ALLIANCE GLOBAL ENVIRONMENT FUND
ANNUAL REPORT
OCTOBER 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
December 28, 1999
Dear Shareholder:
This report contains a portfolio review and the investment performance for the
Alliance Global Environment Fund (the "Fund") for the annual reporting period
ended October 31, 1999.
INVESTMENT RESULTS
The following table provides your Fund's investment results for the six- and
12-month periods ended October 31, 1999. For comparison purposes, relevant
performance data is also provided for the Fund's benchmark index, the unmanaged
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 broad measure of the U.S. stock market.
For the six months ended October 31, 1999, your Fund's Class A shares' return
of -13.85% outperformed the FASC Environmental Index's return of -20.67%, but
underperformed the S&P 500's gain of 2.74%. Over the 12-month period ended
October 31, 1999, your Fund's Class A shares' return of 8.21% outperformed the
4.82% gain in the FASC Environmental Index, but underperformed the 25.66%
advance in the S&P 500. On October 31, 1999, the per-share net asset value
(NAV) for your Fund's Class A shares was $5.66.
The performance of your Fund versus the FASC Environmental Index during the
six-month reporting period reflects gains in a number of holdings in the Fund's
portfolio. These holdings include General Electric Co. (up 28.6% for the
period), AES Corp. (up 12.9%), Cuno Inc. (up 9.2%), Graco Inc. (up 6.3%),
Millipore Corp. (up 3.9%), and OM Group Inc. (up 3.1%). It is interesting to
note that three of these holdings represent major strategic themes of the Fund.
For instance, Cuno and Millipore are filtration companies serving the global
water treatment industry, while AES is an independent power producer. In
addition, Cuno, Millipore, and AES all benefited from the recoveries now
underway in developing economies in Asia and South America. Graco and OM Group
benefit as manufacturers change their product designs to incorporate
environmentally friendly materials. Lastly, General Electric is a diversified
company that benefits from the growth in power generation as a supplier to that
industry.
Your Fund outperformed its benchmark during the 12-month period ended October
31, 1999 because of gains in the Fund's holdings previously discussed. In
addition, the Fund benefited from strong performance by Sealed Air Corp. (up
56.3% for the 12 months ended October 31, 1999), Brambles Industries Ltd. (up
28.7%), and United Technologies Corp. (up 27.0%). Sealed Air (one of the Fund's
ten largest holdings) is a packaging company that enables customers to reduce
corrugated packaging waste, while Brambles Industries is a diversified
Australian company. United Technologies is a diversified beneficiary company.
Your Fund's performance trailed that of the S&P 500 over the six- and 12-month
periods ended October 31, 1999. Many of the environmental and beneficiary
holdings in the Fund underperformed the S&P 500 during the six- and 12-month
periods. These holdings include Waste Management Inc. (down 67.5% for the six
months and down 59.3% for the 12 months ended October 31, 1999), Waste
Connections Inc. (-41.5% and -18.8%), TETRA Technologies Inc. (-34.4% and
- -21.8%), Minerals Technologies Inc. (-20.1% and -5.3%), and Ecolab Inc. (-19.4%
and -13.2%).
INVESTMENT RESULTS*
Periods Ended October 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE GLOBAL ENVIRONMENT FUND
Class A -13.85% 8.21%
Class B -14.15% 7.50%
Class C -14.09% 7.55%
FASC ENVIRONMENTAL INDEX -20.67% 4.82%
S&P 500 2.74% 25.66%
* THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIODS AND ARE
BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS
1
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
OF OCTOBER 31, 1999. 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 UNMANAGED FASC ENVIRONMENTAL INDEX IS A BROAD-BASED INDEX OF COMPANIES
IN THE ENVIRONMENTAL INDUSTRY. THE S&P 500 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.
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-single-digit range), but acquisition activity has abated somewhat and
purchase prices are now declining. As of October 31, 1999, the Fund had
approximately 11% of its total assets invested in the solid waste segment, with
significant holdings in Waste Connections and Waste Management. We believe that
these companies are among those most likely to benefit from favorable industry
trends over the long-term.
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 in a recovery mode and, in our estimation, long-term
growth trends in the water treatment equipment and services industry remain
positive. In addition, the U.S. water utility industry is experiencing
consolidation and attracting investment from foreign companies. As of October
31, 1999, the Fund had approximately 30% of its holdings in water treatment and
water utilities, including positions in TETRA Technologies, Millipore, Vivendi
(based in France), Cuno, SJW Corp., and American Water Works Co. Inc.
