ALLIANCE GREATER CHINA '97 FUND
SEMI-ANNUAL REPORT
JANUARY 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
March 27, 1998
Dear Shareholder:
We are pleased to provide the first report to shareholders for the Alliance
Greater China '97 Fund. This semi-annual report contains investment results and
market activity for Alliance Greater China '97 Fund's initial period of
operations beginning September 3, 1997 and ending January 31, 1998.
MARKET REVIEW
During the period under review, the contagion effect of the Asian currency
crisis started to put downward pressure on the equity markets in the region,
including that of the Greater China region.
INVESTMENT RESULTS
All the Asian markets performed poorly during the last six months due to the
Asian crisis. Alliance Greater China '97 Fund's Class A shares posted a return
of -40.41% at net asset value (NAV) since the Fund's inception on September 3,
1997 through the end of the reporting period, January 31, 1998. By comparison,
the MSCI China Index returned -54.34% and the Lipper China Region Funds Average
returned -41.64%. Your Fund marginally underperformed the local indices due
mainly to cash flow movements during September 1997 and January 1998.
Otherwise, the Fund performed well against its peer group in the fourth quarter
of 1997.
INVESTMENT RESULTS*
Periods Ended January 31, 1998
TOTAL RETURNS
SINCE FUND'S
INCEPTION*
-------------
ALLIANCE GREATER CHINA '97 FUND
Class A -40.41%
Class B -40.57%
Class C -40.47%
MSCI CHINA INDEX -54.34%
MSCI HONG KONG INDEX -38.72%
MSCI TAIWAN INDEX -23.86%
LIPPER CHINA REGION FUNDS AVERAGE -41.64%
* PERFORMANCE RESULTS FOR THE FUND REPRESENT DATA FROM THE FUND'S INCEPTION
DATE OF 9/3/97. PERFORMANCE RESULTS FOR THE BENCHMARKS ARE AS OF 9/30/97 (THE
MONTH-END NEAREST TO THE FUND'S INCEPTION DATE). THE FUND'S INVESTMENT RESULTS
ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD AND ARE BASED ON THE NET ASSET
VALUE OF EACH CLASS OF SHARES AS OF JANUARY 31, 1998. ALL FEES AND EXPENSES
RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS
BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR
REDEEMED. TOTAL RETURN FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT
EXPENSES ASSOCIATED WITH THAT CLASS. RETURNS FOR THE FUND AND ITS COMPARATIVE
BENCHMARKS INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE
PERIOD. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE MSCI CHINA INDEX, THE MSCI HONG KONG INDEX AND THE MSCI TAIWAN INDEX
ARE MARKET CAPITALIZATION-WEIGHTED INDICES OF COMPANIES LOCATED IN THEIR
RESPECTIVE COUNTRIES. THE LIPPER CHINA REGION FUNDS 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.
AN INVESTOR CANNOT INVEST DIRECTLY IN THE INDICES OR THE AVERAGE.
ECONOMIC OUTLOOK
Fundamentally, the Greater China region is still in good shape despite the
short term pain created by the slowdown in the region. Economic reform in China
is moving ahead. In 1998, China may even be able to join the World Trade
Organization and further integrate into the global economic order. The Chinese
currency, the renminbi, is expected to remain stable in 1998 and the government
will further stimulate the domestic economy by focusing on infrastructure
development. In addition, further interest rate cuts may be implemented during
the year. In
1
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
short, China is expected to show stable growth of 7%-8% providing a favorable
macro environment for the Greater China region.
In Hong Kong, interest rate-sensitive sectors like finance and property have
suffered as the risk premium on local interest rates increased sharply due to
speculative attack. We believe the adjustment process to further external
shocks, which will be brought about through interest rates rather than the
exchange rate, will bring some consolidation in the local economy in 1998. With
the risk premium on local interest rates increased as a result of the Asian
currency crisis, asset prices will be under short-term downward pressure. When
the risk premium gradually contracts, local interest rates will gradually
decline. The Argentinean experience suggests that the Hong Kong equity market
could recover strongly once this occurs.
