ALLIANCE GLOBAL SMALL CAP FUND INC, N-30D, 2000-10-04

ALLIANCE GLOBAL SMALL CAP FUND INC
N-30D, 2000-10-04

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GLOBAL SMALL CAP
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[GRAPHIC OMITTED]

Alliance Global
Small Cap Fund

Annual Report
July 31, 2000

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
---------------------------

This shareholder report must be preceded or accompanied by the Fund's prospectus
for individuals who are not current shareholders of the Fund.
<PAGE>

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LETTER TO SHAREHOLDERS
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LETTER TO SHAREHOLDERS
August 24, 2000

Dear Shareholder:

This report provides you with the performance and market activity for Alliance
Global Small Cap Fund (the "Fund") for the annual reporting period ended July
31, 2000.

Investment Objectives and Policies

Alliance Global Small Cap Fund is an open-end fund that seeks long-term growth
of capital. It invests principally in a diversified global portfolio of equity
securities issued by small capitalization companies.

Investment Results

The following table provides performance data for the Fund and its benchmarks,
as represented by the Morgan Stanley Capital International ("MSCI") World Index,
and its peer group, as measured by the Lipper Global Small Company Funds Aver
age, for the six- and 12-month periods ended July 31, 2000.

INVESTMENT RESULTS*
Periods Ended July 31, 2000

---------------------------------
Total Returns
---------------------------------
6 Months 12 Months
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Alliance Global
Small Cap Fund
Class A 1.82% 31.81%
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Class B 1.49% 30.82%
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Class C 1.49% 30.86%
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MSCI World
Index 0.60% 9.69%
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Lipper Global
Small Company
Funds Average -0.15% 29.84%
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* The Fund's investment results are total returns for the periods shown and
are based on the net asset value of each class of shares as of July 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 each period. Total returns
for Advisor Class shares will differ due to different expenses associated
wuth that class. Past performance is no guarantee of future results.

The 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 47 funds
for both the six- and 12-month periods.. These funds have generally
similar investment objectives to the Fund, although investment policies
for the various funds may differ. An investor cannot invest directly in an
index, and its results are not indicative of the performance for any
specific investment, including Alliance Global Small Cap Fund.

Additional investment results appear on pages 5 - 8.

U.S. Investments Period Review

Rising interest rates and excessive valuations ultimately took their toll on
U.S. small-cap stocks during the six-month period ended July 31, 2000. The U.S.
portion of the Fund outperformed the benchmark due to strong stock selection
across all four major sectors with particular strength in health care and
technology. Although small-cap technology stocks started the peri-

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ALLIANCE GLOBAL SMALL CAP FUND o 1
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LETTER TO SHAREHOLDERS
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od strong, their performance quickly faded as investors grew concerned about the
sustainability of growth rates and questioned the ultimate viability of many
Internet companies. Health care was one bright spot during the period, as
investors remained enamored by the new developments unfolding in the area of
biotechnology. Driven by rising oil and natural gas prices, small-cap energy
stocks also performed very well during the period.

International Investments Period Review

Small capitalization securities have proved highly volatile over the period
under review as investors have become unnerved by the rise in oil prices, the
weakness of the Euro and fears as to a further delay in the Japanese economic
recovery. In this environment valuations of smaller capitalization securities
have declined relative to their large cap counterparts as investors have been
prepared to pay more for liquidity in this uncertain environment. We foresee a
better prospective for international small cap over the remainder of the year as
we believe that fears over commodity prices and inflation will ease and the U.S.
economy will succeed in effecting a "soft landing".

We have maintained the portfolio's emphasis on companies with strong balance
sheets and better than average growth prospects in their industry. Our global
asset allocation is currently underweighting North America and overweighting
Japan and other pacific markets. This has come about primarily on our increased
emphasis on drug stocks in Japan, which we feel offer considerable growth and
valuation appeal.

We have continued to invest in new opportunities in Europe, particularly in
technology where we have enjoyed a stream of interesting IPOs on the new small
capitalization markets of the continent. Most notable of these has been the
Neuer market in Germany which has continued to rapidly expand the number of
opportunities for small-cap investors.

We do not foresee changing our growth strategy in the near future despite the
recent volatility in telecommunications, media and technology stocks. We believe
that investors will be rewarded for their commitment to this area over the
longer term and we continue to be on the look out for new opportunities in these
sectors.

Investment Review

The increased emphasis of the Fund's portfolio on a new, growth style - one
focused on identifying companies showing higher than average growth rates and
improving fundamentals - is largely complete. The growth rate for the portfolio
has been significantly increased from 23% to 36%. U.S. sector exposures have
been shifted to better reflect the weightings of the Russell 2000 Growth Index.
The most dramatic sector changes can be seen in the tech-

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2 o ALLIANCE GLOBAL SMALL CAP FUND
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LETTER TO SHAREHOLDERS
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nology and health care components of the portfolio. Importantly, the group has
been disciplined in its approach to valuation. At 32x estimated 2000 earnings,
the U.S. portion of the portfolio was actually trading at a discount to its
valuation prior to the transition.

Although many pure-play Internet companies have come under severe pressure, we
continue to identify many attractive residual plays in both technology and
commercial services. On the technology side we have identified several companies
focused on making the Internet a more stable and secure environment for
businesses and consumers. In commercial services, we have invested in companies
that have helped deliver the additional bandwidth needed to accommodate the
exponential growth in Internet traffic. Elsewhere in technology, we have
increased our exposure to more reasonably valued contract manufacturers and
semiconductor capital equipment suppliers.

In health care, we stepped up our biotech exposure, identifying numerous
well-financed companies with products that are in the later stages of
development. Additionally, we have purchased several small-cap pharmaceutical
companies that are benefiting from consolidation among the larger drug
companies.

Given the backdrop of rising rates and a decelerating economy, we remain
relatively defensive in the areas of commercial services, financial services and
the industrials. We have been overweighting energy as our favorable outlook for
underlying commodity prices continues to unfold.

Outlook

Although there have been isolated examples of the Fed's impact on operating
results, U.S. small-cap companies have, for the most part, delivered solid
results through the second calendar quarter. Furthermore, most of the management
teams we speak with remain optimistic about the remainder of the year. That
said, we are closely watching the performance of the companies we have invested
in to ensure that they are remained positioned to deliver strong, profitable
growth in the quarters ahead.

Small-cap valuations, although still high on an absolute basis, have once again
returned to near record levels when looked at relative to their larger-cap
peers. We believe that this is at least in part related to the unprecedented
volatility we have experienced over the past several months. Historically,
during periods of increased volatility, investors have gravitated toward more
liquid securities. Although the volatility appears to have settled down some
over the past several months, small-cap outperformance may be difficult to
attain, should this trend reverse.

In short, we remain optimistic about the opportunities for U.S. small-cap

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ALLIANCE GLOBAL SMALL CAP FUND o 3
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LETTER TO SHAREHOLDERS
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stocks. Fundamentals are strong, valuations have improved, and the trading
environment appears to be showing early signs of becoming more favorable.

