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GLOBAL SMALL CAP
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[GRAPHIC OMITTED]
Alliance Global
Small Cap Fund
Semi-Annual Report
January 31, 2000 (unaudited)
AllianceCapital [LOGO](R)
The Investment Professional's Choice
<PAGE>
Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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LETTER TO SHAREHOLDERS
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LETTER TO SHAREHOLDERS
March 17, 2000
Dear Shareholder:
We are pleased to report on the performance and investment strategy of the
Alliance Global Small Cap Fund (the "Fund") for the semi-annual reporting period
ended January 31, 2000.
We are pleased to announce that Bruce K. Aronow, CFA, recently assumed lead
responsibility for the management of the U.S. portion of Alliance Global Small
Cap Fund's portfolio. Mr. Aronow brings to the Fund his team of
small-capitalization investment professionals, which for six years has
successfully pursued a structural collaborative approach to
smaller-capitalization investing. Mr. Aronow will also work closely with Mark
Breedon, who remains responsible for the international portion of the Fund's
portfolio.
Investment Results
The following table provides performance data for the Fund's benchmark, as
represented by 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 January 31, 2000. During the six-month period ended
January 31, 2000, your Fund's Class A shares returned 29.46%, substantially
outperforming the MSCI World Index and modestly outperforming the Lipper GSC
Funds Average, which posted respective returns of 9.04% and 28.44%. During the
12-month period ended January 31, 2000, the Fund's Class A shares returned
42.94%, again strongly outperforming the MSCI World Index return of 15.63%, and
modestly outperforming the Lipper GSC Funds Average return of 42.18%.
Your Fund outperformed its benchmark index due to the Fund's relative
overweighting in technology, telecom and media stocks, and its underweighting in
financial, cyclical and defensive stocks. In particular, the Fund's specific
stock selection in these industries contributed strongly to the Fund's
outperformance. Also contributing to the Fund's performance was the Fund's
relative overweight position in international small-cap stocks versus U.S.
small-cap stocks.
INVESTMENT RESULTS*
Periods Ended January 31, 2000
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Total Returns
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6 months 12 months
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Alliance Global
Small Cap Fund
Class A 29.46% 42.94%
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Class B 28.90% 41.92%
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Class C 28.94% 41.79%
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MSCI World
Index 9.04% 15.63%
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Lipper Global
Small Company
Funds
Average 28.44% 42.18%
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* The Fund's investment results represent total returns and are based on the
net asset value as of January 31, 2000. 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
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ALLIANCE GLOBAL SMALL CAP FUND o 1
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LETTER TO SHAREHOLDERS
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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 22 countries. The Lipper
Global Small Company Funds Average reflects performance of 46 and 45 funds
for the six- and 12-month periods, 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 pages 6 - 10.
U.S. Investments Period Review
During the period under review, in the United States portfolio, the Fund
followed its historical discipline of focusing on identifying overlooked growth
opportunities trading at discounted valuations. This led to underweighted
positions in both technology and health care. Although seemingly expensive at
times, technology and health care were the clear performance drivers over the
past six months. As the period ended, Mr. Aronow's team assumed responsibility
for the U.S. portion of the Fund's portfolio.
Update
Mr. Aronow's team has undertaken changes in the Fund's U.S. portfolio that
reflect the team's approach to smaller-capitalization investing and are more
closely aligned with the investment strategy successfully employed by the Fund
outside the United States. The Fund has intensified its focus on companies
demonstrating superior relative earnings growth and improving fundamental
momentum. Accordingly, the Fund's U.S. technology and health care weightings
have been increased from 15% and 10%, respectively, to approximately 35% and 15%
respectively. Given that the technology weighting in the Russell 2000 Growth
Index has risen to more than 45%, indicative of the increasing significance of
technology investing globally, the Fund's U.S. technology weighting will likely
increase further over the next several months. Conversely, exposure to the
consumer, industrial and financial services industries have been scaled back
significantly. These shifts have driven the average estimated earnings growth
rate of the companies in the Fund's U.S. portfolio from 24% to well above 30%.
Importantly, the valuations paid for these new securities have been only
modestly higher than those of the Fund's previous holdings.
Investment Review
Driven by the expanding reach of the Internet and the ever-increasing demand for
telecommunications capacity, technology companies continue to display some of
the strongest fundamentals in the small-cap space. Valuations are certainly
high, but in many cases, we believe justified by already rapid growth rates that
are actually accelerating.
The Fund's U.S. technology investments are concentrated in the component
suppliers to the wireless and broadband industries (i.e. Alpha Industries and
Anadigics), software
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2 o ALLIANCE GLOBAL SMALL CAP FUND
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LETTER TO SHAREHOLDERS
----------------------
and service providers to the Internet (i.e. Aspect Development and ISS Group).
We have also made several investments in pure Internet companies, but we have
been careful to keep total exposure to this sector below its weighting in the
Russell 2000 Growth Index.
Regarding health care, the Fund's U.S. biotech exposure is currently at market
weight. Our biotech holdings are biased toward companies in late stage clinical
trials or with currently approved products. The Fund's recent additions in the
U.S. health care sector are in device, diagnostic, and drug distribution
companies, which are selling at reasonable valuations despite solid bottom-line
growth. Additionally, we continue to substantially underweight traditional
health-care services companies (i.e. hospitals, HMOs, and nursing homes), as the
prospects for these companies remain clouded.
Despite a very healthy macroeconomic backdrop--low unemployment and high
consumer confidence--consumer stocks remain very much out of favor. Investors
continue to fear the impact of rising interest rates and the inability of most
consumer companies to realize any material pricing increases. We have thus
begun to shift the Fund's consumer assets away from companies perceived to have
cyclical sensitivity into more defensive retailers and those benefiting from
unique, isolated factors.
In the commercial services sector, we have increased our exposure to companies
that benefit either directly or indirectly form the enormous investments being
made in telecommunications and Internet infrastructure.
Rising interest rates and prospects for a slowing economy are causing us to
modestly underweight U.S. industrials and financials. We are modestly
overweighted in the energy sector due to our favorable long-term outlook on oil
and gas prices. Among U.S. industrial companies, we have looked for ideas that
are leveraged to rapidly growing and deregulating end-markets such as
telecommunications and power. Our financial services exposure has sought out
opportunities in life reinsurance and asset management, two industries
benefiting from strong secular growth drivers. Finally, within energy, we have
chosen to focus on the companies with the highest production growth rates.
Outlook
We believe several factors are in place to drive continued U.S. small-cap
outperformance over the next several quarters. First among these is the strong
relative earnings growth and recent favorable revision trends. Secondly,
relative valuations, although well off the lows experience late last year, have
only recently begun to approach their historical aver ages. Finally, mutual fund
flows into U.S. small-cap funds have been very strong thus far in 2000.
Tempering our enthusiasm somewhat are the absolute valuation levels, which for
several sectors of the small cap universe have moved up to unprecedented levels.
Additionally, the recent volatility and the dependence on technology and health
care issues to drive small-cap performance, suggest that investors need to be
prepared for performance setbacks along the way.
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ALLIANCE GLOBAL SMALL CAP FUND o 3
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LETTER TO SHAREHOLDERS
- ----------------------
International Investments Period Review
International smaller-capitalization stocks saw dramatically mixed returns
during the period under review. On the one hand, technology, media and
telecommunication stocks posted very strong gains as investors bought into the
idea of a "new paradigm" in which emerging technologies such as the Internet,
wireless application protocol and broadband change the way in which individuals,
companies and economies operate. In contrast, "old economy" stocks such as food
manufacturers and utilities performed poorly as investors shunned them in favor
of growth-orientated investments.
