ALLIANCE GLOBAL ENVIRONMENT FUND
SEMI-ANNUAL REPORT
APRIL 30, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
June 26, 1998
Dear Shareholder:
We are pleased to report the performance of the Alliance Global Environment
Fund for the semi-annual reporting period ended April 30, 1998.
INVESTMENT RESULTS
The following table provides your Fund's investment results, based on net asset
value (NAV) for the six and 12-month periods ended April 30, 1998. For
comparison purposes, performance data for the First Analysis Securities
Corporation (FASC) Environmental Index, a broad-based index of companies in the
environmental industry, and for the S&P 500 Stock Index (S&P 500), a measure of
the broad U.S. stock market, is also provided for the six and 12-month periods
ended April 30, 1998.
For the six months ended April 30, 1998, your Fund's Class A shares
outperformed the FASC return of 7.67%, but underperformed the S&P 500 gain of
22.50%. Over the 12-month period ended April 30, 1998, your Fund's Class A
share return of 37.82% exceeded the 20.16% increase in the FASC Index, but
trailed the 41.06% advance in the S&P 500. On April 30, 1998, the per share NAV
for your Fund's Class A shares was $10.86.
INVESTMENT RESULTS
Periods Ended April 30, 1998
TOTAL RETURNS
-----------------------------------
SINCE
6 MONTHS 12 MONTHS INCEPTION**
--------- --------- -----------
ALLIANCE GLOBAL ENVIRONMENT FUND
Class A 16.53% 37.82% 7.59%
Class B 16.50% --* 9.72%
Class C 13.78% --* 9.38%
FASC ENVIRONMENTAL INDEX 7.67% 20.16%
S&P 500 STOCK INDEX 22.50% 41.06%
* UNTIL OCTOBER 3, 1997, THE FUND OPERATED AS A CLOSED-END INVESTMENT
COMPANY AND ITS COMMON STOCK (WHICH THEN COMPRISED A SINGLE CLASS) WAS LISTED
ON THE NEW YORK STOCK EXCHANGE. AFTER THE CLOSE OF BUSINESS ON OCTOBER 3, 1997,
ALL OF THE FUND'S COMMON STOCK WAS CONVERTED INTO CLASS A SHARES OF THE FUND
AND THE FUND COMMENCED A CONTINUOUS PUBLIC OFFERING OF ITS CLASS A, CLASS B,
CLASS C, AND ADVISOR CLASS SHARES.
THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIODS AND ARE
BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES. RETURNS FOR PERIODS
GREATER THAN ONE YEAR ARE ANNUALIZED. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. TOTAL
RETURN FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE FIRST ANALYSIS SECURITIES CORPORATION (FASC ) ENVIRONMENTAL INDEX IS A
BROAD BASED INDEX OF COMPANIES IN THE ENVIRONMENTAL INDUSTRY. THE S&P 500 STOCK
INDEX IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES, AND IS A COMMON MEASURE OF
THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. AN INVESTOR CANNOT INVEST
DIRECTLY IN AN INDEX.
** INCEPTION: 6/1/90 CLASS A; 10/6/97 CLASS B; 11/5/97 CLASS C.
INVESTMENT ACTIVITY
The strong performance of your Fund over the recent six-month period ended
April 30, 1998, relative to that of its benchmark index, the FASC Environmental
Index, reflects advances in a number of individual holdings. These holdings
include United Rentals, Inc. (up 78.3% for the six months), Generale des Eaux
(+33.1%), Cuno, Inc. (+28.7%), and Tyco International, Ltd. (+21.2%). United
Rentals leases and rents capital equipment to companies in many industries,
including the environmental services industry. The other three holdings
represent companies involved in the water treatment segment of the
environmental services industry.
Overall, the Fund remains concentrated on the growing segments of the
environmental services industry, particularly those areas driven by economics
(rather than those areas driven by government regulations) and existing,
enforced statutes. This focus has led to two primary themes within the Fund:
domestic solid waste collection and disposal services and water treatment
equipment and services.
Domestic solid waste industry fundamentals remain attractive, particularly for
small and mid-sized companies focused on regional integration of collection and
1
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
disposal services. Internal growth remains strong (in the high single digit
range) and acquisition activity has not abated. As of April 30, 1998, the Fund
has approximately 28% of total assets invested in the solid waste segment, with
significant holdings in American Disposal Services, Inc., Waste Management,
Inc., Allied Waste Industries, Inc., Casella Waste Systems, Inc., Superior
Services, Inc., and Eastern Environmental Services, Inc. We believe that these
companies are among those most likely to benefit from current favorable
industry trends.
