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)
Joseph J. Mantineo
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrants telephone number, including area code: (800) 221-5672
Date of fiscal year end: July 31, 2011
Date of reporting period: July 31, 2011
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT
AllianceBernstein
Greater China 97 Fund
July 31, 2011
Annual Report
Investment Products Offered
| Are Not FDIC Insured |
| May Lose Value |
| Are Not Bank Guaranteed |
Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit us online at www.alliancebernstein.com or contact your AllianceBernstein Investments representative. Please read the prospectus and/or summary prospectus carefully before investing.
This shareholder report must be preceded or accompanied by the Funds prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Funds 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 AllianceBernsteins website at www.alliancebernstein.com, or go to the Securities and Exchange Commissions (the Commission) website 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 Funds Forms N-Q are available on the Commissions website at www.sec.gov. The Funds Forms N-Q may also be reviewed and copied at the Commissions Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com.
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AllianceBernstein family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the manager of the funds.
AllianceBernstein® and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P.
September 12, 2011
Annual Report
This report provides managements discussion of fund performance for AllianceBernstein Greater China 97 Fund (the Fund) for the annual reporting period ended July 31, 2011.
Investment Objective and Policies
The Funds investment objective is long-term capital appreciation through investment of at least 80% of its total assets in equity securities of Greater China companies. Under normal circumstances, the Fund will invest at least 80%, and normally substantially all, of its net assets in equity securities of 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. In addition to investing in equity securities of Greater China companies, the Fund may invest up to 20% of its total assets in (i) debt securities issued or guaranteed by Greater China companies or by Greater China Governments, their agencies or instrumentalities and (ii) equity or debt securities issued by issuers other than Greater China companies. The Fund will invest only in investment-grade securities. The Fund normally invests in approximately 45-65 companies.
Currencies can have a dramatic impact on equity returns, significantly adding to returns in some years and greatly diminishing them in others. Currency and equity positions are evaluated separately. AllianceBernstein L.P. (the Adviser) may seek to hedge the currency exposure resulting from securities positions when it finds the currency exposure unattractive. To hedge a portion of its currency risk, the Fund may from time to time invest in currency-related derivatives, including forward currency exchange contracts, futures, options on futures, swaps and options. The Adviser may also seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives.
Investment Results
The table on page 5 shows the Funds performance compared to its benchmark, the Morgan Stanley Capital International (MSCI) Golden Dragon Index (net and gross) and to the Lipper China Region Funds Average (the Lipper Average). 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 majority of the Funds 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 declined and underperformed its benchmark for the six-month period ended July 31, 2011
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 1 |
and underperformed for the 12-month period ended July 31, 2011, before sales charges. The Fund underperformed its Lipper Average during both periods as well.
Stock selection detracted during the 12-month period. Stock selection in the industrials sector was the largest detractor, including positions in shipping companies which underperformed due to the natural disaster in Japan and weaker prospects on freight revenue given global economic outlook. Somewhat mitigating these losses was the Funds underweight to the industrials sector.
Stock selection in the industrials sector was again the leading detractor for the six-month period. An underweight in the defensive utilities and telecommunications sector also detracted. Contributing was stock selection in the consumer discretionary sector.
The Fund did not utilize derivatives or leverage during the six- or 12-month periods ended July 31, 2011.
Market Review and Investment Strategy
Global equities retreated in the six-month period ended July 31, 2011, influenced by the natural disaster in Japan, ongoing concern over the Middle East political situation and further monetary tightening in China. Concerns over the debt situation in the euro area and in the United States also resurfaced, causing investors to worry about the pace of the global economic recovery. The rapid reduction in risk appetite resulted in the Fund trailing
its benchmark for both the six- and 12-month periods. The research of the Hong Kong/China Portfolio Oversight Group (the Group) suggests that the threats to the Greater China regions economic growth are limited, as from past cycles, and they are positioning the Fund with stocks that the Group believes have exceptional long-term growth potential, particularly in the domestic consumer sectors.
While the Group does not think Chinas central bank will ease policy soon, there are global growth concerns that the country is not likely to have more rate hikes in 2011. Inflation is also likely to taper off from a high level.
The shift towards lower growth and peaking inflation should be positive for growth stocks. As fewer companies are able to exceed expectations, stocks that consistently outperform should expect to be rewarded with superior share price gains. The Group believes this will be positive for the Funds investment approach, as it strives to uncover the relatively few stocks with underestimated earnings power.
Despite increases in interest rates over the 12-month period ended July 31, 2011, real interest rates in China remain negative. The weaker U.S. economic growth outlook suggests that interest rates are likely to stay accommodative in the near future. This is likely to drive more international capital into China. Taiwans economy has already moved into a steadier state of self-sustaining growth, but may still be affected by a weaker global economy.
2 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Hong Kong authorities, like their Chinese counterparts, are taking action to quell segments of the property market and inflation.
The Fund is overweight the consumer discretionary, consumer staples, financials and technology sectors and underweight the telecom, utilities, industrials and energy sectors.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 3 |
HISTORICAL PERFORMANCE
An Important Note About Historical Performance
The investment return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. 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.
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 Funds 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 MSCI Golden Dragon Index does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The MSCI Golden Dragon Index (net and gross; free float-adjusted market capitalization) represents the equity market performance in the China region. Net returns include the reinvestment of dividends after deduction of non-U.S. withholding tax; gross returns include reinvestment of dividends prior to such deduction. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. The 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. An investor cannot invest directly in an index or average, and its results are not indicative of the performance for any specific investment, including the Fund.
A Word About Risk
Market Risk: The market values of the portfolios holdings rise and fall from day to day, so investments may lose value.
Foreign (Non-U.S.) Risk: Non-U.S. securities may be more volatile because of political, regulatory, market and economic uncertainties associated with such securities. Fluctuations in currency exchange rates may negatively affect the value of the investment or reduce returns. These risks are magnified in emerging or developing markets.
Focused Portfolio Risk: Portfolios that hold a smaller number of securities may be more volatile than more diversified portfolios, since gains or losses from each security will have a greater impact on the portfolios overall value.
Derivatives Risk: Investing in derivative instruments such as options, futures, forwards or swaps can be riskier than traditional investments, and may be more volatile, especially in a down market.
Country/Geographic Risk: Investments in issuers located in a particular country or geographic region may have more risk because of particular market factors affecting that country or region, including political instability or unpredictable economic conditions.
These risks are fully discussed in the Funds prospectus.
(Historical Performance continued on next page)
4 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK PERIODS ENDED JULY 31, 2011 |
NAV Returns | |||||||||
6 Months | 12 Months | |||||||||
AllianceBernstein Greater China 97 Fund |
||||||||||
Class A |
-4.10% | 8.62% | ||||||||
| ||||||||||
Class B* |
-4.50% | 7.80% | ||||||||
| ||||||||||
Class C |
-4.44% | 7.83% | ||||||||
| ||||||||||
Advisor Class** |
-3.98% | 8.91% | ||||||||
| ||||||||||
MSCI Golden Dragon Index (net) |
-1.61% | 15.10% | ||||||||
| ||||||||||
MSCI Golden Dragon Index (gross) |
-1.34% | 15.51% | ||||||||
| ||||||||||
Lipper China Region Funds Average |
-2.69% | 12.24% | ||||||||
| ||||||||||
* Effective January 31, 2009, Class B shares are no longer available for purchase to new investors. Please see Note A for more information. ** Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or 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 7/31/01- 7/31/11
This chart illustrates the total value of an assumed $10,000 investment in AllianceBernstein Greater China 97 Fund Class A shares (from 7/31/01 to 7/31/11) as compared to the performance of the Funds benchmark, the MSCI Golden Dragon Index. 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 | 5 |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF JULY 31, 2011 | ||||||||
NAV Returns | SEC Returns | |||||||
Class A Shares | ||||||||
1 Year |
8.62 | % | 4.01 | % | ||||
5 Years |
8.55 | % | 7.61 | % | ||||
10 Years |
11.44 | % | 10.95 | % | ||||
Class B Shares | ||||||||
1 Year |
7.80 | % | 3.80 | % | ||||
5 Years |
7.76 | % | 7.76 | % | ||||
10 Years(a) |
10.80 | % | 10.80 | % | ||||
Class C Shares | ||||||||
1 Year |
7.83 | % | 6.83 | % | ||||
5 Years |
7.79 | % | 7.79 | % | ||||
10 Years |
10.63 | % | 10.63 | % | ||||
Advisor Class Shares | ||||||||
1 Year |
8.91 | % | 8.91 | % | ||||
5 Years |
8.86 | % | 8.86 | % | ||||
10 Years |
11.78 | % | 11.78 | % |
The Funds current prospectus fee table shows the Funds total annual operating expense ratios as 1.88%, 2.67%, 2.64% and 1.63% for Class A, Class B, Class C and Advisor Class shares, respectively, gross of any fee waivers or expense reimbursements. These waivers/reimbursements extend through the Funds current fiscal year and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
| 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 accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. |
See Historical Performance disclosures on page 4.
