ALLIANCE GLOBAL SMALL CAP FUND
ANNUAL REPORT
JULY 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
September 25, 1998
Dear Shareholder:
We are pleased to report the performance of the Alliance Global Small Cap Fund
for the annual reporting period ended July 31, 1998. In addition, the following
table provides performance data for the Fund's benchmark, the Morgan Stanley
Capital International (MSCI) World Index, and for the Lipper Global Small
Company (GSC) Funds Average for the six and 12-month periods ended July 31,
1998.
INVESTMENT RESULTS
Alliance Global Small Cap Fund underperformed the Lipper GSC Funds Average for
the six months ended July 31, 1998, but outperformed the Lipper GSC Funds
Average for the 12-month period ended July 31.
The recent performance of your Fund was primarily the result of significant
exposure to developing markets (in Asia, Latin America and Eastern Europe).
These markets have performed very poorly in the global environment of low
inflation and interest rates, but falling commodity prices.
For the same six- and 12-month periods under review, the Lipper GSC Funds
Average and your Fund's performance both trailed that of the MSCI World Index
due to the significant outperformance of large-capitalization stocks (the
primary components of the MSCI World Index) during these time frames.
INVESTMENT RESULTS*
Periods Ended July 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE GLOBAL SMALL CAP FUND
Class A 5.02% 2.49%
Class B 4.58% 1.80%
Class C 4.57% 1.79%
MSCI WORLD INDEX 13.50% 12.11%
LIPPER GLOBAL SMALL COMPANY (GSC)
FUNDS AVERAGE 8.09% 1.91%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF JULY 31, 1998. 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. RETURNS FOR
THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE MSCI WORLD INDEX IS A MARKET-CAPITALIZATION WEIGHTED INDEX THAT
MEASURES THE PERFORMANCE OF STOCK MARKETS IN 23 COUNTRIES. THE LIPPER GLOBAL
SMALL COMPANY (GSC) FUNDS AVERAGE REFLECTS PERFORMANCE OF 36 AND 32 FUNDS FOR
THE SIX- AND 12-MONTH PERIODS ENDED JULY 31, 1998, RESPECTIVELY. THESE FUNDS
HAVE GENERALLY SIMILAR INVESTMENT OBJECTIVES TO YOUR FUND, ALTHOUGH INVESTMENT
POLICIES FOR THE VARIOUS FUNDS MAY DIFFER. THE MSCI WORLD INDEX IS UNMANAGED
AND REFLECT NO FEES OR EXPENSES AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX
OR AN AVERAGE.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
U.S. INVESTMENTS
In the U.S. portion of the portfolio, we continue to hold several positions in
the retail and apparel sectors. These companies have continued to report
earnings per share (EPS) gains typically between 20% and 30% with price to
earnings (P/E) ratios between 12 and 18 times earnings. After not participating
in the strong equity market in 1997, these stocks have done well in the first
half of 1998. They include Tommy Hilfiger Corp., Tiffany & Co., and Abercrombie
& Fitch Co.
Furthermore, we have added several leisure-related companies to the portfolio.
Here, we are looking for strong market share leaders, strong franchises with
dominant positions within their respective industry. This would include Bally
Total Fitness Holding Corp., the largest health club provider in the U.S. with
over 4 million members; Premier Parks, Inc., the largest amusement parks
operator after the Walt Disney Company; and Family Golf Centers, Inc., the
largest provider of golfing recreational centers in the U.S. We believe the
prospects for all of these companies look favorable.
Within the healthcare group, the biotechnology sector continues to act
favorably as more of the smaller tier companies are able to get their products
approved by the Federal Drug Administration (FDA). As previously
1
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
stated, we are focusing on biotechnology companies with products either
approved by the FDA or nearing the end of the approval process. Therefore, many
of the risk hurdles that these companies typically face are already behind
them. The Fund currently has positions in Geltex Pharmaceuticals, Inc.,
Centocor, Inc., and MedImmune, Inc.
We reduced the energy weighting in the U.S. portion of the portfolio during the
second half of 1997 and currently hold a 3% position. We have not added to our
weighting thus far in 1998 given the tremendous selloff in the energy sector.
With oil prices remaining at very low price levels, we believe that the large
oil companies and independents will be forced to reduce the capital budgets
that would normally be used for oil and natural gas drilling and exploration.
As a result, the oil services companies which normally would be a beneficiary
of this cycle will now be a victim of this reduction in capital spending. We
will therefore continue to see earnings estimates coming down for this group.
We continue to favor the airline industry and currently hold a 6% in the U.S.
portion of the portfolio. 1998 will mark the fourth consecutive year of
profitability for the industry after showing losses from 1990-1994.
Furthermore, this industry is more fundamentally sound than at any point since
World War II with load factors over 70% for three years in a row, levels never
attained before. In the past, when times were good, the carriers took their
excess cash flow and bought more planes. This only added to their existing
capacity and took away their pricing power. Today, the carriers are using their
cash flow to pay down debt, buy back stock and restructure their balance
sheets. As demand outpaces capacity growth, pricing power should continue to
increase, allowing them to maximize both revenues and earnings. We continue to
hold positions in America West Holdings Corp. Cl. B, Alaska Air Group, Inc.,
and Mesa Air Group, Inc. We eliminated our positions in Trans World Airlines
(TWA), Inc. and Continental Airlines, Inc.
In the technology sector, we increased our technology weighting to
approximately 12% of the U.S. portfolio. We continue to hold positions in
Comverse Technology, Inc., DBT Online Inc., and Insight Enterprises, Inc.
Currently, we are slightly underweighting the technology benchmark of 14%.
INTERNATIONAL INVESTMENTS
European markets continued to outperform the S&P 500 Stock Index through July.
Our European portfolio remains concentrated in core growth sectors such as
cellular communications, temporary help, and insurance. We have added
significantly to restructuring candidates and to stable growth sectors, such as
food and tobacco, during the past six months. We continue to sell long-term
growth holdings which have reached lofty valuations to fund investment in
restructuring stories.
Despite good stock selection in Japanese growth industries such as
pharmaceuticals, technology, and consumer finance, and our underweight position
in the market, the Japanese segment of the portfolio continued to hurt overall
performance. We continue to sell domestically oriented cyclical shares in order
to further concentrate the portfolio on core growth sectors and globally
competitive exporters.
In developing markets, the Fund was negatively impacted by ongoing currency and
stock market turbulence. We expect to retain holdings in Hong Kong (China) and
Singapore, but are reducing positions elsewhere in Southeast Asia. Within Latin
America, we are emphasizing consumer-related shares in Mexico and utilities in
Brazil. Our East European holdings are concentrated in the Hungarian telephone
monopoly.
MARKET OUTLOOK
We believe that following its slowdown in the second quarter of 1998, global
economic growth will remain subdued in the second half. Continental Europe is
expected to expand modestly as consumer spending improves. Faced with a strong
currency and rising short-term interest rates, the U.K. is slowing sharply from
its recent heady growth. Japan should begin emerging from recession as counter
cyclical spending takes effect.
