ALLIANCE GLOBAL STRATEGIC INCOME TRUST
500 PLAZA DRIVE, SECAUCUS, NJ 07094, (201) 319-4000
SEMI-ANNUAL REPORT
APRIL 30, 1997
(UNAUDITED)
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
June 17, 1997
Dear Shareholder:
The world's bond markets have entered a period of consolidation. Well-behaved
inflation, steady central bank policies, and a focus on fiscal discipline are
still in place and should keep a lid on yields. We are not bearish, and from
current levels, bonds in most markets are likely to outperform cash over the
next six to twelve months. The "yield convergence" theme is still alive even
though it has run a long way. In what promises to be an essentially stable
interest rate environment during 1997, higher-yielding side markets should
continue to outperform, at least in local currency terms.
We are pleased to report that Alliance Global Strategic Income Trust posted
solid returns over the most recent period. For the six months ended April 30,
1997, Class A shares returned 7.71% on a net asset value (NAV) basis. This
compares with 1.85% for the unmanaged Lehman Brothers Aggregate Bond Index, and
3.24% for the Lipper Average of Multi-Sector Income Funds. The 38 funds in the
Lipper peer group have investment objectives that are generally similar to that
of Global Strategic Income Trust. We are pleased to report that for the
trailing twelve months, Class A shares posted a total return of 19.74%, which
compares favorably with returns of both the Lipper benchmark and the Lehman
Aggregate benchmark.
INVESTMENT RESULTS
TOTAL RETURNS AS OF APRIL 30, 1997
6 MONTHS 12 MONTHS
---------- -----------
GLOBAL STRATEGIC INCOME FUND
Class A 7.71% 19.74%
Class B 7.63 19.27
Class C 7.64 19.39
LIPPER AVERAGE OF MULTI-SECTOR
INCOME FUND 3.24% 10.81%
LEHMAN BROTHERS AGGREGATE 1.85% 7.08%
ECONOMIC REVIEW
The U.S. economy finished 1996 on a strong note. After moderating in the third
quarter, the economy picked up speed as the year came to a close, led by a
rebound in consumer spending. The annualized gain in retail sales jumped to
4.8% in the fourth quarter, up from only 0.9% in the third quarter. An
unexpected surge in export growth also added to year-end growth. In all, growth
in aggregate output (GDP), which dipped to 2.1% in the third quarter,
accelerated to 3.8% during the final three months of 1996.
The economy continued its strong performance in the first quarter of 1997,
buoyed by continued growth in the labor market. The unemployment rate edged
down to 5.2% and wages continued to climb, with hourly earnings up 4% annually
through March. Retail sales continued their strong pace during the first
quarter and consumer confidence remained elevated. The production side of the
economy also showed considerable strength with first quarter industrial
production up by 4.9% over levels from a year earlier and total hours worked up
by 3.8% over that same time period. Overall, GDP growth jumped to 5.8% during
the first three months of 1997--its fastest rate of increase in nearly 10 years.
Despite the strong growth, inflation remained well behaved. After moving
slightly higher late in 1996, consumer and producer price gains both retreated
in early 1997 with consumer prices advancing through April at a 2.5% annual
rate and producer prices up just 0.8% for the same period. The Federal Reserve
raised interest rates 0.25% at the end of March in a preemptive strike against
what were seen as mounting inflationary pressures.
In Japan, continued weakness in the banking sector and the rise in consumption
taxes fostered low confidence and slow growth. The financial sector remains
under pressure and attempts to resolve the banking crisis are intensifying.
The Canadian Government called for General Elections in early June, more than a
year before the Government's term expires, which added to market volatility.
The Australian market underperformed the U.S. in local currency terms. However,
sluggishness in consumer demand combined with very well behaved inflation in
Australia is likely to keep the Reserve Bank of Australia in an easing mode. In
fully hedged U.S. dollar terms, all developed markets, except Australia and
Italy, outperformed the U.S. market.
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ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
In Europe, the driving force behind excellent bond market returns has been the
quest for monetary union. However, the change in several governments within
Europe reflects voter unhappiness with long term structural unemployment
problems, particularly in France. Elections in France and Great Britain added
to market volatility, creating speculation and uncertainty in the markets. The
run-up to the election in France has increased market turbulence and EMU
pressures. The U.S. dollar should continue to perform very well against the
core European currencies.
