ALLIANCE GLOBAL SMALL CAP FUND
SEMI-ANNUAL REPORT
JANUARY 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
March 26, 1999
Dear Shareholder:
We are pleased to report the performance of the Alliance Global Small Cap Fund
(the Fund) for the semi-annual reporting period ended January 31, 1999. In
addition, the following table provides performance data for the Morgan Stanley
Capital International (MSCI) World Index, and the Lipper Global Small Company
(GSC) Funds Average for the six- and 12-month periods ended January 31, 1999.
INVESTMENT RESULTS
During the six- and 12-month periods ended January 31, 1999, your Fund
outperformed its peer group, as represented by the Lipper GSC Funds Average,
primarily due to superior stock selection, particularly in Japan. This relative
outperformance was despite our developing market exposure, which negatively
impacted performance. The Fund's relative underperformance versus the MSCI
World Index primarily resulted from the general underperformance of small-cap
stocks relative to large-cap stocks, the U.S. portion of the portfolio's
allocation toward growth stocks with cyclical exposure, and exposure to
developing markets (in Asia, Latin America and Eastern Europe).
INVESTMENT RESULTS*
Periods Ended January 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE GLOBAL SMALL CAP FUND
Class A -2.64% 2.25%
Class B -3.06% 1.37%
Class C -2.96% 1.47%
MSCI WORLD INDEX 9.31% 24.07%
LIPPER GLOBAL SMALL COMPANY (GSC)
FUNDS AVERAGE -4.79% 1.62%
THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE NET
ASSET VALUE AS OF JANUARY 31, 1999. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. 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 42 AND 38 FUNDS FOR THE
SIX- AND 12-MONTH PERIODS ENDED JANUARY 31, 1999, 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 REFLECTS 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 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, the consumer stocks came back in the second half
of 1998. These include Tommy Hilfiger Corp., Tiffany & Co., and The Men's
Wearhouse Inc.
In addition, the jewelry segment offers excellent opportunities as well. We
believe the prospects for both Zale Corporation and Movado Group appear quite
promising. Within the leisure category, we are looking for companies that have
market share leadership, strong franchises and dominant positions within their
respective industry. This would include Bally Total Fitness Corp., the largest
health club provider in the U.S. with over 4 million members, and Premier
Parks, Inc., the largest amusement park operator after the Walt Disney
Companies.
Furthermore, within the turnaround category, we believe that the worst is
finally behind us for the sports retailers and both Venator Group Inc., and The
Sports Authority Inc. should benefit. The aggressive expansion in square
footage that the industry saw over the last five years has essentially come to
a halt, and as the industry becomes rational, Nike sees its business turning,
and with the Olympics a year away, both Venator and The Sports Authority should
see a turn in their business.
1
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
Within health care, we continue to hold positions in the biotechnology sector
and the service sector. Specifically, we continue to hold positions in both
Geltex Pharmaceuticals and Medimmune Inc., two later-stage biotechnology
companies. In addition, we hold positions in Veterinary Centers of America, the
leading operator of veterinary centers in the U.S., and Synetic Inc., an
intranet health care provider.
Within the real estate sector, we believe that the stocks of real estate
investment trusts (REITs) have come under a lot of pressure as investors focus
more on momentum growth and less on yield. There are several well-run companies
yielding over 10% with internal growth of 10%-12%. Therefore, we have about
3.5% of the portfolio invested in REITs and currently hold positions in Chelsea
GCA Realty Inc., Taubman Centers Inc., and Glenborough Realty Trust Co.
On the cyclical side, we continue to favor the airline industry. We have been
bullish on this group since 1995. 1999 will mark the fifth 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 four 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.
In addition, we also like the rental car industry and have positions in Budget
Group and Dollar Thrifty Automotive Group. This industry has gone through a
major change in ownership from the auto manufacturers to financial
entrepreneurs. We are now seeing real pricing power, better yield management,
greater inventory efficiencies, and as a result, a higher level of
profitability. We believe these companies have strong fundamentals that are not
being recognized in the marketplace.
Within the technology sector, we currently hold positions in CheckFree Holdings
Corp., an online banking company, and DBT Online, Inc., a database management
company. We are currently underweighting the technology sector relative to the
small-cap benchmark for the sector.
INTERNATIONAL INVESTMENTS
Overall, the international portion of the Fund continues to focus its
investments in companies with strong relative earnings growth outlook, and in
industries which are less sensitive to the economic cycle.
Within the European portion of your portfolio, we continue to focus on
growth-orientated stocks within the cellular telecommunications and technology
sectors. We also continue to maintain positions in stable growth stocks such as
tobacco and business services. Recently we have added to portfolio weightings
in airline stocks as we believe valuations now look compelling following strong
underperformance.
The Japanese portion of your portfolio continues to invest in growth sectors,
with an emphasis on technology stocks and pharmaceuticals. Recent additions to
the portfolio include consumer service stocks that are in the process of
restructuring.
We continue to maintain our investments within the developing markets.
Telecommunication plays are favored within the Europe/Africa/Middle East
region. In Latin America, we continue to emphasize consumer-related plays in
Mexico and utility stocks in Brazil. Our Asian stock picks remain focused on
companies we believe are best placed to benefit from the economic restructuring
process.
