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: 811-08201
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: July 31, 2006
Date of reporting period: January 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
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SEMI-ANNUAL REPORT
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AllianceBernstein Greater China '97 Fund
Semi-Annual Report
January 31, 2006
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
Investment Products Offered
- ---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
- ---------------------------
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernsteinR at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes
full portfolio holdings for the Fund monthly at www.alliancebernstein.com.
ALLIANCEBERNSTEIN INVESTMENTS, INC. is an affiliate of AllianceBernstein L.P.,
the manager of the funds, and is a member of the NASD.
AllianceBernstein (R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.
March 17, 2006
Semi-Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Greater China '97 Fund (the "Fund") for the semi-annual
reporting period ended January 31, 2006.
Investment Objective and Policies
This open-end fund seeks long-term capital appreciation by investing at least
80% of its total assets in equity securities issued by Greater China companies
("Greater China" refers to the People's Republic of China ("China"), the Hong
Kong Special Administrative Region ("Hong Kong") and the Republic of China
("Taiwan")).
Investment Results
The table on page 3 shows the Fund's performance compared to its benchmark the
Morgan Stanley Capital International (MSCI) Golden Dragon Index, as well as the
Lipper China Region Funds Average (the "Lipper Average"), for the six- and
12-month periods ended January 31, 2006. The MSCI Golden Dragon Index is a
composite index consisting of equity securities of companies based in China,
Hong Kong and Taiwan. These are the countries in which the great majority of
the Fund's securities are located. Funds in the Lipper Average have generally
similar investment objectives to the Fund, although some may have different
investment policies and sales and management fees.
The Fund outperformed its benchmark, the MSCI Golden Dragon Index, during both
the six- and 12-month periods ended January 31, 2006. The Fund's outperformance
during both time frames was primarily due to overweight positions in the energy
and health care sectors and an underweight position in financials.
Market Review and Investment Strategy
The Greater China stock markets were generally trading in a range for most of
the first half of 2005, as rising interest rates and concerns about China's
economic growth dampened investor sentiment. In Taiwan, uncertainties about the
strength of the technology cycle hurt market sentiment in the first half of the
year. In the second half of 2005, rising interest rates continued to be a drag
on the performance of the interest-rate sensitive sectors, particularly in Hong
Kong. The renminbi revaluation in July 2005, which resulted in a 2.1%
appreciation against the U.S. dollar, sparked renewed interest towards Chinese
shares, in particular renminbi asset plays and companies with renminbi revenue.
Renewed confidence in the strength of China's economic growth potential was a
positive for the region and the stock markets towards the end of the year and
going into 2006.
In light of rising interest rates, the Fund was underweight in the financial
sector for both the six- and 12-month periods ended January 31, 2006.
Additionally, overweight positions were maintained in the consumer and energy
sectors. Lastly, the Fund maintained underweight positions in the technology
and telecommunications sectors during the periods under review.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 1
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein at (800) 227-4618. You should read the prospectus carefully
before you invest.
Returns are annualized for periods longer than one year. All fees and expenses
related to the operation of the Fund have been deducted. NAV returns do not
reflect sales charges; if sales charges were reflected, the Fund's quoted
performance would be lower. SEC returns reflect the applicable sales charges
for each share class: a 4.25% maximum front-end sales charge for Class A
shares; the applicable contingent deferred sales charge for Class B shares (4%
year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales
charge for Class C shares. Returns for 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) Golden Dragon Index
does not reflect fees and expenses associated with the active management of a
mutual fund portfolio. The Index is an aggregate of the MSCI Hong Kong Index,
the MSCI China Index and the MSCI Taiwan at 65% Index (the MSCI Taiwan Index
has an inclusion weight at 65% of its market capitalization in the MSCI Index
series). The Lipper China Region Funds Average (the "Lipper Average")
represents funds that invest in equity securities whose primary trading markets
or operations are concentrated in the China region or in a single country
within this region. For the six- and 12-month periods ended January 31, 2006,
the Lipper Average consisted of 38 and 34 funds, respectively. These funds have
generally similar investment objectives to the Fund, although some may have
different investment policies and sales and management fees. An investor cannot
invest directly in an index or average, and its results are not indicative of
the performance for any specific investment, including the Fund.
A Word About Risk
Substantially all of the Fund's assets will be invested in Greater China
(People's Republic of China (Mainland), Republic of China (Taiwan) and Hong
Kong Special Administrative Region) company securities and is subject to
greater risk than would a fund with a more diversified portfolio. Since the
Fund invests in foreign currency denominated securities, fluctuations may be
magnified by changes in foreign exchange rates. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse issuer,
political, regulatory, market or economic developments. 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)
_______________________________________________________________________________
2 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK
PERIODS ENDED JANUARY 31, 2006
Returns
-------------------------
6 Months 12 Months
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AllianceBernstein Greater China '97 Fund
Class A 12.86% 21.94%
Class B 12.39% 21.07%
Class C 12.42% 21.23%
Advisor Class 12.99% 22.48%
MSCI Golden Dragon Index 8.85% 20.88%
Lipper China Region Funds Average 14.16% 22.30%
See Historical Performance and Benchmark Disclosures on previous page.
(Historical Performance continued on next page)
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF JANUARY 31, 2006
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 21.94% 16.76%
5 Year 9.80% 8.85%
Since Inception* 5.12% 4.59%
Class B Shares
1 Year 21.07% 17.07%
5 Year 9.06% 9.06%
Since Inception* 4.37% 4.37%
Class C Shares
1 Year 21.23% 20.23%
5 Year 8.99% 8.99%
Since Inception* 4.31% 4.31%
Advisor Class Shares(+)
1 Year 22.48% 22.48%
5 Year 10.18% 10.18%
Since Inception* 5.44% 5.44%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2005)
- --------------------------------------------------------------
SEC Returns
Class A Shares
1 Year 0.70%
5 Year 7.15%
Since Inception* 3.10%
Class B Shares
1 Year 0.39%
5 Year 7.29%
Since Inception* 2.89%
Class C Shares
1 Year 3.40%
5 Year 7.26%
Since Inception* 2.82%
Advisor Class Shares
1 Year 5.58%
5 Year 8.46%
Since Inception* 3.94%
* Inception dates: 9/3/97 for Class A, Class B, Class C and Advisor Class
shares.
This share class is offered at net asset value (NAV) to eligible investors
and its SEC returns are the same as the NAC returns.
See Historical Performance disclosures on page 2.
_______________________________________________________________________________
4 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual
expenses. You may use the information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
annual rate of return of 5% before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds by comparing this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the hypothetical example is useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs
would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
August 1, 2005 January 31, 2005 During Period*
- ---------------------------------------------------------------------------------------------
Actual Hypothetical Actual Hypothetical** Actual Hypothetical
- ---------------------------------------------------------------------------------------------
Class A $1,000 $1,000 $1,128.58 $1,013.66 $12.29 $11.62
- ---------------------------------------------------------------------------------------------
Class B $1,000 $1,000 $1,123.93 $1,010.03 $16.11 $15.25
- ---------------------------------------------------------------------------------------------
Class C $1,000 $1,000 $1,124.22 $1,010.13 $16.01 $15.15
- ---------------------------------------------------------------------------------------------
Advisor
Class $1,000 $1,000 $1,129.93 $1,015.27 $10.58 $10.01
- ---------------------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 2.29%,
3.01%, 2.99% and 1.97% respectively, multiplied by the average account value
over the period, multiplied by 184/365 (to reflect the one-half year period).
