ALLIANCE GLOBAL SMALL CAP FUND
ANNUAL REPORT
JULY 31, 1996
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
September 27, 1996
Dear Shareholder:
For the year ended, July 31, 1996, the Alliance Global Small Cap Fund produced
strong investment results, easily outperforming the Morgan Stanley Capital
International (MSCI) unmanaged World Index, a measure of stock market
performance in 23 countries, and the Lipper Global Small Company (GSC) Funds
Average, which reflects the average return of 26 similar funds. (This peer
group has generally similar investment objectives to Global Small Cap Fund,
though investment policies for the various funds may differ.) The Fund's
above-average investment results are based on the net asset values of each
class of shares as of July 31, 1996. Additional investment results and complete
descriptions of the Fund's benchmarks appear on page 3.
The Alliance Global Small Cap Fund's superior performance relative to the
benchmarks was due primarily to stock selection. The liquidity supplied by U.S.
mutual fund inflows helped small capitalization growth stocks outperform other
market sectors on a global basis. Our performance was driven by growth stocks,
which have done exceptionally well in an environment of relatively stable
international inflation and subdued interest rates. We also benefitted from
currency hedges against the Japanese Yen and major European currencies.
TOTAL RETURN
PERIODS ENDED JULY 31, 1996
SIX MONTHS TWELVE MONTHS
---------- -------------
ALLIANCE GLOBAL SMALL CAP FUND
Class A +5.35% +17.46%
Class B +5.05% +16.69%
Class C +5.04% +16.77%
MSCI WORLD INDEX +1.70% +9.32%
LIPPER GSC FUNDS AVG. +5.78% +9.28%
TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF EACH CLASS OF SHARES AS OF
JULY 31; ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
MARKET OVERVIEW
Despite a significant correction in July, the U.S. small capitalization market
performed well during the first seven months of 1996, thanks to several
factors. These included moderate economic growth, mild inflation, stable
interest rates, continued earnings growth stories, advancing technology stock
prices and an enhanced competitive position for American companies provided by
ongoing cost reduction. European markets also recorded solid gains, driven
largely by stable growth sectors of the market and corporate restructuring on
the continent and consumer spending and industrial shares in Great Britain. A
significant slowdown in the Japanese economic recovery became evident in July
and caused the stock market there to fall below its 1995 year-end level.
Emerging markets surged through the first six months of the year, then
corrected in July as liquidity fell during the downturn in the U.S. market.
PORTFOLIO POSITIONING
During the period, we maintained an approximate market weighting in U.S.
technology issues. We increased our position in energy, focusing primarily on
stocks of natural gas companies. We also raised our exposure to the retail and
apparel sectors, given their relatively attractive valuations. Among recent
purchases was Jones Apparel Group, a designer and distributor of woman's
clothing. Airline stocks came under pressure due to higher oil prices and
concerns over higher fares. We took advantage of this weakness to build
positions in Alaska Air, Continental Airlines and America West Airlines.
Additionally, we retained positions in hotel stocks with good growth prospects,
such as La Quinta Inns, Host Marriott, Suburban Lodges of America, Extended
Stay America and Studio Plus Hotels.
While maintaining our emphasis on European growth stocks, we added to
economically sensitive holdings in Scandinavia and Great Britain. We continued
to increase our positions in the Japanese industrial and retail sectors,
because we believe that Japanese economic growth will pick up again as the year
goes on. We also added to individual growth stories in Latin America and
Southeast Asia.
1
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
MARKET OUTLOOK
We believe that the outlook for the global equity markets is sound, with
inflation and interest rates at subdued levels and the global economy slowly on
the rise. Steady economic growth appears certain in the U.S. and Japan for the
rest of 1996. We expect that interest-rate reductions may be used to spur
economic activity in Europe. The current downturn in Japanese growth is slowing
the still strong economies of the smaller Southeast Asian countries.
In Japan, we believe the government's fiscal stimulus will continue until early
1997 and then recede sharply unless the government enacts new legislation.
Monetary policy is on hold while the Bank of Japan awaits further evidence on
the pace of current economic activity.
Downside surprises in Europe are possible because companies must cope with
highly valued currencies and highly compensated-but relatively inflexible-work
forces. However, corporate restructuring, currency devaluation and interest
rate cuts may help bolster these markets.
Finally, developing markets should benefit from continued growth in the global
economy and inflows of foreign capital. The volatility and inefficiencies of
these markets should provide individual investment opportunities for
growth-oriented funds, like ours.
As always, we appreciate your investment in the Alliance Global Small Cap Fund
and look forward to reporting its progress to you in the coming period.
Sincerely,
John D. Carifa
Chairman and President
Alden M. Stewart
Senior 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 SMALL CAP FUND
_______________________________________________________________________________
Alliance Global Small Cap Fund seeks long-term growth of capital. It invests
principally in a diversified global portfolio of the equity securities of small
capitalization companies.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF JULY 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +17.46% +12.48%
. Five Years +9.50% +8.55%
. Ten Years +7.58% +7.12%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +16.69% +12.69%
. Five Years +8.72% +8.72%
. Since Inception* +9.17% +9.17%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +16.77% +15.77%
. Since Inception* +12.76% +12.76%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares with and without 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);
Class C shares purchased prior to July 1, 1996 are not subject to front-end or
contingent deferred sales charges. Class C shares purchased on or after July 1,
1996 are subject to a contingent deferred sales charge of 1% on redemptions
made within the first year after purchase. 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: 9/17/90, Class B; 5/3/93, Class C.
3
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
ALLIANCE GLOBAL SMALL CAP FUND
GROWTH OF A $10,000 INVESTMENT:
7/31/86-7/31/96
$28,500
$23,500
$18,500
$13,500
$8,500
MSCI WORLD
LIPPER GLOBAL SMALL CO.
GLOBAL SMALL
CAP FUND
$19,887
7/31/86
7/31/96
This chart illustrates the total value of an assumed investment in Alliance
Global Small Cap Fund Class A shares after deducting the maximum 4.25% sales
charge, and with dividends and capital gains reinvested. Performance for Class
B and Class C 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 Morgan Stanley Capital International (MSCI) World Index is an unmanaged,
market capitalization-weighted index that measures the performance of stock
markets in 23 countries.
The Lipper Global Small Company Funds Average reflects performance of 26 funds,
2 of which have been in existence for the full ten-year period. These funds
have generally similar investment objectives to Alliance Global Small Cap Fund,
although some funds included in the average may have somewhat different
investment policies.