CURRENT REVIEW AND OUTLOOK
European markets performed strongly in the period under review as investors
became increasingly enthusiastic about the prospects for European Monetary
Union (EMU). The launch of EMU was successfully completed at the start of the
year and we envisage no near-term problems for the new currency. Equity markets
were further supported by coordinated interest rate cuts across the continent
and the continued shift of personal savings towards the stock markets of the
region.
2
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
European smaller companies continued to underperform large-capitalization
stocks as investors focused attention on merger and acquisition activity and
corporate restructuring stories. We believe the underperformance of
smaller-capitalization stocks has further increased the attractiveness of this
asset class and see excellent value amongst European smaller companies.
Japanese equity returns were weak during the period as the country's economy
remained in the doldrums and the government failed to fully implement required
banking system reform.
During the last six months, emerging market stocks have continued to
underperform developed market stocks. Emerging market uncertainty persists,
although there have been signs of recovery notably in the Asian region.
Holdings within this asset class have had a negative impact on the Fund's
overall performance during the period. Valuations in emerging markets are
highly attractive and we expect to increase investment exposure as underlying
fundamentals improve.
Recent developments in the smaller companies' initial public offering (IPO)
market gives us further confidence in the prospects for international smaller
companies. The European IPO market has been particularly active and a large
number of successful smaller company transactions have taken place. We continue
to participate in IPO placements focusing on companies with strong fundamentals
and attractive valuations relative to industry and global peers. We expect the
European IPO market will remain buoyant and that the Japanese IPO market will
show signs of improvement this year.
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 JANUARY 31, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 2.25% -2.07%
Three Years 9.96% 8.38%
Five Years 9.51% 8.57%
10 Years 7.21% 6.74%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 1.37% -2.21%
Three Years 9.14% 8.63%
Five Years 8.71% 8.71%
Since Inception* (a) 9.18% 9.18%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 1.47% 0.58%
Three Years 9.16% 9.16%
Five Years 8.76% 8.76%
Since Inception* 11.10% 11.10%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(DECEMBER 31, 1998)
CLASS A CLASS B CLASS C
-------- ------------ ----------
One Year -0.86% -0.86% 1.86%
Three Years 8.55% 8.83% 9.36%
Five Years 9.19% 9.37% 9.37%
10 Years 7.59% 9.07%**(a) 10.98%**
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.
** Performance since inception.
(a) Assumes conversion of Class B shares into Class A shares after 8 years.
4
TEN LARGEST HOLDINGS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
% OF
COMPANY COUNTRY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Alaska Air Group, Inc. United States $ 2,080,487 1.8%
Premier Parks, Inc. United States 1,948,781 1.7
Mohawk Industries, Inc. United States 1,851,850 1.6
Bethlehem Steel Corp. United States 1,731,900 1.5
Legg Mason, Inc. United States 1,642,200 1.5
Chelsea GCA Realty, Inc. United States 1,536,312 1.4
Tiffany & Co. United States 1,531,163 1.3
Union Electrica Fenosa, SA Spain 1,518,516 1.3
America West Airlines, Inc. Cl.B United States 1,423,300 1.3
Autoliv, Inc. (ADS) Sweden 1,403,560 1.2
$ 16,668,069 14.6%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
_______________________________________________________________________________
SHARES*
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES COUNTRY BOUGHT 1/31/99
- -------------------------------------------------------------------------------
Autoliv, Inc. (ADS) Sweden 31,900 33,900
British Airways Plc United Kingdom 213,400 217,400
Dixons Group Plc United Kingdom 56,382 81,382
Essilor International France 2,330 2,330
Fortum Corp. Finland 179,631 179,631
Fresenius AG pfd. Germany 5,190 5,190
Legg Mason, Inc. United States 55,200 55,200
Merita OY Cl.A Finland 193,900 193,900
Union Electrica Fenosa, SA Spain 88,000 88,000
United News & Media Plc United Kingdom 150,700 150,700
HOLDINGS
SALES COUNTRY SOLD 1/31/99
- -------------------------------------------------------------------------------
Abercrombie & Fitch Co. Cl.A United States 23,100 -0-
Centocor, Inc. United States 21,400 -0-
Compass Group Plc United Kingdom 80,000 -0-
Comverse Technology, Inc. United States 18,100 -0-
Fyffes Plc Ireland 280,000 -0-
Insight Enterprises, Inc. United States 27,000 -0-
Irish Life Plc Ireland 90,000 -0-
MedImmune, Inc. United States 11,200 8,900
Nokia AB Oy Corp. Series A Finland 20,000 -0-
Physio-Control International Corp. United States 35,300 -0-
* Adjusted for a stock split.
5
TEN LARGEST COUNTRY HOLDINGS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
PERCENT OF
COUNTRY VALUE NET ASSETS
- -------------------------------------------------------------------------------
United States $ 48,014,242 42.1%
United Kingdom 11,957,151 10.5
Japan 10,604,643 9.3
Spain 5,731,498 5.0
France 3,077,773 2.7
Italy 3,095,007 2.7
Finland 2,194,858 1.9
Sweden 1,892,457 1.7
Australia 1,743,029 1.5
Austria 1,675,767 1.5
$ 89,986,425 78.9%
INDUSTRY DIVERSIFICATION
JANUARY 31, 1999 (UNAUDITED)
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industry $ 3,186,892 2.8%
Capital Goods 2,827,808 2.5
Consumer Manufacturing 7,764,305 6.8
Consumer Services 32,033,422 28.1
Consumer Staples 5,994,533 5.2
Energy 3,158,185 2.8
Finance 12,684,715 11.1
Healthcare 6,430,423 5.7
Multi Industry 2,741,446 2.4
Technology 12,532,136 11.0
Transportation 5,467,538 4.8
Utilities 7,549,449 6.6
Total Investments* 102,370,852 89.8
Cash and receivables, net of liabilities 11,576,467 10.2
Net Assets $ 113,947,319 100.0%
* Excludes short-term obligations.