At the regional level, the Japanese market was one of the best performing
markets, while the Asian bourses also staged positive rallies as post-crisis
restructuring began to benefit both the macro and micro outlook. European
countries witnessed accelerating gross domestic product numbers and equity
markets reacted in a bullish manner.
We believe that the strength in the global economy will be good for the smaller
company investor and we expect to see solid earnings growth, upgrades and
positive equity returns. One concern we have is that rising worldwide interest
rates may have a negative impact on liquidity and equity markets. Additionally,
the threat of inflationary pressure could materialize, however, we believe that
the effects of new technology will continue to restrain such pressure.
Investment Review
Regarding portfolio strategy, the international portion of your Fund continued
to focus its investments in companies with higher-than-average earnings growth.
Throughout the period under review, we have maintained heavily overweight
positions in technology, media stocks and telecommunication stocks and continued
to be underweight in defensive and cyclical sectors.
Your portfolio has embraced a number of successful international investment
themes. We have built significant positions in companies involved in the
enabling and provision of digital television, an area set to benefit from large
subscriber growth and increased functionality such as interactivity and
commerce.
Within our technology holdings, the high exposure to IT service companies was
retained, while an array of positions within the world of the Internet from
service providers to web-hosters continued to be prominent. Our favored
technology plays focus on companies that are typically market leaders or first
movers with strong strategic positions.
We raised the international portfolio's weighting in telecommunication
investments during the period under review as a number of exciting competitive
local exchange carriers ("CLECS") came to the market. These CLECs provide an
alternative to the incumbent telecom operator and usually have a strong presence
in the rapidly growing data market. We continue to own several developing market
cellular operators.
Outlook
Going forward, we expect smaller companies to be among the key beneficiaries of
technological advancement and
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4 o ALLIANCE GLOBAL SMALL CAP FUND
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LETTER TO SHAREHOLDERS
----------------------
adoption as they are often at the forefront of innovation. One interesting
recent international development we have seen is the explosive growth of "new
markets" (e.g. Neuer Markt in Germany, and GEM in Hong Kong).
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[Photo of John D. Carifa]
[Photo of Bruce K. Aronow]
[Photo of Mark Breedon]
Portfolio managers, Bruce Aronow and Mark Breedon are both vice presidents with
35 years of combined investment experience.
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These "new markets" are especially for emerging small corporations and have been
both a European and Asian phenomena. We are looking forward to taking advantage
of the additional investment opportunities such markets will present for your
Fund in the coming months. In particular, we will look at the buoyant initial
public offering market in which we have been successful participants.
International smaller companies continue to be exciting investment proposals
with valuations and growth propositions that remain attractive when compared
with larger capitalized peers.
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,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Bruce K. Aronow
Bruce K. Aronow
Vice President
/s/ Mark Breedon
Mark Breedon
Vice President
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ALLIANCE GLOBAL SMALL CAP FUND o 5
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PERFORMANCE UPDATE
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PERFORMANCE UPDATE
ALLIANCE GLOBAL SMALL CAP FUND
GROWTH OF A $10,000 INVESTMENT
1/31/90 TO 1/31/00
[The following table was depicted as a mountain graph in the printed material]
o Alliance Global Small Cap Fund
o MSCI World Index
o Lipper Global Small Company Funds Average
MSCI World Index: $30,605
Lipper Global Small Company Funds Average: $29,274
Alliance Global Small Cap Fund Class A: $26,959
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Global Small Cap Fund Class A shares (from 1/31/90 to 1/31/00) 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 22 countries.
The Lipper Global Small Company Funds Average reflects the performance of 5
funds (based on the number of funds in the average from 1/31/90 to 1/31/00).
These funds have generally similar investment objectives to Alliance Global
Small Cap Fund, although the investment policies of some funds included in the
average may vary.
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. An investor
cannot invest directly in an index or an average and their results are not
indicative of any specific investment, including Alliance Global Small Cap Fund.
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6 o ALLIANCE GLOBAL SMALL CAP FUND
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PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE GLOBAL SMALL CAP FUND - CLASS A SHARES
HISTORY OF RETURNS
YEARLY PERIODS ENDED JANUARY 31
[GRAPHIC OMITTED]
Past performance is no guarantee of future results. The Fund's investment
results represent total returns and are based on the Fund's Class A shares at
net asset value. 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
Class B, Class C and Advisor Class shares will differ due to different expenses
associated with those classes. The MSCI World Index is a
market-capitalization-weighted index that measures the performance of stock
markets in 22 countries. The MSCI World Index is unmanaged and reflects no fees
or expenses. An investor cannot invest directly in an index and its results are
not indicative of any specific investment, including Alliance Global Small Cap
Fund.
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ALLIANCE GLOBAL SMALL CAP FUND o 7
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PORTFOLIO SUMMARY
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PORTFOLIO SUMMARY
INCEPTION DATE
(Class A Shares)
9/29/66
PORTFOLIO STATISTICS
Assets ($mil): $154.3
Median Market Capitalization ($mil): $2,547.0
[The following tables were depicted as pie charts in the printed material]
SECTOR BREAKDOWN
o 35.1% Consumer Services
o 29.8% Technology
o 10.5% Finance
o 6.1% Health Care
o 4.5% Capital Goods
o 2.7% Utilities
o 2.3% Multi-Industry
o 2.0% Energy
o 1.9% Consumer Staples
o 1.8% Transportation
o 1.7% Basic Industry
o 1.6% Consumer Manufacturing
REGIONAL BREAKDOWN
o 41.50% Europe
o 32.36% The Americas
o 25.78% Asia/Pacific
o 0.36% Middle East/Africa
All data as of January 31, 2000. The sector and country breakdowns are expressed
as a percentage of total investments (excluding cash and cash equivalents).
These breakdowns may vary over time.
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8 o ALLIANCE GLOBAL SMALL CAP FUND
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INVESTMENT OBJECTIVE & POLICIES
and INVESTMENT RESULTS
-------------------------------
INVESTMENT OBJECTIVE & POLICIES
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, 2000
Class A Shares
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Without Sales Charge With Sales Charge
One Year 42.94% 36.85%
Three Years 16.57% 14.91%
Five Years 20.38% 19.33%
Ten Years 10.90% 10.43%
Class B Shares
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Without Sales Charge With Sales Charge
One Year 41.92% 37.92%
Three Years 15.73% 15.23%
Five Years 19.50% 19.50%
Since Inception*(a) 12.33% 12.33%
Class C Shares
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Without Sales Charge With Sales Charge
One Year 41.79% 40.79%
Three Years 15.73% 15.73%
Five Years 19.53% 19.53%
Since Inception* 15.19% 15.19%
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ALLIANCE GLOBAL SMALL CAP FUND o 9
<PAGE>
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INVESTMENT RESULTS
- ------------------
SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END
(DECEMBER 31, 1999)
Class A Class B Class C
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One Year 40.43% 41.53% 44.54%
Three Years 16.27% 16.62% 17.10%
Five Years 18.98% 19.15% 19.16%
Ten Years 9.36% 12.56%*(a) 15.59%*
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 $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Since Inception: 9/17/90 Class B; 5/3/93 Class C.
(a) Assumes conversion of Class B shares into Class A shares after 8 years.
