ALLIANCE GLOBAL ENVIRONMENT FUND
ANNUAL REPORT
OCTOBER 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
December 12, 1997
Dear Shareholder:
We are pleased to report the performance of Alliance Global Environment Fund
for the annual reporting period ended October 31, 1997. The table below also
gives performance data for the FASC (First Analysis Securities Corporation)
Environmental Index, a broad-based index of companies in the environmental
industry, and the S&P 500 Stock Index, a measure of the broad U.S. stock
market, for the 6- and 12-month periods ended October 31.
INVESTMENT RESULTS*
TOTAL RETURNS FOR THE PERIODS
ENDED OCTOBER 31, 1997
6 MONTHS 12 MONTHS
---------- -----------
Alliance Global Environment Fund
Class A Shares 18.27% 23.51%
FASC Environmental Index 11.60% 16.88%
S&P 500 Stock Index 15.16% 32.10%
* 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 COMMON STOCK WAS CONVERTED TO 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. CLASS B SHARES WERE NOT OUTSTANDING PRIOR TO OCTOBER 6,
1997, AND CLASS C AND ADVISOR CLASS SHARES WERE NOT OUTSTANDING DURING THE
PERIOD.
THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD.
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.
On September 12, 1997, the shareholders overwhelmingly approved the conversion
of the Fund into an open-end investment company. We're pleased that the Fund's
Board and shareholders have endorsed Alliance's proposal to provide
shareholders with continuous liquidity at net asset value, and we welcome you
to the Alliance Family of over 100 mutual funds.
The conversion was completed as of the close of business on October 3, 1997, at
which time shares of the Fund were converted into Class A shares of the
open-end Fund of equivalent net asset value. The Fund is extending a privilege
to all shareholders who held shares of the closed-end Fund to purchase
additional Class A shares of the Fund at any time at their then current net
asset value, without any sales charges.
For the most recent six-month period, the Fund's advance of 18.27% (for Class A
shares) outperformed both the FASC benchmark and the S&P 500, which increased
by 11.60% and 15.16%, respectively. For the full fiscal year, the Fund's
advance of 23.51% exceeded the 16.88% increase in the FASC Index, but trailed
the S&P 500's increase of 32.10%.
INVESTMENT ACTIVITY
The strong performance of the Fund over the most recent six months relative to
both the benchmark and the broad market average reflects advances in a number
of individual holdings. These include U.S. Filter (up 32.1% for the six
months), ITEQ (up 108.3%), American Disposal (up 115.3%) and Allied Waste (up
83.1%). It is interesting to note that these holdings represent three different
industry segments, water treatment, industrial gas equipment and solid waste.
In addition, the Fund's fine recent performance has been achieved during a
period in which the Fund was obliged to convert a substantial portion of its
assets to cash to meet the redemptions associated with the Fund's open-ending
period.
Overall, the Fund remains intensely focused on the growing segments of the
environmental services industry, particularly those areas driven by economics
and existing, enforced regulations. 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
disposal services. Internal growth remains strong ( in the high single digit
range) and acquisition activity has not abated. The Fund has approximately 38%
of total assets invested in the solid waste segment, with significant holdings
in Superior Services, Casella Waste, American Disposal, USA Waste and Allied
Waste. These companies are among those most likely to benefit from current
favorable industry trends.
1
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
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 may experience a slowdown
in their Asian operations due to the economic difficulties in that region,
overall growth trends are still positive. The Fund currently has approximately
23% of its holdings in water treatment, including positions in Culligan Water
Technologies, Cuno, Generale des Eaux (based in France), Lindsay Manufacturing
and U.S. Filter.
Other significant holdings include ITEQ, an industrial gas equipment supplier,
International Alliance Services, a provider of outsourcing services to small
businesses and Philip Services, an industrial services company.
We are pleased with the performance of the Fund in fiscal 1997 and are
optimistic regarding the outlook for fiscal 1998. We believe that the Fund
remains well positioned to take advantage of growth opportunities within the
environmental services industry.
ANNUAL CAPITALGAINS DISTRIBUTION
Regulated investment companies, such as the Fund, with undistributed net
realized capital gains normally are required by the Internal Revenue Code to
distribute to shareholders annually such capital gains. In this regard, on
December 12, 1997 the Fund declared a short-term capital gain distribution of
$9.065 per share, payable on December 18, 1997 to shareholders of record at the
close of business on December 12. The unusually large amount of the
distribution reflects the Fund's realization of substantial capital gains as it
sold portfolio securities to raise cash in connection with the Fund's
open-ending.
