ALLIANCE GLOBAL ENVIRONMENT FUND
SEMI-ANNUAL REPORT
APRIL 30, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
June 28, 1999
Dear Shareholder:
This report contains a portfolio review and the investment performance for the
Alliance Global Environment Fund (the "Fund") for the semi-annual reporting
period ended April 30, 1999.
INVESTMENT RESULTS
The following table provides your Fund's investment results for the six- and
12-month periods ended April 30, 1999. For comparison purposes, relevant
performance data is also provided for the Fund's benchmark index, the First
Analysis Securities Corporation ("FASC") Environmental Index, a broad-based
index of companies in the environmental industry. In addition, we have provided
investment results for the unmanaged Standard & Poor's 500 Stock Index (the
"S&P 500"), a measure of the broad U.S. stock market.
INVESTMENT RESULTS*
Periods Ended April 30, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE GLOBAL
ENVIRONMENT FUND
Class A 25.60% -3.54%
Class B 25.22% -4.12%
Class C 25.18% -4.14%
FASC ENVIRONMENTAL INDEX 32.13% 14.67%
S&P 500 STOCK INDEX 22.31% 21.83%
* THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIODS AND ARE
BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES. 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.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
For the six months ended April 30, 1999, your Fund's Class A shares' return of
25.60% underperformed the FASC Environmental Index's return of 32.13%, but
outperformed the S&P 500's gain of 22.31%. Over the 12-month period ended April
30, 1999, your Fund's Class A shares' return of -3.54% fell short of the 14.67%
gain in the FASC Environmental Index, as well as the 21.83% advance in the S&P
500. On April 30, 1999, the per share net asset value (NAV) for your Fund's
Class A shares was $6.57.
The strong performance of your Fund versus the S&P 500 during the six-month
period ended April 30, 1999 reflects significant gains in a number of holdings
in the Fund's portfolio. These holdings include Sealed Air Corp. (up 71.6% for
the period), United Technologies Corp. (up 52.1%), Ecolab, Inc. (up 40.4%),
Waste Connections, Inc. (up 38.8%), Brambles Industries, Ltd. (up 34.8%), and
Tyco International, Ltd. (up 31.2%). It is interesting to note that five of
these holdings represent major strategic themes of the Fund. For instance,
Sealed Air Corp. is a packaging company that enables customers to reduce
corrugated packaging waste, while United Technologies Corp. is a diversified
beneficiary company. Ecolab, Inc.'s products help ensure that food is clean and
contaminant-free, and Waste Connections, Inc. is a solid waste company. Lastly,
Tyco International, Ltd.'s valve business benefits from the growth of the
global water treatment industry.
Your Fund's performance trailed that of the FASC Environmental Index over the
six-month period ended April 30, 1999, as several of the Fund's holdings that
are not included in the FASC Index underperformed the Index's return of 32.13%.
These holdings include Tyco International, Ltd. (up 31.2% for the six months
ended April 30, 1999), General Electric Co. (up 20.4%), Minerals Technologies,
Inc. (up 18.5%), OM Group, Inc. (up 11.5%), and Thermo Eurotech (down -10.3%).
Minerals Technologies, Inc. and OM Group, Inc. are beneficiary companies that
are part of the basic industries sector, and Thermo Eurotech is a private
placement holding in the Fund.
Your Fund underperformed the S&P 500 and FASC Environmental Index over the
12-month period ended April 30, 1999 because it was more heavily weighted in
the basic industries sector, which experienced poor
1
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
performance in the six-month period ended October 31, 1998.
INVESTMENT ACTIVITY
Overall, the Fund's holdings remain concentrated in what we perceive to be the
growing segments of the environmental services industry. In particular, the
Fund's holdings are concentrated in those areas driven by economics (rather
than those areas driven by government regulations) as well as existing,
enforced statutes (as opposed to anticipated actions by lawmakers). This focus
has led to two primary themes within the Fund: domestic solid waste collection
and disposal services, and water treatment equipment and services.
We believe that 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 mid
to high single digit range) and acquisition activity has continued. As of April
30, 1999, the Fund had approximately 24% of its total assets invested in the
solid waste segment, with significant holdings in Republic Services, Inc.,
Waste Connections, Inc., and Waste Management, 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. Companies negatively impacted by the slowdown in their
Asian operations are starting to see improvement in that region, and, in our
estimation, long-term growth trends in the water treatment equipment and
services industry remain positive. As of April 30, 1999, the Fund had
approximately 22% of its holdings in water treatment, including positions in
TETRA Technologies, Inc., Tyco International, Ltd., Millipore Corp., Cuno,
Inc., and Vivendi (based in France).