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10 o ALLIANCE GLOBAL SMALL CAP FUND
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TEN LARGEST COUNTRY HOLDINGS
----------------------------
TEN LARGEST COUNTRY HOLDINGS
January 31, 2000 (unaudited)
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Shares
--------------------------------------------
Percent of
Company Country U.S.$ Value Net Assets
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Station Casinos, Inc. United States $ 4,248,400 2.8%
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United Pan-Europe
Communications, NV Netherlands 3,857,153 2.5
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Brokat Infosystem AG Germany 3,449,184 2.2
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Sogecable, SA Spain 3,059,663 2.0
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Yahoo Japan Corp. Japan 2,934,874 1.9
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Nippon Broadcasting System Japan 2,919,035 1.9
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Fabasoft AG Germany 2,664,480 1.7
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Uproar, Ltd. Austria 2,467,965 1.6
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Open TV Corp. Cl. A United States 2,439,281 1.6
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ISS International Service System Denmark 2,429,718 1.6
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$30,469,753 19.8%
MAJOR PORTFOLIO CHANGES
Six Months Ended January 31, 2000 (unaudited)
--------------------------------------------
Shares
--------------------------------------------
Holdings
Purchases Country Bought 1/31/00
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Atos, SA France 30,000 13,800
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Bank of Fukuoka, Ltd. Japan 263,000 263,000
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British Airways Plc United Kingdom 310,000 310,000
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Brokat Infosystem AG Germany 11,400 11,400
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Centros Commerciales
Pryca, SA Spain 97,000 97,000
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Fabasoft AG Germany 30,000 30,000
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ISS International Service System Denmark 34,000 34,000
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Nippon Broadcasting System Japan 26,000 26,000
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Onward Kashiyama Co., Ltd. Japan 165,000 165,000
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Station Casinos, Inc. United States 197,600 197,600
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Holdings
Sales Country Sold 1/31/00
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Autoliv, Inc. (ADR) Sweden 42,900 -0-
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Cordiant Communications
Group Plc United Kingdom 292,000 -0-
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Fukuyama Transporting Co.,
Ltd. Japan 217,000 -0-
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Future Network Plc United Kingdom 150,000 -0-
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Kingston Communication
(Hull) Plc United Kingdom 123,200 -0-
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Kokuyo Co. Japan 63,000 -0-
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Legg Mason, Inc. United States 41,200 12,500
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Premier Parks, Inc. United States 38,400 12,900
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SEITA France 22,770 -0-
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Shiseido Co., Ltd. Japan 84,000 -0-
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ALLIANCE GLOBAL SMALL CAP FUND o 11
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TEN LARGEST COUNTRY HOLDINGS
----------------------------
TEN LARGEST COUNTRY HOLDINGS
January 31, 2000 (unaudited)
Percent of
Country Value Net Assets
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United States $ 45,973,251 29.8%
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Japan 26,762,595 17.3
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United Kingdom 17,692,649 11.5
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Germany 10,939,547 7.1
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France 8,293,860 5.4
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Spain 6,887,096 4.5
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Netherlands 3,857,153 2.5
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Hong Kong 3,791,177 2.5
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Austria 3,416,881 2.2
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Australia 2,453,694 1.6
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$130,067,903 84.4%
SECTOR DIVERSIFICATION
January 31, 2000 (unaudited)
Percent of
U.S. $ Value Net Assets
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Basic Industry $ 2,636,245 1.7%
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Capital Goods 6,866,212 4.4
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Consumer Manufacturing 2,411,667 1.5
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Consumer Services 53,052,958 34.4
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Consumer Staples 2,808,163 1.8
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Energy 3,025,983 2.0
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Finance 15,846,961 10.3
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Healthcare 9,230,319 6.0
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Multi Industry 3,413,042 2.2
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Technology 45,035,948 29.2
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Transportation 2,739,214 1.8
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Utilities 4,162,153 2.7
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Total Investments* 151,228,865 98.0
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Cash and receivables, net of liabilities 3,052,045 2.0
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Net Assets $154,280,910 100.0%
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* Excludes short-term obligations.
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12 o ALLIANCE GLOBAL SMALL CAP FUND
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PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
January 31, 2000 (unaudited)
Company Shares Value
- --------------------------------------------------------------------------------
Common Stocks & Other Investments-98.0%
United States Investments-29.8%
Consumer Services-9.9%
Advertising-0.1%
Lamar Advertising Co. Cl.A(a) ...................... 2,700 $ 158,288
----------
Airlines-0.4%
Alaska Air Group, Inc.(a) .......................... 14,100 449,437
Expeditors International of Washington, Inc.(a) .... 3,300 139,116
----------
588,553
----------
Apparel-0.8%
Mens Wearhouse, Inc.(a) ............................ 23,000 549,125
Zale Corp.(a) ...................................... 17,000 607,750
----------
1,156,875
----------
Broadcasting & Cable-2.2%
Classic Communications, Inc. Cl.A(a) ............... 20,700 589,950
Entercom Communications Corp.(a) ................... 2,700 143,437
OpenTV Corp. Cl.A(a) ............................... 24,500 2,439,281
Westwood One, Inc.(a) .............................. 2,800 170,450
Young Broadcasting, Inc.(a) ........................ 2,200 97,763
----------
3,440,881
----------
Cellular Communications-0.1%
SBA Communications Corp.(a) ........................ 6,600 200,062
----------
Entertainment & Leisure-3.6%
Ackerley Group, Inc.(a) ............................ 13,400 221,938
Activision, Inc.(a) ................................ 17,500 273,438
Bally Total Fitness Holding Corp.(a) ............... 4,800 105,300
Premier Parks, Inc.(a) ............................. 12,900 362,006
Station Casinos, Inc.(a) ........................... 197,600 4,248,400
Trans World Entertainment Corp.(a) ................. 34,750 321,437
----------
5,532,519
----------
Printing & Publishing-0.2%
Scholastic Corp.(a) ................................ 4,200 270,900
----------
Retail-General Merchandise-1.6%
BJ's Wholesale Club, Inc.(a) ....................... 28,300 990,500
Movado Group, Inc. ................................. 22,500 427,500
Shopko Stores, Inc.(a) ............................. 23,200 424,850
Venator Group, Inc.(a) ............................. 104,200 625,200
----------