(Historical Performance continued on next page)
6 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Historical Performance
HISTORICAL PERFORMANCE
(continued from previous page)
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2011) |
||||||
SEC Returns | ||||||
Class A Shares | ||||||
1 Year |
13.20 | % | ||||
5 Years |
7.88 | % | ||||
10 Years |
9.95 | % | ||||
Class B Shares | ||||||
1 Year |
13.36 | % | ||||
5 Years |
8.05 | % | ||||
10 Years(a) |
9.81 | % | ||||
Class C Shares | ||||||
1 Year |
16.32 | % | ||||
5 Years |
8.06 | % | ||||
10 Years |
9.63 | % | ||||
Advisor Class Shares | ||||||
1 Year |
18.55 | % | ||||
5 Years |
9.14 | % | ||||
10 Years |
10.77 | % |
(a) | Assumes conversion of Class B shares into Class A shares after eight years. |
| Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. |
See Historical Performance disclosures on page 4.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 7 |
Historical Performance
FUND EXPENSES
(unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Funds actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Funds actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the hypothetical example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value February 1, 2011 |
Ending Account Value July 31, 2011 |
Expenses Paid During Period* |
||||||||||||||||||||||
Actual | Hypothetical | Actual | Hypothetical** | Actual | Hypothetical | |||||||||||||||||||
Class A | $ | 1,000 | $ | 1,000 | $ | 959.00 | $ | 1,014.48 | $ | 10.10 | $ | 10.39 | ||||||||||||
Class B | $ | 1,000 | $ | 1,000 | $ | 955.00 | $ | 1,010.76 | $ | 13.72 | $ | 14.11 | ||||||||||||
Class C | $ | 1,000 | $ | 1,000 | $ | 955.62 | $ | 1,010.86 | $ | 13.63 | $ | 14.01 | ||||||||||||
Advisor Class | $ | 1,000 | $ | 1,000 | $ | 960.22 | $ | 1,015.87 | $ | 8.75 | $ | 9.00 |
* | Expenses are equal to the classes annualized expense ratios of 2.08%, 2.83%, 2.81% and 1.80%, 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. |
8 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Fund Expenses
PORTFOLIO SUMMARY
July 31, 2011 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $51.7
* | All data are as of July 31, 2011. The Funds 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 Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poors. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The Portfolio of Investments section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Funds prospectus.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 9 |
Portfolio Summary
TEN LARGEST HOLDINGS*
July 31, 2011 (unaudited)
Company | U.S. $ Value | Percent of Net Assets |
||||||
Industrial & Commercial Bank of China Class H |
$ | 2,997,294 | 5.8 | % | ||||
CNOOC Ltd. |
2,967,123 | 5.7 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. |
2,648,459 | 5.1 | ||||||
AIA Group Ltd. |
2,001,782 | 3.9 | ||||||
China Construction Bank Corp. Class H |
1,848,591 | 3.6 | ||||||
China Unicom Hong Kong Ltd. |
1,569,974 | 3.0 | ||||||
HTC Corp. |
1,499,272 | 2.9 | ||||||
Tencent Holdings Ltd. |
1,366,875 | 2.7 | ||||||
Springland International Holdings Ltd. |
1,356,549 | 2.6 | ||||||
Focus Media Holding Ltd. (ADR) |
1,292,577 | 2.5 | ||||||
$ | 19,548,496 | 37.8 | % |
* | Long-term investments. |
10 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Ten Largest Holdings
PORTFOLIO OF INVESTMENTS
July 31, 2011
Company | Shares | U.S. $ Value | ||||||
|
||||||||
COMMON STOCKS 99.8% |
||||||||
Financials 36.4% |
||||||||
Commercial Banks 15.2% |
||||||||
BOC Hong Kong Holdings Ltd. |
179,500 | $ | 535,802 | |||||
China Construction Bank Corp. Class H |
2,293,600 | 1,848,591 | ||||||
Chinatrust Financial Holding Co., Ltd. |
1,002,000 | 904,845 | ||||||
Hang Seng Bank Ltd. |
33,100 | 520,360 | ||||||
Industrial & Commercial Bank of China Class H |
3,940,020 | 2,997,294 | ||||||
Standard Chartered PLC |
40,981 | 1,047,671 | ||||||
|
|
|||||||
7,854,563 | ||||||||
|
|
|||||||
Diversified Financial Services 3.1% |
||||||||
Fubon Financial Holding Co., Ltd. |
404,000 | 659,093 | ||||||
Hong Kong Exchanges and Clearing Ltd. |
46,500 | 959,268 | ||||||
|
|
|||||||
1,618,361 | ||||||||
|
|
|||||||
Insurance 7.5% |
||||||||
AIA Group Ltd.(a) |
545,000 | 2,001,782 | ||||||
Cathay Financial Holding Co., Ltd. |
582,063 | 872,694 | ||||||
China Life Insurance Co., Ltd. Class H |
63,000 | 210,107 | ||||||
Ping An Insurance Group Co. Class H |
78,500 | 763,917 | ||||||
|
|
|||||||
3,848,500 | ||||||||
|
|
|||||||
Real Estate Management & Development 10.6% |
||||||||
Cheung Kong Holdings Ltd. |
74,000 | 1,127,319 | ||||||
China Overseas Land & Investment Ltd. |
334,000 | 744,469 | ||||||
Longfor Properties Co., Ltd. |
719,500 | 1,107,592 | ||||||
Sun Hung Kai Properties Ltd. |
83,000 | 1,261,514 | ||||||
Wharf Holdings Ltd. |
168,000 | 1,229,686 | ||||||
|
|
|||||||
5,470,580 | ||||||||
|
|
|||||||
18,792,004 | ||||||||
|
|
|||||||
Information Technology 20.4% |
||||||||
Communications Equipment 4.2% |
||||||||
HTC Corp. |
50,400 | 1,499,272 | ||||||
Wistron NeWeb Corp. |
193,000 | 683,003 | ||||||
|
|
|||||||
2,182,275 | ||||||||
|
|
|||||||
Electronic Equipment, Instruments & Components 5.5% |
||||||||
Chroma ATE, Inc. |
439,074 | 1,105,602 | ||||||
Delta Electronics, Inc. |
72,000 | 254,848 | ||||||
Largan Precision Co., Ltd. |
12,000 | 404,077 | ||||||
Unimicron Technology Corp. |
617,000 | 1,097,724 | ||||||
|
|
|||||||
2,862,251 | ||||||||
|
|
|||||||
Internet Software & Services 3.5% |
||||||||
Baidu, Inc./China (Sponsored ADR)(a) |
2,700 | 424,089 | ||||||
Tencent Holdings Ltd. |
52,600 | 1,366,875 | ||||||
|
|
|||||||
1,790,964 | ||||||||
|
|
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 11 |
Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
|
||||||||
Semiconductors & Semiconductor Equipment 7.2% |
||||||||
Kinsus Interconnect Technology Corp. |
43,000 | $ | 177,616 | |||||
MediaTek, Inc. |
23,000 | 206,018 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. |
1,065,714 | 2,648,459 | ||||||
Trina Solar Ltd. (Sponsored ADR)(a) |
37,200 | 666,252 | ||||||
|
|
|||||||
3,698,345 | ||||||||
|
|
|||||||
10,533,835 | ||||||||
|
|
|||||||
Consumer Discretionary 13.2% |
||||||||
Hotels, Restaurants & Leisure 2.3% |
||||||||
Ajisen China Holdings Ltd. |
365,000 | 719,007 | ||||||
Sands China Ltd.(a) |
151,600 | 456,280 | ||||||
|
|
|||||||
1,175,287 | ||||||||
|
|
|||||||
Media 2.5% |
||||||||
Focus Media Holding Ltd. (ADR)(a) |
39,300 | 1,292,577 | ||||||
|
|
|||||||
Multiline Retail 2.6% |
||||||||
Springland International Holdings Ltd. |
1,433,000 | 1,356,549 | ||||||
|
|
|||||||
Specialty Retail 5.8% |
||||||||
Belle International Holdings Ltd. |
347,000 | 757,410 | ||||||
LOccitane International SA(a) |
301,750 | 828,000 | ||||||
Man Wah Holdings Ltd. |
380,000 | 344,831 | ||||||
Zhongsheng Group Holdings Ltd. |
512,000 | 1,085,720 | ||||||
|
|
|||||||
3,015,961 | ||||||||
|
|
|||||||
6,840,374 | ||||||||
|
|
|||||||
Materials 8.3% |
||||||||
Chemicals 2.1% |
||||||||
Formosa Chemicals & Fibre Corp. |
133,000 | 481,857 | ||||||
Formosa Plastics Corp. |
165,000 | 621,296 | ||||||
|
|
|||||||
1,103,153 | ||||||||
|
|
|||||||
Construction Materials 2.9% |
||||||||
BBMG Corp. |
630,500 | 910,699 | ||||||
China Resources Cement Holdings, Ltd. |
604,000 | 578,548 | ||||||
|
|
|||||||
1,489,247 | ||||||||
|
|
|||||||
Metals & Mining 3.3% |
||||||||
China Metal Recycling Holdings Ltd. |
214,800 | 288,010 | ||||||
China Steel Corp. |
436,800 | 455,652 | ||||||
Jiangxi Copper Co., Ltd. Class H |
81,000 | 283,872 | ||||||
Mongolian Mining Corp.(a) |
547,500 | 674,357 | ||||||
|
|
|||||||
1,701,891 | ||||||||
|
|
|||||||
4,294,291 | ||||||||
|
|
|||||||
Energy 8.2% |
||||||||
Oil, Gas & Consumable Fuels 8.2% |
||||||||
China Shenhua Energy Co., Ltd. Class H |
65,500 | 328,843 | ||||||
CNOOC Ltd. |
1,336,000 | 2,967,123 | ||||||
PetroChina Co., Ltd. Class H |
360,000 | 513,677 |
12 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Portfolio of Investments
Company | Shares | U.S. $ Value | ||||||
|
||||||||
Yanzhou Coal Mining Co., Ltd. Class H |
108,000 | $ | 413,738 | |||||
|
|
|||||||
4,223,381 | ||||||||
|
|
|||||||
Consumer Staples 5.9% |
||||||||
Food & Staples Retailing 0.8% |
||||||||
President Chain Store Corp. |
65,000 | 415,857 | ||||||
|
|
|||||||
Food Products 5.1% |
||||||||
Besunyen Holdings Co. |
1,352,000 | 463,171 | ||||||
China Mengniu Dairy Co., Ltd. |
271,000 | 938,241 | ||||||
China Yurun Food Group Ltd. |
395,000 | 1,239,753 | ||||||
|
|
|||||||
2,641,165 | ||||||||
|
|
|||||||
3,057,022 | ||||||||
|
|
|||||||
Industrials 3.3% |
||||||||
Airlines 1.5% |
||||||||
Air China Ltd. |
250,000 | 263,814 | ||||||
Eva Airways Corp.(a) |
574,000 | 511,790 | ||||||
|
|
|||||||
775,604 | ||||||||
|
|
|||||||
Construction & Engineering 0.6% |
||||||||
China Communications Construction Co., Ltd. |
350,000 | 298,219 | ||||||
|
|
|||||||
Marine 1.2% |
||||||||
SITC International Holdings Co., Ltd. |
1,509,000 | 638,359 | ||||||
|
|
|||||||
Transportation Infrastructure 0.0% |
||||||||
China Merchants Holdings International Co., Ltd. |
1,698 | 6,039 | ||||||
|
|
|||||||
1,718,221 | ||||||||
|
|
|||||||
Telecommunication Services 3.1% |
||||||||
Diversified Telecommunication Services 3.1% |
||||||||
China Unicom Hong Kong Ltd. |
786,000 | 1,569,974 | ||||||
|
|
|||||||
Health Care 1.0% |
||||||||
Pharmaceuticals 1.0% |
||||||||
China Shineway Pharmaceutical Group Ltd. |
174,000 | 292,936 | ||||||
Sihuan Pharmaceutical Holdings Group Ltd.(a) |
543,000 | 239,433 | ||||||
|
|
|||||||
532,369 | ||||||||
|
|
|||||||
Total Investments 99.8% |
51,561,471 | |||||||
Other assets less liabilities 0.2% |
121,848 | |||||||
|
|
|||||||
Net Assets 100.0% |
$ | 51,683,319 | ||||||
|
|
(a) | Non-income producing security. |
Glossary:
ADR American Depositary Receipt
See notes to financial statements.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 13 |
Portfolio of Investments
STATEMENT OF ASSETS & LIABILITIES
July 31, 2011
Assets | ||||
Investments in securities, at value |
$ | 51,561,471 | ||
Foreign currencies, at value (cost $241,842) |
241,994 | |||
Receivable for investment securities sold |
781,273 | |||
Dividends and interest receivable |
248,648 | |||
Receivable for capital stock sold |
62,254 | |||
|
|
|||
Total assets |
52,895,640 | |||
|
|
|||
Liabilities | ||||
Due to Custodian |
594,474 | |||
Payable for investment securities purchased |
260,312 | |||
Payable for capital stock redeemed |
119,689 | |||
Advisory fee payable |
33,751 | |||
Administrative fee payable |
30,430 | |||
Distribution fee payable |
23,564 | |||
Transfer Agent fee payable |
10,823 | |||
Accrued expenses and other liabilities |
139,278 | |||
|
|
|||
Total liabilities |
1,212,321 | |||
|
|
|||
Net Assets |
$ | 51,683,319 | ||
|
|
|||
Composition of Net Assets | ||||
Capital stock, at par |
$ | 3,875 | ||
Additional paid-in capital |
32,945,875 | |||
Accumulated net realized gain on investment |
6,853,699 | |||
Net unrealized appreciation of investments |
11,879,870 | |||
|
|
|||
$ | 51,683,319 | |||
|
|
Net Asset Value Per Share12 billion shares of capital stock authorized, $.001 par value
Class | Net Assets | Shares Outstanding |
Net Asset Value |
|||||||||
A | $ | 28,089,291 | 2,035,482 | $ | 13.80 | * | ||||||
|
||||||||||||
B | $ | 7,450,195 | 594,828 | $ | 12.52 | |||||||
|
||||||||||||
C | $ | 11,239,426 | 899,855 | $ | 12.49 | |||||||
|
||||||||||||
Advisor | $ | 4,904,407 | 344,351 | $ | 14.24 | |||||||
|
* | The maximum offering price per share for Class A shares was $14.41, which reflects a sales charge 4.25%. |
See notes to financial statements.
