets and developing countries, including political instability and unpredictable economic conditions, may have a significant effect on the Fund’s net asset value. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the Fund’s prospectus.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   3

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

        

THE FUND VS. ITS BENCHMARK

PERIODS ENDED MAY 31, 2009

   Returns    
  6 Months      12 Months     

AllianceBernstein Small/Mid Cap Value Fund

         
 

Class A

   19.86%      -30.23%  
 

Class B*

   19.73%      -30.39%  
 

Class C

   19.50%      -30.73%  
 

Advisor Class†

   20.11%      -30.00%  
 

Class R†

   19.81%      -30.33%  
 

Class K†

   19.93%      -30.23%  
 

Class I†

   20.11%      -30.02%  
 

Russell 2500 Value Index

   5.17%      -33.08%  
 

Russell 2500 Index

   11.05%      -33.45%  
 

*  Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. See Note A for additional information.

 

†   Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds.

        

See Historical Performance and Benchmark disclosures on previous page.

(Historical Performance continued on next page)

 

4   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2009   
     NAV Returns        SEC Returns  
       
Class A Shares        

1 Year

    -30.23 %       -33.19 % 

5 Years

    0.89 %       0.02 % 

Since Inception*

    6.60 %       6.04 % 
       
Class B Shares(a)        

1 Year

    -30.39 %       -33.15 % 

5 Years

    0.42 %       0.42 % 

Since Inception*

    6.00 %       6.00 % 
       
Class C Shares        

1 Year

    -30.73 %       -31.43 % 

5 Years

    0.19 %       0.19 % 

Since Inception*

    5.85 %       5.85 % 
       
Advisor Class Shares†        

1 Year

    -30.00 %       -30.00 % 

5 Years

    1.20 %       1.20 % 

Since Inception*

    6.92 %       6.92 % 
       
Class R Shares†        

1 Year

    -30.33 %       -30.33 % 

5 Years

    0.76 %       0.76 % 

Since Inception*

    2.54 %       2.54 % 
       
Class K Shares†        

1 Year

    -30.23 %       -30.23 % 

Since Inception*

    -2.64 %       -2.64 % 
       
Class I Shares†        

1 Year

    -30.02 %       -30.02 % 

Since Inception*

    -2.41 %       -2.41 % 

The Fund’s total annual operating ratios are 1.34%, 2.06%, 2.05%, 1.04%, 1.54%, 1.26% and 0.92% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively, per the prospectus, gross of any fee waivers or expense reimbursements. There are contractual fee waivers currently in place for this Fund to the extent necessary in keeping the Fund’s operating expense ratios from exceeding 1.15%, 1.85%, 1.85%, 0.85%, 1.35%, 1.10% and 0.85% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively, of average net assets per year. These waivers extend through the Fund’s current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares.

 

(a)  

Assumes conversion of Class B shares into Class A shares after eight years.

 

†   These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   5

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)

AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2009)

  

  

                   SEC Returns  
            
Class A Shares             

1 Year

              -27.18 % 

5 Years

              -1.31 % 

Since Inception*

              5.67 % 
            
Class B Shares(a)             

1 Year

              -27.14 % 

5 Years

              -0.92 % 

Since Inception*

              5.63 % 
            
Class C Shares             

1 Year

              -25.20 % 

5 Years

              -1.15 % 

Since Inception*

              5.48 % 
            
Advisor Class Shares†             

1 Year

              -23.69 % 

5 Years

              -0.15 % 

Since Inception*

              6.54 % 
            
Class R Shares†             

1 Year

              -24.11 % 

5 Years

              -0.61 % 

Since Inception*

              2.06 % 
            
Class K Shares†             

1 Year

              -23.89 % 

Since Inception*

              -3.12 % 
            
Class I Shares†             

1 Year

              -23.65 % 

Since Inception*

              -2.89 % 

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares.

 

(a)  

Assumes conversion of Class B shares into Class A shares after eight years.

 

†   Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

 

6   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Historical Performance

FUND EXPENSES

(unaudited)

 

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
Account Value
December 1, 2008		    Ending
Account Value
May 31, 2009		    Expenses Paid
During Period*
     Actual    Hypothetical    Actual    Hypothetical**    Actual    Hypothetical
Class A    $   1,000    $   1,000    $   1,198.61    $   1,019.20    $ 6.30    $   5.79
Class B    $ 1,000    $ 1,000    $ 1,197.34    $ 1,017.60    $ 8.05    $ 7.39
Class C    $ 1,000    $ 1,000    $ 1,194.98    $ 1,015.71    $   10.12    $ 9.30
Advisor Class    $ 1,000    $ 1,000    $ 1,201.10    $ 1,020.69    $ 4.66    $ 4.28
Class R    $ 1,000    $ 1,000    $ 1,198.09    $ 1,018.20    $ 7.40    $ 6.79
Class K    $ 1,000    $ 1,000    $ 1,199.28    $ 1,019.45    $ 6.03    $ 5.54
Class I    $ 1,000    $ 1,000    $ 1,201.07    $ 1,020.69    $ 4.66    $ 4.28
*   Expenses are equal to the classes' annualized expense ratios of 1.15%, 1.47%, 1.85%, 0.85%, 1.35%, 1.10% and 0.85%, respectively, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

 

**   Assumes 5% return before expenses.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   7

 

Fund Expenses

PORTFOLIO SUMMARY

May 31, 2009 (unaudited)

 

PORTFOLIO STATISTICS

Net Assets ($mil): $816.3

LOGO

TEN LARGEST HOLDINGS**

May 31, 2009 (unaudited)

Company    U.S. $ Value      Percent of
Net Assets		  

Whiting Petroleum Corp.

    $ 14,728,098      1.8 % 

Cimarex Energy Co.

      13,511,204      1.7   

Commercial Metals Co.

      12,427,131      1.5   

Tech Data Corp.

      11,664,886      1.4   

Ruddick Corp.

      11,656,628      1.4   

Universal Corp.

      11,557,063      1.4   

Aspen Insurance Holdings Ltd.

      11,124,762      1.4   

Universal Health Services, Inc. – Class B

      10,996,986      1.4   

Platinum Underwriters Holdings, Ltd.

      10,799,718      1.3   

JC Penney Co., Inc.

      10,631,675      1.3   
   $   119,098,151      14.6 % 

 

*   All data are as of May 31, 2009. The Fund’s sector breakdown is expressed as a percentage of total investments and may vary over time.

 

**   Long-term investments.

Please Note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard and Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the Broad Market. 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.

 

8   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Portfolio Summary and Ten Largest Holdings

 

PORTFOLIO OF INVESTMENTS

May 31, 2009 (unaudited)

 

Company    Shares    U.S. $ Value
             
     

COMMON STOCKS – 96.2%

      

Information Technology – 19.0%

      

Communications Equipment – 1.0%

      

CommScope, Inc.(a)

    320,500    $ 8,409,920
         

Computers & Peripherals – 3.0%

      

NCR Corp.(a)

    569,000      6,111,060

SanDisk Corp.(a)

    503,000      7,876,980

Western Digital Corp.(a)

    422,400      10,496,640
         
        24,484,680
         

Electronic Equipment, Instruments & Components – 9.1%

      

Anixter International, Inc.(a)

    221,600      9,090,032

Arrow Electronics, Inc.(a)

    436,025      10,547,445

AU Optronics Corp. (Sponsored ADR)

    851,400      8,846,046

Avnet, Inc.(a)

    290,450      6,683,254

AVX Corp.

    378,000      3,507,840

Benchmark Electronics, Inc.(a)

    273,900      3,341,580

Flextronics International Ltd.(a)

    1,956,600      7,748,136

Ingram Micro, Inc.-Class A(a)

    479,400      7,919,688

Insight Enterprises, Inc.(a)

    690,600      5,214,030

Tech Data Corp.(a)

    364,300      11,664,886
         
        74,562,937
         

IT Services – 2.0%

      

Convergys Corp.(a)

    728,700      6,740,475

Perot Systems Corp.-Class A(a)

    673,900      9,205,474
         
        15,945,949
         

Semiconductors & Semiconductor Equipment – 3.4%

      

Lam Research Corp.(a)

    151,000      3,954,690

Siliconware Precision Industries Co. (Sponsored ADR)

    1,325,100      9,805,740

Teradyne, Inc.(a)

    1,356,600      9,699,690

Zoran Corp.(a)

    402,900      4,464,132
         
        27,924,252
         

Software – 0.5%

      

Amdocs Ltd.(a)

    186,400      4,033,696
         
        155,361,434
         
     

Financials – 17.5%

      

Commercial Banks – 2.2%

      

Comerica, Inc.

    214,100      4,641,688

Synovus Financial Corp.

    380,100      1,242,927

Trustmark Corp.

    195,200      3,823,968

Webster Financial Corp.

    277,100      2,067,166

Whitney Holding Corp.

    497,335      6,166,954
         
        17,942,703
         

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   9

 

Portfolio of Investments

 

Company    Shares    U.S. $ Value
             
     

Insurance – 8.4%

      

Arch Capital Group Ltd.(a)

    106,500    $ 6,060,915

Aspen Insurance Holdings Ltd.

    481,800      11,124,762

Fidelity National Financial, Inc.-Class A

    509,400      7,101,036

Old Republic International Corp.

    546,600      5,591,718

PartnerRe Ltd.

    72,386      4,723,911

Platinum Underwriters Holdings, Ltd.

    374,600      10,799,718

Reinsurance Group of America, Inc.-Class A

    185,000      6,804,300

RenaissanceRe Holdings Ltd.

    68,000      3,112,360

StanCorp Financial Group, Inc.

    284,800      8,834,496

Unum Group

    276,000      4,722,360
         
        68,875,576
         

Real Estate Investment Trusts
(REITs) – 4.4%

      

Alexandria Real Estate Equities, Inc.

    74,100      2,660,190

Digital Realty Trust, Inc.

    273,200      9,772,364

Home Properties, Inc.

    187,277      6,236,324

Mid-America Apartment Communities, Inc.

    139,200      5,051,568

Sunstone Hotel Investors, Inc.

    475,720      2,763,933

Tanger Factory Outlet Centers

    219,200      7,093,312

Taubman Centers, Inc.

    104,200      2,577,908
         
        36,155,599
         

Real Estate Management &
Development – 0.6%

      

Brookfield Properties Corp. (New York)

    600,200      4,537,512
         

Thrifts & Mortgage Finance – 1.9%

      

Astoria Financial Corp.

    152,200      1,173,462

First Niagara Financial Group, Inc.

    291,800      3,702,942

Provident Financial Services, Inc.

    217,500      2,140,200

Washington Federal, Inc.

    632,843      8,302,900
         
        15,319,504
         
        142,830,894
         
     

Industrials – 13.4%

      

Airlines – 0.5%

      

Alaska Air Group, Inc.(a)

    199,700      3,109,329

Skywest, Inc.

    109,300      1,120,325
         
        4,229,654
         

Building Products – 0.7%

      

Masco Corp.

    383,100      3,968,916

Quanex Building Products Corp.

    162,100      1,789,584
         
        5,758,500
         

Commercial Services & Supplies – 1.2%

      

United Stationers, Inc.(a)

    277,600      9,940,856
         

Electrical Equipment – 3.6%

      

Acuity Brands, Inc.

    136,300      3,704,634

AO Smith Corp.

    135,300      4,057,647

Cooper Industries Ltd.-Class A

    128,500      4,217,370

EnerSys(a)

    564,500      9,144,900

Regal-Beloit Corp.

    198,823      7,855,497
         
        28,980,048
         

 

10   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Portfolio of Investments

 

Company    Shares    U.S. $ Value
 
     

Machinery – 4.4%

      

Briggs & Stratton Corp.

    532,675    $ 8,096,660

Gardner Denver, Inc.(a)

    292,200      8,280,948

Mueller Industries, Inc.

    419,200      9,209,824

Terex Corp.(a)

    766,100      10,281,062
         
        35,868,494
         

Professional Services – 0.9%

      

Kelly Services, Inc.-Class A

    688,600      7,340,476
         

Road & Rail – 2.1%

      

Arkansas Best Corp.

    72,900      2,049,219

Con-way, Inc.

    200,000      6,420,000

Hertz Global Holdings, Inc.(a)

    855,700      5,861,545

Werner Enterprises, Inc.

    167,700      3,016,923
         
        17,347,687
         
        109,465,715
         
     

Consumer Discretionary – 9.9%

      

Auto Components – 0.3%

      

Autoliv, Inc.

    101,200      2,811,336
         

Automobiles – 1.1%

      

Thor Industries, Inc.

    437,700      8,802,147
         

Hotels, Restaurants & Leisure – 1.0%

      

Boyd Gaming Corp.(a)

    781,700      7,848,268
         

Leisure Equipment & Products – 0.8%

      

Callaway Golf Co.

    915,800      6,520,496
         

Media – 0.4%

      

CBS Corp.-Class B

    468,300      3,456,054
         

Multiline Retail – 1.3%

      

JC Penney Co., Inc.

    407,500      10,631,675
         

Specialty Retail – 4.3%

      

AutoNation, Inc.(a)

    327,200      5,195,936

Foot Locker, Inc.

    907,900      10,086,769

Limited Brands, Inc.

    606,000      7,581,060

Men's Wearhouse, Inc.

    587,500      10,040,375

Signet Jewelers Ltd.

    120,011      2,158,998
         
        35,063,138
         

Textiles, Apparel & Luxury Goods – 0.7%

      

Jones Apparel Group, Inc.

    584,200      5,316,220
         
        80,449,334
         

Consumer Staples – 9.4%

      

Beverages – 1.2%

      

Pepsi Bottling Group, Inc.

    304,600      10,009,156
         

Food & Staples Retailing – 2.4%

      

Ruddick Corp.

    463,300      11,656,628

Supervalu, Inc.

    457,900      7,601,140
         
        19,257,768
         

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   11

 

Portfolio of Investments

 

Company    Shares    U.S. $ Value
 
     

Food Products – 4.4%

      

Bunge Ltd.

    125,100    $ 7,915,077

Del Monte Foods Co.

    1,030,000      8,425,400

Smithfield Foods, Inc. (a)

    787,000      9,782,410

Tyson Foods, Inc.-Class A

    732,400      9,755,568
         
        35,878,455
         

Tobacco—1.4%

      

Universal Corp.

    312,100      11,557,063
         
        76,702,442
         

Energy – 7.9%

   

Energy Equipment & Services – 2.2%

   

Acergy SA (ADR)

    155,168      1,604,437

Helmerich & Payne, Inc.

    247,200      8,644,584

Oil States International, Inc. (a)

    306,400      8,006,232
         
        18,255,253
         

Oil, Gas & Consumable Fuels – 5.7%

   

Cimarex Energy Co.

    414,200      13,511,204

Denbury Resources, Inc. (a)

    484,781      8,333,385

Frontier Oil Corp.

    546,500      9,547,355

Whiting Petroleum Corp. (a)

    314,300      14,728,098
         
        46,120,042
         
        64,375,295
         

Materials – 7.8%

   

Chemicals – 3.1%

   

Arch Chemicals, Inc.

    233,195      6,552,780

Cytec Industries, Inc.

    345,200      7,414,896

Rockwood Holdings, Inc. (a)

    618,100      9,222,052

Westlake Chemical Corp.

    107,525      2,198,886
         
        25,388,614
         

Containers & Packaging – 2.1%

   

Aptargroup, Inc.

    101,700      3,153,717

Owens-Illinois, Inc. (a)

    227,000      6,499,010

Sonoco Products Co.

    298,400      7,269,024
         
        16,921,751
         

Metals & Mining – 2.6%

   

Commercial Metals Co.

    732,300      12,427,131

Reliance Steel & Aluminum Co.

    232,100      8,817,479
         
        21,244,610
         
        63,554,975
         

Health Care – 6.3%

   

Health Care Providers & Services – 6.3%

   

AMERIGROUP Corp. (a)

    246,500      7,113,990

Coventry Health Care, Inc. (a)

    274,200      4,949,310

Henry Schein, Inc. (a)

    94,300      4,294,422

LifePoint Hospitals, Inc. (a)

    317,517      8,652,338

Molina Healthcare, Inc. (a)

    372,315      8,913,221

Omnicare, Inc.

    235,100      6,354,753

Universal Health Services, Inc.-Class B

    200,200      10,996,986
         
        51,275,020
         

 

12   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Portfolio of Investments

 

Company    Shares    U.S. $ Value  
   
     

Utilities – 5.0%

   

Electric Utilities – 2.1%

   

Allegheny Energy, Inc.

    87,200    $ 2,180,000   

Northeast Utilities

    483,200      10,045,728   

Portland General Electric Co.

    296,500      5,334,035   
           
        17,559,763   
           

Gas Utilities – 1.2%

      

Atmos Energy Corp.

    405,146      9,723,504   
           

Independent Power Producers & Energy Traders – 0.5%

      

RRI Energy, Inc.(a)

    774,500      4,244,260   
           

Multi-Utilities – 1.2%

   

NiSource, Inc.

    369,800      3,953,162   

Wisconsin Energy Corp.

    144,200      5,690,132   
           
        9,643,294   
           
        41,170,821   
           

Total Common Stocks
(cost $911,890,879)

         785,185,930   
           
     

SHORT-TERM INVESTMENTS – 4.9%

   

Investment Companies – 4.9%

   

AllianceBernstein Fixed-Income Shares, Inc.
– Government STIF Portfolio(b)
(cost $39,727,958)

    39,727,958      39,727,958   
           

Total Investments – 101.1%

    (cost $951,618,837)

         824,913,888   

Other assets less liabilities – (1.1)%

         (8,635,076 ) 
           

Net Assets – 100.0%

       $ 816,278,812   
           

 

(a)   Non-income producing security.

 

(b)   Investment in affiliated money market mutual fund.

Glossary:

ADR – American Depositary Receipt

See notes to financial statements.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   13

 

Portfolio of Investments

STATEMENT OF ASSETS & LIABILITIES

May 31, 2009 (unaudited)

 

Assets   

Investments in securities, at value

   

Unaffiliated issuers (cost $911,890,879)

    $ 785,185,930   

Affiliated issuers (cost $39,727,958)

      39,727,958   

Receivable for shares of beneficial interest sold

      4,285,698   

Receivable for investment securities sold

      2,746,298   

Dividends receivable

      1,023,530   
        

Total assets

      832,969,414   
        
Liabilities   

Payable for investment securities purchased

      12,285,257   

Payable for shares of beneficial interest redeemed

      3,472,411   

Advisory fee payable

      415,464   

Distribution fee payable

      200,975   

Transfer Agent fee payable

      87,859   

Administrative fee payable

      12,339   

Accrued expenses

      216,297   
        

Total liabilities

      16,690,602   
        

Net Assets

    $ 816,278,812   
        
Composition of Net Assets   

Paid-in capital

    $     1,089,034,922   

Undistributed net investment income

      2,454,045   

Accumulated net realized loss on investment transactions

      (148,505,206 ) 

Net unrealized depreciation on investments

      (126,704,949 ) 
        
   $ 816,278,812   
        

Net Asset Value Per Share—unlimited shares authorized, without par value

 

Class   Net Assets      Shares
Outstanding		      Net Asset
Value		  
A   $ 351,512,126      32,238,292      $ 10.90 * 
   
B   $ 68,680,297      6,533,961      $ 10.51   
   
C   $ 99,693,112      9,509,678      $ 10.48   
   
Advisor   $ 151,602,063      13,723,235      $ 11.05   
   
R   $ 41,630,366      3,849,887      $ 10.81   
   
K   $ 17,728,036      1,636,344      $ 10.83   
   
I   $ 85,432,812      7,857,240      $ 10.87   
   

 

*   The maximum offering price per share for Class A shares was $11.38 which reflects a sales charge of 4.25%.