INVESTMENT OUTLOOK
U.S. economic growth has continued into its third consecutive quarter at a pace
considered above the long-term, non-inflationary rate. While continued growth
at the current pace may warrant additional rate increases, we expect the U.S.
economy to gradually slow over the next several quarters to a more sustainable
2% to 2.5% growth rate. We anticipate this slowing will occur before any
substantial inflationary pressures materialize. Given the potential for further
rate increases in the near-term, the market will be particularly vulnerable to
daily economic news which may put upward pressure on yields. In contrast to
recent periods of rising rates, the relative lack of leverage in the U.S.
financial system suggests that the interest rates and volatility will be less
substantial than in 1994.
In Europe, we expect that well-behaved inflation will be offset by moderately
improving growth prospects. The commodity oriented economies of New Zealand and
Australia are more closely linked to the U.S., but here also we anticipate that
good inflation performance and sluggish growth should continue to produce
strong fixed income returns. We continue to believe that Japan offers the
lowest value of any developed bond market over the next six months. Market
expectations of an interest rate increase in the third quarter are certain to
intensify although the Bank of Japan may delay slightly, to ensure economic
recovery.
After stellar returns in 1996, emerging market debt cooled somewhat in first
quarter 1997. Nonetheless, we remain positive on emerging market debt. Higher
U.S. interest rates may produce temporary weakness in emerging market debt
prices; however, the fundamental economics remain sound for this fixed income
sector and should support additional gains in the upcoming year.
In Argentina, the economy is gaining momentum and is on track for at least 5%
growth this year, after 4.4% growth in 1996. The strength of the economic
expansion is producing a rapid increase in tax revenues while fiscal
expenditures remain largely unchanged from last year's levels. The recent
decision by Standard & Poor's to raise many Argentine corporate debt ratings
underscores the economic progress being made in this country. Panama's external
debt (including Brady bonds) was recently assigned a Ba1 rating by Moody's.
This rating reflects the sound economic policies being pursued by the
Panamanian government and should support significant price gains in the debt
securities of that country in the upcoming year.
The Mexican economy continues to perform strongly, led by strong growth in
investment and exports. Growth is expected to remain strong at around 4% in
1997 and inflation and interest rates should both decline during the upcoming
year. Investor confidence in Mexico's economic policies is growing and the
decision to prepay the remaining $3.5 billion owed to the U.S. for the 1995
peso bailout is another positive step in their efforts to restore Mexico's
credibility in international capital markets. However, Congressional and
Gubernatorial elections are scheduled for the summer and are likely to cause an
increase in market volatility in the months leading up to the elections. This
political uncertainty sounds a cautionary note and we will be monitoring
developments closely.
In Russia, recent data indicate that the economy is beginning to grow.
Inflation remains on a downward trend and reserves have increased considerably.
The government has reinforced its commitment to pursuing a market-oriented
economy with the naming of an aggressive, reform-minded cabinet but the fiscal
situation remains negative. Development of a realistic budget will be an
essential step in putting the country's fiscal affairs in order.
2
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
The high yield bond market continues to perform very well. Continued large
inflows into the high yield market by onshore and offshore investors, combined
with an excellent economic environment for corporate balance sheets, provide a
fine backdrop for high yield investing.
Thank you for your continued interest and investment in Alliance Global
Strategic Income Trust. We look forward to reporting to you again on market
activity and the Fund's investment results in coming periods.
Sincerely,
John D. Carifa
Chairman
Douglas Peebles
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
Alliance Global Strategic Income Trust seeks to provide high current monthly
income and, secondarily, capital appreciation. The Trust invests in a wide
variety of fixed income markets including U.S. government and agency
securities, U.S. corporate securities, U.S. dollar-denominated government bonds
of emerging countries and non-U.S. dollar-denominated bonds of developed and
emerging markets.
INVESTMENT RESULTS
_______________________________________________________________________________
TOTAL RETURNS AND YIELDS AS OF APRIL 30, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. Since Inception* +19.50% +15.64%
. SECYield** +6.15%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. Since Inception* +20.96% +19.20%
. SECYield** +5.71%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. Since Inception* +20.96% +20.96%
. SECYield** +5.73%
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares with and without the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: January 9, 1996, Class A; March 21, 1996, Class B & C.