6
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-89.8%
UNITED STATES INVESTMENTS-42.1%
CONSUMER SERVICES-18.4%
ADVERTISING-0.1%
Merkert American Corp. (a) 11,400 $ 163,875
AIRLINES-3.4%
Alaska Air Group, Inc. (a) 41,300 2,080,487
America West Airlines, Inc. Cl.B (a) 66,200 1,423,300
Mesa Air Group, Inc. (a) 44,900 412,519
------------
3,916,306
APPAREL-2.4%
Mens Wearhouse, Inc. (a) 20,000 592,500
Stage Stores, Inc. (a) 62,300 498,400
Tommy Hilfiger Corp. (a) 15,600 1,099,800
Zale Corp. (a) 16,400 538,125
------------
2,728,825
BROADCASTING & CABLE-1.1%
Entercom Communications Corp. (a) 3,600 111,600
Sinclair Broadcast Group, Inc. Cl.A (a) 31,900 602,113
Young Broadcasting Corp. Cl.A (a) 12,100 547,525
------------
1,261,238
BUSINESS SERVICES-0.9%
TeleSpectrum Worldwide, Inc. (a) 86,900 993,919
ENTERTAINMENT & LEISURE-3.4%
Bally Total Fitness Holding Corp. (a) 34,900 796,156
Premier Parks, Inc. (a) 61,500 1,948,781
Sunterra Corp. (a) 64,300 880,106
Trans World Entertainment Corp. (a) 17,950 264,763
Vistana, Inc. (a) 1,200 14,700
------------
3,904,506
RESTAURANTS & LODGING-0.3%
Florida Panthers Holdings, Inc. Cl.A (a) 30,600 325,125
RETAIL - FOOD & DRUGS-0.3%
Whole Foods Market, Inc. (a) 11,700 375,131
RETAIL - GENERAL MERCHANDISE-4.8%
BJ'S Wholesale Club, Inc. (a) 4,100 182,450
Callaway Golf Co. 14,300 157,300
Circuit City Stores, Inc. -
CarMax Group (a) 91,400 445,575
Furniture Brands International, Inc. (a) 17,600 413,600
Group 1 Automotive, Inc. (a) 45,600 1,299,600
Movado Group, Inc. 21,200 539,275
Sports Authority, Inc. (a) 70,900 288,031
Tiffany & Co. 26,600 1,531,163
Tweeter Home Entertainment Group, Inc. (a) 5,200 159,250
Venator Group, Inc. (a) 83,200 426,400
------------
5,442,644
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
MISCELLANEOUS-1.7%
Carriage Services, Inc. C1.A (a) 21,800 $ 476,875
Cash America International, Inc. 15,100 237,825
Central Garden & Pet Co. (a) 30,200 485,087
Century Business Services, Inc. (a) 49,200 688,800
------------
1,888,587
------------
21,000,156
FINANCE-5.2%
BROKERAGE & MONEY MANAGEMENT-1.7%
Legg Mason, Inc. 55,200 1,642,200
Reinsurance Group of America, Inc. 6,200 353,400
------------
1,995,600
REAL ESTATE-3.5%
Chelsea GCA Realty, Inc. 47,000 1,536,312
Glenborough Realty Trust, Inc. 29,300 514,581
Golf Trust of America, Inc. 10,900 277,269
MeriStar Hospitality Corp. 32,900 633,325
Taubman Centers, Inc. 76,900 999,700
------------
3,961,187
------------
5,956,787
TECHNOLOGY-4.7%
COMMUNICATIONS EQUIPMENT-0.3%
GST Telecommunications, Inc. (a) 30,600 258,188
Tut Systems, Inc. (a) 300 17,145
------------
275,333
COMPUTER HARDWARE-1.0%
Apex PC Solutions, Inc. (a) 31,600 1,090,200
Radius, Inc. (a) 15 52
------------
1,090,252
COMPUTER SERVICES-0.9%
DBT Online, Inc. (a) 32,500 777,969
IMRglobal Corp. (a) 11,200 284,200
------------
1,062,169
COMPUTER SOFTWARE-2.0%
CheckFree Holdings Corp. (a) 29,600 1,198,800
Engineering Animation, Inc. (a) 7,600 384,750
Harbinger Corp. (a) 47,365 260,507
Transaction Systems Architects, Inc. (a) 10,000 476,250
------------
2,320,307
MISCELLANEOUS-0.5%
Excalibur Technologies Corp. (a) 21,000 232,312
Harman International Industries, Inc. 1,000 42,000
Orbital Sciences Corp. (a) 8,000 321,000
------------
595,312
------------
5,343,373
TRANSPORTATION-4.2%
AUTO & RELATED-1.8%
Budget Group, Inc. Cl.A (a) 81,900 1,172,194
Dollar Thrifty Automotive Group, Inc. (a) 66,100 842,775
------------
2,014,969
SHIPPING-0.8%
OMI Corp. (a) 153,300 383,250