When comparing Alliance Global Small Cap Fund to the indices shown above, you
should note that the Fund's performance reflects the maximum sales charge of
4.25%, while no such charges are reflected in the performance of the indices.
The Lipper average assumes deduction of maximum sales charges where applicable.
Global Small Cap Fund
Lipper Global Small Co.
MSCI World
4
TEN LARGEST HOLDINGS
JULY 31, 1996 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
OF NET
COMPANY COUNTRY U.S. $VALUE% ASSETS
- -------------------------------------------------------------------------------
Nine West Group, Inc. United States $1,552,838 1.8%
Telephone and Data Systems, Inc. United States 1,301,662 1.5
Republic Industries, Inc. United States 1,243,200 1.4
Office Max, Inc. United States 1,097,100 1.2
Host Marriott Corp. United States 1,042,125 1.2
Diamond Offshore Drilling, Inc. United States 1,041,957 1.2
Alaska Air Group, Inc. United States 979,200 1.1
Banco Latinoamericano
de Exportaciones, S.A. (ADR) Panama 932,750 1.1
Diamond Shamrock, Inc. United States 843,600 1.0
Millicom International Cellular, S.A. Luxembourg 840,875 1.0
$10,875,307 12.5%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JULY 31, 1996
_______________________________________________________________________________
SHARES
------------------------
HOLDINGS
PURCHASES COUNTRY BOUGHT 7/31/96
- -------------------------------------------------------------------------------
Applix, Inc. United States 18,800 18,800
Crompton & Knowles Corp. United States 29,000 29,000
Diamond Shamrock, Inc. United States 23,400 30,400
Host Marriott Corp. United States 48,600 79,400
La Quinta Inns, Inc. United States 33,000 33,000
Mohawk Industries, Inc. United States 36,200 36,200
Polymer Group, Inc. United States 30,300 30,300
Republic Industries, Inc. United States 51,800 51,800
Tommy Hilfiger Corp. United States 14,600 14,600
Yamato Transport Japan 45,000 45,000
HOLDINGS
SALES COUNTRY SOLD 7/31/96
- -------------------------------------------------------------------------------
Bed Bath & Beyond, Inc. United States 12,400 -0-
Diamond Offshore Drilling, Inc. United States 148 22,052
Gucci Group N.V. United States 8,900 -0-
Healthsouth Corp. United States 20,200 26,868
HFS, Inc. United States 8,400 -0-
Infinity Broadcasting Corp. United States 13,000 -0-
JLG Industries, Inc. United States 11,000 -0-
Physio Control International Corp. United States 37,800 -0-
Reading & Bates Corp. United States 61,900 -0-
USAIR Group, Inc. United States 35,700 -0-
5
TEN LARGEST COUNTRY HOLDINGS
JULY 31, 1996 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COUNTRY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------
United States $33,951,166 39.0%
Japan 15,271,361 17.5
United Kingdom 4,710,316 5.4
Netherlands 2,672,776 3.1
Canada 2,304,363 2.6
Sweden 2,054,004 2.4
Australia 1,815,976 2.1
Germany 1,801,725 2.1
Italy 1,731,140 2.0
Spain 1,625,250 1.9
$67,938,077 78.1%
TEN LARGEST INDUSTRY HOLDINGS
JULY 31, 1996
_______________________________________________________________________________
INDUSTRY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------
Retail $5,660,175 6.5%
Drugs, Hospital Supplies,
Medical Services & Products 5,044,230 5.8
Machinery 3,774,359 4.3
Telecommunications 3,738,289 4.3
Oil & Gas Services 3,690,760 4.2
Computer Software & Services 3,479,279 4.0
Transportation & Shipping 3,094,321 3.6
Restaurants & Lodging 2,959,575 3.4
Building & Related 2,836,552 3.3
Business Services 2,697,504 3.1
$36,975,044 42.5%
6
PORTFOLIO OF INVESTMENTS
JULY 31, 1996 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-94.9%
UNITED STATES INVESTMENTS-39.0%
BASIC INDUSTRIES-12.4%
ADVERTISING-0.4%
Ha Lo Industries, Inc. * 14,850 $ 334,125
BUSINESS SERVICES-1.7%
Equity Corp. International * 11,500 326,312
Oxford Resources Corp. * 9,600 228,000
Stewart Enterprises, Inc. 10,200 270,300
Team Rental Group, Inc. * 33,300 657,675
------------
1,482,287
CHEMICALS-1.6%
Crompton & Knowles Corp. 29,000 435,000
Cytec Industries, Inc. * 20,700 621,000
Polymer Group, Inc. * 30,300 386,325
------------
1,442,325
ENGINEERING & CONSTRUCTION-0.3%
Emcor Group, Inc. * 16,200 271,350
MINING & METALS-1.4%
Century Aluminum Co. 29,200 427,050
Kaiser Aluminum Corp. * 20,400 224,400
RMI Titanium Co. * 7,400 165,575
Titanium Metals Corp. * 14,000 339,500
Uranium Resources, Inc. * 4,000 42,500
------------
1,199,025
POLLUTION CONTROL-2.9%
Republic Industries, Inc. * 51,800 1,243,200
United Waste Systems, Inc. * 19,400 501,975
USA Waste Services, Inc. * 31,500 787,500
------------
2,532,675
TEXTILE PRODUCTS-1.3%
Mohawk Industries, Inc. * 36,200 642,550
Unifi, Inc. 17,400 480,675
------------
1,123,225
TRANSPORTATION & SHIPPING-2.8%
Alaska Air Group, Inc. * 40,800 979,200
America West Airlines, Inc. * 40,400 646,400
Continental Airlines, Inc. * 8,400 212,100
Xtra Corp. 13,700 578,825
------------
2,416,525
------------
10,801,537
CONSUMER PRODUCTS, SERVICES & STAPLES-12.4%
APPAREL-1.8%
Designer Holdings, Ltd. * 14,000 257,250
Mossimo, Inc. * 2,000 75,750
Timberland Co. * 11,800 212,400
Tommy Hilfiger Corp. * 14,600 740,950
Warnaco Group, Inc., Cl.A 10,400 245,700
------------
1,532,050