Other significant holdings in the Fund's portfolio include Sealed Air Corp., a
packaging company, Newpark Resources, Inc., a provider of non-hazardous
oilfield waste (NOW) collection and disposal services, Ecolab, Inc., a provider
of cleaning and sanitizing products and services, Minerals Technologies, Inc.,
a manufacturer of precipitated calcium carbonate and other materials, and OM
Group, Inc., a manufacturer of metal-based chemicals.
INVESTMENT OUTLOOK
We are pleased with the performance of the Fund in the first half of the fiscal
year 1999, and are optimistic regarding the outlook for the remainder of the
fiscal year. Domestic solid waste volumes continue to grow and pricing remains
positive. In our view, global growth prospects for water treatment equipment
and services companies continue to be favorable, and business conditions in
Asia appear to be improving. 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
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, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year -3.54% -7.62%
5 Years 15.07% 14.09%
Since Inception* 6.29% 5.77%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year -4.12% -6.52%
Since Inception* 3.28% 2.67%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year -4.14% -4.74%
Since Inception* 6.03% 6.03%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(MARCH 31, 1999)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year -19.05% -18.06% -16.59%
5 Years 10.90% N/A N/A
Since Inception* 3.95% -7.58% -5.04%
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.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception date: 6/1/90 Class A; 10/6/97 Class B; 11/5/97 Class C.
N/A: not applicable
3
TEN LARGEST HOLDINGS
APRIL 30, 1999 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
TETRA TECHNOLOGIES, INC.--Provides
comprehensive resource
management, infrastructure
and telecommunications support
services. $ 828,422 7.7%
WASTE MANAGEMENT, INC.--The
company provides waste
management services throughout
the United States, Puerto Rico,
and Mexico. 814,617 7.6
REPUBLIC SERVICES, INC., CL. A--
Provides non-hazardous solid
waste collection and disposal
services in the United States. 789,600 7.3
WASTE CONNECTIONS, INC.--Provides
solid waste collection, transfer,
disposal, and recycling services
in secondary markets of the western
United States. 633,000 5.9
SEALED AIR CORP.--The company
manufactures and sells
protective and specialty
packaging products. 614,206 5.7
NEWPARK RESOURCES, INC.--Provides
environmental management and
oilfield construction services
to the oil and gas industry in
the Gulf coast region. 546,656 5.1
GRACO, INC.--The company designs,
manufactures, and markets systems
to move, measure, control,
dispense, and apply fluid
materials. 519,750 4.8
ECOLAB, INC.--The company develops
and markets products and
services for the hospitality,
institutional and industrial
markets. 511,637 4.7
TYCO INTERNATIONAL, LTD.--The
company manufactures and
distributes disposable medical
supplies and conducts vehicle
auctions. 503,750 4.7
MINERALS TECHNOLOGIES, INC.--The
company develops and produces
performance-enhancing minerals,
as well as mineral--based and
synthetic mineral products used
for paper, steel, and other
manufacturing industries. 486,000 4.5
$6,247,638 58.0%
4
INDUSTRY DIVERSIFICATION
APRIL 30, 1999 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 2,514,343 23.4%
Capital Goods 5,969,085 55.4
Energy 1,006,656 9.3
Multi-Industry 900,838 8.4
Transportation 455,468 4.2
Total Investments* 10,846,390 100.7
Cash and other assets,
net of liabilities (81,721) (0.7)
Net Assets $10,764,669 100.0%
* Excludes short-term obligations
5
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-100.7%
AUSTRALIA-4.2%
Brambles Industries, Ltd. 15,500 $ 455,468
FRANCE-3.7%
Vivendi 1,700 397,088
NETHERLANDS-4.4%
Thermo Eurotech (a)(b) 165,000 474,602
UNITED STATES-88.4%
AES Corp. (a) 9,200 460,000
Casella Waste Systems, Inc.