See notes to financial statements.

 

14   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Statement of Assets & Liabilities

STATEMENT OF OPERATIONS

Six Months Ended May 31, 2009 (unaudited)

 

Investment Income     

Dividends

     

Unaffiliated issuers (net of foreign taxes withheld of $43,128)

    $     7,031,885     

Affiliated issuers

      35,359      $ 7,067,244   
          
Expenses     

Advisory fee (see Note B)

      2,539,282     

Distribution fee—Class A

      446,489     

Distribution fee—Class B

      324,660     

Distribution fee—Class C

      447,571     

Distribution fee—Class R

      82,940     

Distribution fee—Class K

      17,281     

Transfer agency—Class A

      467,563     

Transfer agency—Class B

      131,440     

Transfer agency—Class C

      157,889     

Transfer agency—Advisor Class

      161,838     

Transfer agency—Class R

      35,409     

Transfer agency—Class K

      12,268     

Transfer agency—Class I

      32,988     

Custodian

      110,423     

Registration fees

      87,258     

Printing

      73,754     

Administrative

      45,215     

Audit

      26,148     

Trustees’ fees

      24,354     

Legal

      21,200     

Miscellaneous

      14,676     
          

Total expenses

      5,260,646     

Less: expenses waived and reimbursed by the Adviser and Distributor
(see Notes B and C)

      (1,186,261 )   
          

Net expenses

        4,074,385   
          

Net investment income

        2,992,859   
          
Realized and Unrealized Gain (Loss) on Investment Transactions     

Net realized loss on investment transactions

        (126,120,703 ) 

Net change in unrealized appreciation/depreciation of investments

        250,564,662   
          

Net gain on investment transactions

        124,443,959   
          

Net Increase in Net Assets from Operations

      $     127,436,818   
          

See notes to financial statements.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   15

 

Statement of Operations

STATEMENT OF CHANGES IN NET ASSETS

 

     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		  
Increase (Decrease) in Net Assets from Operations     

Net investment income

    $ 2,992,859      $ 6,319,318   

Net realized loss on investment transactions

      (126,120,703 )      (21,902,452 ) 

Net change in unrealized appreciation/depreciation of investments

      250,564,662        (484,979,904 ) 
                

Net increase (decrease) in net assets from operations

      127,436,818        (500,563,038 ) 
Dividends and Distributions to Shareholders from     

Net investment income

     

Class A

      (2,857,158 )      (942,119 ) 

Class B

      (652,057 )      – 0 – 

Advisor Class

      (1,402,356 )      (822,340 ) 

Class R

      (269,201 )      (36,897 ) 

Class K

      (155,306 )      (69,693 ) 

Class I

      (1,265,895 )      (832,213 ) 

Net realized gain on investment transactions

     

Class A

      – 0 –      (45,825,246 ) 

Class B

      – 0 –      (14,438,717 ) 

Class C

      – 0 –      (16,985,109 ) 

Advisor Class

      – 0 –      (13,827,481 ) 

Class R

      – 0 –      (3,350,244 ) 

Class K

      – 0 –      (1,506,690 ) 

Class I

      – 0 –      (10,693,149 ) 
Transactions in Shares of Beneficial Interest     

Net decrease

      (1,232,372 )      (11,287,854 ) 
                

Total increase (decrease)

      119,602,473        (621,180,790 ) 
Net Assets     

Beginning of period

      696,676,339        1,317,857,129   
                

End of period (including undistributed net investment income of $2,454,045 and $6,063,159, respectively)

    $     816,278,812      $     696,676,339   
                

 

See notes to financial statements.

 

16   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Statement of Changes in Net Assets

NOTES TO FINANCIAL STATEMENTS

May 31, 2009 (unaudited)

 

NOTE A

Significant Accounting Policies

AllianceBernstein Trust (the “Trust”) was organized as a Massachusetts business trust on December 12, 2000 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of the following four funds: the AllianceBernstein Global Value Fund, the AllianceBernstein International Value Fund, the AllianceBernstein Small/Mid Cap Value Fund and the AllianceBernstein Value Fund (the “Funds”). Each Fund is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the AllianceBernstein Small/Mid Cap Value Fund (the “Fund”). The Fund offers Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Effective January 31, 2009, sales of Class B shares of the Fund to new investors were suspended. Class B shares will only be issued (i) upon the exchange of Class B shares from another AllianceBernstein Fund, (ii) for purposes of dividend reinvestment, (iii) through the Fund’s Automatic Investment Program (the “Program”) for accounts that established the Program prior to January 31, 2009, and (iv) for purchases of additional shares by Class B shareholders as of January 31, 2009. The ability to establish a new Automatic Investment Program for accounts containing Class B shares was suspended as of January 31, 2009. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, 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

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   17

 

Notes to Financial Statements

 

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 Trustees.

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 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. (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. Investments in money market funds are valued at their net asset value each day.

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

 

18   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Notes to Financial Statements

 

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. Fair Value Measurements

The Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective December 1, 2007. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

 

  •  

Level 1—quoted prices in active markets for identical investments

  •  

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

  •  

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of May 31, 2009:

 

Level

    Investments in
Securities		      Other
Financial
Instruments*		  

Level 1

    $     824,913,888       $     – 0  – 

Level 2

      – 0 –       – 0  – 

Level 3

      – 0 –       – 0  – 
                 

Total

    $ 824,913,888       $ – 0  – 
                 
*   Other financial instruments are derivative instruments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

3. 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.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   19

 

Notes to Financial Statements

 

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 or depreciation of investments and foreign currency denominated assets and liabilities.

4. 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.

In accordance with FASB Interpretation No. 48, “Accounting for Uncertainties in Income Taxes” (“FIN 48”), management has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements.

5. 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 the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income.

6. 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. Expenses of the Trust are charged to each Fund in proportion to each Fund’s respective net assets. Real-

 

20   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Notes to Financial Statements

 

ized and unrealized gains and losses are allocated among the various share classes based on respective net assets.

7. Dividends and Distributions

Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification.

8. Recent Accounting Pronouncements

During the period ended May 31, 2009, the Fund adopted FASB Statement of Financial Accounting Standards No. 161 (“FAS 161”), “Disclosures about Derivative Instruments and Hedging Activities.” FAS 161 requires enhanced disclosure about an entity’s derivative and hedging activities including qualitative disclosures about the objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The Fund did not engage in derivative transactions for the six months ended May 31, 2009.

On April 9, 2009, FASB issued FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with FAS 157, when the volume and level of activity for the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP 157-4 and believes the adoption of FSP 157-4 will have no material impact on the Fund’s financial statements.

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. The fee is accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total fund operating expenses on an annual basis to 1.15%, 1.85%, 1.85%, .85%, 1.35%, 1.10% and .85% of the average daily net assets for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively. For the six months ended May 31, 2009, such reimbursement amounted to $926,533.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   21

 

Notes to Financial Statements

 

Pursuant to the investment advisory agreement, the Fund paid $45,215 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the six months ended May 31, 2009.

The Fund compensates AllianceBernstein Investor Services, Inc. (“ABIS”), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $425,302 for the six months ended May 31, 2009.

AllianceBernstein Investments, 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 $2,400 from the sale of Class A shares and received $3,215, $21,192 and $4,291 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 May 31, 2009.

The Fund may invest in the AllianceBernstein Fixed-Income Shares, Inc.—Government STIF Portfolio, an open-end management investment company managed by the Adviser. The Government STIF Portfolio is offered as a cash management option to mutual funds and other institutional accounts of the Adviser, and is not available for direct purchase by members of the public. The Government STIF Portfolio pays no investment management fees but does bear its own expenses. A summary of the Fund’s transactions in shares of the Government STIF Portfolio for the six months ended May 31, 2009 is as follows:

 

Market Value

November 30, 2008

(000)

   Purchases
at Cost
(000)		   Sales
Proceeds
(000)		   Dividend
Income
(000)		   Market Value
May 31, 2009
(000)
$    20,829   $     128,525   $     109,626   $     35   $     39,728

Brokerage commissions paid on investment transactions for the six months ended May 31, 2009 amounted to $462,058, of which $0 and $0, respectively, was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser.

NOTE C

Distribution Services Agreement

The Fund has adopted a Distribution Services Agreement (the “Agreement”) pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Fund’s average daily net assets attributable to Class A shares, 1% of the Fund’s average daily net assets attributable to both

 

22   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Notes to Financial Statements

 

Class B and Class C shares, .50% of the Fund’s average daily net assets attributable to Class R shares and .25% of the Fund’s average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. For the period November 1, 2006 through October 31, 2007, with respect to Class B shares, payments made to the Distributor were voluntarily limited to .40% of the average daily net assets attributable to Class B shares. For the period November 1, 2007 through April 30, 2008, with respect to Class B shares, payments to the distributor were voluntarily limited to .35% of the average daily net assets attributable to Class B shares. As of May 1, 2008, with respect to Class B shares, payments made to the Distributor are voluntarily being limited to .20% of the average daily net assets attributable to Class B shares. The fees are accrued daily and paid monthly. For the six months ended May 31, 2009, such waiver amounted to $259,728. 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 $59,298, $2,145,327, $558,179 and $155,581 for Class B, Class C, Class R and Class K shares, respectively. While such costs may be recovered from the Fund in future periods so long as the Agreement is in effect, the rate of the distribution and servicing fees payable under the Agreement may not be increased without a shareholder vote. 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 May 31, 2009 were as follows:

 

     Purchases     Sales  

Investment securities (excluding U.S. government securities)

    $     154,133,866      $     163,884,644   

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 are as follows:

 

Gross unrealized appreciation

    $ 64,244,881   

Gross unrealized depreciation

      (190,949,830 ) 
        

Net unrealized depreciation

    $     (126,704,949 ) 
        

1. Currency Transactions

The Fund may invest in non-U.S. Dollar securities on a currency hedged or unhedged basis. The Fund may seek investment opportunities by taking long or

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   23

 

Notes to Financial Statements

 

short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and options. The Fund may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Fund and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Fund may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).

NOTE E

Shares of Beneficial Interest

Transactions in shares of beneficial interest for each class were as follows:

 

            
     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
                                  
Class A             

Shares sold

    6,841,493      9,886,183        $ 64,130,566      $ 138,711,103     
                                    

Shares issued in reinvestment of dividends and distributions

    287,317      2,853,969          2,669,176        44,265,057     
                                    

Shares converted from Class B

    426,786      1,022,702          4,090,690        14,508,837     
                                    

Shares redeemed

    (8,092,934 )    (15,042,890 )        (72,462,227 )      (204,480,399 )   
                                    

Net decrease

    (537,338 )    (1,280,036 )      $ (1,571,795 )    $ (6,995,402 )   
                                    
Class B             

Shares sold

    150,561      380,245        $ 1,347,215      $ 5,092,486     
                                    

Shares issued in reinvestment of dividends and distributions

    66,952      899,337          600,557        13,490,050     
                                    

Shares converted to Class A

    (442,515 )    (1,058,186 )        (4,090,690 )      (14,508,837 )   
                                    

Shares redeemed

    (1,228,701 )    (2,998,421 )        (10,625,345 )      (40,017,864 )   
                                    

Net decrease

    (1,453,703 )    (2,777,025 )      $ (12,768,263 )    $ (35,944,165 )   
                                    
Class C             

Shares sold

    693,728      2,028,093        $ 6,206,312      $ 27,623,504     
                                    

Shares issued in reinvestment of distributions

    – 0 –    888,589          – 0 –      13,257,750     
                                    

Shares redeemed

    (2,038,753 )    (4,709,762 )        (17,509,104 )      (61,291,970 )   
                                    

Net decrease

    (1,345,025 )    (1,793,080 )      $ (11,302,792 )    $ (20,410,716 )   
                                    

 

24   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Notes to Financial Statements

 

            
     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
                                  
Advisor Class             

Shares sold

    5,626,184      5,454,758        $ 55,791,286      $ 74,054,920     
                                    

Shares issued in reinvestment of dividends and distributions

    138,095      890,865          1,298,092        14,004,401     
                                    

Shares redeemed

    (4,030,456 )    (4,631,787 )        (37,264,824 )      (58,350,570 )   
                                    

Net increase

    1,733,823      1,713,836        $ 19,824,554      $ 29,708,751     
                                    
Class R             

Shares sold

    1,133,238      2,112,135        $ 10,217,958      $ 28,346,557     
                                    

Shares issued in reinvestment of dividends and distributions

    29,196      219,659          269,183        3,384,948     
                                    

Shares redeemed

    (679,660 )    (1,388,747 )        (6,123,457 )      (18,804,066 )   
                                    

Net increase

    482,774      943,047        $ 4,363,684      $ 12,927,439     
                                    
Class K             

Shares sold

    470,358      676,765        $ 4,347,419      $ 9,451,421     
                                    

Shares issued in reinvestment of dividends and distributions

    16,826      102,123          155,305        1,576,780     
                                    

Shares redeemed

    (212,664 )    (522,981 )        (1,898,349 )      (6,990,621 )   
                                    

Net increase

    274,520      255,907        $ 2,604,375      $ 4,037,580     
                                    
Class I             

Shares sold

    1,177,019      1,767,405        $ 11,026,008      $ 24,331,178     
                                    

Shares issued in reinvestment of dividends and distributions

    133,936      726,299          1,238,911        11,264,893     
                                    

Shares redeemed

    (1,609,685 )    (2,259,890 )        (14,647,054 )      (30,207,412 )   
                                    

Net increase (decrease)

    (298,730 )    233,814        $ (2,382,135 )    $ 5,388,659     
                                    

NOTE F

Risks Involved in Investing in the Fund

Foreign Securities Risk—Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of 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.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   25

 

Notes to Financial Statements

 

Currency Risk—This is the risk that changes in foreign currency exchange rates may negatively affect the value of the Fund’s investments or reduce the returns of the Fund. For example, the value of the Fund’s investments in foreign currency-denominated securities or currencies may decrease if the U.S. Dollar is strong (i.e., gaining value relative to other currencies) and other currencies are weak (i.e., losing value relative to the U.S. Dollar). Currency markets are generally not as regulated as securities markets. Independent of the Fund’s investments denominated in foreign currencies, the Fund’s positions in various foreign currencies may cause the Fund to experience investment losses due to the changes in exchange rates and interest rates.

Derivatives Risk—The Fund may invest in derivatives such as forwards, options, futures and swaps. These investments may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Fund, and subject to counterparty risk to a greater degree than more traditional investments.

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”) intended to provide short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended May 31, 2009. Effective July 16, 2009, the Facility will be reduced to $140 million.

NOTE H

Distributions to Shareholders

The tax character of distributions to be paid for the year ending November 30, 2009 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended November 30, 2008 and November 30, 2007 were as follows:

 

     2008    2007

Distributions paid from:

      

Ordinary income

    $ 27,500,908    $ 14,541,065

Long-term capital gains

      81,828,990      104,087,709
             

Total taxable distributions

      109,329,898      118,628,774
             

Total distributions paid

    $     109,329,898    $     118,628,774
             

 

26   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Notes to Financial Statements

 

As of November 30, 2008, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Undistributed ordinary income

    $ 6,063,159   

Undistributed long-term capital gains

      (22,384,503 )(a) 

Unrealized appreciation/(depreciation)

          (377,269,611 ) 
        

Total accumulated earnings/(deficit)

    $ (393,590,955 ) 
        

 

(a)  

On November 30, 2008, the Fund had a net capital loss carryforward for federal income tax purposes of $22,384,503 of which $22,384,503 expires in the year 2016. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed.

NOTE I

Legal Proceedings

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 (“AllianceBernstein defendants”), and certain other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the AllianceBernstein 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.

Following 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. 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 Order of the SEC dated December 18, 2003 as amended and restated January 15, 2004 (“SEC Order”) and the New York State Attorney General Assurance of Discontinuance dated September 1, 2004 (“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 containing their

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   27

 

Notes to Financial Statements

 

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 settlement amount ($30 million), which the Adviser previously accrued and disclosed, has been disbursed. The derivative claims brought on behalf of Alliance Holding, in which plaintiffs seek an unspecified amount of damages, remain pending.

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.

 

28   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class A  
   

Six Months

Ended

May 31,

2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value,
beginning of period

   $  9.18      $  16.77      $  17.89      $  17.63      $  17.23      $  14.62   
     

Income From Investment Operations

            

Net investment
income(a)(b)

   .04      .09      .09      .08      .02      .01 (c) 

Net realized and unrealized gain (loss) on investment transactions

   1.77      (6.29 )    .60      2.17      1.58      3.00   
     

Net increase (decrease) in net asset value from operations

   1.81      (6.20 )    .69      2.25      1.60      3.01   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.09 )    (.03 )    (.12 )    – 0  –    – 0  –    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.36 )    (1.69 )    (1.99 )    (1.20 )    (.40 ) 
     

Total dividends and distributions

   (.09 )    (1.39 )    (1.81 )    (1.99 )    (1.20 )    (.40 ) 
     

Net asset value, end of period

   $  10.90      $  9.18      $  16.77      $  17.89      $  17.63      $  17.23   
     

Total Return

            

Total investment return based on net asset value(d)

   19.86  %    (40.35 )%*    4.10  %    14.11  %    9.82  %    21.07  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $351,512      $300,760      $571,165      $533,763      $418,217      $308,303   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   1.15  %(e)    1.15  %    1.15  %(f)    1.15  %(f)    1.15  %    1.17  % 

Expenses, before waivers/reimbursements

   1.48  %(e)    1.34  %    1.27  %(f)    1.31  %(f)    1.44  %    1.58  % 

Net investment income(b)

   .94  %(e)    .62  %    .54  %(f)    .47  %(f)    .14  %    .06  %(c) 

Portfolio turnover rate

   23  %    48  %    30  %    54  %    42  %    31  % 

See footnote summary on page 36.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   29

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class B  
   

Six Months

Ended

May 31,

2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value,
beginning of period

   $  8.86      $  16.24      $  17.30      $  17.23      $  16.97      $  14.51   
     

Income From Investment Operations

            

Net investment
income (loss)(a)

   .03 (g)    .06 (b)(g)    .06 (b)(g)    (.04 )(b)(g)    (.09 )(b)    (.10 )(b)(c) 

Net realized and unrealized gain (loss) on investment transactions

   1.70      (6.08 )    .57      2.10      1.55      2.96   
     

Net increase (decrease) in net asset value from operations

   1.73      (6.02 )    .63      2.06      1.46      2.86   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.08 )    – 0  –    – 0  –    – 0  –    – 0  –    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.36 )    (1.69 )    (1.99 )    (1.20 )    (.40 ) 
     

Total dividends and distributions

   (.08 )    (1.36 )    (1.69 )    (1.99 )    (1.20 )    (.40 ) 
     

Net asset value, end of period

   $  10.51      $  8.86      $  16.24      $  17.30      $  17.23      $  16.97   
     

Total Return

            

Total investment return based on net asset value(d)

   19.73  %    (40.49 )%*    3.86  %    13.24  %    9.10  %    20.17  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $68,680      $70,770      $174,860      $226,764      $255,873      $257,615   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   1.47  %(e)    1.33  %    1.40  %(f)    1.85  %(f)    1.85  %    1.87  % 

Expenses, before waivers/reimbursements

   2.27  %(e)    2.06  %    2.01  %(f)    2.03  %(f)    2.16  %    2.32  % 

Net investment income (loss)

   .62  %(e)(g)    .42  %(b)(g)    .33  %(b)(f)(g)    (.27 ) %(b)(f)(g)    (.56 ) %(b)    (.63 ) %(b)(c) 

Portfolio turnover rate

   23  %    48  %    30  %    54  %    42  %    31  % 

See footnote summary on page 36.