2,468,050
----------
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ALLIANCE GLOBAL SMALL CAP FUND o 13
<PAGE>
- ------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------
Company Shares Value
- --------------------------------------------------------------------------------
Miscellaneous-0.9%
CDW Computer Centers, Inc.(a) .................. 1,900 $ 124,272
Dycom Industries, Inc.(a) ...................... 9,100 391,300
Insight Enterprises, Inc.(a) ................... 11,600 400,200
Iron Mountain, Inc.(a) ......................... 8,800 289,300
Shaw Group, Inc.(a) ............................ 9,000 207,562
-----------
1,412,634
-----------
15,228,762
-----------
Technology-7.1%
Communications Equipment-0.5%
TeleSpectrum Worldwide, Inc.(a) ................ 82,000 748,250
-----------
Computer Hardware-0.7%
Apex, Inc.(a) .................................. 24,350 928,344
Black Box Corp.(a) ............................. 3,900 230,587
-----------
1,158,931
-----------
Computer Services-0.3%
DBT Online, Inc.(a) ............................ 30,300 568,125
-----------
Computer Software-2.2%
Active Software, Inc.(a) ....................... 200 15,600
Aspect Development, Inc.(a) .................... 6,200 415,400
Documentum, Inc.(a) ............................ 3,500 226,188
Electronics Boutique Holdings Corp.(a) ......... 22,200 363,525
FortuneCity. com, Inc.(a) ...................... 45,000 375,516
Informix Corp.(a) .............................. 7,600 95,000
Interleaf, Inc.(a) ............................. 2,200 91,988
InterWorld Corp.(a) ............................ 5,500 405,625
Macrovision Corp.(a) ........................... 5,100 477,806
NetIQ Corp.(a) ................................. 5,500 308,000
New Era of Networks, Inc.(a) ................... 4,300 224,406
Peregrine Systems, Inc.(a) ..................... 4,600 349,312
-----------
3,348,366
-----------
Contract Manufacturing-0.2%
DII Group, Inc.(a) ............................. 3,400 264,350
-----------
Internet-0.1%
Extensity, Inc. ................................ 700 40,513
L90, Inc.(a) ................................... 1,300 29,250
Neoforma.com, Inc.(a) .......................... 400 20,125
Yesmail.com, Inc.(a) ........................... 2,500 69,375
-----------
159,263
-----------
Networking Software-0.2%
Visual Networks, Inc.(a) ....................... 5,300 333,238
-----------
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14 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Shares Value
- --------------------------------------------------------------------------------
Semi-Conductor Capital Equipment-0.8%
Credence Systems Corp.(a) ........................ 3,200 $ 271,600
ISS Group, Inc.(a) ............................... 7,000 463,312
MKS Instruments, Inc.(a) ......................... 16,000 521,000
-----------
1,255,912
-----------
Semi-Conductor Components-1.0%
Fairchild Semiconductor Corp. Cl.A(a) ............ 19,200 652,800
Metron Technology NV ............................. 18,300 364,856
MIPS Technologies, Inc.(a) ....................... 5,800 257,375
Semtech Corp.(a) ................................. 3,800 228,000
-----------
1,503,031
-----------
Miscellaneous-1.1%
Brio Technology, Inc.(a) ......................... 5,400 172,800
Excalibur Technologies Corp.(a) .................. 19,400 434,075
PRI Automation, Inc.(a) .......................... 3,000 210,375
S1 Corp.(a) ...................................... 4,800 434,700
Technology Solutions Co.(a) ...................... 12,500 439,844
-----------
1,691,794
-----------
11,031,260
-----------
Health Care-3.8%
Biotechnology-0.5%
Aviron(a) ........................................ 15,500 314,844
Celgene Corp.(a) ................................. 5,000 348,750
Gene Logic, Inc.(a) .............................. 2,600 174,850
United Therapeutics Corp.(a) ..................... 300 18,600
-----------
857,044
-----------
Drugs-0.4%
Alpharma, Inc. Cl.A .............................. 6,600 224,400
HealthExtras, Inc.(a) ............................ 7,400 54,575
Jones Pharma, Inc. ............................... 400 23,225
King Pharmaceuticals, Inc.(a) .................... 4,800 283,200
-----------
585,400
-----------
Medical Products-0.4%
AmeriSource Health Corp. Cl.A(a) ................. 9,100 164,937
MiniMed, Inc.(a) ................................. 1,500 115,688
Summit Technology, Inc.(a) ....................... 20,900 271,700
Women First Healthcare, Inc.(a) .................. 9,600 50,400
-----------
602,725
-----------
Medical Services-2.5%
Bindley Western Industries, Inc. ................. 11,900 203,044
Health Management Associates, Inc. Cl.A(a) ....... 97,800 1,363,087
Lifepoint Hospitals, Inc.(a) ..................... 75,100 1,013,850
Medical Manager Corp.(a) ......................... 7,800 547,462
Orthodontic Centers of America, Inc.(a) .......... 23,500 359,844
Quest Diagnostics, Inc.(a) ....................... 10,500 357,000
-----------
3,844,287
-----------
5,889,456
-----------
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 15
<PAGE>
- ------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------
Company Shares Value
- --------------------------------------------------------------------------------
Finance-2.2%
Banking-Regional-0.0%
Silicon Valley Bancshares(a) ................. 700 $ 39,025
----------
Brokerage & Money Management-0.3%
Legg Mason, Inc. ............................. 12,500 460,937
----------
Insurance-0.1%
Reinsurance Group of America, Inc. ........... 9,200 203,550
----------
Real Estate-1.2%
Chelsea GCA Realty, Inc. ..................... 55,600 1,560,275
MeriStar Hospitality Corp. ................... 14,100 230,006
----------
1,790,281
----------
Miscellaneous-0.6%
Taubman Centers, Inc. ........................ 81,300 909,544
----------
3,403,337
----------
Capital Goods-1.7%
Electrical Equipment-0.2%
Varian Semiconductor Equipment
Associates, Inc.(a) ....................... 6,000 290,250
----------
Machinery-0.5%
United Rentals, Inc.(a) ...................... 35,900 686,588
----------
Pollution Control-0.0%
Tetra Tech, Inc.(a) .......................... 3,100 45,725
----------
Miscellaneous-1.0%
Applied Power, Inc. Cl.A ..................... 8,600 239,725
Mohawk Industries, Inc.(a) ................... 56,300 1,319,531
----------
1,559,256
----------
2,581,819
----------
Energy-1.6%
Domestic Producers-0.3%
Murphy Oil Corp. ............................. 7,700 441,788
----------
Oil Service-0.6%
Ensco International, Inc. .................... 16,900 386,587
Santa Fe International Corp. ................. 14,500 387,875
Smith International, Inc. .................... 3,900 200,119
----------
974,581
----------
Pipelines-0.7%
Kinder Morgan, Inc. .......................... 8,600 226,287
Southern Union Co. ........................... 47,822 812,974
----------
1,039,261
----------
2,455,630
----------
- --------------------------------------------------------------------------------
16 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Shares Value
- --------------------------------------------------------------------------------
Consumer Manufacturing-1.6%
Auto & Related-1.6%
Budget Group, Inc. Cl.A(a) ....................... 57,600 $ 565,200
Dollar Thrifty Automotive Group, Inc.(a) ......... 16,200 320,962
Group 1 Automotive, Inc.(a) ...................... 37,600 467,650
Monaco Coach Corp.(a) ............................ 48,637 1,057,855
----------
2,411,667
----------
Transportation-0.7%
Trucking-0.1%
Consolidated Freightways Corp.(a) ................ 30,400 176,700
----------
Miscellaneous-0.6%
Carey International, Inc.(a) ..................... 42,400 938,100
----------
1,114,800
----------
Multi-Industry Companies-0.5%
Amphenol Corp. Cl.A(a) ........................... 6,000 407,250
Korn/Ferry International(a) ...................... 9,900 340,931
----------
748,181
----------
Basic Industry-0.5%
Chemicals-0.1%
Lyondell Chemical Co. ............................ 18,400 198,950
----------
Containers-0.4%
Packaging Corp of America(a) ..................... 45,400 547,638
----------
746,588
----------
Consumer Staples-0.1%
Household Products-0.1%
Rayovac Corp.(a) ................................. 10,700 231,388
----------
Utilities-0.1%
Telephone Utility-0.1%
Pac-West Telecomm, Inc.(a) ....................... 3,300 82,913
----------
Miscellaneous-0.0%
IXnet, Inc.(a) ................................... 1,300 47,450
----------
130,363
----------
Total United States Investments
(cost $41,610,398) ............................ 45,973,251
----------