CONSUMER PRODUCTS-0.2%
Marker International * 28,200 172,725
DRUGS, HOSPITAL SUPPLIES, MEDICAL
SERVICES & PRODUCTS-2.6%
Centocor, Inc. * 8,600 213,925
Geltex Pharmaceuticals, Inc. * 23,900 292,775
Healthsouth Corp. * 26,868 816,115
Medimmune, Inc. * 10,700 147,125
National Surgery Centers, Inc. * 12,600 322,875
Neurex Corp. * 12,900 180,600
Veterinary Centers America, Inc. * 17,900 315,488
------------
2,288,903
ENTERTAINMENT & LEISURE TIME-0.3%
Heritage Media Corp. * 6,400 253,600
FOREST PRODUCTS-0.4%
Buckeye Cellulose Corp. * 14,500 333,500
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
RESTAURANTS & LODGING-3.4%
Doubletree Corp. * 6,600 $ 216,150
Extended Stay America, Inc. * 21,800 327,000
Host Marriott Corp. * 79,400 1,042,125
Interstate Hotels Co. * 8,500 193,375
La Quinta Inns, Inc. 33,000 602,250
QPQ Corp. * 16,400 38,950
warrants, expiring 9/22/98* 16,400 4,100
Red Lion Hotels, Inc. * 10,700 247,438
Suburban Lodges of America, Inc. * 14,500 288,187
------------
2,959,575
RETAILING-3.7%
Nine West Group, Inc. * 32,100 1,552,838
Office Max, Inc. * 82,800 1,097,100
Santa Isabel, S.A. 7,600 205,200
Williams Sonoma, Inc. * 18,900 368,550
------------
3,223,688
------------
10,764,041
TECHNOLOGY-8.9%
COMMUNICATION & EQUIPMENT-0.9%
Andrew Corp. * 7,250 296,344
TCSI Corp. * 19,550 488,750
------------
785,094
COMMUNICATION SERVICES-0.3%
Vanguard Cellular Systems, Inc. * 13,400 242,875
COMPUTER PERIPHERALS-0.8%
Exabyte Corp. * 19,800 237,600
Storage Technology Corp. * 13,200 447,150
------------
684,750
COMPUTER SOFTWARE & SERVICES-3.3%
Applix, Inc. * 18,800 430,050
Comverse Technology, Inc. * 17,400 537,225
DST Systems, Inc. * 8,600 245,100
Hyperion Software Corp. * 15,100 179,312
Integrated Systems, Inc. * 10,900 335,175
Intersolv, Inc. * 9,700 88,513
Sterling Software, Inc. * 6,300 433,125
Symantec Corp. * 17,500 170,625
Xircom, Inc. * 34,600 441,150
------------
2,860,275
ELECTRONICS-1.3%
BMC Industries, Inc. 15,400 421,575
Harman International Industries, Inc. 9,600 430,800
VLSI Technology, Inc. * 22,700 278,075
------------
1,130,450
TELECOMMUNICATIONS-0.3%
Tadiran Telecommunications, Ltd. * 16,600 257,300
TELEPHONE UTILITY-2.0%
Telephone and Data Systems, Inc. 33,700 1,301,662
United States Cellular Corp. * 16,200 488,025
------------
1,789,687
------------
7,750,431
ENERGY-4.4%
DOMESTIC PRODUCERS-1.0%
Diamond Shamrock, Inc. * 30,400 843,600
INTERNATIONAL PRODUCERS-0.0%
XCL, Ltd. * 110,000 27,500
OIL & GAS SERVICES-3.4%
Diamond Offshore Drilling, Inc. * 22,052 1,041,957
Global Marine, Inc. * 31,800 425,325
Noble Drilling Corp. * 52,500 721,875
Rowan Cos., Inc. * 54,200 779,125
------------
2,968,282
------------
3,839,382
8
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
FINANCIAL SERVICES-0.9%
INSURANCE-0.7%
20th Century Industries, Inc. * 26,300 $ 394,500
Riscorp, Inc. * 22,900 246,175
------------
640,675
MISCELLANEOUS-0.2%
Onyx Acceptance Corp. * 14,100 155,100
------------
795,775
Total United States Investments
(cost $34,358,479) 33,951,166
FOREIGN INVESTMENTS-55.9%
ARGENTINA-0.2%
Quilmes Industrial Quinsa S.A. (ADR) 14,300 137,638
Beverages
AUSTRALIA-2.1%
AAPC, Ltd. 300,000 185,629
Hotels
Boral, Ltd. 40,000 96,218
Building Materials
Brambles Industries, Ltd. 20,000 275,350
Business Services
Cochlear, Ltd. (a) 123,100 309,440
Medical Devices
Coles Myer, Ltd. 70,000 240,390
Retail
Fai Life, Ltd. 90,000 54,297
Insurance
Oil Search, Ltd. 200,000 201,098
Oil
Plutonic Resources 20,000 86,472
Metals & Mining
Spectrum Network (a)* 480,000 267,306
Telecommunications
WMC, Ltd. 15,000 99,776
Metals & Mining
------------
1,815,976
AUSTRIA-0.6%
Austria Mikro Systeme International AG (a) 1,060 83,384
Semi-Conductors
Benckiser-Wasser-Technik AG 1,200 149,761
Chemicals
OMV AG 3,000 278,877
Oil-International
------------
512,022
CANADA-2.6%
Accugraph Corp. * 17,000 23,494
Computer Software
Alumax, Inc. * 13,000 398,125
Metals & Mining
Architel Systems Corp. (a)* 14,400 85,889
Computer Software & Services
Cinar Films, Inc. Cl. B (ADR) * 5,000 118,750
Entertainment & Leisure
Intelcom Group, Inc. 7,400 142,450
Telecommunications
Intelcom Group, Inc. (b) * 18,461 355,374
Telecommunications
Istar Internet, Inc. (a) * 17,500 54,863
Computer Software & Services
Loewen Group, Inc. 26,600 713,213
Business Services
Nelvana, Ltd. (a) * 12,000 200,757
Entertainment & Leisure
Prime Resources Group, Inc. 5,000 37,096
Mining & Metals
Renaissance Energy, Ltd. * 4,000 101,978
Oil & Gas Exploration
Royal Plastics Group, Ltd. (a) * 5,000 72,374
Building Materials
------------
2,304,363
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
CHILE-0.5%
Banco Santander (ADR) 11,000 $ 143,000
Banks
Empresas Telex Chile S.A. (ADR) 34,000 238,000
Telephone Utility
Enersis S.A. Sponsored (ADR) 3,000 91,500
Utility / Electric
------------
472,500
DENMARK-1.2%
Carli Gry International AS (a) * 8,700 290,356
Textile Products
Novo Nordisk AS 2,450 354,611
Drugs
Scandinavian Mobility Intl. (a) * 18,400 336,132
Medical Products
Tele Danmark AS 2,000 93,097
Utility / Telephone
------------
1,074,196
FINLAND-0.9%
Kone Corp. * 10,000 260,730
Machinery
Nokia AB OY Corp. pfd. (a) 12,000 422,516
Communication Equipment