 

30   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class C  
   

Six Months

Ended

May 31,

2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value,
beginning of period

   $  8.77      $  16.17      $  17.30      $  17.22      $  16.97      $  14.50   
     

Income From Investment Operations

            

Net investment
income (loss)(a)(b)

   .01      (.01 )    (.02 )    (.04 )    (.09 )    (.10 )(c) 

Net realized and unrealized gain (loss) on investment transactions

   1.70      (6.03 )    .58      2.11      1.54      2.97   
     

Net increase (decrease) in net asset value from operations

   1.71      (6.04 )    .56      2.07      1.45      2.87   
     

Less: Distributions

            

Distributions from net realized gain on investment transactions

   – 0  –    (1.36 )    (1.69 )    (1.99 )    (1.20 )    (.40 ) 
     

Net asset value, end of period

   $  10.48      $  8.77      $  16.17      $  17.30      $  17.22      $  16.97   
     

Total Return

            

Total investment return based on net asset value(d)

   19.50  %    (40.81 )%*    3.42  %    13.31  %    9.04  %    20.26  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $99,693      $95,201      $204,487      $208,714      $192,237      $161,634   

Ratio to average net
assets of:

            

Expenses, net of waivers/reimbursements

   1.85  %(e)    1.85  %    1.85  %(f)    1.85  %(f)    1.85  %    1.87  % 

Expenses, before waivers/reimbursements

   2.22  %(e)    2.05  %    1.98  %(f)    2.02  %(f)    2.15  %    2.30  % 

Net investment
income (loss)(b)

   .24  %(e)    (.09 )%    (.14 )%(f)    (.25 )%(f)    (.55 )%    (.64 )%(c) 

Portfolio turnover rate

   23  %    48  %    30  %    54  %    42  %    31  % 

See footnote summary on page 36.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   31

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Advisor Class  
   

Six Months
Ended

May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value,
beginning of period

   $  9.33      $  17.03      $  18.13      $  17.79      $  17.33      $  14.66   
     

Income From Investment Operations

            

Net investment
income(a)(b)

   .06      .13      .15      .13      .07      .05 (c) 

Net realized and unrealized gain (loss) on investment transactions

   1.79      (6.39 )    .60      2.20      1.59      3.02   
     

Net increase (decrease) in net asset value from operations

   1.85      (6.26 )    .75      2.33      1.66      3.07   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.13 )    (.08 )    (.16 )    – 0  –    – 0  –    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.36 )    (1.69 )    (1.99 )    (1.20 )    (.40 ) 
     

Total dividends and distributions

   (.13 )    (1.44 )    (1.85 )    (1.99 )    (1.20 )    (.40 ) 
     

Net asset value, end of period

   $  11.05      $  9.33      $  17.03      $  18.13      $  17.79      $  17.33   
     

Total Return

            

Total investment return based on net asset value(d)

   20.11  %    (40.18 )%*    4.44  %    14.47  %    10.13  %    21.43  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $151,602      $111,814      $175,011      $173,391      $132,379      $419,381   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   .85  %(e)    .85  %    .85  %(f)    .85  %(f)    .85  %    .87  % 

Expenses, before waivers/reimbursements

   1.18  %(e)    1.04  %    .97  %(f)    1.01  %(f)    1.09  %    1.28  % 

Net investment income(b)

   1.25  %(e)    .94  %    .84  %(f)    .75  %(f)    .40  %    .36  %(c) 

Portfolio turnover rate

   23  %    48  %    30  %    54  %    42  %    31  % 

See footnote summary on page 36.

 

32   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class R  
   

Six Months
Ended

May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value,
beginning of period

   $  9.10      $  16.66      $  17.82      $  17.60      $  17.21      $  14.62   
     

Income From Investment Operations

            

Net investment
income (loss)(a)(b)

   .03      .06      .05      .06      (.01 )    (.06 )(c) 

Net realized and unrealized gain (loss) on investment transactions

   1.76      (6.24 )    .61      2.15      1.60      3.05   
     

Net increase (decrease) in net asset value from operations

   1.79      (6.18 )    .66      2.21      1.59      2.99   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.08 )    (.02 )    (.13 )    – 0  –    – 0  –    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (1.36 )    (1.69 )    (1.99 )    (1.20 )    (.40 ) 
     

Total dividends and distributions

   (.08 )    (1.38 )    (1.82 )    (1.99 )    (1.20 )    (.40 ) 
     

Net asset value, end
of period

   $  10.81      $  9.10      $  16.66      $  17.82      $  17.60      $  17.21   
     

Total Return

            

Total investment return based on net asset value(d)

   19.81  %    (40.50 )%*    3.95  %    13.88  %    9.77  %    20.93  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $41,631      $30,639      $40,382      $19,372      $2,463      $453   

Ratio to average net assets of:

            

Expenses, net of waivers/reimbursements

   1.35  %(e)    1.35  %    1.35  %(f)    1.35  %(f)    1.35  %    1.35  % 

Expenses, before waivers/reimbursements

   1.58  %(e)    1.54  %    1.51  %(f)    1.55  %(f)    1.67  %    1.85  % 

Net investment income (loss)(b)

   .72  %(e)    .44  %    .26  %(f)    .33  %(f)    (.03 )%    (.38 )%(c) 

Portfolio turnover rate

   23  %    48  %    30  %    54  %    42  %    31  % 

See footnote summary on page 36.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   33

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class K  
   

Six Months

Ended

May 31,

2009

(unaudited)

     Year Ended November 30,    

March 1,

2005(h) to

November 30,
2005

  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  9.14      $  16.74      $  17.91      $  17.64      $  16.81   
     

Income From Investment Operations

          

Net investment income(a)(b)

   .04      .10      .08      .15      .03   

Net realized and unrealized gain (loss) on investment transactions

   1.76      (6.27 )    .62      2.11      .80   
     

Net increase (decrease) in net asset value from operations

   1.80      (6.17 )    .70      2.26      .83   
     

Less: Dividends and Distributions

          

Dividends from net investment income

   (.11 )    (.07 )    (.18 )    – 0 –    – 0 – 

Distributions from net realized gain on investment transactions

   – 0 –    (1.36 )    (1.69 )    (1.99 )    – 0 – 
     

Total dividends and distributions

   (.11 )    (1.43 )    (1.87 )    (1.99 )    – 0 – 
     

Net asset value, end of period

   $  10.83      $  9.14      $  16.74      $  17.91      $  17.64   
     

Total Return

          

Total investment return based on net asset value(d)

   19.93  %    (40.36 )%*    4.14  %    14.16  %    4.94 % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $17,728      $12,447      $18,514      $5,211      $64   

Ratio to average net
assets of:

          

Expenses, net of waivers/reimbursements

   1.10  %(e)    1.10  %    1.10  %(f)    1.10  %(f)    1.10 %(e) 

Expenses, before waivers/reimbursements

   1.30  %(e)    1.26  %    1.23  %(f)    1.28  %(f)    1.40 %(e) 

Net investment income(b)

   .97  %(e)    .69  %    .48  %(f)    .92  %(f)    .31 %(e) 

Portfolio turnover rate

   23  %    48  %    30  %    54  %    42  % 

See footnote summary on page 36.

 

34   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class I  
   

Six Months

Ended

May 31,

2009
(unaudited)

     Year Ended November 30,    

March 1,

2005(h) to

November 30,
2005

  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  9.20      $  16.84      $  17.98      $  17.66      $  16.81   
     

Income From Investment Operations

          

Net investment income(a)(b)

   .06      .13      .12      .13      .07   

Net realized and unrealized gain (loss) on investment transactions

   1.76      (6.30 )    .62      2.18      .78   
     

Net increase (decrease) in net asset value from operations

   1.82      (6.17 )    .74      2.31      .85   
     

Less: Dividends and Distributions

          

Dividends from net investment income

   (.15 )    (.11 )    (.19 )    – 0 –    – 0 – 

Distributions from net realized gain on investment transactions

   – 0 –    (1.36 )    (1.69 )    (1.99 )    – 0 – 
     

Total dividends and distributions

   (.15 )    (1.47 )    (1.88 )    (1.99 )    – 0 – 
     

Net asset value, end of period

   $  10.87      $  9.20      $  16.84      $  17.98      $  17.66   
     

Total Return

          

Total investment return based on net asset value(d)

   20.11  %    (40.20 )%*    4.38  %    14.46  %    5.06  % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $85,433      $75,045      $133,438      $17,420      $6,738   

Ratio to average net assets of:

          

Expenses, net of waivers/reimbursements

   .85  %(e)    .85  %    .84  %(f)    .85  %(f)    .85  %(e) 

Expenses, before waivers/reimbursements

   .96  %(e)    .92  %    .85  %(f)    .89  %(f)    1.08  %(e) 

Net investment income(b)

   1.23  %(e)    .93  %    .69  %(f)    .79  %(f)    .59  %(e) 

Portfolio turnover rate

   23  %    48  %    30  %    54  %    42  % 

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   35

 

Financial Highlights

 

(a)   Based on average shares outstanding.

 

(b)   Net of fees and expenses waived/reimbursed by the Adviser.

 

(c)   Net of fees and expenses waived/reimbursed by the Transfer Agent.

 

(d)   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 charges 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.

 

(e)   Annualized.

 

(f)   The ratio includes expenses attributable to costs of proxy solicitation.

 

(g)   Net of fees and expenses waived by Distributor.

 

(h)   Commencement of distributions.

 

*   Includes the impact of proceeds received and credited to the Fund resulting from class action settlements, which enhanced the Fund’s performance for the year ended November 30, 2008 by 0.01%.

See notes to financial statements.

 

36   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

Financial Highlights

 

BOARD OF TRUSTEES

William H. Foulk, Jr.(1), Chairman

John H. Dobkin(1)

Michael J. Downey(1)

D. James Guzy(1)

Nancy P. Jacklin(1)

Garry L. Moody(1)

Marshall C. Turner, Jr.(1)

Earl D. Weiner(1)

OFFICERS

Robert M. Keith, President and Chief Executive Officer

Philip L. Kirstein, Senior Vice President and Independent Compliance Officer

Joseph G. Paul(2), Senior Vice President

James W. MacGregor(2), Vice President

Andrew J. Weiner(2), Vice President

Emilie D. Wrapp, Secretary

Joseph J. Mantineo, Treasurer and Chief Financial Officer

Phyllis J. Clarke, Controller

 

Custodian and Accounting Agent

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111

 

 

Principal Underwriter

AllianceBernstein Investments, Inc.
1345 Avenue of the Americas
New York, NY 10105

 

Legal Counsel

Seward & Kissel LLP

One Battery Park Plaza

New York, NY 10004

   

Transfer Agent

AllianceBernstein Investor
Services, Inc.

P.O. Box 786003

San Antonio, TX 78278-6003

Toll-Free (800) 221-5672

 

Independent Registered Public Accounting Firm

Ernst & Young LLP

5 Times Square

New York, NY 10036

 

(1)   Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. Mr. Foulk is the sole member of the Fair Value Pricing Committee.

 

(2)   Management of, and investment decisions for, the Fund’s portfolio are made by the Small/Mid Cap Value Senior Investment Management Team. Messrs. MacGregor, Paul and Weiner are the investment professionals with the most significant responsibility for the day-to-day management of the Fund’s portfolio.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   37

 

Board of Trustees

 

Information Regarding the Review and Approval of the Fund’s Advisory Agreement

The disinterested trustees (the “trustees”) of AllianceBernstein Trust (the “Trust”) unanimously approved the continuance of the Advisory Agreement with the Adviser in respect of AllianceBernstein Small/Mid Cap Value Fund (the “Fund”) at a meeting held on May 5-7, 2009.

Prior to approval of the continuance of the Advisory Agreement, the trustees had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The trustees also reviewed an independent evaluation prepared by the Trust’s Senior Officer (who is also the Trust’s Independent Compliance Officer) of the reasonableness of the advisory fee in the Advisory Agreement wherein the Senior Officer concluded that the contractual fee for the Fund was reasonable. The trustees also discussed the proposed continuance in private sessions with counsel and the Trust’s Senior Officer.

The trustees considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as trustees or directors of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the trustees and its responsiveness, frankness and attention to concerns raised by the trustees in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. The trustees noted that they have four regular meetings each year, at each of which they receive presentations from the Adviser on the investment results of the Fund and review extensive materials and information presented by the Adviser.

The trustees also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the trustees did not identify any particular information that was all-important or controlling, and different trustees may have attributed different weights to the various factors. The trustees determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the trustees considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the trustees’ determinations included the following:

Nature, Extent and Quality of Services Provided

The trustees considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research

 

38   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The trustees also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services provided at the Fund’s request by employees of the Adviser or its affiliates. Requests for these reimbursements are approved by the trustees on a quarterly basis and, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Fund’s Advisory Agreement. The trustees noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Trust’s Senior Officer. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Trust’s other service providers, also were considered. The trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.

Costs of Services Provided and Profitability

The trustees reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2007 and 2008 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant retained by the Trust’s Senior Officer. The trustees reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and noted that there are a number of potentially acceptable allocation methodologies for information of this type. The trustees noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries which provide transfer agency, distribution and brokerage services to the Fund. The trustees recognized that it is difficult to make comparisons of profitability between fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors. The trustees focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The trustees concluded that they were satisfied that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.

Fall-Out Benefits

The trustees considered the benefits to the Adviser and its affiliates from their relationships with the Fund other than the fees and expense reimbursements payable under the Advisory Agreement, including but not limited to benefits relating to soft dollar arrangements (whereby the Adviser receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis), 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   39

 

owned subsidiary of the Adviser) in respect of certain classes of the Fund’s shares, transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser, and brokerage commissions paid by the Fund to brokers affiliated with the Adviser. The trustees recognized that the Adviser’s profitability would be somewhat lower without these benefits. The trustees understood that the Adviser also might derive reputational and other benefits from its association with the Fund.

Investment Results

In addition to the information reviewed by the trustees in connection with the meeting, the trustees receive detailed performance information for the Fund at each regular Board meeting during the year. At the May 2009 meeting, the trustees reviewed information prepared by Lipper showing the performance of the Class A Shares of the Fund as compared with that of a group of similar funds selected by Lipper (the “Performance Group”) and as compared with that of a broader array of funds selected by Lipper (the “Performance Universe”), and information prepared by the Adviser showing performance of the Class A Shares as compared with the Russell 2500 Value Index and the Russell 2500 Index, in each case for the 1-, 3- and 5-year periods ended January 31, 2009 and (in the case of comparisons with the indices) the since inception period (March 2001 inception). The trustees noted that the Fund was in the 2nd quintile of the Performance Group and 3rd quintile of the Performance Universe for the 1-year period, 3rd quintile of the Performance Group and the Performance Universe for the 3-year period and 4th quintile of the Performance Group and 3rd quintile of the Performance Universe for the 5-year period, and that the Fund outperformed the Russell 2500 Value Index in the 3-year and since inception periods and underperformed that index in the 1- and 5-year periods, and outperformed the Russell 2500 Index in the 3- and 5-year and since inception periods and underperformed that index in the 1-year period. Based on their review, the trustees concluded that the Fund’s relative performance over time had been satisfactory.

Advisory Fees and Other Expenses

The trustees considered the advisory fee rate paid by the Fund to the Adviser and information prepared by Lipper concerning advisory fee rates paid by other funds in the same Lipper category as the Fund at a common asset level. The trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds.

The trustees also considered the fees the Adviser charges other clients with an investment style substantially similar to that of the Fund. For this purpose, they reviewed the relevant fee information in the Adviser’s Form ADV and the evaluation from the Trust’s Senior Officer disclosing the institutional fee schedule for institutional products managed by the Adviser that have an investment

 

40   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

style substantially similar to that of the Fund. The trustees noted that the institutional fee schedule for clients with an investment style substantially similar to that of the Fund had breakpoints at lower asset levels than those in the fee schedule applicable to the Fund and that the application of the institutional fee schedule to the level of assets of the Fund would result in a fee rate that would be lower than that in the Fund’s Advisory Agreement. The trustees noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the trustees and that they had previously discussed with the Adviser its policies in respect of such arrangements. The trustees also reviewed information that indicated that the Fund pays a higher fee rate than certain registered investment companies with an investment style similar to that of the Fund that are sub-advised by the Adviser. The trustees also noted that the Adviser advises a portfolio of another AllianceBernstein fund with an investment style substantially similar to that of the Fund for the same fee schedule as the Fund.

The Adviser reviewed with the trustees the significantly greater scope of the services it provides to the Fund relative to institutional clients and sub-advised funds. The Adviser also noted that because mutual funds are constantly issuing and redeeming shares, they are more difficult to manage than an institutional account, where the assets tend to be relatively stable. In light of these facts, the trustees did not place significant weight on these fee comparisons.

The trustees also considered the total expense ratio of the Class A shares of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of funds similar to the Fund and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the Fund. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The expense ratio of the Fund reflected fee waivers and/or expense reimbursements as a result of an applicable expense limitation undertaking by the Adviser. The trustees view the expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The trustees noted that it was likely that the expense ratios of some funds in the Fund’s Lipper category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases were voluntary and perhaps temporary.

The trustees noted that the Fund’s contractual effective advisory fee rate, at approximate current size, of 75 basis points, plus the 1 basis point impact of the administrative expense reimbursement in the latest fiscal year, was lower than the Expense Group median. The trustees noted that the Fund’s total expense ratio, which had been capped by the Adviser, was lower than the Expense Group and the Expense Universe medians. The trustees concluded that the Fund’s expense ratio was satisfactory.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   41

 

Economies of Scale

The trustees noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The trustees also considered presentations by an independent consultant discussing economies of scale in the mutual fund industry and for the AllianceBernstein Funds, as well as a presentation by the Adviser concerning certain of its views on economies of scale. The trustees believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The trustees noted that there is no established methodology for establishing breakpoints that give effect to fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The trustees observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The trustees also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the trustees concluded that the Fund’s breakpoint arrangements would result in a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.

 

42   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS

SUMMARY OF SENIOR OFFICER’S EVALUATION OF INVESTMENT ADVISORY AGREEMENT1

The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the “Adviser”) and the AllianceBernstein Trust (the “Trust”) in respect of AllianceBernstein Small/Mid Cap Value Fund (the “Fund”).2 The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund, for the Trustees of the Fund, as required by a September 2004 agreement between the Adviser and the New York State Attorney General (the “NYAG”). The Senior Officer’s evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Trustees 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 Trustees 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. Advisory fees charged to institutional and other clients of the Adviser for like services;

 

  2. Advisory 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, NET ASSETS, EXPENSE CAPS & 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 consideration of 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

 

1   It should be noted that the information in the fee summary was completed on April 23, 2009 and presented to the Board of Trustees on May 5-7, 2009.
2   Future references to the Fund do not include “AllianceBernstein.”. References in the fee summary pertaining to performance and expense ratio rankings refer to the Class A shares of the Fund.
3   Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser’s settlement with the NYAG.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   43

 

Category    Advisory Fee Based on % of
Average Daily Net Assets		   

Net Assets

02/28/09

($MIL)

    Fund
Specialty   

75 bp on 1st $2.5 billion

65 bp on next $2.5 billion

60 bp on the balance

    $ 567.3    Small/Mid Cap Value Fund

The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund.