Our outlook for U.S. equities has become more cautious. Slowing global economic
growth has begun to impact the earnings estimates of large multinational
companies. Companies with reduced earnings expectations are performing poorly.
Hence, we continue to focus on the earnings growth profile of each company,
working to avoid the risk of earnings disappointments.
European growth stock valuations have begun to approach U.S. levels. While
there is little valuation dis-
2
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
persion across Continental European markets, investors' underlying assumption
of declining interest rates accompanied by solid economic recovery may not
remain in place for next year. We do not foresee companies achieving pricing
power given pervasive, continuous global competition in most products and
services. However, Continental European managements are aggressively pursuing
corporate restructuring, which boosts earnings prospects for their companies.
The Japanese government will attempt to regain consumer confidence with its
fiscal stimulus programs. Monetary stimulus will remain positive. Because
exports and domestic capital spending have remained strong, consumer activity
will determine how quickly Japan escapes recession.
Without renewed Japanese growth, the smaller economies of Southeast Asia are
likely to recover from their recent turmoil very slowly. Although these markets
should experience trading rallies, we think emerging market investment should
be concentrated in markets where economic policy is sound and economic growth
is likely to remain strong. While we anticipate the volatility associated with
investment in developing markets, we also expect ongoing opportunity in these
markets.
CURRENT REVIEW AND OUTLOOK
Recent volatility in the global markets resulted in sharply negative
performance for most global funds during the month of August, and your Fund
returned a negative 18.45% during that period, more than offsetting the Fund's
July 31 year-to-date return of 8.10%. As of September 23, the Fund's
year-to-date return was a negative 9.08%. However, this downturn does not
change our basic outlook. We believe that your Fund is correctly positioned,
and that it should perform well over the coming periods. We continue to seek
out the stocks of companies with primarily secular growth potential plus a
reasonable valuation. Within this context, we continue to believe that we can
identify attractive investment opportunities around the globe. We continue to
rely on Alliance Capital's very substantial research capabilities in helping us
to select stocks that we expect to deliver superior performance.
As always, we appreciate your investment in Alliance Global Small Cap Fund and
look forward to reporting its progress to you in coming periods.
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.
3
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 equity securities issued by
small capitalization companies.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF JULY 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 2.49% -1.86%
Three Years 15.04% 13.39%
Five Years 13.66% 12.68%
Ten Years 9.02% 8.54%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 1.80% -1.93%
Three Years 14.21% 13.70%
Five Years 12.85% 12.85%
Since Inception* 10.13% 10.13%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 1.79% 0.86%
Three Years 14.22% 14.22%
Five Years 12.87% 12.87%
Since Inception* 12.86% 12.86%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(JUNE 30, 1998)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year 7.73% 7.70% 10.68%
5 Years 13.79% 13.95% 13.97%
10 Years 8.87% n/a n/a
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 9/17/90 Class B; 5/3/93 Class C.
n/a: not applicable.
4
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
ALLIANCE GLOBAL SMALL CAP FUND
GROWTH OF A $10,000 INVESTMENT
7/31/88 TO 7/31/98
$30,000
$27,000
$24,000
$21,000
$18,000
$15,000
$12,000
$9,000
$10,000
MSCI WORLD INDEX: $29,711
LIPPER GLOBAL SMALL COMPANY FUNDS AVERAGE: $26,793
GLOBAL SMALL CAP FUND CLASS A SHARES: $22,701
7/31/88 7/31/89 7/31/90 7/31/91 7/31/92 7/31/93 7/31/94
7/31/95 7/31/96 7/31/97 7/31/98
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Global Small Cap Fund Class A shares (from 7/31/88 to 7/31/98) as
compared to the performance of an appropriate broad-based index. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and 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 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 4 funds
(based on the number of funds in the average from 7/31/88 to 7/31/98). These
funds have generally similar investment objectives to Alliance Global SmallCap
Fund, although the investment policies of some funds included in the average
may differ.
When comparing Alliance Global Small Cap Fund to the index and average shown
above, you should note that no charges or expenses are reflected in the
performance of the index. Lipper results include fees and expenses.
Global Small Cap Fund
Lipper Global Small Company Average
MSCI World Index
5
TEN LARGEST HOLDINGS
JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
% OF NET
COMPANY COUNTRY U.S. $ VALUE ASSETS
- -------------------------------------------------------------------------------
Mohawk Industries, Inc. United States $ 2,175,637 1.7%
Bethlehem Steel Corp. United States 2,069,512 1.6
Alaska Air Group, Inc. United States 1,758,750 1.3
Nokia AB Oy Corp.
Series A Finland 1,756,787 1.3
Budget Group,
Inc. Cl.A United States 1,749,562 1.3
Chelsea GCA Realty, Inc. United States 1,718,250 1.3
Industrie Natuzzi
SpA (ADR) Italy 1,603,481 1.2
Tiffany & Co. United States 1,429,819 1.1
America West Holdings
Corp. Cl.B United States 1,419,687 1.1
Insight Enterprises, Inc. United States 1,302,750 1.0
$16,984,235 12.9%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JULY 31, 1998
_______________________________________________________________________________
SHARES*
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES COUNTRY BOUGHT 7/31/98
- -------------------------------------------------------------------------------
Abercrombie & Fitch
Co. Cl.A United States 23,100 23,100
America West Holdings
Corp. Cl.B United States 31,200 59,000
Apex PC Solutions, Inc. United States 33,500 33,500
Brylane, Inc. United States 15,700 27,300
Insight Enterprises, Inc. United States 27,000 27,000
Mens Wearhouse, Inc. United States 27,300 27,300
Premier Parks, Inc. United States 18,900 18,900
Seat SpA Italy 1,265,000 1,265,000
Taubman Centers, Inc. United States 58,800 58,800
United Auto Group, Inc. United States 43,100 43,100
HOLDINGS
SALES COUNTRY SOLD 7/31/98
- -------------------------------------------------------------------------------
CDW Computers Centers,
Inc. United States 23,000 -0-
Centocor, Inc. United States 36,200 21,400
Continental Airlines,
Inc. Cl.B United States 48,200 -0-
Gulfstream Aerospace Corp. United States 41,600 -0-
Mohawk Industries, Inc. United States 39,300 69,900
National Surgery Centers, Inc. United States 37,850 -0-
Neurex Corp United States 74,400 -0-
Snyder Communications, Inc. United States 21,200 -0-
Telephone and Data Systems
Corp. United States 37,000 -0-
Valero Energy Corp. United States 31,100 -0-
* Adjusted for a stock split.