OY Tamro AB 15,000 91,924
Pharmaceutical Distribution
------------
775,170
FRANCE-1.2%
Alcatel Alsthom (Cie Gen. de Electricite) 2,000 163,734
Electrical Equipment
Business Objects S.A. (ADR) * 14,200 273,350
Computer Software & Services
Casino Guichard Perrachon 1,200 48,039
Retail
Coflexip S.A. (ADR) * 7,700 140,525
Oil & Gas Services
Credit Local de France 2,000 166,056
Banks
Lafarge Coppee 2,200 131,976
Building Materials
Michelin 2,000 90,795
Tire & Rubber
------------
1,014,475
GERMANY-2.1%
Adidas AG (a) 2,000 156,229
Apparel
Apcoa Parking AG (a) 1,600 157,587
Business Services
Bayer AG 3,000 100,869
Chemicals
Duerr Beteiliqunqs AG 100 34,642
Machinery
Fag Kugelfischer 300 39,533
Industrial Machinery
Fielmann AG pfd. 13,000 543,065
Retail
Hach AG 50 19,257
Retail
Mannesmann AG 500 179,493
Machinery
Rheinhold & Mahla AG 300 28,529
Building & Related
SGL Carbon AG (a) 4,000 440,701
Specialty Chemical
Veba AG (c) 2,000 101,820
Utility / Electric
------------
1,801,725
GREECE-0.2%
Ote SA 10,000 164,699
Utility / Telephone
HONG KONG-0.4%
Ek Chor China Motorcycle Co. 2,000 22,250
Motorcycles
Fu Hui Jewelry Co., Ltd. * 200,000 5,690
Jewelry & Watches
10
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
HSBC Holdings Plc. 10,000 $ 159,699
Banks
Paul Y.-ITC Construction Holdings, Inc. 600,000 148,190
warrants, expiring 3/31/97* 60,000 1,435
warrants, expiring 3/31/98* 60,000 1,490
Building & Construction
------------
338,754
INDIA-0.1%
Gujarat Narmada Valley Fertilizers Co.,
Ltd. (GDR) (a) * 4,000 21,237
Chemicals
Shriram Industrial Enterprises,
Ltd. (GDR) (a) * 15,000 50,625
Consumer Appliances
------------
71,862
INDONESIA-0.1%
Indonesian Satellite Corp. (ADR) 4,000 122,000
Telecommunications
IRELAND-0.5%
Crean (James) Plc. 55,000 212,164
Multi-Industry
Irish Continental Group 21,500 191,281
Transportation & Shipping
------------
403,445
ITALY-2.0%
Fila Holding Sponsored (ADR) 5,000 403,125
Apparel
Industrie Natuzzi S.p.A. (ADR) 16,600 751,150
Household Products
Mediaset * 109,200 493,183
Broadcasting & Cable
Telecom Italia 40,000 83,682
Utility / Telephone
------------
1,731,140
JAPAN-17.5%
Asahi Diamond Industrial 14,420 174,248
Machinery
Asatsu, Inc. 3,500 144,256
Professional Services
Bank Of Tokyo - Mitsubishi, Ltd. 1,250 26,345
Banks
Bridgestone Metalpha Corp. 1,000 12,739
Automobile Related
Canon, Inc. 24,000 454,124
Office Equipment
Credit Saison Co. 5,700 138,289
Financial Services
Daibiru Corp. 8,000 105,663
Real Estate
Daiichi Corp. 2,000 56,016
Recycling Equipment
Daimon Co. 3,000 140,228
Retail
Daiseki Co. 2,000 55,267
Pollution Control
DDI Corp. 37 299,105
Telecommunications
Doshisha Co. 600 20,289
Retail
Eiden Sakakiya Co. 6,000 80,371
Retail
Fujikura 22,000 174,755
Building Materials
Fujitsu Electronics 2,000 17,779
Technology
Hachijuni Bank 5,000 52,925
Banks
Hirose Electric Co. 3,500 209,498
Technology
Hitachi Metals, Ltd. 16,000 166,362
Steel
Hitachi Plant Engineering & Construction Co. 15,000 120,135
Engineering & Construction
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
Hokushin Co. 300 $ 3,260
Building Materials
Home Wide Corp. 1,000 13,957
Retail
Honda Motor Co. 18,000 435,015
Automobiles
Hoya Corp. 7,000 212,449
Technology
Isetan Co. 10,000 148,939
Retail
Ishihara Sangyo * 30,000 107,068
Chemicals
Japan Industrial Land Development 2,200 68,006
Building & Construction
Kajima Corp. 5,000 47,773
Building & Construction
Kaneshita Construction 8,000 94,422
Building & Construction
Kawasaki Kisen * 11,000 32,148
Transportation
Keyence Corp. 1,200 153,998
Machinery
King Co. 18,000 127,469
Apparel
Koa Fire & Marine 10,000 62,292
Insurance
Makino Milling 10,000 93,204
Industrial Machinery
Matsuda Sangyo 3,000 104,257
Environmental Services
Matsushita Electrical Industrial Co., Ltd. 7,000 121,962
Appliances
Meitec Corp. 14,000 329,165
Software Services
Minebea Co. 22,000 179,289
Machinery
Ministop Co. 1,000 28,945
Retail-Food
Mitsubishi Corp. 20,000 252,916
Diversified
Mitsubishi Estate 16,000 209,826
Real Estate
Mitsubishi Heavy Industries 90,000 762,962
Industrial Machinery
Mitsui Home Co. 3,000 49,178
Homebuilders
Namco 6,200 202,108
Leisure Related
Namura Shipbuilding 12,000 58,452
Machinery
Nanno Construction 8,000 92,923
Building & Construction
NEC Corp. 12,000 125,896
Technology
New Oji Paper Co., Ltd. 7,000 61,177
Paper & Forest Products
Nichiei Co. 5,800 377,050
Financial Services
Nichiha Corp. 5,400 105,213
Building Materials
Nikon Corp. 8,000 91,424
Semi-Conductors
Nintendo Corp. Ltd. 1,500 105,100
Leisure Related
Nippon Electric Glass Co., Ltd. 16,000 272,774
Chemicals
Nippon Kanzai Co. 200 6,257
Building & Construction
Nippon Paper Industries Co. 10,000 64,447
Paper
Nippon TV Network 900 280,736
Broadcasting
Nireco Corp. 9,000 158,494
Machinery
Nissen Corp., Ltd. 2,300 25,207
Retail
Nitta Corp. 7,000 127,863
Machinery
Nitto Kohki Co. 4,600 205,105
Machinery
Noritsu Koki Co. 4,000 206,454
Photography
12
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
Ohmoto Gumi Co. 4,400 $ 83,256
Building & Construction
Oie Sangyo Co., Ltd. 3,000 48,054
Food
Omron Corp. 20,000 367,196
Machinery
Oriental Construction 4,300 72,502
Building & Construction
Paris Miki, Inc. 4,700 212,206