During the Fund’s most recently completed fiscal year, the Adviser was due to receive $92,707 (0.01% of the Fund’s average daily net assets) for such services, but waived the amount in its entirety.4

The Adviser has agreed to waive that portion of its management fees and/or reimburse the Fund for that portion of its total operating expenses to the degree necessary to limit the Fund’s expense ratios to the amounts set forth below for the Fund’s fiscal year. The waiver is terminable by the Adviser at the end of the Fund’s fiscal year upon at least 60 days written notice prior to the termination date of the undertaking. It should be noted that the Fund was operating below its expense cap for the most recently completed fiscal year; accordingly the expense limitation undertaking was of no effect. In addition, set forth below are the gross expense ratios of the Fund for the most recently completed fiscal year:

 

Fund   Expense Cap
Pursuant to
Expense
Limitation
Undertaking		     Gross
Expense
Ratio		      Fiscal
Year End
Small/Mid Cap Value Fund   Advisor

Class A

Class B

Class C

Class R

Class K

Class I

   0.85

1.15

1.85

1.85

1.35

1.10

0.85

 % 

% 

% 

% 

% 

% 

% 

   1.04

1.34

2.06

2.05

1.54

1.26

0.92

 % 

% 

% 

% 

% 

% 

% 

    November 30

 

4   For the most recently completed fiscal year, the Adviser voluntarily agreed to waive $8,583 of the amount shown above.

 

44   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS

The advisory 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 and sub-advised investment companies 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 may be 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. The Adviser also believes that it incurs substantial entrepreneurial risk when offering a new mutual fund since establishing a new mutual fund requires a large upfront investment and it may take a long time for the fund to achieve profitability since the fund must be priced to scale from inception in order to be competitive and assets are acquired one account at a time. In addition, managing the cash flow of an investment company may be more difficult than managing that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if a 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 and legal and reputational risks are greater, it is worth considering information regarding the advisory fees charged to institutional accounts with a similar investment style as the Fund.5 In addition to the

 

5   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.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   45

 

AllianceBernstein institutional fee schedule, set forth below is what would have been the effective advisory fee of the Fund had the AllianceBernstein Institutional fee schedule been applicable to the Fund versus the Fund’s advisory fee based on February 28, 2009 net assets:

 

Fund  

Net Assets

02/28/09

($MIL)

  

AllianceBernstein (“AB”)
Institutional (“Inst.”)

Fee Schedule

   Effective
AB Inst.
Adv. Fee		  

Fund

Advisory
Fee

Small/Mid Cap Value Fund   $567.3  

Small & Mid Cap Value

95 bp on 1st $25 million

75 bp on next $25 million

65 bp on next $50 million

55 bp on the balance

Minimum Account Size: $25 m

   0.585%   0.750%

The adviser also manages the AllianceBernstein Variable Products Series Fund, Inc. (“AVPS”), which is available through variable annuity and variable life contracts offered by other financial institutions and offers policyholders the option to utilize certain AVPS portfolios as the investment option underlying their insurance contracts. Set forth below is the fee schedule of the AVPS portfolio that has a substantially similar investment style as the Fund.6 Also shown is what would have been the effective advisory fee of the Fund had the AVPS fee schedule been applicable to the Fund:

 

Fund    AVPS
Portfolio		    Fee Schedule   

Effective

AVPS

Adv. Fee

   

Fund

Advisory
Fee

Small/Mid Cap Value Fund    Small/Mid Cap Value Portfolio   

0.75% on first $2.5 billion

0.65% on next $2.5 billion

0.60% on the balance

    0.750%    0.750%

 

6   It should be noted that the AVPS portfolio was also affected by the settlement between the Adviser and the NYAG.

 

46   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

The Adviser provides sub-advisory services to certain other investment companies managed by other fund families. The Adviser charges the fees set forth below for each of these sub-advisory relationships. Also shown are what would have been the effective advisory fees of the Fund had the fee schedules of the sub-advisory relationship been applicable to the Fund based on February 28, 2009 net assets and the Fund’s advisory fee:

 

Fund        Fee Schedule   Effective
Sub-Adv.
Fee		   Fund
Advisory
Fee
Small/Mid Cap Value Fund   Client #1  

0.50% on 1st $250 million

0.40% on the balance

   0.472%   0.750%
       
  Client #2  

0.72% on 1st $25 million

0.54% on next $225 million

0.50% on the balance

   0.526%   0.750%
       
  Client #3  

0.95% on 1st $25 million

0.75% on next $25 million

0.65% on next $50 million

0.55% on the balance

   0.585%   0.750%
       
  Client #4  

0.80% on 1st $25 million

0.60% on the balance

   0.609%   0.750%
       
  Client #5  

0.613% on 1st $150 million

0.493% on the balance

   0.526%   0.750%

It is fair to note that the services the Adviser provides pursuant to sub-advisory agreements are generally confined to the services related to the investment process; in other words, they are not as comprehensive as the services provided to the Funds by the Adviser.

 

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 offered by other investment advisers. Lipper’s analysis included the Fund’s ranking with respect to the proposed management fee relative to the median of the Fund’s Lipper Expense Group (“EG”)7 at the approximate current asset level of the Fund.8

 

7   It should be noted that Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratio than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expenses differently.
8   The contractual 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” would mean that the Fund had the lowest effective fee rate in the Lipper peer group.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   47

 

Lipper describes an EG as a representative sample of comparable funds. Lipper’s standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, expense components and attributes. An EG will typically consist of seven to twenty funds.

 

Fund   Contractual
Management
Fee (%)9		  

Lipper Exp.

Group

Median (%)

   Rank
Small/Mid Cap Value Fund   0.750   0.777   6/15

Lipper also analyzed the Fund’s most recently completed fiscal year total expense ratio in comparison to the Fund’s EG and Lipper Expense Universe (“EU”). The EU10 is a broader group compared to the EG, consisting of all funds that have the same investment classification/objective and load type as the subject Fund. It should be noted that Lipper uses expense ratio data from financial statements of the most current fiscal year in their database. This has several implications: the total expense ratio of each fund that Lipper uses in their report is based on each fund’s average net assets during its fiscal year. Since funds have different fiscal year ends, the total expense ratios of the funds may cover different twelve month periods, depending on the funds’ fiscal year ends. This is the process that Lipper utilizes but given market conditions during 2008, especially the last three months of 2008, the effects on the funds’ total expense ratio caused by the differences in fiscal year ends may be more pronounced in 2008 compared to other years under more normal market conditions.11

 

Fund   

Expense

Ratio
(%)12

   

Lipper Exp.

Group

Median (%)

   

Lipper

Group

Rank

   

Lipper Exp.

Universe

Median (%)

   

Lipper
Universe

Rank

Small/Mid Cap Value Fund    1.152    1.253    5/15    1.285    11/56

Based on this analysis, the Fund has a more favorable ranking on a total expense ratio basis than on a management fee basis.

 

9   The contractual management fee would not reflect any expense reimbursements made by the Fund to the Adviser for certain clerical, legal, accounting, administrative and other services. In addition, the contractual management fee does not reflect any advisory fee waivers or expense reimbursements for expense caps that would effectively reduce the actual management fee. It should be noted that for the most recently completed fiscal year, the Fund was operating below its expense cap.
10   Except for asset (size) comparability, Lipper uses the same criteria for selecting an EG when selecting an EU. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund.
11   To cite an example, the average net assets and total expense ratio of a fund with a fiscal year end of March 31, 2008 will not be reflective of the market declines that occurred in the second half of 2008, in contrast to a fund with a fiscal year end of December 31, 2008.
12   Most recently completed fiscal year end Class A total expense ratio.

 

48   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.

The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Adviser’s profitability in connection with investment advisory services provided to the Fund. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion.

 

IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES.

The Fund’s profitability information, prepared by the Adviser for the Board of Trustees, was reviewed by the Senior Officer and the consultant. The Adviser’s profitability from providing investment advisory services to the Fund decreased during calendar year 2008, relative to 2007.

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 such benefits 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 provided the affiliates’ charges and services are competitive and the relationship otherwise complies with the 40 Act restrictions. 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 brokerage commissions. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur.

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 2008, ABI paid approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $21 million for distribution services and educational support (revenue sharing payments). During the Fund’s most recently completed fiscal year, ABI received from the Fund $16,317, $4,687,486 and $131,395 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   49

 

Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. (“ABIS”), the affiliated transfer agent for the Fund, are charged on a per account basis, based on the level of service provided 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. During the Fund’s most recently completed fiscal year, ABIS received $970,562 in fees from the Fund.13

The Fund may effect brokerage transactions through the Adviser’s affiliate, Sanford C. Bernstein & Co., LLC (“SCB & Co.”) and/or its U.K. affiliate, Sanford C. Bernstein Limited (“SCB Ltd.”), collectively “SCB,” and pay commissions for such transactions. During the Fund’s most recently completed fiscal year, the Fund did not effect any brokerage transactions with and pay any commission to SCB. The Adviser represented that SCB’s profitability from business conducted with the Fund is comparable to the profitability of SCB’s dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks (“ECNs”) derived from trading for its clients. These credits and charges are not being passed onto any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for its clients. These soft dollar benefits reduce the Adviser’s cost of doing business and increase its profitability.

 

V. POSSIBLE ECONOMIES OF SCALE

The Adviser has indicated that economies of scale are being shared with shareholders through fee structures,14 subsidies and enhancement to services. 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 make such investments in their business to provide services, there may be a sharing of economies of scale without a reduction in advisory fees.

 

 

13  

The fees disclosed are net of any expense offsets 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 the transfer agent’s account to the Fund’s account. During the Fund’s most recently completed fiscal year, the fees paid by the Fund to ABIS were reduced by $31,080 under the offset agreement between the Fund and ABIS.

14  

Fee structures include fee reductions, pricing at scale and breakpoints in advisory fee schedules.

 

50   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

An independent consultant, retained by the Senior Officer, provided the Board of Directors an update of the Deli15 study on advisory fees and various fund characteristics. The independent consultant first reiterated the results of his previous two dimensional comparison analysis (fund size and family size) with the Board of Directors.16 The independent consultant then discussed the results of the regression model that was utilized to study the effects of various factors on advisory fees. The regression model output indicated that the bulk of the variation in fees predicted were explained by various factors, but substantially by fund AUM, family AUM, index fund indicator and investment style. The independent consultant also compared the advisory fees of the AllianceBernstein Mutual Funds to similar funds managed by 19 other large asset managers, regardless of the fund size and each Adviser’s proportion of mutual fund assets to non-mutual fund assets.

 

VI. NATURE AND QUALITY OF THE ADVISER’S SERVICES, INCLUDING THE PERFORMANCE OF THE FUND

With assets under management of approximately $411 billion as of March 31, 2009, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Fund.

The information prepared by Lipper shows the 1, 3 and 5 year performance rankings of the Fund17 relative to its Lipper Performance Group (“PG”) and Lipper Performance Universe (“PU”)18 for the periods ended January 31, 2009.19

 

    

Fund

Return (%)

  

PG

Median (%)

  

PU

Median (%)

  

PG

Rank

  

PU

Rank

1 year

   -40.04   -41.65   -41.30   5/15   29/60

3 year

   -13.95   -13.89   -13.95   9/15   27/53

5 year

   -3.41   -2.04   -2.88   11/14   25/42

 

15  

The Deli study was originally published in 2002 based on 1997 data.

16  

The two dimensional analysis showed patterns of lower advisory fees for funds with larger asset sizes and funds from larger family sizes compared to funds with smaller asset sizes and funds from smaller family sizes, which according to the independent consultant is indicative of a sharing of economies of scale and scope. However, in less liquid and active markets, such is not the case, as the empirical analysis showed potential for diseconomies of scale in those markets. The empirical analysis also showed diminishing economies of scale and scope as funds surpassed a certain high level of assets.

17  

The performance rankings are for the Class A shares of the Fund. It should be noted that the performance returns of the Fund shown were provided by the Adviser. Lipper maintains its own database that includes the Fund’s performance returns. Rounding differences may cause the Adviser’s Fund returns to be one or two basis points different from Lipper’s own Fund returns. To maintain consistency, the performance returns of the Fund, as reported by the Adviser, are provided instead of Lipper.

18  

The Fund’s PG is identical to the Fund’s EG. The Fund’s PU is not identical to the Fund’s EU as the criteria for including or excluding a fund in a PU is somewhat different from that of an EU.

19  

Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of the fund even if a fund had a different investment classification/objective at a different point in time.

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   51

 

Set forth below are the 1, 3, 5 year and since inception performance returns of the Fund (in bold)20 versus its benchmark.21 Fund and benchmark volatility and reward-to-variability ratio (“Sharpe Ratio”) information is also shown.22

 

    

Periods Ending January 31, 2009

Annualized Performance

   

1

Year
(%)

  

3

Year
(%)

  

5

Year
(%)

  

Since
Inception

(%)

   Annualized   Risk
Period
(Year)
             Volatility
(%)		   Sharpe
(%)		  
Small/Mid Cap Value Fund   -40.04   -13.95   -3.41   3.89   17.71   -0.28   5
Russell 2500 Value Index   -37.71   -14.36   -3.21   3.39   17.06   -0.29   5
Russell 2500 Index   -38.74   -14.15   -3.52   1.96   N/A   N/A   N/A
Inception Date: March 29, 2001

CONCLUSION:

Based on the factors discussed above the Senior Officer’s conclusion is that the proposed advisory fee for the Fund is reasonable and within the range of what would have been negotiated at arm’s-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: May 29, 2009

  

 

20  

The performance returns and risk measures shown in the table are for the Class A shares of the Fund.

21  

The Adviser provided Fund and benchmark performance return information for periods through January 31, 2009.

22  

Fund and benchmark volatility and Sharpe Ratio information was obtained through Lipper LANA, a database maintained by Lipper. Volatility is a statistical measure of the tendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjusted measure of return that divides a fund’s return in excess of the riskless return by the fund’s standard deviation. A fund with a greater volatility would be seen as more risky than a fund with equivalent performance but lower volatility; for that reason, a greater return would be demanded for the more risky fund. A fund with a higher Sharpe Ratio would be viewed as better performing than a fund with a lower Sharpe Ratio.

 

52   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE 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

Large Cap Growth Fund

Small Cap Growth Portfolio

Small/Mid Cap Growth Fund*

Global & International

Global Growth Fund*

Global Thematic Growth Fund*

Greater China ‘97 Fund

International 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

Diversified Yield Fund

Global Bond Fund

High Income Fund

Intermediate Bond Portfolio

Short Duration Portfolio

Municipal Bond Funds

 

National
Arizona
California
Massachusetts
Michigan
Minnesota

   

New Jersey
New York
Ohio
Pennsylvania
Virginia

Intermediate Municipal Bond Funds

Intermediate California

Intermediate Diversified

Intermediate New York

Closed-End Funds

AllianceBernstein Global High Income Fund

AllianceBernstein Income Fund

AllianceBernstein National Municipal Income Fund

ACM Managed Dollar Income Fund

Alliance California Municipal Income Fund

Alliance New York Municipal Income Fund

The Spain Fund


Retirement Strategies Funds

 

2000 Retirement Strategy

  

2020 Retirement Strategy

  

2040 Retirement Strategy

2005 Retirement Strategy

  

2025 Retirement Strategy

  

2045 Retirement Strategy

2010 Retirement Strategy

  

2030 Retirement Strategy

  

2050 Retirement Strategy

2015 Retirement Strategy

  

2035 Retirement Strategy

  

2055 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 November 3, 2008, Small/Mid Cap Growth Fund was named Mid-Cap Growth Fund, Global Growth Fund was named Global Research Growth Fund, and Global Thematic Growth Fund was named Global Technology 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 SMALL/MID CAP VALUE FUND  •   53

 

AllianceBernstein Family of Funds

NOTES

 

54   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

NOTES

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND  •   55

NOTES

 

56   •  ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

 

ALLIANCEBERNSTEIN SMALL/MID CAP VALUE FUND

1345 Avenue of the Americas

New York, NY 10105

800.221.5672

LOGO

 

 

SMCV-0152-0509   LOGO

SEMI-ANNUAL REPORT

 

 

AllianceBernstein

Value Fund

 

LOGO

 

May 31, 2009

 

Semi-Annual Report

 

 

Investment Products Offered

  •  

Are Not FDIC Insured

  •  

May Lose Value

  •  

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® 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. (ABI) is the distributor of the AllianceBernstein family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager of the funds.

AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.

July 14, 2009

 

Semi-Annual Report

This report provides management’s discussion of fund performance for AllianceBernstein Value Fund (the “Fund”) for the semi-annual reporting period ended May 31, 2009.

Investment Objective and Policies

The Fund’s investment objective is long-term growth of capital. The Fund invests primarily in a diversified portfolio of equity securities of US companies, generally representing approximately 95-150 companies, with relatively large market capitalizations that AllianceBernstein L.P. (the “Adviser”) believes are undervalued, using the fundamental value approach of the Adviser’s Bernstein unit (“Bernstein”). In selecting securities for the Fund’s portfolio, Bernstein uses its fundamental and quantitative research to identify companies whose long-term earnings power and dividend-paying capability are not reflected in the current market price of their securities.

The fundamental value approach seeks to identify a universe of securities that are considered to be undervalued because they are attractively priced relative to their future earnings power and dividend-paying capability. Bernstein’s research staff of company and industry analysts covers a research universe of approximately 650 companies. This universe covers approximately 90% of the capitalization of the Russell 1000 Value Index. The Fund may invest in securities of non-US issuers and enter into forward commitments. The Fund may enter into derivatives transactions,

such as options, futures, forwards and swap agreements.

Investment Results

The table on page 4 shows the Fund’s performance compared to the benchmark, the Russell 1000 Value Index, for the six- and 12-month periods ended May 31, 2009.

The Fund’s Class A shares without sales charges outperformed the benchmark for the six-month period ended May 31, 2009, buoyed by strong security selection, particularly in financials, consumer staples and consumer growth. Financial holdings Deutsche Bank and Morgan Stanley were the two largest individual contributors. Deutsche Bank advanced after forecasting strong earnings for the remainder of 2009. Shares of Morgan Stanley benefited from increased capital-markets activity and from the completion of a $4.6 billion common equity offering, which was viewed as a positive step toward repaying the $10 billion of Troubled Asset Relief Program (TARP) capital the company has received. While the Fund’s stock selection in the financials sector was the largest source of outperformance, an underweight in the sector versus the benchmark partially offset relative returns. Notable detractors were the Fund’s underweight positions in Bank of America and Wells Fargo.

The Fund’s Class A shares without sales charges underperformed the benchmark for the 12-month period ended May 31, 2009. For the period, the Fund and the benchmark posted

 

ALLIANCEBERNSTEIN VALUE FUND  •   1

 

negative returns. The underperformance was driven by weak security selection, notably within financials, as many of the Fund’s holdings sold off sharply amid the extreme risk aversion that gripped the markets during 2008 and the beginning of 2009. The largest individual detractors from relative performance were Bank of America and AIG. Global recession fears also undermined many of the Fund’s consumer cyclicals and industrial resources holdings.

Market Review and Investment Strategy

The Russell 1000 Value Index declined in January and February 2009 as fears mounted that the economic contraction would be even worse than expected. The index rebounded sharply

in the following three months, as improved sentiment about the global economic outlook caused the extreme risk aversion that had previously gripped the markets to abate.

The extreme anxiety that gripped the markets since last autumn has eased since March 2009. Value stocks have been rebounding from very low levels that were reached as panicked investors fled risk, often indiscriminately. The value opportunity as the Fund’s US Value Senior Investment Management Team (the “Team”) measures it remains very attractive and remarkably diverse, spanning all sectors of the economy, not just financials and cyclicals deemed most vulnerable to financial and economic pressures.

 

2   •  ALLIANCEBERNSTEIN VALUE FUND

 

HISTORICAL PERFORMANCE

An Important Note About the Value of Historical Performance

The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com.

The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund’s prospectus, which contains this and other information, visit our 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.