** Assumes 5% return before expenses.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 5
PORTFOLIO SUMMARY
January 31, 2006 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $55.2
SECTOR BREAKDOWN*
21.3% Finance [PIE CHART OMITTED]
15.2% Multi-Industry
14.5% Energy
11.2% Technology
8.2% Basic Industry
5.3% Consumer Staples
4.7% Consumer Services
4.6% Capital Goods
4.2% Transportation
3.2% Utilities
1.5% Consumer Manufacturing
1.1% Health Care
5.0% Short-Term
COUNTRY BREAKDOWN*
76.4% Hong Kong [PIE CHART OMITTED]
16.8% Taiwan
1.8% China
5.0% Short-Term
* All data are as of January 31, 2006. The Fund's sector and country
breakdowns are expressed as a percentage of total investments and may vary over
time.
Please note: The sector classifications presented herein are based on the
sector categorization methodology of the Adviser.
_______________________________________________________________________________
6 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
TEN LARGEST HOLDINGS
January 31, 2006 (unaudited)
Percent of
Company U.S. $ Value Net Assets
- -------------------------------------------------------------------------------
PetroChina Co., Ltd. Cl. H $ 2,983,275 5.4%
Taiwan Semiconductor Manufacturing Co., Ltd. 2,579,997 4.7
CNOOC, Ltd. 2,573,169 4.7
Shandong Weigao Group Medical Polymer
Co., Ltd. Cl. H 2,159,389 3.9
Hon Hai Precision Industry Co., Ltd. 1,955,905 3.5
Cheung Kong (Holdings), Ltd. 1,722,811 3.1
China Life Insurance Co., Ltd. Cl. H 1,517,586 2.7
Lifestyle International Holdings, Ltd. 1,416,561 2.6
China Merchants Holdings International Co., Ltd. 1,302,349 2.4
China Oilfield Services, Ltd. Cl. H 1,267,088 2.3
$19,478,130 35.3%
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 7
PORTFOLIO OF INVESTMENTS
January 31, 2006 (unaudited)
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-93.5%
Finance-21.0%
Banking - Money Center-3.3%
Chinatrust Financial Holding Co., Ltd. 635,494 $ 508,697
Dah Sing Banking Group, Ltd. 200,000 389,445
HSBC Holdings Plc. 23,200 387,114
JCG Holdings, Ltd. 500,000 528,504
-------------
1,813,760
-------------
Banking - Regional-3.1%
China Construction Bank Cl. H(a)(b) 2,549,000 1,002,153
Wing Hang Bank, Ltd. 52,500 380,121
Wing Lung Bank, Ltd. 40,000 315,052
-------------
1,697,326
-------------
Brokerage & Money Management-1.8%
Hong Kong Exchanges & Clearing, Ltd. 200,000 979,057
-------------
Insurance-4.9%
Cathay Financial Holding Co., Ltd. 600,000 1,121,460
Cathay Financial Holding Co., Ltd. (GDR)(b) 4,200 80,136
China Life Insurance Co., Ltd. Cl. H(a) 1,500,000 1,517,586
-------------
2,719,182
-------------
Real Estate-6.6%
Cheung Kong (Holdings), Ltd. 160,000 1,722,811
Hongkong Land Holdings, Ltd.(a) 340,000 1,122,000
Hopewell Holdings, Ltd. 320,000 806,951
-------------
3,651,762
-------------
Miscellaneous-1.3%
Melco International Development, Ltd. 456,000 729,765
-------------
11,590,852
-------------
Multi-Industry-15.0%
China Resources Enterprise, Ltd. 458,000 976,502
Jardine Matheson Holdings, Ltd. 30,000 507,414
Jiangsu Expressway Co., Ltd. Cl. H 1,000,000 673,443
Lifestyle International Holdings, Ltd. 949,000 1,416,561
NWS Holdings, Ltd. 528,132 840,763
Shandong Weigao Group Medical Polymer Co.,
Ltd. Cl. H 6,980,000 2,159,389
Swire Pacific, Ltd. Cl. A 118,500 1,106,841
TPV Technology, Ltd. 500,000 573,220
-------------
8,254,133
-------------
Energy-14.2%
International-6.5%
China Petroleum and Chemical Corp. (Sinopec)
Cl. H 1,672,000 1,033,557
CNOOC, Ltd. 3,000,000 2,573,169
-------------
3,606,726
-------------
_______________________________________________________________________________
8 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Oil Service-7.7%
China Oilfield Services, Ltd. Cl. H 2,500,000 $ 1,267,088
PetroChina Co., Ltd. Cl. H 3,000,000 2,983,275
-------------
4,250,363
-------------
7,857,089
-------------
Technology-11.1%
Communication Equipment-0.9%
Solomon Systech International, Ltd. 1,000,000 467,803
-------------
Computer Hardware/Storage-1.3%
Asustek Computer, Inc. 212,000 702,580
-------------
Contract Manufacturing-3.5%
Hon Hai Precision Industry Co., Ltd. 282,396 1,955,905
-------------
Networking Software-0.6%
ZTE Corp. Cl. H 84,400 336,436
-------------
Semiconductor Components-4.8%
MediaTek, Inc. 6,500 64,944
Taiwan Semiconductor Manufacturing Co., Ltd. 1,244,011 2,579,997
-------------
2,644,941
-------------
6,107,665
-------------
Basic Industry-8.1%
Chemicals-2.4%
China Merchants Holdings International Co.,
Ltd. 500,000 1,302,349
-------------
Mining & Metals-5.7%
Aluminum Corp. of China, Ltd. Cl. H 800,000 741,988
Angang New Steel Co., Ltd. Cl. H 1,000,000 738,797
China Shenhua Energy Co., Ltd. Cl. H(a) 756,500 1,006,837
China Steel Corp. 775,000 658,024
-------------
3,145,646
-------------
4,447,995
-------------
Consumer Staples-5.2%
Alcohol-0.6%
Kingway Brewery Holdings, Ltd. 856,000 347,266
-------------
Beverages-1.1%
Tsingtao Brewery Co., Ltd. Cl. H 450,000 584,996
-------------
Food-1.5%
China Mengniu Dairy Co., Ltd. 742,000 795,471
-------------
Retail - Food & Drug-2.0%
Lianhua Supermarket Holdings, Ltd. Cl. H 1,000,000 1,123,612
-------------
2,851,345
-------------
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 9
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Consumer Services-4.6%
Airlines-0.6%
EVA Airways Corp. 807,846 $ 337,885
EVA Airways Corp., Rights expiring 3/10/06 67,854 258
-------------
338,143
-------------
Cellular Communications-0.9%
China Mobile (Hong Kong), Ltd. 100,000 489,612
-------------
Retail - General Merchandise-1.6%
Esprit Holdings, Ltd. 100,000 873,092
-------------
Miscellaneous-1.5%
Li & Fung, Ltd. 450,000 838,896
-------------
2,539,743
-------------
Capital Goods-4.6%
Electrical Equipment-2.8%
AU Optronics Corp. 747,740 1,111,262
Techtronics Industries Co., Ltd. 220,000 425,381
-------------
1,536,643
-------------
Machinery-1.8%
Chen Hsong Holdings, Ltd. 300,000 183,103
Harbin Power Equipment Co., Ltd. Cl. H 1,000,000 796,429
-------------
979,532
-------------
2,516,175
-------------
Transportation-4.1%
Miscellaneous-4.1%
Shun Tak Holdings, Ltd. 942,000 1,035,201
Sinotrans, Ltd. Cl. H 1,800,000 707,494
Zhejiang Expressway Co., Ltd. Cl. H 800,000 511,715
-------------
2,254,410
-------------
Utilities-3.1%
Electric & Gas Utility-2.1%
Datang International Power Generation Co., Ltd.