Retailing
Promise Co., Ltd. 1,500 72,081
Financial Services
PS Corp. 8,000 155,871
Building & Construction
Renown Inc. * 30,000 111,564
Apparel
Rohm Co., Ltd. 4,000 239,801
Technology
Sankyo Co. 4,000 103,789
Drugs
Santen Pharmaceutical Co. 5,200 126,645
Drugs
Sanyo Electric Co. 30,000 165,800
Appliances
Sanyo Pax Co. 9,500 203,784
Packaging
Sanyo Shinpan Finance Co., Ltd. 2,500 162,990
Financial Services
Sato Corp. 6,000 140,509
Technology
Sekisui Chemical Co. 14,000 162,615
Chemicals
Seven Eleven Japan 1,200 76,100
Retail-Food
Shin-Etsu Chemical Co., Ltd. 3,000 53,112
Chemicals
Sho Bond Corp. 5,500 200,412
Building & Construction
SMC Corp. 4,200 326,542
Industrial Machinery
Sodick Co. * 25,000 259,941
Industrial Machinery
Sumitomo Forestry 6,000 94,422
Forest Products
Sumitomo Metal Industries 95,000 285,654
Steel
Taisho Pharmaceutical Co. 8,000 172,357
Drugs
Takeda Chemical Industries 5,000 87,584
Drugs
TDK Corp. 2,000 115,966
Technology
Tokyo Broadcasting 17,000 278,676
Broadcasting
Tokyo Electron, Ltd. 9,000 253,759
Semi-Conductors
Toso Co., Ltd. 10,000 158,306
Household Furnishings
Warabeya Nichiyo 3,000 41,310
Food
Wesco, Inc.* 4,680 90,308
Building & Construction
Xebio Co. 1,600 62,348
Retail
Yamaha Corp. 10,000 157,370
Leisure Related
Yamaichi Securities Co. 35,000 229,170
Financial Services
Yamanouchi Pharmaceutical 12,000 263,032
Drugs
Yamato Transport 45,000 526,907
Transportation
Yaskawa Electric Corp. * 28,000 127,994
Machinery
Yokogawa Electric 35,000 327,854
Electrical Equipment
------------
15,271,361
KOREA-0.6%
Korea Mobile Telecommunications Corp. (ADR) * 31,000 519,250
Telecommunications
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
LUXEMBOURG-1.0%
Millicom International Cellular, S.A. * 21,700 $ 840,875
Telecommunications
MALAYSIA-0.9%
Austral Enterprise 6,333 11,977
Multi-Industry
C.I. Holdings Berhad 8,000 29,169
Building Materials
Highlands & Lowlands 10,000 16,748
Real Estate
Hong Leong Bank Berhad 30,000 77,530
Banks
Kim Hin Industry 70,000 126,773
Building Materials
Malaysian Assurance 11,750 61,203
Insurance
Pacific & Orient 50,000 130,219
Insurance
Road Builder (M) Holdings Bhd 30,000 125,010
Building & Construction
Sriwani Holdings Bhd 100,000 160,269
Retailing
Star Publications 20,000 64,108
Printing & Publishing
------------
803,006
MEXICO-0.3%
Bufete Industrial S.A. (ADR) * 700 11,112
Engineering & Construction
Grupo Industrial Durango, S.A. (ADR) * 15,000 159,375
Paper & Forest Products
International de Ceramica * 34,915 43,555
Ceramic Tiles
------------
214,042
NETHERLANDS-3.1%
Aegon N.V. 18,000 825,808
Insurance
BAM Groep N.V. 800 46,968
Building & Construction
Content Beheer N.V. 5,000 172,497
Temporary Help
Elsevier N.V. 25,000 379,797
Printing & Publishing
Fortis Amev N.V. 10,000 286,890
Insurance
IHC Caland N.V. 4,000 196,102
Machinery
KLM Royal Dutch Airlines 9,000 283,803
Airlines
Kon Ptt Nederland 5,000 176,432
Telephone Utility
Nutricia Verenigde Bedrijuen (a) 1,300 138,639
Food
Philips Electronic 5,000 165,840
Appliances
------------
2,672,776
NEW ZEALAND-0.4%
Fisher & Paykel Industries 10,000 31,582
Consumer Appliances
Helicopter Line 50,000 97,228
Leisure Related
Lion Nathan, Ltd. 40,000 105,364
Beverages
Warehouse Group 62,500 105,589
Retail
------------
339,763
NORWAY-1.5%
Fokus Bank 6,000 34,200
Banks
Hafslund ASA 4,000 26,066
Utility / Electric
Merkantildata 5,000 62,416
Computer Software
Nycomed * 4,000 56,842
Medical Supplies
Sparebanken NOR 8,000 200,361
Banks
14
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
Tomra Systems AS 75,000 $ 818,482
Environmental Services
Western Bulk Shipping AS (a) 26,000 122,478
Shipping
------------
1,320,845
PANAMA-1.1%
Banco Latinoamericano de Exportaciones, S.A. 18,200 932,750
Financial Services
PERU-0.7%
Banco Wiese Sponsored (ADR) 15,000 106,875
Banks
Telefonica del Peru S.A. (ADR)* 24,300 531,563
Telecommunications
------------
638,438
PHILIPPINES-0.6%
Alsons Cement * 500,000 195,574
Building Materials
Asian Terminals, Inc. 400,000 100,744
Shipping
International Container 400,000 240,412
Shipping
------------
536,730
PORTUGAL-0.0%
TVI Televisas Independente (b)* 7,800 23,649
Broadcasting & Cable
SINGAPORE-1.2%
City Developments 40,000 300,049
Real Estate
Fraser & Neave, Ltd. 40,000 401,953
Beverages
Lim Kah Ngam, Ltd. 30,000 28,873
Multi-Industry
Overseas Union Bank, Ltd. 23,000 136,721
Banks
Singapore Airlines, Ltd. 20,000 200,977
Airlines
------------
1,068,573
SOUTH KOREA-0.4%
Samsung Electronics, Co., Ltd. (GDR)(a) 8,385 202,078
bonus shares (a) * 837 42,687
bonus shares (a) * 2,779 66,974
Technology
------------
311,739
SPAIN-1.9%
Aguas de Barcelona (c) 1,200 47,258
Water Utility
Banco Popular Esp 700 120,973
Banks
Centros Commerciales Continente, S.A.* 5,000 117,668
Retail
Construcciones Y Aux de Ferr 2,000 72,871
Railroad Transportation
Corporacion Mapfre 4,952 217,302
Insurance
Gas Y Electricidad 9,000 476,646
Utility / Electric
Hidroel Cantabrico 2,000 63,951
Utility / Electric
Iberdrola II S.A. 20,000 182,376
Utility / Electric
Repsol S.A. 5,000 168,040
Energy
Telefonica de Espana 6,000 104,647
Telephone Utility
Viscofan Envolturas Celulosi 4,000 53,518
Food
------------
1,625,250