Similar to the solid waste industry, certain segments of the water treatment
equipment and services industry are experiencing strong internal growth and
rapid consolidation. While some individual companies are experiencing a
slowdown in their Asian operations due to the economic difficulties in that
region, overall growth trends are still positive. As of April 30, 1998, the
Fund had approximately 18% of its holdings in water treatment, including
positions in Tyco International, Ltd., Culligan Water Technologies, Inc.,
Generale des Eaux (based in France), Cuno, Inc., TETRA Technologies, Inc., and
Sunbeam Corp.
Other significant holdings include Sealed Air Corp., a packaging company,
Ecolab, Inc., a provider of cleaning and sanitizing products and services,
Praxair, Inc., an industrial gas company, OM Group, Inc., a manufacturer of
metal-based chemicals, and AES Corp., an independent power producer.
We are pleased with the performance of the Fund in the first half of fiscal
1998 and are optimistic regarding the outlook for the remainder of the year. We
believe that the Fund remains well positioned to take advantage of growth
opportunities within the environmental services industry.
As always, we thank you for your continued interest and investment in the
Alliance Global Environment Fund.
Sincerely,
John D. Carifa
Chairman and President
Jeremy R. Kramer
Vice President
Linda Bolton Weiser
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
Alliance Global Environment Fund is designed for investors desiring to
participate in companies expected to benefit from the increased global
commitment to a cleaner environment.
Under normal circumstances, the Fund will invest substantially all of its
assets in equity securities in two categories of Eligible Companies: those
having a principal business including environmental protection and other
providers of products or services intended to contribute to the environment.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF APRIL 30, 1998#
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 37.82% 32.00%
Five Years 16.40% 15.40%
Since Inception** 7.59% 7.00%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception** 9.72% 7.54%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception** 9.38% 8.84%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (MARCH 31,
1998)#
CLASS A CLASS B CLASS C
------- ------- -------
1 Year 24.10% --* --*
5 Years 14.47% --* --*
Since Inception** 6.72% 4.77% 6.01%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total returns for Advisor Class shares will differ due to
different expenses associated with that class.
SEC Average Annual Total Returns as of the most recent quarter-end reflect
reinvestment of all distributions and deduction of the maximum 4.25% front-end
sales charges and applicable contingent deferred sales charges.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Until October 3, 1997, the Fund operated as a closed-end investment
company and its common stock (which then comprised a single class) was listed
on the New York Stock Exchange. After October 3, 1997, all of the common stock
was converted into Class A shares of the Fund and the Fund commenced a
continuous offering of its Class A, Class B, and Class C shares. All historical
performance information for Class A shares through October 3, 1997 is for the
Fund's common stock, based on net asset value, while it was a closed-end fund.