Cl. H 1,500,000 1,159,125
-------------
Telephone Utility-1.0%
China Telecom Corp., Ltd. Cl. H 1,474,000 559,712
-------------
1,718,837
-------------
Consumer Manufacturing-1.5%
Textile Products-1.0%
Weiqiao Textile Co., Ltd. Cl. H 360,000 552,245
-------------
Miscellaneous-0.5%
Skyworth Digital Holdings, Ltd. 2,000,000 288,744
-------------
840,989
-------------
_______________________________________________________________________________
10 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
Shares or
Principal
Amount
Company (000) U.S. $ Value
- -------------------------------------------------------------------------------
Health Care-1.0%
Medical Products-1.0%
Tong Ren Tang Technologies Co., Ltd. Cl. H 300,000 $ 576,198
-------------
Total Common Stocks & Other Investments
(cost $34,268,125) 51,555,431
-------------
SHORT-TERM INVESTMENT-4.9%
Time Deposits-4.9%
HSBC Bank
4.41%, 2/01/06
(cost $2,700,000) $ 2,700 2,700,000
-------------
Total Investments-98.4%
(cost $36,968,125) 54,255,431
Other assets less liabilities-1.6% 903,510
-------------
Net Assets-100% $ 55,158,941
=============
(a) Non-income producing security.
(b) Security is exempt from registration under Rule 144a of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At January 31, 2006, the aggregate market value of these securities
amounted to $1,082,289 or 2.0% of net assets.
Glossary :
GDR - Global Depositary Receipt
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 11
STATEMENT OF ASSETS & LIABILITIES
January 31, 2006 (unaudited)
Assets
Investments in securities, at value (cost $36,968,125) $ 54,255,431
Cash 16,888
Foreign cash, at value (cost $1,373,587) 1,391,775
Receivable for investment securities sold 795,167
Receivable for capital stock sold 718,326
Interest and dividends receivable 13,250
-------------
Total assets 57,190,837
-------------
Liabilities
Payable for investment securities purchased and
foreign currency transactions 1,377,886
Payable for capital stock redeemed 399,538
Advisory fee payable 32,178
Distribution fee payable 28,852
Transfer Agent fee payable 5,397
Accrued expenses 188,045
-------------
Total liabilities 2,031,896
-------------
Net Assets $ 55,158,941
-------------
Composition of Net Assets
Capital stock, at par $ 3,828
Additional paid-in capital 38,197,133
Accumulated net investment loss (159,214)
Accumulated net realized loss on investment and
foreign currency transactions (188,259)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 17,305,453
-------------
$ 55,158,941
=============
Calculation of Maximum Offering Price Per Share
Net Asset Value and:
---------------------------
Shares Offering Redemption
Class Net Assets Outstanding Price Price
- ------------------------------------------------------------------------------
A $24,778,779 1,678,682 $15.42* $14.76
B $14,708,866 1,043,102 $14.10 --
C $13,971,616 993,144 $14.07 --
Advisor $ 1,699,680 113,035 $15.04 $15.04
* Represents the maximum offering price per share which includes a sales
charge of 4.25%.
See notes to financial statements.
_______________________________________________________________________________
12 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
STATEMENT OF OPERATIONS
Six Months Ended January 31, 2006 (unaudited)
Investment Income
Dividends (net of foreign taxes withheld
of $27,498) $ 506,646
Interest 14,196 $ 520,842
------------
Expenses
Advisory fee 180,160
Distribution fee--Class A 29,310
Distribution fee--Class B 69,954
Distribution fee--Class C 62,754
Transfer agency--Class A 31,412
Transfer agency--Class B 24,490
Transfer agency--Class C 20,712
Transfer agency--Advisor Class 3,156
Custodian 75,120
Printing 57,609
Administrative 42,000
Legal 35,427
Registration 34,684
Audit 23,678
Directors' fees 8,157
Miscellaneous 8,005
------------
Total expenses 706,628
Less: expenses waived by the Adviser
(see Note B) (42,000)
Less: expense offset arrangement
(see Note B) (1,159)
------------
Net expenses 663,469
------------
Net investment loss (142,627)
------------
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions (76,465)
Foreign currency transactions 3,573
Net change in unrealized
appreciation/depreciation of:
Investments 6,065,943
Foreign currency denominated
assets and liabilities 17,032
------------
Net gain on investments 6,010,083
------------
Net Increase in Net Assets from
Operations $ 5,867,456
============
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 13
STATEMENT OF CHANGES IN NET ASSETS
Six Months
Ended
January 31, Year Ended
2006 July 31,
(unaudited) 2005
============= =============
Increase (Decrease) in Net Assets
from Operations
Net investment income (loss) $ (142,627) $ 91,836
Net realized gain (loss) on investment and
foreign currency transactions (72,892) 141,166
Net change in unrealized
appreciation/depreciation
of investments and foreign
currency denominated assets
and liabilities 6,082,975 8,908,325
------------ ------------
Net increase in net assets from
operations 5,867,456 9,141,327
Dividends and Distributions to
Shareholders from
Net investment income
Class A (94,793) -0-
Advisor Class (10,577) -0-
Net realized gain on investment and foreign
currency transactions
Class A (20,736) -0-
Class B (15,426) -0-
Class C (13,895) -0-
Advisor Class (1,481) -0-
Capital Stock Transactions
Net decrease (1,056,022) (1,584,689)
------------ ------------
Total increase 4,654,526 7,556,638
Net Assets
Beginning of period 50,504,415 42,947,777
------------ ------------
End of period (including accumulated
net investment loss and undistributed
net investment income of $(159,214)
and $88,783, respectively) $ 55,158,941 $ 50,504,415
============ ============
See notes to financial statements.
_______________________________________________________________________________
14 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
NOTES TO FINANCIAL STATEMENTS
January 31, 2006 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein Greater China '97 Fund, Inc. (the "Fund") was organized as a
Maryland corporation on April 30, 1997 and is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund offers Class A, Class B, Class C and Advisor Class shares. Class A
shares are sold with a front-end sales charge of up to 4.25% for purchases not
exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase may be subject to a contingent
deferred sales charge of 1%. Class B shares are sold with a contingent deferred
sales charge which declines from 4% to zero depending on the period of time the
shares are held. Class B shares will automatically convert to Class A shares
eight years after the end of the calendar month of purchase. Class C shares are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. Advisor Class shares are sold without an initial
or contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in
fee-based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have
been prepared in conformity with U.S. generally accepted accounting principles
which require management to make certain estimates and assumptions that affect
the reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. Additional information about some of the
items discussed in these Notes to Financial Statements is contained in the
Fund's Statement of Additional Information, which is available upon request.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange 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 not listed on an exchange but traded on The
NASDAQ Stock Market, Inc.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 15
("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") (but excluding securities traded
on NASDAQ) are valued at the mean of the current bid and asked prices as
reported by the National Quotation Bureau or other comparable sources; U.S.
Government securities and other debt instruments having 60 days or less
remaining until maturity are valued at amortized cost if their original
maturity was 60 days or less; or by amortizing their fair value as of the 61st
day prior to maturity if their original term to maturity exceeded 60 days;
fixed-income securities, including mortgage backed and asset backed securities,
may be valued on the basis of prices provided by a pricing service or at a
price obtained from one or more of the major broker/dealers. In cases where
broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the
"Adviser") (see Note J) may establish procedures whereby changes in market
yields or spreads are used to adjust, on a daily basis, a recently obtained
quoted price on a security; and OTC and other derivatives are valued on the
basis of a quoted bid price or spread from a major broker/dealer in such
security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities. To account for this, the Fund may frequently value
many of its foreign equity securities using fair value prices based on third
party vendor modeling tools to the extent available.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
_______________________________________________________________________________
16 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation and depreciation of investments
and foreign currency denominated assets and liabilities.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the date securities are purchased or sold.
Investment gains and losses are determined on the identified cost basis. The
Fund accretes discounts on short-term securities as adjustments to interest
income.
5. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except for class
specific expenses which are allocated to the specific class. Realized and
unrealized gains and losses are allocated among the various share classes based
on their relative net assets.