The Taiwan economy should weather the Asian currency crisis fairly well due to
flexibility in the manufacturing sector. The electronics sector is expected to
enjoy strong growth as external demand remains healthy. On the political front,
there may not be any breakthrough in the Taiwan-China relationship in the short
term. However, the fact that both sides have expressed interest in resuming the
dialogue at a more concrete level is an encouraging development.
Looking forward, the outlook for the Greater China region remains positive in
the medium term. The region should be the first one to recover from the Asian
currency crisis, although the Asian markets will still be subject to volatility
in the short term, pending further political and economic development in the
region.
We appreciate your interest and investment in Alliance Greater China '97 Fund
and look forward to reporting its progress to you in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Matthew Lee
Portfolio Manager
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
Alliance Greater China '97 Fund is a non-diversified management investment
company that seeks long-term capital appreciation by investing at least 80% of
its total assets in equity securities issued by Greater China companies.
INVESTMENT RESULTS
AVERAGE ANNUAL TOTAL RETURNS AS OF JANUARY 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* -40.41% -42.92%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* -40.57% -42.94%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* -40.47% -41.06%
SEC AVERAGE ANNUAL TOTAL RETURNS (AT MAXIMUM OFFERING PRICE) AS OF THE MOST
RECENT QUARTER-END (DECEMBER 31, 1997)
CLASS A CLASS B CLASS C
------- ------- -------
Since Inception** -31.33% -31.25% -29.02%
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares with and without the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1; 3% year 2; 2% year 3; 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class. SEC average annual total returns
for the period shown reflect reinvestment of all distributions and deduction of
the maximum 4.25% front-end sales charge.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 9/3/97, all share classes.
** Not Annualized.
3
TEN LARGEST HOLDINGS
JANUARY 31, 1998 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Hong Kong Telecommunications--The company
provides telecommunications, computer,
engineering and other services. $ 207,445 7.5%
HSBC Holdings Plc.--The company provides
financial services that include corporate
and retail banking, private and investment
banking, and insurance. 195,063 7.0
Hutchison Whampoa--The company has diverse
operations including property investment
and development, port services, retail,
manufacturing, finance, investment and
other services. 176,425 6.3
Hang Seng Bank--The company provides
commerical banking and other related
financial services primarily in Hong
Kong and China. 157,684 5.7
China Telecom, Ltd. Cl. H--The company
provides cellular telecommunications
services in the People's Republic of China. 127,375 4.6
Cheung Kong Holdings, Ltd.--The company is
involved in property development and
investment, infrastructure and related
businesses. 127,310 4.6
CLP Holdings, Ltd.--The company provides
electricity to Hong Kong and The People's
Republic of China. 109,862 3.9
Sun Hung Kai Properties, Ltd.--The company is
involved in property development and
investment, hotel ownership, financial
services, manufacturing, and other industries. 102,624 3.7
New World Development Co., Ltd.--The company
deals in property development and
investment and other services. 84,367 3.0
China Resources Enterprise--The company is
involved in property development and
investment and related real estate services. 80,652 2.9
$ 1,368,807 49.2%
4
INDUSTRY DIVERSIFICATION
JANUARY 31, 1998 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Capital Goods $ 124,470 4.5%
Consumer Manufacturing 53,897 1.9
Consumer Staples 221,590 7.9
Finance 421,316 15.1
Multi Industry 458,440 16.5
Real Estate 379,708 13.6
Technology 169,068 6.1
Transportation 8,065 0.3
Utilities 478,287 17.2
Total Investments* 2,314,841 83.1
Cash and receivables, net of liabilities 469,595 16.9
Net Assets $ 2,784,436 100.0%
* Excludes short-term obligations.