Teekay Shipping Corp. 31,100 513,150
------------
896,400
8
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
TRUCKING-1.0%
Consolidated Freightways Corp. (a) 75,200 $ 1,203,200
MISCELLANEOUS-0.6%
Carey International, Inc. (a) 34,300 737,450
------------
4,852,019
CONSUMER MANUFACTURING-2.5%
AUTO & RELATED-0.8%
Monaco Coach Corp. (a) 32,725 949,025
TEXTILE PRODUCTS-1.6%
Mohawk Industries, Inc. (a) 48,100 1,851,850
------------
2,800,875
HEALTH CARE-3.2%
BIOTECHNOLOGY-1.4%
Geltex Pharmaceuticals, Inc. (a) 44,400 1,112,775
MedImmune, Inc. (a) 8,900 440,550
------------
1,553,325
DRUGS-0.3%
Aradigm Corp. (a) 29,100 351,019
MEDICAL PRODUCTS-0.6%
Novoste Corp. (a) 14,700 411,600
St. Jude Medical, Inc. (a) 11,100 289,294
------------
700,894
MEDICAL SERVICES-0.9%
Synetic, Inc. (a) 12,500 642,187
Veterinary Centers of America, Inc. (a) 24,600 448,950
------------
1,091,137
------------
3,696,375
BASIC INDUSTRIES-1.8%
BUILDING & RELATED-0.3%
Associated Materials, Inc. (a) 25,200 289,800
MINING & METALS-1.5%
Bethlehem Steel Corp. (a) 200,800 1,731,900
------------
2,021,700
ENERGY-1.1%
OIL SERVICE-0.2%
Parker Drilling Co. (a) 55,700 174,063
PIPELINES-0.9%
Southern Union Co. 48,002 1,062,044
------------
1,236,107
CAPITAL GOODS-1.0%
MACHINERY-1.0%
United Rentals, Inc. (a) 31,400 1,106,850
Total United States Investments
(cost $47,010,173) 48,014,242
FOREIGN INVESTMENTS-47.7%
AUSTRALIA-1.5%
Australian Gas Light Co.,Ltd. 20,000 140,434
Brambles Industries, Ltd. 20,000 544,771
Broken Hill Proprietary Co., Ltd. 10,000 73,561
ERG, Ltd. 320,000 207,565
GIO Australia Holdings 40,000 118,141
Hoyts Cinemas, Ltd. (b) 105,000 94,359
Oil Search, Ltd. 111,100 121,040
Orogen Minerals, Ltd. (GDS) (b) 10,000 98,200
Powertel, Ltd. 240,000 179,856
Suncorp-Metway, Ltd. (a) 15,450 77,351
Village Roadshow, Ltd. pfd. 30,000 41,186
WMC, Ltd. 15,121 46,565
------------
1,743,029
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
AUSTRIA-1.5%
Austria Tabak AB 6,400 $ 494,059
Bank Austria AG 4,200 186,199
Benckiser-Wasser-Technik AG 600 126,179
E-Pub (Holdings), Ltd. (a) 900 460,384
KTM Motorradholding AG 3,000 175,969
Mayr-Melnhof Karton AG 5,000 232,977
------------
1,675,767
BELGIUM-0.2%
Mobistar NV, SA (a) 2,400 175,969
BRAZIL-0.6%
Companhia Riograndense de Telecom pfd. 83 57
Telesp Participacoes, SA (ADR) 36,500 641,031
------------
641,088
CANADA-0.6%
FirstService Corp. (a) 27,700 367,458
Fracmaster Ltd. (b) 57,100 132,570
Kingsway Financial Services, Inc. (a) 20,000 152,571
------------
652,599
CHILE-0.1%
Embotelladora Andina, SA (ADR) 5,000 70,000
CHINA-0.3%
Guangdong Kelon Electrical
Holdings Co., Ltd. 153,000 110,572
VTech Holdings, Ltd. 50,000 186,481
------------
297,053
FINLAND-1.9%
Fortum Corp. (a) 179,631 949,509
Merita OY Cl.A 193,900 1,245,349
------------
2,194,858
FRANCE-2.7%
CNP Assurances (a) 27,057 771,694
Essilor International 2,330 974,695
Louis Dreyfus Citrus (b) 361 8,207
S T Dupont (a) (b) 3,000 28,987
SEITA 22,770 1,294,190
------------
3,077,773
GERMANY-1.2%
BUS Berzelius Umwelt Service AG 7,800 115,266
Fresenius AG pfd. 5,190 957,527
ProSieben Media AG 6,400 316,471
------------
1,389,264
GREECE-0.7%
Hellenic Telecommunication
Organization, SA 6,122 184,483
Petzetakis, SA 100,000 655,482
------------
839,965
HONG KONG-0.1%
Cheung Kong Holdings, Ltd. 14,000 97,112
HSBC Holdings Plc 2,800 69,740
------------
166,852
HUNGARY-0.6%
Magyar Tavkozlesirt (ADS) 20,500 636,781
INDIA-0.0%
Shriram Industrial Enterprises, Ltd.