6. 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.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 17
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 fist $2.5 billion, .65% of the
next $2.5 billion and .60% in excess of $5 billion, of the Fund's average daily
net assets. Prior to September 7, 2004, the Fund paid the Adviser an advisory
fee at an annual rate of 1% of the Fund's average daily net assets. The fee is
accrued daily and paid monthly.
The Adviser has agreed for the current fiscal year to waive its fee and bear
certain expenses so that total expenses do not exceed on an annual basis to
2.50%, 3.20%, 3.20%, and 2.20% of average daily net assets, respectively, for
the Class A, Class B, Class C and Advisor Class shares. For the six months
ended January 31, 2006, there were no fees waived by the Adviser.
Effective January 1, 2004 through September 6, 2004, in contemplation of the
final agreement with the Office of New York Attorney General ("NYAG"), the
Adviser began waiving a portion of its advisory fee so as to charge the Fund at
the reduced annual rate discussed above. For a more complete discussion of the
Adviser's settlement with the NYAG, please see "Legal Proceedings" below.
Pursuant to the advisory agreement, the Fund may reimburse the Adviser for
certain legal and accounting services provided to the Fund by the Adviser. For
the six months ended January 31, 2006, the Adviser voluntarily agreed to waive
its fees for such services. Such waiver amounted to $42,000.
The Fund compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund (see Note J). AGIS may make payments to intermediaries that provide
omnibus account services, sub-accounting services and/or networking services.
Such compensation retained by AGIS amounted to $30,665 for the six months ended
January 31, 2006.
For the six months ended January 31, 2006, the Fund's expenses were reduced by
$1,159 under an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc. (the "Distributor"),
a wholly-owned subsidiary of the Adviser, serves as the distributor of the
Fund's shares (see Note J). The Distributor has advised the Fund that it has
retained front-end sales charges of $3,457 from the sale of Class A shares and
received $50, $14,018 and $2,508 in contingent deferred sales charges imposed
upon redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the six months ended January 31, 2006.
_______________________________________________________________________________
18 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
Brokerage commissions paid on investment transactions for the six months ended
January 31, 2006, amounted to $43,110, none of which 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 and 1% of the Fund's average daily net assets
attributable to both Class B and Class C shares. There are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amounts of $2,242,674 and $991,353 for Class B
and Class C shares, respectively; such costs may be recovered from the Fund in
future periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended January 31, 2006, were as follows:
Purchases Sales
============= =============
Investment securities (excluding
U.S. government securities) $ 7,046,058 $ 9,915,924
U.S. government securities -0- -0-
At January 31, 2006, the cost of investments for federal income tax purposes,
was substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation and unrealized depreciation
(excluding foreign currency transactions) are as follows:
Gross unrealized appreciation $ 17,847,361
Gross unrealized depreciation (560,055)
-------------
Net unrealized appreciation $ 17,287,306
=============
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 19
Forward Exchange Currency Contracts
The Fund may enter into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchase and sales commitments
denominated in foreign currencies and for investment purposes. A forward
exchange currency contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contract and the closing of
such contract would be included in net realized gains or losses on foreign
currency transactions. Fluctuations in the value of open forward exchange
currency contracts are recorded for financial reporting purposes as unrealized
appreciation and depreciation by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value at
least equal to the aggregate amount of the Fund's commitments under forward
exchange currency contracts entered into with respect to position hedges. Risks
may arise from the potential inability of a counterparty to meet the terms of a
contract and from unanticipated movements in the value of foreign currency
relative to the U.S. dollar. The face or contract amount, in U.S. dollars
reflects the total exposure the Fund has in that particular currency contract.
NOTE E
Capital Stock
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
Shares Amount
------------------------------- --------------------------------
Six Months Ended Six Months Ended
January 31, 2006 Year Ended January 31, 2006 Year Ended
(unaudited) July 31, 2005 (unaudited) July 31, 2005
---------------- ------------- ----------------- -------------
Class A
Shares sold 516,981 626,170 $ 7,041,159 $ 7,580,040
Shares issued in
reinvestment
of dividends
and distributions 7,426 -0- 92,824 -0-
Shares converted
from Class B 58,555 27,101 767,136 331,493
Shares redeemed 435,890) (769,641) (5,728,563) (9,194,859)
Net increase
(decrease) 147,072 (116,370) $ 2,172,556 $ (1,283,326)
_______________________________________________________________________________
20 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
Shares Amount
------------------------------- --------------------------------
Six Months Ended Six Months Ended
January 31, 2006 Year Ended January 31, 2006 Year Ended
(unaudited) July 31, 2005 (unaudited) July 31, 2005
---------------- ------------- ----------------- -------------
Class B
Shares sold 78,392 203,353 $ 980,406 $ 2,360,867
Shares issued in
reinvestment of
distributions 1,074 -0- 12,829 -0-
Shares converted
to Class A (61,367) (28,338) (767,136) (331,493)
Shares redeemed (143,624) (252,296) (1,800,020) (2,895,199)
Net decrease (125,525) (77,281) $ (1,573,921) $ (865,825)
Class C
Shares sold 112,184 280,653 $ 1,410,738 $ 3,264,255
Shares issued in
reinvestment
of distributions 848 -0- 10,120 -0-
Shares redeemed (144,714) (321,552) (1,797,884) (3,708,947)
Net decrease (31,682) (40,899) $ (377,026) $ (444,692)
Advisor Class
Shares sold 34,524 192,036 $ 466,078 $ 2,350,726
Shares issued in
reinvestment
of dividends
and distributions 408 -0- 5,191 -0-
Shares redeemed (132,443) (107,707) (1,748,900) (1,341,572)
Net increase
(decrease) (97,511) 84,329 $ (1,277,631) $ 1,009,154
NOTE F
Risks Involved in Investing in the Fund
Concentration of Risk-- Investing in securities of foreign companies involves
special risk which include the possibility of future political and economic
developments which could adversely affect the value of such securities.
Moreover, securities of many foreign companies and their markets may be less
liquid and their prices more volatile than those of comparable United States
companies.
The Fund has invested approximately 76% of its net assets in Hong Kong equity
securities. Political, social or economic changes in this market may have a
greater impact on the value of the Fund's portfolio due to this concentration.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 21
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 January 31, 2006.
NOTE H
Distributions to Shareholders
The tax character for distributions to be paid for the fiscal year ending July
31, 2006 will be determined at the end of the current fiscal year. The tax
character of distributions paid during the fiscal years ended July 31, 2005 and
July 31, 2004 were as follows:
2005 2004
============ ============
Distributions paid from:
Ordinary income $ -0- $ 89,585
------------ ------------
Total taxable distributions -0- 89,585
------------ ------------
Total distributions paid $ -0- $ 89,585
------------ ------------
As of July 31, 2005, the components of accumulated earnings/(deficit) on a tax
basis were as follows:
Undistributed net investment income $ 95,112
Undistributed long term capital gain 40,559
Accumulated capital and other losses (6,329)(a)
Unrealized appreciation/(depreciation) 11,118,090(b)
------------
Total accumulated earnings/(deficit) $ 11,247,432
============
(a) During the year ending July 31, 2005, the Fund utilized $103,660 of capital
loss carryforward.
(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
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the NYAG have been investigating practices in the mutual
fund industry identified as "market timing" and "late trading" of mutual fund
shares. Certain other regulatory authorities have also been conducting
_______________________________________________________________________________
22 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
investigations into these practices within the industry and have requested that
the Adviser provide information to them. The Adviser has been cooperating and
will continue to cooperate with all of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the
"Reimbursement Fund") to compensate mutual fund shareholders for the adverse
effects of market timing attributable to market timing relationships described
in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be
paid, in order of priority, to fund investors based on (i) their aliquot share
of losses suffered by the fund due to market timing, and (ii) a proportionate
share of advisory fees paid by such fund during the period of such market
timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds until December 31,
2008; and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order and the NYAG Order
contemplate that the Adviser's registered investment company clients, including
the Fund, will introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement , please see "Advisory
Fee and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, is continuing to direct and oversee an internal
investigation and a comprehensive review of the facts and circumstances
relevant to the SEC's and the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have initiated an investigation of the above-mentioned matters with
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 23
the advice of an independent economic consultant and independent counsel. The
Independent Directors have formed a special committee to supervise the
investigation.