Foreign Investments-68.2%
Australia-1.6%
LibertyOne, Ltd.(a) .............................. 285,000 214,378
Publishing & Broadcasting, Ltd. .................. 75,000 593,340
Qantas Airways, Ltd. ............................. 125,900 307,642
Smith (Howard), Ltd. ............................. 66,414 414,823
TAB Corp. Holdings, Ltd. ......................... 65,000 353,158
Woodside Petroleum, Ltd. ......................... 77,000 570,353
----------
2,453,694
----------
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 17
<PAGE>
- ------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------
Company Shares Value
- --------------------------------------------------------------------------------
Austria-2.2%
Austria Technologie & Systemtechnik AG(a) .......... 10,000 $ 650,016
S & T System Integration & Technology
Distribution AG(a) .............................. 7,000 298,900
Uproar, Ltd. ....................................... 60,206 2,467,965
-----------
3,416,881
-----------
Brazil-1.0%
Tele Centro Sul Participacoes, SA (ADR) pfd ........ 6,500 536,250
Tele Sudeste Celular Participacoes,
SA (ADR) pfd .................................... 20,600 996,525
-----------
1,532,775
-----------
Canada-0.9%
724 Solutions, Inc.(a) ............................. 2,700 183,262
Cinar Films, Inc. Cl.B (ADR)(a) .................... 33,200 800,950
FirstService Corp.(a) .............................. 17,600 215,600
Imax Corp.(a) ...................................... 10,000 230,000
-----------
1,429,812
-----------
Denmark-1.6%
ISS International Service System A/S Series B(a) ... 34,000 2,429,718
-----------
France-5.4%
Atos, SA(a) ........................................ 13,800 1,872,163
Business Objects, SA (ADR)(a) ...................... 5,400 363,488
CNP Assurances ..................................... 33,020 1,047,395
Equant NV(a) ....................................... 18,000 1,835,856
NetValue ........................................... 6,100 446,520
Rhodia, SA ......................................... 69,000 1,474,834
Unibail, SA ........................................ 5,100 668,492
Union des Assurances Federales ..................... 5,500 585,112
-----------
8,293,860
-----------
Germany-7.1%
Brokat Infosystem AG ............................... 11,400 3,449,185
Fabasoft AG(a) ..................................... 30,000 2,664,480
Hornbach Holdings AG pfd ........................... 28,730 1,430,065
Primacom AG (ADR) .................................. 25,000 1,654,320
Software AG ........................................ 27,200 1,741,497
-----------
10,939,547
-----------
Greece-0.3%
Panafon Hellenic Telecom, SA ....................... 42,000 539,427
-----------
Hong Kong-2.5%
Amoy Properties, Ltd. .............................. 780,000 506,266
China Merchants Holdings International Co., Ltd .... 540,000 451,128
Ng Fung Hong, Ltd. ................................. 836,000 389,499
SmarTone Telecommunications Holdings, Ltd. ......... 280,000 1,009,447
Television Broadcasting, Ltd. ...................... 195,000 1,434,837
-----------
3,791,177
-----------
- --------------------------------------------------------------------------------
18 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Shares Value
- --------------------------------------------------------------------------------
Hungary-0.3%
Magyar Tavkozlesirt (ADS) ........................ 12,100 $ 471,900
-----------
India-0.2%
Mahanagar Telephone Nigam, Ltd. (GDR) ............ 27,200 393,720
-----------
Italy-1.1%
Industrie Natuzzi SpA (ADR) ...................... 28,800 320,400
Seat Pagine Gialle SpA(a) ........................ 502,000 1,433,110
-----------
1,753,510
-----------
Japan-17.3%
Ajinomoto Co., Inc. .............................. 45,000 545,048
Alps Electric Co., Ltd. .......................... 100,000 1,434,827
Bank of Fukuoka, Ltd. ............................ 263,000 1,573,148
Banyu Pharmaceutical Co., Ltd. ................... 97,000 1,597,839
Daito Trust Construction Co., Ltd. ............... 93,400 1,173,918
Daiwa Securities Co., Ltd. ....................... 124,000 2,016,025
Hoya Corp. ....................................... 25,000 1,886,704
Mikuni Coca-Cola Bottling Co., Ltd. .............. 88,000 1,426,628
Nippon Broadcasting System ....................... 26,000 2,919,035
Onward Kashiyama Co., Ltd. ....................... 165,000 1,944,703
Sankyo Co., Ltd. ................................. 27,500 1,870,400
Santen Pharmaceutical Co. ........................ 87,420 1,743,024
Toyo Trust & Banking Co., Ltd. ................... 391,000 1,482,689
Uni-Charm Corp. .................................. 30,000 2,213,733
Yahoo Japan Corp. ................................ 3 2,934,874
-----------
26,762,595
-----------
Luxembourg-1.2%
Millicom International Cellular, SA(a) ........... 25,200 1,798,650
-----------
Netherlands-2.5%
United Pan-Europe Communications NV(a) ........... 30,400 3,857,153
-----------
Norway-0.0%
Frontline, Ltd. warrants, expiring 05/02/01(a) ... 15,216 20,341
-----------
Singapore-0.9%
DBS Group Holdings, Ltd. ......................... 95,366 1,277,148
St Assembly Test Services, Ltd.(a) ............... 14,000 64,552
-----------
1,341,700
-----------
South Africa-0.3%
M-Cell, Ltd. ..................................... 115,400 544,995
-----------
South Korea-1.4%
Dacom Corp. ...................................... 2,000 528,705
SK Telecom Co., Ltd. (ADR) ....................... 44,500 1,632,594
-----------
2,161,299
-----------
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 19
<PAGE>
- ------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------
Shares or
Principal
Amount
Company (000) Value
- --------------------------------------------------------------------------------
Spain-4.5%
Amadeus Global Travel Distribution, SA ........... 130,000 $ 1,471,808
Centros Commerciales Pryca, SA ................... 97,000 1,311,207
Sogecable, SA(a) ................................. 58,000 3,059,663
Terra Networks, SA(a) ............................ 12,300 1,044,418
------------
6,887,096
------------
Sweden-1.5%
Securitas AB Series B ............................ 109,000 2,277,538
------------
Switzerland-1.5%
SEZ Holding AG ................................... 3,600 2,379,480
------------
Taiwan-0.8%
Hon Hai Precision Industry, Co., Ltd. (GDR)(a)(b) 57,000 1,216,950
------------
Thailand-0.6%
Advanced Info Service Public Co., Ltd.(a) ........ 35,000 494,337
CMIC Finance & Security Public Co.(a)(c) ......... 110,000 0
Siam Commercial Bank Plc pfd.(a) ................. 329,000 374,810
------------
869,147
------------
United Kingdom-11.5%
Aegis Group Plc .................................. 380,000 1,164,884
British Airways Plc .............................. 310,000 1,646,149
CMG Plc .......................................... 26,300 1,707,394
EMAP Plc ......................................... 40,000 1,084,697
Filtronic Comtek Plc ............................. 41,900 1,058,211
Jazztel Plc (ADR)(a) ............................. 19,800 1,294,425
Misys Plc ........................................ 136,000 1,893,525
NDS Group Plc (ADR)(a) ........................... 40,000 1,880,000
Next Plc ......................................... 215,000 1,693,382
Slough Estates Plc ............................... 122,000 635,001
Thus Plc(a) ...................................... 197,000 1,269,354
United News & Media Plc .......................... 64,000 761,554
WPP Group Plc .................................... 101,000 1,604,073
------------
17,692,649
------------
Total Foreign Investments
(cost $74,154,199) ............................ 105,255,614
------------
Total Common Stocks & Other Investments
(cost $115,764,597) ........................... 151,228,865
------------
Short-Term Investment-3.4%
Time Deposit-3.4%
State Street Euro Dollar
5.00%, 2/01/00
(amortized cost $5,274,000) ................... $ 5,274 5,274,000
------------
- --------------------------------------------------------------------------------
20 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Value
- --------------------------------------------------------------------------------
Total Investments-101.4%
(cost $121,038,597) .................................. $ 156,502,865
Other assets less liabilities-(1.4%) .................... (2,221,955)
-------------
Net Assets-100% ......................................... $ 154,280,910
=============
(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 January 31, 2000, these
securities amounted to $1,216,950 representing 0.8% of net assets.