As always, we thank you for your continued interest and investment in 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
_______________________________________________________________________________
The 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 total
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
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1997*
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
.One Year +23.51% +18.28%
.Since Inception +5.91% +5.30%
(6/1/90)
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares with and without the effect of
the 4.25% maxi-mum front-end sales charge for Class A. 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. After the close of business on October 3,
1997, all of the common stock was converted to 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. Class B shares were not outstanding prior to
October 6, 1997, and Class C and Advisor Class shares were not outstanding
during the period. Total returns for Class B, Class C and Advisor Class shares
will differ due to different expenses associated with those classes.
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 to Class A shares of the Fund and the Fund commenced a continuous
public 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.
3
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ALLIANCE GLOBAL ENVIRONMENT FUND
GROWTH OF A $10,000 INVESTMENT
6/30/90* TO 10/31/97
$31,000
$28,000
$25,000
$22,000
$19,000
$16,000
$13,000
$10,000
$7,000
S&P 500: $30,951
Global Environment Fund Class A: $15,314
FASC Environmental Index: $11,505
6/30/90 10/31/91 10/31/92 10/31/93
10/31/94 10/31/95 10/31/96 10/31/97
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Global Environment Fund Class A shares (from 6/30/90 to 10/31/97) as
compared to the performance of appropriate broad-based indices. Historical
performance information is for the Fund's common stock, based on net asset
value, while it was a closed end Fund.
The chart assumes the reinvestment of dividends and capital gains. Performance
for Class B, Class C and Advisor Class shares will vary from the results shown
above due to differences in expenses charged to those classes. Past performance
is not indicative of future results, and is not representative of future gain
or loss in capital value or dividend income.
The unmanaged Standard & Poor's 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market.
The FASCEnvironmental Index is a broad-based index of companies in the
environmental industry.
When comparing Alliance Global Environment Fund to the FASC Environmental Index
and the S&P 500 Stock Index, you should note that no charges or expenses are
reflected in the performance of the indices.
Global Environment Fund
Standard &Poor's 500 Stock Index
FASCEnvironmental Index
* Month-end nearest to Fund's inception date of 6/1/90.
4
TEN LARGEST HOLDINGS
OCTOBER 31, 1997 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S.$ VALUE NET ASSETS
- -------------------------------------------------------------------------------
INTERNATIONAL ALLIANCE SERVICES--The company
provides specialty insurance and bonding in
addition to environmental services. 3,491,350 6.7
SUPERIOR SERVICES, INC.--The company provides
solid waste collection, transfer, recycling and
disposal services to residential, commercial
and industrial customers. $ 2,701,750 5.1%
CASELLA WASTE SYSTEMS, INC.--The company provides
integrated, non-hazardous solid waste
collection, transfer, disposal and recycling
processing facilities. 2,677,125 5.1
ITEQ, INC.--The company supplies manufactured
equipment and engineered systems used in the
processing, treatment, and movement of gases
and liquids. 2,662,500 5.1
AMERICAN DISPOSAL SERVICES, INC.--The company
provides solid waste collection, transfer and
disposal services for residential, commercial,
and industrial customers. 2,643,750 5.0
USA WASTE SERVICES, INC.--The company provides
solid waste management services to municipal,
commercial, industrial and residential
customers in the United States. 2,627,000 5.0
ALLIED WASTE INDUSTRIES--The company provides
non-hazardous solid waste collection, transfer,
recycling and disposal services. 2,567,250 4.9
CULLIGAN WATER TECHNOLOGIES, INC.--The company
manufactures and distributes products that
purify and treat water. 2,557,500 4.9
CUNO, INC.--The company designs, manufactures
and markets a line of filtration products used
in the healthcare, fluid processing and
portable water industries. 2,550,000 4.9
BRAMBLES INDUSTRIES, LTD.--The company offers
waste management services, pallet management
systems, international tank container leasing
and marine towage services. 2,403,357 4.6
$26,881,582 51.3%
5
INDUSTRY DIVERSIFICATION
OCTOBER 31, 1997 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 6,747,313 12.9%
Capital Goods 30,093,913 57.5
Consumer Manufacturing 2,090,500 4.0
Consumer Services 4,108,100 7.8
Energy 3,311,625 6.3
Multi-Industry 4,546,676 8.7
Transportation 2,403,357 4.6
Total Investments* 53,301,484 101.8
Cash and other assets, net of liabilities (923,357) (1.8)
Net Assets $52,378,127 100.0%
* Excludes short-term obligations
6
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-101.8%
AUSTRALIA-4.6%
Brambles Industries, Ltd. 125,000 $ 2,403,357