On October 2, 2003, a purported class action complaint entitled HINDO, ET AL.
V. ALLIANCEBERNSTEIN GROWTH & INCOME FUND, ET AL. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges
that certain of the Alliance defendants failed to disclose that they improperly
allowed certain hedge funds and other unidentified parties to engage in "late
trading" and "market timing" of AllianceBernstein Fund securities, violating
Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the
Exchange Act and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an
unspecified amount of compensatory damages and rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, numerous 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, and others
may be filed. The plaintiffs in such lawsuits have asserted a variety of
theories for recovery including, but not limited to, violations of the
Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
certain state securities laws and common law. All state court actions against
the Adviser either were voluntarily dismissed or removed to federal court. On
February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred
all federal actions to the United States District Court for the District of
Maryland (the "Mutual Fund MDL"). All of the actions removed to federal court
were also transferred to the Mutual Fund MDL. The plaintiffs in the removed
actions have since moved for remand, and that motion is pending.
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual allegations, which appear to be based in large part on the SEC Order
and the NYAG Order. The claims in the mutual fund derivative consolidated
amended complaint are generally based on the theory that all fund advisory
agreements, distribution agreements and 12b-1 plans between the Adviser and
_______________________________________________________________________________
24 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
the AllianceBernstein Funds should be invalidated, regardless of whether market
timing occurred in each individual fund, because each was approved by fund
trustees on the basis of materially misleading information with respect to the
level of market timing permitted in funds managed by the Adviser. The claims
asserted in the other three consolidated amended complaints are similar to
those that the respective plaintiffs asserted in their previous federal
lawsuits. All of these lawsuits seek an unspecified amount of damages. The
Alliance defendants have moved to dismiss the complaints, and those motions are
pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commission") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled THE ATTORNEY GENERAL OF THE STATE OF
WEST VIRGINIA V. AIM ADVISORS, INC., ET AL. ("WVAG Complaint") was filed
against the Adviser, Alliance Holding, and various other defendants not
affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court
of Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On May 31, 2005, defendants removed the WVAG
Complaint to the United States District Court for the Northern District of West
Virginia. On July 12, 2005, plaintiff moved to remand. On October 19, 2005, the
WVAG Complaint was transferred to the Mutual Fund MDL.
On August 30, 2005, the deputy commissioner of securities of the West Virginia
Securities Commission signed a "Summary Order to Cease and Desist, and Notice
of Right to Hearing" addressed to the Adviser and Alliance Holding. The Summary
Order claims that the Adviser and Alliance Holding violated the West Virginia
Uniform Securities Act, and makes factual allegations generally similar to
those in the Commission Order and the NYAG Order. On January 26, 2006, the
Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition
for Writ of Prohibition and Order Suspending Proceedings in West Virginia state
court seeking to vacate the Summary Order and for other relief. The Adviser
intends to vigorously defend against the allegations in the WVAG Complaint.
On June 22, 2004, a purported class action complaint entitled AUCOIN, ET AL. V.
ALLIANCE CAPITAL MANAGEMENT L.P., ET AL. ("Aucoin Complaint") was filed against
the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA
Financial, Inc., AllianceBernstein Investment Research & Management, Inc.,
certain current and former directors of the AllianceBernstein Mutual Funds, and
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 25
unnamed Doe defendants. The Aucoin Complaint names certain of the
AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was
filed in the United States District Court for the Southern District of New York
by an alleged shareholder of an AllianceBernstein mutual fund. The Aucoin
Complaint alleges, among other things, (i) that certain of the defendants
improperly authorized the payment of excessive commissions and other fees from
fund assets to broker-dealers in exchange for preferential marketing services,
(ii) that certain of the defendants misrepresented and omitted from
registration statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as control
persons of other defendants. The Aucoin Complaint asserts claims for violation
of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206
and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding
and abetting breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amount of compensatory damages and punitive damages, rescission of
their contracts with the Adviser, including recovery of all fees paid to the
Adviser pursuant to such contracts, an accounting of all fund-related fees,
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical to the Aucoin
Complaint, and (iii) are brought on behalf of shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiff's claim under Section 36(b) of the Investment Company Act. On January
11, 2006, the District Court granted defendants' motion for reconsideration and
dismissed the remaining Section 36(b) claim. Plaintiffs have moved for leave to
amend their consolidated complaint.
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.
_______________________________________________________________________________
26 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
NOTE J
Subsequent Event
Effective February 24, 2006, the names of Alliance Capital Management L.P.,
AllianceBernstein Investment Research and Management, Inc. and Alliance Global
Investor Services, Inc. were changed to AllianceBernstein L.P.,
AllianceBernstein Investments, Inc. and AllianceBernstein Investor Services,
Inc., respectively.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 27
FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each period
Class A
-------------------------------------------------------
Six Months
Ended
January 31, Year Ended July 31,
2006 ----------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
---------------------------------------------------------------------------
Net asset value,
beginning of period $ 13.16 $ 10.75 $ 8.82 $ 7.55 $ 8.45 $ 10.34
---------------------------------------------------------------------------
Income From Investment
Operations
Net investment
income (loss)(a)(b) (.02) .07 (.04)(c) .04 .09 (.01)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 1.69 2.34 2.01 1.32 (.99) (1.88)
----------------------------------------------------------------------------
Net increase (decrease)
in net asset value
from operations 1.67 2.41 1.97 1.36 (.90) (1.89)
----------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from
net investment income (.06) -0- (.04) (.09) -0- -0-
Distributions from net
realized gains on
investment and
foreign currency
transactions (.01) -0- -0- -0- -0- -0-
----------------------------------------------------------------------------
Total dividends and
distributions (.07) -0- (.04) (.09) -0- -0-
Net asset value,
end of period $ 14.76 $ 13.16 $ 10.75 $ 8.82 $ 7.55 $ 8.45
=============================================================================
Total Return
Total investment return
based on
net asset value(d) 12.86% 22.42% 22.30% 18.35% (10.65)% (18.28)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $24,779 $20,163 $17,719 $3,958 $2,253 $2,039
Ratio to average net
assets of:
Expenses, net of
waivers/reimbursements 2.29%(e)(f) 2.32%(g) 2.38% 2.50% 2.50% 2.51%(g)
Expenses, before
waivers/reimbursements 2.47%(e)(f) 2.52% 2.94% 9.24% 10.82% 9.50%
Net investment
income (loss)(b) (.17)%(e)(f) .60% (.37)%(c) .58% 1.18% (.09)%
Portfolio turnover rate 15% 42% 89% 102% 63% 64%
See footnote summary on page 32.