5
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-83.1%
HONG KONG-70.5%
Cheung Kong Holdings, Ltd. 25,000 $ 127,310
Cheung Kong Infra Holdings 25,000 64,301
China Foods Holdings, Ltd. 300,000 70,570
China Merchants Holdings International Co. 50,000 29,727
China Resources Enterprise 60,000 80,652
China Telecom, Ltd. Cl. H (a) 90,000 127,375
Citic Pacific, Ltd. 15,000 43,040
CLP Holdings, Ltd. 20,000 109,862
Hang Seng Bank 20,000 157,684
Henderson Land Development 6,000 19,930
Hong Kong & China Gas 20,000 33,605
Hong Kong Telecommunications 100,000 207,445
HSBC Holdings Plc. 8,800 195,063
Hutchison Whampoa 30,000 176,425
Ka Wah Bank, Ltd. 40,000 19,775
Legend Holdings, Ltd. (a) 330,000 72,509
New World Development Co., Ltd. 35,000 84,367
New World Infrastructure (a) 10,000 19,581
Ng Fung Hong, Ltd. 60,000 56,611
Shanghai Industrial Holdings 15,000 39,453
Sun Hung Kai Properties, Ltd. 20,000 102,624
Swire Pacific Cl. A 15,000 68,244
Tianjin Development Holdings (a) 60,000 36,836
Wharf Holdings 15,000 21,326
------------
1,964,315
PEOPLE'S REPUBLIC OF CHINA-3.3%
China National Aviation (a) 60,000 8,065
Qingling Motor Companies Cl. H 60,000 17,061
Yantai Changyu Pioneer Cl. B (a) 200,000 67,468
------------
92,594
SINGAPORE-1.6%
Hong Kong Land Holdings 15,000 24,150
Jardine Matheson 5,000 20,900
------------
45,050
TAIWAN-7.7%
Asustek Computer, Inc. (a) 2,000 37,882
Cathay Life Insurance 6,000 24,441
China Trust Commercial Bank (a) 20,000 24,353
Compal Electronics, Inc. (a) 10,000 31,030
Kang Na Hsiung Enterprise (a) 20,000 26,941
Phoenixtec Power Co., Ltd. (a) 15,000 40,588
Taiwan Semiconductor (a) 8,000 27,647
------------
212,882
Total Common Stocks
(cost $3,474,800) 2,314,841
TIME DEPOSIT-14.4%
Dresdner Bank
5.63%, 2/02/98
(cost $400,000) $400 400,000
TOTAL INVESTMENTS-97.5%
(cost $3,874,800) 2,714,841
Other assets less liabilities-2.5% 69,595
NET ASSETS-100% $ 2,784,436
(a) Non-income producing security
6
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $3,874,800) $ 2,714,841
Cash, at value (cost $64,673) 64,670
Receivable for investment securities sold 419,851
Deferred organization expenses 298,969
Receivable for capital stock sold 60,198
Receivable from advisor 42,873
Total assets 3,601,402
LIABILITIES
Payable for investment securities purchased 400,000
Organizational expense payable 326,500
Distribution fee payable 1,962
Accrued expenses 88,504
Total liabilities 816,966
NET ASSETS $ 2,784,436
COMPOSITION OF NET ASSETS
Capital stock, at par $ 4,710
Additional paid-in capital 4,330,431
Distributions in excess of net investment income (9,483)
Accumulated net realized loss on investments and foreign
currency transactions (381,278)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (1,159,944)
$ 2,784,436
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($541,551/
91,632 shares of capital stock issued and outstanding) $5.91
Sales Charge--4.25% of public offering price 0.26
Maximum offering price $6.17
CLASS B SHARES
Net asset value and offering price per share ($2,050,319/
346,827 shares of capital stock issued and outstanding) $5.91
CLASS C SHARES
Net asset value and offering price per share ($120,491/
20,368 shares of capital stock issued and outstanding) $5.92
ADVISOR CLASS SHARES
Net asset value, redemption, and offering price per share
($72,075/12,180 shares of capital stock issued
and outstanding) $5.92
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SEPTEMBER 3, 1997* TO JANUARY 31, 1998 (UNAUDITED)
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends $ 30,931
Interest 15,154 $ 46,085
EXPENSES
Advisory fee 12,016
Distribution fee - Class A 660
Distribution fee - Class B 8,863
Distribution fee - Class C 593
Custodian 44,072
Audit and legal 35,918
Amortization of organization expenses 27,531
Transfer agency 18,612
Printing 11,532
Directors' fees 4,158
Miscellaneous 8,182
Total expenses 172,137
Less: expenses waived by the Adviser
(see Note B) (135,587)
Net expenses 36,550
Net investment income 9,535
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (383,186)
Net realized gain on foreign
currency transactions 1,908
Net unrealized appreciation (depreciation) of:
Investments (1,159,959)
Foreign currency denominated assets
and liabilities 15
Net loss on investments and foreign
currency transactions (1,541,222)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(1,531,687)
* Commencement of operations
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS
SEPTEMBER 3, 1997* TO JANUARY 31, 1998 (UNAUDITED)