** Inception: 6/1/90 Class A; 10/6/97 Class B; 11/5/97 Class C.
# Returns for periods less than one year are not annualized.
3
TEN LARGEST HOLDINGS
APRIL 30, 1998 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
SEALED AIR CORP.--The company manufactures
and sells protective and specialty
packaging products. $ 3,535,575 12.1%
INTERNATIONAL ALLIANCE SERVICES WARRANTS,
EXPIRING 12/31/99
The company provides specialty insurance
and bonding in addition to environmental
services. 2,800,200 9.6
AMERICAN DISPOSAL SERVICES, INC.--The
company provides solid waste collection,
transfer and disposal services for
residential, commercial and industrial
customers. 1,643,844 5.6
UNITED RENTALS, INC.--The company rents a
broad array of equipment to construction
industry participants, industrial
companies, homeowners and others. 1,549,688 5.3
WASTE MANAGEMENT, INC.--The company
provides comprehensive waste
management services. 1,366,800 4.7
ECOLAB, INC.--The company develops and
markets products and services for the
hospitality, institutional and
industrial markets. 1,315,031 4.5
TYCO INTERNATIONAL, LTD.--The company
manufactures and distributes disposable
medical supplies and conducts vehicle
auctions. 1,264,400 4.3
ALLIED WASTE INDUSTRIES, INC.--The company
provides non-hazardous solid waste
collection, transfer, recycling and
disposal services. 1,210,000 4.1
PRAXAIR, INC.--The company produces, sells
and distributes atmospheric gases. 1,187,375 4.1
OM GROUP, INC.--The company produces metal
carboxylates, metal salts and powders. 1,112,244 3.8
$16,985,157 58.1%
4
INDUSTRY DIVERSIFICATION
APRIL 30, 1998 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 7,150,225 24.5%
Capital Goods 11,340,166 38.8
Consumer Manufacturing 138,188 0.5
Consumer Services 3,453,325 11.8
Energy 2,112,406 7.2
Multi-Industry 3,164,005 10.8
Technology 776,000 2.7
Transportation 865,940 3.0
Total Investments * 29,000,255 99.3
Cash and other assets, net of liabilities 209,976 0.7
Net Assets $29,210,231 100.0%
5
PORTFOLIO OF INVESTMENTS
APRIL 30, 1998 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-99.3%
AUSTRALIA-3.0%
Brambles Industries, Ltd. 42,000 $ 865,940
FRANCE-3.2%
Generale des Eaux 5,000 929,962
NETHERLANDS-1.7%
Thermo Eurotech (a)(b) 165,000 489,984
UNITED STATES-91.4%
AES Corp. (a) 14,700 811,256
Airgas, Inc. (a) 28,800 446,400
Allied Waste Industries, Inc. (a) 44,000 1,210,000
American Disposal Services, Inc. (a) 41,000 1,643,844
Casella Waste Systems, Inc. (a) 32,000 996,000
Culligan Water Technologies, Inc. (a) 16,700 969,644
Cuno, Inc. (a) 45,500 892,937
Eastern Environmental Services, Inc. (a) 25,000 653,125
Ecolab, Inc. 41,500 1,315,031
General Electric Co. 11,900 1,012,987
International Alliance Services
warrants, expiring
12/31/99 (a)(c) 300,000 2,800,200
ITEQ, Inc. (a) 65,200 831,300
KTI, Inc. (a) 25,000 462,500
OM Group, Inc. 25,100 1,112,244
Praxair, Inc. 23,600 1,187,375
Raychem Corp. 22,000 884,125
Sealed Air Corp. (a) 56,400 3,535,575
Sunbeam Corp. 5,500 138,188
Superior Services, Inc. (a) 26,300 854,750
TETRA Technologies, Inc. (a) 32,000 776,000
Tyco International, Ltd. 23,200 1,264,400
United Rentals, Inc. (a) 45,000 1,549,688
Waste Management, Inc. 40,800 1,366,800
------------
26,714,369
Total Common Stocks & Other Investments
(cost $21,589,493) 29,000,255
TIME DEPOSIT-1.7%
Rabobank
5.44%, 5/01/98
(cost $500,000) $500 500,000
TOTAL INVESTMENTS-101.0%
(cost $22,089,493) 29,500,255
Other assets less liabilities-(1.0)% (290,024)
NET ASSETS-100% $ 29,210,231
(a) Non-income producing security.
(b) Restricted and illiquid security, valued at fair value. (See notes A
and F.)