_______________________________________________________________________________
28 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
Selected data for a share of capital stock outstanding throughout each period
Class B
---------------------------------------------------------
Six Months
Ended
January 31, Year Ended July 31,
2006 ------------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------
Net asset value,
beginning of period $ 12.56 $ 10.33 $ 8.52 $ 7.30 $ 8.21 $ 10.13
-----------------------------------------------------------------------------------
Income From Investment
Operations
Net investment
income (loss)(a)(b) (.06) (.02) (.12)(c) (.01) .03 (.07)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 1.61 2.25 1.95 1.27 (.94) (1.85)
------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value
from operations 1.55 2.23 1.83 1.26 (.91) (1.92)
------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from
net investment income -0- -0- (.02) (.04) -0- -0-
Distributions from net
realized gains on
investment and
foreign currency
transactions (.01) -0- -0- -0- -0- -0-
v --------------------------------------------------------------------------------------
Total dividends and
distributions (.01) -0- (.02) (.04) -0- -0-
Net asset value,
end of period $ 14.10 $ 12.56 $ 10.33 $ 8.52 $ 7.30 $ 8.21
====================================================================================
Total Return
Total investment return
based on
net asset value(d) 12.39% 21.59% 21.41% 17.32% (11.08)% (18.95)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $14,709 $14,676 $12,872 $4,632 $3,266 $3,234
Ratio to average net
assets of:
Expenses, net of
waivers/reimbursements 3.01%(e)(f) 3.04%(g) 3.18% 3.20% 3.20% 3.21%(g)
Expenses, before
waivers/reimbursements 3.19%(e)(f) 3.24% 3.79% 9.98% 11.56% 10.28%
Net investment
income (loss)(b) (.83)%(e)(f) (.13)% (1.11)%(c) (.11)% .41% (.81)%
Portfolio turnover rate 15% 42% 89% 102% 63% 64%
See footnote summary on page 32.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 29
Selected data for a share of capital stock outstanding throughout each period
Class C
------------------------------------------------------------------
Six Months
Ended
January 31, Year Ended July 31,
2006 ------------------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------
Net asset value,
beginning of period $ 12.53 $ 10.30 $ 8.50 $ 7.30 $ 8.21 $ 10.13
--------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment
income (loss)(a)(b) (.06) (.01) (.12)(c) (.01) .04 (.08)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 1.61 2.24 1.94 1.25 (.95) (1.84)
-----------------------------------------------------------------------------------
Net increase (decrease)
in net asset value
from operations 1.55 2.23 1.82 1.24 (.91) (1.92)
-----------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from
net investment income -0- -0- (.02) (.04) -0- -0-
Distributions from net
realized gains on
investment and
foreign currency
transactions (.01) -0- -0- -0- -0- -0-
-----------------------------------------------------------------------------------
Total dividends and
distributions (.01) -0- (.02) (.04) -0- -0-
Net asset value,
end of period $ 14.07 $ 12.53 $ 10.30 $ 8.50 $ 7.30 $ 8.21
====================================================================================
Total Return
Total investment return
based on
net asset value(d) 12.42% 21.65% 21.34% 17.05% (11.08)% (18.95)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $13,972 $12,838 $10,978 $4,856 $1,302 $877
Ratio to average net
assets of:
Expenses, net of
waivers/reimbursements 2.99%(e)(f) 3.02%(g) 3.15% 3.20% 3.20% 3.21%(g)
Expenses, before
waivers/reimbursements 3.17%(e)(f) 3.22% 3.75% 10.19% 11.28% 10.13%
Net investment
income (loss)(b) (.85)%(e)(f) (.10)% (1.07)%(c) (.15)% .50% (.84)%
Portfolio turnover rate 15% 42% 89% 102% 63% 64%
See footnote summary on page 32.
_______________________________________________________________________________
30 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
Selected data for a share of capital stock outstanding throughout each period
Advisor Class
-------------------------------------------------------------
Six Months
Ended
January 31, Year Ended July 31,
2006 -------------------------------------------------------------
(unaudited) 2005 2004 2003 2002 2001
---------------------------------------------------------------------------------
Net asset value,
beginning of period $ 13.43 $ 10.93 $ 8.94 $ 7.66 $ 8.53 $ 10.41
---------------------------------------------------------------------------------
Income From Investment
Operations
Net investment
income (loss)(a)(b) .04 .07 (.02)(c) .08 .10 .06
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions 1.68 2.43 2.05 1.31 (.97) (1.94)
---------------------------------------------------------------------------------
Net increase (decrease)
in net asset value
from operations 1.72 2.50 2.03 1.39 (.87) (1.88)
---------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from
net investment income (.10) -0- (.04) (.11) -0- -0-
Distributions from net
realized gains on
investment and
foreign currency
transactions (.01) -0- -0- -0- -0- -0-
---------------------------------------------------------------------------------
Total dividends and
distributions (.11) -0- (.04) (.11) -0- -0-
Net asset value,
end of period $ 15.04 $ 13.43 $ 10.93 $ 8.94 $ 7.66 $ 8.53
=================================================================================
Total Return
Total investment return
based on
net asset value(d) 12.99% 22.87% 22.72% 18.55% (10.20)% (18.06)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $1,699 $2,827 $1,379 $309 $196 $386
Ratio to average net
assets of:
Expenses, net of
waivers/reimbursements 1.97%(e)(f) 2.00%(g) 2.14% 2.20% 2.20% 2.21%(g)
Expenses, before
waivers/reimbursements 2.15%(e)(f) 2.20% 2.71% 8.69% 10.57% 9.35%
Net investment
income (loss)(b) .72%(e)(f) .55% (.13)%(c) 1.14% 1.28% .71%
Portfolio turnover rate 15% 42% 89% 102% 63% 64%
See footnote summary on page 32.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 31
(a) Based on average shares outstanding.
(b) Net of expenses waived/reimbursed by the adviser.
(c) Net of expenses waived by the transfer agent.
(d) 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 estimated costs of proxy
solicitation.
(g) Ratios reflect expenses grossed up for expense offset arrangement with the
transfer agent. For the periods shown below, the net expense ratios were as
follows:
Year Ended July 31,
-------------------
2005 2001
-------------------
Class A 2.31% 2.50%
Class B 3.04% 3.20%
Class C 3.02% 3.20%
Advisor Class 2.00% 2.20%
_______________________________________________________________________________
32 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
RESULTS OF STOCKHOLDERS MEETING
(unaudited)
The Annual Meeting of Stockholders of AllianceBernstein Greater China '97 Fund
(the "Fund") was held on November 15, 2005 and adjourned until December 6,
2005, December 19, 2005, December 21, 2005 and December 22, 2005. At the
November 15, 2005 Meeting, with respect to the first item of business, the
election of Directors, the required number of outstanding shares were voted in
favor of the proposal, and the proposal was approved. At the December 19, 2005
Meeting, the required number of outstanding shares voted in favor of the third
item of business, the amendment, elimination or reclassification as
non-fundamental of certain investment restrictions, and the proposal was
approved. With respect to the second item of business, the amendment and
restatement of the Fund's charter, an insufficient number of required
outstanding shares voted in favor of the proposal and, therefore, the proposal
was not approved. A description of each proposal and number of shares voted at
the Meetings are as follows (the proposal numbers shown below correspond to the
proposal numbers in the Fund's proxy statement):
1. The election of the Directors, each such Director to serve a term of an
indefinite duration and until his or her successor is duly elected and
qualifies.
Voted For Withheld Authority
----------------------------------------------
David H. Dievler 2,152,203 88,714
William H. Foulk, Jr. 2,151,774 89,143
2. The amendment and restatement of the Fund's charter, which repealed in its
entirety all currently existing charter provisions and substituted in lieu
thereof new provisions set forth in the Form of Articles of Amendment and
Restatement attached to the Fund's Proxy Statement as Appendix D.
Voted Broker
Voted For Against Abstained Non-Votes
-------------------------------------------------------------
1,588,546 63,441 60,708 0
3. The amendment, elimination, or reclassification as non-fundamental of the
fundamental investment restrictions regarding:
Voted Broker
Voted For Against Abstained Non-Votes
------------------------------------------------------
3.B. Issuing Senior Securities 1,552,382 113,975 12,995 561,565
and Borrowing Money
3.D. Concentration of 1,569,520 97,183 12,649 561,565
Investments
3.E. Real Estate and 1,553,862 111,467 14,023 561,565
Companies that Deal
in Real Estate
3.F. Commodities, Commodity 1,556,258 110,445 12,649 561,565
Contracts and Futures
Contracts
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 33
Voted Broker
Voted For Against Abstained Non-Votes
------------------------------------------------------
3.G. Loans 1,552,857 112,452 14,044 561,565
3.H. Joint Securities Trading 1,550,430 115,427 13,495 561,565
Accounts
3.I. Exercising Control 1,559,941 95,202 24,209 561,565
3.L. Purchases of Securities 1,555,760 110,943 12,649 561,565
on Margin
3.M. Short Sales 1,568,011 97,422 13,919 561,565
3.N. Pledging, Hypothecating, 1,550,485 116,218 12,649 561,565
Mortgaging, or Otherwise
Encumbering Assets
_______________________________________________________________________________
34 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
David H. Dievler(1)
OFFICERS
Marc O. Mayer, President and Chief Executive Officer
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Manish Singhai(2), Vice President
Vernon Yu(2), Vice President
Emilie D. Wrapp, Secretary
Mark D. Gersten, Treasurer and Chief Financial Officer
Vincent S. Noto, Controller
Principal Underwriter
AllianceBernstein Investments Inc.