Sincerely,

/s/ John D. Carifa

John D. Carifa
Chairman and President

/s/ Bruce K. Aronow

Bruce K. Aronow
Vice President

/s/ Mark H. Breedon

Mark H. Breedon
Vice President

[PHOTO]

John D. Carifa

[PHOTO]

Bruce K. Aronow

[PHOTO]

Mark H. Breedon

Portfolio Managers, Bruce K. Aronow and Mark H. Breedon, have over 35 years of
investment experience.

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4 o ALLIANCE GLOBAL SMALL CAP FUND
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PERFORMANCE UPDATE
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PERFORMANCE UPDATE

ALLIANCE GLOBAL SMALL CAP FUND
GROWTH OF A $10,000 INVESTMENT
7/31/90 TO 7/31/00

o Alliance Global Small Cap Fund
o MSCI World Index
o Lipper Global Small Company Funds Average

[MOUNTAIN CHART OMITTED]

MSCI World Index: $31,334

Lipper Global Small Company Funds Average: $30,046

Alliance Global Small Cap Fund Class A: $26,240

This chart illustrates the total value of an assumed $10,000 investment in
Alliance Global Small Cap Fund Class A shares (from 7/31/90 to 7/31/00) as
compared to the performance of an appropriate broad-based index and the Lipper
Global Small Company Funds Average. 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 these 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 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 6
funds (based on the number of funds in the average from 7/31/90 to 7/31/00).
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 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 5
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PERFORMANCE UPDATE
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PERFORMANCE UPDATE

ALLIANCE GLOBAL SMALL CAP FUND
HISTORY OF RETURNS
YEARLY PERIODS ENDED 7/31

o Alliance Global Small Cap Fund
o MSCI World Index

[BAR CHART OMITTED]

Alliance Global Small Cap Fund - Yearly Periods Ended 7/31
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Alliance Global Small Cap Fund MSCI World Index
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7/31/91 -5.25% -0.70%
7/31/92 -1.68% 0.36%
7/31/93 9.41% 19.53%
7/31/94 6.85% 10.60%
7/31/95 16.62% 14.61%
7/31/96 17.46% 9.32%
7/31/97 26.47% 33.16%
7/31/98 2.49% 12.11%
7/31/99 7.51% 15.91%
7/31/00 31.81% 9.69%

Past performance in no guarantee of future results. The Fund's investment
results represent total returns for Class A shares and are based on the net
asset value. All fees and expenses related to the operation of the Fund have
been deducted. Returns for the Fund include the reinvestment of any
distributions paid during the period.

The MSCI World Index is an unmanaged, market capitalization-weighted index that
measures the performance of stock markets in 22 countries. An investor cannot
invest directly in an index, and its results are not indicative of the
performance for any specific investment, including Alliance Global Small Cap
Fund.

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6 o ALLIANCE GLOBAL SMALL CAP FUND
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PORTFOLIO SUMMARY
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PORTFOLIO STATISTICS
Net Assets ($ mil): $206.1
Median Market Capitalization ($ mil): $2,252

PORTFOLIO SUMMARY
July 31, 2000

INCEPTION DATES
Class A Shares
9/29/66
Class B Shares
9/17/90
Class C Shares
5/3/93

[PIE CHART OMITTED]

SECTOR BREAKDOWN

o 34.1% Technology
o 28.4% Consumer Services
o 11.4% Health Care
o 8.0% Finance
o 3.5% Utilities
o 2.8% Capital Goods
o 2.5% Energy
o 1.7% Basic Industry
o 1.0% Consumer Staples
o 0.5% Consumer Manufacturing
o 0.5% Transportation
o 5.6% Short-term Investments

[PIE CHART OMITTED]

REGIONAL BREAKDOWN

o 41.09% The Americas
o 33.96% Europe
o 18.77% Asia/Pacific
o 0.54% Middle East/Africa
o 5.64% Short-term Investments

All data as of July 31, 2000. The Fund's sector and regional breakdowns may vary
over time. These breakdowns are expressed as a percentage of total investments.

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ALLIANCE GLOBAL SMALL CAP FUND o 7
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INVESTMENT RESULTS
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INVESTMENT RESULTS

AVERAGE ANNUAL TOTAL RETURNS AS OF JULY 31, 2000

Class A Shares
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Without Sales Charge With Sales Charge
1 Year 31.81% 26.18%
5 Years 16.62% 15.62%
10 Years 10.60% 10.13%

Class B Shares
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Without Sales Charge With Sales Charge
1 Year 30.82% 26.82%
5 Years 15.78% 15.78%
Since Inception(a) 11.88% 11.88%

Class C Shares
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Without Sales Charge With Sales Charge
1 Year 30.86% 29.86%
5 Years 15.79% 15.79%
Since Inception* 14.30% 14.30%

SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END (JUNE 30, 2000)

Class A Class B Class C
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1 Year 34.56% 35.39% 38.51%
5 Years 18.38% 18.55% 18.57%
10 Years 10.00% 12.50%*(a) 15.23%*(a)

The Fund's investment results represent average annual total returns. The
returns reflect reinvestment of dividends and/or capital gains distributions in
additional shares without and with 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.

Investing in the stocks of small companies may provide the potential for greater
returns, but is generally more volatile and the loss of principal may be
greater, than funds investing in stocks of larger, more established companies.

Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.

* Inception Date: 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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8 o ALLIANCE GLOBAL SMALL CAP FUND
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TEN LARGEST HOLDINGS
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TEN LARGEST HOLDINGS
July 31, 2000

Percent of
Company Country U.S. $ Value Net Assets
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Brokat Infosystem AG Germany $3,359,473 1.6%
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Sankyo Co., Inc. Japan 3,280,211 1.6
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ISS A/S Denmark 3,230,164 1.6
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CMG Plc United Kingdom 3,191,721 1.6
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SEZ Holding AG Switzerland 3,191,152 1.6
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NDS Group Plc (ADR) United Kingdom 3,160,000 1.5
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EMAP Plc United Kingdom 2,834,154 1.4
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Banyu Pharmaceutical Co.,
Ltd. Japan 2,730,319 1.3
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Stepstone ASA Norway 2,714,539 1.3
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Hoya Corp. Japan 2,516,297 1.2
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$30,208,030 14.7%

MAJOR PORTFOLIO CHANGES
Six Months Ended July 31, 2000

-----------------------------------------
Shares*
-----------------------------------------
Holdings
Purchases Country Bought 7/31/00
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Canon Sales Co., Inc. Japan 150,000 150,000
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Cybertron Telekom AG Austria 90,000 90,000
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EMAP Plc United Kingdom 120,000 160,000
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Kose Corp. Japan 87,000 87,000
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Libertel NV Netherlands 81,300 81,300
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Nippon System Development Co. Japan 24,500 24,500
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Saizeriya Co., Ltd. Japan 31,000 31,000
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Stepstone ASA Norway 650,000 650,000
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Tele1 Europe Holding AB Sweden 136,600 136,600
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World Online International NV Netherlands 162,000 162,000
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Holdings
Sales Country Sold 7/31/00
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Chelsea GCA Realty, Inc. United States 55,600 -0-
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Fabasoft AG Germany 7,000 23,000
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Health Management Assoc., Inc. United States 97,800 -0-
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Mikuni Coca-Cola Bottling Co. Japan 88,000 -0-
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Next Plc United Kingdom 215,000 -0-
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Seat Pagine Gialle SpA Italy 502,000 -0-
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Software AG Germany 27,200 -0-
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Station Casinos, Inc. United States 184,300 -0-
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Uni-Charm Corp. Japan 30,000 -0-
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Yahoo Japan Corp. Japan 3 -0-
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* Adjusted for a stock split.