(c) 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
See notes to financial statements.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 21
<PAGE>
- ---------------------------------
STATEMENT OF ASSETS & LIABILITIES
- ---------------------------------
STATEMENT OF ASSETS & LIABILITIES
January 31, 2000 (unaudited)
Assets
Investments in securities, at value (cost $121,038,597) ...... $ 156,502,865
Cash, at value (cost $178,564) ............................... 178,564
Receivable for investment securities sold .................... 1,288,654
Receivable for capital stock sold ............................ 215,726
Dividends and interest receivable ............................ 42,333
Foreign tax receivable ....................................... 38,508
-------------
Total assets ................................................. 158,266,650
-------------
Liabilities
Payable for investment securities purchased .................. 2,873,226
Unclaimed dividends .......................................... 634,069
Management fee payable ....................................... 130,058
Distribution fee payable ..................................... 68,277
Payable for capital stock redeemed ........................... 30,856
Accrued expenses and other liabilities ....................... 249,254
-------------
Total liabilities ............................................ 3,985,740
-------------
Net Assets ................................................... $ 154,280,910
=============
Composition of Net Assets
Capital stock, at par ........................................ $ 107,559
Additional paid-in capital ................................... 110,758,726
Accumulated net investment loss .............................. (920,910)
Accumulated net realized gain on investments and
foreign currency transactions ............................. 8,875,786
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities ....... 35,459,749
-------------
$ 154,280,910
=============
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($103,115,774 / 6,939,871 shares of capital stock
issued and outstanding) ................................... $14.86
Sales charge--4.25% of public offering price ................. .66
------
Maximum offering price ....................................... $15.52
======
Class B Shares
Net asset value and offering price per share
($41,020,913 / 3,063,792 shares of capital stock
issued and outstanding) ................................... $13.39
======
Class C Shares
Net asset value and offering price per share
($9,663,862 / 720,181 shares of capital stock
issued and outstanding) ................................... $13.42
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($480,361 / 32,057 shares of capital stock
issued and outstanding) ................................... $14.98
======
See notes to financial statements.
- --------------------------------------------------------------------------------
22 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
-----------------------
STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Six Months Ended January 31, 2000 (unaudited)
Investment Income
Dividends (net of foreign taxes
withheld of $36,721) .................... $ 498,243
Interest ................................... 125,023 $ 623,266
------------
Expenses
Advisory fee ............................... 642,145
Distribution fee - Class A ................. 130,709
Distribution fee - Class B ................. 166,012
Distribution fee - Class C ................. 39,150
Transfer agency ............................ 226,150
Custodian .................................. 110,107
Printing ................................... 70,100
Administrative ............................. 64,000
Audit and legal ............................ 42,764
Registration ............................... 23,612
Directors' fees ............................ 11,000
Miscellaneous .............................. 6,100
------------
Total expenses ............................. 1,531,849
Less: expense offset arrangement
(see Note B) ............................ (12,788)
------------
Net expenses ............................... 1,519,061
------------
Net investment loss ........................ (895,795)
------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized gain on investment
transactions ............................ 11,833,776
Net realized loss on foreign currency
transactions ............................ (266,922)
Net change in unrealized
appreciation/depreciation of:
Investments ............................. 23,370,436
Foreign currency denominated assets
and liabilities ....................... (6,866)
------------
Net gain on investments and foreign
currency transactions ................... 34,930,424
------------
Net Increase in Net Assets
from Operations ......................... $ 34,034,629
============
See notes to financial statements.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 23
<PAGE>
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
Six Months Ended Year Ended
January 31, 2000 July 31,
(unaudited) 1999
------------- -------------
Increase (Decrease) in Net Assets
from Operations
Net investment loss .......................... $ (895,795) $ (1,182,124)
Net realized gain on investments and
foreign currency transactions ............. 11,566,854 1,819,665
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities ........ 23,363,570 5,106,195
------------- -------------
Net increase in net assets from operations ... 34,034,629 5,743,736
Distributions to Shareholders from:
Net realized gain on investments
Class A ................................... (1,378,758) (7,496,012)
Class B ................................... (559,969) (3,620,259)
Class C ................................... (131,883) (837,402)
Advisor Class ............................. (3,350) (18,180)
Capital Stock Transactions
Net increase (decrease) ...................... 7,705,192 (10,689,478)
------------- -------------
Total increase (decrease) .................... 39,665,861 (16,917,595)
Net Assets
Beginning of year ............................ 114,615,049 131,532,644
------------- -------------
End of period ................................ $ 154,280,910 $ 114,615,049
============= =============
See notes to financial statements.
- --------------------------------------------------------------------------------
24 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
January 31, 2000 (unaudited)
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 C shares are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase. Advisor Class shares are
sold without an initial or contingent deferred sales charge and are not subject
to ongoing distribution expenses. Advisor Class shares are offered to investors
participating in fee-based programs and to certain retirement plan accounts. All
four classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The financial
statements have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) or on the
Nasdaq Stock Market, Inc. 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 (but
excluding securities traded on the Nasdaq Stock Market, Inc.), 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.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 25
<PAGE>
- -----------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
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 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.
- --------------------------------------------------------------------------------
26 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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 $64,000 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, 2000.
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 $162,311 for the six months ended January 31, 2000.
For the six months ended January 31, 2000, the Fund's expenses were reduced by
$12,788 under an expense offset arrangement with Alliance Fund Services, Inc.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned subsidiary
of the Manager, serves as the Distributor of the Fund's shares. The Distributor
has advised the Fund that it has received front-end sales charges of $2,246 from
the sales of Class A shares and $24,839 and $2,291 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, 2000.
Brokerage commissions paid on investment transactions for the six months ended
January 31, 2000, amounted to $336,366, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Manager, and of which $1,075 was
paid to DLJ directly.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees 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 are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has advised the Fund that it has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $3,092,501 and
$859,078 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
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 27
<PAGE>
- -----------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
with the Agreement, there is no pro vision 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 $88,654,643 and $86,008,492,
respectively, for the six months ended January 31, 2000. There were no purchases
or sales of U.S. government and government agency obligations for the six months
ended January 31, 2000.
At January 31, 2000, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $43,364,959 and
gross unrealized depreciation of investments was $7,900,691, resulting in net
unrealized appreciation of $35,464,268, 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.
There were no forward exchange currency contracts outstanding at January 31,
2000.
