ALLIANCE GREATER CHINA '97 FUND
SEMI-ANNUAL REPORT
JANUARY 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
March 22, 1999
Dear Shareholder:
We are pleased to report on our performance, outlook and investment strategy
for Alliance Greater China '97 Fund (the Fund) for the period ended January 31,
1999.
INVESTMENT RESULTS
The following table provides performance data for the Fund during the six- and
12-month periods ended January 31, 1999. For comparison, we have also included
performance results for the Lipper China Region Funds Average (Lipper Average).
For reference, the table also shows performance data for three Morgan Stanley
Capital International (MSCI) indices including the China Free, Hong Kong and
Taiwan indices. Since the performance for each MSCI index represents issues
located only in a single country, these indices should not be used to compare
the performance data of your Fund, as your Fund's investments are diversified
into all three countries.
As shown, your Fund significantly outperformed the Lipper Average during the
six- and 12-month periods due to our overweighting Hong Kong-based companies at
the expense of China and Taiwan. In addition, the Fund has switched more
aggressively into interest-rate sensitive sectors, such as property and banking
in Hong Kong, as rates started to trend down.
INVESTMENT RESULTS*
Periods Ended January 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE GREATER
CHINA '97 FUND
Class A 22.52% 0.34%
Class B 22.20% -0.34%
Class C 21.99% -0.68%
MSCI CHINA FREE INDEX -12.25% -38.67%
MSCI HONG KONG INDEX 32.53% 5.29%
MSCI TAIWAN INDEX -6.26% -18.60%
LIPPER CHINA REGION
FUNDS AVERAGE 9.37% -10.60%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF JANUARY 31, 1999. 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. RETURNS FOR
THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. 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, AND ARE RESPECTIVELY COMPRISED OF 37, 34, AND 77
COMPANIES AS OF JANUARY 31, 1999. 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. THESE FUNDS HAVE GENERALLY SIMILAR INVESTMENT OBJECTIVES TO
YOUR FUND, ALTHOUGH INVESTMENT POLICIES FOR THE VARIOUS FUNDS MAY DIFFER. FOR
THE SIX- AND 12-MONTH PERIODS, THE LIPPER AVERAGE INCLUDED 26 AND 20 FUNDS,
RESPECTIVELY. ALL COMPARATIVE INDICES ARE UNMANAGED AND REFLECT NO FEES OR
EXPENSES. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX OR AN AVERAGE.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
MARKET REVIEW
During the 12 months ended January 31, 1999, the macro environment in Asia
remained volatile as the Russian debt default and the collapse of Long Term
Capital Management's hedge fund sent shock waves through global equity markets.
Sentiment in the emerging universe was further dampened by the Brazilian real
devaluation. However, investors concluded that the global central bank
interventions in lowering interest rates will most likely prevent a
deflationary bust, and hence global equity markets rebounded quickly from the
summer lows. Within the Greater China region, the Hong Kong stock market
rebounded sharply following the government's intervention in the stock and
futures markets, and selling pressure also subsided due to the unwinding of
hedge funds. The Chinese and Taiwanese stock markets remained depressed as
investors remained concerned about the short-term economic outlook.
1
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
ECONOMIC REVIEW AND OUTLOOK
The Chinese economy recorded a provisional 7.8% gross domestic product (GDP)
growth rate for 1998, which is in line with the official target of 8%. The
preliminary target set for 1999 GDP growth is 7%. Regarding exchange rate
policy, China is committed to maintaining a stable renminbi unless there is a
massive deterioration in the current account and balance of payments. China
will also continue its economic reform in both the banking sector and in state
owned enterprises.
The Hong Kong economy continued to adjust to the Asian contagion, and third
quarter 1998 GDP declined due to weak consumer demand and trade performance.
With U.S. rates falling, and the new measures introduced in the money market by
the Hong Kong Monetary Authority, local interest rates have started to trend
downward and there should be room for rates to gradually decline over 1999.
This is positive for the property sector, which is a key component of the Hong
Kong economy.
In Taiwan, the economy began to feel the impact of the regional slowdown, as
reflected by some corporate failures and a relatively small-scale banking
sector problem. The economy only grew 3.7% year-on-year in the fourth quarter
of 1998, the lowest since the third quarter of 1990, and calendar 1998 GDP
growth was 4.8%. The slowdown was mainly due to declines in private investment
and exports. The 1999 growth outlook for Taiwan should be flat, as the
government will try to boost the infrastructure spending to cushion the
economic slowdown. The KMT victory at the December '98 local election also
removed political uncertainly in the short term.
