-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nt6GK14pXx1Osck6hTjR991vPqmN4nfQF/MR++zvl7WQhiQbVGIFK1ZS0Pi4mIA4 I/EgstMBp5gr4E6vfJWVpw== 0000936772-06-000157.txt : 20061010 0000936772-06-000157.hdr.sgml : 20061009 20061010134151 ACCESSION NUMBER: 0000936772-06-000157 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060731 FILED AS OF DATE: 20061010 DATE AS OF CHANGE: 20061010 EFFECTIVENESS DATE: 20061010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCEBERNSTEIN GREATER CHINA 97 FUND INC CENTRAL INDEX KEY: 0001038457 IRS NUMBER: 000000000 FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08201 FILM NUMBER: 061136925 BUSINESS ADDRESS: STREET 1: C/O ALLIANCE CAPITAL MANAGEMENT L P STREET 2: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2129692124 MAIL ADDRESS: STREET 1: C/O ALLIANCE CAPITAL MANAGEMENT L P STREET 2: 1324 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: ALLIANCE GREATER CHINA 97 FUND INC DATE OF NAME CHANGE: 19970506 0001038457 S000010075 ALLIANCEBERNSTEIN GREATER CHINA 97 FUND INC C000027892 Class A GCHAX C000027893 Class B GCHBX C000027894 Class C GCHCX C000027895 Advisor Class GCHYX N-CSR 1 edg11961_ar.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-08201 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 AllianceBernstein L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: July 31, 2006 Date of reporting period: July 31, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. AllianceBernstein Greater China '97 Fund Annual Report July 31, 2006 ANNUAL REPORT [LOGO] ALLIANCEBERNSTEIN INVESTMENTS Investment Products Offered - --------------------------- o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed - --------------------------- The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission's (the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com. AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the 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. September 28, 2006 Annual Report This report provides management's discussion of fund performance for AllianceBernstein Greater China '97 Fund (the "Fund") for the annual reporting period ended July 31, 2006. Investment Objective and Policies This open-end fund's investment objective is long-term capital appreciation through investment of at least 80% of its total assets in equity securities issued by Greater China companies, which are companies in China, Hong Kong and Taiwan. Of these countries, the Fund expects to invest a significant portion of its assets, which may be greater than 50%, in Hong Kong companies and may invest all of its assets in Hong Kong companies or companies of either of the other Greater China countries. The Fund also may invest in convertible securities and equity-linked debt securities issued or guaranteed by Greater China Companies or Greater China Governments, their agencies, or instrumentalities. 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 July 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 the six-month period ended July 31, 2006, due primarily to an overweight position in the energy sector and an underweight position in the technology sector. The Fund also outperformed its benchmark for the 12-month period ended July 31, 2006, primarily due to overweight positions in the energy and consumer staples sectors and an underweight position in the technology sector. Market Review and Investment Strategy The Greater China stock markets traded on an upward trend from November 2005 until the end of April 2006 as renewed confidence in China's economic growth momentum led to strong portfolio flows into the region. Interest in renminbi asset plays and companies with renminbi revenue continued to be high following the July 2005 revaluation of the renminbi by 2.1% against the U.S. dollar. However, the regional markets corrected in May 2006 as concerns turned to the possible overheating of the Chinese economy and the potential for prolonged measures to slow economic growth. In Taiwan, concerns were focused on the consumer credit problems in the banking sector for much of the period under review. With rising energy prices, the Fund was overweight in the energy sector for both the six- and 12-month periods under review. An overweight position was also maintained in the consumer staples sector, while the Fund maintained underweights in the technology and financials sectors. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 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 website at www.alliancebernstein.com or call your financial advisor or AllianceBernstein Investments at 800.227.4618. You should read the prospectus carefully before you invest. All fees and expenses related to the operation of the Fund have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Fund's quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes. Benchmark Disclosure The unmanaged Morgan Stanley Capital International (MSCI) 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 Index (at 65%) (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 July 31, 2006, the Lipper Average consisted of 47 and 38 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. The six- and 12-month returns for the MSCI Golden Dragon Index shown on the next page are net and gross returns. Growth of $10,000 values for the MSCI Golden Dragon Index are calculated using gross returns. In calculating net returns, the dividend is reinvested after deduction of withholding tax, applying the rate to non-resident individuals who do not benefit from double taxation treaties. In calculating gross returns, the amount of the dividend reinvested is the dividend distributed to individuals resident in the country of the company, but does not include tax credits. 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 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 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Historical Performance - ------------------------------------------------------------------------------- HISTORICAL PERFORMANCE (continued from previous page) Returns THE FUND VS. ITS BENCHMARK ------------------------- PERIODS ENDED JULY 31, 2006 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Greater China '97 Fund Class A 9.69% 23.79% Class B 9.29% 22.84% Class C 9.31% 22.89% Advisor Class* 9.84% 24.11% MSCI Golden Dragon Index (Net) 2.22% 11.27% MSCI Golden Dragon Index (Gross) 2.41% 11.60% Lipper China Region Funds Average 9.64% 24.84% * Please note that this share class is for investors purchasing shares through institutional pension plans and investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. GROWTH OF A $10,000 INVESTMENT IN THE FUND 9/3/97* TO 7/31/06 AllianceBernstein Greater China '97 Fund Class A: $15,994 MSCI Golden Dragon Index (Gross): $10,661 [THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] AllianceBernstein Greater MSCI Golden China '97 Fund Class A Dragon Index (Gross) - ------------------------------------------------------------------------------- 9/3/97* $ 9,575 $ 10,000 7/31/98 $ 4,673 $ 5,322 7/31/99 $ 7,916 $ 8,440 7/31/00 $ 9,982 $ 9,687 7/31/01 $ 8,158 $ 6,277 7/31/02 $ 7,289 $ 5,886 7/31/03 $ 8,626 $ 6,242 7/31/04 $ 10,550 $ 7,392 7/31/05 $ 12,915 $ 9,553 7/31/06 $ 15,994 $ 10,661 * Since inception of the Fund's Class A shares on 9/3/97. Growth of $10,000 for the MSCI Golden Dragon Index (Gross) is from the month-end after the Fund's inception date. This chart illustrates the total value of an assumed $10,000 investment in AllianceBernstein Greater China '97 Fund Class A shares (from 9/3/97* to 7/31/06) as compared to the performance of the Fund's benchmark, the MSCI Golden Dragon Index (Gross). The chart reflects the deduction of the maximum 4.25% sales charge from the initial $10,000 investment in the Fund and assumes the reinvestment of dividends and capital gains distributions. See Historical Performance and Benchmark Disclosures on previous page. (Historical Performance continued on next page) ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 3 HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF JULY 31, 2006 - ----------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 23.79% 18.57% 5 Year 14.40% 13.40% Since Inception* 5.92% 5.41% Class B Shares 1 Year 22.84% 18.84% 5 Year 13.60% 13.60% Since Inception* 5.21% 5.21% Class C Shares 1 Year 22.89% 21.89% 5 Year 13.55% 13.55% Since Inception* 5.11% 5.11% Advisor Class Shares+ 1 Year 24.11% 24.11% 5 Year 14.78% 14.78% Since Inception* 6.24% 6.24% SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2006) - ----------------------------------------------------------- SEC Returns Class A Shares 1 Year 23.45% 5 Year 11.08% Since Inception* 5.45% Class B Shares 1 Year 24.06% 5 Year 11.27% Since Inception* 5.25% Class C Shares 1 Year 27.13% 5 Year 11.23% Since Inception* 5.15% Advisor Class Shares+ 1 Year 29.28% 5 Year 12.41% Since Inception* 6.28% * 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 its NAV returns. Please note that this share class is for investors purchasing shares through institutional pension plans and investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on page 2. 4 . 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 February 1, 2006 July 31, 2006 During Period* - --------------------------------------------------------------------------------------------- Actual Hypothetical Actual Hypothetical** Actual Hypothetical - --------------------------------------------------------------------------------------------- Class A $1,000 $1,000 $1,096.89 $1,015.87 $9.36 $9.00 - --------------------------------------------------------------------------------------------- Class B $1,000 $1,000 $1,092.91 $1,012.20 $13.18 $12.67 - --------------------------------------------------------------------------------------------- Class C $1,000 $1,000 $1,093.10 $1,012.30 $13.08 $12.57 - --------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,000 $1,098.40 $1,017.11 $8.06 $7.75 - ---------------------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 1.80%, 2.54%, 2.52% and 1.55%, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). ** Assumes 5% return before expenses. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 5 PORTFOLIO SUMMARY July 31, 2006 PORTFOLIO STATISTICS Net Assets ($mil): $62.1 SECTOR BREAKDOWN* 31.3% Finance 18.6% Multi-Industry [PIE CHART OMITTED.] 14.0% Technology 10.4% Energy 8.3% Consumer Services 4.6% Transportation 4.1% Capital Goods 3.7% Consumer Staples 3.3% Basic Industry 0.9% Health Care 0.8% Short-Term COUNTRY BREAKDOWN* 60.3% Hong Kong [PIE CHART OMITTED.] 22.0% Taiwan 15.3% China 0.9% Bermuda 0.7% Luxembourg 0.8% Short-Term * All data are as of July 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. These sector classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Fund's prospectus. 