Cl. A (a) 8,000 200,000
Cuno, Inc. (a) 22,500 412,031
Ecolab, Inc. 12,200 511,637
General Electric Co. 4,100 432,550
Graco, Inc. 16,500 519,750
IT Group, Inc. (a) 30,000 444,375
Millipore Corp. 14,000 429,625
Minerals Technologies, Inc. 9,000 486,000
Newpark Resources, Inc. (a) 59,500 546,656
OM Group, Inc. 13,000 472,875
Republic Services, Inc.,
Cl. A (a) 38,400 789,600
Sealed Air Corp. (a) 10,100 614,206
TETRA Technologies, Inc. (a) 34,250 828,422
Tyco International, Ltd. 6,200 503,750
United Technologies Corp. 2,900 420,138
Waste Connections, Inc. (a) 24,000 633,000
Waste Management, Inc. 14,418 814,617
------------
9,519,232
Total Common Stocks
(cost $8,435,188) 10,846,390
TIME DEPOSIT-5.6%
West Deutsche Landesbank Girozentrale
4.88%, 5/03/99 (cost $600,000) $600 600,000
TOTAL INVESTMENTS-106.3%
(cost $9,035,188) 11,446,390
Other assets less liabilities-(6.3)% (681,721)
NET ASSETS-100% $10,764,669
(a) Non-income producing security.
(b) Restricted and illiquid security, valued at fair value (See notes A and F).
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $9,035,188) $11,446,390
Cash 24,334
Receivable for investment securities sold 625,586
Receivable for capital stock sold 33,807
Receivable from adviser 9,392
Dividends and interest receivable 7,360
Total assets 12,146,869
LIABILITIES
Payable for investment securities purchased 1,140,000
Payable for capital stock redeemed 27,533
Distribution fee payable 2,789
Accrued expenses 211,878
Total liabilities 1,382,200
NET ASSETS $10,764,669
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,638
Additional paid-in capital 8,861,390
Accumulated net investment loss (194,756)
Accumulated net realized loss on investments and
foreign currency transactions (314,597)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 2,410,994
$10,764,669
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($10,499,500 / 1,597,356 shares of capital stock
issued and outstanding) $6.57
Sales Charge--4.25% of public offering price .29
Maximum offering price $6.86
CLASS B SHARES
Net asset value and offering price per share
($219,568 / 33,785 shares of capital stock
issued and outstanding) $6.50
CLASS C SHARES
Net asset value and offering price per share
($39,498 / 6,112 shares of capital stock
issued and outstanding) $6.46
ADVISOR CLASS SHARES
Net asset value, redemption and offering price
per share ($6,103 / 921 shares of capital stock
issued and outstanding) $6.63
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends $ 25,055
Interest 6,841 $ 31,896
EXPENSES
Advisory fee 60,523
Distribution fee - Class A 16,150
Distribution fee - Class B 1,033
Distribution fee - Class C 131
Custodian 61,755
Audit and legal 49,821
Registration 36,130
Transfer agency 18,869
Directors' fees 16,000
Printing 15,240
Miscellaneous 8,213
Total expenses 283,865
Less: expenses waived and reimbursed
by the Adviser (see Note B) (56,292)
Less: expense offset arrangement
(see Note B) (921)
Net expenses 226,652
Net investment loss (194,756)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 728,526
Net realized loss on foreign currency
transactions (7,552)
Net change in unrealized appreciation of:
Investments 1,837,836
Foreign currency denominated assets and
liabilities (603)
Net gain on investments and foreign currency
transactions 2,558,207
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,363,451
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998
---------------- ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (194,756) $ (650,162)
Net realized gain on investments and
foreign currency transactions 720,974 4,572,240
Net change in unrealized appreciation
of investments and foreign currency
denominated assets and liabilities 1,837,233 (7,383,845)
Net increase (decrease) in net assets
from operations 2,363,451 (3,461,767)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (4,656,014) (23,312,560)
Class B (70,731) (15,304)
Class C (9,441) (45,452)
Advisor Class (1,754) -0-
CAPITAL STOCK TRANSACTIONS
Net decrease (343,277) (12,060,609)
Total decrease (2,717,766) (38,895,692)
NET ASSETS
Beginning of year 13,482,435 52,378,127
End of period $10,764,669 $ 13,482,435
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (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 may 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 were subject to a 2% redemption fee through October 2, 1998.
There was no redemption fee after October 2, 1998. The entire amount of the
redemption fee was 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 results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported 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 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 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.