In addition, as of October 31, 1999, the Fund had approximately 9% of its
holdings in independent power producers, including Calpine Corp. and AES.
INVESTMENT OUTLOOK
We are pleased with the performance of the Fund in fiscal year 1999, and are
optimistic regarding the outlook for fiscal year 2000. 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. 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, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year 8.21% 3.61%
5 Years 10.96% 10.00%
Since Inception* 4.27% 3.79%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year 7.50% 4.81%
Since Inception* -4.80% -5.09%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year 7.55% 6.88%
Since Inception* -3.22% -3.22%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(SEPTEMBER 30, 1999)
CLASS A CLASS B CLASS C
------------ ------------ ------------
1 Year 6.05% 7.63% 9.57%
5 Years 10.76% N/A N/A
Since Inception* 4.10% -4.19% -2.09%
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
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ALLIANCE GLOBAL ENVIRONMENT FUND
GROWTH OF A $10,000 INVESTMENT
6/30/90* TO 10/31/99
$49,000
$42,000
$35,000
$28,000
$21,000
$14,000
$10,000
$7,000
S&P 500 STOCK INDEX: $47,777
ALLIANCE GLOBAL ENVIRONMENT FUND CLASS A**: $14,092
FASC ENVIRONMENTAL INDEX: $11,274
6/30/90 10/31/90 10/31/91 10/31/92 10/31/93 10/31/94 10/31/95
10/31/96 10/31/97 10/31/98 10/31/99
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 10/31/99) 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 FASC Environmental Index is a broad-based index of companies in the
environmental industry.
Alliance Global Environment Fund
Standard & Poor's 500 Stock Index
FASC Environmental Index
* Closest month-end after the Fund's Class A share 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, 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, 1999 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
ECOLAB, INC.--The company develops and markets
products and services for the hospitality,
institutional and industrial markets. $ 970,419 11.0%
- -------------------------------------------------------------------------------
TETRA TECHNOLOGIES, INC.--Provides comprehensive
resource management, infrastructure and
telecommunications support services. 834,422 9.4
- -------------------------------------------------------------------------------
MILLIPORE CORP.--Develops, manufactures and sells
products that are used primarily for the analysis,
identification, monitoring, and purification of
liquids and gases. 790,500 8.9
- -------------------------------------------------------------------------------
SEALED AIR CORP.--The company manufactures and
sells protective and specialty packaging products. 725,412 8.2
- -------------------------------------------------------------------------------
THERMO EUROTECH--The company offers a wide range
of services, including the recycling of residual
materials and the conversion of waste into energy. 472,558 5.3
- -------------------------------------------------------------------------------
WASTE CONNECTIONS, INC.--Provides solid waste
collection, transfer, disposal, and recycling
services in secondary markets of the western
United States. 432,250 4.9
- -------------------------------------------------------------------------------
CALPINE CORP.--Acquires, develops, operates and
owns power generation facilities, as well as sells
electricity in the United States. The company
also provides thermal energy for industrial
customers. 403,375 4.6
- -------------------------------------------------------------------------------
VIVENDI--An industrial service group that services
the world market through subsidiaries in several
areas. The subsidiaries produce and distribute
water, generate electricity, collect and dispose of
waste, offer construction and urban development
services, provide mobile and fixed line telephone
internet access services and publish newspapers,
books, and magazines. 386,526 4.4
- -------------------------------------------------------------------------------
AES CORP.--Provides electricity to customers.