6 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND TEN LARGEST HOLDINGS July 31, 2006 U.S. $ Percent of Company Value Net Assets - ------------------------------------------------------------------------------- Shandong Weigao Group Medical Polymer Co., Ltd. Class H $4,205,679 6.8% - ------------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co., Ltd. 4,003,933 6.4 - ------------------------------------------------------------------------------- China Mobile (Hong Kong), Ltd. 3,274,768 5.3 - ------------------------------------------------------------------------------- PetroChina Co., Ltd. Class H 3,043,348 4.9 - ------------------------------------------------------------------------------- China Construction Bank Class H 2,864,143 4.6 - ------------------------------------------------------------------------------- China Life Insurance Co., Ltd. Class H 2,181,329 3.5 - ------------------------------------------------------------------------------- Swire Pacific, Ltd. Class A 2,099,711 3.4 - ------------------------------------------------------------------------------- Cheung Kong (Holdings), Ltd. 1,733,867 2.8 - ------------------------------------------------------------------------------- Shun Tak Holdings, Ltd. 1,688,238 2.7 - ------------------------------------------------------------------------------- Sino Land Co., Ltd. 1,622,640 2.6 - ------------------------------------------------------------------------------- $26,717,656 43.0% ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 7 PORTFOLIO OF INVESTMENTS July 31, 2006 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-97.2% Finance-30.9% Banking-Money Center-1.5% Chinatrust Financial Holding Co., Ltd. 635,494 $494,832 HSBC Holdings Plc. 23,831 431,551 -------------- 926,383 -------------- Banking-Regional-8.7% Bank of China, Ltd. Class H(a) 2,255,000 998,327 Chang Hwa Commercial Bank(a) 1,045,000 669,914 China Construction Bank Class H(b) 6,545,000 2,864,143 Wing Hang Bank, Ltd. 52,500 481,611 Wing Lung Bank, Ltd. 40,000 354,217 -------------- 5,368,212 -------------- Brokerage & Money Management-2.1% Hong Kong Exchanges & Clearing, Ltd. 200,000 1,300,417 -------------- Insurance-5.7% Cathay Financial Holding Co., Ltd. 600,000 1,282,765 Cathay Financial Holding Co., Ltd. (GDR)(a)(b) 4,200 89,040 China Life Insurance Co., Ltd. Class H 1,292,000 2,181,329 -------------- 3,553,134 -------------- Real Estate-11.3% Cheung Kong (Holdings), Ltd. 160,000 1,733,867 Hongkong Land Holdings, Ltd. 340,000 1,326,000 Hopewell Holdings, Ltd. 320,000 912,314 Sino Land Co., Ltd. 962,270 1,622,640 Sun Hung Kai Properties, Ltd. 137,000 1,440,649 -------------- 7,035,470 -------------- Miscellaneous-1.6% Melco International Development, Ltd. 456,000 1,002,951 -------------- 19,186,567 -------------- Multi-Industry-18.4% Multi-Industry-18.4% China Resources Enterprise, Ltd. 286,000 630,262 Citic Pacific, Ltd. 285,000 834,240 Jardine Matheson Holdings, Ltd. 30,000 569,709 Lifestyle International Holdings, Ltd. 551,500 1,030,980 NWS Holdings, Ltd. 292,132 562,443 Shandong Weigao Group Medical Polymer Co., Ltd. Class H 6,980,000 4,205,679 Swire Pacific, Ltd. Class A 202,000 2,099,711 Taiwan Green Point Enterprises Co., Ltd. 441,200 980,510 TPV Technology, Ltd. 500,000 495,727 -------------- 11,409,261 -------------- 8 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Technology-13.8% Computer Peripherals-2.7% Foxconn Technology Co., Ltd. 157,000 $1,133,021 Lite-On Technology Corp. 427,000 576,418 -------------- 1,709,439 -------------- Contract Manufacturing-1.7% Hon Hai Precision Industry Co., Ltd. 177,396 1,051,164 -------------- Electronics & Components-2.0% Largan Precision Co., Ltd. 58,000 1,221,778 -------------- Semiconductor Components-7.4% Advanced Semiconductor Engineering, Inc. 669,000 592,942 Taiwan Semiconductor Manufacturing Co., Ltd. 2,367,959 4,003,933 -------------- 4,596,875 -------------- 8,579,256 -------------- Energy-10.3% International-3.2% China Petroleum and Chemical Corp. (Sinopec) Class H 1,672,000 954,780 CNOOC, Ltd. 1,210,000 1,036,369 -------------- 1,991,149 -------------- Oil Service-7.1% China Oilfield Services, Ltd. Class H 2,500,000 1,360,229 PetroChina Co., Ltd. Class H 2,666,000 3,043,348 -------------- 4,403,577 -------------- 6,394,726 -------------- Consumer Services-8.2% Cellular Communications-5.3% China Mobile (Hong Kong), Ltd. 506,500 3,274,768 -------------- Retail-General Merchandise-1.2% Esprit Holdings, Ltd. 100,000 762,352 -------------- Miscellaneous-1.7% Li & Fung, Ltd. 495,000 1,037,944 -------------- 5,075,064 -------------- Capital Goods-4.0% Electrical Equipment-2.2% AU Optronics Corp.(a) 505,740 733,936 Techtronic Industries Co., Ltd. 494,000 666,018 -------------- 1,399,954 -------------- Machinery-1.8% Harbin Power Equipment Co., Ltd. Class H 1,000,000 1,115,454 -------------- 2,515,408 -------------- Transportation-3.9% Shipping-0.3% Dalian Port (PDA) Co., Ltd.(a) 348,000 158,544 -------------- ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 9 Shares or Principal Amount Company (000) U.S. $ Value - ------------------------------------------------------------------------------- Miscellaneous-3.6% Shun Tak Holdings, Ltd. 1,310,000 $1,688,238 Sinotrans, Ltd. Class H 1,800,000 549,021 -------------- 2,237,259 -------------- 2,395,803 -------------- Consumer Staples-3.6% Food-1.9% China Mengniu Dairy Co., Ltd. 969,000 1,172,572 -------------- Retail-Food & Drug-1.7% Lianhua Supermarket Holdings, Ltd. Class H 1,000,000 1,093,395 -------------- 2,265,967 -------------- Basic Industry-3.2% Mining & Metals-3.2% China Shenhua Energy Co., Ltd. Class H 756,500 1,362,162 China Steel Corp. 802,125 644,149 -------------- 2,006,311 -------------- Health Care-0.9% Medical Products-0.9% Tong Ren Tang Technologies Co., Ltd. Class H 300,000 553,955 -------------- Total Common Stocks (cost $41,746,311) 60,382,318 -------------- WARRANT-0.7% Transportation-0.7% Miscellaneous-0.7% Shenzhen Expressway Co., Ltd. expiring 7/20/09(a)(b) (cost $449,684) 919 440,976 -------------- SHORT-TERM INVESTMENT-0.8% Time Deposit-0.8% HSBC Bank 5.19%, 8/01/06 (cost $500,000) $ 500 500,000 -------------- Total Investments-98.7% (cost $42,695,995) 61,323,294 Other assets less liabilities-1.3% 823,348 -------------- Net Assets-100% $62,146,642 ============== (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 July 31, 2006, the aggregate market value of these securities amounted to $3,394,159 or 5.5% of net assets. Glossary: GDR - Global Depositary Receipt See notes to financial statements. 10 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND STATEMENT OF ASSETS & LIABILITIES July 31, 2006 Statement of Assets & Liabilities Assets Investments in securities, at value (cost $42,695,995) $61,323,294 Foreign cash, at value (cost $479,279) 479,144 Receivable for capital stock sold 650,234 Receivable for foreign currency transactions 316,040 Interest and dividends receivable 163,197 ------------- Total assets 62,931,909 ------------- Liabilities Due to custodian 1,669 Payable for foreign currency transactions 316,093 Payable for capital stock redeemed 255,296 Advisory fee payable 38,926 Distribution fee payable 33,493 Transfer Agent payable 11,622 Accrued expenses 128,168 ------------- Total liabilities 785,267 ------------- Net Assets $62,146,642 ------------- Composition of Net Assets Capital stock, at par $3,935 Additional paid-in capital 40,349,500 Undistributed net investment income 186,089 Accumulated net realized gain on investment and foreign currency transactions 2,980,597 Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 18,626,521 ------------- $62,146,642 ============= Net Asset Value Per Share--12 billion shares of capital stock authorized, $.001 par value Shares Net Asset Class Net Assets Outstanding Value - ----------------------------------------------------------------------------- A $26,050,149 1,608,735 $16.19* - ----------------------------------------------------------------------------- B $16,696,737 1,083,189 $15.41 - ----------------------------------------------------------------------------- C $15,265,625 992,620 $15.38 - ----------------------------------------------------------------------------- Advisor $4,134,131 250,277 $16.52 - ----------------------------------------------------------------------------- * The maximum offering price per share for Class A shares was $16.91 which reflects a sales charge of 4.25%. See notes to financial statements. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 11 STATEMENT OF OPERATIONS Year Ended July 31, 2006 Investment Income Dividends (net of foreign taxes withheld of $92,959) $1,515,922 Interest 46,404 $1,562,326 Expenses Advisory fee 413,453 Distribution fee--Class A 71,483 Distribution fee--Class B 149,663 Distribution fee--Class C 138,920 Transfer agency--Class A 50,833 Transfer agency--Class B 37,600 Transfer agency--Class C 31,867 Transfer agency--Advisor Class 5,169 Custodian 150,015 Administrative 84,000 Legal 82,877 Printing 61,039 Registration 53,191 Audit 49,200 Directors' fees 15,500 Miscellaneous 14,343 ------------ Total expenses 1,409,153 Less: expenses waived by the Adviser (see Note B) (84,000) Less: expense offset arrangement (see Note B) (2,743) ------------ Net expenses 1,322,410 ------------ Net investment income 239,916 ------------ Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions Net realized gain (loss) on: Investment transactions 3,095,965 Foreign currency transactions (37,238) Net change in unrealized appreciation/depreciation of: Investments 7,405,936 Foreign currency denominated assets and liabilities (1,893) ------------ Net gain on investment and foreign currency transactions 10,462,770 ------------ Net Increase in Net Assets from Operations $10,702,686 ============ See notes to financial statements. 12 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND STATEMENT OF CHANGES IN NET ASSETS Statement of Changes in Net Assets Year Ended Year Ended July 31, July 31, 2006 2005 ================ ================ Increase in Net Assets from Operations Net investment income $239,916 $91,836 Net realized gain on investment and foreign currency transactions 3,058,727 141,166 Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities 7,404,043 8,908,325 ------------ ------------ Net increase in net assets from operations 10,702,686 9,141,327 Dividends to shareholders from Net investment income Class A (94,795) -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 (13,896) -0- Advisor Class (1,481) -0- Capital Stock Transactions Net increase (decrease) 1,096,452 (1,584,689) ------------ ------------ Total increase 11,642,227 7,556,638 Net Assets Beginning of period 50,504,415 42,947,777 ------------ ------------ End of period (including undistributed net investment income of $186,089 and $88,783, respectively) $62,146,642 $50,504,415 ================ ============== See notes to financial statements. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 13 NOTES TO FINANCIAL STATEMENTS July 31, 2006 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 the classes bear different distribution and transfer agency expenses. Each class has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 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 (other than securities listed on The NASDAQ Stock Market, Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities 14 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Notes to Financial Statements listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market, ("OTC") are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, AllianceBernstein L.P. (prior to February 24, 2006 known as Alliance Capital Management L.P.) (the "Adviser") may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer's financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 15 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 amortizes premiums and accretes discounts as adjustments to interest income. 5. Class Allocations All income earned and expenses incurred by the Fund are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Realized and unrealized gains and losses are allocated among the various share classes based on their 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. 16 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Notes to Financial Statements NOTE B Advisory Fee and Other Transactions with Affiliates Under the terms of the investment advisory agreement, the Fund pays the Adviser an advisory fee at an annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the Fund's average daily net assets. 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 year ended July 31, 2006, there were no fees waived by the Adviser. 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 year ended July 31, 2006, the Adviser voluntarily agreed to waive its fees for such services. Such waiver amounted to $84,000. The Fund compensates AllianceBernstein Investor Services, Inc. (prior to February 24, 2006 known as Alliance Global Investor Services, Inc.) ("ABIS"), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. The compensation retained by ABIS amounted to $63,321 for the year ended July 31, 2006. For the year ended July 31, 2006, the Fund's expenses were reduced by $2,743 under an expense offset arrangement with ABIS. AllianceBernstein Investments, Inc. (prior to February 24, 2006 known as AllianceBernstein Investment Research and Management, Inc.) (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Fund's shares. The Distributor has advised the Fund that it has retained front-end sales charges of $566 from the sale of Class A shares and received $50, $34,505 and $7,697 in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the year ended July 31, 2006. Brokerage commissions paid on investment transactions for the year ended July 31, 2006, amounted to $123,165, none of which was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 17 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 $2,264,122 and $1,044,648 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 year ended July 31, 2006, were as follows: Purchases Sales ============ ============ Investment securities (excluding U.S. government securities) $27,646,508 $25,766,231 U.S. government securities -0- -0- The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation (excluding foreign currency transactions) are as follows: Cost $42,796,574 --------------- Gross unrealized appreciation $19,802,079 Gross unrealized depreciation (1,275,359) --------------- Net unrealized appreciation $18,526,720 ============== 18 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Notes to Financial Statements Forward Currency Exchange Contracts The Fund may enter into forward currency exchange contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings, to hedge certain firm purchase and sales commitments denominated in foreign currencies and for investment purposes. A forward currency exchange contract is a commitment to purchase or sell a foreign currency 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 currency exchange contracts are recorded for financial, reporting purposes as unrealized appreciation and depreciation by the Fund. The Fund's custodian will place and maintain cash not available for investment or other liquid assets in a separate account of the Fund having a value at least equal to the aggregate amount of the Fund's commitments under forward 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 Each class consists of 3,000,000,000 authorized shares. Transactions in capital shares for each class were as follows: Shares Amount ----------------------------- ----------------------------- Year Ended Year Ended Year Ended Year Ended July 31, July 31, July 31, July 31, 2006 2005 2006 2005 ------------------------------------------------------------- Class A Shares sold 1,405,406 626,170 $21,132,323 $7,580,040 - ------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 7,426 -0- 92,824 -0- - ------------------------------------------------------------------------------- Shares converted from Class B 85,978 27,101 1,200,130 331,493 - ------------------------------------------------------------------------------- Shares redeemed (1,421,685) (769,641) (21,119,603) (9,194,859) - ------------------------------------------------------------------------------- Net increase (decrease) 77,125 (116,370) $1,305,674 $(1,283,326) =============================================================================== ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 19 Shares Amount ----------------------------- ----------------------------- Year Ended Year Ended Year Ended Year Ended July 31, July 31, July 31, July 31, 2006 2005 2006 2005 ------------------------------------------------------------- Class B Shares sold 300,734 203,353 $4,383,027 $2,360,867 - ------------------------------------------------------------------------------- Shares issued in reinvestment of distributions 1,074 -0- 12,829 -0- - ------------------------------------------------------------------------------- Shares converted to Class A (90,126) (28,338) (1,200,130) (331,493) - ------------------------------------------------------------------------------- Shares redeemed (297,120) (252,296) (4,129,346) (2,895,199) - ------------------------------------------------------------------------------- Net decrease (85,438) (77,281) $(933,620) $(865,825) =============================================================================== Class C Shares sold 317,295 280,653 $4,538,016 $3,264,255 - ------------------------------------------------------------------------------- Shares issued in reinvestment of distributions 848 -0- 10,120 -0- - ------------------------------------------------------------------------------- Shares redeemed (350,349) (321,552) (4,864,689) (3,708,947) - ------------------------------------------------------------------------------- Net decrease (32,206) (40,899) $(316,553) $(444,692) =============================================================================== Advisor Class Shares sold 200,813 192,036 $3,252,514 $2,350,726 - ------------------------------------------------------------------------------- Shares issued in reinvestment of dividends and distributions 408 -0- 5,191 -0- - ------------------------------------------------------------------------------- Shares redeemed (161,490) (107,707) (2,216,754) (1,341,572) - ------------------------------------------------------------------------------- Net increase 39,731 84,329 $1,040,951 $1,009,154 =============================================================================== NOTE F Risks Involved in Investing in the Fund Concentration of Risk--Investing in securities of foreign companies or foreign governments involves special risk which include changes in foreign currency exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies or of the U.S. government. The Fund has invested approximately 60% 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 20 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Notes to Financial Statements 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 year ended July 31, 2006. NOTE H Distributions to Shareholders The tax character of distributions paid during the fiscal years ended July 31, 2006 and July 31, 2005 were as follows: 2006 2005 ======== ======== Distributions paid from: Ordinary income $ 105,372 $ -0- --------- ------- Net long-term capital gains 51,539 -0- Total taxable distributions 156,911 -0- --------- ------- Total distributions paid $ 156,911 $ -0- --------- ------- As of July 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed net investment income $ 221,070 Undistributed long-term capital gain 3,081,176 Accumulated capital and other losses (34,981)(a) Unrealized appreciation/(depreciation) 18,525,942(b) ------------- Total accumulated earnings/(deficit) $ 21,793,207 ============= (a) For the year ended July 31, 2006, the Fund deferred to August 1, 2006 post-October currency losses of $34,981. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales. During the current fiscal year, permanent differences, primarily due to foreign currency transactions, resulted in a net decrease in accumulated net investment income, a net increase in accumulated net realized gain on investment and foreign currency transactions. This reclassification had no effect on net assets. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 21 NOTE I Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of New York Attorney General ("NYAG") have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized 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. 22 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Notes to Financial Statements A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, directed and oversaw an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have conducted an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. 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, 43 additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed in various federal and state courts against the Adviser and certain other defendants. The plaintiffs in such lawsuits have asserted a variety of theories for recovery including, but not limited to, violations of the Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), certain state securities laws and common law. All state court actions against the Adviser either were voluntarily dismissed or removed to federal court. On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred all actions to the United States District Court for the District of Maryland (the "Mutual Fund MDL"). On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Alliance Holding; and claims brought under ERISA by participants in the Profit Sharing Plan for Employees of the Adviser. All four complaints include substantially identical factual alle- ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 23 gations, which appear to be based in large part on the SEC Order and the NYAG Order. On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims entered into a confidential memorandum of understanding ("MOU") containing their agreement to settle these claims. The agreement will be documented by a stipulation of settlement and will be submitted for court approval at a later date. The derivative claims brought on behalf of Alliance Holding remain pending. On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commissioner") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Holding, and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The WVAG Complaint makes factual allegations generally similar to those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On August 30, 2005, the deputy commissioner of securities of the West Virginia Securities Commissioner signed a Summary Order to Cease and Desist, and Notice of Right to Hearing addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in the Commission Order and the NYAGOrder. On January 26, 2006, the Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. On April 12, 2006, respondents' petition was denied. On May 4, 2006, respondents appealed the court's determination. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the 24 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiffs' claim under Section 36(b) of the Investment Company Act. On January 11, 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court denied plaintiffs' motion for leave to file an amended complaint. On July 5, 2006, plaintiffs filed a notice of appeal. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds' shares or other adverse consequences to the AllianceBernstein Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the AllianceBernstein Mutual Funds. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 25 NOTE J Recent Accounting Pronouncement On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined. 26 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A -------------------------------------------------------------------------- Year Ended July 31, --------------------------------------------------------------- 2006 2005 2004 2003 2002 ---------------------------------------------------------------------------- Net asset value, beginning of period $13.16 $10.75 $8.82 $7.55 $8.45 Income From Investment Operations Net investment income (loss)(a)(b) .12 .07 (.04)(c) .04 .09 Net realized and unrealized gain (loss) on investment and foreign currency transactions 2.98 2.34 2.01 1.32 (.99) Net increase (decrease) in net asset value from operations 3.10 2.41 1.97 1.36 (.90) Less: Dividends and Distributions Dividends from net investment income (.06) -0- (.04) (.09) -0- Distributions from net realized gains on investment and foreign currency transactions (.01) -0- -0- -0- -0- Total dividends and distributions (.07) -0- (.04) (.09) -0- Net asset value, end of period $16.19 $13.16 $10.75 $8.82 $7.55 Total Return Total investment return based on net asset value(d) 23.79% 22.42% 22.30% 18.35% (10.65)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $26,050 $20,163 $17,719 $3,958 $2,253 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.02%(e) 2.32%(f) 2.38% 2.50% 2.50% Expenses, before waivers/ reimbursements 2.17%(e) 2.52% 2.94% 9.24% 10.82% Net investment income (loss)(b) .85%(e) .60% (.37)%(c) .58% 1.18% Portfolio turnover rate 48% 42% 89% 102% 63%
See footnote summary on page 31. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 27 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B -------------------------------------------------------------------------- Year Ended July 31, --------------------------------------------------------------- 2006 2005 2004 2003 2002 ---------------------------------------------------------------------------- Net asset value, beginning of period $12.56 $10.33 $8.52 $7.30 $8.21 Income From Investment Operations Net investment income (loss)(a)(b) -0- (.02) (.12)(c) (.01) .03 Net realized and unrealized gain (loss) on investment and foreign currency transactions 2.86 2.25 1.95 1.27 (.94) Net increase (decrease) in net asset value from operations 2.86 2.23 1.83 1.26 (.91) Less: Dividends and Distributions Dividends from net investment income -0- -0- (.02) (.04) -0- Distributions from net realized gains on investment and foreign currency transactions (.01) -0- -0- -0- -0- Total dividends and distributions (.01) -0- (.02) (.04) -0- Net asset value, end of period $15.41 $12.56 $10.33 $8.52 $7.30 Total Return Total investment return based on net asset value(d) 22.84% 21.59% 21.41% 17.32% (11.08)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $16,697 $14,676 $12,872 $4,632 $3,266 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.79%(e) 3.04%(f) 3.18% 3.20% 3.20% Expenses, before waivers/ reimbursements 2.94%(e) 3.24% 3.79% 9.98% 11.56% Net investment income (loss)(b) (.02)%(e) (.13)% (1.11)%(c) (.11)% .41% Portfolio turnover rate 48% 42% 89% 102% 63%
See footnote summary on page 31. 28 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C -------------------------------------------------------------------------- Year Ended July 31, --------------------------------------------------------------- 2006 2005 2004 2003 2002 ---------------------------------------------------------------------------- Net asset value, beginning of period $12.53 $10.30 $8.50 $7.30 $8.21 Income From Investment Operations Net investment income (loss)(a)(b) -0- (.01) (.12)(c) (.01) .04 Net realized and unrealized gain (loss) on investment and foreign currency transactions 2.86 2.24 1.94 1.25 (.95) Net increase (decrease) in net asset value from operations 2.86 2.23 1.82 1.24 (.91) Less: Dividends and Distributions Dividends from net investment income -0- -0- (.02) (.04) -0-- Distributions from net realized gains on investment and foreign currency transactions (.01) -0- -0- -0- -0- Total dividends and distributions (.01) -0- (.02) (.04) -0- Net asset value, end of period $15.38 $12.53 $10.30 $8.50 $7.30 Total Return Total investment return based on net asset value(d) 22.89% 21.65% 21.34% 17.05% (11.08)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $15,266 $12,838 $10,978 $4,856 $1,302 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.75%(e) 3.02%(f) 3.15% 3.20% 3.20% Expenses, before waivers/ reimbursements 2.91%(e) 3.22% 3.75% 10.19% 11.28% Net investment income (loss)(b) .02%(e) (.10)% (1.07)%(c) (.15)% .50% Portfolio turnover rate 48% 42% 89% 102% 63%
See footnote summary on page 31. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 29 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class --------------------------------------------------------------------------- Year Ended July 31, ------------------------------------------------------------ 2006 2005 2004 2003 2002 --------------------------------------------------------------------------- Net asset value, beginning of period $13.43 $10.93 $8.94 $7.66 $8.53 Income From Investment Operations Net investment income (loss)(a)(b) .22 .07 (.02)(c) .08 .10 Net realized and unrealized gain (loss) on investment and foreign currency transactions 2.98 2.43 2.05 1.31 (.97) Net increase (decrease) in net asset value from operations 3.20 2.50 2.03 1.39 (.87) Less: Dividends and Distributions Dividends from net investment income (.10) -0- (.04) (.11) -0- Distributions from net realized gains on investment and foreign currency transactions (.01) -0- -0- -0- -0- Total dividends and distributions (.11) -0- (.04) (.11) -0- Net asset value, end of period $16.52 $13.43 $10.93 $8.94 $7.66 Total Return Total investment return based on net asset value(d) 24.11% 22.87% 22.72% 18.55% (10.20)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $4,134 $2,827 $1,379 $309 $196 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.74%(e) 2.00%(f) 2.14% 2.20% 2.20% Expenses, before waivers/ reimbursements 1.90%(e) 2.20% 2.71% 8.69% 10.57% Net investment income (loss)(b) 1.54%(e) .55% (.13)%(c) 1.14% 1.28% Portfolio turnover rate 48% 42% 89% 102% 63%
See footnote summary on page 31. 30 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Financial Highlights (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) The ratio includes expenses attributable to estimated costs of proxy solicitation. (f) Ratios reflect expenses grossed up for expense offset arrangement with the Transfer Agent. For the period shown below, the net expense ratios were as follows: Year Ended July 31, 2005 --------------- Class A 2.31% Class B 3.04% Class C 3.02% Advisor Class 2.00% ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 31 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of AllianceBernstein Greater China '97 Fund, Inc. We have audited the accompanying statement of assets and liabilities of AllianceBernstein Greater China '97 Fund, Inc., including the portfolio of investments, as of July 31, 2006, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of July 31, 2006, by correspondence with the custodian and others. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AllianceBernstein Greater China '97 Fund, Inc. at July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP New York, New York September 8, 2006 32 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND TAX INFORMATION (unaudited) Additional Information For the fiscal year ended July 31, 2006, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates an amount of $103,219 as qualified dividend income, which is taxed at a maximum rate of 15%. The Fund intends to make an election under the Internal Revenue Code Section 853 to pass through foreign taxes paid by the Fund to its shareholders. The total amount of foreign taxes that may be passed through to shareholders for the fiscal year ended July 31, 2006 is $92,959. The foreign source of income for information reporting purposes is $1,608,881. The information necessary to complete your income tax returns will be included with your Form 1099-DIV which will be sent to you separately in January 2007. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 33 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 Edward D. Baker, III, Senior Vice President Manish Singhai(2), Vice President Vernon Yu(2), Vice President Emilie D. Wrapp, Secretary Joseph J. Mantineo, 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. 34 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND MANAGEMENT OF THE FUND Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund's Directors is set forth below.
PORTFOLIOS PRINCIPAL IN FUND OTHER NAME, ADDRESS, OCCUPATION(S) COMPLEX DIRECTORSHIPS DATE OF BIRTH, DURING PAST OVERSEEN BY HELD BY (YEARS ELECTED*) 5 YEARS DIRECTOR DIRECTOR - --------------------------------------------------------------------------------------------------------------------------- INTERESTED DIRECTOR Chairman of the Board Investment Adviser and an 113 None William H. Foulk, Jr., # + Independent Consultant. He P.O. Box 5060 was formerly Senior Manager Greenwich, CT of Barrett Associates, Inc., a 06831-0505 registered investment adviser, 9/7/32 with which he had been (1997) associated since prior to 2001. He was formerly Deputy Comptroller and Chief Investment Officer of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings. David H. Dievler, # Independent Consultant. Until 112 None P.O. Box 167 December 1994, he was Senior Spring Lake, NJ 07762 Vice President of AllianceBernstein 10/23/29 Corporation ("AB Corp.") responsible (1997) for mutual fund administration. Prior to joining AB Corp. in 1984, he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that, he was a Senior Manager at Price Waterhouse & Co. Member of the American Institute of Certified Public Accountants since 1953.