6
TEN LARGEST COUNTRY HOLDINGS
JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
PERCENT OF
COUNTRY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
United States $ 59,914,331 45.5%
Japan 11,430,348 8.7
United Kingdom 9,992,628 7.6
Netherlands 4,650,572 3.5
France 4,151,891 3.2
Spain 3,893,290 3.0
Finland 3,365,153 2.6
Italy 3,089,143 2.3
Sweden 2,527,059 1.9
Ireland 2,346,836 1.8
$105,361,251 80.1%
INDUSTRY DIVERSIFICATION
JULY 31, 1998
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Aerospace & Defense $ 202,765 0.2%
Basic Industry 5,317,002 4.0
Capital Goods 6,363,505 4.8
Consumer Manufacturing 10,454,403 7.9
Consumer Services 39,031,680 29.7
Consumer Staples 5,071,687 3.9
Energy 2,748,243 2.1
Finance 14,030,989 10.7
Healthcare 9,528,557 7.2
Multi Industry 4,870,689 3.7
Technology 13,540,137 10.3
Transportation 6,508,760 4.9
Utilities 6,794,061 5.2
Total Investments* 124,462,478 94.6
Cash and receivables,
net of liabilities 7,070,166 5.4
Net Assets $131,532,644 100.0%
* Excludes short-term obligations.
7
PORTFOLIO OF INVESTMENTS
JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-94.6%
UNITED STATES INVESTMENTS-45.5%
CONSUMER SERVICES-20.8%
AIRLINES-2.8%
Alaska Air Group, Inc. (a) 42,000 $ 1,758,750
America West Holdings Corp. Cl.B (a) 59,000 1,419,687
Mesa Air Group, Inc. (a) 61,100 481,163
------------
3,659,600
APPAREL-2.8%
Mens Wearhouse, Inc. (a) 27,300 863,362
Nautica Enterprises, Inc. (a) 18,900 487,266
The Finish Line, Inc. Cl.A (a) 29,400 635,775
Tommy Hilfiger Corp. (a) 17,600 986,700
Wolverine World Wide, Inc. 45,400 737,750
------------
3,710,853
BROADCASTING & CABLE-1.3%
Sinclair Broadcast Group, Inc. Cl.A (a) 27,400 717,537
Young Broadcasting, Inc. Cl.A (a) 15,800 1,034,900
------------
1,752,437
BUSINESS SERVICES-0.6%
TeleSpectrum Worldwide, Inc. (a) 104,100 728,700
ENTERTAINMENT & LEISURE-2.8%
Bally Total Fitness Holding Corp. (a) 38,100 945,356
Family Golf Centers, Inc. (a) 20,450 506,138
N2K, Inc. (a) 15,500 220,875
Premier Parks, Inc. (a) 18,900 1,207,237
Sunterra Corp. (a) 60,400 671,950
Trans World Entertainment Corp. (a) 2,900 114,188
------------
3,665,744
RESTAURANTS & LODGING-1.0%
Capstar Hotel Co. 35,800 897,238
Florida Panthers Holdings, Inc. (a) 33,700 488,650
QPQ Corp. warrants, expiring 9/22/98 (a) 16,400 0
------------
1,385,888
RETAIL-GENERAL MERCHANDISE-7.3%
Abercrombie & Fitch Co. Cl.A (a) 23,100 1,072,706
Brylane, Inc. (a) 27,300 1,062,994
Circuit City Stores, Inc.-CarMax Group (a) 101,600 876,300
Furniture Brands International, Inc. (a) 29,100 822,075
Group 1 Automotive, Inc. (a) 44,100 661,500
Movado Group, Inc. 21,700 520,800
Pacific Sunwear of California (a) 32,600 961,700
Petco Animal Supplies, Inc. (a) 29,000 300,875
Petsmart, Inc. (a) 41,100 336,506
Stride Rite Corp. 52,300 634,138
Tiffany & Co. 33,300 1,429,819
United Auto Group, Inc. (a) 43,100 910,487
------------
9,589,900
MISCELLANEOUS-2.2%
Carriage Services, Inc. C1.A (a) 20,900 462,413
Central Garden & Pet Co. (a) 26,100 603,562
8
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Century Business Services, Inc. (a) 61,200 $ 1,208,700
International Alliance Services, Inc.
warrants, expiring 12/30/99 (a) 61,100 619,493
------------
2,894,168
------------
27,387,290
TECHNOLOGY-4.7%
COMMUNICATION EQUIPMENT-0.5%
Global TeleSystems Group, Inc. (a) 3,000 160,500
Globecomm Systems, Inc. (a) 10,600 80,825
GST Telecommunications, Inc. (a) 34,000 463,250
------------
704,575
COMPUTER HARDWARE-0.7%
Apex PC Solutions, Inc. (a) 33,500 875,188
Radius, Inc. (a) 15 30
------------
875,218
COMPUTER SERVICES-1.1%
DBT Online, Inc. (a) 36,100 798,712
Renaissance Worldwide, Inc. (a) 38,800 586,850
------------
1,385,562
COMPUTER SOFTWARE-1.6%
CheckFree Holdings Corp. (a) 20,300 502,425
Harbinger Corp. (a) 35,800 309,894
Insight Enterprises, Inc. (a) 27,000 1,302,750
Transaction Systems Architects, Inc. (a) 1,000 38,625
------------
2,153,694
NETWORKING SOFTWARE-0.3%
Xylan Corp. (a) 13,900 343,156
SEMI-CONDUCTOR COMPONENTS-0.1%
Brooks Automation, Inc. (a) 2,900 28,819
Photronics, Inc. (a) 9,300 168,562
------------
197,381
MISCELLANEOUS-0.4%
Carrier Access Corp. (a) 1,000 16,125
Excalibur Technologies Corp. (a) 21,000 215,250
Preview Travel, Inc. (a) 14,600 317,550
------------
548,925
------------
6,208,511
TRANSPORTATION-4.4%
AUTO & RELATED-1.6%
Avis Rent A Car, Inc. (a) 12,000 309,750
Budget Group, Inc. Cl.A (a) 65,100 1,749,562
------------
2,059,312
SHIPPING-1.4%
Knightsbridge Tankers, Ltd. 13,300 325,850
Marine Transport Corp. 16,880 29,012
OMI Corp. (a) 168,800 844,000
Teekay Shipping Corp. 31,400 675,100
------------
1,873,962
TRUCKING-0.8%
Consolidated Freightways Corp. (a) 91,300 1,061,363
MISCELLANEOUS-0.6%
Carey International, Inc. (a) 31,500 791,438
------------
5,786,075
HEALTH CARE-4.0%
BIOTECHNOLOGY-3.3%
Centocor, Inc. (a) 21,400 754,350
Geltex Pharmaceuticals, Inc. (a) 59,500 1,197,438
Gensia Sicor, Inc. (a) 83,800 282,825
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
MedImmune, Inc. (a) 20,100 $ 1,181,503
Physio-Control International Corp. (a) 35,300 944,275
------------
4,360,391
DRUGS-0.3%
Aradigm Corp. (a) 32,300 335,113