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ALLIANCE GLOBAL SMALL CAP FUND o 9
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TEN LARGEST COUNTRY HOLDINGS
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TEN LARGEST COUNTRY HOLDINGS
July 31, 2000

Percent of
Country Value Net Assets
--------------------------------------------------------------------------------
United States $ 80,211,011 38.9%
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Japan 31,041,005 15.1
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United Kingdom 21,431,186 10.4
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Germany 6,569,098 3.2
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France 6,168,648 3.0
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Spain 5,283,654 2.6
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Sweden 5,109,040 2.5
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Switzerland 5,016,903 2.4
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Austria 4,623,917 2.2
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Netherlands 4,332,308 2.1
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$169,786,770 82.4%

SECTOR DIVERSIFICATION
July 31, 2000

Percent of
Country U.S. $ Value Net Assets
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Basic Industry $ 3,448,362 1.7%
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Capital Goods 5,770,201 2.8
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Consumer Manufacturing 1,107,962 0.5
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Consumer Services 54,734,185 26.6
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Consumer Staples 2,078,133 1.0
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Energy 5,015,917 2.4
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Finance 16,407,071 8.0
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Healthcare 26,513,965 12.9
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Technology 69,755,451 33.8
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Transportation 1,001,269 0.5
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Utilities 7,059,892 3.4
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Total Investments* 192,892,408 93.6
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Cash and receivables, net of liabilities 13,179,033 6.4
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Net Assets $206,071,441 100.0%
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* Excludes short-term obligations.

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10 o ALLIANCE GLOBAL SMALL CAP FUND
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PORTFOLIO OF INVESTMENTS
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PORTFOLIO OF INVESTMENTS
July 31, 2000

Company Shares Value
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Common & Preferred Stocks - 93.6%

United States Investments - 38.9%

Technology - 13.3%
Communication Equipment - 0.9%
Digital Microwave Corp.(a) ................. 16,300 $ 443,156
New Focus, Inc.(a) ......................... 4,700 471,762
Stanford Microdevices, Inc.(a) ............. 9,100 383,338
Westell Technologies, Inc.(a) ............. 20,700 498,094
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1,796,350
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Computer Peripherals - 0.4%
Informatica Corp.(a) ....................... 9,500 760,000
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Computer Services - 0.2%
eLoyalty Corp.(a) .......................... 28,600 424,531
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Computer Software - 3.5%
Active Software, Inc.(a) ................... 8,600 490,200
Actuate Corp.(a) ........................... 15,600 768,300
BindView Development Corp.(a) ............. 23,800 210,481
Documentum, Inc.(a) ........................ 13,800 646,875
Interwoven, Inc.(a) ........................ 13,000 839,313
Macrovision Corp.(a) ....................... 12,900 973,950
Micromuse, Inc.(a) ......................... 3,900 505,964
NetIQ Corp.(a) ............................. 12,200 588,650
Tumbleweed Communications Corp.(a) ......... 10,300 463,500
Uproar, Ltd.(a) ............................ 150,412 857,229
WatchGuard Technologies, Inc.(a) ........... 16,100 789,906
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7,134,368
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Contract Manufacturing - 0.8%
DDI Corp.(a) ............................... 32,000 704,000
Semtech Corp.(a) ........................... 12,500 1,002,344
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1,706,344
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Internet - 1.0%
Digital Island, Inc.(a) .................... 3,900 111,881
DigitalThink, Inc.(a) ...................... 8,200 405,900
Excalibur Technologies Corp.(a) ............ 10,700 492,869
NetRatings, Inc.(a) ........................ 2,200 44,275
Niku Corp.(a) .............................. 15,400 410,025
Packeteer, Inc.(a) ......................... 4,300 165,550
Selectica, Inc.(a) ......................... 2,600 134,550
Support.com, Inc.(a) ....................... 4,900 167,212
Virage, Inc.(a) ............................ 9,800 161,088
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2,093,350
----------

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ALLIANCE GLOBAL SMALL CAP FUND o 11
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PORTFOLIO OF INVESTMENTS
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Company Shares Value
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Networking Software - 1.0%
Predictive Systems, Inc.(a) ................ 13,600 $ 299,200
SonicWALL, Inc.(a) ......................... 14,300 1,240,525
Stratos Lightwave, Inc.(a) ................. 14,600 547,500
-----------
2,087,225
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Semi-Conductor Capital Equipment - 1.8%
ASAT Holdings, Ltd.(ADR)(a) ................ 53,900 458,150
Credence Systems Corp.(a) .................. 19,600 837,900
Internet Security Systems, Inc.(a) ......... 9,300 687,038
Intersil Holding Corp.Cl.A(a) ............. 14,600 836,762
MKS Instruments, Inc.(a) ................... 13,400 337,513
Varian Semiconductor Equipment
Associates, Inc.(a) ...................... 12,900 626,456
-----------
3,783,819
-----------
Semi-Conductor Components - 2.2%
Axcelis Technologies, Inc.(a) ............. 12,200 225,700
Elantec Semiconductor, Inc.(a) ............. 11,900 866,469
Fairchild Semiconductor Corp.Cl.A(a) ....... 26,500 937,437
International Rectifier Corp.(a) ........... 13,500 746,719
Marvell Technology Group Ltd.(a) ........... 3,400 155,338
SCG Holdings Corp.(a) ...................... 21,100 466,837
Telcom Semiconductor, Inc.(a) ............. 19,200 434,400
Virata Corp.(a) ............................ 10,400 665,600
-----------
4,498,500
-----------
Miscellaneous - 1.5%
Aeroflex, Inc.(a) .......................... 13,700 392,162
Amphenol Corp.Cl.A(a) ...................... 10,800 566,325
Exar Corp.(a) .............................. 16,400 1,522,125
PRI Automation, Inc.(a) .................... 10,900 497,312
Triton Networks Systems, Inc.(a) ........... 5,700 157,463
-----------
3,135,387
-----------
27,419,874
Consumer Services - 9.3%
Apparel - 0.2%
Mens Wearhouse, Inc.(a) .................... 13,600 352,750
-----------
Broadcasting & Cable - 1.5%
OpenTV Corp.Cl.A(a) ........................ 46,700 2,299,975
Westwood One, Inc.(a) ...................... 26,000 723,125
-----------
3,023,100
-----------
Cellular Communications - 0.8%
Pinnacle Holdings, Inc.(a) ................. 11,500 646,156
SBA Communications Corp.(a) ................ 21,300 961,163
-----------
1,607,319
-----------