CANADA-13.2%
Laidlaw, Inc. Cl.B. 160,000 2,260,000
Philip Services Corp. (a) 129,000 2,257,500
Novamerican Steel, Inc. (a) 170,000 2,380,000
------------
6,897,500
FRANCE-3.8%
Generale des Eaux 17,000 1,978,596
Wts. 5/02/01 (a) 20,000 10,581
------------
1,989,177
NETHERLANDS-1.0%
Thermo Eurotech (a) (b) 165,000 509,144
UNITED STATES-79.2%
Allied Waste Industries, Inc. (a) 126,000 2,567,250
American Disposal Services, Inc. (a) 75,000 2,643,750
American Waste Services, Inc. (a) 348,000 500,250
Browning Ferris Industries, Inc. 44,000 1,430,000
Casella Waste Systems, Inc. (a) 121,000 2,677,125
Costilla Energy, Inc. (a) 41,000 609,875
Culligan Water Technologies, Inc. (a) 60,000 2,557,500
Cuno, Inc. (a) 150,000 2,550,000
GNI Group, Inc. (a) 101,500 621,688
International Alliance
Services (a) 230,000 2,616,250
Wts. 12/31/99 (a) 300,000 875,100
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
International Technology Corp. (a) 132,000 $ 1,204,500
ITEQ, Inc. (a) 213,000 2,662,500
Lindsay Manufacturing Co. 42,500 1,843,438
Molten Metal Technology, Inc. (a) 356,000 1,246,000
NuCo2, Inc. (a) 79,000 1,027,000
Oak Hill Sportswear Corp. (a) 15,000 67,500
Osmonics, Inc. (a) 68,100 1,076,831
Republic Industries, Inc. (a) 34,000 1,003,000
Sealed Air Corp. (a) 21,000 1,082,812
Sunbeam Corp. 24,000 1,087,500
Superior Services, Inc. (a) 101,000 2,701,750
TETRA Technologies, Inc. (a) 65,000 1,499,062
U.S. Filter Corp. (a) 28,000 1,123,500
USA Waste Services, Inc. (a) 71,000 2,627,000
Waste Industries, Inc. (a) 26,000 549,250
Waste Management, Inc. 45,000 1,051,875
------------
41,502,306
Total Common Stocks & Other Investments
(cost $45,344,853) 53,301,484
TIME DEPOSIT-5.1%
Dresdner Bank
5.65%, 11/03/97
(cost $2,700,000) $2,700 2,700,000
TOTAL INVESTMENTS-106.9%
(cost $48,044,853) 56,001,484
Other assets less liabilities-(6.9)% (3,623,357)
NET ASSETS-100% $52,378,127
(a) Non-income producing security.
(b) Restricted and illiquid security, valued at fair value.
(See notes A and G.)
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $48,044,853) $56,001,484
Cash 74,157
Receivable for investment securities sold 3,155,354
Receivable for capital stock sold 30,667
Dividends and interest receivable 25,932
Prepaid expenses 3,087
Total assets 59,290,681
LIABILITIES
Payable for investment securities purchased 5,759,313
Payable for capital stock redeemed 541,985
Advisory fee payable 68,789
Accrued expenses 542,467
Total liabilities 6,912,554
NET ASSETS $52,378,127
COMPOSITION OF NET ASSETS
Capital stock, at par $ 2,791
Additional paid-in capital 21,264,123
Accumulated net realized gain on investments and foreign
currency transactions 23,153,607
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 7,957,606
$52,378,127
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($52,377,892/
2,790,709 shares ofcapital stock issued and outstanding) $18.77
Sales charge--4.25% of public offering price .83
Maximum offering price $19.60
CLASS B SHARES
Net asset value and offering price per share ($235/
12.526 shares ofcapital stock issued and outstanding) $18.76
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends(net of foreign taxes withheld of $7,206) $ 218,641
Interest 525,483 $ 744,124
EXPENSES
Advisory fee 1,093,547
Distribution fee - Class A 14,116
Audit and legal 423,002
Registration 118,997
Custodian 112,921
Printing 107,947
Transfer agency 104,898
Directors' fees 83,000
Miscellaneous 21,549
Total expenses before interest 2,079,977
Interest expense 10,883
Total expenses 2,090,860
Net investment loss (1,346,736)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 24,914,539
Net realized loss on foreign currency transactions (13,022)
Net change in unrealized appreciation (depreciation) of:
Investments (1,179,704)
Foreign currency denominated assets and liabilities 712
Net gain on investments and foreign currency transactions 23,722,525
NET INCREASE IN NET ASSETS FROM OPERATIONS $22,375,789
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (1,346,736) $ (833,738)
Net realized gain on investments and foreign
currency transactions 24,901,517 19,882,087
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities (1,178,992) 6,302,983
Net increase in net assets from operations 22,375,789 25,351,332
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A -0- (138,142)
Net realized gain on investments
Class A (6,786,801) -0-
CAPITAL STOCK TRANSACTIONS
Net decrease (63,481,665) (10,359,153)
Total increase (decrease) (47,892,677) 14,854,037
NET ASSETS
Beginning of year 100,270,804 85,416,767
End of year $ 52,378,127 $100,270,804
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 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 following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
All securities listed on an exchange for which market quotations are readily
available are valued at the closing price on the exchange on the day of
valuation or, if no such closing price is available, at the mean of the last
bid and ask price quoted on such day. Securities for which market quotations
are not readily available and restricted securities are valued in good faith at
fair value using methods determined by the Board of Directors. In determining
fair value, consideration is given to cost, operating and other financial data.