Corixa Corp. (a) 12,600 72,450
------------
407,563
MEDICAL SERVICES-0.4%
Veterinary Centers of America, Inc. (a) 27,100 511,512
------------
5,279,466
CONSUMER MANUFACTURING-3.5%
APPLIANCES-0.4%
Mettler-Toledo International, Inc. (a) 26,700 564,037
AUTO & RELATED-0.7%
Miller Industries, Inc. (a) 49,800 333,038
Monaco Coach Corp. (a) 24,150 588,656
------------
921,694
TEXTILE PRODUCTS-1.9%
Mohawk Industries, Inc. (a) 69,900 2,175,637
Novel Denim Holdings, Ltd. (a) 13,300 290,938
------------
2,466,575
MISCELLANEOUS-0.5%
Synetic, Inc. (a) 13,900 719,325
------------
4,671,631
FINANCE-3.3%
BROKERAGE & MONEY MANAGEMENT-0.4%
Reinsurance Group of America, Inc. (a) 8,800 489,500
REAL ESTATE-2.9%
Chelsea GCA Realty, Inc. 47,400 1,718,250
Glenborough Realty Trust, Inc. 25,300 623,012
Golf Trust of America, Inc. 22,600 692,125
Taubman Centers, Inc. 58,800 768,075
------------
3,801,462
------------
4,290,962
BASIC INDUSTRIES-1.9%
BUILDING & RELATED-0.2%
Associate Materials, Inc. (a) 26,900 322,800
MINING & METALS-1.7%
Bethlehem Steel Corp. (a) 191,400 2,069,512
Royal Oak Mines, Ltd. (a) 204,100 127,563
------------
2,197,075
------------
2,519,875
CAPITAL GOODS-1.7%
ELECTRICAL EQUIPMENT-0.2%
Rofin Sinar Technologies, Inc. (a) 15,000 223,125
MACHINERY-1.5%
Comverse Technology, Inc. (a) 18,100 924,231
United Rentals, Inc. (a) 31,100 1,055,457
------------
1,979,688
------------
2,202,813
ENERGY-1.1%
OIL SERVICE-0.5%
Oceaneering International, Inc. (a) 15,600 218,400
Parker Drilling Co. (a) 89,800 465,837
------------
684,237
PIPELINES-0.6%
Southern Union Co. 45,502 756,471
------------
1,440,708
CONSUMER STAPLES-0.1%
MISCELLANEOUS-0.1%
Hines Horticulture, Inc. (a) 12,700 127,000
Total United States Investments
(cost $59,087,973) 59,914,331
10
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
FOREIGN INVESTMENTS-49.1%
AUSTRALIA-1.3%
Australian Gas Light Co.,Ltd. 20,000 $ 132,492
Brambles Industries, Ltd. 20,000 422,669
Broken Hill Proprietary Co., Ltd. 10,000 81,152
Cultus Petroleum NL 50,000 19,749
ERG, Ltd. 320,000 219,726
GIO Australia Holdings 80,000 208,400
Great Central Mines, Ltd. 15,000 13,672
Hoyts Cinemas Group (b) 105,000 151,852
Oil Search, Ltd. 87,000 137,450
Orogen Minerals, Ltd. (GDS) (b) 10,000 136,800
Spectrum Network Systems, Ltd. 246,832 97,492
Suncorp-Metway, Ltd. 15,450 36,145
Village Roadshow, Ltd. pfd. 30,000 43,386
WMC, Ltd. 15,121 45,390
------------
1,746,375
AUSTRIA-1.4%
Austria Mikro Systeme International AG 900 43,128
Austria Tabakwerke AG 5,155 310,840
Bank Austria AG 4,200 332,082
BWT AG 600 112,611
Erste Bank Der Oesterreichi schen Sparkassen AG 5,610 337,828
KTM Motorradholding AG 3,000 253,973
Mayr Melnhof Karton AG 5,000 318,265
OMV AG 1,200 153,342
------------
1,862,069
BRAZIL-0.6%
Companhia Paranaense de
Energia (ADS) 33,000 358,875
Companhia Riograndense de Telecom pfd. 395,183 360,168
------------
719,043
CANADA-0.7%
Boardwalk Equities, Inc. (a) 9,000 101,264
FirstService Corp. (a) 6,100 73,963
Fracmaster, Ltd. Inst. Receipts (b) 57,100 189
Kingsway Financial Services, Inc. (a) 20,000 167,450
Leitch Technology Corp. (a) 4,700 73,102
National Bank Canada Montreal Quebec 10,000 179,363
Nelvana, Ltd. (a) (b) (c) 8,000 164,141
Royal Group Technologies, Ltd. (a) (b) 5,000 118,803
------------
878,275
CHILE-0.1%
Enersis, SA (ADR) 3,000 83,625
Santa Isabel, SA (ADR) 665 7,357
------------
90,982
DENMARK-0.6%
Carli Gry International A/S (b) 8,000 624,272
Coloplast 1,500 134,974
Vestas Wind Systems A/S 1,600 65,377
------------
824,623
FINLAND-2.6%
Amer Group, Ltd. 10,600 182,299
Hartwall Oy AB C1.A 4,000 126,489
Helsingin Puhelin Oy 9,160 542,052
KCI Konecranes International Corp. (b) 2,000 112,804
Kesko 9,600 153,562
Nokia AB Oy Corp. Series A 20,000 1,756,787
Orion-Yhtyma Oy Cl.B 16,000 491,160
------------
3,365,153
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
FRANCE-3.2%
Accor 1,500 $ 401,308
Alcatel Alsthom (c) 1,400 278,099
Bouygues Offshore, SA (ADR) 5,000 104,062
Canal Plus (ADR) 1,390 267,957
Coflexip, SA (ADR) 6,000 297,000
Compagnie Generale de Geophysique,
SA (ADR) (a) 20,000 500,000
Lafarge, SA 1,600 157,975
Louis Dreyfus Citrus (b) (c) 5,700 195,876
Michelin Cl.B (c) 2,000 110,133
Moulinex 11,000 233,258
S T Dupont (a) (b) (c) 7,540 82,156
Sanofi, SA 3,200 384,612
SEITA (c) 7,000 315,531
Societe Generale 1,200 288,861
Total, SA C1.B 800 91,325
Viverdi (c) 2,030 443,738
------------
4,151,891
GERMANY-1.3%
Apcoa Parking AG (b) 1,390 97,477
Bayer AG 3,000 136,095
BUS Berzelius Umwelt
Service AG 7,800 135,927
Gesco Industries, Inc. AG 12,000 303,558
ProSieben Media AG pfd. 5,800 309,742
SGL Carbon AG (b) 4,000 445,219
Veba AG 2,600 153,466
Viag AG 200 141,998
------------
1,723,482
GREECE-0.6%
Hellenic Telecommunication Organization, SA 5,972 169,630
Petzetakis, SA 100,000 625,571
------------
795,201
HONG KONG-0.2%
Cheung Kong Holdings, Ltd. 24,000 104,072
HSBC Holdings Plc 4,000 97,567
ITC Corporation, Ltd. 287,800 1,040
Television Broadcasting, Ltd. 21,000 51,087
------------
253,766
HUNGARY-0.3%
Magyar Tavkozlesirt (ADS) 14,000 447,125
INDIA-0.2%
Gujarat Narmada Valley
Fertilizers Co., Ltd. (GDR) (b) (d) 4,000 9,497