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12 o ALLIANCE GLOBAL SMALL CAP FUND
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PORTFOLIO OF INVESTMENTS
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Company Shares Value
--------------------------------------------------------------------------------

Entertainment & Leisure - 0.6%
Ackerley Group, Inc. ....................... 25,400 $ 323,850
Penton Media, Inc. ......................... 25,200 872,550
-----------
1,196,400
-----------
Gaming - 0.1%
Station Casinos, Inc.(a) ................... 13,300 171,238
-----------
Retail - General Merchandise - 1.3%
BJ's Wholesale Club, Inc.(a) ............... 31,700 949,019
Fred's, Inc. ............................... 12,100 251,075
Group 1 Automotive, Inc.(a) ................ 25,100 299,631
MSC Industrial Direct Co., Inc. Cl.A(a) .... 44,600 811,162
Venator Group, Inc.(a) ..................... 31,600 446,350
-----------
2,757,237
-----------
Miscellaneous - 4.8%
Career Education Corp.(a) .................. 12,300 702,637
CDW Computer Centers, Inc.(a) ............. 17,700 852,919
ChoicePoint, Inc.(a) ....................... 15,067 655,415
Dycom Industries, Inc.(a) .................. 34,750 1,485,562
Insight Enterprises, Inc.(a) ............... 18,900 874,125
Iron Mountain, Inc.(a) ..................... 32,200 1,127,000
Lexent, Inc.(a) ............................ 4,000 106,500
MasTec, Inc.(a) ............................ 22,750 755,016
Michaels Stores, Inc.(a) ................... 20,300 879,244
PC Connection, Inc.(a) ..................... 13,900 628,106
Rent-Way, Inc.(a) .......................... 26,400 818,400
TeleSpectrum Worldwide, Inc.(a) ............ 82,000 292,125
West TeleServices Corp.(a) ................. 35,700 843,412
-----------
10,020,461
-----------
19,128,505
Health Care - 8.7%
Biotechnology - 3.3%
Abgenix, Inc.(a) ........................... 6,600 330,825
Aclara Biosciences, Inc.(a) ................ 1,600 67,200
Applied Molecular Evolution(a) ............. 2,400 63,300
Aviron(a) .................................. 25,600 736,000
deCode GENETICS, Inc.(a) ................... 6,200 159,263
Enzon, Inc.(a) ............................. 3,800 170,050
Exelixis, Inc.(a) .......................... 6,600 256,987
Genencor International, Inc.(a) ............ 6,700 140,700
Genomic Solutions, Inc.(a) ................. 29,700 475,200
IDEC Pharmaceuticals Corp.(a) ............. 9,600 1,179,000
Illumina, Inc.(a) .......................... 2,400 84,000
Intermune Pharmaceuticals, Inc.(a) ......... 9,700 400,125
Invitrogen Corp.(a) ........................ 3,800 238,450
Orchid Biosciences, Inc.(a) ................ 9,100 334,425
PRAECIS Pharmaceuticals, Inc.(a) ........... 10,800 303,075
Tanox, Inc.(a) ............................. 11,500 552,000
Transgenomic, Inc.(a) ...................... 1,500 28,500

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ALLIANCE GLOBAL SMALL CAP FUND o 13
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PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------

Company Shares Value
--------------------------------------------------------------------------------

Trimeris, Inc.(a) ............................ 9,600 $ 548,400
United Therapeutics Corp.(a) ................. 6,900 676,200
Variagenics, Inc.(a) ......................... 3,300 66,825
-----------
6,810,525
-----------
Drugs - 1.4%
Alpharma, Inc. Cl.A .......................... 18,600 1,218,300
Jones Pharma, Inc. ........................... 17,400 568,762
King Pharmaceuticals, Inc.(a) ............... 25,550 769,694
Matrix Pharmaceuticals, Inc.(a) .............. 34,500 422,625
-----------
2,979,381
-----------
Medical Products - 0.4%
ArthroCare Corp.(a) .......................... 1,500 54,469
Cytyc Corp.(a) ............................... 3,500 168,000
INAMED Corp.(a) .............................. 17,500 575,312
Rita Medical Systems, Inc.(a) ............... 4,800 59,700
-----------
857,481
-----------
Medical Services - 3.1%
AmeriSource Health Corp. Cl.A(a) ............. 22,300 779,106
Bindley Western Industries, Inc. ............. 29,700 781,481
Caremark Rx, Inc.(a) ......................... 68,500 577,969
Laboratory Corp. of America Holding .......... 8,100 795,825
Lifepoint Hospitals, Inc.(a) ................. 53,600 1,433,800
Orthodontic Centers of America, Inc.(a) ...... 28,900 747,788
Priority Healthcare Corp.Cl. B(a) ............ 8,600 461,175
Quest Diagnostics, Inc.(a) ................... 4,700 474,406
ResMed, Inc.(a) .............................. 15,200 421,800
-----------
6,473,350
-----------
Miscellaneous - 0.5%
Argonaut Technologies, Inc.(a) ............... 3,200 63,150
Discovery Partners International, Inc.(a) .... 10,000 180,000
Tektronix, Inc. .............................. 11,200 688,800
-----------
931,950
-----------
18,052,687
Energy - 2.0%
Domestic Producers - 0.6%
Barrett Resources Corp.(a) ................... 17,400 483,937
Murphy Oil Corp. ............................. 10,600 638,650
-----------
1,122,587
-----------
Oil Service - 0.3%
Santa Fe International Corp. ................. 16,300 572,538
-----------
Pipelines - 0.8%
Kinder Morgan, Inc. .......................... 19,900 676,600
Maverick Tube Corp.(a) ....................... 21,800 497,312
Patterson Energy, Inc.(a) .................... 22,500 561,094
-----------
1,735,006
-----------

--------------------------------------------------------------------------------
14 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------

Company Shares Value
--------------------------------------------------------------------------------

Miscellaneous - 0.3%
Newfield Exploration Co.(a) ................ 20,700 $ 705,094
----------
4,135,225
----------
Capital Goods - 1.8%
Electrical Equipment - 0.6%
American Superconductor Corp.(a) ........... 10,300 381,100
C&D Technologies, Inc. ..................... 21,700 878,850
----------
1,259,950
----------
Pollution Control - 0.4%
Tetra Tech, Inc.(a) ........................ 31,800 796,987
----------
Miscellaneous - 0.8%
Carlisle Cos., Inc. ........................ 14,100 638,025
L-3 Communications Holdings, Inc.(a) ....... 16,000 942,000
----------
1,580,025
----------
3,636,962
----------
Finance - 1.2%
Banking - Regional - 0.3%
Silicon Valley Bancshares(a) ............... 12,800 560,800
----------
Brokerage & Money Management - 0.0%
Legg Mason, Inc. ........................... 1,800 93,600
----------
Insurance - 0.4%
Reinsurance Group of America, Inc. ......... 27,800 884,388
----------
Miscellaneous - 0.5%
CompuCredit Corp.(a) ....................... 32,000 944,000
----------
2,482,788
----------
Utilities - 1.0%
Telephone Utility - 0.1%
MGC Communications, Inc.(a) ................ 6,700 301,500
----------
Miscellaneous - 0.9%
Digital Lightwave, Inc.(a) ................. 3,700 323,519
Dobson Communications Corp.Cl.A(a) ......... 10,800 236,250
Evoke Communications, Inc.(a) ............. 13,000 104,000
Net2000 Communication, Inc.(a) ............. 49,300 468,350
Rural Cellular Corp.Cl.A(a) ................ 9,200 721,050
----------
1,853,169
----------
2,154,669
----------
Basic Industry - 0.9%
Chemicals - 0.5%
OM Group, Inc. ............................. 21,400 1,015,163
----------
Containers - 0.3%
Packaging Corp of America(a) ............... 51,600 586,950
----------