Benchmark Disclosure

The unmanaged Russell 1000 Value Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Russell 1000 Value Index contains those securities in the Russell 1000 Index with a less-than-average growth orientation. The Russell 1000 Index is composed of 1000 of the largest capitalized companies that are traded in the United States. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Fund.

A Word About Risk

Value investing does not guarantee a profit or eliminate risk. Not all companies whose stocks are considered to be value stocks are able to turn their business around or successfully employ corrective strategies which would result in stock prices that rise as initially expected. Because the Fund can invest in foreign securities, it includes risks not associated with funds that invest primarily in US issues, including magnified fluctuations due to changes in foreign exchange rates and the possibility of substantial volatility due to political and economic uncertainties in foreign countries. To the extent that the Fund invests a substantial amount of its assets in a particular country, an investment in the Fund has the risk that market changes or other factors affecting that country may have a more significant effect on the Fund’s net asset value. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. These risks are fully discussed in the Fund’s prospectus.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN VALUE FUND  •   3

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

        

THE FUND VS. ITS BENCHMARK

PERIODS ENDED MAY 31, 2009

   Returns    
  6 Months      12 Months     

AllianceBernstein Value Fund*

         

Class A

   1.99%      -37.86%  
 

Class B**

   1.85%      -38.00%  
 

Class C

   1.41%      -38.42%  
 

Advisor Class†

   2.20%      -37.72%  
 

Class R†

   1.83%      -38.05%  
 

Class K†

   2.01%      -37.91%  
 

Class I†

   2.16%      -37.66%  
 

Russell 1000 Value Index

   -0.79%      -35.35%  
 

*    Includes the impact of proceeds received and credited to the Fund resulting from class action settlements, which enhanced the Fund’s performance for the six- and 12-month periods ended May 31, 2009, by 0.04% and 0.09%, respectively.

 

**  Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. Please see Note A for more information.

 

†    Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds.

        

See Historical Performance and Benchmark disclosures on previous page.

(Historical Performance continued on next page)

 

4   •  ALLIANCEBERNSTEIN VALUE FUND

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

AVERAGE ANNUAL RETURNS AS OF MAY 31, 2009   
     NAV Returns        SEC Returns  
       
Class A Shares        

1 Year

    -37.86 %       -40.52 % 

5 Years

    -4.70 %       -5.53 % 

Since Inception*

    -0.85 %       -1.37 % 
       
Class B Shares(a)        

1 Year

    -38.00 %       -40.39 % 

5 Years

    -4.95 %       -4.95 % 

Since Inception*

    -1.29 %       -1.29 % 
       
Class C Shares        

1 Year

    -38.42 %       -39.02 % 

5 Years

    -5.43 %       -5.43 % 

Since Inception*

    -1.58 %       -1.58 % 
       
Advisor Class Shares†        

1 Year

    -37.72 %       -37.72 % 

5 Years

    -4.43 %       -4.43 % 

Since Inception*

    -0.55 %       -0.55 % 
       
Class R Shares†        

1 Year

    -38.05 %       -38.05 % 

5 Years

    -4.98 %       -4.98 % 

Since Inception*

    -3.26 %       -3.26 % 
       
Class K Shares†        

1 Year

    -37.91 %       -37.91 % 

Since Inception*

    -8.28 %       -8.28 % 
       
Class I Shares†        

1 Year

    -37.66 %       -37.66 % 

Since Inception*

    -8.05 %       -8.05 % 

The Fund’s current prospectus fee table shows the Fund’s total annual operating expense ratios as 1.18%, 1.97%, 1.91%, 0.88%, 1.38%, 1.11% and 0.71% for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I, respectively.

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 11/3/03 for Class R Shares; and 3/1/05 for Class K and Class I shares.

 

(a)  

Assumes conversion of Class B shares into Class A shares after eight years.

 

†   These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans, and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

(Historical Performance continued on next page)

 

ALLIANCEBERNSTEIN VALUE FUND  •   5

 

Historical Performance

HISTORICAL PERFORMANCE

(continued from previous page)

 

SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)

AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2009)

  

  

                   SEC Returns  
            
Class A Shares             

1 Year

              -33.73 % 

5 Years

              -6.26 % 

Since Inception*

              -1.53 % 
            
Class B Shares(a)             

1 Year

              -33.53 % 

5 Years

              -5.69 % 

Since Inception*

              -1.45 % 
            
Class C Shares             

1 Year

              -32.05 % 

5 Years

              -6.15 % 

Since Inception*

              -1.74 % 
            
Advisor Class Shares†             

1 Year

              -30.60 % 

5 Years

              -5.17 % 

Since Inception*

              -0.72 % 
            
Class R Shares†             

1 Year

              -31.03 % 

5 Years

              -5.75 % 

Since Inception*

              -3.49 % 
            
Class K Shares†             

1 Year

              -30.78 % 

Since Inception*

              -8.44 % 
            
Class I Shares†             

1 Year

              -30.45 % 

Since Inception*

              -8.18 % 

 

*   Inception Dates: 3/29/01 for Class A, Class B, Class C and Advisor Class shares; 11/3/03 for Class R Shares; and 3/1/05 for Class K and Class I shares.

 

(a)  

Assumes conversion of Class B shares into Class A shares after eight years.

 

†   Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans, and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for these share classes are listed above.

See Historical Performance disclosures on page 3.

 

6   •  ALLIANCEBERNSTEIN VALUE FUND

 

Historical Performance

FUND EXPENSES

(unaudited)

 

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
Account Value
December 1, 2008		    Ending
Account Value
May 31, 2009		    Expenses Paid
During Period*
     Actual    Hypothetical    Actual    Hypothetical**    Actual    Hypothetical
Class A    $   1,000    $   1,000    $   1,019.91    $   1,019.05    $   5.94    $   5.94
Class B    $ 1,000    $ 1,000    $ 1,018.49    $ 1,018.60    $ 6.39    $ 6.39
Class C    $ 1,000    $ 1,000    $ 1,014.07    $ 1,015.41    $ 9.59    $ 9.60
Advisor Class    $ 1,000    $ 1,000    $ 1,022.04    $ 1,020.54    $ 4.44    $ 4.43
Class R    $ 1,000    $ 1,000    $ 1,018.32    $ 1,018.05    $ 6.94    $ 6.94
Class K    $ 1,000    $ 1,000    $ 1,020.06    $ 1,019.40    $ 5.59    $ 5.59
Class I    $ 1,000    $ 1,000    $ 1,021.64    $ 1,021.39    $ 3.58    $ 3.58

 

*   Expenses are equal to the classes’ annualized expense ratios of 1.18%, 1.27%, 1.91%, 0.88%, 1.38%, 1.11% and 0.71%, respectively, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

 

**   Assumes 5% return before expenses.

 

ALLIANCEBERNSTEIN VALUE FUND  •   7

 

Fund Expenses

PORTFOLIO SUMMARY

May 31, 2009 (unaudited)

 

PORTFOLIO STATISTICS

Net Assets ($mil): $534.9

LOGO

TEN LARGEST HOLDINGS**

May 31, 2009 (unaudited)

 

Company    U.S. $ Value      Percent of
Net Assets		  

Exxon Mobil Corp.

    $ 33,724,905      6.3 % 

AT&T, Inc.

      22,499,404      4.2   

Chevron Corp.

      19,200,960      3.6   

Pfizer, Inc.

      17,594,577      3.3   

Procter & Gamble Co.

      15,120,357      2.8   

Johnson & Johnson

      14,485,016      2.7   

JP Morgan Chase & Co.

      14,040,450      2.6   

Merck & Co., Inc.

      10,149,440      1.9   

Nokia OYJ (Sponsored ADR) – Class A

      10,128,600      1.9   

The Goldman Sachs Group, Inc.

      10,090,986      1.9   
   $   167,034,695      31.2 % 

 

*   All data are as of May 31, 2009. The Fund’s sector breakdown is expressed as a percentage of total investments and may vary over time.

 

**   Long-term investments.

Please Note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard and Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the Broad Market. 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.

 

8   •  ALLIANCEBERNSTEIN VALUE FUND

 

Portfolio Summary and Ten Largest Holdings

 

PORTFOLIO OF INVESTMENTS

May 31, 2009 (unaudited)

 

Company    Shares   U.S. $ Value
 
    

COMMON STOCKS – 99.1%

     

Financials – 18.9%

     

Capital Markets – 4.6%

     

Deutsche Bank AG

    94,600   $ 6,395,906

The Goldman Sachs Group, Inc.

    69,800     10,090,986

Morgan Stanley

    261,700     7,934,744
        
       24,421,636
        

Commercial Banks – 2.6%

     

Regions Financial Corp.

    302,200     1,266,218

SunTrust Banks, Inc.

    73,200     964,044

U.S. Bancorp

    308,100     5,915,520

Wells Fargo & Co.

    215,900     5,505,450
        
       13,651,232
        

Consumer Finance – 0.3%

     

Capital One Financial Corp.

    72,300     1,767,012
        

Diversified Financial Services – 2.6%

     

JP Morgan Chase & Co.

    380,500     14,040,450
        

Insurance – 8.8%

     

ACE Ltd.

    112,700     4,957,673

Allstate Corp.

    215,700     5,549,961

Fidelity National Financial, Inc. – Class A

    218,600     3,047,284

Genworth Financial, Inc. – Class A

    288,400     1,707,328

Hartford Financial Services Group, Inc.

    198,185     2,841,973

Lincoln National Corp.

    258,300     4,894,785

MetLife, Inc.

    243,700     7,676,550

PartnerRe Ltd.

    15,900     1,037,634

Prudential Financial, Inc.

    56,900     2,270,879

The Travelers Co., Inc.

    164,700     6,696,702

Unum Group

    307,000     5,252,770

XL Capital Ltd. – Class A

    111,600     1,129,392
        
       47,062,931
        
       100,943,261
        

Energy – 18.0%

     

Oil, Gas & Consumable Fuels – 18.0%

     

Apache Corp.

    97,600     8,223,776

BP PLC (Sponsored ADR)

    60,300     2,984,850

Chevron Corp.

    288,000     19,200,960

ConocoPhillips

    209,700     9,612,648

Devon Energy Corp.

    121,300     7,671,012

EOG Resources, Inc.

    46,900     3,432,611

Exxon Mobil Corp.

    486,300     33,724,905

Occidental Petroleum Corp.

    66,400     4,456,104

Royal Dutch Shell PLC (ADR)

    105,400     5,682,114

Sunoco, Inc.

    54,400     1,655,392
        
       96,644,372
        

 

ALLIANCEBERNSTEIN VALUE FUND  •   9

 

Portfolio of Investments

 

Company   

Shares

   U.S. $ Value
 
    

Consumer Staples – 14.0%

     

Beverages – 1.6%

     

Coca-Cola Enterprises, Inc.

    269,200   $ 4,484,872

Pepsi Bottling Group, Inc.

    125,600     4,127,216
        
       8,612,088
        

Food & Staples Retailing – 2.3%

     

The Kroger Co.

    244,400     5,572,320

Safeway, Inc.

    120,800     2,447,408

Sysco Corp.

    54,600     1,308,216

Wal-Mart Stores, Inc.

    54,800     2,725,752
        
       12,053,696
        

Food Products – 5.8%

     

Archer-Daniels-Midland Co.

    270,000     7,430,400

Bunge Ltd.

    95,600     6,048,612

ConAgra Foods, Inc.

    148,800     2,766,192

Del Monte Foods Co.

    243,400     1,991,012

Kraft Foods, Inc. – Class A

    184,700     4,822,517

Sara Lee Corp.

    376,300     3,382,937

Tyson Foods, Inc. – Class A

    337,600     4,496,832
        
       30,938,502
        

Household Products – 2.8%

     

Procter & Gamble Co.

    291,112     15,120,357
        

Tobacco – 1.5%

     

Altria Group, Inc.

    261,600     4,470,744

Philip Morris International, Inc.

    66,400     2,831,296

Reynolds American, Inc.

    21,700     867,349
        
       8,169,389
        
       74,894,032
        

Health Care – 13.9%

     

Biotechnology – 1.7%

     

Amgen, Inc.(a)

    180,900     9,034,146
        

Health Care Providers & Services – 0.6%

     

Cardinal Health, Inc.

    98,600     3,524,950
        

Pharmaceuticals – 11.6%

     

Bristol-Myers Squibb Co.

    16,000     318,720

Eli Lilly & Co.

    196,000     6,775,720

GlaxoSmithKline PLC (Sponsored ADR)

    39,800     1,341,658

Johnson & Johnson

    262,600     14,485,016

Merck & Co., Inc.

    368,000     10,149,440

Pfizer, Inc.

    1,158,300     17,594,577

Sanofi-Aventis SA (ADR)

    100,900     3,197,521

Schering-Plough Corp.

    336,300     8,205,720
        
       62,068,372
        
       74,627,468
        

 

10   •  ALLIANCEBERNSTEIN VALUE FUND

 

Portfolio of Investments

 

Company   

Shares

   U.S. $ Value
 
    

Consumer Discretionary – 13.2%

     

Auto Components – 0.9%

     

Autoliv, Inc.

    92,600   $ 2,572,428

Magna International, Inc. – Class A

    64,900     2,104,707
        
       4,677,135
        

Media – 7.2%

     

CBS Corp. – Class B

    509,100     3,757,158

Comcast Corp. – Class A

    208,800     2,875,176

News Corp. – Class A

    928,300     9,078,774

Time Warner Cable, Inc. – Class A

    154,100     4,744,739

Time Warner, Inc.

    401,333     9,399,219

Viacom, Inc. – Class B(a)

    157,300     3,487,341

The Walt Disney Co.

    212,900     5,156,438
        
       38,498,845
        

Multiline Retail – 1.1%

     

JC Penney Co., Inc.

    89,400     2,332,446

Macy’s, Inc.

    303,900     3,549,552
        
       5,881,998
        

Specialty Retail – 3.6%

     

AutoNation, Inc.(a)

    143,100     2,272,428

The Gap, Inc.

    383,000     6,836,550

Home Depot, Inc.

    209,200     4,845,072

Limited Brands, Inc.

    188,100     2,353,131

Lowe’s Cos, Inc.

    141,100     2,682,311
        
       18,989,492
        

Textiles, Apparel & Luxury Goods – 0.4%

     

Jones Apparel Group, Inc.

    263,000     2,393,300
        
       70,440,770
        

Telecommunication Services – 7.3%

     

Diversified Telecommunication Services – 5.6%

     

AT&T, Inc.

    907,600     22,499,404

Verizon Communications, Inc.

    259,100     7,581,266
        
       30,080,670
        

Wireless Telecommunication
Services – 1.7%

     

Sprint Nextel Corp.(a)

    878,100     4,522,215

Vodafone Group PLC (Sponsored ADR)

    227,900     4,289,078
        
       8,811,293
        
       38,891,963
        

Information Technology – 7.1%

     

Communications Equipment – 4.0%

     

Corning, Inc.

    232,600     3,419,220

Motorola, Inc.

    1,094,455     6,632,397

Nokia OYJ (Sponsored ADR) – Class A

    662,000     10,128,600

Telefonaktiebolaget LM Ericsson (Sponsored ADR) – Class B

    147,500     1,373,225
        
       21,553,442
        

 

ALLIANCEBERNSTEIN VALUE FUND  •   11

 

Portfolio of Investments

 

Company   

Shares

   U.S. $ Value
 
    

Computers & Peripherals – 0.6%

     

Western Digital Corp.(a)

    120,200   $ 2,986,970
        

Electronic Equipment, Instruments & Components – 1.3%

     

AU Optronics Corp. (Sponsored ADR)

    206,800     2,148,652

Tyco Electronics Ltd.

    266,600     4,630,842

Vishay Intertechnology, Inc.(a)

    20,600     113,918
        
       6,893,412
        

Semiconductors & Semiconductor Equipment – 0.2%

     

Nvidia Corp.(a)

    79,400     828,142
        

Software – 1.0%

     

Symantec Corp.(a)

    360,800     5,624,872
        
       37,886,838
        

Industrials – 3.7%

     

Aerospace & Defense – 1.0%

     

Northrop Grumman Corp.

    86,200     4,104,844

Raytheon Co.

    32,200     1,437,730
        
       5,542,574
        

Building Products – 0.5%

     

Masco Corp.

    250,800     2,598,288
        

Electrical Equipment – 0.3%

     

Cooper Industries Ltd. – Class A

    49,800     1,634,436
        

Industrial Conglomerates – 1.9%

     

3M Co.

    40,300     2,301,130

General Electric Co.

    561,600     7,570,368
        
       9,871,498
        
       19,646,796
        

Materials – 1.8%

     

Chemicals – 1.5%

     

E.I. Du Pont de Nemours & Co.

    133,800     3,809,286

Eastman Chemical Co.

    107,000     4,434,080
        
       8,243,366
        

Containers & Packaging – 0.3%

     

Ball Corp.

    33,200     1,321,360
        
       9,564,726
        

Utilities – 1.2%

     

Electric Utilities – 0.6%

     

Pinnacle West Capital Corp.

    114,100     3,154,865
        

Independent Power Producers & Energy Traders – 0.3%

     

RRI Energy, Inc.(a)

    299,100     1,639,068
        

Multi-Utilities – 0.3%

     

Alliant Energy Corp.

    20,600     488,838

 

12   •  ALLIANCEBERNSTEIN VALUE FUND

 

Portfolio of Investments

 

Company   

Shares

   U.S. $ Value
 
    

CMS Energy Corp.

    69,450   $ 787,563

NiSource, Inc.

    52,400     560,156
        
       1,836,557
        
       6,630,490
        

Total Common Stocks
(cost $614,873,390)

        530,170,716
        
    

SHORT-TERM INVESTMENTS – 0.9%

     

Investment Companies – 0.9%

     

AllianceBernstein Fixed-Income Shares, Inc. – Government STIF Portfolio(b)
(cost $4,663,345)

    4,663,345     4,663,345
        

Total Investments – 100.0%
(cost $619,536,735)

        534,834,061

Other assets less liabilities – 0.0%

        75,223
        

Net Assets – 100.0%

      $ 534,909,284
        

 

(a)   Non-income producing security.

 

(b)   Investment in affiliated money market mutual fund.

Glossary:

ADR – American Depositary Receipt

See notes to financial statements.

 

ALLIANCEBERNSTEIN VALUE FUND  •   13

 

Portfolio of Investments

STATEMENT OF ASSETS & LIABILITIES

May 31, 2009 (unaudited)

 

Assets   

Investments in securities, at value

   

Unaffiliated issuers (cost $614,873,390)

    $ 530,170,716   

Affiliated issuers (cost $4,663,345)

      4,663,345   

Receivable for shares of beneficial interest sold

      2,871,409   

Dividends receivable

      1,769,261   

Receivable for investment securities sold

      1,277,205   
        

Total assets

      540,751,936   
        
Liabilities   

Payable for investment securities purchased

      2,901,226   

Payable for shares of beneficial interest redeemed

      2,345,230   

Advisory fee payable

      243,311   

Transfer Agent fee payable

      61,004   

Distribution fee payable

      57,444   

Administrative fee payable

      18,503   

Accrued expenses

      215,934   
        

Total liabilities

      5,842,652   
        

Net Assets

    $ 534,909,284   
        
Composition of Net Assets   

Paid-in capital

    $ 900,962,575   

Undistributed net investment income

      4,689,785   

Accumulated net realized loss on investment transactions

      (286,040,402 ) 

Net unrealized depreciation on investments

      (84,702,674 ) 
        
   $     534,909,284   
        

Net Asset Value Per Share—unlimited shares authorized, without par value

 

Class   Net Assets      Shares
Outstanding		      Net Asset
Value		  
A   $   105,591,016      15,149,887      $   6.97 * 
                         
B   $ 23,726,950      3,409,381      $ 6.96   
                         
C   $ 26,978,125      3,890,387      $ 6.93   
                         
Advisor   $ 305,088,258      43,662,798      $ 6.99   
                         
R   $ 3,700,088      535,844      $ 6.91   
                         
K   $ 5,091,587      739,013      $ 6.89   
                         
I   $ 64,733,260      9,337,427      $ 6.93   
                         

 

*   The maximum offering price per share for Class A shares was $7.28 which reflects a sales charge of 4.25%.