Short-term debt securities which mature in 60 days or less are valued at
amortized cost which approximates market value, unless this method does not
represent fair value.
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 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 denominated 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 U.S. Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for Federal income or excise taxes are
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.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
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. During the current fiscal year, permanent differences,
primarily due to tax reclassification of net investment loss, resulted in a net
decrease in accummulated net investment loss and corresponding decreases in
accummulated net realized gains on investment and foreign currency transactions
and additional paid-in capital. This reclassification had no effect on net
assets.
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 compensates Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Adviser) under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. Such compensation amounted to $2,255 for the year ended October 31, 1997.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares.
Brokerage commissions paid on investment transactions for the year ended
October 31, 1997, amounted to $493,332, 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.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Investment Manager, the Fund
reimburses AFS for costs relating to servicing phone inquires for the Fund. The
Fund reimbursed AFS $1,092 for the period November 1, 1996 to October 31, 1997.
The Shareholder Inquiry Agency Agreement terminated with the conversion of the
Fund to an open-end management investment company.
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 did not incur expenses in
12
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
excess of the distribution costs reimbursed by the Fund. 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 $130,761,906 and $196,123,021 respectively,
for the year ended October 31, 1997. There were no purchases or sales of U.S.
government or government agency obligations for the year ended October 31,
1997. At October 31, 1997, the cost of securities for federal income tax
purposes was $48,254,640. Accordingly, gross unrealized appreciation of
investments was $9,243,304 and gross unrealized depreciation of investments was
$1,496,461, resulting in net unrealized appreciation of $7,746,843, (excluding
foreign currency transactions).
NOTE E: BANK BORROWING
Each of the open-end Alliance Mutual Funds have entered into a revolving credit
facility to provide short-term financing in the event of abnormally high
redemption activity experienced by any of the Funds. The maximum credit
available under the credit facility is $500,000,000. At October 31, 1997, there
were no amounts outstanding under the credit agreement with respect to the Fund.
The weighted average of bank loans outstanding during the year ended October
31, 1997, amounted to approximately $9,285,714 over the 6 days the loan was
outstanding at a weighted average interest rate of 6.03%.
NOTE F: 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
allows 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 includes $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
--------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
----------- ----------- -------------- --------------
CLASS A
Shares sold 2,558 -- $ 48,826 $ --
Shares redeemed (3,179,118) -- (61,955,419) --
Shares repurchased
in tender offer
prior to conversion
of Fund to
open-end status (117,700) (822,200) (1,575,322) (10,359,153)
Net decrease (3,294,260) (822,200) $(63,481,915) $(10,359,153)
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ----------------------------
OCT. 6,1997(A) OCT. 6,1997(A)
TO TO
OCT. 31, 1997 OCT. 31, 1997
------------- -------------
CLASS B
Shares sold 13 $ 250
Net increase 13 $ 250
NOTE G: 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 October 31, 1997 was $509,144 representing 1.0%
of net assets.
(a) Commencement of distribution.