** Yields are for the 30-day period ended April 30, 1997.
4
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED) ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
ARGENTINA-12.7%
CORPORATE DEBT OBLIGATIONS-7.3%
Acindar Industry
11.25%, 2/15/04 (a) US$ 500 $ 508,750
Telefonica De Argentina
11.88%, 11/01/04 700 823,375
------------
1,332,125
GOVERNMENT OBLIGATIONS-5.4%
Republic of Argentina
11.75%, 2/12/07 (a)(b) ARS 550 578,959
Pensioner-Bocon Series 1 FRN
3.58%, 4/01/07 (a) 554 419,114
------------
998,073
Total Argentinian Securities
(cost $2,277,260) 2,330,198
AUSTRALIA-4.7%
GOVERNMENT OBLIGATION-4.7%
Republic of Australia
8.75%, 8/15/08 (a)
(cost $879,353) AU$ 1,050 866,745
CROATIA-3.2%
GOVERNMENT OBLIGATION-3.2%
Republic of Croatia
6.50%, 7/30/10 (a)
(cost $590,011) US$ 600 577,500
CZECH REPUBLIC-0.4%
CORPORATE DEBT OBLIGATION-0.4%
International Bank For
Reconstruction & Development
11.50%, 10/09/97 (a)
(cost $92,792) CZK 2,500 80,197
DENMARK-2.5%
GOVERNMENT OBLIGATION-2.5%
Kingdom of Denmark
7.00%, 11/15/07 (a)
(cost $465,025) DKK 3,000 463,908
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
ECUADOR-3.4%
GOVERNMENT OBLIGATION-3.4%
Government of Ecuador
11.25%, 4/25/02 (b)
(cost $603,750) US$ 600 $ 615,000
FRANCE-2.2%
PREFERRED STOCK-2.2%
Credit Lyonaise Capital ADR (a)(b)
(cost $394,112) US$ 16,000 400,288
GERMANY-9.3%
CORPORATE DEBT OBLIGATION-4.5%
Exide Holding Europe S.A.
9.13%, 4/15/04 (b) DEM 1,400 817,171
GOVERNMENT OBLIGATIONS-4.8%
Republic of Germany
6.00%, 1/04/07 (a) 780 456,745
6.50%, 10/14/05 (a) 700 425,859
------------
882,604
Total German Securities
(cost $1,712,187) 1,699,775
ITALY-5.0%
GOVERNMENT OBLIGATION-5.0%
Republic of Italy
8.25%, 7/01/01 (a)
(cost $921,636) ITL 1,500,000 915,066
MEXICO-2.9%
CORPORATE DEBT OBLIGATION-1.6%
Innova De R.L.
12.88%, 4/01/07 (a)(b) US$ 300 297,000
GOVERNMENT OBLIGATIONS-1.3%
Mexican Treasury Bill
25.90%, 6/26/97 (a)(c) MXP 497 60,412
27.70%, 7/31/97 (a)(c) 1,405 167,567
------------
227,979
Total Mexican Securities
(cost $528,915) 524,979
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
NEW ZEALAND-3.4%
GOVERNMENT OBLIGATION-3.4%
Government of New Zealand
8.00%, 11/15/06 (a)
(cost $653,394) NZ$ 900 $628,293
NORWAY-2.3%
GOVERNMENT OBLIGATION-2.3%
Kingdom of Norway
5.75%, 11/30/04 (a)
(cost $457,109) NOK 3,000 419,476
PANAMA-3.2%
GOVERNMENT OBLIGATION-3.2%
Republic of Panama FRN IRB
3.50%, 7/17/14 (a)
(cost $593,131) US$ 800 593,000
POLAND-0.7%
GOVERNMENT OBLIGATION-0.7%
Polish Treasury Bill
21.70%, 11/26/97 (c)
(cost $128,995) PLN 450 126,748
QATAR-2.5%
CORPORATE DEBT OBLIGATION-2.5%
Ras Laffan Liquid Natural Gas
8.29%, 3/15/14 (a)(b)
(cost $462,945) US$ 450 457,463
RUSSIA-7.4%
SOVEREIGN DEBT OBLIGATIONS-4.1%
Russia Principal Loans - WI
FRN 12/29/49 (b)(d) US$ 1,000 586,875
Vnesheconombank
3.25%, 12/31/25 200 162,750
------------
749,625
SOVEREIGN DEBT-RELATED-3.3%
Credit Suisse First Boston Corp.
