ALLIANCE GLOBAL ENVIRONMENT FUND
ANNUAL REPORT
OCTOBER 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
December 24, 1998
Dear Shareholder:
This report contains a portfolio review and the investment performance of the
Alliance Global Environment Fund for the annual reporting period ended October
31, 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 October 31, 1998. For
comparison purposes, relevant performance data is also provided for the Fund's
benchmark index as represented by the First Analysis Securities Corporation
("FASC") Environmental Index, a broad-based index of companies in the
environmental industry, and for the Standard & Poor's 500 Stock Index (the "S&P
500"), a measure of the broad U.S. stock market.
For the six months ended October 31, 1998, your Fund's Class A shares
underperformed both the FASC Environmental Index return of -13.22%, and the S&P
500 decline of -0.40%. Over the 12-month period ended October 31, 1998, your
Fund's Class A share return of -10.51% trailed the 6.56% decline in the FASC
Environmental Index, as well as the 22.01% advance in the S&P 500. On October
31, 1998, the per share NAV for your Fund's Class A shares was $8.34.
The weak performance of your Fund over the recent six- and 12-month periods
ended October 31, 1998, relative to that of the FASC Environmental Index,
reflects declines in a number of individual holdings in the Fund's portfolio.
These holdings include Thermo Eurotech N.V. (down 46.5% for the six months),
Sealed Air Corp. (-43.5%), United States Filter Corp. (-35.1%), OM Group, Inc.
(-26.4%), AES Corp. (-25.8%), Cuno, Inc. (-22.3%), Allied Waste Industries,
Inc. (-21.4%), and Praxair, Inc. (-20.0%). Three of these companies (Sealed
Air, OM Group, and Praxair) are part of the basic industries sector, which
experienced poor performance during the period. AES, an independent power
producer, declined because of investor concern over economic conditions in
Brazil, while Cuno, a filtration company, underperformed because of weakness in
its Asian business. United States Filter and Allied Waste Industries trailed
the benchmark index because they are companies that grow predominantly through
acquisition, requiring external capital, and therefore are negatively impacted
by declining equity markets. Thermo Eurotech, an environmental company in the
Netherlands, is a private placement holding in the Fund.
INVESTMENT RESULTS*
Periods Ended October 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE GLOBAL
ENVIRONMENT FUND
Class A -23.20% -10.51%
Class B -23.43% -10.79%
Class C -23.43% n/a
FASC ENVIRONMENTAL INDEX -13.22% -6.56%
S&P 500 STOCK INDEX -0.40% 22.01%
* 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. 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.
N/A: NOT APPLICABLE.
INVESTMENT ACTIVITY
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,
1
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
enforced statutes (rather than 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.
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 for companies
that do not require external capital. As of October 31, 1998, the Fund has
approximately 24% of total assets invested in the solid waste segment, with
significant holdings in Republic Services, Inc., Eastern Environmental
Services, Inc., Waste Connections, Inc. and Casella Waste Systems, 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 decline
in growth because of reduced access to capital in order to fund consolidation
activities, and others are seeing a slowdown in their Asian operations due to
the economic difficulties in that region, long-term growth trends are still
positive. As of October 31, 1998, the Fund had approximately 24% of its
holdings in water treatment, including positions in Tyco International, Ltd.,
United States Filter Corp., TETRA Technologies, Inc., Vivendi (based in
France), Cuno, Inc., and Millipore Corp.
Other significant holdings include Sealed Air Corp., a packaging company,
Ecolab, Inc., a provider of cleaning and sanitizing products and services, KTI,
Inc., a recycling and waste-to-energy company, Newpark Resources, Inc., a
provider of non-hazardous oilfield waste ("NOW") collection and disposal
services, and OM Group, Inc., a manufacturer of metal-based chemicals.
Despite the weak performance of the Fund in the second half of fiscal 1998, we
are optimistic regarding the outlook for fiscal 1999. Domestic solid waste
volumes continue to grow and pricing remains positive. 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 OCTOBER 31, 1998#
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -10.51% -14.30%
Five Years 10.72% 9.75%
Since Inception** 3.81% 3.28%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -10.79% -12.56%
Since Inception** -15.03% -16.21%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception** -12.88% -13.31%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (SEPTEMBER
30, 1998)#
CLASS A CLASS B CLASS C
------- ------- -------
1 Year -17.28% n/a n/a
5 Years 9.65% n/a n/a
Since Inception** 3.33% -17.66% -13.31%
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 return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* 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, Class C and Advisor Class 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.
n/a: not applicable
3
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ALLIANCE GLOBAL ENVIRONMENT FUND
GROWTH OF A $10,000 INVESTMENT
6/30/90* TO 10/31/98
$43,000
$37,000
$31,000
$25,000
$19,000
$13,000
$ 7,000
$10,000
S&P 500: $38,020
GLOBAL ENVIRONMENT FUND CLASS A**: $13,023
FASC ENVIRONMENTAL INDEX: $10,756
6/30/90 10/31/91 10/31/92 10/31/93 10/31/94 10/31/95 10/31/96
10/31/97 10/31/98
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 10/31/98) as
compared to the performance of appropriate broad-based indices. 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.