(GDR) (a) 18,000 18,000
INDONESIA-0.1%
Great River International 427,000 9,623
Gulf Indonesia Resources, Ltd. 11,400 102,600
------------
112,223
10
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
IRELAND-1.0%
Avonmore Waterford Group Plc 40,000 $ 94,123
Crean (James) Plc 55,000 48,454
Green Property Plc 44,000 251,585
Irish Continental Group Plc 21,000 274,525
Kingspan Group Plc 40,000 113,675
Saville Systems Plc (ADR) (a) 8,600 188,125
Unidare Plc 92,000 172,559
------------
1,143,046
ITALY-2.7%
Banca Naz del Lavoro (a) 302,000 916,607
Industrie Natuzzi SpA (ADR) 42,400 901,000
Seat-Pagine Gialle SpA (a) 1,091,000 1,277,400
------------
3,095,007
JAPAN-9.3%
Aiful Corp 8,100 537,649
Aiwa Co., Ltd. 4,100 94,013
Akita Bank 6,000 23,844
Asahi Diamond Industrial 2,852 12,981
Bank of Tokyo Mitsubishi, Ltd. 19,250 229,331
Canon, Inc. 3,000 65,040
Credit Saison Co. 9,915 212,394
Dai-Ichi Kangyo Bank 16,000 97,789
Daibiru Corp. 4,000 26,206
Daito Trust Construction Co., Ltd. 1,400 14,832
Daiwa Securities Co., Ltd. 40,000 147,580
Data Communication System 4,500 89,608
DDI Corp. 24 92,479
Disco Corp. 1,300 43,705
Familymart Co. 4,200 205,646
Fuji Photo Film Co. 12,000 443,774
Fuji Software ABC, Inc. 3,480 179,992
Fujikura 28,000 168,958
Fujimi, Inc. 5,240 212,301
Home Wide Corp. 4,000 12,241
Honda Motor Co. 8,000 297,918
Ishihara Sangyo 3,000 4,733
Japan Airport Terminal 19,200 103,278
Japan Industrial Land Development 200 379
Japan Tobacco, Inc. 28 272,747
Kaneshita Construction 5,000 24,223
Kao Corp. 18,000 364,639
Keyence Corp. 2,600 309,969
Kikuchi Co. 3,000 10,991
King Co. 10,000 11,982
Koa Fire & Marine 3,000 9,724
Meitec Corp. 7,000 171,975
Mercian Corp. 14,000 60,704
Micronics Japan Co. 5,500 96,246
Minebea Co. 10,000 111,116
Misumi Corp. 12,300 233,266
Mitsubishi Trust and Banking 5,000 40,602
Mitsui Home Co. 3,000 14,999
Mori Seiki Co., Ltd. 7,000 71,747
Murata Manufacturing Co., Ltd. 1,000 46,464
Nanno Construction 7,000 8,237
Nichiei Co., Ltd. 4,600 320,797
Nichiha Corp. 8,800 90,879
Nikon Corp. 13,000 167,536
Nintendo Corp., Ltd. 4,500 418,947
Nippon Broadcasting System 4,000 134,132
Nippon Paper Industries Co. 7,000 28,964
Nippon System Development 10,000 367,226
Nippon Telegraph & Telephone Corp. 62 501,323
Nippon Television Network Corp. 260 71,609
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Nireco Corp. 3,000 $ 9,931
Nitta Corp. 8,000 46,136
Nitto Kohki Co. 4,800 36,454
Noritsu Koki Co. 3,700 76,867
Oie Sangyo Co., Ltd. 4,400 19,534
Paris Miki, Inc. 6,280 142,647
PS Corp. 5,000 17,241
Rohm Co., Ltd. 3,000 283,177
Sankyo Co., Ltd. 11,000 230,421
Santen Pharmaceutical Co. 13,420 257,977
Sanyo Engineering and Construction Co. 2,000 6,914
Sanyo Pax Co. 9,500 54,786
Sanyo Shinpan Finance Co., Ltd. 1,600 56,411
Sato Corp. 13,400 213,120
Seven-Eleven Japan 2,400 185,785
Shimano, Inc. 10,000 223,697
Shizuoka Bank 10,000 124,133
SMC Corp. 2,600 192,974
Sodick Co. 27,000 55,860
Sony Corp. 4,000 291,367
Sumitomo Metal Industries 44,000 49,308
Sumitomo Realty & Development Co., Ltd. 14,000 46,826
TDK Corp. 1,000 82,410
Toho Bank 16,000 65,101
Toho Titanium Co. 10,000 48,963
Tokyo Broadcasting 17,000 189,044
Toso Co., Ltd. 6,500 19,891
Yamaichi Electronics Co., Ltd. 4,000 74,135
Yamanouchi Pharmaceutical Co., Ltd. 6,000 183,613
Yokogawa Electric 8,000 42,205
------------
10,604,643
LUXEMBOURG-0.7%
Millicom International Cellular, SA (a) 22,300 780,500
MALAYSIA-0.1%
Lingkaran Trans Kota Holdings (c) 40,000 25,930
Metacorp Berhad (c) 30,000 15,691
Sime Darby Berhad (c) 43,000 33,735
Star Publications (c) 10,000 10,313
UMW Holdings Bhd (c) 16,000 11,786
------------
97,455
MEXICO-0.6%
Cifra SA, de CV (ADR) (a) 28,400 317,281
Fomento Economico Mexicano, SA de CV (ADR) 15,700 347,363
------------
664,644
NETHERLANDS-1.1%
ASR Verzekeringsgroep NV 6,100 517,289
Equant NV (a) 10,000 795,725
------------
1,313,014
NEW ZEALAND-0.4%
Fisher & Paykel Industries, Ltd. 90,000 338,631
Restaurant Brands, Ltd. 93,700 71,723
Tourism Holdings, Ltd. (a) 40,000 37,733
Warehouse Group, Ltd. 15,800 59,193
------------
507,280
NORWAY-0.3%
Choice Hotels International, Inc. 135,000 208,236
London & Overseas Freighters (a) 15,216 22,420
Navia ASA 36,000 84,970
------------
315,626
12
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
PORTUGAL-0.7%
CIA de Seguros Imperio, SA 19,000 $ 152,484
Telecel-Comunicacaoes Pessoais, SA (b) 3,200 641,672
------------
794,156
RUSSIA-0.0%
Sun Brewing, Ltd. (ADR) (a) (b) 25,000 46,889
SINGAPORE-0.5%
City Developments 12,000 48,936
Keppel Telecomunications &
Transportation, Ltd. 200,000 159,574
Natsteel Electronics, Ltd. 50,000 149,232
Singapore Press 10,000 113,475
United Overseas Bank 8,000 47,754
Venture Manufacturing (Singapore), Ltd. 14,000 60,816
------------
579,787
SOUTH KOREA-0.3%
Samsung Electronics Co., Ltd.