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 15
<PAGE>

--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------

Company Shares Value
--------------------------------------------------------------------------------

Paper & Forest Products - 0.1%
Pactiv Corp.(a) .............................. 25,400 $ 234,950
-----------
1,837,063
-----------
Transportation - 0.5%
Shipping - 0.5%
Expeditors International of Washington, Inc. . 18,200 914,550
-----------
Trucking - 0.0%
American Freightways Corp.(a) ................ 5,000 86,719
-----------
1,001,269
-----------
Consumer Manufacturing - 0.2%
Auto & Related - 0.2%
Tower Automotive, Inc.(a) .................... 29,700 361,969
-----------
Total United States Investments
(cost $75,338,989) ......................... 80,211,011
-----------
Foreign Investments - 54.7%
Australia - 0.7%
Publishing & Broadcasting, Ltd. .............. 75,000 571,285
Woodside Petroleum, Ltd. ..................... 120,000 880,692
-----------
1,451,977
-----------
Austria - 2.2%
Austria Technologie & Systemtechnik AG ....... 20,000 1,649,526
Cybertron Telekom AG(a) ...................... 90,000 2,143,457
Yline Internet Business Services AG(a) ....... 8,380 830,934
-----------
4,623,917
-----------
Brazil - 0.7%
Brasil Telecom Participacoes SA (ADR) pfd. ... 13,000 936,000
Telesp Celular Participacoes, SA (ADR) pfd. .. 15,000 565,313
-----------
1,501,313
-----------
Canada - 1.1%
Cinar Corp. Cl.B(a)(b) ....................... 11,700 81,900
FirstService Corp.(a) ........................ 17,600 202,400
GT Group Telecom, Inc. Cl.B(a) ............... 24,800 404,550
Imax Corp.(a) ................................ 20,500 512,500
Pivotal Corp.(a) ............................. 21,500 696,063
SMTC Corp.(a) ................................ 22,100 399,181
-----------
2,296,594
-----------
Denmark - 1.6%
ISS A/S(a) ................................... 45,600 3,230,164
-----------
Finland - 0.5%
Technomen Oyj(a) ............................. 150,000 1,028,637
-----------

--------------------------------------------------------------------------------
16 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------

Company Shares Value
--------------------------------------------------------------------------------

France - 3.0%
Atos, SA(a) ................................ 25,200 $ 2,498,754
Business Objects, SA (ADR)(a) ............. 8,900 841,050
Credit Lyonnais ............................ 11,000 475,536
Rhodia, SA ................................. 107,000 1,611,299
Unibail, SA ................................ 5,100 742,009
-----------
6,168,648
-----------
Germany - 3.2%
Brokat Infosystem AG(a) .................... 34,200 3,359,473
Fabasoft AG(a) ............................. 23,000 1,534,615
Primacom AG(ADR)(a) ........................ 37,500 1,675,010
-----------
6,569,098
-----------
Hong Kong - 0.8%
Television Broadcasting, Ltd. .............. 293,000 1,585,530
-----------
India - 0.1%
Mahanagar Telephone Nigam, Ltd. (GDR)(a) ... 27,200 235,960
-----------
Ireland - 1.2%
Bank of Ireland ............................ 269,827 1,657,823
Riverdeep Group Plc (ADR)(a) ............... 45,000 843,750
-----------
2,501,573
-----------
Israel - 0.3%
BackWeb Technologies, Ltd.(a) ............. 29,900 575,575
-----------
Italy - 0.4%
Ferretti SpA(a) ............................ 250,000 745,993
-----------
Japan - 15.1%
Bank of Fukuoka, Ltd. ...................... 368,000 2,113,689
Banyu Pharmaceutical Co., Ltd. ............. 121,000 2,730,319
Canon Sales Co., Inc. ...................... 150,000 2,508,091
Crayfish Co., Ltd.(a) ...................... 8 226,102
Daito Trust Construction Co., Ltd. ......... 93,400 1,600,024
Daiwa Securities Co., Ltd. ................. 124,000 1,349,829
Hoya Corp. ................................. 30,000 2,516,297
Kose Corp.(a) .............................. 87,000 2,078,133
Nippon Broadcasting System ................. 52,000 2,180,791
Nippon System Development Co., Ltd. ........ 24,500 1,920,955
Onward Kashiyama Co., Ltd. ................. 169,000 1,895,154
Ryohin Keikaku Co., Ltd. ................... 4,700 566,048
Saizeriya Co., Ltd. ........................ 31,000 2,275,152
Sankyo Co., Ltd. ........................... 89,500 3,280,211
Santen Pharmaceutical Co. .................. 87,420 1,912,823
Toyo Trust & Banking Co., Ltd. ............. 651,000 1,887,387
-----------
31,041,005
-----------

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 17
<PAGE>

--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------

Company Shares Value
--------------------------------------------------------------------------------

Luxembourg - 0.3%
Millicom International Cellular, SA(a) ......... 15,100 $ 666,288
----------
Netherlands - 2.1%
Libertel NV(a) ................................. 81,300 1,277,025
United Pan-Europe Communications NV(a) ......... 54,500 1,388,891
World Online International NV(a) ............... 162,000 1,666,392
----------
4,332,308
----------
Norway - 1.3%
Stepstone ASA(a) ............................... 650,000 2,714,539
----------
Singapore - 0.7%
DBS Group Holdings, Ltd. ....................... 51,366 619,242
Singapore Press Holdings, Ltd. ................. 48,000 816,774
----------
1,436,016
----------
South Africa - 0.2%
M-Cell, Ltd. ................................... 115,400 518,968
----------
South Korea - 0.7%
SK Telecom Co., Ltd. (ADR) ..................... 44,500 1,357,250
----------
Spain - 2.6%
Amadeus Global Travel Distribution, SA ......... 130,000 1,442,038
Indra Sistemas, SA ............................. 61,000 1,310,335
Sogecable, SA(a) ............................... 58,000 2,063,946
Terra Networks, SA(a) .......................... 12,300 467,335
----------
5,283,654
----------
Sweden - 2.5%
Framtidsfabriken AB(a) ......................... 122,000 1,170,774
Securitas AB Series B .......................... 101,000 2,202,835
Tele1 Europe Holding AB(a) ..................... 136,600 1,735,431
----------
5,109,040
----------
Switzerland - 2.4%
EMTS Technologie AG(a) ......................... 28,600 1,825,751
SEZ Holding AG ................................. 3,800 3,191,152
----------
5,016,903
----------
Taiwan - 0.4%
Hon Hai Precision Industry, Co., Ltd. (GDR)(c) . 50,050 869,619
----------
Thailand - 0.2%
Advanced Info Service Public Co., Ltd.(a) ...... 35,000 389,642
CMIC Finance & Security Public Co.(a)(b) ....... 110,000 -0-
----------
389,642
----------
United Kingdom - 10.4%
Aegis Group Plc ................................ 380,000 1,036,433
British Airways Plc ............................ 314,767 1,775,989
CMG Plc ........................................ 185,200 3,191,721
EMAP Plc ....................................... 160,000 2,834,154