SIEL, Ltd. (GDR) (b) 18,000 18,000
Videsh Sanchar Nigam, Ltd. (GDS) (b) 16,000 186,000
------------
213,497
INDONESIA-0.1%
Great River International 427,000 8,930
Gulf Indonesia Resources, Ltd. (a) 11,400 109,725
PT Indosat (ADR) 4,000 43,000
------------
161,655
IRELAND-1.8%
Crean (James) Plc 55,000 114,549
Fyffes Plc 280,000 581,302
Irish Continental Group Plc 15,000 230,911
Irish Life Plc 90,000 808,583
Marlborough International Plc (a) 75,000 333,656
Unidare Plc 91,500 277,835
------------
2,346,836
12
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
ITALY-2.3%
Banca Naz del Lavoro 3,000 $ 90,353
Gildemeister Italiana SpA 52,500 247,787
Industrie Natuzzi SpA (ADR) 64,300 1,603,481
Mediaset SpA 30,000 188,818
Seat SpA 1,265,000 886,570
Zucchini SpA 9,050 72,134
------------
3,089,143
JAPAN-8.7%
Aiful Corp (c) 8,100 417,266
Akita Bank (c) 6,000 26,138
Asahi Bank (c) 7,000 24,395
Asahi Diamond Industrial (c) 4,852 21,036
Bank of Tokyo Mitsubishi, Ltd. (c) 19,250 192,074
Canon, Inc. 1,000 22,818
Credit Saison Co. (c) 36,015 692,309
Daibiru Corp. (c) 4,000 27,437
Dai-Ichi Kangyo Bank, Ltd. (c) 21,000 109,632
Daito Trust Construction Co., Ltd. (c) 1,400 11,617
Data Communication System 1,000 21,090
DDI Corp. (c) 30 89,614
Disco Corp. (c) 7,000 188,771
Familymart Co. (c) 7,700 291,239
Fuji Photo Film Co. (c) 9,000 331,697
Fuji Software ABC, Inc. (c) 6,680 242,498
Fujikura (c) 28,000 118,684
Fujimi, Inc. (c) 6,340 220,510
Home Wide Corp. (c) 4,000 16,180
Honda Motor Co. 2,000 74,540
Ishihara Sangyo 6,000 8,671
Japan Airport Terminal (c) 12,200 63,269
Japan Industrial Land Development (c) 5,200 7,623
Japan Tobacco, Inc. (c) 24 162,301
Kaneshita Construction (c) 5,000 23,683
Kao Corp. 16,000 263,311
Kawasaki Heavy Industries (c) 2,000 4,425
Keyence Corp. (c) 2,600 293,044
Kikuchi Co. (c) 3,000 8,713
King Co. (c) 10,000 13,484
Koa Fire & Marine (c) 3,000 10,579
Matsuda Sangyo 2,000 15,765
Meitec Corp. 4,900 188,045
Micronics Japan Co. (c) 5,500 77,963
Minebea Co. (c) 12,000 127,368
Misumi Corp. (c) 12,500 209,601
Mitsubishi Heavy Industries, Ltd. (c) 4,000 14,880
Mitsubishi Trust and Banking (c) 5,000 36,371
Mitsui Home Co. 3,000 15,205
Mori Seiki Co., Ltd. (c) 14,000 167,957
Murata Manufacturing Co., Ltd. (c) 10,000 340,202
Nanno Construction (c) 7,000 7,793
NIC Corp. (c) 3,000 22,611
Nichiei Co., Ltd. (c) 5,100 382,623
Nichiha Corp. (c) 12,900 70,021
Nichii Gakkan Co. (c) 1,000 31,462
Nikon Corp. (c) 13,000 80,722
Nintendo Corp., Ltd. (c) 2,800 266,215
Nippon Broadcasting System (c) 4,000 157,655
Nippon Denwa Shisetsu (c) 5,500 16,277
Nippon Kanzai Co. (c) 200 2,475
Nippon Paper Industries Co. (c) 7,000 28,316
Nippon System Development (c) 14,600 349,302
Nippon Telegraph & Telephone Corp. 16 138,294
Nippon Television Network Corp. (c) 650 187,647
Nireco Corp. (c) 4,000 19,085
Nitta Corp. (c) 8,000 48,956
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Nitto Kohki Co. (c) 4,800 $ 48,624
Noritsu Koki Co. (c) 9,000 205,366
Ohmoto Gumi Co. (c) 1,400 6,438
Oie Sangyo Co., Ltd. (c) 4,400 17,190
Paris Miki, Inc. (c) 9,880 133,218
PS Corp. (c) 5,000 19,396
Ricoh Elemex Corp. (c) 3,000 19,499
Rohm Co., Ltd. (c) 3,000 323,399
Sankyo Co., Ltd. (c) 32,000 716,913
Sankyo Engineering 1,000 4,398
Santen Pharmaceutical Co. (c) 25,420 290,901
Sanyo Engineering and Construction Co. (c) 2,000 6,956
Sanyo Pax Co. (c) 8,500 58,775
Sanyo Shinpan Finance Co., Ltd. 1,200 44,724
Sato Corp. (c) 13,100 197,469
Seven-Eleven Japan (c) 4,400 268,040
Shimano, Inc. (c) 3,000 73,434
Shizuoka Bank (c) 3,000 29,415
Sho Bond Corp. 6,000 108,906
SMC Corp. 4,400 329,802
Sodick Co. (c) 28,000 75,508
Sumitomo Bank, Ltd. (c) 9,000 84,822
Sumitomo Metal Industries (c) 44,000 65,413
Sumitomo Realty & Development Co., Ltd. (c) 14,000 58,180
Taisho Pharmaceutical Co. (c) 1,000 20,053
Toei Co. (c) 7,000 21,249
Toho Bank (c) 16,000 57,530
Toho Titanium Co. (c) 10,000 69,907
Tokyo Broadcasting (c) 18,000 217,812
Tokyo Cathode Laboratory 2,000 17,978
Toso Co., Ltd. (c) 6,500 25,619
Toyoda Gosei 1,000 3,872
Wesco, Inc. (c) 1,600 3,872
Yamaichi Electronics Co., Ltd. (c) 5,000 95,768
Yamanouchi Pharmaceutical Co., Ltd. (c) 29,000 600,574
Yokogawa Electric (c) 20,000 107,869
------------
11,430,348
LUXEMBOURG-0.9%
Millicom International Cellular, SA (a) 24,500 1,145,375
MALAYSIA-0.1%
Lingkaran Trans Kota Holdings (b) 40,000 21,255
Metacorp Berhad 40,000 10,434
Pernas International Holdings Berhad 80,000 14,492
Sime Darby Berhad 50,000 29,467
Sriwani Holdings Berhad 39,000 5,134
Star Publications 10,000 9,227
UMW Holdings Berhad 30,000 13,115
------------
103,124
MEXICO-0.5%
Grupo Elektra 150,000 118,452
Grupo Industrial Durango, SA (ADS) (a) 11,000 71,500
Grupo Television, SA de CV (a) 12,000 423,000
Industrias Campos Hermanos Cl.B (a) 20,000 71,789
------------
684,741
NETHERLANDS-3.5%
Aegon NV 6,000 552,185
Akzo Nobel NV 5,600 285,325
ASR Verzekeringsgroep NV 6,100 576,289
Content Beheer NV (b) 9,000 314,081
Elsevier NV 17,100 271,097
Fortis Amev NV 5,900 445,621
Fugro NV 9,000 341,003
Hagemeyer NV 4,000 169,105
IHC Caland NV 5,000 259,242
ING Groep NV 6,000 453,773
KLM Royal Dutch Airlines NV 4,000 170,701