The company owns or has an interest in ninety
four power facilities in fourteen countries. 378,131 4.3
- -------------------------------------------------------------------------------
OM GROUP, INC.--Produces and markets value-added
metal-based specialty chemicals and powders. The
company supplies metal carboxylates, inorganic
metal salts and metal powders for diverse
applications to a variety of industries. 375,000 4.2
- -------------------------------------------------------------------------------
$5,768,593 65.2%
- -------------------------------------------------------------------------------
5
SECTOR DIVERSIFICATION
OCTOBER 31, 1999 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $3,320,519 37.5%
Capital Goods 3,111,617 35.2
Consumer Staples 610,656 6.9
Energy 792,631 9.0
Multi-Industry 386,526 4.4
Technology 138,188 1.6
Transportation 351,587 4.0
Utilities 234,500 2.6
Total Investments 8,946,224 101.2
Cash and other assets, net of liabilities (102,764) (1.2)
Net Assets $8,843,460 100.0%
6
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1999 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-101.2%
AUSTRALIA-4.0%
Brambles Industries, Ltd. 12,500 $ 351,587
FRANCE-4.4%
Vivendi 5,100 386,526
NETHERLANDS-5.3%
Thermo Eurotech (a)(b) 165,000 472,558
UNITED STATES-87.5%
AES Corp. (a) 6,700 378,131
Airgas, Inc. (a) 10,000 95,000
American Water Works Co.,
Inc. 1,500 43,781
Calpine Corp. (a) 7,000 403,375
Catalytica, Inc. (a) 11,000 138,187
Cuno, Inc. (a) 18,000 360,000
Donaldson Co., Inc. 5,000 116,250
Ecolab, Inc. 28,700 970,419
Enron Corp. 8,000 319,500
General Electric Co. 2,600 352,463
Graco, Inc. 5,900 197,650
Millipore Corp. 24,800 790,500
Minerals Technologies,
Inc. 2,000 86,250
OM Group, Inc. 10,000 375,000
Sealed Air Corp. (a) 13,100 725,412
Sigma-Aldrich Corp. 4,500 128,250
SJW Corp. 2,000 234,500
Sonoco Products Co. 7,500 180,000
Spartech Corp. 3,000 85,875
TETRA Technologies,
Inc. (a) 52,562 834,422
United Technologies
Corp. 4,300 260,150
Waste Connections,
Inc. (a) 28,000 432,250
Waste Management, Inc. 10,500 192,938
Wild Oats Markets,
Inc. (a) 1,000 35,250
------------
7,735,553
TOTAL INVESTMENTS-101.2%
(cost $8,289,128) 8,946,224
Other assets less
liabilities-(1.2%) (102,764)
NET ASSETS-100% $ 8,843,460
(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, 1999 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $8,289,128) $ 8,946,224
Cash 245,154
Receivable due from adviser 29,109
Dividends and interest receivable 2,927
Receivable for capital stock sold 144
Total assets 9,223,558
LIABILITIES
Payable for investment securities purchased 169,500
Payable for capital stock redeemed 11,459
Distribution fee payable 2,468
Accrued expenses 196,671
Total liabilities 380,098
NET ASSETS $ 8,843,460
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,564
Additional paid-in capital 8,117,012
Accumulated net realized gain on investments and foreign
currency transactions 67,813
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 657,071
$ 8,843,460
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($8,539,634/
1,509,147 shares of capital stock issued and outstanding) $5.66
Sales Charge--4.25% of public offering price .25
Maximum offering price $5.91
CLASS B SHARES
Net asset value and offering price per share ($266,577/47,777
shares of capital stock issued and outstanding) $5.58
CLASS C SHARES
Net asset value and offering price per share ($31,729/5,720
shares of capital stock issued and outstanding) $5.55
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($5,520/965 shares of capital stock issued and outstanding) $5.72
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999 ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends $ 54,552
Interest 14,120 $ 68,672
EXPENSES
Advisory fee 116,634
Distribution fee - Class A 30,999
Distribution fee - Class B 2,324
Distribution fee - Class C 323
Custodian 129,747
Audit and legal 118,080
Registration 43,728
Directors' fees 30,000
Transfer agency 29,299
Printing 21,240
Miscellaneous 22,975
Total expenses 545,349
Less: expenses waived and reimbursed by the
Adviser (see Note B) (168,307)
Less: expense offset arrangement (see Note B) (1,723)
Net expenses 375,319
Net investment loss (306,647)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 1,135,801
Net realized loss on foreign currency transactions (8,159)
Net change in unrealized appreciation of:
Investments 83,730
Foreign currency denominated assets and liabilities (420)
Net gain on investments and foreign currency transactions 1,210,952
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 904,305
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1999 1998
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (306,647) $ (650,162)
Net realized gain on investments and foreign
currency transactions 1,127,642 4,572,240
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities 83,310 (7,383,845)
Net increase (decrease) in net assets from
operations 904,305 (3,461,767)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (4,655,923) (23,312,560)
Class B (70,731) (15,304)
Class C (9,442) (45,452)
Advisor Class (1,754) -0-
CAPITAL STOCK TRANSACTIONS
Net decrease (805,430) (12,060,609)
Total decrease (4,638,975) (38,895,692)
NET ASSETS
Beginning of year 13,482,435 52,378,127
End of year $ 8,843,460 $ 13,482,435
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 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%. 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 denominated assets and liabilities
represents net currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
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 on short-term securities as adjustments
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 foreign currency losses, resulted in a net decrease in
accumulated net realized loss on investments and foreign currency transactions
and a corresponding increase in undistributed net investment income. 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. Effective
February 1, 1999 the Adviser has agreed to 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 year
ended October 31, 1999, such waivers and reimbursement amounted to $168,307.