FUND STRATEGY
The Fund's strategy will continue to focus on those companies with strong
financial strength and leading market positions as the economic adjustment in
Asia continues. In Hong Kong, the outlook for the property and banking sectors
should gradually improve due to a more stable interest rate environment.
Infrastructure development should remain the focus of China's growth, and
selected consumer plays should also benefit as private consumption recovers. In
Taiwan, the growing electronic companies should continue to benefit from global
outsourcing.
Thank you for your continued interest in Alliance Greater China '97 Fund. We
look forward to reporting to you on market activity and your Fund's investment
results 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
NAV AND SEC TOTAL RETURNS AS OF JANUARY 31, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 0.34% -3.89%
Since Inception* -30.56% -32.65%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -0.34% -4.32%
Since Inception* -31.03% -32.49%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -0.68% -1.67%
Since Inception* -31.11% -31.11%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (DECEMBER
31, 1998)
CLASS A CLASS B CLASS C
1 Year -11.98% -12.36% -9.89%
Since Inception* -29.21% -29.00% -27.45%
The Fund's investment results represent total returns. The NAV and SEC returns
reflect reinvestment of dividends and/or capital gains distributions in
additional shares without (NAV) and with (SEC) 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.
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.
3
TEN LARGEST HOLDINGS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Cheung Kong Holdings, Ltd.--The company
is involved in property development and
investment, infrastructure and related
businesses. $ 243,909 9.5%
HSBC Holdings Plc.--The company provides
financial services that include corporate
and retail banking, private and investment
banking, and insurance. 239,727 9.3
Hutchison Whampoa, Ltd.--The company has
diverse operations including property
investment and development, port services,
retail, manufacturing, finance, investment
and other services. 198,741 7.7
China Telecom (Hong Kong), Ltd.--The company
provides cellular telecommunications
services in the People's Republic
of China. 170,968 6.7
China Resources Enterprise, Ltd.--A holding
company whose subsidiaries develop and
invest in real estate and infrastructural
projects, provide cold storage services,
manufacture beer products and office
furniture. 145,571 5.7
Hang Seng Bank, Ltd.--The company provides
financial services and commercial banking
in Hong Kong, the United States, and the
People's Republic of China. 125,342 4.9
CLP Holdings, Ltd.--The company provides
electricity to Hong Kong and the People's
Republic of China. 113,243 4.4
Dao Heng Bank Group, Ltd.--An investment
holding company whose principle activities
include commercial banking, trustee and
nominee services. 110,920 4.3
New World Development Co., Ltd.--A holding
company whose subsidiaries are involved in
property development and investment, as
well as hotel operations, construction and
civil engineering activities, and other
investments. 107,888 4.2
Henderson Land Development Co., Ltd.--A
holding company whose subsidiaries are
involved in property development and
investment, project management,
construction, property management,
finance and investment holding. 107,436 4.2
$1,563,745 60.9%
4
INDUSTRY DIVERSIFICATION
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Banking $ 476,036 18.5%
Capital Goods 83,045 3.2
Consumer Manufacturing 30,353 1.2
Consumer Staples 272,610 10.6
Finance 620,418 24.2
Multi Industry 433,268 16.9
Technology 133,382 5.2
Transportation 44,136 1.7
Utilities 385,224 15.0
Total Investments 2,478,472 96.5
Cash and receivables, net of liabilities 89,142 3.5
Net Assets $2,567,614 100.0%
5
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-96.5%
HONG KONG-89.2%
Cheung Kong Holdings, Ltd. 35,000 $ 243,909
Cheung Kong Infrastructure Holdings, Ltd. 45,000 83,045
China Foods Holdings, Ltd. 150,000 27,295
China Resources Enterprise, Ltd. 120,000 145,571
China Telecom (Hong Kong), Ltd. (a) 96,000 170,968
CLP Holdings, Ltd. 25,000 113,243
Dah Sing Financial Group, Ltd. 20,000 37,554
Dao Heng Bank Group, Ltd. 45,000 110,920
Guangdong Kelon Electrical
Holdings Co., Ltd. 'H' shares 42,000 30,353
Hang Seng Bank, Ltd. 15,000 125,342
Henderson Land Development Co., Ltd. 25,000 107,436
Hengan International Group Co., Ltd. (a) 300,000 107,436