--------------------------------------------------------------------------------
18 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------

Shares or
Principal
Amount
Company (000) Value
--------------------------------------------------------------------------------

Filtronic Plc .............................. 41,900 $ 543,145
Freeserve Plc(a) ........................... 475,894 2,203,712
Future Network Plc(a) ...................... 100,000 1,351,738
Gemini Genomics Plc (ADR)(a) ............... 2,600 45,175
Land Securities Plc ........................ 110,000 1,275,909
Misys Plc .................................. 136,000 1,263,620
NDS Group Plc (ADR)(a) ..................... 39,500 3,160,000
Shire Pharmaceuticals Group Plc (ADR)(a) ... 9,000 492,750
Telework Group Plc(a) ...................... 200,000 434,594
Thus Plc(a) ................................ 197,000 451,693
WPP Group Plc .............................. 101,000 1,370,553
------------
21,431,186
------------
Total Foreign Investments
(cost $100,390,014) ...................... 112,681,397
------------
Total Common & Preferred Stocks
(cost $175,729,003) ...................... 192,892,408
------------
Short-Term Investment - 5.6%
Time Deposit - 5.6%
State Street Euro Dollar
6.00%, 8/01/00
(amortized cost $11,539,000) ............. $ 11,539 11,539,000
------------
Total Investments - 99.2%
(cost $187,268,003) ...................... 204,431,408
Other assets less liabilities - 0.8% ....... 1,640,033
------------
Net Assets - 100% .......................... $206,071,441
============

(a) Non-income producing security.
(b) Illiquid security, valued at fair market value (see Note A).
(c) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At July 31, 2000, these
securities amounted to $869,619, representing 0.4% of net assets.
Glossary of Terms:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
See notes to financial statements.

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 19
<PAGE>

--------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
--------------------------------------------------------------------------------

STATEMENT OF ASSETS & LIABILITIES
July 31, 2000

Assets
Investments in securities, at value (cost $187,268,003) ... $ 204,431,408
Cash ...................................................... 879
Foreign cash, at value (cost $859,383) .................... 859,382
Receivable for capital stock sold ......................... 3,745,017
Receivable for investment securities sold and foreign
currency contracts ...................................... 1,009,937
Dividends and interest receivable ......................... 147,439
Foreign tax receivable .................................... 35,982
-------------
Total assets .............................................. 210,230,044
-------------
Liabilities
Payable for investment securities purchased and
foreign currency contracts .............................. 2,548,827
Unclaimed dividends ....................................... 634,063
Payable for capital stock redeemed ........................ 395,116
Management fee payable .................................... 181,502
Distribution fee payable .................................. 107,316
Accrued expenses and other liabilities .................... 291,779
-------------
Total liabilities ......................................... 4,158,603
-------------
Net Assets ................................................ $ 206,071,441
=============
Composition of Net Assets
Capital stock, at par ..................................... $ 142,511
Additional paid-in capital ................................ 166,703,685
Accumulated net investment loss ........................... (757,734)
Accumulated net realized gain on investments and
foreign currency transactions ........................... 22,823,138
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities ..... 17,159,841
-------------
$ 206,071,441
=============
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($120,687,294 / 7,975,273 shares of capital stock
issued and outstanding) ................................. $15.13
Sales charge--4.25% of public offering price .............. .67
------
Maximum offering price .................................... $15.80
======
Class B Shares
Net asset value and offering price per share
($65,097,279 / 4,791,591 shares of capital stock
issued and outstanding) ................................. $13.59
======
Class C Shares
Net asset value and offering price per share
($19,580,080 / 1,438,014 shares of capital stock
issued and outstanding) ................................. $13.62
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($706,788 / 46,250 shares of capital stock
issued and outstanding) ................................. $15.28
======

See notes to financial statements.

--------------------------------------------------------------------------------
20 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------

STATEMENT OF OPERATIONS
Year Ended July 31, 2000

Investment Income
Dividends (net of foreign taxes
withheld of $123,523) .................. $ 1,034,739
Interest ................................. 513,761 $ 1,548,500
------------
Expenses
Advisory fee ............................. 1,659,431
Distribution fee - Class A ............... 312,846
Distribution fee - Class B ............... 480,010
Distribution fee - Class C ............... 131,628
Transfer agency .......................... 507,324
Custodian ................................ 294,843
Administrative ........................... 131,000
Registration ............................. 87,751
Printing ................................. 81,035
Audit fees ............................... 53,530
Legal fees ............................... 37,724
Directors' fees .......................... 26,000
Miscellaneous ............................ 6,496
------------
Total expenses ........................... 3,809,618
Less: expense offset arrangement
(see Note B) ........................... (28,666)
------------
Net expenses ............................. 3,780,952
------------
Net investment loss ...................... (2,232,452)
------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized gain on investment
transactions ........................... 27,903,799
Net realized loss on foreign currency
transactions ........................... (938,899)
Net change in unrealized
appreciation/depreciation of:
Investments ............................ 5,069,573
Foreign currency denominated assets
and liabilities ....................... (5,911)
------------
Net gain on investments and foreign
currency transactions .................. 32,028,562
------------
Net Increase in Net Assets
from Operations ........................ $ 29,796,110
============

See notes to financial statements

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 21
<PAGE>

--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

STATEMENT OF CHANGES
IN NET ASSETS

Year Ended Year Ended
July 31, July 31,
2000 1999
------------- -------------
Increase (Decrease) in Net Assets
from Operations
Net investment loss ...................... $ (2,232,452) $ (1,182,124)
Net realized gain on investments and
foreign currency transactions .......... 26,964,900 1,819,665
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities ..... 5,063,662 5,106,195
------------- -------------
Net increase in net assets from operations 29,796,110 5,743,736
Distributions to Shareholders from:
Net realized gain on investments
Class A ................................ (1,378,774) (7,496,012)
Class B ................................ (559,968) (3,620,259)
Class C ................................ (131,883) (837,402)
Advisor Class .......................... (3,350) (18,180)
Capital Stock Transactions
Net increase (decrease) .................. 63,734,257 (10,689,478)
------------- -------------
Total increase (decrease) ................ 91,456,392 (16,917,595)
Net Assets
Beginning of period ...................... 114,615,049 131,532,644
------------- -------------
End of period ............................ $ 206,071,441 $ 114,615,049
============= =============

See notes to financial statements.