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
- --------------------------------------------------------------------------------
28 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
of 3,000,000,000 authorized shares. Transactions in capital stock were as
follows:
--------------------------- -----------------------------
Shares Amount
--------------------------- -----------------------------
Six Months Six Months
Ended Ended
January 31, Year Ended January 31, Year Ended
2000 July 31, 2000 July 31,
(unaudited) 1999 (unaudited) 1999
-----------------------------------------------------------
Class A
Shares sold 1,900,043 623,396 $ 23,467,719 $ 6,806,663
- --------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 90,243 629,890 1,142,478 6,097,336
- --------------------------------------------------------------------------------
Shares converted
from Class B 51,736 73,883 663,621 780,932
- --------------------------------------------------------------------------------
Shares redeemed (1,717,638) (1,536,869) (21,304,139) (16,383,463)
- --------------------------------------------------------------------------------
Net increase
(decrease) 324,384 (209,700) $ 3,969,679 $ (2,698,532)
- --------------------------------------------------------------------------------
Class B
Shares sold 486,936 657,798 $ 6,010,669 $ 6,355,692
- --------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 46,604 370,560 532,631 3,268,436
- --------------------------------------------------------------------------------
Shares converted
to Class A (57,268) (77,917) (663,621) (780,932)
- --------------------------------------------------------------------------------
Shares redeemed (270,204) (1,559,407) (3,080,052) (14,943,035)
- --------------------------------------------------------------------------------
Net increase
(decrease) 206,068 (608,966) $ 2,799,627 $ (6,099,839)
- --------------------------------------------------------------------------------
Class C
Shares sold 170,236 265,399 $ 2,033,847 $ 2,571,782
- --------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 10,930 87,168 125,214 770,565
- --------------------------------------------------------------------------------
Shares redeemed (127,336) (530,032) (1,452,209) (5,072,717)
- --------------------------------------------------------------------------------
Net increase
(decrease) 53,830 (177,465) $ 706,852 $ (1,730,370)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 29
<PAGE>
- -----------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
--------------------------- -----------------------------
Shares Amount
--------------------------- -----------------------------
Six Months Six Months
Ended Ended
January 31, Year Ended January 31, Year Ended
2000 July 31, 2000 July 31,
(unaudited) 1999 (unaudited) 1999
-----------------------------------------------------------
Advisor Class
Shares sold 16,202 4,127 $ 232,024 $ 44,310
- --------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 237 1,319 3,028 12,857
- --------------------------------------------------------------------------------
Shares redeemed (440) (21,501) (6,018) (217,904)
- --------------------------------------------------------------------------------
Net increase
(decrease) 15,999 (16,055) $ 229,034 $(160,737)
- --------------------------------------------------------------------------------
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")
intended 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
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the six months ended January 31, 2000.
NOTE G
Concentration of Risk
Investing in securities of foreign companies involves special risks which
include revaluation of currencies and the possibility of future political and
economic developments which could adversely affect the value of such securities.
Moreover securities of many foreign companies and their markets may be less
liquid and their prices more volatile than those of comparable United States
companies.
- --------------------------------------------------------------------------------
30 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------------------
Six
Months
Ended
January 31, Year Ended July 31,
2000 ------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year ............... $ 11.66 $ 12.14 $ 12.87 $ 11.61 $ 10.38 $ 11.08
----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss ............... (.07)(a) (.08)(a) (.11)(a) (.15)(a) (.14)(a) (.09)
Net realized and unrealized
gain on investments and
foreign currency
transactions .................... 3.47 .76 .37 2.97 1.90 1.50
----------------------------------------------------------------------------------------
Net increase in net asset
value from operations ........... 3.40 .68 .26 2.82 1.76 1.41
----------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains .................. (.20) (1.16) (.99) (1.56) (.53) (1.99)
Tax return of capital ............. -0- -0- -0- -0- -0- (1.12)
----------------------------------------------------------------------------------------
Total distributions ............... (.20) (1.16) (.99) (1.56) (.53) (2.11)
----------------------------------------------------------------------------------------
Net asset value,
end of period ................... $ 14.86 $ 11.66 $ 12.14 $ 12.87 $ 11.61 $ 10.38
========================================================================================
Total Return
Total investment return
based on net asset value(b)...... 29.46% 7.51% 2.49% 26.47% 17.46% 16.62%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ................. $103,116 $77,164 $82,843 $85,217 $68,623 $60,057
Ratios to average net assets of:
Expenses ........................ 2.13%(c)(d) 2.37%(c) 2.16%(c) 2.41%(c) 2.51% 2.54%(e)
Net investment loss . ........... (1.15)%(d) (.79)% (.88)% (1.25)% (1.22)% (1.17)%
Portfolio turnover rate ........... 69% 120% 113% 129% 139% 128%
</TABLE>
See footnote summary on page 35.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 31
<PAGE>
- --------------------
FINANCIAL HIGHLIGHTS
- --------------------
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Class B
-----------------------------------------------------------------------------------------
Six
Months
Ended
January 31, Year Ended July 31,
2000 ---------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year ............ $ 10.57 $ 11.20 $ 12.03 $ 11.03 $ 9.95 $10.78
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss ............ (.11)(a) (.15)(a) (.18)(a) (.21)(a) (.20)(a) (.12)
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 3.13 .68 .34 2.77 1.81 1.40
-----------------------------------------------------------------------------------------
Net increase in net asset
value from operations ........ 3.02 .53 .16 2.56 1.61 1.28
-----------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains ............... (.20) (1.16) (.99) (1.56) (.53) (1.99)
Tax return of capital .......... -0- -0- -0- -0- -0- (.12)
-----------------------------------------------------------------------------------------
Total distributions ............ (.20) (1.16) (.99) (1.56) (.53) (2.11)
-----------------------------------------------------------------------------------------
Net asset value,
end of period ................ $ 13.39 $ 10.57 $ 11.20 $ 12.03 $ 11.03 $ 9.95
=========================================================================================
Total Return
Total investment return
based on net asset value(b) .. 28.90% 6.74% 1.80% 25.42% 16.69% 15.77%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $41,021 $30,205 $38,827 $31,946 $14,247 $5,164
Ratios to average net assets of:
Expenses ..................... 2.89%(c)(d) 3.14%(c) 2.88%(c) 3.11%(c) 3.21% 3.20%(e)
Net investment loss .......... (1.91)%(d) (1.59)% (1.58)% (1.92)% (1.88)% (1.92)%
Portfolio turnover rate ........ 69% 120% 113% 129% 139% 128%
</TABLE>
See footnote summary on page 35.
- --------------------------------------------------------------------------------
32 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Class C
---------------------------------------------------------------------------------------
Six
Months
Ended
January 31, Year Ended July 31,
2000 -----------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year ............ $10.59 $11.22 $12.05 $11.05 $ 9.96 $10.79
---------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss ............ (.11)(a) (.16)(a) (.19)(a) (.22)(a) (.20)(a) (.17)
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 3.14 .69 .35 2.78 1.82 1.45
---------------------------------------------------------------------------------------
Net increase in net asset
value from operations ........ 3.03 .53 .16 2.56 1.62 1.28
---------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains ............... (.20) (1.16) (.99) (1.56) (.53) (1.99)
Tax return of capital .......... -0- -0- -0- -0- -0- (.12)
---------------------------------------------------------------------------------------
Total distributions ............ (.20) (1.16) (.99) (1.56) (.53) (2.11)
---------------------------------------------------------------------------------------
Net asset value,
end of period ................ $13.42 $10.59 $11.22 $12.05 $11.05 $ 9.96
=======================================================================================
Total Return
Total investment return
based on net asset value(b) .. 28.94% 6.72% 1.79% 25.37% 16.77% 15.75%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $9,664 $7,058 $9,471 $8,718 $4,119 $1,407
Ratios to average net assets of:
Expenses ..................... 2.89%(c)(d) 3.15%(c) 2.88%(c) 3.10%(c) 3.19% 3.25%(e)
Net investment loss .......... (1.92)%(d) (1.61)% (1.59)% (1.93)% (1.85)% (2.10)%
Portfolio turnover rate ........ 69% 120% 113% 129% 139% 128%
</TABLE>
See footnote summary on page 35.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 33
<PAGE>
- --------------------
FINANCIAL HIGHLIGHTS
- --------------------
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------------------
ADVISOR CLASS
--------------------------------------------------------
Six Months October 2,
Ended 1996(f)
January 31, Year Ended July 31, to
2000 ---------------------- July 31,
(unaudited) 1999 1998 1997
--------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ................... $ 11.74 $ 12.20 $ 12.89 $ 12.56
--------------------------------------------------------
Income From Investment
Operations
Net investment loss(a) .................. (.06) (.07) (.07) (.08)
Net realized and unrealized gain on
investments and foreign currency
transactions .......................... 3.50 .77 .37 1.97
--------------------------------------------------------
Net increase in net asset value
from operations ....................... 3.44 .70 .30 1.89
--------------------------------------------------------
Less: Distributions
Distributions from net realized gains ... (.20) (1.16) (.99) (1.56)
--------------------------------------------------------
Net asset value, end of period .......... $ 14.98 $ 11.74 $ 12.20 $ 12.89
========================================================
Total Return
Total investment return based
on net asset value(b) ................. 29.60% 7.63% 2.82% 17.08%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 480 $ 189 $ 392 $ 333
Ratios to average net assets of:
Expenses(c) ........................... 1.82%(d) 2.13% 1.87% 2.05%(d)
Net investment loss ................... (.89)%(d) (.63)% (.57)% (.84)%(d)
Portfolio turnover rate ................. 69% 120% 113% 129%
</TABLE>
See footnote summary on page 35.