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 $20,271 for the year ended October 31, 1999.
For the year ended October 31, 1999, the Fund's expenses were reduced by $1,723
under an expense offset arrangement with Alliance Fund Services, Inc.
Alliance Fund Distributors, Inc. (the "Distributor") a wholly-owned subsidiary
of the Adviser serves as the Distributor of the Fund's shares. The Distributor
has advised the Fund that it has received front-end sales charges of $392 from
the sale of Class A shares and $2,081 in contingent deferred sales charges
imposed upon redemption by shareholders of Class B shares, for the year ended
October 31, 1999.
Brokerage commissions paid on investment transactions for the year ended
October 31, 1999, amounted to $39,967, 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 distribution and servicing fees to the Distributor at
an annual rate of up to .30 of 1% of the average daily net assets attributable
to Class A shares and 1% of the average daily net assets attributable to the
Class B and Class C shares. There are no distribution and servicing fees 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 advised the Fund that it has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $508,017 and
$154,777 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 $11,567,951 and $16,643,515 respectively,
for the year ended October 31, 1999. There were no purchases or sales of U.S.
government or government agency obligations for the year ended October 31,
1999. At October 31, 1999, the cost of investments for federal income tax
purposes was $8,385,823. Accordingly, gross unrealized appreciation of
investments was $1,169,868 and gross unrealized depreciation of investments was
$609,467, resulting in net unrealized appreciation of $560,401, (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
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 83,689 55,756 $ 527,447 $ 849,917
Shares issued in
reinvestment of
distributions 563,375 1,310,177 2,935,183 11,708,454
Shares redeemed (732,786) (2,561,773) (4,459,977) (24,890,942)
Net decrease (85,722) (1,195,840) $ (997,347) $ (12,332,571)
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998
------------ ------------ -------------- --------------
CLASS B
Shares sold 40,120 17,859 $ 244,845 $ 188,915
Shares issued in
reinvestment of
distributions 11,443 1,716 59,160 15,304
Shares redeemed (22,153) (1,221) (123,377) (9,093)
Net increase 29,410 18,354 $ 180,628 $ 195,126
NOVEMBER 5, NOVEMBER 5,
1997(A) 1997(A)
TO TO
OCTOBER 31, OCTOBER 31,
1998 1998
------------ --------------
CLASS C
Shares sold 4,336 8,706 $ 24,606 $ 123,284
Shares issued in
reinvestment of
distributions 246 5,087 1,263 45,325
Shares redeemed (2,567) (10,088) (16,808) (96,487)
Net increase 2,015 3,705 $ 9,061 $ 72,122
DECEMBER 29, DECEMBER 29,
1997(A) 1997(A)
TO TO
OCTOBER 31, OCTOBER 31,
1998 1998
------------ --------------
ADVISOR CLASS
Shares sold 77 1,557 $ 489 $ 15,054
Shares issued in
reinvestment of
distributions 331 -0- 1,739 -0-
Shares redeemed -0- (1,000) -0- (10,340)
Net increase 408 557 $ 2,228 $ 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 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, 1999 was
$472,558 representing 5.3% 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 expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended October 31, 1999.