(c) Redeemable for common stocks of Century Business Services.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $22,089,493) $ 29,500,255
Cash 90,223
Receivable for investment securities sold 540,998
Dividends and interest receivable 14,980
Prepaid expenses 5,594
Total assets 30,152,050
LIABILITIES
Payable for investment securities purchased 500,000
Payable for capital stock redeemed 89,013
Advisory fee payable 26,095
Accrued expenses 326,711
Total liabilities 941,819
NET ASSETS $ 29,210,231
COMPOSITION OF NET ASSETS
Capital stock, at par $ 2,689
Additional paid-in capital 17,758,777
Accumulated net investment loss (393,710)
Accumulated net realized gain on investments and foreign
currency transactions 4,432,069
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 7,410,406
$ 29,210,231
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($29,086,712/
2,677,937 shares of capital stock issued and outstanding) $10.86
Sales Charge--4.25% of public offering price 0.48
Maximum offering price $11.34
CLASS B SHARES
Net asset value and offering price per share ($113,952/
10,517 shares of capital stock issued and outstanding) $10.84
CLASS C SHARES
Net asset value and offering price per share ($3,846/356
shares of capital stock issued and outstanding) $10.80
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($5,721/526 shares of capital stock issued and outstanding) $10.88
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $978) $ 47,537
Interest 28,806 $ 76,343
EXPENSES
Advisory fee 187,733
Distribution fee - Class A 51,063
Distribution fee - Class B 201
Distribution fee - Class C 222
Custodian 64,121
Audit and legal 54,984
Directors' fees 30,000
Transfer agency 28,072
Registration 21,087
Printing 20,624
Miscellaneous 11,946
Total expenses 470,053
Net investment loss (393,710)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 4,744,155
Net realized loss on foreign currency
transactions (92,377)
Net change in unrealized appreciation of:
Investments (545,869)
Foreign currency denominated assets and
liabilities (1,331)
Net gain on investments and foreign currency
transactions 4,104,578
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 3,710,868
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (393,710) $ (1,346,736)
Net realized gain on investments and foreign
currency transactions 4,651,778 24,901,517
Net change in unrealized appreciation of
investments and foreign currency
denominated assets and liabilities (547,200) (1,178,992)
Net increase in net assets from operations 3,710,868 22,375,789
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (23,312,560) (6,786,801)
Class B (15,304) -0-
Class C (45,452) -0-
CAPITAL STOCK TRANSACTIONS
Net decrease (3,505,448) (63,481,665)
Total decrease (23,167,896) (47,892,677)
NET ASSETS
Beginning of year 52,378,127 100,270,804
End of period $ 29,210,231 $ 52,378,127
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Environment Fund (the "Fund") is registered under the
Investment Company Act of 1940 (the "1940 Act"), as a non-diversified, open-end
management investment company. Until October 3, 1997, the Fund was registered
under the 1940 Act as a non-diversified, closed-end management investment
company. After October 3, 1997 all of the common stock was converted to Class A
shares of the Fund and the Fund commenced a public offering of its Class A,
Class B, Class C and Advisor Class of 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 will be subject to a contingent deferred sales charge of
1%. In order to moderate the impact of a potentially large number of redemption
and exchange requests, redemptions or exchanges of Class A shares received in
the conversion are subject to a 2% redemption fee through October 2, 1998.
There will be no redemption fee after October 2, 1998. The entire amount of the
redemption fee will be payable to the Fund, and not to Alliance, providing an
antidilutive benefit to stockholders. Class B shares are currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
to investors participating in fee-based programs and to certain retirement plan
accounts. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual reports could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sale price or if no sale occurred, at the
mean of the closing bid and asked price on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked price. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair market value of such securities.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the quoted bid and asked price of the respective
currency against the U.S. dollar. Purchases and sales of portfolio securities
are translated at the rates of exchange prevailing when such securities were
acquired or sold. Income and expenses are translated at rates of exchange
prevailing when earned or accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from the holding of foreign currencies, currency
gains or losses realized between the trade and settlement dates on security
transactions, and the difference between the amounts of dividends, interest and
foreign taxes receivable on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net change in unrealized appreciation
(depreciation) of foreign currency denomi-
10
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
nated assets and liabilities represents net currency gains and losses from
valuing foreign currency denominated assets and liabilities at period end
exchange rates.
3. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provision for Federal income or excise taxes is
required. Withholding taxes on foreign interest and dividends have been
provided for in accordance with the applicable tax requirements.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts as an adjustment to interest income.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisor Class shares have no distribution fees.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Advisory Agreement, the Fund pays Alliance Capital Management L.P.
("the Adviser") a fee at the annual rate of 1.10% of the Fund's average daily
net assets up to $100 million, .95% of the next $100 million of the Fund's
average daily net assets, and .80% of the Fund's average daily net assets over
$200 million. The fee is accrued daily and paid monthly. Prior to the Fund's
conversion to an open-end Fund, the fee was calculated based on average weekly
net assets.
Commencing October 6, 1997 the Fund began compensating Alliance Fund Services,
Inc. (a wholly-owned subsidiary of the Adviser) under a Transfer Agency
Agreement for providing personnel and facilities to perform transfer agency
services for the Fund. Such compensation amounted to $12,528 for the six months
ended April 30, 1998.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $1,502 from the sale of Class A shares for the six
months ended April 30, 1998.