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 9,535
Net realized loss on investments and foreign
currency transactions (381,278)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (1,159,944)
Net decrease in net assets from operations (1,531,687)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,855)
Class B (7,021)
Class C (412)
Advisor Class (247)
Distributions in excess of net investment income
Class A (3,448)
Class B (5,170)
Class C (398)
Advisor Class (467)
CAPITAL STOCK TRANSACTIONS
Net increase 4,335,141
Total increase 2,784,436
NET ASSETS
Beginning of period -0-
End of period $ 2,784,436
* Commencement of operations
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance 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 non-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 an initial 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 will be subject to a contingent
deferred sales charge of 1%. Class B shares are sold with a contingent deferred
sales charge which declines from 4% to zero depending on the period of time the
shares are held. Class B shares will automatically convert to Class A shares
eight years after the end of the calendar month of purchase. Class C shares are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. Advisor Class shares are sold without an initial
or contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in
fee-based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have
been prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair value of such securities.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $326,500 have been deferred and are
being amortized on a straight-line basis through August, 2002.
3. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when earned or accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of investments and foreign
currency contracts, the holding of foreign currencies, currency gains or losses
realized between the trade and settlement dates on foreign security
transactions, and the difference between the amounts of dividends, interest and
foreign taxes receivable recorded on the Fund's books and the U.S. dollar
equivalent of the 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
change in unrealized appreciation (depreciation) of investments and foreign
currency denominated assets and liabilities.
10
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and Advisor Class shares (Advisor Class shares also have no
distribution fees).
6. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts on short-term securities as adjustments
to interest income.
7. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under an investment advisory agreement, the Fund pays Alliance Capital
Management, L.P. ("the Adviser") a fee at an annual rate of 1% of the Fund's
average daily net assets. Such fee is accrued daily and paid monthly.
The Adviser has agreed to voluntarily waive its fee and bear certain expenses
so that total expenses do not exceed on an annual basis 2.50%, 3.20%, 3.20%,
and 2.20% of average net assets, respectively, for the Class A, Class B, Class
C and Advisor Class shares. For the period ended January 31, 1998, such waiver
and reimbursement amounted to $135,587.
The Fund compensates Alliance Fund Services, Inc. (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. For the period
ended January 31, 1998, the Transfer Agent voluntarily waived all of its fees
under the Agreement.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $1,452 from the sale of Class A shares and $725 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the period ended January 31, 1998.
Brokerage commissions paid on investment transactions for the period ended
January 31, 1998 amounted to $22,184, none of which was paid to a broker
utilizing the services of an affiliate of the Adviser.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the Fund's average daily net assets attributable to
Class A shares and 1% of the average daily net assets attributable to both
Class B and Class C shares. There is no distribution fee 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 distrib-
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
ution costs reimbursed by the Fund in the amounts of $305,668 and $13,239 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 and U.S.
government obligations) aggregated $4,253,229 and $401,527, respectively, for
the period ended January 31, 1998. There were no purchases or sales of U.S.
government or government agency obligations for the period ended January 31,
1998.