Global Environment Fund
Standard & Poor's 500 Stock Index
FASCEnvironmental Index
* Month-end nearest to Fund's inception date of 6/1/90.
** 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 and Advisor Class
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.
4
TEN LARGEST HOLDINGS
OCTOBER 31, 1998 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
U.S. $ PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
REPUBLIC SERVICES, INC., CL. A--Provides
non-hazardous solid waste collection
and disposal services in the
United States. $ 894,687 6.6%
EASTERN ENVIRONMENTAL SERVICES, INC.--A
non-hazardous solid waste management
company that collects, transports, and
disposes residential, industrial,
commercial, and special waste. 854,700 6.4
ECOLAB, INC.--The company develops and
markets products and services for
the hospitality, institutional and
industrial markets. 851,437 6.3
SEALED AIR CORP.--The company manufactures
and sells protective and specialty
packaging products. 776,081 5.8
TYCO INTERNATIONAL, LTD.--The company
manufactures and distributes
disposable medical supplies and
conducts vehicle auctions. 743,250 5.5
UNITED STATES FILTER CORP.--Provides
industrial and municipal water and
wastewater treatment systems, products
and services on a global basis. 716,392 5.3
GENERAL ELECTRIC CO.--Diversified
manufacturing, technology and
services company. 691,250 5.1
KTI, INC.--An integrated waste
management company. 682,500 5.1
TETRA TECHNOLOGIES, INC.--Provides
comprehensive resource management,
infrastructure and telecommunications
support services. 665,234 4.9
NEWPARK RESOURCES, INC.--Provides
environmental management and oilfield
construction services to the oil and
gas industry in the Gulf coast region. 618,156 4.6
$ 7,493,687 55.6%
5
INDUSTRY DIVERSIFICATION
OCTOBER 31, 1998 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
U.S. $ PERCENT OF
VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 3,263,680 24.2%
Capital Goods 5,367,388 39.8
Consumer Services 854,700 6.4
Energy 835,125 6.2
Multi-Industry 1,245,689 9.2
Technology 665,234 5.0
Transportation 570,441 4.2
Total Investments* 12,802,257 95.0
Cash and other assets,
net of liabilities 680,178 5.0
Net Assets $13,482,435 100.0%
* Excludes short-term obligations
6
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-95.0%
AUSTRALIA-4.3%
Brambles Industries, Ltd. 26,000 $ 570,441
FRANCE-3.7%
Vivendi 2,200 502,439
NETHERLANDS-3.9%
Thermo Eurotech (a)(b) 165,000 529,974
UNITED STATES-83.1%
AES Corp.(a) 5,300 216,969
Allied Waste Industries, Inc. (a) 12,375 267,609
Casella Waste Systems, Inc. (a) 7,900 233,050
Cuno, Inc. (a) 32,500 495,625
Eastern Environmental Services, Inc.(a) 30,800 854,700
Ecolab, Inc. 28,500 851,437
General Electric Co. 7,900 691,250
KTI, Inc.(a) 32,500 682,500
Millipore Corp. 6,000 147,750
Minerals Technologies, Inc. 12,000 546,750
Newpark Resources, Inc.(a) 65,500 618,156
OM Group, Inc. 18,500 603,563
Praxair, Inc. 8,400 338,100
Republic Services, Inc., CL. A(a) 40,900 894,687
Sealed Air Corp. (a) 21,900 776,081
TETRA Technologies, Inc. (a) 32,750 665,234
Tyco International, Ltd. 12,000 743,250
United States Filter Corp.(a) 33,812 716,392
United Technologies Corp 5,200 495,300
Waste Connections, Inc.(a) 19,000 361,000
------------
11,199,403
Total Common Stocks
(cost $12,228,891) 12,802,257
TIME DEPOSIT-5.2%
Dresdner
5.56%, 11/02/98
(cost $700,000) $ 700 700,000
TOTAL INVESTMENTS-100.2%
(cost $12,928,891) 13,502,257
Other assets less liabilities-(0.2)% (19,822)
NET ASSETS-100% $ 13,482,435
(a) Non-income producing security.