14 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Statement of Assets & Liabilities
STATEMENT OF OPERATIONS
Year Ended July 31, 2011
Investment Income | ||||||||
Dividends |
||||||||
Unaffiliated issuers (net of foreign taxes withheld of $166,342) |
$ | 1,320,493 | ||||||
Affiliated issuers |
424 | |||||||
Interest |
24 | $ | 1,320,941 | |||||
|
|
|||||||
Expenses | ||||||||
Advisory fee (see Note B) |
458,948 | |||||||
Distribution feeClass A |
102,483 | |||||||
Distribution feeClass B |
91,385 | |||||||
Distribution feeClass C |
129,740 | |||||||
Transfer agencyClass A |
75,376 | |||||||
Transfer agencyClass B |
24,628 | |||||||
Transfer agencyClass C |
31,434 | |||||||
Transfer agencyAdvisor Class |
10,993 | |||||||
Custodian |
108,758 | |||||||
Administrative |
82,257 | |||||||
Registration fees |
70,528 | |||||||
Audit |
47,260 | |||||||
Legal |
47,850 | |||||||
Directors fees |
39,036 | |||||||
Printing |
34,773 | |||||||
Miscellaneous |
26,956 | |||||||
|
|
|||||||
Total expenses |
1,382,405 | |||||||
|
|
|||||||
Net investment loss |
(61,464 | ) | ||||||
|
|
|||||||
Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions | ||||||||
Net realized gain on: |
||||||||
Investment transactions |
9,829,108 | |||||||
Foreign currency transactions |
41,830 | |||||||
Net change in unrealized appreciation/depreciation of: |
||||||||
Investments |
(4,484,447 | ) | ||||||
Foreign currency denominated assets and liabilities |
47 | |||||||
|
|
|||||||
Net gain on investment and foreign currency transactions |
5,386,538 | |||||||
|
|
|||||||
Net Increase in Net Assets from Operations |
$ | 5,325,074 | ||||||
|
|
See notes to financial statements.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 15 |
Statement of Operations
STATEMENT OF CHANGES IN NET ASSETS
Year Ended July 31, 2011 |
Year Ended July 31, 2010 |
|||||||
Increase in Net Assets from Operations | ||||||||
Net investment loss |
$ | (61,464 | ) | $ | (128,103 | ) | ||
Net realized gain on investment and foreign currency transactions |
9,870,938 | 19,171,736 | ||||||
Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities |
(4,484,400 | ) | (15,431,077 | ) | ||||
|
|
|
|
|||||
Net increase in net assets from operations |
5,325,074 | 3,612,556 | ||||||
Dividends and Distributions to Shareholders from |
||||||||
Net investment income |
||||||||
Class A |
0 | | (304,414 | ) | ||||
Class B |
0 | | (37,552 | ) | ||||
Class C |
0 | | (48,562 | ) | ||||
Advisor Class |
0 | | (44,194 | ) | ||||
Net realized gain on investment and foreign currency transactions |
||||||||
Class A |
(1,637,463 | ) | 0 | | ||||
Class B |
(496,629 | ) | 0 | | ||||
Class C |
(666,687 | ) | 0 | | ||||
Advisor Class |
(202,492 | ) | 0 | | ||||
Capital Stock Transactions | ||||||||
Net decrease |
(10,388,644 | ) | (56,069,660 | ) | ||||
|
|
|
|
|||||
Total decrease |
(8,066,841 | ) | (52,891,826 | ) | ||||
Net Assets | ||||||||
Beginning of period |
59,750,160 | 112,641,986 | ||||||
|
|
|
|
|||||
End of period (including accumulated net investment loss and distributions in excess of net investment income of $0 and ($10,279), respectively) |
$ | 51,683,319 | $ | 59,750,160 | ||||
|
|
|
|
See notes to financial statements.
16 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Statement of Changes in Net Assets
NOTES TO FINANCIAL STATEMENTS
July 31, 2011
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. Effective January 31, 2009, sales of Class B shares of the Fund to new investors were suspended. Class B shares will only be issued (i) upon the exchange of Class B shares from another AllianceBernstein Mutual Fund, (ii) for purposes of dividend reinvestment, (iii) through the Funds Automatic Investment Program (the Program) for accounts that established the Program prior to January 31, 2009, and (iv) for purchases of additional shares by Class B shareholders as of January 31, 2009. The ability to establish a new Program for accounts containing Class B shares was suspended as of January 31, 2009. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. 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 (U.S. GAAP), which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at fair value as determined in accordance with procedures established by and under the general supervision of the Funds 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
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 17 |
Notes to Financial Statements
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 ask prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter market (OTC) put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, AllianceBernstein L.P. (the Adviser) will have discretion to determine the best valuation (e.g. last trade price); open futures contracts 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; 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, 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 using the Advisers pricing models which utilize pricing-related information from external sources. Investments in money market funds are valued at their net asset value each day.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuers financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time (see Note A.2).
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The U.S. GAAP disclosure requirements establish a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable
18 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Notes to Financial Statements
inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Funds own assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| Level 1quoted prices in active markets for identical investments |
| Level 2other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| Level 3significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments) |
The following table summarizes the valuation of the Funds investments by the above fair value hierarchy levels as of July 31, 2011:
Investments in |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks: |
||||||||||||||||
Financials |
$ | 0 | | $ | 18,792,004 | $ | 0 | | $ | 18,792,004 | ||||||
Information Technology |
1,090,341 | 9,443,494 | 0 | | 10,533,835 | |||||||||||
Consumer Discretionary |
1,292,577 | 5,547,797 | 0 | | 6,840,374 | |||||||||||
Materials |
0 | | 4,294,291 | 0 | | 4,294,291 | ||||||||||
Energy |
0 | | 4,223,381 | 0 | | 4,223,381 | ||||||||||
Consumer Staples |
463,171 | 2,593,851 | 0 | | 3,057,022 | |||||||||||
Industrials |
0 | | 1,718,221 | 0 | | 1,718,221 | ||||||||||
Telecommunication Services |
0 | | 1,569,974 | 0 | | 1,569,974 | ||||||||||
Health Care |
0 | | 532,369 | 0 | | 532,369 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments in Securities |
2,846,089 | 48,715,382 | | 0 | | 51,561,471 | ||||||||||
Other Financial Instruments*: |
0 | | 0 | | 0 | | 0 | | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 2,846,089 | $ | 48,715,382 | $ | 0 | | $ | 51,561,471 | |||||||
|
|
|
|
|
|
|
|
* | Other financial instruments are derivative instruments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument. |
| The earlier close of the foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred between the close of the foreign markets and the time at which the Fund values its securities which may materially affect the value of securities trading in such markets. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. Accordingly, a significant portion of the Funds investments are categorized as Level 2 investments. |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 19 |
Notes to Financial Statements
rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds 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.
4. Taxes
It is the Funds policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Funds tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Funds financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income.
6. Class Allocations
All income earned and expenses incurred by the Fund are borne on a pro-rata basis by each settled 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 respective net assets.
20 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Notes to Financial Statements
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. GAAP. 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 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 Funds average daily net assets. The fee is accrued daily and paid monthly.
The Adviser had agreed to waive its fee and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis to 2.50%, 3.20%, 3.20% and 2.20% of the daily average net assets for Class A, Class B, Class C and Advisor Class shares, respectively (the Expense Caps). The Expense Caps will expire on July 31, 2012 and then may be extended by the Adviser for additional one year terms. For the year ended July 31, 2011, there was no such reimbursement.
Pursuant to the investment 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, 2011, such fee amounted to $82,257.
The Fund compensates AllianceBernstein Investor Services, Inc. (ABIS), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $71,734 for the year ended July 31, 2011.
For the year ended July 31, 2011, there was no reduction to the expenses of Class A, Class B, Class C and Advisor Class shares under an expense offset arrangement with ABIS.
AllianceBernstein Investments, Inc. (the Distributor), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Funds shares. The Distributor has advised the Fund that it has retained front-end sales charges of $1,530 from the sale of Class A shares and received $100, $9,005 and $570 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, 2011.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 21 |
Notes to Financial Statements
The Fund may invest in the AllianceBernstein Fixed-Income Shares, Inc.Government STIF Portfolio, an open-end management investment company managed by the Adviser. The Government STIF Portfolio is offered as a cash management option to mutual funds and other institutional accounts of the Adviser, and is not available for direct purchase by members of the public. The Government STIF Portfolio pays no investment management fees but does bear its own expenses. A summary of the Funds transactions in shares of the Government STIF Portfolio for the year ended July 31, 2011 is as follows:
Market Value |
Purchases at Cost (000) |
Sales Proceeds (000) |
Market Value July 31, 2011 (000) |
Dividend Income (000) |
||||||||||||||
$ | 242 | $ | 14,032 | $ | 14,274 | $ | 0 | | $ | 0 | * |
* | Amount is less than $500. |
Brokerage commissions paid on investment transactions for the year ended July 31, 2011 amounted to $142,362, of which $0 and $498 was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, respectively, affiliates of the Adviser.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the Agreement) pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .30% of the Funds average daily net assets attributable to Class A shares and 1% of the Funds average daily net assets attributable to both Class B and Class C shares. There are no distribution and servicing fees on 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. Since the commencement of the Funds operations, the Distributor has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amounts of $2,091,903 and $1,482,755 for Class B and Class C shares, respectively. While such costs may be recovered from the Fund in future periods so long as the Agreement is in effect, the rate of the distribution and servicing fees payable under the Agreement may not be increased without a shareholder vote. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Funds shares.