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
SWEDEN-2.4%
Autoliv AB 5,000 $ 142,157
Automobile Related
Autoliv AB Sponsored (ADR) (a) 7,800 221,916
Automobile Related
Dahl International AB * 20,500 303,823
Building Materials
Kalmar Industries AB (a) 16,000 313,351
Machinery
Netcom Systems AB (a) * 22,000 224,578
Telecommunications
SKF AB 25,000 516,076
Machinery
Sparbanken Sverige (a) 8,000 96,183
Banks
Swedish Match * 80,000 235,920
Tobacco
------------
2,054,004
SWITZERLAND-1.1%
BBC Brown Boveri AG 300 355,299
Electrical Equipment
Roche Holdings AG, Ltd. 60 442,496
Drugs
Sandoz AG 140 156,218
Drugs
------------
954,013
TAIWAN-0.1%
The Taiwan Fund, Inc. 5,000 110,000
Mutual Funds
THAILAND-1.0%
CMIC Finance & Security Public Co. 110,000 257,091
Financial Services
Nawarat Patanakarn 20,000 48,328
Building & Construction
Thai Engine Manufacturing 50,000 435,747
Machinery
Total Access Communication (a) 20,000 143,000
Communication Services
------------
884,166
TURKEY-0.0%
Netas Telekomunik Ord. Cl.B (a) 215,600 45,933
Communication Equipment
UNITED KINGDOM-5.4%
Asda Group Plc. 20,000 35,698
Retailing
Automated Security Holdings Plc. * 120,008 69,067
Business Services
Barclays Plc. 14,000 177,477
Banks
British Airways Plc 25,000 204,153
Airlines
Caird Group * 3,000 17,592
Environmental Services
Carlton Communications Plc. 10,000 71,317
Broadcasting
Filtronic Comtec Plc. 100,000 365,531
Communication Equipment
Grand Metropolitan Plc 10,000 67,584
Food
Guinness 40,000 287,448
Beverages
Harvey Nichols Group Plc. (a)* 73,400 357,924
Retail
M.S. International Plc. 325,000 121,325
Machinery
McBride (a) 30,000 61,129
Household Products
Mid-States Plc * 250,000 159,434
Automobile Related
Mirror Group Plc 25,000 72,717
Newspapers
Misys Plc. 10,000 118,992
Computer Software & Services
Mowlem (John) & Co. Plc 220,000 285,737
Building & Construction
16
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- -------------------------------------------------------------------------
Pace Micro Tech * 110,000 $ 300,280
Technology
Powerscreen International Plc. 44,000 340,831
Recycling Equipment
Railtrack Group Plc (a) (ADR)* 670 22,881
Transportation-Shipping
Rank Organisation 10,000 74,817
Entertainment & Leisure
Rentokil Group 50,000 302,535
Environmental Services
Resort Hotels Plc (b) * 1,000,000 -0-
Restaurants & Lodging
Siebe Plc. 12,000 164,256
Machinery
Tate & Lyle Plc 20,000 144,346
Food
Tomkins 35,000 137,191
Diversified
Vodafone Group Plc 50,000 178,488
Telecommunications
WPP Group 70,000 225,385
Advertising
Zeneca Group Plc 16,000 346,181
Drugs
------------
4,710,316
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- -------------------------------------------------------------------------
Total Foreign Investments
(cost $46,004,105) $48,617,444
Total Common Stocks & Other Investments
(cost $80,362,584) 82,568,610
COMMERCIAL PAPER-5.9%
American Express Co.
5.28%, 8/02/96 $3,000 2,999,560
Ford Motor Credit Corp.
5.31%, 8/06/96 305 304,775
Prudential Funding
5.26%, 8/05/96 1,060 1,059,380
5.30%, 8/05/96 785 784,538
Total Commercial Paper
(amortized cost $5,148,253) 5,148,253
TOTAL INVESTMENTS -100.8%
(cost $85,510,837) 87,716,863
Other assets less liabilities-(0.8%) (727,107)
NET ASSETS-100% $86,989,756
* Non-income producing security.
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At July 31, 1996, these securities
amounted to $5,009,147 representing 5.8% of net assets.
(b) Illiquid security, valued at fair market value (see Notes A and E).
(c) Warrants attached, expiring August 8, 1996.
Glossary of Terms:
ADR - American Depository Receipt
GDR - Global Depository Receipt
GDS - Global Depository Share
See notes to financial statements.
17
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $85,510,837) $87,716,863
Cash, at value (cost $377,402) 381,244
Receivable for investment securities and foreign currency sold 653,118
Receivable for capital stock sold 233,974
Dividends and interest receivable 32,512
Foreign taxes receivable 25,577
Total assets 89,043,288
LIABILITIES
Payable for investment securities and foreign currency purchased 742,495
Unclaimed dividends 634,139
Unrealized depreciation of forward exchange currency contracts 234,070
Payable for capital stock redeemed 121,901
Management fee payable 75,846
Distribution fee payable 33,700
Accrued expenses 211,381
Total liabilities 2,053,532
NET ASSETS $86,989,756
COMPOSITION OF NET ASSETS
Capital stock, at par $ 75,731
Additional paid-in capital 72,262,656
Accumulated net realized gain on investments and foreign
currency transactions 12,674,051
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 1,977,318
$86,989,756
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($68,623,378/
5,908,426 shares of capital stock issued and outstanding) $11.61
Sales charge-4.25% of public offering price .52
Maximum offering price $12.13
CLASS B SHARES
Net asset value and offering price per share ($14,247,210/
1,291,853 shares of capital stock issued and outstanding) $11.03
CLASS C SHARES
Net asset value and offering price per share ($4,119,168/
372,853 shares of capital stock issued and outstanding) $11.05
See notes to financial statements.