Indexed Note, Linked Russian
Federation GKO
12.50%, 11/03/97 (e) US$ 650 607,945
Total Russian Securities
(cost $1,317,081) 1,357,570
SPAIN-2.0%
GOVERNMENT OBLIGATIONS-2.0%
Government of Spain
10.00%, 2/28/05 (a) ESP 23,000 188,970
10.10%, 2/28/01 (a) 22,000 172,128
Total Spanish Securities
(cost $390,177) 361,098
SWEDEN-2.2%
GOVERNMENT OBLIGATION-2.2%
Government of Sweden
5.50%, 4/12/02 (a)
(cost $416,628) SEK 3,300 406,559
UNITED KINGDOM-4.6%
GOVERNMENT OBLIGATIONS-4.6%
U.K. Treasury Gilts
7.00%, 11/06/01 (a) GBP 200 322,298
7.25%, 12/07/07 325 518,958
Total United Kingdom Securities
(cost $839,797) 841,256
UNITED STATES-24.4%
U.S. GOVERNMENT OBLIGATIONS-12.5%
U.S. Treasury Bonds
6.63%, 2/15/27 (a) US$ 375 359,414
U.S. Treasury Notes
6.25%, 2/15/07 (a) 2,000 1,934,374
------------
2,293,788
6
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-7.5%
Optel Inc.
13.00%, 2/15/05 (a)(b) US$ 500 $ 477,500
Providian Capital
9.53%, 02/01/27 (a)(b) 400 413,049
Riggs Capital
8.88%, 3/15/27 (a)(b) 500 492,840
------------
1,383,389
TIME DEPOSIT-4.4%
Bank of Tokyo
5.69%, 5/01/97 800 800,000
Total United States Securities
(cost $4,519,289) $ 4,477,177
TOTAL INVESTMENTS-99.0%
(cost $18,243,587) 18,142,296
Other assets less liabilities-1.0% 188,858
NET ASSETS-100% $18,331,154
(a) Securities, or portion thereof, with an aggregate market value of
$12,284,760 have been segregated to collateralize forward exchange currency
contracts.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1997,
these securities amounted to $5,136,145 or 28.0% of net assets.
(c) Annualized yield to maturity at purchase date.
(d) An interest rate based on the six month Libor Rate plus 81.25 basis points
will take effect upon issuance of bonds.
(e) Redemption value of this security will be an amount equal to the principal
amount of such note, plus or minus any calculated cost to the issuer.
Glossary of terms:
ADR - American depositary receipt.
FRN - Floating rate note.
IRB - Interest reduction bond.
WI - When issued.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED) ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $18,243,587) $18,142,296
Cash 80,955
Receivable for investment securities sold 2,144,116
Interest receivable 302,646
Receivable for capital stock sold 189,222
Unrealized appreciation of forward exchange currency contracts 102,921
Receivable from advisor 10,313
Deferred organization expenses 111,931
Total assets 21,084,400
LIABILITIES
Payable for investment securities purchased 2,644,758
Dividend payable 44,024
Distribution fee payable 11,081
Accrued expenses and other liabilities 53,383
Total liabilities 2,753,246
NET ASSETS $18,331,154
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,656
Additional paid-in capital 18,131,286
Distributions in excess of net investment income (168,887)
Accumulated net realized gain on investments and foreign
currency transactions 367,039
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 60
$18,331,154
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($5,649,176/
510,251 shares of capital stock issued and outstanding) $11.07
Sales Charge--4.25% of public offering price .49
Maximum offering price $11.56
CLASS B SHARES
Net asset value and offering price per share ($10,211,681/
922,366 shares of capital stock issued and outstanding) $11.07
CLASS C SHARES
Net asset value and offering price per share ($2,470,297/
223,125 shares of capital stock issued and outstanding) $11.07
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $118) $422,331
Dividends 12,595 $ 434,926
EXPENSES
Advisory fee 38,710
Distribution fee - Class A 5,302
Distribution fee - Class B 25,914
Distribution fee - Class C 8,029
Custodian 66,884
Administration 44,500
Audit and legal 30,018
Registration 17,726
Amortization of organization expenses 14,822
Transfer agency 14,636
Directors' fees 11,637
Printing 5,346
Miscellaneous 1,703
Total expenses 285,227
Less expenses waived and assumed by Adviser (see Note B) (163,390)
Net expenses 121,837
Net investment income 313,089
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 282,720
Net realized gain on foreign currency transactions 85,395
Net change in unrealized appreciation of:
Investments (259,477)
Foreign currency denominated assets and liabilities 93,392
Net gain on investments 202,030
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 515,119
See notes to financial statements.