22 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Notes to Financial Statements
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments) for the year ended July 31, 2011, were as follows:
Purchases | Sales | |||||||
Investment securities (excluding |
$ | 46,627,091 | $ | 60,092,328 | ||||
U.S. government securities |
0 | | 0 | |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation (excluding forward currency exchange contracts) are as follows:
Cost |
$ | 40,254,061 | ||
|
|
|||
Gross unrealized appreciation |
$ | 13,435,490 | ||
Gross unrealized depreciation |
(2,128,080 | ) | ||
|
|
|||
Net unrealized appreciation |
$ | 11,307,410 | ||
|
|
1. Derivative Financial Instruments
The Fund may use derivatives to earn income and enhance returns, to hedge or adjust the risk profile of its portfolio, to replace more traditional direct investments, or to obtain exposure to otherwise inaccessible markets.
The Fund did not engage in derivative transactions for the year ended July 31, 2011.
2. Currency Transactions
The Fund may invest in non-U.S. Dollar securities on a currency hedged or unhedged basis. The Fund may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Fund may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Fund and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Fund may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 23 |
Notes to Financial Statements
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 July 31, 2011 |
Year Ended July 31, 2010 |
Year Ended July 31, 2011 |
Year Ended July 31, 2010 |
|||||||||||||||||
|
|
|||||||||||||||||||
Class A | ||||||||||||||||||||
Shares sold |
258,306 | 884,238 | $ | 3,687,769 | $ | 11,382,758 | ||||||||||||||
|
||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions |
105,256 | 20,513 | 1,518,839 | 276,520 | ||||||||||||||||
|
||||||||||||||||||||
Shares converted from Class B |
57,964 | 80,645 | 833,022 | 1,024,877 | ||||||||||||||||
|
||||||||||||||||||||
Shares redeemed |
(880,142 | ) | (4,908,266 | ) | (12,548,609 | ) | (61,602,035 | ) | ||||||||||||
|
||||||||||||||||||||
Net decrease |
(458,616 | ) | (3,922,870 | ) | $ | (6,508,979 | ) | $ | (48,917,880 | ) | ||||||||||
|
||||||||||||||||||||
Class B | ||||||||||||||||||||
Shares sold |
26,748 | 86,130 | $ | 355,386 | $ | 1,029,536 | ||||||||||||||
|
||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions |
34,896 | 2,817 | 459,575 | 35,037 | ||||||||||||||||
|
||||||||||||||||||||
Shares converted to Class A |
(63,625 | ) | (87,635 | ) | (833,022 | ) | (1,024,877 | ) | ||||||||||||
|
||||||||||||||||||||
Shares redeemed |
(187,906 | ) | (256,350 | ) | (2,444,519 | ) | (3,016,262 | ) | ||||||||||||
|
||||||||||||||||||||
Net decrease |
(189,887 | ) | (255,038 | ) | $ | (2,462,580 | ) | $ | (2,976,566 | ) | ||||||||||
|
||||||||||||||||||||
Class C | ||||||||||||||||||||
Shares sold |
65,982 | 143,041 | $ | 853,919 | $ | 1,693,314 | ||||||||||||||
|
||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions |
47,698 | 3,574 | 626,272 | 44,320 | ||||||||||||||||
|
||||||||||||||||||||
Shares redeemed |
(280,065 | ) | (489,469 | ) | (3,633,634 | ) | (5,735,182 | ) | ||||||||||||
|
||||||||||||||||||||
Net decrease |
(166,385 | ) | (342,854 | ) | $ | (2,153,443 | ) | $ | (3,997,548 | ) | ||||||||||
|
||||||||||||||||||||
Advisor Class | ||||||||||||||||||||
Shares sold |
155,870 | 169,415 | $ | 2,310,957 | $ | 2,267,051 | ||||||||||||||
|
||||||||||||||||||||
Shares issued in reinvestment of dividends and distributions |
12,184 | 2,945 | 181,044 | 40,692 | ||||||||||||||||
|
||||||||||||||||||||
Shares redeemed |
(120,415 | ) | (185,268 | ) | (1,755,643 | ) | (2,485,409 | ) | ||||||||||||
|
||||||||||||||||||||
Net increase (decrease) |
47,639 | (12,908 | ) | $ | 736,358 | $ | (177,666 | ) | ||||||||||||
|
24 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Notes to Financial Statements
NOTE F
Risks Involved in Investing in the Fund
Foreign Securities RiskInvesting in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. government.
The Fund has invested approximately 53% of its net assets in China equity securities. Political, social or economic changes in this market may have a greater impact on the value of the Funds portfolio due to this concentration.
Currency RiskThis is the risk that changes in foreign currency exchange rates may negatively affect the value of the Funds investments or reduce the returns of the Fund. For example, the value of the Funds investments in foreign currency-denominated securities or currencies may decrease if the U.S. Dollar is strong (i.e., gaining value relative to other currencies) and other currencies are weak (i.e., losing value relative to the U.S. Dollar). Currency markets are generally not as regulated as securities markets. Independent of the Funds investments denominated in foreign currencies, the Funds positions in various foreign currencies may cause the Fund to experience investment losses due to the changes in exchange rates and interest rates.
Emerging Market RiskInvestments in emerging market countries may have more risk because the markets are less developed and less liquid as well as being subject to increased economic, political, regulatory or other uncertainties.
Focused Portfolio RiskInvestments in a limited number of companies may have more risk because changes in the value of a single security may have a more significant effect, either negative or positive, on the Funds NAV.
Derivatives RiskThe Fund may enter into derivative transactions such as forwards, options, futures and swaps. Derivatives may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Fund, and subject to counterparty risk to a greater degree than more traditional investments. Derivatives may result in significant losses, including losses that are far greater than the value of the derivatives reflected in the statement of assets and liabilities.
Indemnification RiskIn the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Funds maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. Therefore, the Fund has not accrued any liability in connection with these indemnification provisions.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 25 |
Notes to Financial Statements
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $140 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, 2011.
NOTE H
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended July 31, 2011 and July 31, 2010 were as follows:
2011 | 2010 | |||||||
Distributions paid from: |
||||||||
Ordinary income |
$ | 0 | | $ | 417,417 | |||
Long-term capital gains |
3,003,271 | 17,305 | ||||||
|
|
|
|
|||||
Total taxable distributions |
$ | 3,003,271 | $ | 434,722 | ||||
|
|
|
|
As of July 31, 2011, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed ordinary income |
$ | 160,091 | ||
Undistributed capital gain |
7,265,780 | |||
Unrealized appreciation/(depreciation) |
11,307,698 | (a) | ||
|
|
|||
Total accumulated earnings/(deficit) |
$ | 18,733,569 | ||
|
|
(a) | The difference between book-basis and tax-basis unrealized appreciation/depreciation is attributable primarily to the tax deferral of losses on wash sales. |
During the current year, permanent differences primarily due to foreign currency reclassifications and a net operating loss resulted in a net decrease in accumulated net investment loss, a net decrease in accumulated net realized gain on investment and foreign currency transactions, and a net increase in additional paid-in capital. These reclassifications had no effect on net assets.
26 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Notes to Financial Statements
NOTE I
New Accounting Pronouncement
In May 2011, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to develop common requirements for measuring fair value and for disclosing information about fair value measurements in U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments are intended to improve the comparability of fair value measurements presented and disclosed in the financial statements prepared in accordance with U.S. GAAP and IFRS. The ASU is effective during interim or annual periods beginning after December 15, 2011. At this time, management is evaluating the implication of this ASU and its impact on the financial statements has not been determined.
NOTE J
Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Funds financial statements through this date.
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 27 |
Notes to Financial Statements
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A | ||||||||||||||||||||
Year Ended July 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
|
|
|||||||||||||||||||
Net asset value, beginning of period |
$ 13.29 | $ 12.54 | $ 21.04 | $ 25.78 | $ 16.19 | |||||||||||||||
|
|
|||||||||||||||||||
Income From Investment Operations |
||||||||||||||||||||
Net investment income(a) |
.02 | .02 | .10 | .15 | (b) | .04 | (b) | |||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions |
1.16 | .84 | (4.60 | ) | (3.00 | ) | 10.72 | |||||||||||||
|
|
|||||||||||||||||||
Net increase (decrease) in net asset value from operations |
1.18 | .86 | (4.50 | ) | (2.85 | ) | 10.76 | |||||||||||||
|
|
|||||||||||||||||||
Less: Dividends and Distributions |
||||||||||||||||||||
Dividends from net investment income |
0 | | (.11 | ) | (.14 | ) | (.09 | ) | (.10 | ) | ||||||||||
Distributions from net realized gain on investment and foreign currency transactions |
(.67 | ) | 0 | | (3.86 | ) | (1.80 | ) | (1.07 | ) | ||||||||||
|
|
|||||||||||||||||||
Total dividends and distributions |
(.67 | ) | (.11 | ) | (4.00 | ) | (1.89 | ) | (1.17 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of period |
$ 13.80 | $ 13.29 | $ 12.54 | $ 21.04 | $ 25.78 | |||||||||||||||
|
|
|||||||||||||||||||
Total Return |
||||||||||||||||||||
Total investment return based on net asset value(c) |
8.62 | % | 6.82 | % | (11.92 | )% | (13.00 | )% | 69.53 | % | ||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||
Net assets, end of period (000s omitted) |
$28,089 | $33,146 | $80,444 | $46,250 | $62,614 | |||||||||||||||