1345 Avenue of the Americas
New York, NY 10105
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
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.
(2) The management of and investment decisions for the Fund's portfolio are
made by the Global Emerging Market Growth Research Team. Mr. Manish Singhai and
Mr. Vernon Yu are the investment professionals with the most significant
responsibility for the day-to-day management of the Fund's portfolio.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 35
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- -------------------------------------------------------------------------------
Wealth Strategies Funds
- -------------------------------------------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- -------------------------------------------------------------------------------
Blended Style Funds
- -------------------------------------------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- -------------------------------------------------------------------------------
Growth Funds
- -------------------------------------------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund*
Small Cap Growth Portfolio
Global & International
Global Health Care Fund*
Global Research Growth Fund
Global Technology Fund*
Greater China '97 Fund
International Growth Fund*
International Research Growth Fund*
- -------------------------------------------------------------------------------
Value Funds
- -------------------------------------------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund*
Growth & Income Fund
Real Estate Investment Fund
Small/Mid-Cap Value Fund*
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- -------------------------------------------------------------------------------
Taxable Bond Funds
- -------------------------------------------------------------------------------
Global Government Income Trust*
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Intermediate Bond Portfolio*
Short Duration Portfolio
U.S. Government Portfolio
- -------------------------------------------------------------------------------
Municipal Bond Funds
- -------------------------------------------------------------------------------
National Michigan
Insured National Minnesota
Arizona New Jersey
California New York
Insured California Ohio
Florida Pennsylvania
Massachusetts Virginia
- -------------------------------------------------------------------------------
Intermediate Municipal Bond Funds
- -------------------------------------------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- -------------------------------------------------------------------------------
Closed-End Funds
- -------------------------------------------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
- -------------------------------------------------------------------------------
Retirement Strategies Funds
- -------------------------------------------------------------------------------
2000 Retirement Strategy 2015 Retirement Strategy 2030 Retirement Strategy
2005 Retirement Strategy 2020 Retirement Strategy 2035 Retirement Strategy
2010 Retirement Strategy 2025 Retirement Strategy 2040 Retirement Strategy
2045 Retirement Strategy
We also offer Exchange Reserves,** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current
prospectus. You should read the prospectus carefully before you invest.
* Prior to May 16, 2005, International Growth Fund was named Worldwide
Privatization Fund and International Research Growth Fund was named
International Premier Growth Fund. On June 24, 2005, All-Asia Investment Fund
merged into International Research GrowthFund. On July 8, 2005, New Europe Fund
merged into International Research Growth Fund. Prior to February 1, 2006,
Global Government Income Trust was named Americas Government Income Trust and
Intermediate Bond Portfolio was named Quality Bond Portfolio.
** 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.
_______________________________________________________________________________
36 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICER'S EVALUATION OF
INVESTMENT ADVISORY AGREEMENT*
The following is a summary of the evaluation of the investment advisory
agreement between Alliance Capital Management L.P., (the "Adviser") and the
AllianceBernstein Greater China '97 Fund, Inc., (the "Fund"), prepared by
Philip L. Kirstein, the Senior Officer, for the independent directors of the
Fund, as required by the Assurance of Discontinuance between the New York State
Attorney General and the Adviser. The Senior Officer's evaluation of the
investment advisory agreement is not meant to diminish the responsibility or
authority of the Boards of Directors to perform their 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 which was provided to the independent directors in connection with their
review of the proposed continuance of the investment advisory agreement. The
Senior Officer's evaluation considered the following factors:
1. Management fees charged to institutional and other clients of the
Adviser for like services.
2. Management fees charged by other mutual fund companies for like
services.
3. Costs to the Adviser and its affiliates of supplying services
pursuant to the advisory agreement, excluding any intra-corporate profit.
4. Profit margins of the Adviser and its affiliates from providing such
services.
5. Possible economies of scale as the Fund grows larger.
6. Nature and quality of the adviser's services, including the
performance of the Fund.
* It should be noted that the information in the fee summary was completed on
June 8, 2005 and presented to the Board of Directors and Trustees on June 15,
2005 in accordance with the Assurance of Discontinuance with the New York State
Attorney General. It also should be noted that references in the fee summary
pertaining to performance and expense ratios refer to Class A shares of the
Fund.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 37
FUND ADVISORY FEES, EXPENSE REIMBURSEMENTS, CAPS & RATIOS
The table below describes the Fund's advisory fee pursuant to the Investment
Advisory Agreement. This is the fee schedule the adviser implemented in January
2004 as a result of the settlement with the New York State Attorney General.
Advisory Fee Based on % of
Average Daily Net Assets
- -----------------------------------------------------------------------------
AllianceBernstein Greater China '97 Fund, Inc. First $2.5 billion .75%
Next $2.5 billion .65%
Excess of $5 billion .60%
The Adviser is reimbursed as specified in the Investment Advisory Agreement for
certain clerical, legal, accounting, administrative and other services provided
to the Fund. For the most recent completed fiscal year, the Adviser waived its
reimbursement of $109,500 or .25% of average daily net assets as a result of
the Fund's expense ratio being higher than its expense cap.
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 levels set forth
below for that Fund's current fiscal year. That waiver agreement is terminable
by the Adviser at the end of the Fund's fiscal year upon at least 60 days
written notice. Pro-forma expense ratio is also set forth below.
Expense Cap
pursuant to
Expense
Limitation Pro-Forma Fiscal
Undertaking Expense Ratio* Year End
- ---------------------------------------------------------------------------
AllianceBernstein Greater Advisor-2.20% 2.19% July 31,
China '97 Fund, Inc. Class A-2.50% 2.54% 2004
Class B-3.20% 3.27%
Class C-3.20% 3.25%
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS OF THE ADVISER
The management fees charged to investment companies which the Adviser manages
and sponsors may be higher than those charged to institutional accounts,
including pension plans and sub-advised investment companies. The fee
differential reflects, among other things, different services provided to such
clients, and different liabilities assumed. Services provided by the Adviser to
the Fund that are not provided to non-investment company clients include
providing office space and personnel to serve as Fund Officers and coordinating
with and
* This pro-forma expense ratio information shows what would have been the
Fund's expense ratio in the indicated fiscal year had the current fee been in
effect throughout the fiscal year.
_______________________________________________________________________________
38 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
monitoring the Fund's third party service providers such as Fund counsel,
auditors, custodians, transfer agents and pricing services. The accounting,
administrative and legal/compliance requirements for the Fund are more costly
than those for institutional assets due to the greater complexities and time
required for investment companies. A portion of the expenses related to these
services are reimbursed by the Fund to the Adviser. Managing the cash flow of
an investment company may be more difficult than for other accounts,
particularly if the Fund is in net redemptions, as the Adviser is forced to
sell securities to meet redemptions.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, the Senior Officer believes it is worth noting the
information from the Adviser's ADV regarding the advisory fees charged to
institutional accounts in the same asset class as the Fund. However, with
respect to the Fund the Adviser represented that there is no category set forth
in its Form ADV for institutional products which have a substantially similar
investment style as the Fund.