14
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Numico NV 4,800 $ 157,938
Nutreco Holding NV 6,500 241,419
Philips Electronics NV 1,200 97,216
Vedior 10,000 315,577
------------
4,650,572
NEW ZEALAND-0.1%
Restaurant Brands, Ltd. 93,700 39,328
Tourism Holdings, Ltd. 49,450 24,805
Warehouse Group, Ltd. 28,000 52,884
------------
117,017
NORWAY-1.6%
Choice Hotels Scandinavia ASA (a) 135,000 420,021
Frontline, Ltd. (a) 261,080 141,718
London & Overseas Freighters (a) 15,216 3,205
Navia ASA 36,000 145,369
ProSafe ASA 10,000 145,634
Schibsted ASA 12,000 203,357
Sparebanken NOR (c) 8,000 238,310
Tomra Systems ASA 26,500 863,078
------------
2,160,692
PANAMA-0.1%
Banco Latinoamericano de Exportaciones,
SA (ADR) 6,000 162,375
PERU-0.2%
Telefonica del Peru, SA (ADS) 14,000 297,500
PHILIPPINES-0.0%
Asian Terminals, Inc. 193,333 3,903
PORTUGAL-1.3%
BPI Soc Gestora 6,000 236,673
CIA de Seguros Imperio, SA 49,000 520,335
Electricidade de Portugal, SA 11,900 279,654
Portugal Telecom, SA 670 38,440
Telecel-Comunicacaoes Pesscasis, SA (b) 3,400 591,791
------------
1,666,893
RUSSIA-0.2%
Sun Brewing, Ltd. (ADR) (a) (b) 25,000 309,150
SINGAPORE-0.3%
City Developments 14,000 39,896
Keppel Telecomunications & Transportation, Ltd. 156,000 65,056
Lim Kah Ngam, Ltd. 30,000 6,429
Singapore Land, Ltd. 20,000 36,606
United Overseas Bank 8,000 22,983
Venture Manufacturing (Singapore), Ltd. 62,000 158,726
------------
329,696
SOUTH KOREA-0.2%
Samsung Electronics Co., Ltd. (GDR) (a) (b) 10,912 105,628
bonus shares (GDR) (a) (b) 1,089 22,216
SK Telecom Co., Ltd. (ADR) 19,500 151,125
------------
278,969
SPAIN-3.0%
Aldeasa, SA 10,000 382,477
Argentaria Corp. BC 22,000 535,005
BCO Central Hispan (a) 3,000 112,957
Catalana Occidente, SA (c) 9,800 304,791
Construcciones Y Aux de Ferr (c) 2,000 78,084
Corporacion Mapfre, SA 9,700 352,389
Gas Y Electricidad (c) 7,000 548,901
Iberdrola II, SA 15,000 237,229
Portland Valderriv 900 104,758
Repsol, SA (c) 5,000 271,969
Tabacalera, SA Series A 20,000 441,371
Telefonica, SA 7,000 341,384
TelePizza, SA (a) 20,000 181,975
------------
3,893,290
SWEDEN-1.9%
Asticus AB (a) 18,440 206,438
Astra AB Series A (c) 5,001 96,247
Autoliv, Inc. (ADS) (b) (c) 2,000 68,177
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Dahl International AB (b) 11,000 $ 185,411
ForeningsSparbanken AB 200 5,975
Frontec AB 10,000 104,404
Kalmar Industries AB (b) 6,750 95,095
Lindex AB 4,500 156,794
Mandamus Fastigheter AB (a) 10 60
Netcom Systems AB (b) 800 36,227
Nordbanken Holding AB 30,000 215,097
Scandic Hotels AB (b) 10,800 478,874
Skandia Forsakrings AB 10,000 171,071
Skandinaviska Enskilda Banken 27,300 472,176
Swedish Match AB (c) 73,847 235,013
------------
2,527,059
SWITZERLAND-1.6%
Barry Callebaut AB (a) 2,050 474,505
Ciba Specialty Chemicals AG 1,500 174,606
Gretag Imaging Group 4,500 480,040
Nestle, SA 150 311,573
Novartis AG 140 236,136
Roche Holdings AG, Ltd. 20 215,364
Selecta Gruppe 500 113,385
Tag Heuer International, SA (ADR) 11,600 101,500
------------
2,107,109
THAILAND-0.0%
CMIC Finance & Securities Co. (d) 110,000 0
Thai Engine Manufacturing 39,300 18,590
------------
18,590
UNITED KINGDOM-7.6%
Amvescap Plc 20,000 231,630
Bank of Scotland 20,000 218,889
Barclays Plc 10,000 285,863
BPB Plc 25,000 136,704
British Aerospace 26,000 198,340
British Airways Plc 4,000 40,576
Carpetright Plc 5,000 22,052
Compass Group Plc 80,000 825,898
Cordiant Communications Group Plc 120,000 254,826
De La Rue Plc 5,000 20,827
Diageo Plc 51,840 616,476
Dixons Group Plc 25,000 218,399
EMI Group Plc 15,000 117,857
Energis Plc (a) 40,000 614,196
Filtronic Comtek Plc 90,000 639,148
Harvey Nichols Plc (b) 10,000 31,527
House of Fraser Plc 30,000 74,243
Imperial Tobacco Group Plc 37,000 312,775
Johnson Matthey Plc 10,000 70,812
Johnston Press Plc 40,000 137,214
LucasVarity Plc 28,000 97,879
M.S. International Plc 130,000 46,718
Misys Plc 10,000 477,799
National Grid Group Plc 45,000 313,142
National Power Plc 36,000 304,615
Powerscreen International Plc 70,000 117,775
Reed International Plc 30,000 288,150
Rentokil Initial Plc 42,000 267,567
Senior Engineering Group Plc 80,000 229,997
Siebe Plc 7,000 126,237
Smith (WH) Group Plc 18,000 154,660
SmithKline Beecham Plc 10,000 116,142
Thistle Hotels Plc (b) 36,000 127,609
Thomson Travel Group Plc (a) 56,000 160,998
Tomkins Plc 40,000 206,475
Virgin Express Holdings Plc (ADS) (a) 32,000 394,000
Vodafone Group Plc 30,000 413,848
WPP Group Plc 56,000 373,222
16
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
Yule Catto & Co. Plc 20,944 $ 100,926
Zeneca Group Plc 16,000 606,617
------------
9,992,628
Total Foreign Investments
(cost $58,539,493) 64,548,147
Total Common Stocks & Other Investments
(cost $117,627,466) 124,462,478
SHORT-TERM INVESTMENTS-5.2%
COMMERCIAL PAPER-5.2%
Ford Motor Credit Corp.5.59%, 8/03/98 $ 400 399,876
Prudential Funding Corp.5.56%, 8/03/98 6,400 6,398,023
Total Short-Term Investments
(amortized cost $6,797,899) 6,797,899
TOTAL INVESTMENTS -99.8%
(cost $124,425,365) 131,260,377
Other assets less liabilities-0.2% 272,267
NET ASSETS-100% $131,532,644
(a) Non-income producing security.