(GDR) (a) (b) 10,912 165,099
bonus shares (GDR) (a) (b) 1,089 45,139
rights expiring 2/03/99 656 -0-
SK Telecom Co., Ltd. (ADR) 15,450 157,397
------------
367,635
SPAIN-5.0%
Aldeasa, SA 10,000 394,793
Catalana Occidente, SA 6,536 162,935
Construcciones Y Aux de Ferr 1,544 46,073
Gas Y Electricidad 9,400 956,348
Portland Valderrivas, SA 7,700 303,728
Repsol, SA 10,000 542,798
Tabacalera, SA Series A 53,000 1,227,247
Telefonica, SA (a) 5,000 -0-
TelePizza, SA (a) 60,000 579,060
Union Electrica Fenosa, SA 88,000 1,518,516
------------
5,731,498
SWEDEN-1.7%
Astra AB Series A 6,001 129,815
Autoliv, Inc. (ADS) (b) 33,900 1,403,560
Dahl International AB (b) 11,000 111,563
Frontec AB 40,000 190,004
Netcom Systems AB (b) 1,400 57,515
------------
1,892,457
SWITZERLAND-0.7%
Barry Callebaut AB 2,100 430,297
Gretag Imaging Group 4,500 333,852
------------
764,149
THAILAND-0.0%
CMIC Finance & Security Public Co. (a) (c) 110,000 -0-
Thai Engine Manufacturing 39,300 10,452
------------
10,452
UNITED KINGDOM-10.5%
BPB Plc 125,000 429,939
British Airways Plc 217,400 1,266,524
Cordiant Communications Group Plc 408,700 961,815
Dixons Group Plc 81,382 1,360,733
Energis Plc 36,400 976,427
Filtronic Comtek Plc 83,800 1,092,934
Misys Plc 54,000 564,755
Stagecoach Holdings Plc 225,900 961,939
Thomson Travel Group Plc 372,500 913,405
Tomkins Plc 281,600 989,699
United News & Media Plc 150,700 1,373,959
WPP Group Plc 141,300 1,065,022
------------
11,957,151
Total Foreign Investments
(cost $55,212,442) 54,356,610
Total Common Stocks & Other Investments
(cost $102,222,615) 102,370,852
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-3.3%
COMMERCIAL PAPER-1.5%
General Electric Capital Corp.
4.82%, 2/02/99 $ 700 $ 699,906
Prudential Funding Corp.
4.65%, 2/01/99 1,000 1,000,000
------------
1,699,906
TIME DEPOSIT-1.8%
State Street Cayman Islands
4.50%, 2/01/99 1,995 1,995,000
Total Short-Term Investments
(amortized cost $3,694,906) 3,694,906
TOTAL INVESTMENTS -93.1%
(cost $105,917,521) 106,065,758
Other assets less liabilities-6.9% 7,881,561
NET ASSETS-100% $ 113,947,319
(a) Non-income producing security.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At January 31, 1999,
these securities amounted to $2,833,760 representing 2.5% of net assets.
(c) Illiquid securities, 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.
14
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999 (UNAUDITED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $105,917,521) $ 106,065,758
Cash, at value (cost $15,114) 11,359
Receivable for investment securities sold 30,606,892
Dividends and interest receivable 75,847
Foreign taxes receivable 31,950
Receivable for capital stock sold 10,333
Total assets 136,802,139
LIABILITIES
Payable for investment securities purchased 21,638,348
Unclaimed dividends 634,101
Payable for capital stock redeemed 181,346
Management fee payable 97,342
Distribution fee payable 53,243
Accrued expenses and other liabilities 250,440
Total liabilities 22,854,820
NET ASSETS $ 113,947,319
COMPOSITION OF NET ASSETS
Capital stock, at par $ 111,670
Additional paid-in capital 113,110,981
Accumulated net investment loss (1,206,706)
Accumulated net realized gain on investments and foreign
currency transactions 1,754,935
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 176,439
$ 113,947,319
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($73,797,448/6,989,918 shares of capital stock
issued and outstanding) $10.56
Sales charge--4.25% of public offering price .47
Maximum offering price $11.03
CLASS B SHARES
Net asset value and offering price per share
($32,469,209/3,380,700 shares of capital stock
issued and outstanding) $ 9.60
CLASS C SHARES
Net asset value and offering price per share
($7,497,852/778,970 shares of capital stock
issued and outstanding) $ 9.63
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($182,810/17,194 shares of capital stock
issued and outstanding) $10.63
See notes to financial statements.