The Adviser represented that it does not sub-advise any registered investment
companies with a similar investment style as the Fund. The Adviser also manages
and sponsors retail mutual funds organized in jurisdictions outside the United
States, generally Luxembourg, and sold to non-United States investors. With
respect to the Fund, the Adviser represented that there are no offshore retail
mutual funds of similar investment style.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES.
Lipper, Inc., an analytical service that is not affiliated with the Adviser,
compared the fees charged to the Fund with fees charged to other investment
companies for similar services by other investment advisers. Lipper's analysis
included the Fund's ranking with respect to the proposed advisory fees relative
to the Lipper group median at the approximate current asset level for the Fund.*
Lipper Group
Fee Median Rank
- -------------------------------------------------------------------------------
AllianceBernstein Greater China
'97 Fund, Inc. 0.750 1.250 1/5
* A ranking of "1" means that the AllianceBernstein Fund has the lowest
effective fee rate in the Lipper peer group.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 39
Lipper also analyzed the expense ratio of the Fund in comparison to its Lipper
Expense Group* and Lipper Expense Universe**. Lipper describes a Lipper Expense
Group as a representative sample of comparable funds and a Lipper Universe as a
broader group, consisting of all funds in the investment
classification/objective with a similar load type as the subject Fund. The
results of that analysis are set forth below:
Lipper Lipper Lipper
Expense Universe Universe Lipper Group
Ratio Median Rank Group Rank Median
- -------------------------------------------------------------------------------
AllianceBernstein Greater
China '97 Fund, Inc. 2.381 2.262 4/6 4/5 2.142
Based on this analysis, the Fund has a more favorable ranking on an advisory
fee basis than on a total expense ratio basis. This has resulted in a variety
of efforts by the adviser to lower non-management expenses.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE ADVISORY AGREEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
The profitability information for the Fund prepared by the Adviser for the
Board of the Directors was reviewed by the Senior Officer. An independent
consultant is working with the Adviser's personnel on a new system to produce
profitability information at the Fund level which will reflect the Adviser's
management reporting approach. It is possible that future Fund profitability
information may differ from previously reviewed information due to changes in
methodologies and allocations. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The Fund was unprofitable to the Adviser during calendar year 2004 primarily as
a result of the reduction in the advisory fee schedule implemented early in
2004.
In addition to the Adviser's direct profits from managing the Fund pursuant to
the investment advisory agreement, certain of the Adviser's affiliates have
business relationships with the Fund and may earn a profit from providing other
services to the Fund. These affiliates provide transfer agency and distribution
related services and receive transfer agent fees, Eule 12b-1 payments,
front-end sales loads, contingent deferred sales charges ("CDSC") and
commissions for pro-
* Lipper uses the following criteria in screening funds to be included in the
Fund's expense group: fund type, investment classification/objective, load type
and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and
expense components and attributes. An expense group will typically consist of
seven to twenty funds.
** Except for asset (size) comparability, Lipper uses the same criteria for
selecting an expense group when selecting an expense universe. Unlike an
expense group, an expense universe allows for the same advisor to be
represented by more than just one fund.
_______________________________________________________________________________
40 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
viding brokerage services. In addition, the Adviser benefits from soft dollar
arrangements which offset expenses the Adviser would otherwise incur.
Additional information regarding distribution related fees can be found in the
prospectus of the Fund.
Different classes of shares are charged different types of distribution fees.
The Adviser's affiliate, AllianceBernstein Investment Research and Management
Inc. ("ABIRM"), is the Fund's principal underwriter. ABIRM and the Adviser may
make payments* from their own resources, in addition to sales loads and Rule
12b-1 fees, to firms that sell shares of the Fund. In 2004, ABIRM paid from its
own resources approximately .04% of the average monthly assets of the Fund for
distribution services and educational support. For 2005, it is anticipated that
ABIRM will pay approximately .04% of average monthly assets of the Fund for
such purposes.
After payments to third party intermediaries, ABIRM retained the following
amounts in Class A front-end load sales charges from sales of the Fund's shares
in the Fund's most recent fiscal year:
Amount Received
- ------------------------------------------------------------------------------
AllianceBernstein Greater China '97 Fund, Inc. $ 26,091
ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for the
Fund during the Fund's most recent fiscal year. A significant percentage of
such amounts were paid out to third party intermediaries by ABIRM.
12b-1 Fee
Received** CDSC Received
- ------------------------------------------------------------------------------
AllianceBernstein Greater China '97 Fund, Inc. $ 283,800 $ 87,149
Fees and reimbursements for out of pocket expenses charged by Alliance Global
Investor Services, Inc. ("AGIS"), the affiliated transfer agent, are based on
the level of the network account and the class of share held by the account.
AGIS also receives a fee per shareholder sub-account for each account
maintained by an intermediary on an omnibus basis. AGIS' after-tax
profitability decreased in 2004 in comparison to 2003.
* The total amount paid to the financial intermediary in connection with the
sale of shares will generally not exceed the sum of (a) .25% of the current
year's Fund sales by that firm and (b) .10% of the average daily net assets
attributable to that firm over the year.
** 12b-1 amounts are gross amounts paid to ABIRM.
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 41
AGIS received the following fee from the Fund in the most recent fiscal year:
AGIS Fee
- -----------------------------------------------------------------------------
AllianceBernstein Greater China '97 Fund, Inc. $ 66,000
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule for the Fund
reflect a sharing of economies of scale to the extent they exist. Based on some
of the professional literature that have considered economies of scale in the
mutual fund industry it is thought that to the extent economies of scale exist,
they may more often exist across a fund family as opposed to a specific fund.
This is because the costs incurred by the Adviser, such as investment research
or technology for trading or compliance systems can be spread across a greater
asset base as the fund family increases in size. It is also possible that as
the level of services required to operate a successful investment company has
increased over time, and advisory firms have made such investments in their
business to provide improved services, there may be a sharing of economies of
scale without a reduction in advisory fees.
An independent consultant made a presentation to the Board of Directors and the
Senior Officer regarding possible economies of scale or scope in the mutual
fund industry. Based on the presentation, it was evident that fund management
companies benefit from economies of scale. However, due to the lack of cost
data which forced the researchers to infer facts about the costs from the
behavior of fund expenses, there was a lack of consensus among researchers as
to whether economies of scale were being passed on to the shareholders. It is
contemplated that additional work will be performed to determine if the
benefits of economies of scale or scope are being passed to shareholders by the
Adviser. In the meantime, it is clear that to the extent a fund's assets exceed
the initial breakpoint its shareholders benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING PERFORMANCE OF THE
FUND.
With assets under management of $534.4 billion as of March 31, 2005, the
Adviser has the investment experience and resources necessary to effectively
manage the Fund and provide non-investment services (described in Section II)
to the Fund.
_______________________________________________________________________________
42 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
The information prepared by Lipper showed the 1, 3 and 5 year performance
ranking of the Fund's relative to its Lipper Universe:
Performance Year
Rank in Performance Universe for Periods
Ended March 31, 2005
- -------------------------------------------------------------------------------
1 3 5
- -------------------------------------------------------------------------------
AllianceBernstein Greater China
'97 Fund, Inc. 4/6 1/5 2/5
CONCLUSION:
Based on the factors discussed above the Senior Officer's conclusion is that
the proposed fee for the Fund is reasonable and within the range of what would
have been negotiated at arms-length in light of all the surrounding
circumstances. This conclusion in respect of the Fund is based on an evaluation
of all of these factors and no single factor was dispositive.
Dated: July 22, 2005
_______________________________________________________________________________
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND o 43
NOTES
_______________________________________________________________________________
44 o ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
ALLIANCEBERNSTEIN GREATER CHINA '97 FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
GC-0152-0106
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-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
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 Greater China '97 Fund, Inc.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: March 31, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: March 31, 2006
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: March 31, 2006