18
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $89,314) $675,843
Interest 328,246 $ 1,004,089
EXPENSES
Management fee 772,166
Distribution fee - Class A 197,902
Distribution fee - Class B 87,676
Distribution fee - Class C 24,818
Custodian 321,779
Transfer agency 215,149
Administrative 146,488
Audit and legal 89,391
Printing 65,281
Registration 52,733
Directors' fees 32,000
Miscellaneous 10,967
Total expenses 2,016,350
Net investment loss (1,012,261)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investments 15,991,254
Net realized gain on foreign currency transactions 938,616
Net change in unrealized appreciation of investments (4,647,179)
Net change in unrealized depreciation of foreign currency
denominated assets and liabilities (78,971)
Net gain on investments and foreign currency transactions 12,203,720
NET INCREASE IN NET ASSETS FROM OPERATIONS $11,191,459
See notes to financial statements.
19
STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1996 1995
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $(1,012,261) $ (794,248)
Net realized gain on investments and foreign
currency transactions 16,929,870 7,789,167
Net change in unrealized appreciation/
depreciation of investments and foreign
currency denominated assets and liabilities (4,726,150) 2,436,403
Net increase in net assets from operations 11,191,459 9,431,322
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (2,964,670) (10,605,411)
Class B (331,138) (885,298)
Class C (74,101) (257,942)
Tax return of capital
Class A -0- (679,545)
Class B -0- (56,726)
Class C -0- (16,528)
CAPITAL STOCK TRANSACTIONS
Net increase 12,540,287 3,106,523
Total increase 20,361,837 36,395
NET ASSETS
Beginning of year 66,627,919 66,591,524
End of year $86,989,756 $66,627,919
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Small Cap Fund, Inc., (the "Fund"), is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge of up to 4.25%. Class B shares are sold
with a contingent deferred sales charge which declines from 4.00% 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 were sold without an initial or
contingent deferred sales charge. However, Class C shares purchased on or after
July 1, 1996, are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase. All three classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Securities traded on United States or foreign securities exchanges are valued
at the last reported sales price, or, if no sale occurred, at the mean of the
bid and asked price. Securities listed or traded on certain foreign exchanges
whose operations are similar to the U.S. over-the-counter market are valued at
the closing bid price. Debt securities are valued at the mean of the bid and
asked price except that debt securities maturing within 60 days are valued at
amortized cost, which approximates market value. Securities for which current
market quotations are not readily available (including investments which are
subject to limitations as to their sale) are valued at their fair value as
determined in good faith by the Board of Directors. The values of foreign
securities quoted in foreign currencies are translated into U.S. dollars at the
current rate of exchange at July 31, 1996.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies 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 on foreign currency transactions represents net foreign
exchange gains from holding of foreign currencies, currency gains or losses
realized between the trade and settlement dates on foreign security
transactions, and the difference between the amounts of dividends, interest and
foreign taxes recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid.
Net currency gains or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of
net change in unrealized depreciation of foreign currency denominated assets
and liabilities.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date the securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis.
4. 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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
6. RECLASSIFICATION OF NET ASSETS
As of July 31, 1996, the Fund reclassified certain components of net assets.
The reclassification resulted in a net increase of $1,012,261 to undistributed
net investment income, and net decreases to accumulated net realized gain on
investments and foreign currency transactions of $7,970 and to additional paid
in capital of $1,004,291.
21
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
These reclassifications were the result of permanent book and tax differences,
primarily resulting from the Fund's net operating loss and certain foreign
currency gains. These reclasses had no effect on net investment income, net
realized gains and net assets.
NOTE B: MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under an investment advisory agreement the Fund pays Alliance Capital
Management L.P., (the "Adviser"), a management fee at an annual rate of 1% of
the average daily net assets of the Fund. The fee is accrued daily and paid
monthly.
The Manager has agreed to reimburse the Fund to the extent that its aggregate
annual expenses (exclusive of interest, taxes, brokerage, distribution fees,
foreign custody charges and extraordinary expenses) exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale.
The Manager believes that the most restrictive expense ratio limitation imposed
by any state is 2.5% of the first $30 million of its average daily net assets,
2% of the next $70 million of its average daily net assets and 1.5% of its
average daily net assets in excess of $100 million. No reimbursement was
required for the year ended July 31, 1996. Pursuant to the management
agreement, the Fund paid $146,488 to the Manager representing the cost of
certain legal and accounting services provided to the Fund by the Manager for
the year ended July 31, 1996.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Manager) in accordance with a Services Agreement for providing personnel
and facilities to perform transfer agency services for the Fund. Such
compensation amounted to $168,984 for the year ended July 31, 1996.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Manager)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $8,247 from the sale of Class A shares and $11,791
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended July 31, 1996.
Brokerage commissions paid on securities transactions for the year ended July
31, 1996 amounted to $455,996, 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 Manager, nor to DLJ directly.
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. 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 $1,345,113, and $442,584 for
Class B and 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 Manager 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 investments)
aggregated $111,058,934 and $100,770,120, respectively, for the year ended July
31, 1996. There were no purchases or sales of U.S. Government and government
agency obligations for the year ended July 31, 1996.
22
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gain or
loss on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At July 31, 1996, the Fund had outstanding forward exchange currency contracts,
both to purchase and sell foreign currencies against the U.S. dollar, as
follows:
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
-------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
Japanese Yen, expiring 11/12/96 173,000 $1,636,862 $1,644,901 $8,039
FOREIGN CURRENCY SALE CONTRACTS
Deutsche Mark, expiring 9/20/96 2,500 1,643,439 1,703,316 (59,877)
Japanese Yen, expiring 11/12/96 355,000 3,273,398 3,375,376 (101,978)
Netherland Guilder, expiring 9/20/96 4,400 2,592,047 2,672,301 (80,254)
----------
$(234,070)
</TABLE>
At July 31, 1996, the cost of investments for federal income tax purposes was
$85,617,099. Accordingly, gross unrealized appreciation of investments was
$9,446,338 and gross unrealized depreciation of investments was $7,346,574,
resulting in net unrealized appreciation of $2,099,764.
NOTE E: ILLIQUID SECURITIES
DATE ACQUIRED COST
------------- -----------
Intelcom Group, Inc. 7/8/96 $ 283,503
Resort Hotels Plc. 5/1/92 719,086
TVI Televisao Independente 10/24/94 56,543
-----------
$1,059,132
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with the procedures described in Note A. The value of
these securities at July 31, 1996 was $379,023, representing 0.4% of net assets.