Brokerage commissions paid on investment transactions for the six months ended
April 30, 1998, amounted to $137,247, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
Effective after the close of business on October 3, 1997, the Fund adopted a
"Rule 12b-1 plan" (the "Plan") and entered into a Distribution Services
Agreement (the "Agreement") with AFD. Pursuant to the Plan, the Fund pays to
AFD for distribution expenses a Rule 12b-1 distribution services fee, which may
not exceed an annual rate of .30% of the Fund's aggregate average daily net
assets attributable to the Class A shares, 1.00% of the Fund's aggregate
average daily net assets attributable to the Class B shares and 1.00% of the
Fund's aggregate average daily net assets attributable to the Class C shares.
There is no distribution fee on the Advisor Class shares. The Plan provides
that AFD will use such payments in their entirety for distribution assistance
and promotional activities. The Distributor has incurred expenses in
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
excess of the distribution costs reimbursed by the Fund in the amount of
$47,801 and 89,369 for Class B and Class C shares respectively. 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 Plan also provides that the Adviser may use its own
resources to finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term and U.S.
government obligations) aggregated $35,183,416 and $63,423,853 respectively,
for the six months ended April 30, 1998. There were no purchases or sales of
U.S. government or government agency obligations for the six months ended April
30, 1998. At April 30, 1998, the cost of investments for federal income tax
purposes was $22,119,410. Accordingly, gross unrealized appreciation of
investments was $7,603,410 and gross unrealized depreciation of investments was
$222,565, resulting in net unrealized appreciation of $7,380,845, (excluding
foreign currency transactions).
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $0.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each Class consists of 3,000,000,000 authorized shares. Until
October 3, 1997, the Fund was a closed end management investment company. On
March 14, 1996 the Fund initiated a share repurchase program. The program
allowed for repurchase over a twelve month period of up to 20% of the 6,907,169
shares outstanding at March 14, 1996. For the year ended October 31, 1997,
117,700 shares were repurchased at a cost of $1,575,322 representing 13.60% of
the 6,907,169 shares outstanding at March 14, 1996. This included $46,995 in
commissions paid to Paine Webber Incorporated. The average discount of market
price to net asset value of shares repurchased over the period of March 15,
1996 to March 14, 1997 was 19.6%. Transactions in shares of beneficial interest
were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 44,058 2,558 $ 430,406 $ 48,826
Shares issued in
reinvestment of
distributions 1,310,177 -0- 11,708,454 -0-
Shares redeemed (1,467,007) (3,179,118) (15,811,628) (61,955,419)
Shares repurchased
in tender offer
prior to
conversion of
Fund to open-end
status -0- (117,700) -0- (1,575,322)
Net decrease (112,772) (3,294,260) $ (3,672,768) $ (63,481,915)
12
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS OCT. 6, SIX MONTHS OCT. 6,
ENDED 1997(A) ENDED 1997(A)
APRIL 30, 1998 TO APRIL 30, 1998 TO
(UNAUDITED) OCT. 31, 1997 (UNAUDITED) OCT. 31, 1997
------------ ------------ -------------- --------------
CLASS B
Shares sold 8,824 13 $ 104,917 $ 250
Shares issued in
reinvestment of
distributions 1,715 -0- 15,304 -0-
Shares redeemed (35) -0- (472) -0-
Net increase 10,504 13 $ 119,749 $ 250
NOV. 5, 1997(A) NOV. 5, 1997(A)
TO TO
APRIL 30, 1998 APRIL 30, 1998
(UNAUDITED) (UNAUDITED)
------------ --------------
CLASS C
Shares sold 5,357 $ 94,343
Shares issued in
reinvestment of
distributions 5,087 45,325
Shares redeemed (10,088) (96,487)
Net increase 356 $ 43,181
DEC. 29, 1997(A) DEC. 29, 1997(A)
TO TO
APRIL 30, 1998 APRIL 30, 1998
(UNAUDITED) (UNAUDITED)
------------ --------------
ADVISOR CLASS
Shares sold 1,526 $ 14,730
Shares redeemed (1,000) (10,340)
Net increase 526 $ 4,390
NOTE F: RESTRICTED AND ILLIQUID SECURITY
DATE ACQUIRED COST
--------------- --------
Thermo Eurotech 3/19/91-4/15/91 $529,926
The security shown above, formerly known as Beheersmaatchappij J. Amerika N.V.,
is restricted as to sale and has been valued at fair value in accordance with
the procedures in Note A.
The value of this security at April 30, 1998 was $489,984 representing 1.7% of
net assets
(a) Commencement of distribution.