HKR International, Ltd. 44,800 24,572
Hong Kong & China Gas Co., Ltd. 20,000 23,229
Hong Kong Telecommunications, Ltd. 48,000 77,741
HSBC Holdings Plc. 9,600 239,727
Hutchison Whampoa, Ltd. 28,000 198,741
Legend Holdings, Ltd. 100,000 39,361
New World Development Co., Ltd. 55,000 107,888
Ng Fung Hong, Ltd. 96,000 73,095
Shum Yip Investment, Ltd. 250,000 42,910
Sino Land Co., Ltd. 150,000 73,076
Swire Pacific, Ltd. 5,000 21,423
Wharf Holdings, Ltd. 18,000 20,674
Zhejiang Expressway Co., Ltd. Cl. H 300,000 44,136
------------
2,289,645
PEOPLE'S REPUBLIC OF CHINA-2.5%
Yantai Changyu Pioneer Wine
Co., Ltd. Cl. B (a) 200,000 64,784
TAIWAN-4.8%
D-Link Corp. 8,000 14,854
Giga-Byte Technology Co., Ltd. (a) 3,280 21,315
Hon Hai Precision Industry Co., Ltd. 5,600 29,980
Siliconware Precision Industries Co. (a) 9,000 16,850
Synnex Technology International Corp. (a) 4,000 14,854
Taiwan Semiconductor Manufacturing
Co., Ltd. 10,000 26,149
------------
124,002
WARRANTS-0.0%
Hong Kong & China Gas
Warrants, expiring 9/30/99 (a) 1,000 41
TOTAL INVESTMENTS-96.5%
(cost $2,635,521) 2,478,472
Other assets less liabilities-3.5% 89,142
NET ASSETS-100% $ 2,567,614
(a) Non-income producing security.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $2,635,521) $ 2,478,472
Cash, at value (cost $108,394) 108,393
Deferred organization expenses 238,383
Receivable for capital stock sold 201,366
Receivable from Adviser 20,085
Total assets 3,046,699
LIABILITIES
Organizational expense payable 326,500
Payable for capital stock redeemed 14,658
Distribution fee payable 1,868
Accrued expenses 136,059
Total liabilities 479,085
NET ASSETS $ 2,567,614
COMPOSITION OF NET ASSETS
Capital stock, at par $ 435
Additional paid-in capital 4,207,797
Distributions in excess of net investment income (1,874)
Accumulated net realized loss on investments and foreign
currency transactions (1,481,694)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (157,050)
$ 2,567,614
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($586,582 / 98,974 shares of beneficial interest
issued and outstanding) $5.93
Sales Charge--4.25% of public offering price .26
Maximum offering price $6.19
CLASS B SHARES
Net asset value and offering price per share
($1,815,954 / 308,437 shares of beneficial interest
issued and outstanding) $5.89
CLASS C SHARES
Net asset value and offering price per share
($84,717 / 14,397 shares of beneficial interest
issued and outstanding) $5.88
ADVISOR CLASS SHARES
Net asset value, redemption, and offering price per share
($80,361 / 13,504 shares of beneficial interest
issued and outstanding) $5.95
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $645) $ 35,759
Interest 1,928 $ 37,687
EXPENSES
Advisory fee 12,554
Distribution fee - Class A 760
Distribution fee - Class B 9,058
Distribution fee - Class C 571
Administrative 63,500
Custodian 49,214
Audit and legal 34,326
Amortization of organizational expenses 31,555
Registration 15,412
Printing 11,813
Transfer agency 10,647
Directors fees 5,200
Miscellaneous 1,448
Total expenses 246,058
Less: expenses waived and reimbursed by
the Adviser (see Note B) (207,820)
Less: expense offset arrangement
(see Note B) (231)
Net expenses 38,007
Net investment loss (320)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (610,319)
Net realized gain on foreign currency
transactions 1,631
Net change in unrealized appreciation
(depreciation) of:
Investments 1,071,683
Foreign currency denominated assets and
liabilities (5)
Net gain on investments and foreign currency
transactions 462,990
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 462,670
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
SIX MONTHS ENDED SEPT. 3, 1997*
JANUARY 31, 1999 TO
(UNAUDITED) JULY 31, 1998
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) $ (320) $ 18,810
Net realized loss on investments and
foreign currency transactions (608,688) (877,930)
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency denominated assets
and liabilities 1,071,678 (1,228,728)
Net increase (decrease) in net assets
from operations 462,670 (2,087,848)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A -0- (5,303)
Class B -0- (10,749)
Class C -0- (619)
Advisor Class -0- (714)
Distributions in excess of net
investment income
Class B -0- (1,442)
Class C -0- (191)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (53,526) 4,165,036
Total increase 409,144 2,058,170
NET ASSETS
Beginning of period 2,158,470 100,300
End of period $ 2,567,614 $ 2,158,470
* Commencement of operations.