Ratio to average net assets of: |
||||||||||||||||||||
Expenses, net of waivers/reimbursements |
2.02 | %(d) | 1.88 | %(d) | 2.02 | % | 1.61 | % | 1.63 | % | ||||||||||
Expenses, before waivers/reimbursements |
2.02 | %(d) | 1.88 | %(d) | 2.02 | % | 1.64 | % | 1.71 | % | ||||||||||
Net investment income |
.13 | %(d) | .13 | %(d) | .95 | % | .57 | %(b) | .19 | %(b) | ||||||||||
Portfolio turnover rate |
78 | % | 86 | % | 105 | % | 46 | % | 43 | % |
See footnote summary on page 32
28 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B | ||||||||||||||||||||
Year Ended July 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
|
|
|||||||||||||||||||
Net asset value, beginning of period |
$ 12.20 | $ 11.54 | $ 19.78 | $ 24.43 | $ 15.41 | |||||||||||||||
|
|
|||||||||||||||||||
Income From Investment Operations |
||||||||||||||||||||
Net investment loss(a) |
(.08 | ) | (.10 | ) | (.06 | ) | (.04 | )(b) | (.11 | )(b) | ||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions |
1.07 | .80 | (4.32 | ) | (2.81 | ) | 10.20 | |||||||||||||
|
|
|||||||||||||||||||
Net increase (decrease) in net asset value from operations |
.99 | .70 | (4.38 | ) | (2.85 | ) | 10.09 | |||||||||||||
|
|
|||||||||||||||||||
Less: Dividends and Distributions |
||||||||||||||||||||
Dividends from net investment income |
0 | | (.04 | ) | 0 | | 0 | | 0 | | ||||||||||
Distributions from net realized gain on investment and foreign currency transactions |
(.67 | ) | 0 | | (3.86 | ) | (1.80 | ) | (1.07 | ) | ||||||||||
|
|
|||||||||||||||||||
Total dividends and distributions |
(.67 | ) | (.04 | ) | (3.86 | ) | (1.80 | ) | (1.07 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of period |
$ 12.52 | $ 12.20 | $ 11.54 | $ 19.78 | $ 24.43 | |||||||||||||||
|
|
|||||||||||||||||||
Total Return |
||||||||||||||||||||
Total investment return based on net asset value(c) |
7.80 | % | 6.04 | % | (12.59 | )% | (13.66 | )% | 68.40 | % | ||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||
Net assets, end of period (000s omitted) |
$7,450 | $9,577 | $12,000 | $18,382 | $26,697 | |||||||||||||||
Ratio to average net assets of: |
||||||||||||||||||||
Expenses, net of waivers/reimbursements |
2.76 | %(d) | 2.67 | %(d) | 2.92 | % | 2.32 | % | 2.36 | % | ||||||||||
Expenses, before waivers/reimbursements |
2.76 | %(d) | 2.67 | %(d) | 2.92 | % | 2.36 | % | 2.45 | % | ||||||||||
Net investment loss |
(.64 | )%(d) | (.82 | )%(d) | (.55 | )% | (.16 | )%(b) | (.54 | )%(b) | ||||||||||
Portfolio turnover rate |
78 | % | 86 | % | 105 | % | 46 | % | 43 | % |
See footnote summary on page 32
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 29 |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C | ||||||||||||||||||||
Year Ended July 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
|
|
|||||||||||||||||||
Net asset value, beginning of period |
$ 12.17 | $ 11.50 | $ 19.73 | $ 24.37 | $ 15.38 | |||||||||||||||
|
|
|||||||||||||||||||
Income From Investment Operations |
||||||||||||||||||||
Net investment loss(a) |
(.07 | ) | (.09 | ) | (.05 | ) | (.03 | )(b) | (.10 | )(b) | ||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions |
1.06 | .80 | (4.32 | ) | (2.81 | ) | 10.16 | |||||||||||||
|
|
|||||||||||||||||||
Net increase (decrease) in net asset value from operations |
.99 | .71 | (4.37 | ) | (2.84 | ) | 10.06 | |||||||||||||
|
|
|||||||||||||||||||
Less: Dividends and Distributions |
||||||||||||||||||||
Dividends from net investment income |
0 | | (.04 | ) | 0 | | 0 | | 0 | | ||||||||||
Distributions from net realized gain on investment and foreign currency transactions |
(.67 | ) | 0 | | (3.86 | ) | (1.80 | ) | (1.07 | ) | ||||||||||
|
|
|||||||||||||||||||
Total dividends and distributions |
(.67 | ) | (.04 | ) | (3.86 | ) | (1.80 | ) | (1.07 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of period |
$ 12.49 | $ 12.17 | $ 11.50 | $ 19.73 | $ 24.37 | |||||||||||||||
|
|
|||||||||||||||||||
Total Return |
||||||||||||||||||||
Total investment return based on net asset value(c) |
7.83 | % | 6.15 | % | (12.56 | )% | (13.66 | )% | 68.34 | % | ||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||
Net assets, end of period (000s omitted) |
$11,239 | $12,975 | $16,211 | $25,388 | $31,363 | |||||||||||||||
Ratio to average net |
||||||||||||||||||||
Expenses, net of waivers/reimbursements |
2.74 | %(d) | 2.64 | %(d) | 2.88 | % | 2.32 | % | 2.34 | % | ||||||||||
Expenses, before waivers/reimbursements |
2.74 | %(d) | 2.64 | %(d) | 2.88 | % | 2.35 | % | 2.42 | % | ||||||||||
Net investment loss |
(.56 | )%(d) | (.76 | )%(d) | (.51 | )% | (.14 | )%(b) | (.50 | )%(b) | ||||||||||
Portfolio turnover rate |
78 | % | 86 | % | 105 | % | 46 | % | 43 | % |
See footnote summary on page 32
30 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class | ||||||||||||||||||||
Year Ended July 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
|
|
|||||||||||||||||||
Net asset value, beginning of period |
$ 13.66 | $ 12.88 | $ 21.54 | $ 26.36 | $ 16.52 | |||||||||||||||
|
|
|||||||||||||||||||
Income From Investment Operations |
||||||||||||||||||||
Net investment income(a) |
.08 | .05 | .04 | .23 | (b) | .07 | (b) | |||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions |
1.17 | .88 | (4.60 | ) | (3.09 | ) | 10.98 | |||||||||||||
|
|
|||||||||||||||||||
Net increase (decrease) in net asset value from operations |
1.25 | .93 | (4.56 | ) | (2.86 | ) | 11.05 | |||||||||||||
|
|
|||||||||||||||||||
Less: Dividends and Distributions |
||||||||||||||||||||
Dividends from net investment income |
0 | | (.15 | ) | (.24 | ) | (.16 | ) | (.14 | ) | ||||||||||
Distributions from net realized gain on investment and foreign currency transactions |
(.67 | ) | 0 | | (3.86 | ) | (1.80 | ) | (1.07 | ) | ||||||||||
|
|
|||||||||||||||||||
Total dividends and distributions |
(.67 | ) | (.15 | ) | (4.10 | ) | (1.96 | ) | (1.21 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of period |
$ 14.24 | $ 13.66 | $ 12.88 | $ 21.54 | $ 26.36 | |||||||||||||||
|
|
|||||||||||||||||||
Total Return |
||||||||||||||||||||
Total investment return based on net asset value(c) |
8.91 | % | 7.18 | % | (11.65 | )% | (12.82 | )% | 70.01 | % | ||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||
Net assets, end of period (000s omitted) |
$4,904 | $4,052 | $3,987 | $7,100 | $10,013 | |||||||||||||||
Ratio to average net |
||||||||||||||||||||
Expenses, net of waivers/reimbursements |
1.74 | %(d) | 1.63 | %(d) | 1.87 | % | 1.31 | % | 1.32 | % | ||||||||||
Expenses, before waivers/reimbursements |
1.74 | %(d) | 1.63 | %(d) | 1.87 | % | 1.34 | % | 1.40 | % | ||||||||||
Net investment income |
.55 | %(d) | .37 | %(d) | .39 | % | .85 | %(b) | .35 | %(b) | ||||||||||
Portfolio turnover rate |
78 | % | 86 | % | 105 | % | 46 | % | 43 | % |
See footnote summary on page 32
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 31 |
Financial Highlights
(a) | Based on average shares outstanding. |
(b) | Net of expenses waived/reimbursed by the Adviser. |
(c) | 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. |
(d) | The ratio includes expenses attributable to costs of proxy solicitation. |
See notes to financial statements.
32 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Financial Highlights
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. (the Fund), including the portfolio of investments, as of July 31, 2011, and the related statement of operations for the year then ended, the statements 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 Funds 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 Funds 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 Funds 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2011, by correspondence with the custodian and others, or by other appropriate auditing procedures where replies from others were not received. 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, 2011, 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.
New York, New York
September 26, 2011
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 33 |
Report of Independent Registered Public Accounting Firm
2011 FEDERAL TAX INFORMATION
(unaudited)
For Federal income tax purposes, the following information is furnished with respect to the earnings of the Fund for the taxable year ended July 31, 2011. For such taxable year, the Fund designates $7,265,780 as capital gain dividends.
The Fund intends to make an election to pass through foreign taxes to its shareholders. For the taxable year ended July 31, 2011, $166,342 of foreign taxes may be passed through and the associated foreign source income for information reporting purposes is $1,487,056.
Shareholders should not use the above information to prepare their income tax returns. 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 2012.
34 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
2011 Federal Tax Information
BOARD OF DIRECTORS
William H. Foulk, Jr.(1) , Chairman
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Robert M. Keith, President and Chief Executive Officer
Garry L. Moody(1)
Marshall C. Turner, Jr.(1)
Earl D. Weiner(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Richard Chow(2), Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and Chief Financial Officer
Stephen M. Woetzel, Controller
Principal Underwriter AllianceBernstein Investments, Inc. 1345 Avenue of the Americas New York, NY 10105
Custodian and Accounting Agent 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.
Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York, NY 10036 |
(1) | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. Mr. Foulk is the sole member of the Fair Value Pricing Committee. |
(2) | The day-to-day management of, and investment decisions for, the Funds portfolio are made by the Advisers Hong Kong/China Investment Team. Mr. Richard Chow is the investment professional with the most significant responsibility for the day-to-day management of the Funds portfolio. |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 35 |
Board of Directors
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 Funds Directors is set forth below.