See notes to financial statements.

 

14   •  ALLIANCEBERNSTEIN VALUE FUND

 

Statement of Assets & Liabilities

STATEMENT OF OPERATIONS

Six Months Ended May 31, 2009 (unaudited)

 

Investment Income     

Dividends

     

Unaffiliated issuers (net of foreign taxes withheld of $128,179)

    $     8,942,386     

Affiliated issuers

      47,046      $ 8,989,432   
          
Expenses     

Advisory fee (see Note B)

      1,368,340     

Distribution fee—Class A

      148,914     

Distribution fee—Class B

      137,977     

Distribution fee—Class C

      136,465     

Distribution fee—Class R

      8,221     

Distribution fee—Class K

      5,750     

Transfer agency—Class A

      94,662     

Transfer agency—Class B

      38,588     

Transfer agency—Class C

      30,188     

Transfer agency—Advisor Class

      263,857     

Transfer agency—Class R

      3,082     

Transfer agency—Class K

      3,875     

Transfer agency—Class I

      5,834     

Custodian

      104,100     

Registration fees

      62,674     

Printing

      56,425     

Administrative

      45,835     

Audit

      29,512     

Trustees’ fees

      24,751     

Legal

      15,909     

Miscellaneous

      15,055     
          

Total expenses

      2,600,014     

Less: expenses waived by the Distributor (see Note C)

      (96,584 )   
          

Net expenses

        2,503,430   
          

Net investment income

        6,486,002   
          
Realized and Unrealized Gain (Loss) on Investment Transactions     

Net realized loss on investment transactions

        (194,362,197 ) 

Net change in unrealized appreciation/depreciation of investments

        194,984,105   
          

Net gain on investment transactions

        621,908   
          

Net Increase in Net Assets from Operations

      $     7,107,910   
          

See notes to financial statements.

 

ALLIANCEBERNSTEIN VALUE FUND  •   15

 

Statement of Operations

STATEMENT OF CHANGES IN NET ASSETS

 

     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		  
Increase (Decrease) in Net Assets from Operations     

Net investment income

    $ 6,486,002      $ 21,101,461   

Net realized loss on investment transactions

      (194,362,197 )      (93,376,162 ) 

Net change in unrealized appreciation/depreciation of investments

      194,984,105        (402,366,233 ) 
                

Net increase (decrease) in net assets from operations

      7,107,910        (474,640,934 ) 
Dividends and Distributions to Shareholders from     

Net investment income

     

Class A

      (3,846,309 )      (6,927,098 ) 

Class B

      (1,146,380 )      (1,891,808 ) 

Class C

      (706,612 )      (988,587 ) 

Advisor Class

      (11,117,318 )      (9,519,175 ) 

Class R

      (111,043 )      (107,562 ) 

Class K

      (192,917 )      (279,374 ) 

Class I

      (2,655,783 )      (3,003,834 ) 

Net realized gain on investment transactions

     

Class A

      – 0 –        (24,676,152 ) 

Class B

      – 0 –        (7,172,153 ) 

Class C

      – 0 –        (6,526,054 ) 

Advisor Class

      – 0 –        (29,270,686 ) 

Class R

      – 0 –        (406,155 ) 

Class K

      – 0 –        (859,052 ) 

Class I

      – 0 –        (9,297,112 ) 
Transactions in Shares of Beneficial Interest     

Net increase (decrease)

      13,382,029        (62,261,010 ) 
Capital Contributions     

Proceeds from third party regulatory settlement (see Note E)

      – 0 –        317   
                

Total increase (decrease)

      713,577        (637,826,429 ) 
Net Assets     

Beginning of period

      534,195,707        1,172,022,136   
                

End of period (including undistributed net investment income of $4,689,785 and $17,980,145, respectively)

    $     534,909,284      $     534,195,707   
                

See notes to financial statements.

 

16   •  ALLIANCEBERNSTEIN VALUE FUND

 

Statement of Changes in Net Assets

NOTES TO FINANCIAL STATEMENTS

May 31, 2009 (unaudited)

 

NOTE A

Significant Accounting Policies

AllianceBernstein Trust (the “Trust”) was organized as a Massachusetts business trust on December 12, 2000 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of the following four funds: the AllianceBernstein Global Value Fund, the AllianceBernstein International Value Fund, the AllianceBernstein Small/Mid Cap Value Fund and the AllianceBernstein Value Fund (the “Funds”). Each Fund is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the AllianceBernstein Value Fund (the “Fund”). The Fund offers Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Effective January 31, 2009, sales of Class B shares of the Fund to new investors were suspended. Class B shares will only be issued (i) upon the exchange of Class B shares from another AllianceBernstein Fund, (ii) for purposes of dividend reinvestment, (iii) through the Fund’s Automatic Investment Program (the “Program”) for accounts that established the Program prior to January 31, 2009, and (iv) for purchases of additional shares by Class B shareholders as of January 31, 2009. The ability to establish a new Automatic Investment Program for accounts containing Class B shares was suspended as of January 31, 2009. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, 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

 

ALLIANCEBERNSTEIN VALUE FUND  •   17

 

Notes to Financial Statements

 

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 Trustees.

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 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. (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. Investments in money market funds are valued at their net asset value each day.

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.

 

18   •  ALLIANCEBERNSTEIN VALUE FUND

 

Notes to Financial Statements

 

2. Fair Value Measurements

The Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective December 1, 2007. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

 

  •  

Level 1—quoted prices in active markets for identical investments

  •  

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

  •  

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of May 31, 2009:

 

Level

    Investments in
Securities		      Other
Financial
Instruments*		  

Level 1

    $     534,834,061      $     – 0  – 

Level 2

      – 0 –        – 0  – 

Level 3

      – 0 –        – 0  – 
                 

Total

    $ 534,834,061      $ – 0  – 
                 

 

*   Other financial instruments are derivative instruments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

3. Currency Translation

Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued.

 

ALLIANCEBERNSTEIN VALUE FUND  •   19

 

Notes to Financial Statements

 

Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities.

4. 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.

In accordance with FASB Interpretation No. 48, “Accounting for Uncertainties in Income Taxes” (“FIN 48”), management has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Fund’s financial statements.

5. 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 the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income.

6. 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. Expenses of the Trust are charged to each Fund in proportion to each Fund’s respective net assets. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.

7. Dividends and Distributions

Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are

 

20   •  ALLIANCEBERNSTEIN VALUE FUND

 

Notes to Financial Statements

 

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.

8. Recent Accounting Pronouncements

During the period ended May 31, 2009, the Fund adopted FASB Statement of Financial Accounting Standards No. 161 (“FAS 161”), “Disclosures about Derivative Instruments and Hedging Activities.” FAS 161 requires enhanced disclosure about an entity’s derivative and hedging activities including qualitative disclosures about the objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The Fund did not engage in derivative transactions for the six months ended May 31, 2009.

On April 9, 2009, FASB issued FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with FAS 157, when the volume and level of activity for the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP 157-4 and believes the adoption of FSP 157-4 will have no material impact on the Fund’s financial statements.

NOTE B

Advisory Fee and Other Transactions with Affiliates

Under the terms of the investment advisory agreement, the Fund pays the Adviser an advisory fee at an annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the Fund’s average daily net assets. The fee is accrued daily and paid monthly. The Adviser had agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis to 2.50%, 3.20%, 3.20%, 2.20%, 2.70%, 2.45% and 2.20% of the daily average net assets for Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares, respectively (the “Expense Caps”). The Expense Caps expired on January 1, 2009. For the six months ended May 31, 2009, there was no such reimbursement.

Pursuant to the investment advisory agreement, the Fund paid $45,835 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the six months ended May 31, 2009.

The Fund compensates AllianceBernstein Investor Services, Inc. (“ABIS”), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for

 

ALLIANCEBERNSTEIN VALUE FUND  •   21

 

Notes to Financial Statements

 

providing personnel and facilities to perform transfer agency services for the Fund. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $223,433 for the six months ended May 31, 2009.

AllianceBernstein Investments, 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 $1,998 from the sale of Class A shares and received $4,244, $8,917 and $1,175 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 May 31, 2009.

The Fund may invest in the AllianceBernstein Fixed-Income Shares, Inc. – Government STIF Portfolio, an open-end management investment company managed by the Adviser. The Government STIF Portfolio is offered as a cash management option to mutual funds and other institutional accounts of the Adviser, and is not available for direct purchase by members of the public. The Government STIF Portfolio pays no investment management fees but does bear its own expenses. A summary of the Fund’s transactions in shares of the Government STIF Portfolio for the six months ended May 31, 2009 is as follows:

 

Market Value

November 30,
2008

(000)

   Purchases
at Cost
(000)		   Sales
Proceeds
(000)		   Dividend
Income
(000)		   Market Value
May 31, 2009
(000)
$     15,867   $     142,496   $     153,700   $     47   $     4,663

Brokerage commissions paid on investment transactions for the six months ended May 31, 2009 amounted to $281,915, of which $0 and $0, respectively, was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser.

NOTE C

Distribution Services Agreement

The Fund has adopted a Distribution Services Agreement (the “Agreement”) pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Fund’s average daily net assets attributable to Class A shares, 1% of the Fund’s average daily net assets attributable to both Class B and Class C shares, .50% of the Fund’s average daily net assets attributable to Class R shares and .25% of the Fund’s average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. As of November 1, 2005, with respect to Class B shares, payments to the Distributor are voluntarily being limited to .30% of the average daily net assets attributable to Class B shares. For the period August 1, 2007

 

22   •  ALLIANCEBERNSTEIN VALUE FUND

 

Notes to Financial Statements

 

through July 31, 2008, with respect to Class K shares, payments to the Distributor were voluntarily limited to 0% of the average daily net assets attributable to Class K shares. The fees are accrued daily and paid monthly. For the six months ended May 31, 2009, such waiver amounted to $96,584. 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 $489,365, $832,359, $106,045 and $35,215 for Class B, Class C, Class R and Class K shares, respectively. While such costs may be recovered from the Fund in future periods so long as the Agreement is in effect, the rate of the distribution and servicing fees payable under the Agreement may not be increased without a shareholder vote. 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 May 31, 2009 were as follows:

 

     Purchases    Sales

Investment securities (excluding U.S. government securities)

    $     150,734,187    $     126,959,870

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 are as follows:

 

Gross unrealized appreciation

    $ 45,925,368   

Gross unrealized depreciation

      (130,628,042 ) 
        

Net unrealized depreciation

    $     (84,702,674 ) 
        

1. Currency Transactions

The Fund may invest in non-U.S. Dollar securities on a currency hedged or unhedged basis. The Fund may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and options. The Fund may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Fund and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Fund may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).

 

ALLIANCEBERNSTEIN VALUE FUND  •   23

 

Notes to Financial Statements

 

NOTE E

Shares of Beneficial Interest

Transactions in shares of beneficial interest for each class were as follows:

 

            
     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
        
Class A             

Shares sold

    1,818,670      7,094,240        $ 11,834,265      $ 77,967,343     
                                    

Shares issued in reinvestment of dividends and distributions

    520,827      2,159,341          3,515,581        27,337,252     
                                    

Shares converted from Class B

    807,872      1,049,710          5,085,137        11,413,902     
                                    

Shares redeemed

    (3,948,278 )    (20,576,677 )        (25,039,341 )      (209,136,774 )   
                                    

Net decrease

    (800,909 )    (10,273,386 )      $ (4,604,358 )    $ (92,418,277 )   
     
            
Class B             

Shares sold

    126,933      216,810        $ 839,586      $ 2,139,401     
                                    

Shares issued in reinvestment of dividends and distributions

    150,019      639,360          1,011,129        8,107,085     
                                    

Shares converted to Class A

    (809,167 )    (1,049,143 )        (5,085,137 )      (11,413,902 )   
                                    

Shares redeemed

    (813,190 )    (2,830,097 )        (5,016,913 )      (30,479,909 )   
                                    

Net decrease

    (1,345,405 )    (3,023,070 )      $ (8,251,335 )    $ (31,647,325 )   
     
            
Class C             

Shares sold

    243,146      452,074        $ 1,596,472      $ 4,939,425     
                                    

Shares issued in reinvestment of dividends and distributions

    92,156      437,745          621,130        5,511,207     
                                    

Shares redeemed

    (1,161,426 )    (3,230,727 )        (7,340,208 )      (33,948,508 )   
                                    

Net decrease

    (826,124 )    (2,340,908 )      $ (5,122,606 )    $ (23,497,876 )   
     
            
Advisor Class             

Shares sold

    19,838,138      22,270,605        $ 127,285,110      $ 222,611,919     
                                    

Shares issued in reinvestment of dividends and distributions

    510,388      2,940,058          3,445,118        37,426,941     
                                    

Shares redeemed

    (16,683,698 )    (16,609,134 )        (105,202,510 )      (166,744,300 )   
     

Net increase

    3,664,828      8,601,529        $ 25,527,718      $ 93,294,560     
     

 

24   •  ALLIANCEBERNSTEIN VALUE FUND

 

Notes to Financial Statements

 

     Shares         Amount      
     Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		         Six Months Ended
May 31, 2009
(unaudited)		     Year Ended
November 30,
2008		      
                                  
Class R             

Shares sold

    95,451      234,272        $ 585,263      $ 2,453,684     
     

Shares issued in reinvestment of dividends and distributions

    16,598      40,804          111,043        513,718     
     

Shares redeemed

    (70,754 )    (207,442 )        (444,472 )      (1,995,723 )   
     

Net increase

    41,295      67,634        $ 251,834      $ 971,679     
     
Class K             

Shares sold

    77,119      277,785        $ 485,895      $ 2,814,419     
     

Shares issued in reinvestment of dividends and distributions

    28,923      90,566          192,915        1,138,420     
     

Shares redeemed

    (83,410 )    (526,259 )        (530,976 )      (5,091,169 )   
     

Net increase (decrease)

    22,632      (157,908 )      $ 147,834      $ (1,138,330 )   
     
            
Class I             

Shares sold

    1,531,632      3,663,377        $ 9,821,498      $ 40,402,787     
     

Shares issued in reinvestment of dividends and distributions

    392,271      970,652          2,628,216        12,269,043     
     

Shares redeemed

    (1,144,613 )    (5,887,276 )        (7,016,772 )      (60,497,271 )   
     

Net increase (decrease)

    779,290      (1,253,247 )      $ 5,432,942      $ (7,825,441 )   
     

For the year ended November 30, 2008, the Fund received $317, related to a third-party’s settlement of regulatory proceedings involving allegations of improper trading. This amount is presented in the Fund’s statement of changes in net assets. Neither the Fund nor its affiliates were involved in the proceedings or the calculation of the payment.

NOTE F

Risks Involved in Investing in the Fund

Foreign Securities Risk—Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of 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.

Currency Risk—This is the risk that changes in foreign currency exchange rates may negatively affect the value of the Fund’s investments or reduce the returns

 

ALLIANCEBERNSTEIN VALUE FUND  •   25

 

Notes to Financial Statements

 

of the Fund. For example, the value of the Fund’s investments in foreign currency-denominated securities or currencies may decrease if the U.S. Dollar is strong (i.e., gaining value relative to other currencies) and other currencies are weak (i.e., losing value relative to the U.S. Dollar). Currency markets are generally not as regulated as securities markets. Independent of the Fund’s investments denominated in foreign currencies, the Fund’s positions in various foreign currencies may cause the Fund to experience investment losses due to the changes in exchange rates and interest rates.

Derivatives Risk—The Fund may invest in derivatives such as forwards, options, futures and swaps. These investments may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Fund, and subject to counterparty risk to a greater degree than more traditional investments.

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”) intended to provide short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended May 31, 2009. Effective July 16, 2009, the Facility will be reduced to $140 million.

NOTE H

Distributions to Shareholders

The tax character of distributions to be paid for the year ending November 30, 2009 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended November 30, 2008 and November 30, 2007 were as follows:

 

     2008    2007

Distributions paid from:

      

Ordinary income

    $ 38,226,872    $ 16,024,201

Long-term capital gains

      62,697,930      35,602,732
             

Total taxable distributions

      100,924,802      51,626,933
             

Total distributions paid

    $     100,924,802    $     51,626,933
             

 

26   •  ALLIANCEBERNSTEIN VALUE FUND

 

Notes to Financial Statements

 

As of November 30, 2008, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Undistributed ordinary income

    $ 17,980,145   

Accumulated capital and other losses

      (91,052,654 )(a) 

Unrealized appreciation/(depreciation)

      (280,312,330 )(b) 
        

Total accumulated earnings/(deficit)

    $     (353,384,839 ) 
        

 

(a)   On November 30, 2008, the Fund had a net capital loss carryforward for federal income tax purposes of $91,052,654 of which $91,052,654 expires in the year 2016. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed.

 

(b)   The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales.

NOTE I

Legal Proceedings

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 (“AllianceBernstein defendants”), and certain other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the AllianceBernstein 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.

Following 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. 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 Order of the SEC dated December 18, 2003 as amended and restated January 15, 2004 (“SEC Order”) and the New York State Attorney General Assurance of Discontinuance dated September 1, 2004 (“NYAG Order”).

 

ALLIANCEBERNSTEIN VALUE FUND  •   27

 

Notes to Financial Statements

 

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 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 settlement amount ($30 million), which the Adviser previously accrued and disclosed, has been disbursed. The derivative claims brought on behalf of Alliance Holding, in which plaintiffs seek an unspecified amount of damages, remain pending.

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.

 

28   •  ALLIANCEBERNSTEIN VALUE FUND

 

Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class A  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  7.08      $  14.00      $  14.65      $  13.25      $  12.63      $  10.96   
     

Income From Investment Operations

            

Net investment income(a)

   .08      .24      .24      .21      .17      .14 (b)(c) 

Net realized and unrealized gain (loss) on investment transactions

   .05      (5.95 )    (.23 )    2.09      .82      1.63   
     

Net increase (decrease) in net asset value from operations

   .13      (5.71 )    .01      2.30      .99      1.77   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.24 )    (.27 )    (.19 )    (.20 )    (.14 )    (.10 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (.94 )    (.47 )    (.70 )    (.23 )    – 0  – 
     

Total dividends and distributions

   (.24 )    (1.21 )    (.66 )    (.90 )    (.37 )    (.10 ) 
     

Net asset value, end of period

   $  6.97      $  7.08      $  14.00      $  14.65      $  13.25      $  12.63   
     

Total Return

            

Total investment return based on net asset value(d)

   1.99  %*    (44.60 )%*    (.01 )%    18.47  %    8.04  %    16.26  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $105,591      $112,991      $367,098      $314,824      $230,269      $187,004   

Ratio to average net assets of:

            

Expenses, net of waivers

   1.18  %(e)    1.07  %    1.02  %    1.04  %(f)    1.16  %    1.18  % 

Expenses, before waivers

   1.18  %(e)    1.07  %    1.02  %    1.04  %(f)    1.16  %    1.32  % 

Net investment income

   2.44  %(e)    2.17  %    1.62  %    1.44  %(f)    1.31  %    1.17  %(b)(c) 

Portfolio turnover rate

   26  %    23  %    28  %    19  %    25  %    27  % 

See footnote summary on page 35.