(b) 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, 1998, these securities
amounted to $4,720,630 representing 3.6% of net assets.
(c) Securities, or portion thereof, with aggregate market value of $13,168,832
have been segregated to collateralize forward exchange currency contracts.
(d) Illiquid security, valued at fair market value (see Note A).
Glossary of Terms:
ADR - American Depositary Receipt
ADS - American Depositary Shares
GDR - Global Depositary Receipt
GDS - Global Depositary Shares
See notes to financial statements.
17
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $124,425,365) $131,260,377
Cash, at value (cost $477,838) 477,078
Receivable for investment securities sold 1,237,509
Receivable for capital stock sold 374,281
Unrealized appreciation of forward exchange currency
contracts 156,113
Dividends receivable 86,632
Foreign taxes receivable 35,049
Total assets 133,627,039
LIABILITIES
Payable for investment securities and foreign currency
contracts purchased 802,270
Unclaimed dividends 634,139
Payable for capital stock redeemed 176,324
Management fee payable 118,998
Distribution fee payable 66,443
Accrued expenses and other liabilities 296,221
Total liabilities 2,094,395
NET ASSETS $131,532,644
COMPOSITION OF NET ASSETS
Capital stock, at par $ 111,680
Additional paid-in capital 113,701,242
Accumulated net investment loss (353,121)
Accumulated net realized gain on investments and
foreign currency transactions 11,082,859
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 6,989,984
$131,532,644
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($82,842,736/6,825,187 shares of capital stock issued
and outstanding) $12.14
Sales charge--4.25% of public offering price .54
Maximum offering price $12.68
CLASS B SHARES
Net asset value and offering price per share
($38,826,722/3,466,690 shares of capital stock issued
and outstanding) $11.20
CLASS C SHARES
Net asset value and offering price per share
($9,471,457/843,816 shares of capital stock issued
and outstanding) $11.22
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($391,729/32,113 shares of capital stock issued
and outstanding) $12.20
See notes to financial statements.
18
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998 ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $155,744) $ 1,238,967
Interest 457,856 $ 1,696,823
EXPENSES
Management fee 1,347,278
Distribution fee - Class A 261,526
Distribution fee - Class B 379,215
Distribution fee - Class C 92,628
Transfer agency 441,207
Custodian 342,765
Administrative 135,500
Audit and legal 93,445
Printing 71,361
Registration 50,907
Directors' fees 30,000
Miscellaneous 6,185
Total expenses 3,252,017
Less: expense offset arrangement (see Note B) (36,217)
Net expenses 3,215,800
Net investment loss (1,518,977)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 14,184,263
Net realized gain on foreign currency
transactions 692,929
Net change in unrealized appreciation of:
Investments (9,895,727)
Foreign currency denominated assets and
liabilities (607,534)
Net gain on investments and foreign currency
transactions 4,373,931
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,854,954
See notes to financial statements.
19
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1998 1997
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (1,518,977) $ (1,513,106)
Net realized gain on investments
and foreign currency transactions 14,877,192 10,850,949
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency denominated
assets and liabilities (10,503,261) 15,515,927
Net increase in net assets
from operations 2,854,954 24,853,770
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (6,916,095) (9,231,726)
Class B (3,117,806) (2,729,321)
Class C (796,527) (783,298)
Advisor Class (28,565) (38,258)
CAPITAL STOCK TRANSACTIONS
Net increase 13,322,160 27,153,600
Total increase 5,318,121 39,224,767
NET ASSETS
Beginning of year 126,214,523 86,989,756
End of year $131,532,644 $126,214,523
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998 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, Class C and Advisor Class shares.
Class A shares are sold with a front-end sales charge of up to 4.25% for
purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or
more, Class A shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge of 1%. 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 Cshares 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 sales price or if no sale occurred, at
the mean of the closing bid and asked prices 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 prices. 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 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 into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities and foreign exchange
currency contracts, currency gains and losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of interest recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid. The Fund does not isolate the effect of
fluctuations in foreign currency exchange rates when determining the gain or
loss upon the sale of equity securities. Net currency gains and losses from
valuing foreign currency denominated assets and liabilities at year end
exchange rates are reflected as a component of net unrealized appreciation of
investments and foreign currency denominated assets and liabilities.
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
21
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
company taxable income and net realized gains, if any, to shareholders.
Therefore, no provisions for federal income or excise taxes are required.
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 trade date the
securities are purchased or sold. The Fund accretes discounts as adjustments to
interest income. Investment gains and losses are determined on the identified
cost basis.
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 net assets 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 dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to net investment loss and the tax treatment of foreign currency
gains, resulted in a net increase in accumulated net investment loss and a
corresponding decrease in accumulated net realized gains on investments and
foreign currency denominated assets and liabilities. This reclassification had
no effect on net assets.
NOTE B: MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Manager") a management fee at an annual rate of
1% of the average daily net assets of the Fund. Such fee is accrued daily and
paid monthly.
Pursuant to the management agreement, the Fund paid $135,500 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, 1998.
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 $309,875 for the year ended July 31, 1998.
In addition, for the year ended July 31, 1998, the Fund's expenses were reduced
by $36,217 under an expense offset arrangement with Alliance Fund Services.
Transfer agency fees reported in the statement of operations exclude these
credits.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned
subsidiary of the Manager, serves as the Distributor of the Fund's shares. The
Distributor received front-end sales charges of $8,313 from the sales of Class
A shares and $100,848 and $2,747 in contingent deferred sales charges imposed
upon redemptions by shareholders of Class B and Class C shares, respectively,
for the year ended July 31, 1998.
Brokerage commissions paid on investment transactions for the year ended July
31, 1998 amounted to $512,201, of which $90 was paid to Donaldson, Lufkin &
Jenrette Securities Corp., an affiliate of the Manager.
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 1% of the Fund's average daily net assets attributable to
Class A shares and 1% of the average daily net assets attributable to both
Class B and Class C shares. There is no distribution fee on the Advisor Class
shares. The fees are accrued daily and paid monthly. The Agreement provides
that the Distributor will use such payments in their entirety for
22
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
distribution assistance and promotional activities. The Distributor has
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $2,594,264 and $676,624 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 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
and U.S. government securities) aggregated $145,822,450 and $142,376,843,
respectively, for the year ended July 31, 1998. There were no purchases or
sales of U.S. government and government agency obligations for the year ended
July 31, 1998.
At July 31, 1998, the cost of investments for federal income tax purposes was
$125,296,288. Accordingly, gross unrealized appreciation of investments was
$24,524,186 and gross unrealized depreciation of investments was $18,560,097,
resulting in net unrealized appreciation of $5,964,089, excluding foreign
currency transactions.