15
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $24,279) $ 525,442
Interest 133,767 $ 659,209
EXPENSES
Management fee 557,248
Distribution fee - Class A 106,719
Distribution fee - Class B 161,574
Distribution fee - Class C 38,705
Transfer agency 266,667
Custodian 183,963
Audit and legal 69,083
Administrative 68,000
Printing 30,291
Registration 28,893
Directors' fees 15,000
Miscellaneous 2,660
Total expenses 1,528,803
Less: expense offset arrangement (see Note B) (16,009)
Net expenses 1,512,794
Net investment loss (853,585)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 3,797,486
Net realized loss on foreign currency
transactions (1,153,557)
Net change in unrealized appreciation of:
Investments (6,686,775)
Foreign currency denominated assets and
liabilities (126,770)
Net loss on investments and foreign
currency transactions (4,169,616)
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (5,023,201)
See notes to financial statements.
16
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (853,585) $ (1,518,977)
Net realized gain on investments and
foreign currency transactions 2,643,929 14,877,192
Net change in unrealized appreciation of
investments and foreign currency
denominated assets and liabilities (6,813,545) (10,503,261)
Net increase (decrease) in net assets from
operations (5,023,201) 2,854,954
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (7,496,012) (6,916,095)
Class B (3,620,259) (3,117,806)
Class C (837,402) (796,527)
Advisor Class (18,180) (28,565)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (590,271) 13,322,160
Total increase (decrease) (17,585,325) 5,318,121
NET ASSETS
Beginning of year 131,532,644 126,214,523
End of period $ 113,947,319 $ 131,532,644
See notes to financial statements.
17
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 (UNAUDITED) 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 may be subject to a
contingent deferred sales charge of 1%. Class B shares are currently sold with
a contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class 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 period 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
18
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.
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 $68,000 to the Manager
representing the cost of certain legal and accounting services provided to the
Fund by the Manager for the six months ended January 31, 1999.
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 $266,667 for the six months ended January 31, 1999.
In addition, for the six months ended January 31, 1999, the Fund's expenses
were reduced by $16,009 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 $2,607 from the sales of Class
A shares and $40,280 and $3,024 in contingent deferred sales charges imposed
upon redemptions by shareholders of Class B and Class C shares, respectively,
for the six months ended January 31, 1999.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 1999 amounted to $280,288, none of which 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 distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amount of
$2,682,989 and $706,960 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
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
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 $54,901,325 and $74,358,558,
respectively, for the six months ended January 31, 1999. There were no
purchases or sales of U.S. government and government agency obligations for the
six months ended January 31, 1999.
At January 31, 1999, the cost of investments for federal income tax purposes
was $105,917,521. Accordingly, gross unrealized appreciation of investments was
$15,020,756 and gross unrealized depreciation of investments was $14,872,519,
resulting in net unrealized appreciation of $148,237, 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 January 31, 1999, the Fund had no outstanding forward exchange currency
contracts to buy and sell foreign currencies against the U.S. dollar.
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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 162,138 1,542,623 $ 1,722,410 $ 19,248,639
Shares issued in
reinvestment of
distributions 629,885 491,450 6,097,281 5,622,159
Shares converted
from Class B 25,275 78,190 261,864 969,207
Shares redeemed (652,567) (1,908,638) (6,777,346) (23,505,697)
Net increase 164,731 203,625 $ 1,304,209 $ 2,334,308
20
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1999 JULY 31, JANUARY 31, 1999 JULY 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS B
Shares sold 481,126 1,841,143 $ 4,620,347 $ 21,462,154
Shares issued in
reinvestment of
distributions 370,538 257,260 3,268,242 2,725,087
Shares converted
to Class A (27,626) (84,225) (261,864) (969,207)
Shares redeemed (910,028) (1,202,471) (8,701,496) (13,793,910)
Net increase
(decrease) (85,990) 811,707 $ (1,074,771) $ 9,424,124
CLASS C
Shares sold 165,759 620,351 $ 1,595,033 $ 7,209,073
Shares issued in
reinvestment of
distributions 87,084 69,804 769,821 741,394
Shares redeemed (317,689) (569,558) (3,034,618) (6,465,829)
Net increase
(decrease) (64,846) 120,597 $ (669,764) $ 1,484,638
ADVISOR CLASS
Shares sold 768 6,144 $ 8,075 $ 77,324
Shares issued in
reinvestment of
distributions 1,319 2,093 12,857 24,004
Shares redeemed (17,006) (1,981) (170,877) (22,238)
Net increase
(decrease) (14,919) 6,256 $ (149,945) $ 79,090
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 six months ended January 31, 1999.