NAME, (FIRST YEAR ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER RELEVANT QUALIFICATIONS*** |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
INTERESTED DIRECTOR | ||||||||
Robert M. Keith, + 1345 Avenue of the Americas 51 (2010) |
Senior Vice President of AllianceBernstein L.P. (the Adviser) and the head of AllianceBernstein Investments, Inc. (ABI) since July 2008; Director of ABI and President of the AllianceBernstein Mutual Funds. Previously, he served as Executive Managing Director of ABI from December 2006 to June 2008. Prior to joining ABI in 2006, Executive Managing Director of Bernstein Global Wealth Management, and prior thereto, Senior Managing Director and Global Head of Client Service and Sales of the Advisers institutional investment management business since 2004. Prior thereto, he was Managing Director and Head of North American Client Service and Sales in the Advisers institutional investment management business, with which he had been associated since prior to 2004. | 101 | None | |||||
DISINTERESTED DIRECTORS | ||||||||
William H. Foulk, Jr., #, ## Chairman of the Board 79 (1997) |
Investment Adviser and an Independent Consultant since prior to 2006. Previously, he was Senior Manager of Barrett Associates, Inc., a registered investment adviser. 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. He has served as a director or trustee of various AllianceBernstein Funds since 1983 and has been Chairman of the AllianceBernstein Funds and of the Independent Directors Committee of such Funds since 2003. He is also active in a number of mutual fund related organizations and committees. | 101 | None |
36 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Management of the Fund
NAME, (FIRST YEAR ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER RELEVANT QUALIFICATIONS*** |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
DISINTERESTED DIRECTORS (continued) |
||||||||
John H. Dobkin, # 69 (2010) |
Independent Consultant since prior to 2006. Formerly, President of Save Venice, Inc. (preservation organization) from 2001-2002; Senior Advisor from June 1999-June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989-May 1999. Previously, Director of the National Academy of Design. He has served as a director or trustee of various AllianceBernstein Funds since 1992, and as Chairman of the Audit Committees of a number of such Funds from 2001-2008. | 100 | None | |||||
Michael J. Downey, # 67 |
Private Investor since prior to 2006. Formerly, managing partner of Lexington Capital, LLC (investment advisory firm) from December 1997 until December 2003. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential Mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AllianceBernstein Funds since 2005 and is a director of two other registered investment companies (and Chairman of one of them). | 100 | Asia Pacific Fund, Inc., The Merger Fund since prior to 2006 and Prospect Acquisition Corp. (financial services) since 2007 until 2009 | |||||
D. James Guzy, # 75 |
Chairman of the Board of PLX Technology (semi-conductors) and of SRC Computers Inc., with which he has been associated since prior to 2006. He was a director of Intel Corporation (semi-conductors) from 1969 until 2008, and served as Chairman of the Finance Committee of such company for several years until May 2008. He has served as a director or trustee of one or more of the AllianceBernstein Funds since 1982. | 100 | Cirrus Logic Corporation (semi-conductors), and PLX Technology Inc. (semi-conductors) since prior to 2006 and Intel Corporation (semi-conductors) since prior to 2006 until 2008 | |||||
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 37 |
Management of the Fund
NAME, (FIRST YEAR ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER RELEVANT QUALIFICATIONS*** |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
DISINTERESTED DIRECTORS (continued) |
||||||||
Nancy P. Jacklin, # 63 |
Professorial Lecturer at the Johns Hopkins School of Advanced International Studies since 2008. Formerly, U.S. Executive Director of the International Monetary Fund (December 2002-May 2006); Partner, Clifford Chance (1992-2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985-1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982-1985); and Attorney Advisor, U.S. Department of the Treasury (1973-1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AllianceBernstein Funds since 2006. | 100 | None | |||||
Garry L. Moody, # 59 (2010) |
Independent Consultant. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995); and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services. He is also a member of the Governing Council of the Independent Directors Council (IDC), an organization of independent directors of mutual funds, and serves on that organizations Education and Communications Committee. He has served as a director or trustee, and as Chairman of the Audit Committee, of most of the AllianceBernstein Funds since 2008. | 100 | None | |||||
38 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Management of the Fund
NAME, (FIRST YEAR ELECTED**) |
PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER RELEVANT QUALIFICATIONS*** |
PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR |
OTHER DIRECTORSHIPS HELD BY DIRECTOR IN PAST FIVE YEARS | |||||
DISINTERESTED DIRECTORS (continued) |
||||||||
Marshall C. Turner, Jr., # 69 |
Private Investor since prior to 2006. Interim CEO of MEMC Electronic Materials, Inc. (semi-conductor and solar cell substrates) from November 2008 until March 2009. He was Chairman and CEO of Dupont Photomasks, Inc. (components of semi-conductor manufacturing), 2003-2005, and President and CEO, 2005-2006, after the company was acquired and renamed Toppan Photomasks, Inc. He has extensive experience in venture capital investing including prior service as general partner of three institutional venture capital partnerships, and serves on the boards of a number of education and science-related non-profit organizations. He has served as a director or trustee of one or more of the AllianceBernstein Funds since 1992. | 100 | Xilinx, Inc. (programmable logic semi-conductors) and MEMC Electronic Materials, Inc. (semi-conductor and solar cell substrates) since prior to 2006 | |||||
Earl D. Weiner, # 72 |
Of Counsel, and Partner prior to January 2007, of the law firm Sullivan & Cromwell LLP and member of ABA Federal Regulation of Securities Committee Task Force to draft editions of the Fund Directors Guidebook. He also serves as a director or trustee of various non-profit organizations and has served as Chairman or Vice Chairman of a number of them. He has served as a director or trustee of the AllianceBernstein Funds since 2007 and is Chairman of the Governance and Nominating Committees of most of the Funds. | 100 | None |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 39 |
Management of the Fund
* | The address for each of the Funds disinterested Directors is c/o AllianceBernstein L.P., Attention: Philip L. Kirstein, 1345 Avenue of the Americas, New York, NY 10105. |
** | There is no stated term of office for the Funds Directors. |
*** | The information above includes each Directors principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Directors qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
+ | Mr. Keith is an interested person of the Fund, as defined in the 1940 Act, due to his position as a Senior Vice President of the Adviser. |
# | Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. |
## | Member of the Fair Value Pricing Committee. |
40 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Management of the Fund
Officer Information
Certain information concerning the Funds Officers is listed below.
NAME, ADDRESS* AND AGE |
POSITION(S) HELD WITH FUND |
PRINCIPAL OCCUPATION DURING PAST FIVE YEARS** | ||
Robert M. Keith, 51 |
President and Chief Executive Officer | See biography above. | ||
Philip L. Kirstein, 66 |
Senior Vice President and Independent Compliance Officer | Senior Vice President and Independent Compliance Officer of the AllianceBernstein Funds, 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. prior to March 2003. | ||
Richard Chow, 40 |
Vice President | Senior Vice President of AllianceBernstein Limited,** and Vice President of the Adviser,** with which he has been associated since prior to 2006. | ||
Emilie D. Wrapp, 55 |
Secretary | Senior Vice President, Assistant General Counsel and Assistant Secretary of ABI,** with which she has been associated since prior to 2006. | ||
Joseph J. Mantineo, 52 |
Treasurer and Chief Financial Officer | Senior Vice President of ABIS,** with which he has been associated since prior to 2006. | ||
Stephen M. Woetzel, 39 |
Controller | Vice President of ABIS,** with which he has been associated since prior to 2006. |
* | The address for each of the Funds Officers is 1345 Avenue of the Americas, New York, NY 10105. |
** | The Adviser, ABI, ABIS and AllianceBernstein Limited are affiliates of the Fund. |
The Funds Statement of Additional Information (SAI) has additional information about the Funds Directors and Officers and is available without charge upon request. Contact your financial representative or AllianceBernstein at 1-800-227-4618, or visit www.alliancebernstein.com, for a free prospectus or SAI. |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 41 |
Management of the Fund
Information Regarding the Review and Approval of the Funds Advisory Agreement
The disinterested directors (the directors) of AllianceBernstein Greater China 97 Fund, Inc. (the Fund) unanimously approved the continuance of the Funds Advisory Agreement with the Adviser at a meeting held on May 3-5, 2011.
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed an independent evaluation prepared by the Funds Senior Officer (who is also the Funds Independent Compliance Officer) of the reasonableness of the advisory fee in the Advisory Agreement wherein the Senior Officer concluded that the contractual fee for the Fund were reasonable. The directors also discussed the proposed continuance in private sessions with counsel and the Funds Senior Officer.
The directors 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 Advisers integrity and competence they have gained from that experience, the Advisers initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Advisers willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AllianceBernstein Funds. The directors noted that they have four regular meetings each year, at each of which they receive presentations from the Adviser on the investment results of the Fund and review extensive materials and information presented by the Adviser.
The directors also considered all other factors they believed relevant, including the specific matters discussed below. 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 selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment
42 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. They also noted the professional experience and qualifications of the Funds portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services provided at the Funds request by employees of the Adviser or its affiliates. Requests for these 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 Funds Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant retained by the Funds Senior Officer. The quality of administrative and other services, including the Advisers role in coordinating the activities of the Funds other service providers, also were considered. 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
The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2009 and 2010 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant retained by the Funds Senior Officer. The directors reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and noted that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Advisers relationship with the Fund, including those relating to its subsidiaries which provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of profitability between fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Advisers relationship with the Fund before taxes and distribution expenses. The directors concluded that they were satisfied that the Advisers level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the benefits to the Adviser and its affiliates from their relationships with the Fund other than the fees and expense reimbursements payable under the Advisory Agreement, including but not limited to benefits relating to soft dollar arrangements (whereby the Adviser receives brokerage and research services from many of the brokers that execute purchases and sales of securities on behalf of its clients on an agency basis), 12b-1 fees and sales charges received by the Funds principal underwriter (which is a wholly owned subsidiary
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 43 |
of the Adviser) in respect of certain classes of the Funds shares, transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser, and brokerage commissions paid by the Fund to brokers affiliated with the Adviser. The directors recognized that the Advisers profitability would be somewhat lower without these benefits. 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 performance information for the Fund at each regular Board meeting during the year. At the May 2011 meeting, the directors reviewed information prepared by Lipper showing the performance of the Class A Shares of the Fund as compared with that of a group of similar funds selected by Lipper (the Performance Group) and as compared with that of a broader array of funds selected by Lipper (the Performance Universe) for the 1-, 3-, 5- and 10-year periods ended February 28, 2011, and information prepared by the Adviser showing performance of the Class A Shares as compared with the Morgan Stanley Capital International Golden Dragon Index (Net) (the Index) for the 1-, 3-, 5- and 10-year periods. The directors noted that the Fund was in the 4th quintile of the Performance Group and the Performance Universe for the 1-year period, in the 5th quintile of the Performance Group and the Performance Universe for the 3- and 5-year periods, and 2nd out of 3 of the Performance Group and 3rd out of 4 of the Performance Universe for the 10-year period. The directors noted the small number of other funds in the Performance Group. The Fund lagged the Index in the 1- and 3-year periods but outperformed the Index in the 5- and 10-year periods. The directors also reviewed performance information for periods ended March 31, 2011 (for which the data was not limited to Class A Shares), and noted that in the 3-month period the Fund lagged the Lipper China Region Funds Average and the Index (all the returns were negative). The directors also took into account the Advisers recently implemented organizational and investment process changes that are intended to improve the investment performance of its equity services. Based on their review and their discussion with the Adviser of the reasons for the Funds performance, the directors retained confidence in the Advisers ability to advise the Fund.
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 advisory 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.
44 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
The directors also considered the fees the Adviser charges other clients pursuing an investment style substantially similar to that of the Fund. For this purpose, they reviewed the relevant fee information from the Advisers Form ADV and the evaluation from the Funds Senior Officer disclosing the institutional fee schedule for institutional products managed by the Adviser that have an investment style substantially similar to that of the Fund. The directors noted that the institutional fee schedule had breakpoints at lower asset levels than those in the fee schedule applicable to the Fund, although the initial rates in the institutional fee schedule were higher, and that the application of the institutional fee schedule to the level of assets of the Fund would result in a fee rate higher than that in the Funds Advisory Agreement (including the impact of the expense reimbursement to the Adviser pursuant to the Advisory Agreement). The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional clients. The Adviser also noted that because mutual funds are constantly issuing and redeeming shares, they are more difficult to manage than an institutional account, where the assets tend to be relatively stable. In light of the substantial differences in services rendered by the Adviser to institutional clients as compared to funds such as the Fund, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
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 funds similar to the Fund and an Expense Universe as a broader group, consisting of all funds in the Funds investment classification/objective with a similar load type as the Fund. The Class A expense ratio of the Fund was based on the Funds latest fiscal year. The directors noted that it was likely that the expense ratios of some of the other funds in the Funds Lipper category were lowered by waivers or reimbursements by those funds investment advisers, which in some cases might be voluntary or temporary. The directors view the expense ratio information as relevant to their evaluation of the Advisers services because the Adviser is responsible for coordinating services provided to the Fund by others.