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 (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 may be subject to a contingent
deferred sales charge of 1%. Class B shares are sold with a contingent deferred
sales charge which declines from 4% to zero depending on the period of time the
shares are held. Class B shares will automatically convert to Class A shares
eight years after the end of the calendar month of purchase. Class C shares are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. Advisor Class shares are sold without an initial
or contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in
fee-based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have
been prepared in conformity with 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 market 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 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 dividends 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 the terms of 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 six months ended January 31, 1999, such
waiver of management fees, amounted to $141,320 and the waiver of the cost of
certain legal and accounting services provided to the Fund by the Adviser
amounted to $63,500.
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 six months
ended January 31, 1999, the Transfer Agent voluntarily waived all of its fees
under the Agreement which amounted to $3,000.
In addition, for the six months ended January 31, 1999, the Fund's expenses
were reduced by $231 under an expense offset arrangement with Alliance Fund
Services. Transfer agency fees reported in the statement of operations exclude
these credits.
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 $386 from the sale of Class A shares and $9,724 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the six months ended January 31, 1999.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 1999 amounted to $10,691, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor DLJ directly.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
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 distribution costs reimbursed by the Fund in the amounts of
$787,938 and $28,675 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 $1,136,564 and $1,300,933, respectively, for
the six months ended January 31, 1999. There were no purchases or sales of U.S.
government or government agency obligations for the six months ended January
31, 1999.
At January 31, 1999, 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 $210,046 and gross unrealized
depreciation of investments was $367,095 resulting in net unrealized
depreciation of $157,049 (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, 1999.
12
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
----------------------------- ------------------------------
SIX MONTHS ENDED SEP. 3, 1997* SIX MONTHS ENDED SEP. 3, 1997*
JAN. 31, 1999 TO JAN. 31, 1999 TO
(UNAUDITED) JULY 31, 1998 (UNAUDITED) JULY 31, 1998
-------------- ------------ -------------- --------------
CLASS A
Shares sold 39,713 112,520 $ 262,815 $ 971,684
Shares issued in
reinvestment of
dividends -0- 502 -0- 3,613
Shares redeemed (32,799) (20,972) (196,180) (132,177)
Net increase 6,914 92,050 $ 66,635 $ 843,120
CLASS B
Shares sold 53,127 398,593 $ 297,078 $3,556,766
Shares issued in
reinvestment of
dividends and
distributions -0- 1,205 -0- 8,686
Shares redeemed (66,331) (78,167) (379,383) (463,301)
Net increase
(decrease) (13,204) 321,631 $ (82,305) $ 3,102,151
CLASS C
Shares sold 564 21,183 $ 3,742 $ 201,955
Shares issued in
reinvestment of
dividends and
distributions -0- 84 -0- 604
Shares redeemed (7,276) (168) (46,737) (1,054)
Net increase
(decrease) (6,712) 21,099 $ (42,995) $ 201,505
ADVISOR CLASS
Shares sold 1,183 2,622 $ 5,293 $ 20,507
Shares issued in
reinvestment of
dividends -0- 9 -0- 64
Shares redeemed (31) (279) (154) (2,311)
Net increase 1,152 2,352 $ 5,139 $ 18,260
NOTE F: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 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
the miscellaneous expenses in the statement of operations. The Fund did not
utilize the Facility during the six months ended January 31, 1999.
* Commencement of operations.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
NOTE G: CONCENTRATION OF RISK
Investing in securities of foreign companies involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies and their markets may be less liquid and their prices
more volatile than those of United States companies.