23
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE F: CAPITAL STOCK
There are 62,500,000 shares of $.01 par value capital stock authorized, divided
into three classes, designated Class A, Class B and Class C shares. Class A and
Class C each consist of 25,000,000 authorized shares and Class B consists of
12,500,000 authorized shares. Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31,1996 JULY 31,1995 JULY 31,1996 JULY 31,1995
------------ ------------ -------------- --------------
CLASS A
Shares sold 666,687 391,760 $ 7,703,615 $ 3,971,546
Shares issued in
reinvestment of
distributions 214,027 952,163 2,238,721 8,217,164
Shares converted
from Class B 29,137 -0- 365,303 -0-
Shares redeemed (788,775) (1,095,655) (8,976,608) (10,827,369)
Net increase 121,076 248,268 $ 1,331,031 $ 1,361,341
CLASS B
Shares sold 1,035,693 287,247 $11,503,034 $ 2,886,684
Shares issued in
reinvestment of
distributions 21,596 75,995 215,523 631,516
Shares converted
to Class A (30,676) -0- (365,303) -0-
Shares redeemed (253,960) (204,792) (2,731,200) (1,961,914)
Net increase 772,653 158,450 $ 8,622,054 $ 1,556,286
CLASS C
Shares sold 501,624 136,839 $ 5,589,123 $ 1,295,724
Shares issued in
reinvestment of
distributions 4,299 15,861 42,946 131,935
Shares redeemed (274,347) (134,697) (3,044,867) (1,238,763)
Net increase 231,576 18,003 $ 2,587,202 $ 188,896
24
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------
OCTOBER 1,
1993
YEAR ENDED JULY 31, TO YEAR ENDED SEPTEMBER 30,
------------------------- JULY 31, ------------------------------------
1996 1995 1994(E) 1993 1992 1991
------------ ----------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.38 $11.08 $11.24 $ 9.33 $10.55 $ 8.26
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.14)(a) (.09) (.15)(a) (.15) (.16) (.06)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.90 1.50 (.01) 2.49 (1.03) 2.35
Net increase (decrease) in net asset
value from operations 1.76 1.41 (.16) 2.34 (1.19) 2.29
LESS: DISTRIBUTIONS
Distributions from net realized gains (.53) (1.99) -0- (.43) (.03) -0-
Tax return of capital -0- (.12) -0- -0- -0- -0-
Net asset value, end of period $11.61 $10.38 $11.08 $11.24 $ 9.33 $10.55
TOTAL RETURN
Total investment return based on net
asset value (b) 17.46% 16.62% (1.42)% 25.83% (11.30)% 27.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $68,623 $60,057 $61,372 $65,713 $58,491 $84,370
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.51% 2.54%(c) 2.42%(d) 2.53% 2.34% 2.29%
Net investment loss (1.22)% (1.17)% (1.26)%(d) (1.13)% (.85)% (.55)%
Portfolio turnover rate 139% 128% 78% 97% 108% 104%
</TABLE>
See footnote summary on page 27.
25
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------------
OCTOBER 1,
1993
YEAR ENDED JULY 31, TO YEAR ENDED SEPTEMBER 30,
------------------------- JULY 31, ------------------------------------
1996 1995 1994(E) 1993 1992 1991
------------ ----------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.95 $10.78 $11.00 $ 9.20 $10.49 $ 8.26
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.20)(a) (.12) (.17)(a) (.15) (.20) (.07)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.81 1.40 (.05) 2.38 (1.06) 2.30
Net increase (decrease) in net asset
value from operations 1.61 1.28 (.22) 2.23 (1.26) 2.23
LESS: DISTRIBUTIONS
Distributions from net realized gains (.53) (1.99) -0- (.43) (.03) -0-
Tax return of capital -0- (.12) -0- -0- -0- -0-
Net asset value, end of period $11.03 $ 9.95 $10.78 $11.00 $ 9.20 $10.49
TOTAL RETURN
Total investment return based on net
asset value (b) 16.69% 15.77% (2.00)% 24.97% (12.03)% 27.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,247 $5,164 $3,889 $1,150 $819 $121
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.21% 3.20%(c) 3.15%(d) 3.26% 3.11% 2.98%
Net investment loss (1.88)% (1.92)% (1.93)%(d) (1.85)% (1.31)% (1.39)%
Portfolio turnover rate 139% 128% 78% 97% 108% 104%
</TABLE>
See footnote summary on page 27.
26
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
OCTOBER 1, MAY 3,
1993 1993(F)
YEAR ENDED JULY 31, TO TO
-------------------------- JULY 31, SEPTEMBER 30,
1996 1995 1994(E) 1993
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.96 $10.79 $11.00 $ 9.86
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.20)(a) (.17) (.17)(a) (.05)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.82 1.45 (.04) 1.19
Net increase (decrease) in net asset
value from operations 1.62 1.28 (.21) 1.14
LESS: DISTRIBUTIONS
Distributions from net realized gains (.53) (1.99) -0- -0-
Tax return of capital -0- (.12) -0- -0-
Net asset value, end of period $11.05 $ 9.96 $10.79 $11.00
TOTAL RETURN
Total investment return based on net
asset value (b) 16.77% 15.75% (1.91)% 11.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,119 $1,407 $1,330 $261
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.19% 3.25%(c) 3.13%(d) 3.75%(d)
Net investment loss (1.85)% (2.10)% (1.92)%(d) (2.51)%(d)
Portfolio turnover rate 139% 128% 78% 97%
</TABLE>
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) If the Fund had borne all expenses, the expense ratios would have been
2.61%, 3.27%, and 3.31% for Class A, Class B and Class C shares, respectively.
(d) Annualized.
(e) The Fund changed its fiscal year end from September 30 to July 31.
(f) Commencement of distribution.
27
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE GLOBAL SMALL CAP FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Global Small Cap Fund, Inc., including the portfolio of investments,
as of July 31, 1996, and the related statement of operations for the year then
ended, the statements 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 July
31, 1996, 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 Small Cap Fund, Inc. at July 31, 1996, 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
September 6, 1996
28
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER (1)
RUTH BLOCK (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
ALDEN M. STEWART, SENIOR VICE PRESIDENT-INVESTMENTS
RANDALL E. HAASE, VICE PRESIDENT
RONALD L. SIMCOE, VICE PRESIDENT
TIMOTHY D. RICE, VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
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, NJ 07096-1520
Toll-free 1-(800) 221-5672
(1) Member of the Audit Committee.
29
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 Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment 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
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
30
ALLIANCE GLOBAL SMALL CAP FUND, INC.
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
INVESTING WITHOUT THE MYSTERY.
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.
GSCAR