21
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS OCTOBER 1,
ENDED 1993
JANUARY 31, YEAR ENDED JULY 31, TO
1999 -------------------------------------------------- JULY 31,
(UNAUDITED) 1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.14 $12.87 $11.61 $10.38 $11.08 $11.24
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.07)(b) (.11)(b) (.15)(b) (.14)(b) (.09) (.15)(b)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.35) .37 2.97 1.90 1.50 (.01)
Net increase (decrease) in net asset
value from operations (.42) .26 2.82 1.76 1.41 (.16)
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.16) (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- -0- (.12) -0-
Total distributions (1.16) (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $10.56 $12.14 $12.87 $11.61 $10.38 $11.08
TOTAL RETURN
Total investment return based on net
asset value (c) (2.64)% 2.49% 26.47% 17.46% 16.62% (1.42)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $73,797 $82,843 $85,217 $68,623 $60,057 $61,372
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.47%(d)(e) 2.16%(e) 2.41%(e) 2.51% 2.54%(f) 2.42%(d)
Net investment loss (1.25)%(d) (.88)% (1.25)% (1.22)% (1.17)% (1.26)%(d)
Portfolio turnover rate 51% 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 25.
22
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS OCTOBER 1,
ENDED 1993
JANUARY 31, YEAR ENDED JULY 31, TO
1999 -------------------------------------------------- JULY 31,
(UNAUDITED) 1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.20 $12.03 $11.03 $ 9.95 $10.78 $11.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.10)(b) (.18)(b) (.21)(b) (.20)(b) (.12) (.17)(b)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.34) .34 2.77 1.81 1.40 (.05)
Net increase (decrease) in net asset
value from operations (.44) .16 2.56 1.61 1.28 (.22)
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.16) (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- -0- (.12) -0-
Total distributions (1.16) (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $ 9.60 $11.20 $12.03 $11.03 $ 9.95 $10.78
TOTAL RETURN
Total investment return based on net
asset value (c) (3.06)% 1.80% 25.42% 16.69% 15.77% (2.00)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $32,469 $38,827 $31,946 $14,247 $5,164 $3,889
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 3.24%(d)(e) 2.88%(e) 3.11%(e) 3.21% 3.20%(f) 3.15%(d)
Net investment loss (2.03)%(d) (1.58)% (1.92)% (1.88)% (1.92)% (1.93)%(d)
Portfolio turnover rate 51% 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 25.
23
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS OCTOBER 1,
ENDED 1993
JANUARY 31, YEAR ENDED JULY 31, TO
1999 -------------------------------------------------- JULY 31,
(UNAUDITED) 1998 1997 1996 1995 1994(A)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.22 $12.05 $11.05 $ 9.96 $10.79 $11.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.10)(b) (.19)(b) (.22)(b) (.20)(b) (.17) (.17)(b)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.33) .35 2.78 1.82 1.45 (.04)
Net increase (decrease) in net asset
value from operations (.43) .16 2.56 1.62 1.28 (.21)
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.16) (.99) (1.56) (.53) (1.99) -0-
Tax return of capital -0- -0- -0- -0- (.12) -0-
Total distributions (1.16) (.99) (1.56) (.53) (2.11) -0-
Net asset value, end of period $ 9.63 $11.22 $12.05 $11.05 $ 9.96 $10.79
TOTAL RETURN
Total investment return based on net
asset value (c) (2.96)% 1.79% 25.37% 16.77% 15.75% (1.91)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,498 $9,471 $8,718 $4,119 $1,407 $1,330
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 3.25%(d)(e) 2.88%(e) 3.10%(e) 3.19% 3.25%(f) 3.13%(d)
Net investment loss (2.04)%(d) (1.59)% (1.93)% (1.85)% (2.10)% (1.92)%(d)
Portfolio turnover rate 51% 113% 129% 139% 128% 78%
</TABLE>
See footnote summary on page 25.
24
ALLIANCE GLOBAL SMALL CAP FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ADVISOR CLASS
------------------------------------
SIX MONTHS OCTOBER 2,
ENDED 1996(G)
JANUARY 31, YEAR ENDED TO
1999 JULY 31, JULY 31,
(UNAUDITED) 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $12.20 $12.89 $12.56
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.06) (.07) (.08)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.35) .37 1.97
Net increase (decrease) in net asset
value from operations (.41) .30 1.89
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.16) (.99) (1.56)
Net asset value, end of period $10.63 $12.20 $12.89
TOTAL RETURN
Total investment return based on net
asset value (c) (2.55)% 2.82% 17.08%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $183 $392 $333
Ratios to average net assets of:
Expenses, net of waivers/reimbursements (e) 2.25%(d) 1.87% 2.05%(d)
Net investment loss (1.07)%(d) (.57)% (.84)%(d)
Portfolio turnover rate 51% 113% 129%
</TABLE>
(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) Annualized.
(e) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the six months ended January 31, 1999, the years ended July
31, 1998, and July 31, 1997, the ratios of expenses net of
waivers/reimbursements were 2.44%, 2.14% and 2.38% for Class A shares, 3.21%,
2.86% and 3.08% for Class B shares, 3.22%, 2.85% and 3.08% for Class C shares
and 2.22%, 1.84% and 2.04% for Advisor Class shares, respectively.
(f) 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.
(g) Commencement of distribution.
25
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
MARK BREEDON, VICE PRESIDENT
RANDALL E. HAASE, 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.
26
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Trust Portfolio
Treasury Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
27
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.
GSCSR