At January 31, 1998, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $16,550 and gross unrealized
depreciation of investments was $1,176,509 resulting in net unrealized
depreciation of $1,159,959 (excluding foreign currency transactions).
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts for investment
purposes and to hedge its exposure to changes in foreign currency exchange
rates on its foreign portfolio holdings and to hedge certain firm purchase and
sale commitments denominated in foreign currencies. A forward exchange currency
contract is a commitment to purchase or sell a foreign currency at a future
date at a negotiated forward rate. The gain or loss arising from the difference
between the original contracts and the closing of such contracts is included in
net realized gains or losses on foreign currency transactions. Fluctuations in
the value of forward exchange currency contracts are recorded for financial
reporting purposes as unrealized gains or losses 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 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 currencies
relative to the U.S. dollar. There were no forward exchange currency contracts
outstanding at January 31, 1998.
12
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
------------------ ------------------
SEPTEMBER 3, 1997* SEPTEMBER 3, 1997*
TO TO
JANUARY 31, 1998 JANUARY 31, 1998
(UNAUDITED) (UNAUDITED)
------------------ ------------------
CLASS A
Shares sold 96,418 $ 866,870
Shares issued in
reinvestment of
dividends and
distributions 502 3,613
Shares redeemed (5,288) (42,189)
Net increase 91,632 $ 828,294
CLASS B
Shares sold 361,616 $ 3,300,875
Shares issued in
reinvestment of
dividends and
distributions 1,205 8,686
Shares redeemed (15,994) (117,413)
Net increase 346,827 $ 3,192,148
CLASS C
Shares sold 20,284 $ 196,906
Shares issued in
reinvestment of
dividends and
distributions 84 604
Net increase 20,368 $ 197,510
ADVISOR CLASS
Shares sold 12,423 $ 119,232
Shares issued in
reinvestment of
dividends and
distributions 9 64
Shares redeemed (252) (2,107)
Net increase 12,180 $ 117,189
* Commencement of operations
13
FINANCIAL HIGHLIGHTS ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASS B CLASS C CLASS
----------- ----------- ----------- -----------
SEPT. 3, SEPT. 3, SEPT. 3, SEPT. 3,
1997(A) 1997(A) 1997(A) 1997(A)
TO TO TO TO
JAN. 31, 1998 JAN. 31, 1998 JAN. 31, 1998 JAN. 31, 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .05 .02 .03 .06
Net realized and unrealized loss
on investments and foreign
currency transactions. (4.08) (4.07) (4.07) (4.07)
Net decrease in net asset value
from operations (4.03) (4.05) (4.04) (4.01)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.02) (.02) (.02) (.02)
Distributions in excess from net
investment income (.04) (.02) (.02) (.05)
Total dividends and distributions (.06) (.04) (.04) (.07)
Net asset value, end of period $ 5.91 $ 5.91 $ 5.92 $ 5.92
TOTAL RETURN
Total investment return based on
net asset value (d) (40.41)% (40.57)% (40.47)% (40.27)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $542 $2,050 $120 $72
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements (e) 2.50% 3.20% 3.20% 2.20%
Expenses, before waivers/
reimbursements (e) 13.67% 14.50% 14.52% 13.64%
Net investment income (e) 1.30% .64% .66% 1.64%
Portfolio turnover rate 46% 46% 46% 46%
Average commission rate $.0072 $.0072 $.0072 $.0072
</TABLE>
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Net of expenses waived/reimbursed by the Adviser.
(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 charge or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(e) Annualized.
14
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER
WILLIAM H. FOULK, JR.
TAK-LUNG TSIM
OFFICERS
MATTHEW W. S. LEE, CHIEF INVESTMENT OFFICER
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, 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
One Battery Park Plaza
New York, NY10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY10019
15
ALLIANCE GREATER CHINA '97 FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
GCFSR