The directors noted that, at the Funds current size, its contractual effective advisory fee rate of 75 basis points, plus the 13 basis point impact of the administrative expense reimbursement in the latest fiscal year, was lower than the Expense Group median. The directors noted that the Funds total expense ratio, which had been capped by the Adviser (although the expense ratio was currently
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 45 |
lower than the cap), was essentially the same as the Expense Group and the Expense Universe medians. The directors concluded that the Funds expense ratio was satisfactory.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AllianceBernstein Funds, and by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale at the May 2011 meetings. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for establishing breakpoints that give effect to the fund-specific services provided by a funds adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a funds 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. 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 Funds breakpoint arrangements would result in a sharing of economies of scale in the event the Funds net assets exceed a breakpoint in the future.
46 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICERS EVALUATION OF INVESTMENT ADVISORY AGREEMENT1
The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the Adviser) and AllianceBernstein Greater China 97 Fund, Inc. (the Fund).2 The evaluation of the Investment Advisory Agreement was prepared by Philip L. Kirstein, the Senior Officer of the Fund, for the Trustees of the Fund, as required by a September 2004 agreement between the Adviser and the New York State Attorney General (the NYAG). The Senior Officers 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 Officers evaluation considered the following factors:
1. | Advisory fees charged to institutional and other clients of the Adviser for like services; |
2. | Advisory fees charged by other mutual fund companies for like services; |
3. | Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit; |
4. | Profit margins of the Adviser and its affiliates from supplying such services; |
5. | Possible economies of scale as the Fund grows larger; and |
6. | Nature and quality of the Advisers services including the performance of the Fund. |
These factors, with the exception of the first factor, are generally referred to as the Gartenberg factors, which were articulated by the United States Court of Appeals for the Second Circuit in 1982. Gartenberg v. Merrill Lynch Asset Management, Inc., 694 F. 2d 923 (2d Cir. 1982). On March 30, 2010, the Supreme Court held the Gartenberg decision was correct in its basic formulation of what §36(b) requires: to face liability under §36(b), an investment adviser must charge a fee that is so disproportionately large that it
1 | It should be noted that the information in the fee summary was completed on April 21, 2011 and discussed with the Board of Directors on May 3-5, 2011. |
2 | Future references to the Fund do not include AllianceBernstein. References in the fee summary pertaining to performance and expense ratio rankings refer to the Class A shares of the Fund. |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 47 |
bears no reasonable relationship to the services rendered and could not have been the product of arms length bargaining. Jones v. Harris Associates L.P., (No. 08-586), 130 U.S. 1418 (2010). In the Jones decision, the Court stated the Gartenberg approach fully incorporates the correct understanding of fiduciary duty within the context of section 36(b) and noted with approval that Gartenberg insists that all relevant circumstances be taken into account and uses the range of fees that might result from arms-length bargaining as the benchmark for reviewing challenged fees.
FUND ADVISORY FEES, NET ASSETS, EXPENSE CAPS & RATIOS
The Adviser proposed that the Fund pay the advisory fee set forth in the table below for receiving the services to be provided pursuant to the Investment Advisory Agreement. The fee schedule below, implemented in January 2004 in consideration of the Advisers 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
Category | Advisory Fee Based on % of Average Daily Net Assets |
Net Assets 03/31/11 ($MIL) |
Fund | |||||
Specialty | 75 bp on 1st $2.5 billion 65 bp on next $2.5
billion 60 bp on the balance |
$ | 60.4 | Greater China 97 Fund, Inc. |
The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund. During the Funds most recently completed fiscal year, the Adviser received $92,921 (0.13% of the Funds average daily net assets) for such services.
The Adviser has agreed to waive that portion of its management fees and/or reimburse the Fund for that portion of its total operating expenses to the degree necessary to limit the Funds expense ratio to the amount set forth below for the Funds fiscal year. The waiver is terminable by the Adviser at the end of the Funds 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 recently completed semi-annual period; accordingly, the expense limitation undertaking of the Fund was of no effect. Also shown are the Funds gross expense ratios for the most recent semi-annual period:4
3 | Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Advisers settlement with the NYAG. |
4 | Semi-annual total expense ratios are unaudited. |
48 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Fund | Expense Cap Pursuant to Expense Limitation Undertaking |
Gross Ratio |
Fiscal Year End | |||||||
Greater China 97 Fund, Inc. | Advisor Class A Class B Class C |
|
2.20 2.50 3.20 3.20 |
% % % % |
1.67% 1.96% 2.71% 2.68% |
July 31 |
I. | ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS |
The advisory fees charged to investment companies which the Adviser manages and sponsors are normally higher than those charged to similar sized institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Fund that are not provided to non-investment company clients and sub-advised investment companies include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the Funds 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, the Adviser is reimbursed for providing such services. Also, retail mutual funds managed by the Adviser are widely held. Servicing the Funds investors is more time consuming and labor intensive compared to institutional clients since the Adviser needs to communicate with a more extensive network of financial intermediaries and shareholders. The Adviser also believes that it incurs substantial entrepreneurial risk when offering a new mutual fund since establishing a new mutual fund requires a large upfront investment and it may take a long time for the fund to achieve profitability since the fund must be priced to scale from inception in order to be competitive and assets are acquired one account at a time. In addition, managing the cash flow of an investment company may be more difficult than managing that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if a fund is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry.
5 | Annualized. |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 49 |
Notwithstanding the Advisers view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, the Supreme Court has indicated consideration should be given to the advisory fees charged to institutional accounts with a similar investment style as the Fund.6 In addition to the AllianceBernstein Institutional fee schedule, set forth below is what would have been the effective advisory fee of the Fund had the AllianceBernstein Institutional fee schedule been applicable to the Fund versus the Funds advisory fee based on March 31, 2011 net assets:7
Fund | Net Assets 03/31/11 ($MIL) |
AllianceBernstein (AB) Fee Schedule |
Effective AB Inst. Adv. Fee |
Fund Advisory | ||||||||
Greater China 97 Fund, Inc. | $60.4 | Greater China Growth 100 bp on 1st $25
million 90 bp on next $25 million 75 bp on the
balance Minimum Account Size: $25m |
0.916% | 0.750% |
The Adviser also manages and sponsors retail mutual funds, which are organized in jurisdictions outside the United States, generally Luxembourg and Japan, and sold to non-United States resident investors. The Adviser charges the fees set forth below for Greater China Portfolio, which is a Luxembourg fund that has a somewhat similar investment style as the Fund:
Fund | Fee8 | |
Greater China Portfolio | ||
Class A |
2.00% on the first $300 million 1.75% on the balance | |
Class I (Institutional) |
1.20% on the first $300 million 0.95% on the balance |
The Adviser represented that it does not sub-advise any registered investment company with a substantially similar investment style as the Fund.
6 | It should be noted that the Supreme Court stated that courts may give such comparisons the weight that they merit in light of the similarities and differences between the services that the clients in question require, but the courts must be wary of inapt comparisons. Among the significant differences the Supreme Court noted that may exist between services provided to mutual funds and institutional accounts are higher marketing costs. Jones v. Harris at 1428. |
7 | 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. |
8 | It should be noted that Class A shares of the funds are charged an all-in fee, which covers investment advisory services and distribution related services, unlike Class I shares, whose fee is for investment advisory services only. |
50 | ALLIANCEBERNSTEIN GREATER CHINA 97 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 offered by other investment advisers.9 Lippers analysis included the Funds ranking with respect to the contractual management fee relative to the median of the Funds Lipper Expense Group (EG)10 at the approximate current asset level of the Fund.11
Lipper describes an EG as a representative sample of comparable funds. Lippers standard methodology for screening funds to be included in an EG entails the consideration of several fund criteria, including fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, expense components and attributes. An EG will typically consist of seven to twenty funds.
Fund | Contractual Management Fee12 |
Lipper Exp. Group Median (%) |
Rank | |||||||
Greater China 97 Fund, Inc. | 0.750 | 1.250 | 1/9 |
Lipper also analyzed the Funds most recently completed fiscal year total expense ratio in comparison to the Funds EG and Lipper Expense Universe (EU). The EU13 is a broader group compared to the EG, consisting of all funds that have the same investment classification/objective and load type as the subject Fund.
9 | It should be noted that the Supreme Court cautioned against accepting mutual fund fee comparisons without careful scrutiny since these comparisons are problematic because these fees, like those challenged, may not be the product of the negotiations conducted at arms length. Jones v. Harris at 1429. |
10 | It should be noted that Lipper does not consider average account size when constructing EGs. Funds with relatively small average account sizes tend to have higher transfer agent expense ratio than comparable sized funds that have relatively large average account sizes. Note that there are limitations on Lipper expense category data because different funds categorize expenses differently. |
11 | The contractual management fee is calculated by Lipper using the Funds 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. Lippers total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of 1 would mean that the Fund had the lowest effective fee rate in the Lipper peer group. |
12 | The contractual management fee would not reflect any expense reimbursements made by the Fund to the Adviser for certain clerical, legal, accounting, administrative and other services. In addition, the contractual management fee does not reflect any advisory fee waivers for expanse caps that would effectively reduce the actual effective management fee. |
13 | Except for asset (size) comparability, Lipper uses the same criteria for selecting an EG when selecting an EU. Unlike the EG, the EU allows for the same adviser to be represented by more than just one fund. |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 51 |
Fund | Expense Ratio |
Lipper Exp. Group Median (%) |
Lipper Group Rank |
Lipper Exp. Universe Median (%) |
Lipper Rank | |||||||||||
Greater China 97 Fund, Inc. | 1.878 | 1.870 | 6/9 | 1.874 | 8/14 |
Based on this analysis, the Fund has a more favorable ranking on a management fee basis than on a total expense ratio basis.
III. | COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. |
The Adviser utilizes two profitability reporting systems, which operate independently but are aligned with each other, to estimate the Advisers profitability in connection with investment advisory services provided to the Fund. The Senior Officer has retained a consultant to provide independent advice regarding the alignment of the two profitability systems as well as the methodologies and allocations utilized by both profitability systems. See Section IV for additional discussion.
IV. | PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. |
The Funds profitability information, prepared by the Adviser for the Board of Directors, was reviewed by the Senior Officer and the consultant. The Advisers profitability from providing investment advisory services to the Fund decreased during calendar year 2010, relative to 2009.
In addition to the Advisers direct profits from managing the Fund, certain of the Advisers affiliates have business relationships with the Fund and may earn a profit from providing other services to the Fund. The courts have referred to this type of business opportunity as fall-out benefits to the Adviser and indicated that such benefits should be factored into the evaluation of the total relationship between the Fund and the Adviser. Neither case law nor common business practice precludes the Advisers affiliates from earning a reasonable profit on this type of relationship provided the affiliates charges and services are competitive and the relationship otherwise complies with the 40 Act restrictions. These affiliates provide transfer agent, distribution and brokerage related services to the Fund and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges (CDSC) and brokerage commissions. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur.