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 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.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
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, 1998, the Fund had outstanding forward exchange currency contracts
to buy and sell foreign currencies against the U.S. dollar, as follows:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION/
(000) DATE VALUE (DEPRECIATION)
-------- ----------- ---------- --------------
FOREIGN CURRENCY
BUY CONTRACTS
Japanese Yen,
settling 8/10/98 550,000 $4,191,434 $3,808,469 $(382,965)
FOREIGN CURRENCY
SALE CONTRACTS
Japanese Yen,
settling 8/10/98 550,000 4,211,977 3,808,468 403,509
Japanese Yen,
settling 10/29/98 814,000 5,837,427 5,701,858 135,569
$ 156,113
23
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.01 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.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 1997 1998 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 1,542,623 993,161 $19,248,639 $11,718,840
Shares issued in
reinvestment of
distributions 491,450 632,521 5,622,159 6,982,712
Shares converted
from Class B 78,190 62,837 969,207 741,976
Shares redeemed (1,908,638) (975,383) (23,505,697) (11,573,247)
Net increase 203,625 713,136 $ 2,334,308 $ 7,870,281
CLASS B
Shares sold 1,841,143 2,096,355 $21,462,154 $23,394,278
Shares issued in
reinvestment of
distributions 257,260 179,345 2,725,087 1,859,822
Shares converted
to Class A (84,225) (65,905) (969,207) (741,976)
Shares redeemed (1,202,471) (846,665) (13,793,910) (9,385,983)
Net increase 811,707 1,363,130 $ 9,424,124 $15,126,141
CLASS C
Shares sold 620,351 781,046 $ 7,209,073 $ 8,633,201
Shares issued in
reinvestment of
distributions 69,804 37,793 741,394 392,675
Shares redeemed (569,558) (468,473) (6,465,829) (5,183,229)
Net increase 120,597 350,366 $ 1,484,638 $ 3,842,647
YEAR ENDED OCT. 2, 1996(A) YEAR ENDED OCT. 2, 1996(A)
JULY 31, TO JULY 31, TO
1998 JULY 31, 1997 1998 JULY 31, 1997
------------ ------------ -------------- --------------
ADVISOR CLASS
Shares sold 6,144 32,509 $ 77,324 $ 401,185
Shares issued in
reinvestment of
distributions 2,093 2,983 24,004 32,937
Shares redeemed (1,981) (9,635) (22,238) (119,591)
Net increase 6,256 25,857 $ 79,090 $ 314,531
(a) Commencement of distribution.
24
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
NOTE F: 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") to
provide 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 the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended July 31, 1998.
25
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
-------------------------------------------------- JULY 31,
1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.87 $11.61 $10.38 $11.08 $11.24
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.11)(b) (.15)(b) (.14)(b) (.09) (.15)(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .37 2.97 1.90 1.50 (.01)
Net increase (decrease) in net
asset value from operations .26 2.82 1.76 1.41 (.16)
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- (.12) -0-
Total distributions (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $12.14 $12.87 $11.61 $10.38 $11.08
TOTAL RETURN
Total investment return based on net
asset value (c) 2.49% 26.47% 17.46% 16.62% (1.42)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $82,843 $85,217 $68,623 $60,057 $61,372
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.16%(d) 2.41%(d) 2.51% 2.54%(e) 2.42%(f)
Net investment loss (.88)% (1.25)% (1.22)% (1.17)% (1.26)%(f)
Portfolio turnover rate 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 29.
26
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
-------------------------------------------------- JULY 31,
1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.03 $11.03 $9.95 $10.78 $11.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.18)(b) (.21)(b) (.20)(b) (.12) (.17)(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .34 2.77 1.81 1.40 (.05)
Net increase (decrease) in net asset
value from operations .16 2.56 1.61 1.28 (.22)
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- (.12) -0-
Total distributions (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $11.20 $12.03 $11.03 $9.95 $10.78
TOTAL RETURN
Total investment return based on net
asset value (c) 1.80% 25.42% 16.69% 15.77% (2.00)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $38,827 $31,946 $14,247 $5,164 $3,889
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.88%(d) 3.11%(d) 3.21% 3.20%(e) 3.15%(f)
Net investment loss (1.58)% (1.92)% (1.88)% (1.92)% (1.93)%(f)
Portfolio turnover rate 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 29.
27
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
OCTOBER 1,
1993
YEAR ENDED JULY 31, TO
-------------------------------------------------- JULY 31,
1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.05 $11.05 $9.96 $10.79 $11.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.19)(b) (.22)(b) (.20)(b) (.17) (.17)(b)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .35 2.78 1.82 1.45 (.04)
Net increase (decrease) in net
asset value from operations .16 2.56 1.62 1.28 (.21)
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- (.12) -0-
Total distributions (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $11.22 $12.05 $11.05 $9.96 $10.79
TOTAL RETURN
Total investment return based on net
asset value (c) 1.79% 25.37% 16.77% 15.75% (1.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $9,471 $8,718 $4,119 $1,407 $1,330
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.88%(d) 3.10%(d) 3.19% 3.25%(e) 3.13%(f)
Net investment loss (1.59)% (1.93)% (1.85)% (2.10)% (1.92)%(f)
Portfolio turnover rate 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 29.
28
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
---------------------------
OCTOBER 2,
1996(G)
YEAR ENDED TO
JULY 31, JULY 31,
1998 1997
------------- ------------
Net asset value, beginning of period $12.89 $12.56
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.07) (.08)
Net realized and unrealized gain on
investments and foreign
currency transactions .37 1.97
Net increase in net asset value
from operations .30 1.89
LESS: DISTRIBUTIONS
Distributions from net realized gains (.99) (1.56)
Net asset value, end of period $12.20 $12.89
TOTAL RETURN
Total investment return based on
net asset value (c) 2.82% 17.08%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $392 $333
Ratios to average net assets of:
Expenses, net of waivers/reimbursements (d) 1.87% 2.05%(f)
Net investment loss (.57)% (.84)%(f)
Portfolio turnover rate 113% 129%
(a) The Fund changed its fiscal year end from September 30 to July 31.
(b) Based on average shares outstanding.
(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 charges or contingent
deferred sales charges are 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) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended July 31, 1998 and the year ended July 31,
1997, the ratios of expenses net of waivers/reimbursements were 2.14% and 2.38%
for Class A shares, 2.86% and 3.08% for Class B shares, 2.85% and 3.08% for
Class C shares and 1.84% and 2.04% for Advisor Class shares, respectively.
(e) 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.
(f) Annualized.
(g) Commencement of distribution.
29
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, 1998, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Global Small Cap Fund, Inc. at July 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
New York, New York
September 9, 1998
TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $987,204 and $1,480,806 of the capital gain distributions
paid by the Fund during the fiscal year July 31, 1998 are subject to maximum
tax rates of 28% and 20% respectively.
In addition, the Fund intends to make an election under Internal Revenue Code
Section 853 to pass through foreign taxes paid by the Fund to its shareholders.
The total amount of foreign taxes that may be passed through to the
shareholders for the fiscal year ended July 31, 1998 is $155,744. The foreign
source income for information reporting purposes is $155,744.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 1999.
30
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (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
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
RANDALL E. HAASE, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
RONALD L. SIMCOE, 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.
31
ALLIANCE GLOBAL SMALL CAP 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.
GSCAR