(b) Restricted and illiquid security, valued at fair value (See notes A and F)
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $12,928,891) $ 13,502,257
Cash 212,523
Dividends and interest receivable 6,628
Receivable for capital stock sold 5,152
Total assets 13,726,560
LIABILITIES
Advisory fee payable 12,855
Payable for capital stock redeemed 8,730
Accrued expenses 222,540
Total liabilities 244,125
NET ASSETS $ 13,482,435
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,617
Additional paid-in capital 9,204,688
Accumulated net realized gain on investments
and foreign currency transactions 3,702,369
Net unrealized appreciation of investments
and foreign currency denominated assets
and liabilities 573,761
$ 13,482,435
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($13,294,761 / 1,594,869 shares of
capital stock issued and outstanding) $8.34
Sales charge--4.25% of public offering price 0.37
Maximum offering price $8.71
CLASS B SHARES
Net asset value and offering price per share
($152,389 / 18,367 shares of
capital stock issued and outstanding) $8.30
CLASS C SHARES
Net asset value and offering price per share
($30,624 / 3,705 shares of
capital stock issued and outstanding) $8.27
ADVISOR CLASS SHARES
Net asset value, redemption and offering price
per share ($4,661 / 557 shares of
capital stock issued and outstanding) $8.37
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1998 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $978) $ 97,693
Interest 49,483 $ 147,176
EXPENSES
Advisory fee 314,210
Distribution fee - Class A 85,334
Distribution fee - Class B 854
Distribution fee - Class C 287
Custodian 128,675
Audit and legal 95,613
Directors' fees 41,000
Registration 34,896
Transfer agency 33,119
Printing 23,201
Miscellaneous 38,589
Total expenses before interest 795,778
Interest expense 4,738
Total expenses 800,516
Less: expense offset arrangement
(see Note B) (3,178)
Net expenses 797,338
Net investment loss (650,162)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 4,666,985
Net realized loss on foreign
currency transactions (94,745)
Net change in unrealized appreciation of:
Investments (7,383,265)
Foreign currency denominated assets
and liabilities (580)
Net loss on investments and foreign
currency transactions (2,811,605)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(3,461,767)
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (650,162) $(1,346,736)
Net realized gain on investments and
foreign currency transactions 4,572,240 24,901,517
Net change in unrealized appreciation
of investments and foreign currency
denominated assets and liabilities (7,383,845) (1,178,992)
Net increase (decrease) in net assets
from operations (3,461,767) 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 (12,060,609) (63,481,665)
Total decrease (38,895,692) (47,892,677)
NET ASSETS
Beginning of year 52,378,127 100,270,804
End of year $13,482,435 $ 52,378,127
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 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 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-
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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. During the current fiscal year, permanent differences,
primarily due to net operating loss, resulted in a net decrease in accumulated
net investment loss and a corresponding decrease in accumulated net realized
gain on investments and foreign currency denominated assets and liabilities.
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 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. 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 $27,577 for the year ended
October 31, 1998.
In addition, for the year ended October 31, 1998, the Fund's expenses were
reduced by $3,178 under an expense offset arrangement with Alliance Fund
Services. Transfer Agency fees reported in the statement of operations exclude
these credits.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $1,830 from the sale of Class A shares and $180 in
contingent deferred sales charges imposes upon redemption by shareholders of
Class B shares, for the year ended October 31, 1998.
Brokerage commissions paid on investment transactions for the year ended
October 31, 1998, amounted to $195,494, 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.
12
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
$151,011 and $101,842 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 $275,503,634 and $315,270,128 respectively,
for the year ended October 31, 1998. There were no purchases or sales of U.S.
government or government agency obligations for the year ended October 31,
1998. At October 31, 1998, the cost of investments for federal income tax
purposes was $13,825,524. Accordingly, gross unrealized appreciation of
investments was $1,275,337 and gross unrealized depreciation of investments was
$1,598,604, resulting in net unrealized depreciation of $323,267, (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 19.60%. Transactions in capital stock were as
follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997 1998 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 55,756 2,558 $ 849,917 $ 48,826
Shares issued in
reinvestment of
distributions 1,310,177 -0- 11,708,454 -0-
Shares redeemed (2,561,773) (3,179,118) (24,890,942) (61,955,419)
Shares repurchased
in tender offer
prior to conversion
of Fund to
open-end status -- (117,700) -- (1,575,322)
Net decrease (1,195,840) (3,294,260) $ (12,332,571) $ (63,481,915)
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED OCT. 6,1997(A) YEAR ENDED OCT. 6,1997(A)
OCTOBER 31, TO OCTOBER 31, TO
1998 OCT. 31, 1997 1998 OCT. 31, 1997
------------ ------------ -------------- --------------
CLASS B
Shares sold 17,859 13 $188,915 $250
Shares issued in
reinvestment of
distributions 1,716 -0- 15,304 -0-
Shares redeemed (1,221) -0- (9,093) -0-
Net increase 18,354 13 $195,126 $250
NOV. 5, 1997(A) NOV. 5, 1997(A)
TO TO
OCT. 31, 1998 OCT. 31, 1998
-------------- --------------
CLASS C
Shares sold 8,706 $ 123,284
Shares issued in
reinvestment of
distributions 5,087 45,325
Shares redeemed (10,088) (96,487)
Net increase 3,705 $ 72,122
DEC. 29,1997(A) DEC. 29,1997(A)
TO TO
OCT. 31, 1998 OCT. 31, 1998
-------------- --------------
ADVISOR CLASS
Shares sold 1,557 $ 15,054
Shares redeemed (1,000) (10,340)
Net increase 557 $ 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 October 31, 1998 was $529,974 representing 3.9%
of net assets.