14
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.48 $12.37 $11.74 $10.97 $10.78
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.23)(a) (.13)(a) .03 -0- .01
Net realized and unrealized gain on
investments and foreign currency
transactions 3.65 4.26 .60 .77 .18
Net increase in net asset value from
operations 3.42 4.13 .63 .77 .19
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.02) -0- -0- -0-
Distributions from net realized gain
on investments
and foreign currency transactions (1.13) -0- -0- -0- -0-
Total dividends and distributions (1.13) (.02) -0- -0- -0-
Net asset value, end of year $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: (b)
Net asset value 23.51% 33.48% 5.37% 7.02% 1.76%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $52,378 $100,271 $85,416 $81,102 $75,805
Ratio of expenses to average net assets 2.39%(c) 1.60% 1.57% 1.67% 1.62%
Ratio of net investment income (loss)
to average net assets (1.35)% (.85)% .21% (.04)% .15%
Portfolio turnover rate 145% 268% 109% 42% 25%
Average commission rate (d) $.0506 $.0313 -- -- --
</TABLE>
See footnote summary on page 16.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
---------------
OCTOBER 6,
1997(E)
TO
OCTOBER 31,
1997
---------------
Net asset value, beginning of period $19.92
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.20)(a)
Net realized and unrealized loss on investments and
foreign currency transactions (.96)
Net decrease in net asset value from operations (1.16)
Net asset value, end of period $18.76
TOTAL RETURN
Total investment return based on: (b)
Net asset value (5.82)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $235
Ratio of expenses to average net assets 20.84%(c)
Ratio of net investment loss to average net assets (1.03)%(c)
Portfolio turnover rate 145%
Average commission rate $.0506
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for periods of less than one year is
not annualized.
(c) Annualized.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged. This amount includes commissions paid to foreign
brokers which may materially affect the rate shown. Amounts paid in foreign
currencies have been converted into US dollars using the prevailing exchange
rate on the date of the transaction.
(e) Commencement of distribution.
16
ADDITIONAL INFORMATION ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SUPPLEMENTAL PROXY INFORMATION
The reconvened Annual Meeting of Stockholders of Alliance Global Environment
Fund, Inc. held on September 12, 1997. The results of this tabulation are as
follows:
We certify that the number of shares issued, outstanding and eligible to vote
as of the record date of May 16, 1997 were 5,967,269. We tabulated 122 proxies
representing 4,721,468,954 shares or 95.242 percent of the eligible voting
shares.
1. PROPOSAL I
Approval of the conversion of the Fund from a closed-end investment company to
an open-end investment company, including in connection herewith:
a) Changing the subclassification of the Fund from that of a closed-end
investment company to that of an open-end investment company.
b) Amending the Articles of Incorporation of the Fund to provide for the
conversion, eliminate certain "anti-takeover" provisions and reclassify the
outstanding shares of the Fund as Class A shares;
c) Modifying of an Investment Restriction of the Fund;
d) Approving an Advisory Agreement to replace the Fund's existing Investment
Management and Administration Agreement; and
e) Establishing a Multiple Distribution System, including in connection
therewith, adopting a Rule 12b-1 distribution plan.
NUMBER OF
SHARES/VALUES
-------------
For 4,496,798.088
Against 93,528.554
Abstain 131,142.322
2. PROPOSAL II
Election of Directors.
If Proposal No. 1 is approved, to elect the following seven Directors:
AUTHORITY
FOR WITHHELD
------------- -----------
John D. Carifa 5,070,813.402 185,257.562
W.H. Henderson 5,090,362.441 165,708.523
Richard M. Lilly 5,090,362.441 165,708.523
Dave H. Dievler 5,088,972.441 167,098.523
Stig Host 5,090,362.441 165,708.523
Alan Stoga 5,086,887.441 169,183.523
John H. Dobkin 5,065,687.441 190,383.523
If Proposal No. 1 is not approved, to elect the following Class Two Directors,
term expiring in 2000.
John H. Dobkin 5,067,482.984 188,587.980
Stig Host 5,091,157.984 164,912.980
W.H. Henderson 5,092,157.984 163,912.980
3. PROPOSAL III
Ratification of the Selection of Ernst & Young LLP as independent auditors of
the Fund for its fiscal year ending October 31, 1997.
NUMBER OF
SHARES/VOTES
-------------
For 5,128,170.780
Against 14,315.461
Abstain 113,584.723
4. In their discretion on such other matters that may properly come before the
Meeting or any adjournments thereof.
17
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS ALLIANCE GLOBAL ENVIRONMENT FUND,
INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Global Environment Fund, Inc. (the "Fund"), including the portfolio of
investments, as of October 31, 1997, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspon
dence with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Global Environment Fund, Inc. at October 31, 1997, 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 indicated periods, in conformity with generally accepted accounting
principles.
New York, New York
December 10, 1997
18
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)
RICHARD M. LILLY (1)
ALAN STOGA (1)
ROBERT C. WHITE (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
FRANCES P. REEVES, 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
JOSEPH J. MANTINEO, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109-3661
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.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
This report, including the financial statements herein, is transmitted to
the shareholders of Alliance Global Environment Fund for their information.
This is not a prospectus, circular or representation intended for use in the
purchase of shares of the Fund or any securities mentioned in this report.
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.
ENVAR