9
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
SIX MONTHS ENDED JAN. 9,1996*
APRIL 30,1997 TO
(UNAUDITED) OCT. 31,1996
------------- ------------
INCREASE (DECREASE)IN NET ASSETS FROM OPERATIONS
Net investment income $ 313,089 $ 137,202
Net realized gain on investments and foreign
currency transactions 368,115 60,401
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities. (166,085) 166,145
Net increase in net assets from operations 515,119 363,748
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (164,172) (139,600)
Class B (225,568) (13,366)
Class C (69,738) (12,007)
Net realized gain on investments
Class A (22,494) -0-
Class B (23,190) -0-
Class C (10,520) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 14,487,529 3,545,413
Total increase 14,486,966 3,744,188
NET ASSETS
Beginning of period 3,844,188 100,000
End of period $18,331,154 $3,844,188
* Commencement of operations.
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED) ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Strategic Income Trust, Inc. (the "Fund"), was incorporated in
the State of Maryland on October 25, 1995 as a non-diversified, open-end
management investment company. Prior to commencement of operations on January
9, 1996, the Fund had no operations other than the sale to Alliance Capital
Management L.P. (the "Adviser") of 10,000 shares of Class A shares for the
aggregate amount of $100,000 on December 18, 1995.
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge of up to 4.25% for purchases not exceeding
$1,000,000. With respect to purchases of $1,000,000 or more, Class A shares
redeemed within one year of purchase will be subject to a contingent deferred
sales charge of 1%. Class B shares are currently sold with a contingent
deferred sales charge which declines from 4% to zero depending on the period of
time the shares are held. Class B shares will automatically convert to Class A
shares eight years after the end of the calendar month of purchase. Class C
shares purchased on or after July 1, 1996 are subject to a contingent deferred
sales charge of 1% on redemptions made within the first year after purchase.
All three classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Investments are stated at value. Investments for which market quotations are
readily available are valued at the closing price on the day of valuation or if
no such closing price is available, at the mean of the last bid and ask price
quoted on such day. However, readily marketable portfolio securities may be
valued on the basis of prices provided by a pricing service when such prices
are believed by the Adviser to reflect the fair value of such security. Options
are valued at market value or fair value using methods determined by the Board
of Directors. Securities which mature in 60 days or less are valued at
amortized cost, which approximates market value, unless this method does not
represent fair value. Securities for which market quotations are not readily
available and restricted securities are valued in good faith at fair value as
determined by the Board of Directors. In determining fair value, consideration
is given to cost, operating and other financial data.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward foreign exchange currency contracts are translated into U.S. dollars at
the mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
Net realized gains on foreign currency transactions represent foreign exchange
gains and losses from sales and maturities of securities, holdings of foreign
currencies, exchange 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. Net change in unrealized appreciation of foreign
currency denominated assets and liabilities represents net currency gains and
losses from valuing foreign currency denominated assets and liabilities at
period end exchange rates.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $151,270 have been deferred and are
being amortized on a straight-line basis through January 2001.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date the securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund accretes discount as an
adjustment to interest income.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for
that year.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of
.75 of 1% of the average daily net assets of the Fund. Such fee is accrued
daily and paid monthly.
The Adviser has agreed, to voluntarily waive its fees and bear certain expenses
so that total expenses do not exceed on an annual basis 1.90%, 2.60% and 2.60%
of the daily average net assets for the Class A, Class B and Class C shares
respectively.