13
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $18.77 $16.48 $12.37 $11.74 $10.97 $10.78
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.14)(a) (.23)(a) (.13)(a) .03 -0- .01
Net realized and unrealized gain on
investments and foreign currency
transactions 1.30 3.65 4.26 .60 .77 .18
Net increase in net asset value from
operations 1.16 3.42 4.13 .63 .77 .19
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- (.02) -0- -0- -0-
Distributions from net realized gain on
investments and foreign currency
transactions (9.07) (1.13) -0- -0- -0- -0-
Total dividends and distributions (9.07) (1.13) (.02) -0- -0- -0-
Net asset value, end of period $10.86 $18.77 $16.48 $12.37 $11.74 $10.97
Market value, end of year $13.25 $ 9.375 $ 9.50 $ 9.25
TOTAL RETURN
Total investment return based on
net asset value (b) 16.53% 23.51% 33.48% 5.37% 7.02% 1.76%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $29,087 $52,378 $100,271 $85,416 $81,102 $75,805
Ratio of expenses to average net assets 2.75%(c) 2.39% 1.60% 1.57% 1.67% 1.62%
Ratio of net investment income (loss) to
average net assets (2.31)%(c) (1.35)% (.85)% .21% (.04)% .15%
Portfolio turnover rate 199% 145% 268% 109% 42% 25%
</TABLE>
See footnote summary on page 17.
14
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
-----------------------------
SIX MONTHS OCTOBER 6,
ENDED 1997(D)
APRIL 30, TO
1998 OCTOBER 31,
(UNAUDITED) 1997
----------- -------------
Net asset value, beginning of period $18.76 $19.92
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.15) (.20)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions 1.30 (.96)
Net increase (decrease) in net asset value
from operations 1.15 (1.16)
LESS: DISTRIBUTIONS
Distributions from net realized gain on
investments and foreign currency
transactions (9.07) -0-
Total distributions (9.07) -0-
Net asset value, end of period $10.84 $18.76
TOTAL RETURN
Total investment return based on
net asset value (b) 16.50% (5.82)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $114 $235
Ratio of expenses to average net assets (c) 3.55% 20.84%
Ratio of net investment loss to
average net assets (c) (3.08)% (1.03)%
Portfolio turnover rate 199% 145%
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
-------------------
NOVEMBER 5, 1997(D)
TO
APRIL 30, 1998
(UNAUDITED)
-------------------
Net asset value, beginning of period $19.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.16)
Net realized and unrealized gain on investments and
foreign currency transactions .88
Net increase in net asset value from operations .72
LESS: DISTRIBUTIONS
Distributions from net realized gain on investments and
foreign currency transactions (9.07)
Total distributions (9.07)
Net asset value, end of period $10.80
TOTAL RETURN
Total investment return based on net asset value (b) 13.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4
Ratio of expenses to average net assets (c) 3.32%
Ratio of net investment loss to average net assets (c) (2.71)%
Portfolio turnover rate 199%
See footnote summary on page 17.
16
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
--------------------
DECEMBER 29, 1997(D)
TO
APRIL 30, 1998
(UNAUDITED)
--------------------
Net asset value, beginning of period $ 9.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.10)
Net realized and unrealized gain on investments and
foreign currency transactions 1.83
Net increase in net asset value from operations 1.73
Net asset value, end of period $10.88
TOTAL RETURN
Total investment return based on net asset value (b) 18.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6
Ratio of expenses to average net assets (c) 2.54%
Ratio of net investment loss to average net assets (c) (2.04)%
Portfolio turnover rate 199%
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's Dividend Reinvestment and Cash Purchase Plan. Generally, total
investment return based on net asset value will be higher than total investment
return based on market value in periods where there is an increase in the
discount or a decrease in the premium of the market value to the net asset
value from the beginning to the end of such years. Conversely, total investment
return based on net asset value will be lower than total investment return
based on market value in years where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such years.
(c) Annualized
(d) Commencement of distribution.
17
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
W.H. HENDERSON (1)
STIG HOST (1)
ALAN STOGA (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
RUSSELL BRODY, VICE PRESIDENT
JEREMY R. KRAMER, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
LINDA BOLTON WEISER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109-3661
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES
P.O.Box 1520
Secaucus, NJ07094
Toll-Free 1-(800)-221-5672
(1) Member of the Audit Committee.
18
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
19
ALLIANCE GLOBAL ENVIRONMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
ENVSR