--------------------------------------------------------------------------------
22 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS
July 31, 2000

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 accounting principles generally
accepted in the United States, 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 23
<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 accounting principles generally accepted in the United States. To the
extent these differences are permanent, such amounts are reclassified within the
capital accounts based on

--------------------------------------------------------------------------------
24 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

their federal tax basis treatment; temporary differences do not require such
reclassification.

During the current fiscal year, permanent differences, primarily due to foreign
currency transactions and net operating losses, resulted in a net decrease in
accumulated net investment loss and a corresponding decrease in accumulated net
realized gain on investments and foreign currency transactions. This
reclassification had no effect on net assets.

NOTE B

Management Fees and Other Transactions with Affiliates

Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Manager") a management fee at an annual rate of 1%
of the average daily net assets of the Fund. Such fee is accrued daily and paid
monthly.

Pursuant to the management agreement, the Fund paid $131,000 to the Manager
representing the cost of certain legal and accounting services provided to the
Fund by the Manager for the year ended July 31, 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 $366,106 for the year ended July 31, 2000.

For the year ended July 31, 2000, the Fund's expenses were reduced by $28,666
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 $26,638
from the sales of Class A shares and $55,509 and $3,782 in contingent deferred
sales charges imposed upon redemptions by shareholders of Class B and Class C
shares, respectively, for the year ended July 31, 2000.

Brokerage commissions paid on investment transactions for the year ended July
31, 2000, amounted to $722,202, 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

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 25
<PAGE>

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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
$3,590,153 and $960,322 for Class B and Class C shares, respectively; such costs
may be recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs incurred by the Distributor beyond the current
fiscal year for Class A shares. The Agreement also provides that the Manager may
use its own resources to finance the distribution of the Fund's shares.

NOTE D

Investment Transactions

Purchases and sales of investment securities (excluding short-term in vestments
and U.S. government securities) aggregated $255,304,052 and $208,381,171,
respectively, for the year ended July 31, 2000. There were no purchases or sales
of U.S. government and government agency obligations for the year ended July 31,
2000.

At July 31, 2000, the cost of investments was $188,389,241. Accordingly, gross
unrealized appreciation of investments was $33,063,086 and gross unrealized
depreciation of investments was $16,161,545, resulting in net unrealized
appreciation of $16,901,541, excluding foreign currency transactions.

Currency losses incurred after October 31 (post-October losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net currency losses of
$757,734 during the fiscal year 2000. To the extent that the carryover losses
are used to offset future currency gains, it is probable that the gain to offset
will not be distributed to shareholders.

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 or other liquid assets in a
separate account of the Fund having a value at least 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 unan-

--------------------------------------------------------------------------------
26 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

ticipated movements in the value of a foreign currency relative to the U.S.
dollar.

There were no forward exchange currency contracts outstanding at July 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 of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:

-------------------------- -----------------------------
Shares Amount
-------------------------- -----------------------------
Year Ended Year Ended Year Ended Year Ended
July 31, July 31, July 31, July 31,
2000 1999 2000 1999
-----------------------------------------------------------
Class A
Shares sold 4,707,931 623,396 $ 69,245,773 $ 6,806,663
--------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 90,314 629,890 1,143,434 6,097,336
--------------------------------------------------------------------------------
Shares converted
from Class B 99,018 73,883 1,437,368 780,932
--------------------------------------------------------------------------------
Shares redeemed (3,537,477) (1,536,869) (50,604,797) (16,383,463)
--------------------------------------------------------------------------------
Net increase
(decrease) 1,359,786 (209,700) $ 21,221,778 $ (2,698,532)
================================================================================

Class B
Shares sold 2,907,356 657,798 $ 43,066,147 $ 6,355,692
--------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 46,649 370,560 533,216 3,268,436
--------------------------------------------------------------------------------
Shares converted
to Class A (109,806) (77,917) (1,437,368) (780,932)
--------------------------------------------------------------------------------
Shares redeemed (910,332) (1,559,407) (12,326,311) (14,943,035)
--------------------------------------------------------------------------------
Net increase
(decrease) 1,933,867 (608,966) $ 29,835,684 $ (6,099,839)
================================================================================

Class C
Shares sold 1,102,402 265,399 $ 16,596,295 $ 2,571,782
--------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 10,944 87,168 125,410 770,565
--------------------------------------------------------------------------------
Shares redeemed (341,683) (530,032) (4,534,218) (5,072,717)
--------------------------------------------------------------------------------
Net increase
(decrease) 771,663 (177,465) $ 12,187,487 $ (1,730,370)
================================================================================

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 27
<PAGE>

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

-------------------------- -----------------------------
Shares Amount
-------------------------- -----------------------------
Year Ended Year Ended Year Ended Year Ended
July 31, July 31, July 31, July 31,
2000 1999 2000 1999
-----------------------------------------------------------
Advisor Class
Shares sold 43,166 4,127 $ 698,733 $ 44,310
--------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions 237 1,319 3,028 12,857
--------------------------------------------------------------------------------
Shares redeemed (13,211) (21,501) (212,453) (217,904)
--------------------------------------------------------------------------------
Net increase
(decrease) 30,192 (16,055) $ 489,308 $(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 year ended July 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.

--------------------------------------------------------------------------------
28 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
-----------------------------------------------------------------------------------------
Year Ended July 31,
-----------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .................... $11.66 $12.14 $12.87 $11.61 $10.38
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss(a) ......... (.16) (.08) (.11) (.15) (.14)
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 3.83 .76 .37 2.97 1.90
-----------------------------------------------------------------------------------------
Net increase in net asset
value from operations ........ 3.67 .68 .26 2.82 1.76
Less: Distributions
Distributions from net realized
gains ........................ (.20) (1.16) (.99) (1.56) (.53)
-----------------------------------------------------------------------------------------
Net asset value, end of
period ....................... $15.13 $11.66 $12.14 $12.87 $11.61
=========================================================================================
Total Return
Total investment return based
on net asset value(b) ........ 31.81% 7.51% 2.49% 26.47% 17.46%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $120,687 $77,164 $82,843 $85,217 $68,623
Ratios to average net assets of:
Expenses ..................... 2.02%(c) 2.37%(c) 2.16%(c) 2.41%(c) 2.51%
Net investment loss .......... (1.07)% (.79)% (.88)% (1.25)% (1.22)%
Portfolio turnover rate ........ 133% 120% 113% 129% 139%
</TABLE>

See footnote summary on page 33

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 29
<PAGE>

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

Selected Data For A Share Of Common Stock Outstanding Throughout Each Period

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Class B
-------------------------------------------------------------------------------------
Year Ended July 31,
-------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .................... $10.57 $11.20 $12.03 $11.03 $9.95
-------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss(a) ......... (.24) (.15) (.18) (.21) (.20)
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 3.46 .68 .34 2.77 1.81
-------------------------------------------------------------------------------------
Net increase in net asset
value from operations ........ 3.22 .53 .16 2.56 1.61
Less: Distributions
Distributions from net realized
gains ........................ (.20) (1.16) (.99) (1.56) (.53)
-------------------------------------------------------------------------------------
Net asset value, end of
period ....................... $13.59 $10.57 $11.20 $12.03 $11.03
=====================================================================================
Total Return
Total investment return based
on net asset value(b) ........ 30.82% 6.74% 1.80% 25.42% 16.69%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $65,097 $30,205 $38,827 $31,946 $14,247
Ratios to average net assets of:
Expenses ..................... 2.76%(c) 3.14%(c) 2.88%(c) 3.11%(c) 3.21%
Net investment loss .......... (1.82)% (1.59)% (1.58)% (1.92)% (1.88)%
Portfolio turnover rate ........ 133% 120% 113% 129% 139%
</TABLE>

See footnote summary on page 33.