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,
---------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 8.34 $18.77 $16.48 $12.37 $11.74
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.18)(a)(b) (.24)(a) (.23)(a) (.13) .03
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .60 (1.12) 3.65 4.26 .60
Net increase (decrease) in net asset
value from operations .42 (1.36) 3.42 4.13 .63
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- (.02) -0-
Distributions from net realized gain
on investments and foreign currency
transactions (3.10) (9.07) (1.13) -0- -0-
Total dividends and distributions (3.10) (9.07) (1.13) (.02) -0-
Net asset value, end of year $ 5.66 $ 8.34 $18.77 $16.48 $12.37
Market value, end of year $13.25 $ 9.375
TOTAL RETURN
Total investment return based on net
asset value 8.21%(c) (10.51)%(c) 23.51%(c) 33.48%(d) 5.37%(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $8,540 $13,295 $52,378 $100,271 $85,416
Ratios to average net assets:
Expenses, net of waivers/
reimbursements 3.54%(e) 2.80%(e) 2.39% 1.60% 1.57%
Expenses, before waivers/
reimbursements 5.12% -0- -0- -0- -0-
Net investment income (loss) (2.88)%(b) (2.27)% (1.35)% (.85)% .21%
Portfolio turnover rate 110% 205% 145% 268% 109%
</TABLE>
See footnote summary on page 19.
16
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------
OCTOBER 6,
1997 (F)
YEAR ENDED OCTOBER 31, TO
------------------------ OCTOBER 31,
1999 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) (.21)(b) (.27) (.20)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .59 (1.12) (.96)
Net increase (decrease) in net asset
value from operations .38 (1.39) (1.16)
LESS: DISTRIBUTIONS
Distributions from net realized gain
on investments and foreign currency
transactions (3.10) (9.07) -0-
Net asset value, end of period $ 5.58 $ 8.30 $18.76
TOTAL RETURN
Total investment return based on net
asset value (c) 7.50% (10.79)% (5.82)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $266 $152 $235(g)
Ratios to average net assets:
Expenses, net of waivers/
reimbursements 4.12%(e) 3.52%(e) 20.84%(h)
Expenses, before waivers/
reimbursements 5.90% -0- -0-
Net investment loss (3.44)%(b) (2.93)% (1.03)%(h)
Portfolio turnover rate 110% 205% 145%
</TABLE>
See footnote summary on page 19.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
------------------------
NOVEMBER 5,
YEAR 1997(F)
ENDED TO
OCTOBER 31, OCTOBER 31,
1999 1998
----------- -----------
Net asset value, beginning of period $ 8.27 $19.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.21)(b) (.27)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .59 (1.54)
Net increase (decrease) in net asset
value from operations .38 (1.81)
LESS: DISTRIBUTIONS
Distributions from net realized gain
on investments and foreign currency
transactions (3.10) (9.07)
Net asset value, end of period $ 5.55 $ 8.27
TOTAL RETURN
Total investment return based on net
asset value (c) 7.55% (12.88)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $32 $31
Ratios to average net assets:
Expenses, net of waivers/
reimbursements (e) 4.02% 3.39%(h)
Expenses, before waivers/
reimbursements. 5.83% -0-
Net investment loss (3.34)%(b) (2.75)%(h)
Portfolio turnover rate 110% 205%
See footnote summary on page 19.
18
ALLIANCE GLOBAL ENVIRONMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
------------------------
DECEMBER 29,
YEAR 1997(F)
ENDED TO
OCTOBER 31, OCTOBER 31,
1999 1998
----------- -----------
Net asset value, beginning of period $ 8.37 $ 9.15
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.15)(b) (.20)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .60 (.58)
Net increase (decrease) in net asset
value from operations .45 (.78)
LESS: DISTRIBUTIONS
Distributions from net realized gain
on investments and foreign currency
transactions (3.10) -0-
Net asset value, end of period $ 5.72 $ 8.37
TOTAL RETURN
Total investment return based on net
asset value (c) 8.65% (8.52)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5 $5
Ratios to average net assets:
Expenses, net of waivers/
reimbursements (e) 3.09% 3.04%(h)
Expenses, before waivers/
reimbursements 4.86% -0-
Net investment loss (2.41)%(b) (2.39)%(h)
Portfolio turnover rate 110% 205%
(a) Based on average shares outstanding.
(b) Net of expenses waived/reimbursed by the Adviser.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(d) 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.
(e) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended October 31, 1999 and the year ended October
31, 1998, the ratios of expenses to average net assets were 3.53% and 2.79% for
Class A, 4.10% and 3.51% for Class B, 4.00% and 3.38% for Class C and 3.08% and
3.03% for Advisor Class shares, respectively.
(f) Commencement of distribution.
(g) Actual net assets without 000's omitted.
(h) 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, 1999, 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 and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, 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, 1999, 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 7, 1999
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 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.
21
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Quality Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income 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 Health Care 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
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.
ENVAR1099