"For the six months ended April 30, 1997, the Adviser waived $38,710 in fees
and reimbursed the Fund $72,080 for additional expenses." Pursuant to the
Advisory Agreement, the Fund may reimburse the Adviser for certain legal and
accounting services provided to the Fund by the Adviser. For the six months
ended April 30, 1997, the Adviser agreed to waive reimbursement for these
administrative expenses in the amount of $44,500.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. For the six months
ended April 30, 1997 the transfer agent agreed to waive fees in the amount of
$8,100.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $5,995 from the sale of Class A shares and $1,293,
and $1,694 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the six months
ended April 30, 1997.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and up to 1% of the average daily net assets attributable to
both Class B and Class C shares. Such fee is accrued daily and paid monthly.
The Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $508,283 and $150,479 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 period for Class
A shares. The Agreement also provides that the Adviser may use its own
resources to finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government obligations) aggregated $43,084,821 and $32,423,757
respectively, for the six months ended April 30, 1997. There were purchases of
$4,552,811 and sales of $2,596,539 of U.S. government and government agency
obligations for the six months ended April 30, 1997.
12
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
At April 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $151,602 and gross unrealized
depreciation of investments was $252,893, resulting in net unrealized
depreciation of $101,291 (excluding foreign currency transactions).
1. FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts for investment
purposes and to hedge its exposure to changes in foreign currency exchange
rates on its foreign portfolio holdings and to hedge certain firm purchase and
sales 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 realized gains or losses from foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid high quality debt securities in a separate account of the Fund
having a value equal to the aggregate amount of the Fund's commitments under
forward exchange currency contracts entered into with respect to position
hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At April 30, 1997, the Fund had outstanding forward exchange currency
contracts, as follows:
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
---------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
Australian Dollars, expiring 7/10/97 614 $476,431 $478,811 $ 2,380
Deutsche Marks, expiring 7/07/97 460 297,695 266,792 (30,903)
Greek Drachma, expiring 5/27/97 64,775 236,811 234,767 (2,044)
Indonesia Rupiah, expiring
5/12/97-1/16/98 550,000 221,437 220,169 (1,268)
Japanese Yen, expiring 1/12/98 10,485 92,103 85,863 (6,240)
Polish Zloty, expiring 9/17/97 800 241,000 238,096 (2,904)
Spanish Pesetas, expiring 5/30/97 25,000 174,459 171,099 (3,360)
</TABLE>
13
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
---------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
Australian Dollars, expiring 7/10/97 1,593 $1,243,786 $1,241,835 $ 1,951
British Pound, expiring
5/07/97-6/18/97 535 868,397 865,987 2,410
Danish Krone, expiring 7/22/97 2,001 311,259 304,883 6,376
Deutsche Marks, expiring
5/09/97-9/17/97 4,321 2,558,847 2,509,643 49,204
European Currency Unit expiring 5/12/97 213 250,865 239,766 11,099
French Francs, expiring 5/30/97 1,274 223,872 218,627 5,245
Italian Lira, expiring 5/19/97 1,609,706 945,218 939,082 6,136
Japanese Yen, expiring 1/12/98 10,485 108,822 85,863 22,959
New Zealand Dollars, expiring 5/07/97 1,000 691,750 693,157 (1,407)
Spanish Pesetas, expiring 5/30/97 54,754 382,298 374,732 7,566
Swedish Krona, expiring 5/28/97 3,212 419,320 409,677 9,643
Swiss Francs, expiring 7/07/97 400 299,446 273,368 26,078
------------
$102,921
</TABLE>
2. OPTION TRANSACTIONS
For hedging and investment purposes, the Fund purchases and writes (sells) put
and call options on U.S. and foreign government securities and foreign
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from options
written. The difference between the premium and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds
14
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
from the sale of the underlying security or currency in determining whether the
Fund has realized a gain or loss. If a put option is exercised, the premium
reduces the cost basis of the security or currency purchased by the Fund. In
writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security or currency underlying the written option. Exercise
of an option written by the Fund could result in the Fund selling or buying a
security or currency at a price different from the current market value. There
were no transactions in written options for the six months ended April 30, 1997.