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 1% of the next $100 million of the Fund's
average daily net assets, and .80 of 1% of the Fund's average daily net assets
over $200 million. The fee is accrued daily and paid monthly. Effective
February 1, 1999 the Adviser has agreed to voluntarily waive its fees and bear
certain expenses to the extent necessary to limit total operating expenses on
an annual basis to 3.00%, 3.70%, 3.70% and 2.70% of the daily average net
assets for the Class A, Class B, Class C and Advisor Class shares,
respectively. For the six month period ended April 30, 1999, such waivers and
reimbursement amounted to $56,292. The Adviser may terminate the voluntary
waiver at any time.
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 $10,691 for the six months ended April 30, 1999.
For the six months ended April 30, 1999, the Fund's expenses were reduced by
$921 under an expense offset arrangement with Alliance Fund Services.
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 $116 from the sale of Class A shares and $2,073 in
contingent deferred sales charges imposes upon redemption by shareholders of
Class B shares, for the six months ended April 30, 1999.
Brokerage commissions paid on investment transactions for the six months ended
April 30, 1999, amounted to $19,029, 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.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to both Class B
and Class C shares. There is no distribution fee on the Advisor Class shares.
The fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amount of
$300,636 and $127,347 for Class B and Class C shares, respectively; such costs
may be recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs incurred by the Distributor, beyond the current
fiscal year for Class A shares. The Agreement also provides that the Adviser
may use its own resources to finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term and U.S.
government obligations) aggregated $4,716,643 and $9,238,872 respectively, for
the six months ended April 30, 1999. There were no purchases or sales of U.S.
government or government agency obligations for the six months ended April 30,
1999. At April 30, 1999, the cost of investments for federal income tax
purposes was 2,666,775. Accordingly, gross unrealized appreciation of
investments was $2,473,651 and gross unrealized depreciation of investments was
$159,011, resulting in net unrealized appreciation of $2,314,640, (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.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 52,423 55,756 $ 325,598 $ 849,917
Shares issued in
reinvestment of
distributions 563,375 1,310,177 2,935,183 11,708,454
Shares redeemed (613,311) (2,561,773) (3,707,803) (24,890,942)
Net increase
(decrease) 2,487 (1,195,840) $ (447,022) $(12,332,571)
CLASS B
Shares sold 23,628 17,859 $ 140,075 $ 188,915
Shares issued in
reinvestment of
distributions 11,443 1,716 59,160 15,304
Shares redeemed (19,653) (1,221) (108,716) (9,093)
Net increase 15,418 18,354 $ 90,519 $ 195,126
12
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS NOV. 5, SIX MONTHS NOV. 5,
ENDED 1997(A) ENDED 1997(A)
APRIL 30, 1999 TO APRIL 30, 1999 TO
(UNAUDITED) OCT. 31, 1998 (UNAUDITED) OCT. 31, 1998
------------ ------------ -------------- --------------
CLASS C
Shares sold 3,203 8,706 $ 17,730 $ 123,284
Shares issued in
reinvestment of
distributions 245 5,087 1,263 45,325
Shares redeemed (1,041) (10,088) (7,718) (96,487)
Net increase 2,407 3,705 $ 11,275 $ 72,122
DEC. 29, 1997(A) DEC. 29, 1997(A)
TO TO
OCT. 31, 1998 OCT. 31, 1998
------------ ------------ -------------- --------------
ADVISOR CLASS
Shares sold 33 1,557 $ 213 $ 15,054
Shares issued in
reinvestment of
distributions 331 -0- 1,738 -0-
Shares redeemed -0- (1,000) -0- (10,340)
Net increase 364 557 $1,951 $ 4,714
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, 1999 was
$474,602 representing 4.4% of net assets.
NOTE G: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility ("the Facility")
intended to provide for 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 six months ended April 30, 1999.
(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,
1999 --------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $8.34 $18.77 $16.48 $12.37 $11.74 $10.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.11)(a)(b) (.24)(a) (.23)(a) (.13)(a) .03 -0-
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.44 (1.12) 3.65 4.26 .60 .77
Net increase (decrease) in net asset
value from operations 1.33 (1.36) 3.42 4.13 .63 .77
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- (.02) -0- -0-
Distributions from net realized gain on
investments and foreign currency
transactions (3.10) (9.07) (1.13) -0- -0- -0-
Total dividends and distributions (3.10) (9.07) (1.13) (.02) -0- -0-
Net asset value, end of period $6.57 $8.34 $18.77 $16.48 $12.37 $11.74
Market value, end of year $13.25 $9.375 $9.50
TOTAL RETURN
Total investment return based on net
asset value (c) 25.60% (10.51)% 23.51% 33.48% 5.37% 7.02%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $10,500 $13,295 $52,378 $100,271 $85,416 $81,102
Ratios to average net assets:
Expenses, net of waivers/
reimbursements 4.12%(d)(e) 2.80%(d) 2.39% 1.60% 1.57% 1.67%
Expenses, before waivers/
reimbursements 5.14%(e) -- -- -- -- --
Ratio of net investment income (loss) to
average net assets (3.56)%(e) (2.27)% (1.35)% (.85)% .21% (.04)%
Portfolio turnover rate 86% 205% 145% 268% 109% 42%
</TABLE>
See footnote summary on page 17.