- --------------------------------------------------------------------------------
34 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales 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.
(c) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the periods shown below, the net expense ratios were
as follows:
Six Months
Ended Year Year Period
January 31, Ended Ended Ended
2000(d) July 31, July 31, July 31,
(unaudited) 1999 1998 1997
------------------------------------------------
Class A ............. 2.12% 2.33% 2.14% 2.38%
Class B ............. 2.88% 3.11% 2.86% 3.08%
Class C ............. 2.88% 3.12% 2.85% 3.08%
Advisor Class ....... 1.81% 2.10% 1.84% 2.04%(d)
(d) Annualized.
(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) Commencement of distribution.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 35
<PAGE>
- ----------------------------
GLOSSARY OF INVESTMENT TERMS
- ----------------------------
GLOSSARY OF INVESTMENT TERMS
capitalization or market capitalization
The absolute dollar value of a company's outstanding stock. Capitalization is
determined by multiplying the amount of publicly owned shares by the stock's
current market value.
Consumer Price Index (CPI)
An index that measures the cost of living. The CPI is published by the U.S.
Bureau of Labor Statistics.
diversification
A technique of allocating assets among many types of investments.
earnings
Revenues minus cost of sales, operating expenses, and taxes, over a given period
of time. Earnings are often the most important determinant of a company's stock
price.
earnings per share (EPS)
A common measurement of a stock's performance, calculated by taking a company's
net income and dividing it by the number of shares the company has outstanding.
initial public offering (IPO)
A sale of securities by a previously private company to the general public.
liquidity
The ability of an asset to be quickly converted into cash and without penalty.
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding.
multiples
A measurement of an individual stock's performance that lets investors know how
much they are paying for a company's potential earning power. The multiple for a
company's stock is calculated by dividing the company's earnings per share of
outstanding stock by the stock's current market value.
price-to-earnings (P/E) ratio
What an investor pays for a security versus a company's earnings per share of
outstanding stock.
real estate investment trust (REIT)
A security which invests primarily in income producing real estate or real
estate related loans.
small-capitalization company or small-cap stock
Refers to a company with a relatively small market capitalization.
valuation
The process of determining the value of an asset or company.
- --------------------------------------------------------------------------------
36 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
- ----------------
ALLIANCE CAPITAL
- ----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $368
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 31 of the FORTUNE 100 companies and public retirement funds in 31
states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 277
investment professionals in 21 investment offices worldwide. Our commitment to
this process means that our mutual fund shareholders have their portfolios
managed by the same experienced analysts and portfolio managers who manage the
pension funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 12/31/99.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 37
<PAGE>
- --------------------------------
ALLIANCE CAPITAL AT YOUR SERVICE
- --------------------------------
ALLIANCE CAPITAL AT YOUR SERVICE
At Alliance Capital, shareholder satisfaction is among our top priorities.
That's why we provide our shareholders with a wide variety of products and
time-saving services to meet their needs.
o Low Minimum Investments
You can begin investing in Alliance Capital funds with as little as $250
(except for Alliance Select Investor Series Premier Portfolio and Alliance
Select Investor Series Technology Portfolio, which generally have a
$10,000 minimum initial investment) and may make subsequent investments of
$50 or more.
o Automatic Reinvestment
You may choose to reinvest fund dividend and capital-gains distributions
automatically at no charge.
o Automatic Investment Program
Build your investment account by having money automatically transferred
from your bank account on a regular basis.
o Dividend Direction Plans
You may cross-invest dividends from one fund into the same class of shares
in any other fund without incurring a sales charge. This can be a good way
to diversify your assets.
o The Alliance Advance
A quarterly newsletter discussing investment strategies, economic news and
other matters that could affect your mutual fund investment.
o Auto Exchange
You may choose to automatically exchange money from one Alliance Capital
fund to another on a regular basis. This can be a good way to dollar cost
average*, helping you to invest with discipline.
o Systematic Withdrawals
Regular checks for specified amounts can be sent to you or to your
brokerage or bank account.
o A Choice of Purchase Plans
Most funds are available in A, B, and C Class shares. Many funds are also
available in Advisor Class shares.
o Telephone Transaction
Purchases, transfers and redemptions can be made by calling (800)
221-5672. Our knowledgeable representatives are available to assist you
Monday through Friday from 8:30 a.m. to 8:00 p.m. Eastern Standard Time.
o Alliance Answer: 24-Hour Information
For your convenience, our computerized audio response system is available
to you 24-hours a day by calling (800) 251-0539. Using any touch tone
phone, you can hear share prices, get account balances, review details of
your last transaction, obtain dividend information, order
statements/checkbooks, review fund objectives, literature and Watchlist
information, order additional copies of statements and request additional
year-end tax forms (available from February 1 to May 31).
o Alliance Capital on the World Wide Web at www.alliancecapital.com. Here,
you can access updated account information, make additional investments,
request more information, exchange between Alliance funds and view fund
performance, press releases and articles.
* Dollar cost averaging does not assure a profit nor protect against loss in
a declining market. Since this strategy involves continuous investments in
securities, regardless of fluctuating prices, investors should consider
their financial ability to invest during periods of low price levels.
- --------------------------------------------------------------------------------
38 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
- ------------------
BOARD OF DIRECTORS
- ------------------
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
Bruce Aronow, 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.
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 39
<PAGE>
- --------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
- --------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Balanced Shares
Conservative Investors Fund
Disciplined Value Fund
Growth & Income Fund
Growth Fund
Growth Investors Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Real Estate Investment Fund
Technology Fund
The Alliance Fund
Utility Income Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Limited Maturity Government Fund
Mortgage Securities Income Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
- --------------------------------------------------------------------------------
40 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>
This page intentionally blank
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 41
<PAGE>
Alliance Global Small Cap Fund
1345 Avenue of the Americas ---------------
New York, NY 10105 BULK RATE
(800) 221-5672 U.S. POSTAGE
PAID
New York, NY
Permit No. 7131
---------------
AllianceCapital [LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
GSCSR100