 

ALLIANCEBERNSTEIN VALUE FUND  •   29

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class B  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  7.08      $  13.99      $  14.60      $  13.12      $  12.50      $  10.86   
     

Income From Investment Operations

            

Net investment income(a)

   .08 (g)    .23 (g)    .23 (g)    .18 (g)    .08 (g)    .05 (b)(c) 

Net realized and unrealized gain (loss) on investment transactions

   .04      (5.95 )    (.23 )    2.10      .82      1.62   
     

Net increase (decrease) in net asset value from operations

   .12      (5.72 )    0      2.28      .90      1.67   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.24 )    (.25 )    (.14 )    (.10 )    (.05 )    (.03 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (.94 )    (.47 )    (.70 )    (.23 )    – 0  – 
     

Total dividends and distributions

   (.24 )    (1.19 )    (.61 )    (.80 )    (.28 )    (.03 ) 
     

Net asset value, end of period

   $  6.96      $  7.08      $  13.99      $  14.60      $  13.12      $  12.50   
     

Total Return

            

Total investment return based on net asset value(d)

   1.85  %*    (44.63 )%*    (.06 )%    18.40  %    7.34  %    15.41  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $23,727      $33,655      $108,851      $153,836      $160,666      $182,244   

Ratio to average net assets of:

            

Expenses, net of waivers

   1.27  %(e)    1.12  %    1.05  %    1.06  %(f)    1.82  %    1.90  % 

Expenses, before waivers

   1.97  %(e)    1.82  %    1.75  %    1.76  %(f)    1.87  %    2.04  % 

Net investment income

   2.35  %(e)(g)    2.13  %(g)    1.56  %(g)    1.39  %(f)(g)    .63  %(g)    .43  %(b)(c) 

Portfolio turnover rate

   26  %    23  %    28  %    19  %    25  %    27  % 

See footnote summary on page 35.

 

30   •  ALLIANCEBERNSTEIN VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class C  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  6.99      $  13.81      $  14.51      $  13.12      $  12.51      $  10.86   
     

Income From Investment Operations

            

Net investment income(a)

   .05      .16      .13      .09      .08      .05 (b)(c) 

Net realized and unrealized gain (loss) on investment transactions

   .04      (5.89 )    (.22 )    2.09      .81      1.63   
     

Net increase (decrease) in net asset value from operations

   .09      (5.73 )    (.09 )    2.18      .89      1.68   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.15 )    (.15 )    (.14 )    (.09 )    (.05 )    (.03 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (.94 )    (.47 )    (.70 )    (.23 )    – 0  – 
     

Total dividends and distributions

   (.15 )    (1.09 )    (.61 )    (.79 )    (.28 )    (.03 ) 
     

Net asset value, end of period

   $  6.93      $  6.99      $  13.81      $  14.51      $  13.12      $  12.51   
     

Total Return

            

Total investment return based on net asset value(d)

   1.41  %*    (45.02 )%*    (.70 )%    17.61  %    7.26 %    15.50  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $26,978      $32,949      $97,436      $112,965      $101,654      $98,512   

Ratio to average net assets of:

            

Expenses, net of waivers

   1.91  %(e)    1.79  %    1.73  %    1.74  %(f)    1.86  %    1.88  % 

Expenses, before waivers

   1.91  %(e)    1.79  %    1.73  %    1.74  %(f)    1.86  %    2.03  % 

Net investment income

   1.71  %(e)    1.47  %    .90  %    .72  %(f)    .59  %    .45  %(b)(c) 

Portfolio turnover rate

   26  %    23  %    28  %    19  %    25  %    27  % 

See footnote summary on page 35.

 

ALLIANCEBERNSTEIN VALUE FUND  •   31

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Advisor Class  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  7.13      $  14.11      $  14.75      $  13.34      $  12.70      $  11.01   
     

Income From Investment Operations

            

Net investment income(a)

   .09      .27      .29      .24      .20      .17 (b)(c) 

Net realized and unrealized gain (loss) on investment transactions

   .06      (6.00 )    (.23 )    2.10      .84      1.65   
     

Net increase (decrease) in net asset value from operations

   .15      (5.73 )    .06      2.34      1.04      1.82   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.29 )    (.31 )    (.23 )    (.23 )    (.17 )    (.13 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (.94 )    (.47 )    (.70 )    (.23 )    – 0  – 
     

Total dividends and distributions

   (.29 )    (1.25 )    (.70 )    (.93 )    (.40 )    (.13 ) 
     

Net asset value, end of period

   $  6.99      $  7.13      $  14.11      $  14.75      $  13.34      $  12.70   
     

Total Return

            

Total investment return based on net asset value(d)

   2.20  %*    (44.50 )%*    .31  %    18.76  %    8.41  %    16.68  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $305,088      $285,379      $443,002      $390,462      $262,311      $556,117   

Ratio to average net assets of:

            

Expenses, net of waivers

   .88  %(e)    .77  %    .72  %    .74  %(f)    .83  %    .88  % 

Expenses, before waivers

   .88  %(e)    .77  %    .72  %    .74  %(f)    .83  %    1.02  % 

Net investment income

   2.72  %(e)    2.52  %    1.92  %    1.76  %(f)    1.54  %    1.47  %(b)(c) 

Portfolio turnover rate

   26  %    23  %    28  %    19  %    25  %    27  % 

See footnote summary on page 35.

 

32   •  ALLIANCEBERNSTEIN VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class R  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,  
      2008     2007     2006     2005     2004  
     
           

Net asset value, beginning of period

   $  7.02      $  13.91      $  14.60      $  13.23      $  12.63      $  10.95   
     

Income From Investment Operations

            

Net investment income(a)

   .07      .20      .21      .16      .14      .12 (b)(c) 

Net realized and unrealized gain (loss) on investment transactions

   .05      (5.90 )    (.24 )    2.08      .82      1.64   
     

Net increase (decrease) in net asset value from operations

   .12      (5.70 )    (.03 )    2.24      .96      1.76   
     

Less: Dividends and Distributions

            

Dividends from net investment income

   (.23 )    (.25 )    (.19 )    (.17 )    (.13 )    (.08 ) 

Distributions from net realized gain on investment transactions

   – 0  –    (.94 )    (.47 )    (.70 )    (.23 )    – 0  – 
     

Total dividends and distributions

   (.23 )    (1.19 )    (.66 )    (.87 )    (.36 )    (.08 ) 
     

Net asset value, end of period

   $  6.91      $  7.02      $  13.91      $  14.60      $  13.23      $  12.63   
     

Total Return

            

Total investment return based on net asset value(d)

   1.83  %*    (44.75 )%*    (.33 )%    18.01  %    7.77  %    16.11  % 

Ratios/Supplemental Data

            

Net assets, end of period (000’s omitted)

   $3,700      $3,470      $5,940      $1,983      $757      $665   

Ratio to average net assets of:

            

Expenses, net of waivers

   1.38  %(e)    1.33  %    1.32  %    1.36  %(f)    1.40  %    1.40  % 

Expenses, before waivers

   1.38  %(e)    1.33  %    1.32  %    1.36  %(f)    1.40  %    1.54  % 

Net investment income

   2.24  %(e)    1.93  %    1.43  %    1.20  %(f)    1.06  %    1.07  %(b)(c) 

Portfolio turnover rate

   26  %    23  %    28  %    19  %    25  %    27  % 

See footnote summary on page 35.

 

ALLIANCEBERNSTEIN VALUE FUND  •   33

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class K  
   

Six Months

Ended

May 31,

2009

(unaudited)

                      

March 1,
2005(h) to
November 30,

2005

  
      Year Ended November 30,    
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $  7.03      $  13.95      $  14.59      $  13.26      $  12.84   
                             

Income From Investment Operations

          

Net investment income(a)

   .08      .26 (g)    .28 (g)    .20      .17   

Net realized and unrealized gain (loss) on investment transactions

   .05      (5.93 )    (.25 )    2.09      .25   
                             

Net increase (decrease) in net asset value from operations

   .13      (5.67 )    .03      2.29      .42   
                             

Less: Dividends and Distributions

          

Dividends from net investment income

   (.27 )    (.31 )    (.20 )    (.26 )    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (.94 )    (.47 )    (.70 )    – 0  – 
                             

Total dividends and distributions

   (.27 )    (1.25 )    (.67 )    (.96 )    – 0  – 
                             

Net asset value, end of period

   $  6.89      $  7.03      $  13.95      $  14.59      $  13.26   
                             

Total Return

          

Total investment return based on net asset value(d)

   2.01  %*    (44.59 )%*    .11  %    18.51  %    3.27  % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $5,092      $5,039      $12,195      $1,651      $1,123   

Ratio to average net assets of:

          

Expenses, net of waivers

   1.11  %(e)    .88  %    .83  %    .99  %(f)    1.10  %(e) 

Expenses, before waivers

   1.11  %(e)    1.07  %    1.01  %    .99  %(f)    1.10  %(e) 

Net investment income

   2.51  %(e)    2.37  %(g)    1.99  %(g)    1.50  %(f)    2.93  %(e) 

Portfolio turnover rate

   26  %    23  %    28  %    19  %    25  % 

 

See   footnote summary on page 35.

 

34   •  ALLIANCEBERNSTEIN VALUE FUND

 

Financial Highlights

 

Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period

 

    Class I  
   

Six Months
Ended
May 31,
2009

(unaudited)

     Year Ended November 30,    

March 1,
2005(h) to
November 30,

2005

  
      2008     2007     2006    
     
         

Net asset value, beginning of period

   $7.09      $14.01      $14.66      $13.29      $12.84   
                             

Income From Investment Operations

          

Net investment income(a)

   .09      .28      .28      .24      .16   

Net realized and unrealized gain (loss) on investment transactions

   .05      (5.95 )    (.23 )    2.09      .29   
                             

Net increase (decrease) in net asset value from operations

   .14      (5.67 )    .05      2.33      .45   
                             

Less: Dividends and Distributions

          

Dividends from net investment income

   (.30 )    (.31 )    (.23 )    (.26 )    – 0  – 

Distributions from net realized gain on investment transactions

   – 0  –    (.94 )    (.47 )    (.70 )    – 0  – 
                             

Total dividends and distributions

   (.30 )    (1.25 )    (.70 )    (.96 )    – 0  – 
                             

Net asset value, end of period

   $  6.93      $  7.09      $  14.01      $  14.66      $  13.29   
                             

Total Return

          

Total investment return based on net asset value(d)

   2.16  %*    (44.39 )%*    .26  %    18.76  %    3.51  % 

Ratios/Supplemental Data

          

Net assets, end of period (000’s omitted)

   $64,733      $60,713      $137,500      $148,342      $36,790   

Ratio to average net assets of:

          

Expenses

   .71  %(e)    .65  %    .72  %    .74  %(f)    .83  %(e) 

Net investment income

   2.90  %(e)    2.59  %    1.88  %    1.77  %(f)    1.78  %(e) 

Portfolio turnover rate

   26  %    23  %    28  %    19  %    25  % 

 

(a)   Based on average shares outstanding.

 

(b)   Net of fees and expenses waived by the Adviser.

 

(c)   Net of fees and expenses waived by the Transfer Agent.

See notes to financial statements.

 

ALLIANCEBERNSTEIN VALUE FUND  •   35

 

Financial Highlights

 

(d)   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 charges 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.

 

(e)   Annualized.

 

(f)   The ratio includes expenses attributable to costs of proxy solicitation.

 

(g)   Net of fees and expenses waived by Distributor.

 

(h)   Commencement of distributions.

 

*   Includes the impact of proceeds received and credited to the Fund resulting from class action settlements, which enhanced the Fund’s performance for the six months ended May 31, 2009 and year ended November 30, 2008 by 0.04% and 0.06%, respectively.

 

 

See notes to financial statements.

 

36   •  ALLIANCEBERNSTEIN VALUE FUND

 

Financial Highlights

 

BOARD OF TRUSTEES

William H. Foulk, Jr.(1), Chairman

John H. Dobkin(1)

Michael J. Downey(1)

D. James Guzy(1)

Nancy P. Jacklin(1)

Garry L. Moody(1)

Marshall C. Turner, Jr.(1)

Earl D. Weiner(1)

OFFICERS

Robert M. Keith, President and Chief Executive Officer

Philip L. Kirstein, Senior Vice President and Independent Compliance Officer

Marilyn G. Fedak(2), Senior Vice President

John P. Mahedy(2), Vice President

Christopher W. Marx(2), Vice President

John D. Phillips, Jr.(2), Vice President

David Yuen(2), Vice President

Emilie D. Wrapp, Secretary

Joseph J. Mantineo, Treasurer and Chief Financial Officer

Phyllis J. Clarke, Controller

 

Custodian and Accounting Agent    Transfer Agent

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111

   

AllianceBernstein Investor

Services, Inc.

P.O. Box 786003

San Antonio, TX 78278-6003

Toll-free (800) 221-5672

 

Principal Underwriter

AllianceBernstein Investments, Inc.

1345 Avenue of the Americas

New York, NY 10105

   

Independent Registered Public Accounting Firm

Ernst & Young LLP

5 Times Square

New York, NY 10036

 

Legal Counsel   

Seward & Kissel LLP

One Battery Park Plaza

New York, NY 10004

   

 

(1) Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. Mr. Foulk is the sole member of the Fair Value Pricing Committee.

 

(2) Management of, and investment decisions for, the Fund’s portfolio are made by the U.S. Value Senior Investment Management Team. Messrs. Mahedy, Marx, Phillips and Yuen and Ms. Fedak are the investment professionals with the most significant responsibility for the day-to-day management of the Fund’s portfolio.

 

ALLIANCEBERNSTEIN VALUE FUND  •   37

 

Board of Trustees

 

Information Regarding the Review and Approval of the Fund’s Advisory Agreement

The disinterested trustees (the “trustees”) of AllianceBernstein Trust (the “Trust”) unanimously approved the continuance of the Advisory Agreement with the Adviser in respect of AllianceBernstein Value Fund (the “Fund”) at a meeting held on May 5-7, 2009.

Prior to approval of the continuance of the Advisory Agreement, the trustees had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The trustees also reviewed an independent evaluation prepared by the Trust’s Senior Officer (who is also the Trust’s Independent Compliance Officer) of the reasonableness of the advisory fee in the Advisory Agreement wherein the Senior Officer concluded that the contractual fee for the Fund was reasonable. The trustees also discussed the proposed continuance in private sessions with counsel and the Trust’s Senior Officer.

The trustees considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as trustees or directors of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the trustees and its responsiveness, frankness and attention to concerns raised by the trustees in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. The trustees noted that they have four regular meetings each year, at each of which they receive presentations from the Adviser on the investment results of the Fund and review extensive materials and information presented by the Adviser.

The trustees also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the trustees did not identify any particular information that was all-important or controlling, and different trustees may have attributed different weights to the various factors. The trustees determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the trustees considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the trustees’ determinations included the following:

Nature, Extent and Quality of Services Provided

The trustees considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research

 

38   •  ALLIANCEBERNSTEIN VALUE FUND

 

capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The trustees also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services provided at the Fund’s request by employees of the Adviser or its affiliates. Requests for these reimbursements are approved by the trustees on a quarterly basis and, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Fund’s Advisory Agreement. The trustees noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Trust’s Senior Officer. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Trust’s other service providers, also were considered. The trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.

Costs of Services Provided and Profitability

The trustees reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2007 and 2008 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant retained by the Trust’s Senior Officer. The trustees reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and noted that there are a number of potentially acceptable allocation methodologies for information of this type. The trustees noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries which provide transfer agency, distribution and brokerage services to the Fund. The trustees recognized that it is difficult to make comparisons of profitability between fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors. The trustees focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The trustees concluded that they were satisfied that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.

Fall-Out Benefits

The trustees considered the benefits to the Adviser and its affiliates from their relationships with the Fund other than the fees and expense reimbursements payable under the Advisory Agreement, including but not limited to benefits relating to soft dollar arrangements (whereby the Adviser receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis), 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly

 

ALLIANCEBERNSTEIN VALUE FUND  •   39

 

owned subsidiary of the Adviser) in respect of certain classes of the Fund’s shares, transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser, and brokerage commissions paid by the Fund to brokers affiliated with the Adviser. The trustees recognized that the Adviser’s profitability would be somewhat lower without these benefits. The trustees understood that the Adviser also might derive reputational and other benefits from its association with the Fund.

Investment Results

In addition to the information reviewed by the trustees in connection with the meeting, the trustees receive detailed performance information for the Fund at each regular Board meeting during the year. At the May 2009 meeting, the trustees reviewed information prepared by Lipper showing the performance of the Class A Shares of the Fund as compared with that of a group of similar funds selected by Lipper (the “Performance Group”) and as compared with that of a broader array of funds selected by Lipper (the “Performance Universe”), and information prepared by the Adviser showing performance of the Class A Shares as compared with the Russell 1000 Value Index (the “Index”), in each case for the 1-, 3- and 5-year periods ended January 31, 2009 and (in the case of comparisons with the Index) the since inception period (March 2001 inception). The trustees noted that the Fund was in the 5th quintile of the Performance Group and the Performance Universe for the 1-, 3- and 5-year periods, and that the Fund underperformed the Index in all periods reviewed. The trustees also reviewed performance information for periods ended March 31, 2009, and noted that relative investment performance in 2009 had been stronger than in the immediately prior periods. Based on their review and their discussion of the reasons for the Fund’s performance with the Adviser, the trustees retained confidence in the Adviser’s ability to advise the Fund and concluded that the Fund’s performance was acceptable. The trustees determined to closely monitor the Fund’s performance.

Advisory Fees and Other Expenses

The trustees considered the advisory fee rate paid by the Fund to the Adviser and information prepared by Lipper concerning advisory fee rates paid by other funds in the same Lipper category as the Fund at a common asset level. The trustees recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds.

The trustees noted that in light of the Fund’s historical investment performance, they had asked the Adviser to address the continued appropriateness of the Fund’s fee rate. In response the Adviser informed the trustees that the Adviser had begun to implement changes and enhancements to address investment performance and discussed the new leadership for the Adviser effective December 2008. The Adviser further noted, among other things, that while it would take

 

40   •  ALLIANCEBERNSTEIN VALUE FUND

 

time to realize the benefits of these changes, relative investment performance in 2009 had generally shown improvement. The trustees noted that they had discussed their concerns about the relative performance of a number of the AllianceBernstein equity funds with senior management of the Adviser.

The trustees also considered the fees the Adviser charges other clients with an investment style substantially similar to that of the Fund. For this purpose, they reviewed the relevant fee information in the Adviser’s Form ADV and the evaluation from the Trust’s Senior Officer disclosing the institutional fee schedule for institutional products managed by the Adviser that have an investment style substantially similar to that of the Fund. The trustees noted that the institutional fee schedule for clients with an investment style substantially similar to that of the Fund had breakpoints at lower asset levels than those in the fee schedule applicable to the Fund and that the application of the institutional fee schedule to the level of assets of the Fund would result in a fee rate that would be lower than that in the Fund’s Advisory Agreement. The trustees noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the trustees and that they had previously discussed with the Adviser its policies in respect of such arrangements. The trustees also reviewed information that indicated that the Fund pays a higher fee rate than certain registered investment companies with an investment style similar to that of the Fund that are sub-advised by the Adviser. The trustees also noted that the Adviser advises a portfolio of another AllianceBernstein fund with an investment style substantially similar to that of the Fund for the same fee schedule as the Fund.

The Adviser reviewed with the trustees the significantly greater scope of the services it provides to the Fund relative to institutional clients and sub-advised funds. The Adviser also noted that because mutual funds are constantly issuing and redeeming shares, they are more difficult to manage than an institutional account, where the assets tend to be relatively stable. In light of these facts, the trustees did not place significant weight on these fee comparisons.