--------------------------------------------------------------------------------
30 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
-------------------------------------------------------------------------------------
Year Ended July 31,
-------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .................... $10.59 $11.22 $12.05 $11.05 $9.96
-------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment loss(a) ......... (.24) (.16) (.19) (.22) (.20)
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 3.47 .69 .35 2.78 1.82
-------------------------------------------------------------------------------------
Net increase in net asset
value from operations ........ 3.23 .53 .16 2.56 1.62
Less: Distributions
Distributions from net realized
gains ........................ (.20) (1.16) (.99) (1.56) (.53)
-------------------------------------------------------------------------------------
Net asset value, end of
period ....................... $13.62 $10.59 $11.22 $12.05 $11.05
=====================================================================================
Total Return
Total investment return based
on net asset value(b) ........ 30.86% 6.72% 1.79% 25.37% 16.77%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $19,580 $7,058 $9,471 $8,718 $4,119
Ratios to average net assets of:
Expenses ..................... 2.75%(c) 3.15%(c) 2.88%(c) 3.10%(c) 3.19%
Net investment loss .......... (1.80)% (1.61)% (1.59)% (1.93)% (1.85)%
Portfolio turnover rate ........ 133% 120% 113% 129% 139%
</TABLE>

See footnote summary on page 33

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 31
<PAGE>

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

Selected Data For A Share Of Common Stock Outstanding Throughout Each Period

<TABLE>
<CAPTION>
------------------------------------------------
Advisor Class
------------------------------------------------
October 2,
1996(d)
Year Ended July 31, to
-------------------------------- July 31,
2000 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) ........ (.12) (.07) (.07) (.08)
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 3.86 .77 .37 1.97
------------------------------------------------
Net increase in net asset
value from operations ........ 3.74 .70 .30 1.89
Less: Distributions
Distributions from net realized
gains ........................ (.20) (1.16) (.99) (1.56)
------------------------------------------------
Net asset value, end of
period ....................... $15.28 $11.74 $12.20 $12.89
================================================
Total Return
Total investment return based
on net asset value(b) ........ 32.19% 7.63% 2.82% 17.08%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $707 $189 $392 $333
Ratios to average net assets of:
Expenses(c) .................. 1.69% 2.13% 1.87% 2.05%(e)
Net investment loss .......... (.76)% (.63)% (.57)% (.84)%(e)
Portfolio turnover rate ........ 133% 120% 113% 129%
</TABLE>

See footnote summary on page 33

--------------------------------------------------------------------------------
32 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:

Year Year Year Period
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
2000 1999 1998 1997
---------------------------------------------
Class A 2.01% 2.33% 2.14% 2.38%
Class B 2.75% 3.11% 2.86% 3.08%
Class C 2.74% 3.12% 2.85% 3.08%
Advisor Class 1.68% 2.10% 1.84% 2.04%(e)

(d) Commencement of distribution.
(e) Annualized.

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 33
<PAGE>

--------------------------------------------------------------------------------
REPORT OF INDEPENDEDNT AUDITORS
--------------------------------------------------------------------------------

REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS

To the Shareholders and Board of Directors of Alliance Global Small Cap Fund,
Inc.

We have audited the accompanying statement of assets and liabilities of
Alliance Global Small Cap Fund, Inc., including the portfolio of investments, as
of July 31, 2000, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of July 31, 2000, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Global Small Cap Fund, Inc. at July 31, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated periods, in conformity with accounting principles generally
accepted in the United States.

/s/ Ernst & Young LLP

New York, New York
August 25, 2000

--------------------------------------------------------------------------------
34 o ALLIANCE GLOBAL SMALL CAP FUND
<PAGE>

--------------------------------------------------------------------------------
TAX INFORMATION
--------------------------------------------------------------------------------

TAX INFORMATION
(Unaudited)

In order to meet certain requirements of the Internal Revenue Code we are
advising you that $446,991 of the capital gain distributions paid by the Fund
during the fiscal year July 31, 2000 are subject to minimum tax rates of 20%.

The Fund intends to make an election under Internal Revenue Code Section 853 to
pass through foreign taxes paid by the Fund to its shareholders. The total
amount of foreign taxes that may be passed through to the shareholders for the
fiscal year ended July 31, 2000 is $123,523. The foreign source income for
information reporting purposes is $1,672,023.

Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 2001.

--------------------------------------------------------------------------------
ALLIANCE GLOBAL SMALL CAP FUND o 35
<PAGE>

--------------------------------------------------------------------------------
GLOSSARY OF INVESTMENT TERMS
--------------------------------------------------------------------------------

GLOSSARY OF INVESTMENT TERMS

benchmark

A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.

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.

Federal Reserve Board

The seven-member board that oversees Federal Reserve Banks, establishes monetary
policy and monitors the country's economic state.

equity

Another term for stock.

net asset value (NAV)

The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding.

portfolio

The collection of securities that make up a Fund's or an investor's investments.

index

A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.

--------------------------------------------------------------------------------
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 nearly $388
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 29 of the FORTUNE 100 companies and public retirement funds in 33
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 282
investment professionals in 22 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 6/30/00.

--------------------------------------------------------------------------------
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, Alliance
Select Investor Series Technology Portfolio, and Alliance Select Investor
Series Biotechnology 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
Bruce Aronow, Vice President
Thomas Bardong, Vice President
Mark Breedon, 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

Biotechnology Portfolio
Premier Portfolio
Technology Portfolio

Fixed Income Funds

Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield 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

Closed-End Funds

The Spain Fund
ACM Municipal Securities Income Fund
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Government Opportunity Fund
ACM Managed Income Fund
The Southern Africa Fund
The Austria Fund
Alliance World Dollar Government Fund
ACM Managed Dollar Income Fund
The Korean Investment Fund
Alliance World Dollar Government Fund II

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>

Alliance Global Small Cap Fund ---------------
1345 Avenue of the Americas BULK RATE
New York, NY 10105 U.S. POSTAGE
(800) 221-5672 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.

GSCAR700