(a) Commencement of distribution.
14
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
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 expense in the statement of operations. During the year ended
October 31, 1998, the Fund had borrowings outstanding for twelve days and the
weighted average interest on such borrowings was 5.59%. The Fund had no
borrowings outstanding on October 31, 1998.
15
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,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $18.77 $16.48 $12.37 $11.74 $10.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.24)(a) (.23)(a) (.13)(a) .03 -0-
Net realized and unrealized gain
(loss) on investments
and foreign currency
transactions (1.12) 3.65 4.26 .60 .77
Net increase (decrease) in net asset
value from operations (1.36) 3.42 4.13 .63 .77
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- (.02) -0- -0-
Distributions from net realized gain
on investments and
foreign currency transactions (9.07) (1.13) -0- -0- -0-
Total dividends and distributions (9.07) (1.13) (.02) -0- -0-
Net asset value, end of year $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 (b) (10.51)% 23.51% 33.48% 5.37% 7.02%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $13,295 $52,378 $100,271 $85,416 $81,102
Ratio of expenses to average net assets 2.80%(c) 2.39% 1.60% 1.57% 1.67%
Ratio of net investment income (loss) to
average net assets (2.27)% (1.35)% (.85)% .21% (.04)%
Portfolio turnover rate 205% 145% 268% 109% 42%
</TABLE>
See footnote summary on page 19.
16
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
----------------------------
OCTOBER 6,
1997(D)
YEAR ENDED TO
OCTOBER 31, OCTOBER 31,
1998 1997
----------- ------------
Net asset value, beginning of period $18.76 $19.92
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.27) (.20)
Net realized and unrealized loss on
investments and foreign currency
transactions (1.12) (.96)
Net decrease in net asset value from
operations (1.39) (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 $8.30 $18.76
TOTAL RETURN
Total investment return based on net
asset value (b) (10.79)% (5.82)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $152 $235(e)
Ratio of expenses to average net assets 3.52%(c) 20.84%(f)
Ratio of net investment loss to average
net assets (2.93)% (1.03)%(f)
Portfolio turnover rate 205% 145%
See footnote summary on page 19.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
CLASS C
-----------
NOVEMBER 5,
1997(D)
TO
OCTOBER 31,
1998
-----------
Net asset value, beginning of period $19.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.27)
Net realized and unrealized loss on investments
and foreign currency transactions (1.54)
Net decrease in net asset value from
operations (1.81)
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 $8.27
TOTAL RETURN
Total investment return based on net asset value (b)(f) (12.88)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $31
Ratio of expenses to average net assets (f) 3.39%(c)
Ratio of net investment loss to average
net assets (f) (2.75)%
Portfolio turnover rate 205%
See footnote summary on page 19.
18
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
ADVISOR
CLASS
------------
DECEMBER 29,
1997(D)
TO
OCTOBER 31,
1998
------------
Net asset value, beginning of period $9.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.20)
Net realized and unrealized loss on investments
and foreign currency transactions (.58)
Net decrease in net asset value from
operations (.78)
Net asset value, end of period $8.37
TOTAL RETURN
Total investment return based on net asset value (b)(f) (8.52)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5
Ratio of expenses to average net assets (f) 3.04%(c)
Ratio of net investment loss to average
net assets (f) (2.39)%
Portfolio turnover rate 205%
(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) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended October 31, 1998, the ratios of expenses to
average net assets were 2.79%, 3.51%, 3.38% and 3.03% for Class A, B, C and
Advisor Class shares, respectively.
(d) Commencement of distribution.
(e) Actual net assets without 000's omitted.
(f) Annualized
19
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, 1998, 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, 1998, by correspondence 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, 1998, 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 2, 1998
20
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
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.
21
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
Alliance/Regent Sector Opportunity 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
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
22
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