The trustees also considered the total expense ratio of the Class A shares of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of funds similar to the Fund and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the Fund. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The trustees view the expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The trustees noted that it was likely that the expense ratios of some funds in the Fund’s Lipper category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases were voluntary and perhaps temporary.

 

ALLIANCEBERNSTEIN VALUE FUND  •   41

 

The trustees noted that the Fund’s contractual effective advisory fee rate, at approximate current size, of 55 basis points, plus the 1 basis point impact of the administrative expense reimbursement in the latest fiscal year, was lower than the Expense Group median. The trustees also noted that the Fund’s total expense ratio was lower than the Expense Group and the Expense Universe medians. The trustees concluded that the Fund’s expense ratio was satisfactory.

Economies of Scale

The trustees noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The trustees also considered presentations by an independent consultant discussing economies of scale in the mutual fund industry and for the AllianceBernstein Funds, as well as a presentation by the Adviser concerning certain of its views on economies of scale. The trustees believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The trustees noted that there is no established methodology for establishing breakpoints that give effect to fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The trustees observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The trustees also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the trustees concluded that the Fund’s breakpoint arrangements would result in a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.

 

42   •  ALLIANCEBERNSTEIN VALUE FUND

 

THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS

SUMMARY OF SENIOR OFFICER’S EVALUATION OF INVESTMENT ADVISORY AGREEMENT1

The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the “Adviser”) and the AllianceBernstein Trust, Inc. (the “Trust”) in respect of AllianceBernstein Value Fund (the “Fund”).2 The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund, for the Trustees of the Fund, as required by a September 2004 agreement between the Adviser and the New York State Attorney General (the “NYAG”). The Senior Officer’s evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Trustees 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 Trustees 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. Advisory fees charged to institutional and other clients of the Adviser for like services;

 

  2. Advisory 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, NET ASSETS, & EXPENSE 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 consideration of the Adviser’s settlement with the NYAG in December 2003, is

 

1   It should be noted that the information in the fee summary was completed on April 23, 2009 and presented to the Board of Trustees on May 5-7, 2009.

 

2   Future references to the Fund do not include “AllianceBernstein.” References in the fee summary pertaining to performance and expense ratio rankings refer to the Class A shares of the Fund.

 

ALLIANCEBERNSTEIN VALUE FUND  •   43

 

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

 

Category   Advisory Fee Based on % of
Average Daily Net Assets4		  

Net Assets

02/28/09

($MIL)

   Fund
Value  

55 bp on 1st $2.5 billion

45 bp on next $2.5 billion

40 bp on the balance

   $ 422.8   Value Fund

The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund. During the Fund’s most recently completed fiscal year, the Adviser received $87,167 (0.01% of the Fund’s average daily net assets) for such services.

Set forth below are the Fund’s total expense ratios for the most recently completed fiscal year:

 

Fund   Total Expense
Ratio5		      Fiscal
Year End
Value Fund  

Advisor

Class A

Class B

Class C

Class R

Class K

Class I

   0.77

1.07

1.82

1.79

1.33

1.07

0.65

 % 

% 

% 

% 

% 

% 

% 

    November 30

 

I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS

The advisory 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 and sub-advised investment companies 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 are reimbursed by the Fund to the Adviser. Also, retail mutual

 

3   Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser’s settlement with the NYAG.

 

4   The advisory fee is based on the percentage of the Fund’s net assets and paid on a monthly basis.

 

5   Annualized.

 

44   •  ALLIANCEBERNSTEIN VALUE FUND

 

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. The Adviser also believes that it incurs substantial entrepreneurial risk when offering a new mutual fund since establishing a new mutual fund requires a large upfront investment and it may take a long time for the fund to achieve profitability since the fund must be priced to scale from inception in order to be competitive and assets are acquired one account at a time. In addition, managing the cash flow of an investment company may be more difficult than managing that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if a 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 and legal and reputational risks are greater, it is worth considering information regarding the advisory fees charged to institutional accounts with a similar investment style as the Fund.6 In addition to the AllianceBernstein Institutional fee schedule, set forth below is what would have been the effective advisory fee of the Fund had the AllianceBernstein Institutional fee schedule been applicable to the Fund versus the Fund’s advisory fee based on February 28, 2009 net assets:

 

Fund  

Net Assets

02/28/09

($MIL)

  

AllianceBernstein (“AB”)
Institutional (“Inst.”)

Fee Schedule

   Effective
AB Inst.
Adv. Fee		  

Effective

Fund

Adv. Fee

Value Fund   $422.8  

Diversified Value

65 bp on 1st $25 million

50 bp on next $25 million

40 bp on next $50 million

30 bp on next $100 million

25 bp on the balance

Minimum account size: $25m

   0.318%   0.550%

The adviser also manages the AllianceBernstein Variable Products Series Fund, Inc. (“AVPS”), which is available through variable annuity and variable life contracts offered by other financial institutions and offers policyholders the option

 

6   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.

 

ALLIANCEBERNSTEIN VALUE FUND  •   45

 

to utilize certain AVPS portfolios as the investment option underlying their insurance contracts. Set forth below is the fee schedule of the AVPS portfolio that has a substantially similar investment style as the Fund.7 Also shown is what would have been the effective advisory fee of the Fund had the AVPS fee schedule been applicable to the Fund:

 

Fund   AVPS Portfolio   Fee Schedule  

Effective

AVPS

Adv. Fee

  

Fund

Advisory

Fee

Value Fund   Value Portfolio  

0.55% on first $2.5 billion

0.45% on next $2.5 billion

0.40% on the balance

   0.550%   0.550%

The Adviser provides sub-advisory services to certain other investment companies managed by other fund families. The Adviser charges the fees set forth below for each of these sub-advisory relationships. Also shown are what would have been the effective advisory fees of the Fund had the fee schedules of the sub-advisory relationships been applicable to the Fund based on February 28, 2009 net assets and the Fund’s advisory fee:

 

Fund        Fee Schedule   Effective
Sub-Adv.
Fee		   Fund
Advisory
Fee
Value Fund   Client #1  

0.25% on 1st $500 million

0.20% on the balance

   0.250%   0.550%
       
  Client #28  

0.49% on 1st $100 million

0.30% on next $1 million

0.20% on the balance

   0.319%   0.550%
       
  Client #3  

0.23% on 1st $300 million

0.20% on the balance

   0.221%   0.550%
       
  Client #4  

0.23% on 1st $300 million

0.20% on the balance

   0.221%   0.550%
       
  Client #5  

0.15% on 1st $1 billion

0.14% on next $2 billion

0.12% on next $2 billion

0.10% on the balance

+/- Performance Fee9

   0.150%10   0.550%
       
  Client #6   0.35%   0.350%   0.550%

 

7   It should be noted that the AVPS portfolio was also affected by the settlement between the Adviser and the NYAG. As a result, the Fund has the same breakpoints in its advisory fee schedule as the AVPS portfolio.

 

8   The Fund is an affiliate of the Adviser.

 

9   The performance fee is calculated by multiplying the Base Fee during the period by an adjustment factor that considers the excess or under performance of the fund versus its benchmark over a cumulative 36-month period. The performance adjustment factor can range from -50% to +50% of the base fee.

 

10   The calculation excludes the performance fee.

 

46   •  ALLIANCEBERNSTEIN VALUE FUND

 

It is fair to note that the services the Adviser provides pursuant to sub-advisory agreements are generally confined to the services related to the investment process; in other words, they are not as comprehensive as the services provided to the Funds by the Adviser. In addition, to the extent that certain of these sub-advisory relationships are with affiliates of the Adviser, the fee schedules may not reflect arm’s-length bargaining or negotiations.

 

II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES.

Lipper, Inc. (“Lipper”), an analytical service that is not affiliated with the Adviser, compared the fees charged to the Fund with fees charged to other investment companies for similar services offered by other investment advisers. Lipper’s analysis included the Fund’s ranking with respect to the proposed management fee relative to the median of the Fund’s Lipper Expense Group (“EG”)11 at the approximate current asset level of the Fund.12

Lipper describes an EG as a representative sample of comparable funds. Lipper’s standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, expense components and attributes. An EG will typically consist of seven to twenty funds.

 

Fund    Contractual
Management
Fee (%)13		   

Lipper Exp.

Group

Median (%)

    Rank
Value Fund    0.550    0.674    2/12

Lipper also analyzed the Fund’s most recently completed fiscal year total expense ratio in comparison to the Fund’s EG and Lipper Expense Universe (“EU”). The EU is a broader group compared to the EG, consisting of all funds that have the same investment classification/objective and load type as the subject Fund.14 It should be noted that Lipper uses expense ratio data from financial

 

11   It should be noted that Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratio than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expenses differently.

 

12   The contractual 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” would mean that the Fund had the lowest effective fee rate in the Lipper peer group.

 

13   The contractual management fee does not reflect any expense reimbursements made by the Fund to the Adviser for certain clerical, legal, accounting, administrative and other services.

 

14   Except for asset (size) comparability, Lipper uses the same criteria for selecting an EG when selecting an EU. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund.

 

ALLIANCEBERNSTEIN VALUE FUND  •   47

 

statements of the most current fiscal year in their database. This has several implications: the total expense ratio of each fund that Lipper uses in their report is based on each fund’s average net assets during its fiscal year. Since funds have different fiscal year ends, the total expense ratios of the funds may cover different twelve month periods, depending on the funds’ fiscal year ends. This is the process that Lipper utilizes but given market conditions during 2008, especially the last three months of 2008, the effects on the funds’ total expense ratio caused by the differences in fiscal year ends may be more pronounced in 2008 compared to other years under more normal market conditions.15

 

Fund  

Expense

Ratio (%)16

  

Lipper Exp.

Group

Median (%)

  

Lipper

Group

Rank

  

Lipper Exp.

Universe

Median (%)

  

Lipper
Universe

Rank

Value Fund   1.071   1.129   5/12   1.173   29/97

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.

The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Adviser’s profitability in connection with investment advisory services provided to the Portfolio. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion.

 

IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES.

The Fund’s profitability information, prepared by the Adviser for the Board of Trustees, was reviewed by the Senior Officer and the consultant. The Adviser’s profitability from providing investment advisory services to the Fund decreased during calendar year 2008, relative to 2007.

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 such benefits should be factored into the evaluation of the total relationship between the Fund and the Adviser. Neither case law nor common business

 

15   To cite an example, the average net assets and total expense ratio of a fund with a fiscal year end of March 31, 2008 will not be reflective of the market declines that occurred in the second half of 2008, in contrast to a fund with a fiscal year end of December 31, 2008.

 

16   The total expense ratios shown are for the Fund’s most recent fiscal year end Class A shares.

 

48   •  ALLIANCEBERNSTEIN VALUE FUND

 

practice precludes the Adviser’s affiliates from earning a reasonable profit on this type of relationship provided the affiliates’ charges and services are competitive and the relationship otherwise complies with the 40 Act restrictions. 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 brokerage commissions. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur.

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 2008, ABI paid approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $21 million for distribution services and educational support (revenue sharing payments).17 During the Fund’s most recently completed fiscal year, ABI received from the Fund $5,299, $2,197,073 and $60,745 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively.

Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. (“ABIS”), the affiliated transfer agent for the Fund, are charged on a per account basis, based on the level of service provided 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. During the Fund’s most recently completed fiscal year, ABIS received $577,825 in fees from the Fund.18

The Portfolio may effect brokerage transactions through the Adviser’s affiliate, Sanford C. Bernstein & Co., LLC (“SCB & Co.”) and/or its U.K. affiliate, Sanford C. Bernstein Limited (“SCB Ltd.”), collectively “SCB,” and pay commissions for such transactions. During the Portfolio’s most recently completed fiscal year, the Portfolio did not effect any brokerage transactions with and pay any commission to SCB. The Adviser represented that SCB’s profitability from business conducted with the Portfolio is comparable to the profitability of SCB’s dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks (“ECNs”) derived from trading for its clients, including the Portfolio.

 

17   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.

 

18   The fees disclosed are net of any expense offsets 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 the transfer agent’s account to the Fund’s account. During the Fund’s most recently completed fiscal year, the fees paid by the Fund to ABIS were reduced by $17,855 under the offset agreement between the Fund and ABIS.

 

ALLIANCEBERNSTEIN VALUE FUND  •   49

 

These credits and charges are not being passed onto any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for the Portfolio and other clients. These soft dollar benefits reduce the Adviser’s cost of doing business and increase its profitability.

 

V. POSSIBLE ECONOMIES OF SCALE

The Adviser has indicated that economies of scale are being shared with shareholders through fee structures,19 subsidies and enhancement to services. 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 make such investments in their business to provide services, there may be a sharing of economies of scale without a reduction in advisory fees.

An independent consultant, retained by the Senior Officer, provided the Board of Trustees an update of the Deli20 study on advisory fees and various fund characteristics. The independent consultant first reiterated the results of his previous two dimensional comparison analysis (fund size and family size) with the Board of Trustees.21 The independent consultant then discussed the results of the regression model that was utilized to study the effects of various factors on advisory fees. The regression model output indicated that the bulk of the variation in fees predicted were explained by various factors, but substantially by fund AUM, family AUM, index fund indicator and investment style. The independent consultant also compared the advisory fees of the AllianceBernstein Mutual Funds to similar funds managed by 19 other large asset managers, regardless of the fund size and each Adviser’s proportion of mutual fund assets to non-mutual fund assets.

 

VI. NATURE AND QUALITY OF THE ADVISER’S SERVICES, INCLUDING THE PERFORMANCE OF THE FUND

With assets under management of approximately $411 billion as of March 31, 2009, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Fund.

 

19   Fee structures include fee reductions, pricing at scale and breakpoints in advisory fee schedules.

 

20   The Deli study was originally published in 2002 based on 1997 data.

 

21   The two dimensional analysis showed patterns of lower advisory fees for funds with larger asset sizes and funds from larger family sizes compared to funds with smaller asset sizes and funds from smaller family sizes, which according to the independent consultant is indicative of a sharing of economies of scale and scope. However, in less liquid and active markets, such is not the case, as the empirical analysis showed potential for diseconomies of scale in those markets. The empirical analysis also showed diminishing economies of scale and scope as funds surpassed a certain high level of assets.

 

50   •  ALLIANCEBERNSTEIN VALUE FUND

 

The information prepared by Lipper shows the 1, 3, and 5 year performance rankings of the Fund22 relative to its Lipper Performance Group (“PG”) and Lipper Performance Universe (“PU”)23 for the periods ended January 31, 2009.24

 

     Fund Return
(%)		   PG Median
(%)		   PU Median
(%)		   PG Rank   PU Rank

1 year

   -46.48   -38.96   -39.85   12/12   104/109

3 year

   -16.96   -12.31   -12.67   11/11   95/100

5 year

   -7.20   -3.85   -3.82   11/11   87/90

Set forth below are the 1, 3, 5 year and since inception performance returns of the Fund (in bold)25 versus its benchmark.26 Fund and benchmark volatility and reward-to-variability ratio (“Sharpe Ratio”) information is also shown.27

 

     Periods Ending January 31, 2009
Annualized Performance
    1 Year
(%)		   3 Year
(%)		   5 Year
(%)		   Since
Inception
(%)		   Annualized   Risk
Period
(Year)
             Volatility
(%)		   Sharpe
(%)		  
Value Fund   -46.48   -16.96   -7.20   -2.34   14.81   -0.64   5
Russell 1000 Value Index   -41.78   -13.09   -3.52   -0.66   13.92   -0.41   5
Inception Date: March 29, 2001

 

22   The performance rankings are for the Class A shares of the Fund. It should be noted that the performance returns of the Fund shown were provided by the Adviser. Lipper maintains its own database that includes the Fund’s performance returns. Rounding differences may cause the Adviser’s Fund returns to be one or two basis points different from Lipper’s own Fund returns. To maintain consistency, the performance returns of the Fund, as reported by the Adviser, are provided instead of Lipper.

 

23   The Fund’s PG is identical to the Fund’s EG. The Fund’s PU is not identical to the Fund’s EU as the criteria for including or excluding a fund in a PU is somewhat different from that of an EU.

 

24   Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of the fund even if a fund had a different investment classification/objective at a different point in time.

 

25   The performance returns and risk measures shown in the table are for the Class A shares of the Fund.

 

26   The Adviser provided Fund and benchmark performance return information for periods through January 31, 2009.

 

27   Fund and benchmark volatility and Sharpe Ratio information was obtained through Lipper LANA, a database maintained by Lipper. Volatility is a statistical measure of the tendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjusted measure of return that divides a fund’s return in excess of the riskless return by the fund’s standard deviation. A fund with a greater volatility would be seen as more risky than a fund with equivalent performance but lower volatility; for that reason, a greater return would be demanded for the more risky fund. A fund with a higher Sharpe Ratio would be viewed as better performing than a fund with a lower Sharpe Ratio.

 

ALLIANCEBERNSTEIN VALUE FUND  •   51

 

CONCLUSION:

Based on the factors discussed above the Senior Officer’s conclusion is that the proposed advisory fee for the Fund is reasonable and within the range of what would have been negotiated at arm’s-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: May 29, 2009

 

52   •  ALLIANCEBERNSTEIN VALUE 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

Large Cap Growth Fund

Small Cap Growth Portfolio

Small/Mid Cap Growth Fund*

Global & International

Global Growth Fund*

Global Thematic Growth Fund*

Greater China ‘97 Fund

International 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

Diversified Yield Fund

Global Bond Fund

High Income Fund

Intermediate Bond Portfolio

Short Duration Portfolio

Municipal Bond Funds

 

National
Arizona
California
Massachusetts
Michigan
Minnesota

   

New Jersey
New York
Ohio
Pennsylvania
Virginia

Intermediate Municipal Bond Funds

Intermediate California

Intermediate Diversified

Intermediate New York

Closed-End Funds

AllianceBernstein Global High Income Fund

AllianceBernstein Income Fund

AllianceBernstein National Municipal Income Fund

ACM Managed Dollar Income Fund

Alliance California Municipal Income Fund

Alliance New York Municipal Income Fund

The Spain Fund


Retirement Strategies Funds

 

2000 Retirement Strategy

  

2020 Retirement Strategy

  

2040 Retirement Strategy

2005 Retirement Strategy

  

2025 Retirement Strategy

  

2045 Retirement Strategy

2010 Retirement Strategy

  

2030 Retirement Strategy

  

2050 Retirement Strategy

2015 Retirement Strategy

  

2035 Retirement Strategy

  

2055 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 November 3, 2008, Small/Mid Cap Growth Fund was named Mid-Cap Growth Fund, Global Growth Fund was named Global Research Growth Fund, and Global Thematic Growth Fund was named Global Technology 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 VALUE FUND   •   53

 

AllianceBernstein Family of Funds

NOTES

 

54   •  ALLIANCEBERNSTEIN VALUE FUND

NOTES

 

ALLIANCEBERNSTEIN VALUE FUND  •   55

NOTES

 

56   •  ALLIANCEBERNSTEIN VALUE FUND

 

ALLIANCEBERNSTEIN VALUE FUND

1345 Avenue of the Americas

New York, NY 10105

800.221.5672

LOGO

 

 

VAL-0152-0509   LOGO

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.

 

3

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-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 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

 

4

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 Trust

 

By:  

/s/    Robert M. Keith

  Robert M. Keith
  President
Date:   July 28, 2009

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/    Robert M. Keith

  Robert M. Keith
  President
Date:   July 28, 2009
By:  

/s/    Joseph J. Mantineo

  Joseph J. Mantineo
  Treasurer and Chief Financial Officer
Date:   July 28, 2009

 

5