14
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------
SIX MONTHS OCTOBER 6,
ENDED 1997(F)
APRIL 30, YEAR ENDED TO
1999 OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $8.30 $18.76 $19.92
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.13)(b) (.27) (.20)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.43 (1.12) (.96)
Net increase (decrease) in net asset
value from operations 1.30 (1.39) (1.16)
LESS: DISTRIBUTIONS
Distributions from net realized gain on
investments and foreign currency
transactions (3.10) (9.07) -0-
Total distributions (3.10) (9.07) -0-
Net asset value, end of period $6.50 $8.30 $18.76
TOTAL RETURN
Total investment return based on net
asset value (c) 25.22% (10.79)% (5.82)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $220 $152 $235(g)
Ratios to average net assets:
Expenses, net of waivers/
reimbursements 4.78%(d)(e) 3.52%(d) 20.84%(e)
Expenses, before waivers/
reimbursements 5.90%(e) -- --
Ratio of net investment loss to
average net assets (4.22)%(e) (2.93)% (1.03)%(e)
Portfolio turnover rate 86% 205% 145%
</TABLE>
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
-------------------------
SIX MONTHS NOVEMBER 5,
ENDED 1997(F)
APRIL 30, TO
1999 OCTOBER 31,
(UNAUDITED) 1998
----------- ----------
Net asset value, beginning of period $8.27 $19.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.12)(b) (.27)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.41 (1.54)
Net increase (decrease) in net asset
value from operations 1.29 (1.81)
LESS: DISTRIBUTIONS
Distributions from net realized gain on
investments and foreign currency
transactions (3.10) (9.07)
Total distributions (3.10) (9.07)
Net asset value, end of period $6.46 $8.27
TOTAL RETURN
Total investment return based on net
asset value (c) 25.18% (12.88)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $39 $31
Ratios to average net assets:
Expenses, net of waivers/
reimbursements (d)(e) 4.61% 3.39%
Expenses, before waivers/
reimbursements(e) 5.87% --
Ratio of net investment loss to
average net assets (e) (4.07)% (2.75)%
Portfolio turnover rate 86% 205%
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
--------------------------
SIX MONTHS DECEMBER 29,
ENDED 1997(F)
APRIL 30, TO
1999 OCTOBER 31,
(UNAUDITED) 1998
----------- ----------
Net asset value, beginning of period $8.37 $9.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.10)(b) (.20)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.46 (.58)
Net increase (decrease) in net asset
value from operations 1.36 (.78)
LESS: DISTRIBUTIONS
Distributions from net realized gain on
investments and foreign currency
transactions (3.10) -0-
Total distributions (3.10) -0-
Net asset value, end of period $6.63 $8.37
TOTAL RETURN
Total investment return based on net
asset value (c) 25.94% (8.52)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6 $5
Ratios to average net assets:
Expenses, net of waivers/
reimbursements (d)(e) 3.73% 3.04%
Expenses, before waivers/
reimbursements (e) 4.88% --
Ratio of net investment loss to
average net assets (e) (3.16)% (2.39)%
Portfolio turnover rate 86% 205%
(a) Based on average shares outstanding.
(b) Net of expenses waived/reimbursed by the Adviser.
(c) 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.
(d) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the six months ended April 30, 1999 and the year ended
October 31, 1998, the ratios of expenses to average net assets were 4.15% and
2.79% for Class A, 4.81% and 3.51% for Class B, 4.67% and 3.38% for Class C and
3.76% and 3.03% for Advisor Class shares, respectively.
(e) Annualized
(f) Commencement of distribution.
(g) Actual net assets without 000's omitted.
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
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 LLP
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, INC.
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 U.S. Government Fund
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
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors 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
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
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
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
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
General Municipal Portfolio
Government 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