AllianceBernstein Investments, Inc. (ABI), an affiliate of the Adviser, is the Funds principal underwriter. ABI and the Adviser have disclosed in the Funds prospectus that they may make revenue sharing payments from their own
14 | Most recently completed fiscal year end Class A total expense ratio. |
52 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
resources, in addition to resources derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Fund. In 2010, ABI paid approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $13.8 million for distribution services and educational support (revenue sharing payments).
During the Funds most recently completed fiscal year, ABI received from the Fund $3,687, $386,498 and $25,813 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively.
Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. (ABIS), the affiliated transfer agent for the Fund, are charged on a per account basis, based on the level of service provided and the class of share held by the account. ABIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. During the Funds most recently completed fiscal year, ABIS received $91,863 in fees from the Fund.15
The Fund effected brokerage transactions through the Advisers affiliate, Sanford C. Bernstein & Co., LLC (SCB & Co.) and/or its U.K. affiliate, Sanford C. Bernstein Limited (SCB Ltd.), collectively SCB, and paid commissions for such transactions during the Funds most recently completed fiscal year. The Adviser represented that SCBs profitability from any business conducted in the future with the Fund would be comparable to the profitability of SCBs dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks (ECNs) derived from trading for its clients. These credits and charges are not being passed onto any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for its clients. These soft dollar benefits reduce the Advisers cost of doing business and increase its profitability.
V. | POSSIBLE ECONOMIES OF SCALE |
The Adviser has indicated that economies of scale are being shared with shareholders through fee structures,16 subsidies and enhancement to services. Based on some of the professional literature that has considered economies of scale in the mutual fund industry, it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a
15 | The fees disclosed are net of any expense offsets with ABIS. An expense offset is created by the interest earned on the positive cash balance that occurs within the transfer agent account as there is a one day lag with regards to money movement from the shareholders account to the transfer agents account and then the transfer agents account to the Funds account. During the Funds most recently completed fiscal year, there were no fees paid by the Fund to ABIS under the offset agreement between the Fund and ABIS. |
16 | Fee structures include fee reductions, pricing at scale and breakpoints in advisory fee schedules. |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 53 |
greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms make such investments in their business to provide services, there may be a sharing of economies of scale without a reduction in advisory fees.
In February 2008, an independent consultant, retained by the Senior Officer, provided the Board of Directors an update of the Deli17 study on advisory fees and various fund characteristics.18 The independent consultant first reiterated the results of his previous two dimensional comparison analysis (fund size and family size) with the Board of Directors.19 The independent consultant then discussed the results of the regression model that was utilized to study the effects of various factors on advisory fees. The regression model output indicated that the bulk of the variation in fees predicted were explained by various factors, but substantially by fund AUM, family AUM, index fund indicator and investment style. The independent consultant also compared the advisory fees of the AllianceBernstein Mutual Funds to similar funds managed by 19 other large asset managers, regardless of the fund size and each Advisers proportion of mutual fund assets to non-mutual fund assets.
VI. | NATURE AND QUALITY OF THE ADVISERS SERVICES, INCLUDING THE PERFORMANCE OF THE FUND |
With assets under management of approximately $477 billion as of March 31, 2011, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Fund.
The information prepared by Lipper shows the 1, 3, 5 and 10 year performance rankings of the Fund20 relative to its Lipper Performance Group (PG) and Lipper Performance Universe (PU)21 for the periods ended February 28, 2011.22
17 | The Deli study was originally published in 2002 based on 1997 data. |
18 | As mentioned previously, the Supreme Court cautioned against accepting mutual fund fee comparisons without careful scrutiny since the fees may not be the product of negotiations conducted at arms length. See Jones V. Harris at 1429. |
19 | The two dimensional analysis showed patterns of lower advisory fees for funds with larger asset sizes and funds from larger family sizes compared to funds with smaller asset sizes and funds from smaller family sizes, which according to the independent consultant is indicative of a sharing of economies of scale and scope. However, in less liquid and active markets, such is not the case, as the empirical analysis showed potential for diseconomies of scale in those markets. The empirical analysis also showed diminishing economies of scale and scope as funds surpassed a certain high level of assets. |
20 | The performance rankings are for the Class A shares of the Fund. It should be noted that the performance returns of the Fund shown were provided by Lipper. |
21 | The Funds PG is identical to the Funds EG. The Funds PU is not identical to the Funds EU as the criteria for including/excluding a fund in a PU is somewhat different from that of an EU. |
22 | Note that the current Lipper investment classification/objective dictates the PG and PU throughout the life of the fund even if a fund had a different investment classification/objective at a different point in time. |
54 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
Fund Return (%) |
PG Median (%) |
PU Median (%) |
PG Rank | PU Rank | ||||||||||||
1 year |
15.97 | 16.54 | 18.74 | 6/9 | 12/16 | |||||||||||
3 year |
-3.54 | 1.22 | 1.22 | 8/8 | 11/12 | |||||||||||
5 year |
10.64 | 13.25 | 13.78 | 7/7 | 9/10 | |||||||||||
10 year |
10.53 | 10.53 | 11.90 | 2/3 | 3/4 |
Set forth below are the 1, 3, 5 and 10 year and since inception performance returns of the Fund (in bold)23 versus its benchmark.24 Fund and benchmark volatility and reward-to-variability ratio (Sharpe Ratio) information is also shown.25
Periods Ending February 28, 2011 Annualized Performance |
||||||||||||||||||||||||||||||||
1 Year |
3 Year |
5 Year |
10 (%) |
Since Inception (%) |
Annualized | Risk Period (Year) |
||||||||||||||||||||||||||
Volatility (%) |
Sharpe (%) |
|||||||||||||||||||||||||||||||
Greater China 97 Fund, Inc. | 15.97 | -3.54 | 10.64 | 10.53 | 7.19 | 24.14 | 0.44 | 10 | ||||||||||||||||||||||||
MSCI Golden Dragon Index (Net) | 17.66 | 2.96 | 10.49 | 8.13 | N/A | 23.73 | 0.35 | 10 | ||||||||||||||||||||||||
Inception Date: September 3, 1997 |
CONCLUSION:
Based on the factors discussed above the Senior Officers conclusion is that the proposed advisory 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: May 24, 2011
23 | The performance returns and risk measures shown in the table are for the Class A shares of the Fund. |
24 | The Adviser provided Fund and benchmark performance return information for periods through February 28, 2011. |
25 | Fund and benchmark volatility and Sharpe Ratio information was obtained through Lipper LANA, a database maintained by Lipper. Volatility is a statistical measure of the tendency of a market price or yield to vary over time. A Sharpe Ratio is a risk adjusted measure of return that divides a funds return in excess of the riskless return by the funds standard deviation. A fund with a greater volatility would be regarded as more risky than a fund with equivalent performance but lower volatility; for that reason, a greater return would be demanded for the more risky fund. A fund with a higher Sharpe Ratio would be regarded as better performing than a fund with a lower Sharpe Ratio. |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 55 |
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
Retirement Strategies Funds
2000 Retirement Strategy |
2020 Retirement Strategy |
2040 Retirement Strategy | ||
2005 Retirement Strategy |
2025 Retirement Strategy |
2045 Retirement Strategy | ||
2010 Retirement Strategy |
2030 Retirement Strategy |
2050 Retirement Strategy | ||
2015 Retirement Strategy |
2035 Retirement Strategy |
2055 Retirement Strategy |
We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds.
You should consider the investment objectives, risks, charges and expenses of any AllianceBernstein fund/portfolio carefully before investing. For free copies of our prospectuses, which contain this and other information, visit us online at www.alliancebernstein.com or contact your financial advisor. Please read the prospectus carefully before investing.
* | Prior to February 3, 2011, Unconstrained Bond Fund was named Diversified Yield Fund. |
** | An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. |
56 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
AllianceBernstein Family of Funds
NOTES
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 57 |
NOTES
58 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
NOTES
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND | 59 |
NOTES
60 | ALLIANCEBERNSTEIN GREATER CHINA 97 FUND |
ALLIANCEBERNSTEIN GREATER CHINA 97 FUND
1345 Avenue of the Americas
New York, NY 10105
800.221.5672
GC-0151-0711 |
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 registrants 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 registrants Board of Directors has determined that independent directors William H. Foulk, Jr. and Garry L. Moody 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 Funds last two fiscal years for professional services rendered for: (i) the audit of the Funds annual financial statements included in the Funds annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Funds 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 | ||||||||||||
AB Greater China |
2010 | $ | 29,000 | $ | $ | 12,877 | ||||||||
2011 | $ | 29,000 | $ | $ | 14,544 |
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Funds Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Funds independent registered public accounting firm. The Funds 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 Funds Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to the Fund, the Funds 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):
All Fees for Non-Audit Services Provided to the Portfolio, the Adviser and Service Affiliates |
Pre-approved by the Audit Committee (Portion Comprised of Audit Related Fees) (Portion Comprised of Tax Fees) |
|||||||||||
AB Greater China |
2010 | $ | 605,824 | $ | 140,592 | |||||||
$ | (127,715 | ) | ||||||||||
$ | (12,877 | ) | ||||||||||
2011 | $ | 892,280 | $ | 14,544 | ||||||||
$ | | |||||||||||
$ | (14,544 | ) |
(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 Funds independent registered public accounting firm to the Adviser and Service Affiliates is compatible with maintaining the auditors 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 Funds Board of Directors since the Fund last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrants principal executive officer and principal financial officer have concluded that the registrants 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 registrants 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 registrants 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/ Robert M. Keith | |
Robert M. Keith | ||
President | ||
Date: | September 23, 2011 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Robert M. Keith | |
Robert M. Keith President | ||
Date: | September 23, 2011 |
By: | /s/ Joseph J. Mantineo | |
Joseph J. Mantineo Treasurer and Chief Financial Officer | ||
Date: | September 23, 2011 |
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 Complexs 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 Officers 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 Officers 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 Companys and the investment advisers 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 Companys 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; |
2
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 Companys 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 Officers 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 |
3
| 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 Companys 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. |
4
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 Companys 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 Companys and its investment advisers 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
5
Exhibit A
Persons Covered by this Code of Ethics
Principal Executive Officer
Principal Financial and Accounting Officer
Controller
6
Exhibit 12(b)(1)
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Robert M. Keith, 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 registrants 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 registrants 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 registrants 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 registrants internal control over financial reporting; and |
5. The registrants other certifying officers and I have disclosed to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: September 23, 2011
/s/ Robert M. Keith |
||
Robert M. Keith | ||
President |
2
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 registrants 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 registrants 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 evaluation; and |
d) | disclosed in this report any change in the registrants 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 registrants internal control over financial reporting; and |
5. The registrants other certifying officers and I have disclosed to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: September 23, 2011
/s/ Joseph J. Mantineo |
Joseph J. Mantineo |
Treasurer and Chief Financial Officer |
2
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 Registrants report on Form N-CSR for the period ended July 31, 2011 (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 23, 2011
By: | /s/ Robert M. Keith | |
Robert M. Keith | ||
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.
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