* There is no stated term of office for the Fund's Directors. # Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. + Member of the Fair Value Pricing Committee. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 35 Officer Information Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* AND POSITION(S) PRINCIPAL OCCUPATION DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS** - --------------------------------------------------------------------------------------------------------------------------- Marc O. Mayer, ** President and Chief Executive Vice President of the Adviser 10/2/57 Executive Officer since 2001 and Executive Managing Director of AllianceBernstein Investments, Inc. ("ABI") since 2003; prior thereto, he was head of AllianceBernstein Institutional Investments, a unit of the Adviser from 2001-2003. Prior thereto, Chief Executive Officer of Sanford C. Bernstein & Co., LLC (institutional research and brokerage arm of Bernstein & Co. LLC) ("SCB & Co.") and its predecessor since prior to 2001. He is a Director of SCB Partners, Inc. and SCB, Inc. Philip L. Kirstein, Senior Vice President Senior Vice President and Independent 5/29/45 and Independent Compliance Officer of the AllianceBernstein Funds, Compliance Officer with which he has been associated since October 2004. Prior thereto, he was Of Counsel to Kirkpatrick & Lockhart, LLP from October 2003 to October 2004, and General Counsel of Merrill Lynch Investment Managers, L.P. since prior to 2001 until March 2003. Edward D. Baker, III, Senior Vice President Senior Vice President and Chief Investment Officer-- 2/4/1951 Emerging Markets of the Adviser,** with which he has been associated since prior to 2001. Manish Singhai, Vice President Vice President of the Adviser,** and an Emerging Markets 10/21/1970 Telecoms and Utility Analyst and Portfolio Manager since prior to 2001. Vernon Yu, Vice President Vice President and Research Analyst of AllianceBernstein/ 1/4/1969 Singapore** since January 2005. Prior thereto, he was a Senior Investment Manager with HSBC Asset Management since prior to 2001. Emilie D. Wrapp, Secretary Senior Vice President, Assistant General Counsel and 11/13/1955 Assistant Secretary of ABI,** with which she has been associated since prior to 2001.
36 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND Management of the Fund
NAME, ADDRESS* AND POSITION(S) PRINCIPAL OCCUPATION DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS** - --------------------------------------------------------------------------------------------------------------------------- Joseph J. Mantineo, Treasurer and Chief Senior Vice President of ABIS,** with 3/28/1959 Financial Officer which he has been associated since prior to 2001. Vincent S. Noto, Controller Vice President of ABIS**, with which 12/14/64 he has been associated since prior to 2001.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas, New York, NY 10105. ** The Adviser, ABI, ABIS, AllianceBernstein Singapore, and SCB &Co. are affiliates of the Fund. The Fund's Statement of Additional Information ("SAI") has additional information about the Fund's Directors and Officers and is available without charge upon request. Contact your financial representative or AllianceBernstein at 1-800-227-4618 for a free prospectus or SAI. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 37 Information Regarding the Review and Approval of the Fund's Advisory Agreement The Fund's disinterested directors (the "directors") unanimously approved the continuance of the Advisory Agreement between the Fund and the Adviser at a meeting held on June 14, 2006. In preparation for the meeting, the directors had requested from the Adviser and received and evaluated extensive materials, including performance and expense information for other investment companies with similar investment objectives as the Fund derived from data compiled by Lipper Inc. ("Lipper"), which is not affiliated with the Adviser. The directors also reviewed an independent evaluation from the Fund's Senior Officer (who is also the Fund's Independent Compliance Officer) of the reasonableness of the advisory fees in the Fund's Advisory Agreement (as contemplated by the September 2004 Assurance of Discontinuance between the Adviser and the New York Attorney General) wherein the Senior Officer concluded that such fees were reasonable. In addition, the directors received a presentation from the Adviser and had an opportunity to ask representatives of the Adviser various questions relevant to the proposed approval. The directors noted that the Senior Officer's evaluation considered the following factors: management fees charged to institutional and other clients of the Adviser for like services; management fees charged by other mutual fund companies for like services; cost to the Adviser and its affiliates of supplying services pursuant to the Advisory Agreement, excluding any intra-corporate profit; profit margins of the Adviser and its affiliates from supplying such services; possible economies of scale as the Fund grows larger; and nature and quality of the Adviser's services including the performance of the Fund. Prior to voting, the directors reviewed the proposed continuance of the Advisory Agreement with management and with experienced counsel who are independent of the Adviser and received a memorandum from such counsel discussing the legal standards for their consideration of the proposed continuance. The directors also discussed the proposed continuance in two private sessions at which only the directors, their independent counsel and the Fund's Independent Compliance Officer were present. In reaching their determinations relating to continuance of the Advisory Agreement, the directors considered all factors they believed relevant, including the following: 1. information comparing the performance of the Fund to other investment companies with similar investment objectives and to an index; 2. the nature, extent and quality of investment, compliance, administrative and other services rendered by the Adviser; 38 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND 3. payments received by the Adviser from all sources in respect of the Fund and all investment companies in the AllianceBernstein Funds complex; 4. the costs borne by, and profitability of, the Adviser and its affiliates in providing services to the Fund and to all investment companies in the AllianceBernstein Funds complex; 5. comparative fee and expense data for the Fund and other investment companies with similar investment objectives; 6. the extent to which economies of scale would be realized to the extent the Fund grows and whether fee levels reflect any economies of scale for the benefit of investors; 7. the Adviser's policies and practices regarding allocation of portfolio transactions of the Fund, including the extent to which the Adviser benefits from soft dollar arrangements; 8. information about "revenue sharing" arrangements that the Adviser has entered into in respect of the Fund; 9. portfolio turnover rates for the Fund compared to other investment companies with similar investment objectives; 10. fall-out benefits which the Adviser and its affiliates receive from their relationships with the Fund; 11. the Adviser's representation that there are no institutional products managed by the Adviser which have a substantially similar investment style as the Fund; 12. the Senior Officer's evaluation of the reasonableness of the fee payable to the Adviser in the Advisory Agreement; 13. the professional experience and qualifications of the Fund's portfolio management team and other senior personnel of the Adviser; and 14. the terms of the Advisory Agreement. The directors also considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser's integrity and competence ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 39 they have gained from that experience and the Adviser's responsiveness to concerns raised by them in the past, including the Adviser's willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. In their deliberations, the directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors reaching their determinations to approve the continuance of the Advisory Agreement (including their determinations that the Adviser should continue to be the investment adviser for the Fund, and that the fees payable to the Adviser pursuant to the Advisory Agreement are appropriate) were separately discussed by the directors. Nature, extent and quality of services provided by the Adviser The directors noted that, under the Advisory Agreement, the Adviser, subject to the control of the directors, administers the Fund's business and other affairs. The Adviser manages the investment of the assets of the Fund, including making purchases and sales of portfolio securities consistent with the Fund's investment objective and policies. Under the Advisory Agreement, the Adviser also provides the Fund with such office space, administrative and other services (exclusive of, and in addition to, any such services provided by any others retained by the Fund) and executive and other personnel as are necessary for the Fund's operations. The Adviser pays all of the compensation of directors of the Fund who are affiliated persons of the Adviser and of the officers of the Fund. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost of certain clerical, accounting, administrative and other services provided at the Fund's request by employees of the Adviser or its affiliates. Requests for these "at no more than cost" reimbursements are approved by the directors on a quarterly basis and (to the extent requested and paid) result in a higher rate of total compensation from the Fund to the Adviser than the fee rates stated in the Fund's Advisory Agreement. The directors noted that the Adviser had waived reimbursement payments in recent periods from the Fund in light of the expense caps currently in effect for the Fund. 40 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement and noted that the scope of services provided by advisers of funds had expanded over time as a result of regulatory and other developments. The directors noted, for example, that the Adviser is responsible for maintaining and monitoring its own and, to varying degrees, the Fund's compliance programs, and that these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The directors considered the quality of the in-house investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The quality of administrative and other services, including the Adviser's role in coordinating the activities of the Fund's other service providers, also were considered. The directors also considered the Adviser's response to recent regulatory compliance issues affecting a number of the investment companies in the AllianceBernstein Funds complex. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement. Costs of Services Provided and Profitability to the Adviser The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2004 and 2005 that had been prepared with an updated expense allocation methodology. The directors noted that the updated methodology differed in various respects from the methodology used in prior years. The directors reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data, and noted the Adviser's representation to them that it believed that the methods of allocation used in preparing the profitability information were reasonable and appropriate and that the Adviser had previously discussed with the directors that there is no generally accepted allocation methodology for information of this type. The directors recognized that it is difficult to make comparisons of profitability from fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser's capital structure and cost of capital. In considering profitability information, the directors considered the effect of fall-out benefits on the Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser has entered into with certain entities that distribute shares of the Fund. The directors focused on the profitability of the Adviser's relationship with the Fund before taxes and distribution expenses. The directors noted that the Adviser's relationship with the Fund was not profitable to it. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 41 Fall-Out Benefits The directors considered that the Adviser benefits from soft dollar arrangements whereby it receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis. They noted that the Adviser makes presentations to the directors regarding its trading practices and brokerage allocation policies, including its policies with respect to soft dollar arrangements, from time to time and had made a special presentation to the directors in May 2006 on this subject. The directors noted that the Adviser has represented to them that all of its soft dollar arrangements are consistent with applicable legal requirements including the achievement of best execution. The directors also considered that the Distributor, which is a wholly-owned subsidiary of the Adviser, receives 12b-1 fees from the Fund in respect of classes of shares of the Fund that are subject to the Fund's 12b-1 plan and retains a portion of such 12b-1 fees, and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The directors also noted that certain affiliates of the Adviser distribute shares of the Fund and receive compensation in that connection, that a subsidiary of the Adviser provides transfer agency services to the Fund and receives compensation from the Fund for such services, and that brokers who are affiliated with the Adviser are permitted to execute brokerage transactions for the Fund subject to satisfaction of certain requirements and receive brokerage commissions from the Fund and liquidity rebates from electronic communication networks ("ECNs") in connection with certain of such transactions. The directors noted that the Adviser had made a recent presentation to the directors detailing liquidity rebates that Sanford C. Bernstein & Co. LLC receives in respect of transactions effected through ECNs. The directors recognized that the Adviser's profitability would be somewhat lower if it did not receive research for soft dollars or if the Adviser's affiliates did not receive the other benefits described above. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund. Investment Results In addition to the information reviewed by the directors in connection with the meeting, the directors receive detailed comparative performance information for the Fund at each regular Board meeting during the year. At the meeting, the directors reviewed information prepared from a report prepared by Lipper showing performance for Class A shares of the Fund as compared to a group of 4 to 3 funds (depending on the year) in its Lipper category selected by Lipper (the "Performance Group") and as compared to a universe of 7 to 5 funds (depending on the year) in its Lipper category selected by Lipper (the 42 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND "Performance Universe") for periods ended December 31, 2005 over the 1-, 3- and 5-year periods. The directors also reviewed information prepared by the Adviser showing performance of the Class A Shares of the Fund as compared to the Morgan Stanley Capital International Golden Dragon Index (Net) (the "Index") for periods ended December 31, 2005 over the 1-, 3- and 5-year periods. The directors noted that in the Performance Group comparison the Fund was 3 out of 4 in the 1-year period, 1 out of 3 in the 3-year period and 3 out of 3 in the 5-year period, and in the Performance Universe comparison the Fund was in the 3rd quintile in the 1-year period, 2nd quintile in the 3-year period and 4th quintile in the 5-year period. The comparative information showed that the Fund underperformed the Index in the 1-year period and outperformed the Index in the 3- and 5-year periods. Comparative information was not available for the since inception period (September 1997 inception). Based on their review, the directors concluded that the Fund's relative performance over time was satisfactory. Advisory Fees and Other Expenses The directors considered the advisory fee rate paid by the Fund to the Adviser and information prepared by Lipper concerning fee rates paid by other funds in the same Lipper category as the Fund at a common asset level. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors reviewed information in the Adviser's Form ADV and noted that it charged institutional clients lower fees for advising comparably sized accounts using strategies that differ from those of the Fund but which involve investments in securities of the same type that the Fund invests in (i.e., equity securities). They had previously received an oral presentation from the Adviser that supplemented such information. The Adviser reviewed with the directors the significant differences in the scope of services it provides to institutional clients and to the Fund. For example, the Advisory Agreement requires the Adviser to provide, in addition to investment advice, office facilities and officers (including officers to provide required certifications). The Adviser also coordinates the provision of services to the Fund by non-affiliated service providers and is responsible for the compensation of the Fund's Independent Compliance Officer and certain related expenses. The provision of these non-advisory services involves costs and exposure to liability. The Adviser explained that many of these services normally are not provided to non-investment company clients, and that fees charged to the Fund reflect the costs and risks of the additional obligations. The Adviser also noted that since the Fund is constantly issuing and redeeming its shares, it is more difficult to manage than an institutional account, where the assets are relatively stable. In light of these facts, the directors did not place significant weight on these fee comparisons. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 43 The directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of comparable funds and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the subject Fund. The Class A expense ratio of the Fund was based on the Fund's latest fiscal year expense ratio. The directors recognized that the expense ratio information for the Fund potentially reflected on the Adviser's provision of services, as the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that it was likely that the expense ratios of some funds in the Fund's Lipper category also were lowered by waivers or reimbursements by those funds' investment advisers, which in some cases were voluntary and perhaps temporary. The directors noted that the Fund's at approximate current size contractual effective fee rate of 75 basis points was significantly lower than the Expense Group median and that in the Fund's latest fiscal year the administrative expense reimbursement of 18 basis points had been waived by the Adviser. The directors also noted that the Fund's total expense ratio, which had been capped by the Adviser (although the expense ratio was currently somewhat lower than the cap) was materially higher than the Expense Group median and somewhat higher than the Expense Universe median. The directors noted that the Fund's expense ratio was affected by its relatively small size (the Fund's net asset value was less than $50 million as of December 31, 2005). The directors further noted that the Adviser had recently reviewed with them steps being taken that are intended to reduce expenses of the AllianceBernstein Funds. The directors concluded that the Fund's expense ratio was acceptable. Economies of Scale The directors noted that the advisory fee schedule for the Fund contains breakpoints so that, if assets were to increase over the breakpoint levels, the fee rates would be reduced on the incremental assets. The directors also considered a presentation by an independent consultant discussing economies of scale issues in the mutual fund industry. The directors believe that economies of scale are realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no uniform methodology for establishing breakpoints that give effect to fund-specific services provided by the Adviser and to the economies of scale that the Adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect the Fund's operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. Depending on the age and size of a particular fund and its adviser's cost structure, different conclusions can be drawn as to whether there are 44 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND economies of scale to be realized at any particular level of assets, notwithstanding the intuitive conclusion that such economies exist, or will be realized at some level of total assets. Moreover, because different advisers have different cost structures and service models, it is difficult to draw meaningful conclusions from the comparison of a fund's advisory fee breakpoints with those of comparable funds. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund's breakpoint arrangements would result in a sharing of economies of scale in the event of a very significant increase in the Fund's net assets. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 45 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1) The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the "Adviser") and AllianceBernstein Greater China '97 Fund, Inc. (the "Fund"), prepared by Philip L. Kirstein, the Senior Officer of the Fund for the Directors of the Fund, as required by an August 2004 agreement between the Adviser and the New York State Attorney General (the "NYAG").(2) The Senior Officer's evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Directors of the Fund to perform its duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees proposed to be paid by the Fund which was provided to the Directors in connection with their review of the proposed approval of the continuance of the Investment Advisory Agreement. The Senior Officer's evaluation considered the following factors: 1. Management fees charged to institutional and other clients of the Adviser for like services; 2. Management fees charged by other mutual fund companies for like services; 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit; 4. Profit margins of the Adviser and its affiliates from supplying such services; 5. Possible economies of scale as the Fund grows larger; and 6. Nature and quality of the Adviser's services including the performance of the Fund. 1 It should be noted that the information in the fee summary was completed on June 2, 2006 and presented to the Board of Directors on June 14, 2006 in accordance with the Assurance of Discontinuance between the NYAG and the Adviser. It also should be noted that references in the fee summary pertaining to performance and expense ratios refer to Class A shares of the Fund. 2 Future references to the Fund do not include "AllianceBernstein." 46 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND FUND ADVISORY FEES, EXPENSE CAPS, REIMBURSEMENTS & RATIOS The Adviser proposed that the Fund pay the advisory fee set forth in the table below for receiving the services to be provided pursuant to the Investment Advisory Agreement. The fee schedule below, implemented in January 2004 in connection with the Adviser's settlement with the NYAG in December 2003, is based on a master schedule that contemplates eight categories of funds with almost all funds in each category having the same advisory fee schedule.(3) Net Assets Advisory Fee 02/28/06 Based on % of Average Category (million) Daily Net Assets Fund - ------------------------------------------------------------------------------ Specialty $58.2 75 bp on 1st $2.5 billion Greater China '97 65 bp on next $2.5 billion Fund, Inc. 60 bp on the balance The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund. Indicated below is the reimbursement amount, which the Adviser received from the Fund in the Fund's most recently completed fiscal year, expressed in dollars and as a percentage of average daily net assets: As a % of Average Fund Amount Daily Net Assets - ------------------------------------------------------------------------------- Greater China '97 Fund, Inc.(4) $84,000 0.18% The Adviser agreed to waive that portion of its management fees and/or reimburse the Fund for that portion of its total operating expenses to the degree necessary to limit the Fund's expense ratios to the amounts set forth below for the Fund's fiscal year. The waiver is terminable by the Adviser at the end of the Fund's fiscal year upon at least 60 days written notice prior to the termination date of the undertaking. It should be noted that the Fund was operating below its expense cap as of its most recent semi-annual period; accordingly the expense limitation undertaking of the Fund was of no effect. Expense Cap Pursuant to Gross Expense Limitation Expense Fiscal Fund Undertaking Ratio(5) Year End - ---------------------------------------------------------------------------- Greater China '97 Class A-2.50% 2.47% July 31 (ratios Fund, Inc. Class B-3.20% 3.19% as of January Class C-3.20% 3.17% 31, 2006) Adv. Class-2.20% 2.15% 3 Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser's settlement with the NYAG. 4 The Adviser waived this expense reimbursement by the Fund. 5 Annualized. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 47 I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS The management fees charged to investment companies which the Adviser manages and sponsors are normally higher than those charged to similar sized institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Fund that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the Fund's third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative, legal and compliance requirements for the Fund are more costly than those for institutional assets due to the greater complexities and time required for investment companies, although as previously noted, a portion of these expenses is reimbursed by the Fund to the Adviser. Also, retail mutual funds managed by the Adviser are widely held. Servicing the Fund's investors is more time consuming and labor intensive compared to institutional clients since the Adviser needs to communicate with a more extensive network of financial intermediaries and shareholders. In addition, managing the cash flow of an investment company may be more difficult than that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if the Fund is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry. Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, it is worth considering information regarding the advisory fees charged to institutional accounts with a substantially similar investment style as the Fund. It should be noted that the Adviser has indicated that with respect to institutional accounts with assets greater than $300 million, it will negotiate a fee schedule. Discounts that are negotiated vary based upon each client relationship. However, with respect to the Fund, the Adviser represented that there is no institutional product that has a substantially similar investment style as the Fund. The Adviser also manages and sponsors retail mutual funds, which are organized in jurisdictions outside the United States, generally Luxembourg and Japan, and sold to non-United States resident investors. The Adviser charges the following 48 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND "all-in" fee(6) for the Luxembourg fund that has a similar investment strategy as the Fund: Fund Fee - ------------------------------------------------------------------------------- Greater China 2.05% The Adviser represented that it does not sub-advise any registered investment company with a substantially similar investment style as the Fund. II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the Adviser, compared the fees charged to the Fund with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included the Fund's ranking with respect to the proposed management fee relative to the Lipper group median at the approximate current asset level of the Fund.(7) Effective Lipper Management Group Fund Fee(8) Median Rank - ------------------------------------------------------------------------------- Greater China '97 Fund, Inc. 0.750 1.100 1/4 Lipper also analyzed the total expense ratio of the Fund in comparison to its Lipper Expense Group(9) and Lipper Expense Universe.(10) Lipper describes a Lipper Expense Group as a representative sample of comparable funds and a 6 The "all-in" fee shown is for the class A shares of Greater China. This includes a fee for investment advisory services and a separate fee for distribution related services. 7 The effective management fee is calculated by Lipper using the Fund's contractual management fee rate at a hypothetical asset level. The hypothetical asset level is based on the combined net assets of all classes of the Fund, rounded up to the next $25 million. Lipper's total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of "1" means that the Fund has the lowest effective fee rate in the Lipper peer group. 8 The effective management fee rate for the Fund does not reflect the aforementioned payments (waived) made by the Fund to the Adviser for certain clerical, legal, accounting, administrative, and other services. In addition, the effective management fee does not reflect any waivers or expense reimbursements for expense caps that effectively reduce the contractual fee rate. 9 Lipper uses the following criteria in screening funds to be included in the Fund's expense group: fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes. A Lipper Expense Group will typically consist of seven to twenty funds. 10 Except for asset (size) comparability, Lipper uses the same criteria for selecting a Lipper Expense Group when selecting a Lipper Expense Universe. Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the same adviser to be represented by more than just one fund. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 49 Lipper Expense Universe as a broader group, consisting of all funds in the same investment classification/objective with a similar load type as the subject Fund. The result of that analysis is set forth below: Expense Lipper Lipper Lipper Lipper Ratio Group Group Universe Universe Fund (%)(11) Median (%) Rank Median (%) Rank - ------------------------------------------------------------------------------- Greater China '97 Fund, Inc. 2.320 2.064 4/4 2.187 5/6 Based on this analysis, the Fund has a more favorable ranking on a management fee basis than it does on a total expense ratio basis. Additional expense information was obtained from Morningstar, Inc. since the Fund has a low number of peers in its Lipper Expense Group. Morningstar, Inc., an analytical service not affiliated with the Adviser, publishes the Morningstar Mutual Fund Report, which includes information with regards to the Fund's expenses in comparison to its category:(12) Total Expense Ratios (%)(13) Fund Greater China '97 Fund, Inc. Category Pacific / Asia ex-Japan Stock 2001 2002 2003 2004 2005 - ------------------------------------------------------------------------------- Fund 2.51 2.50 2.50 2.38 2.31 Category Average 2.28 2.38 2.30 2.15 2.11 Difference 0.23 0.12 0.20 0.23 0.20 Based on the information obtained by Morningstar, the Fund's most recent total expense ratio is higher than its category average, Pacific / Asia ex-Japan Stock. It should be noted that the funds included in the Pacific / Asia ex-Japan Stock category can invest in any in any Asian nations except Japan, and they can also invest in New Zealand and Australia. Most of these funds focus on export-oriented nations such as Hong Kong, Singapore, Taiwan and Korea. This is significantly different from the geographic scope of the Fund's investment strategy, which restricts the Fund to investing in stocks of China, Hong Kong and Taiwan. 11 The total expense ratio shown is for the Fund's Class A shares. 12 Morningstar's category may include funds with different load types and significantly different asset sizes, which may cause any comparison between the category and the Fund to be less meaningful than that of the Fund and its respective Lipper Expense Group. 13 Fund and category expense ratios provided are for the fiscal year end. 50 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. A consultant was retained by the Senior Officer to work with the Adviser's personnel to align the Adviser's two profitability reporting systems. The alignment, which now has been completed, allows the Adviser's management and the Directors to receive consistent presentations of the financial results and profitability although the two profitability reporting systems operate independently. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The profitability information for the Fund prepared by the Adviser for the Board of Directors was reviewed by the Senior Officer. The Adviser's profitability from providing investment advisory services to the Fund decreased during calendar year 2005 relative to 2004. In addition to the Adviser's direct profits from managing the Fund, certain of the Adviser's affiliates have business relationships with the Fund and may earn a profit from providing other services to the Fund. The courts have referred to this type of business opportunity as "fall-out benefits" to the Adviser and indicated that they should be factored into the evaluation of the total relationship between the Fund and the Adviser. Neither case law nor common business practice precludes the Adviser's affiliates from earning a reasonable profit on this type of relationship. These affiliates provide transfer agent, distribution, and brokerage related services to the Fund and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC") and commissions for providing brokerage services. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. Additional information regarding distribution related fees can be found in the prospectus of the Fund. AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is the Fund's principal underwriter. ABI and the Adviser have disclosed in the Fund's prospectus that they may make revenue sharing payments from their own resources, in addition to resources derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Fund. In 2005, ABI paid approximately 0.042% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $18.0 million for distribution services and educational support (revenue sharing payments). For 2006, it is anticipated, ABI will pay approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $17.5 million.(14) 14 ABI currently inserts the "Advance" in quarterly account statements and pays the incremental costs associated with the mailing. The incremental cost is less than what an "independent mailing" would cost. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 51 After payments to third party intermediaries, ABI retained the following amounts for Class A front-end load sales charges from sales of the Fund's Class A shares during the Fund's most recently completed fiscal year: Fund Amount Received - ------------------------------------------------------------------------------- Greater China '97 Fund, Inc. $5,775 ABI received the amounts set forth below in Rule 12b-1 fees and CDSC for the Fund during the Fund's most recent fiscal year: 12b-1 Fees Fund Received CDSC Received - ------------------------------------------------------------------------------- Greater China '97 Fund, Inc. $316,566 $ 38,826 Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. ("ABIS"), the affiliated transfer agent, are based on the level of the network account and the class of share held by the account. ABIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. ABIS' after-tax profitability increased in 2005 in comparison to 2004. ABIS received the following fee from the Fund in the most recent fiscal year: Fund ABIS Fee(15) - ------------------------------------------------------------------------------- Greater China '97 Fund, Inc. $ 65,575 The Fund may effect brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB") and/or its U.K. affiliate, Sanford C. Bernstein Limited ("SCB Ltd."), collectively "SCB," and pay commissions for such transactions during the Fund's fiscal year. The Adviser represented that SCB's profitability from any business conducted with the Fund would be comparable to the profitability of SCB's dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks ("ECNs") derived from trading for its clients. These credits and charges are not being passed on to any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for the Adviser's clients. These soft dollar benefits reduce the Adviser's cost of doing business and increase its profitability. 15 The fee disclosed is net of any waivers or any other expense offset arrangement with ABIS. An expense offset is created by the interest earned on the positive cash balance that occurs within the transfer agent account as there is a one day lag with regards to money movement from the shareholder's account to the transfer agent's account and then from the transfer agent's account to the Fund's account. 52 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule in the Investment Advisory Agreement reflect a sharing of economies of scale to the extent the breakpoints are reached. Based on some of the professional literature that has considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide improved services, there may be a sharing of economies of scale without a reduction in advisory fees. An independent consultant made a presentation to the Board of Directors and the Senior Officer regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to lack of cost data, researchers had to infer facts about the costs from the behavior of fund expenses; there was a lack of consensus among researchers as to whether economies of scale were being passed on to the shareholders. It is contemplated that additional work will be performed to determine if the benefits of economies of scale or scope are being passed to shareholders by the Adviser. In the meantime, it is clear that to the extent a fund's assets exceeds its initial breakpoint its shareholders benefit from a lower fee rate. VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF THE FUND. With assets under management of $635 billion as of April 30, 2006, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Fund. The information below, which was prepared by Lipper, shows the 1, 3, and 5 year performance ranking of the Fund(16) relative to its Lipper Performance Group(17) and Lipper Performance Universe(18) for the periods ended December 31, 2005: Greater China '97 Fund, Inc. Group Universe - ------------------------------------------------------------------------------- 1 year 3/4 4/7 3 year 1/3 2/5 5 year 3/3 4/5 16 The performance rankings are for the Class A shares of the Fund. 17 The Lipper Performance Group is identical to the Lipper Expense Group. 18 For the Lipper Performance Universe, Lipper included the Fund and all of the funds of the same Lipper Classification/Objective and load type, regardless of asset size. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 53 Set forth below are the 1, 3, 5 year and since inception performance returns of the Fund (in bold)(19) versus its benchmark:(20) Periods Ending December 31, 2005 Annualized Performance - ------------------------------------------------------------------------------- 1 3 5 Since Fund Year Year Year Inception - ------------------------------------------------------------------------------- Greater China '97 Fund, Inc. 5.14 25.47 8.08 3.82 MSCI Golden Dragon Index (Net) 9.86 22.95 5.86 N/A CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed fee for the Fund is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of the Fund is based on an evaluation of all of these factors and no single factor was dispositive. Dated: July 17, 2006 19 The performance returns shown are for the Class A shares of the Fund. 20 The Adviser provided Fund and benchmark performance return information for periods through December 31, 2005 in order to maintain consistency with Lipper's performance rankings in the analysis. 54 . ALLIANCEBERNSTEIN GREATER CHINA '97 FUND THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS ALLIANCEBERNSTEIN FAMILY OF FUNDS AllianceBernstein Family of Funds - -------------------------------------------- Wealth Strategies Funds - -------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy - -------------------------------------------- Blended Style Funds - -------------------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio - -------------------------------------------- Growth Funds - -------------------------------------------- Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund Small Cap Growth Portfolio Global & International Global Health Care Fund Global Research Growth Fund Global Technology Fund Greater China '97 Fund International Growth Fund International Research Growth Fund - -------------------------------------------- Value Funds - -------------------------------------------- Domestic Balanced Shares Focused Growth & Income Fund Growth & Income Fund Real Estate Investment Fund Small/Mid-Cap Value Fund Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund - -------------------------------------------- Taxable Bond Funds - -------------------------------------------- Global Government Income Trust* Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Intermediate Bond Portfolio* Short Duration Portfolio U.S. Government Portfolio - -------------------------------------------- Municipal Bond Funds - -------------------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts Virginia - -------------------------------------------- Intermediate Municipal Bond Funds - -------------------------------------------- Intermediate California Intermediate Diversified Intermediate New York - -------------------------------------------- Closed-End Funds - -------------------------------------------- All-Market Advantage Fund 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 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. 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 website 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 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. ALLIANCEBERNSTEIN GREATER CHINA '97 FUND . 55 NOTES 56 . 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-0151-0706 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant's code of ethics is filed herewith as Exhibit 12(a)(1). (b) During the period covered by this report, no material amendments were made to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors has determined that independent directors David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial experts. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) - (c) The following table sets forth the aggregate fees billed by the independent registered public accounting firm Ernst & Young LLP, for the Fund's last two fiscal years for professional services rendered for: (i) the audit of the Fund's annual financial statements included in the Fund's annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Fund's financial statements and are not reported under (i), which include advice and education related to accounting and auditing issues and quarterly press release review (for those Funds which issue press releases), and preferred stock maintenance testing (for those Funds that issue preferred stock); and (iii) tax compliance, tax advice and tax return preparation. Audit-Related Audit Fees Fees Tax Fees - ------------------------------------------------------------------------------- 2005 $27,000 $7,134 $ 7,775 2006 $28,000 $4,910 $13,756 (d) Not applicable. (e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Fund's Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Fund's independent registered public accounting firm. The Fund's Audit Committee policies and procedures also require pre-approval of all audit and non-audit services provided to the Adviser and Service Affiliates to the extent that these services are directly related to the operations or financial reporting of the Fund. (e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in the table under Item 4 (a) - (c) are for services pre-approved by the Fund's Audit Committee. (f) Not applicable. (g) The following table sets forth the aggregate non-audit services provided to the Fund, the Fund's Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund, which include preparing an annual internal control report pursuant to Statement on Auditing Standards No. 70 ("Service Affiliates"): Total Amount of Foregoing Column Pre- approved by the Audit All Fees for Committee Non-Audit Services (Portion Comprised of Provided to the Audit Related Fees) Portfolio, the Adviser (Portion Comprised of and Service Affiliates Tax Fees) - ------------------------------------------------------------------------------- 2005 $1,094,765 [ $182,612 ] ( $174,837 ) ( $7,775 ) 2006 $ 479,879 [ $171,536 ] ( $157,780 ) ( $13,756 ) (h) The Audit Committee of the Fund has considered whether the provision of any non-audit services not pre-approved by the Audit Committee provided by the Fund's independent registered public accounting firm to the Adviser and Service Affiliates is compatible with maintaining the auditor's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. SCHEDULE OF INVESTMENTS. Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. 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 (a) (1) Code of Ethics that is subject to the disclosure of Item 2 hereof 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: September 28, 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: September 28, 2006 By: /s/ Joseph J. Mantineo Joseph J. Mantineo Treasurer and Chief Financial Officer Date: September 28, 2006 EX-99.CODE ETH 2 edg11961_ethics.txt Exhibit 12(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code The AllianceBernstein Mutual Fund Complex's code of ethics (this "Code") for the investment companies within the complex (collectively, the "Funds" and each, a "Company") applies to each Company's Principal Executive Officer, Principal Financial and Accounting Officer and Controller (the "Covered Officers," each of whom is set forth in Exhibit A) for the purpose of promoting: * honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; * compliance with applicable laws and governmental rules and regulations; * the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and * accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. For the purposes of this Code, members of the Covered Officer's family include his or her spouse, children, stepchildren, financial dependents, parents and stepparents. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The Company's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Company's Board of Directors or Trustees (the "Directors") that the Covered Officers may also be officers or employees of one or more of the other Funds or of other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. Each Covered Officer must: * not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Company whereby the Covered Officer would benefit personally to the detriment of the Company; * not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Company; * not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; There are some conflict of interest situations, whether involving a Covered Officer directly or a member of his family, that should always be discussed with the General Counsel of Alliance Capital Management L.P.(the "General Counsel"), if material. Examples of these include: * service as a director on the board of directors or trustees of any public or private company (other than a not-for-profit organization); * the receipt of any non-nominal gifts; * the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; * any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; * a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance * Each Covered Officer should familiarize himself with the disclosure requirements and disclosure controls and procedures generally applicable to the Company; * each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; * each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and * it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: * upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the General Counsel that he has received, read, and understands the Code; * annually thereafter affirm to the General Counsel that he has complied with the requirements of the Code; * complete at least annually a questionnaire relating to affiliations or other relationships that may give rise to conflicts of interest; * not retaliate against any other Covered Officer or any employee of the Company or their affiliated persons for reports of potential violations that are made in good faith; and * notify the General Counsel promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, waivers sought by a Covered Officer will be considered by the Company's Audit Committee (the "Committee"). The Company will follow these procedures in investigating and enforcing this Code: * the General Counsel will take all appropriate action to investigate any potential violations reported to him; * if, after such investigation, the General Counsel believes that no material violation has occurred, the General Counsel is not required to take any further action; * any matter that the General Counsel believes is a material violation will be reported to the Committee; * if the Committee concurs that a material violation has occurred, it will inform and make a recommendation to the Directors, who will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; * the Committee will be responsible for granting waivers, as appropriate; and * any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Company, the Company's adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, it is understood that this Code is in all respects separate and apart from, and operates independently of, any such policies and procedures. In particular, the Company's and its investment adviser's and principal underwriter's codes of ethics under Rule 17j-l under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Directors, including a majority of independent directors. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Directors, the investment adviser, their counsel, counsel to the Company and, if deemed appropriate by the Directors of the Company, to the Directors of the other Funds. VIII. Internal Use The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. Date: July 22, 2003, as amended March 17, 2004 Exhibit A Persons Covered by this Code of Ethics Principal Executive Officer Principal Financial and Accounting Officer Controller EX-99.CERT 3 edg11961_ex302.txt Exhibit 12(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, President of AllianceBernstein Greater China '97 Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of AllianceBernstein Greater China '97 Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 28, 2006 /s/ Marc O. Mayer Marc O. Mayer President Exhibit 12(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Joseph J. Mantineo, Treasurer and Chief Financial Officer of AllianceBernstein Greater China '97 Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of AllianceBernstein Greater China '97 Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluations; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 28, 2006 /s/ Joseph J. Mantineo ---------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer EX-99.906 CERT 4 edg11961_ex906b.txt EXHIBIT 12(c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of AllianceBernstein Greater China '97 Fund, Inc., (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended July 31, 2006 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: September 28, 2006 By:/s/ Marc O. Mayer -------------------- Marc O. Mayer President By:/s/ Joseph J. Mantineo ------------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----