14
FINANCIAL HIGHLIGHTS ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
------------------------------
SIX MONTHS ENDED SEPTEMBER 3,
JANUARY 31, 1997(A)
1999 TO
(UNAUDITED) JULY 31, 1998
--------------- -------------
Net asset value, beginning of period $4.84 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .01 .08
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.08 (5.18)
Net increase (decrease) in net asset
value from operations 1.09 (5.10)
LESS: DIVIDENDS
Dividends from net investment
income .00 (.06)
Net asset value, end of period $5.93 $4.84
TOTAL RETURN
Total investment return based on net
asset value (d) 22.52% (51.20)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $587 $445
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements (e)(f) 2.52% 2.52%
Expenses, before waivers/
reimbursements (e) 19.76% 18.27%
Net investment income (e) .43% 1.20%
Portfolio turnover rate 47% 58%
See footnote summary on page 18.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
------------------------------
SIX MONTHS ENDED SEPTEMBER 3,
JANUARY 31, 1997(A)
1999 TO
(UNAUDITED) JULY 31, 1998
--------------- -------------
Net asset value, beginning of period $4.82 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (b)(c) (.01) .03
Net realized and unrealized (gain)
loss on investments and foreign
currency transactions 1.08 (5.17)
Net increase (decrease) in net asset
value from operations 1.07 (5.14)
LESS: DIVIDENDS
Dividends from net investment income .00 (.03)
Distributions in excess of net
investment income .00 (.01)
Total dividends .00 (.04)
Net asset value, end of period $5.89 $4.82
TOTAL RETURN
Total investment return based on
net asset value (d) 22.20% (51.53)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,816 $1,551
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements (e)(f) 3.22% 3.22%
Expenses, before waivers/
reimbursements (e) 19.67% 19.18%
Net investment income (e) (.19)% .53%
Portfolio turnover rate 47% 58%
See footnote summary on page 18.
16
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
------------------------------
SIX MONTHS ENDED SEPTEMBER 3,
JANUARY 31, 1997(A)
1999 TO
(UNAUDITED) JULY 31, 1998
------------- -------------
Net asset value, beginning of period $4.82 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .00 .03
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 1.06 (5.17)
Net increase (decrease) in net asset
value from operations 1.06 (5.14)
LESS: DIVIDENDS
Dividends from net investment income .00 (.03)
Distributions in excess of net
investment income .00 (.01)
Total dividends .00 (.04)
Net asset value, end of period $5.88 $4.82
TOTAL RETURN
Total investment return based on
net asset value (d) 21.99% (51.53)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $85 $102
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements (e)(f) 3.22% 3.22%
Expenses, before waivers/
reimbursements (e) 18.33% 19.37%
Net investment income (e) (.08)% .50%
Portfolio turnover rate 47% 58%
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
------------------------------
SIX MONTHS ENDED SEPTEMBER 3,
JANUARY 31, 1997(A)
1999 TO
(UNAUDITED) JULY 31, 1998
--------------- -------------
Net asset value, beginning of period $4.85 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .02 .10
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 1.08 (5.18)
Net increase (decrease) in net
asset value from operations 1.10 (5.08)
LESS: DIVIDENDS
Dividends from net investment income .00 (.07)
Net asset value, end of period $5.95 $4.85
TOTAL RETURN
Total investment return based on
net asset value (d) 22.68% (51.06)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $80 $60
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements (e)(f) 2.22% 2.22%
Expenses, before waivers/
reimbursements (e) 18.71% 18.13%
Net investment income (e) .81% 1.51%
Portfolio turnover rate 47% 58%
(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 charges 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.
(f) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For periods shown below, the net expense ratios were as follows:
SIX MONTHS SEPTEMBER 3,
ENDED 1997
JANUARY 31, TO
1999 JULY 31, 1998
----------- -------------
Class A 2.50% 2.50%
Class B 3.20% 3.20%
Class C 3.20% 3.20%
Advisor Class 2.20% 2.20%
18
ALLIANCE GREATER CHINA '97 FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER (1)
WILLIAM H. FOULK, JR. (1)
TAK-LUNG TSIM
OFFICERS
MATTHEW W. S. LEE, CHIEF INVESTMENT OFFICER
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
MAMURO YAMAOKA, 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 LLP
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
(1) Member of the Audit Committee
19
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