NOTE E: CAPITAL STOCK
There are 9,000,000 shares of $.001 par value capital stock authorized, divided
into three classes, designated Class A, Class B and Class C shares. Each class
consists of 3,000,000 authorized shares. Transactions in capital stock were as
follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED JAN. 9,1996* SIX MONTHS ENDED JAN. 9,1996*
APRIL 30,1997 TO APRIL 30,1997 TO
(UNAUDITED) OCT. 31, 1996 (UNAUDITED) OCT. 31,1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 326,600 253,587 $3,639,992 $2,571,898
Shares issued in
reinvestment of
dividends and
distributions 7,185 4,140 79,134 42,969
Shares redeemed (35,480) (55,781) (389,594) (570,111)
Net increase 298,305 201,946 $3,329,532 $2,044,756
MARCH 25,1996** MARCH 25,1996**
TO TO
OCT. 31,1996 OCT. 31,1996
------------- --------------
CLASS B
Shares sold 984,252 78,358 $10,950,005 $822,339
Shares issued in
reinvestment of
dividends and
distributions 7,903 107 86,934 1,138
Shares redeemed (143,668) (4,586) (1,582,253) (47,937)
Net increase 848,487 73,879 $ 9,454,686 $775,540
CLASS C
Shares sold 178,304 74,590 $ 1,977,485 $781,283
Shares issued in
reinvestment of
dividends and
distributions 1,896 117 20,825 1,225
Shares redeemed (26,338) (5,444) (294,999) (57,391)
Net increase 153,862 69,263 $ 1,703,311 $725,117
* Commencement of operations.
** Commencement of distribution.
15
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
--------------------------------
SIX MONTHS ENDED JAN. 9,1996(a)
APRIL 30,1997 TO
(UNAUDITED) OCT. 31,1996
------------- --------------
Net asset value, beginning of period $10.83 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .35 .69
Net realized and unrealized gain on investments
and foreign currency transactions .50 .95
Net increase in net asset value from operations .85 1.64
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.51) (.81)
Distributions from net realized gains on investments (.10) -0-
Total dividends and distributions (.61) (.81)
Net asset value, end of period $11.07 $10.83
TOTAL RETURN
Total investment return based on net asset value (d) 7.71% 17.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $5,649 $2,295
Ratio to average net assets of:
Expenses, net of waivers/reimbursements (e) 1.90% 1.90%
Expenses, before waivers/reimbursements (e) 5.07% 19.20%
Net investment income (e) 6.57% 8.36%
Portfolio turnover rate 730% 282%
See footnote summary on page 18.
16
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
---------------------------------
SIX MONTHS ENDED MAR. 25,1996(f)
APRIL 30,1997 TO
(UNAUDITED) OCT. 31,1996
------------- --------------
Net asset value, beginning of period $10.83 $ 9.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .30 .41
Net realized and unrealized gain on investments
and foreign currency transactions .52 1.01
Net increase in net asset value from operations .82 1.42
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.48) (.56)
Distributions from net realized gains on investments (.10) -0-
Total dividends and distributions (.58) (.56)
Net asset value, end of period $11.07 $10.83
TOTAL RETURN
Total investment return based on net asset value (d) 7.63% 14.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $10,212 $800
Ratio to average net assets of:
Expenses, net of waivers/reimbursements (e) 2.60% 2.60%
Expenses, before waivers/reimbursements (e) 5.76% 19.57%
Net investment income (e) 5.79% 7.26%
Portfolio turnover rate 730% 282%
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
---------------------------------
SIX MONTHS ENDED MAR. 25,1996(f)
APRIL 30,1997 TO
(UNAUDITED) OCT. 31,1996
-------------- --------------
Net asset value, beginning of period $10.83 $ 9.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)(c) .32 .39
Net realized and unrealized gain on investments
and foreign currency transactions .50 1.03
Net increase in net asset value from operations .82 1.42
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.48) (.56)
Distributions from net realized gains on investments (.10) -0-
Total dividends and distributions (.58) (.56)
Net asset value, end of period $11.07 $10.83
TOTAL RETURN
Total investment return based on net asset value (d) 7.64% 14.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,470 $750
Ratio to average net assets of:
Expenses, net of waivers/reimbursements (e) 2.60% 2.60%
Expenses, before waivers/reimbursements (e) 5.77% 19.49%
Net investment income (e) 5.86% 7.03%
Portfolio turnover rate 730% 282%
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Net of expenses waived/reimbursed by the Adviser.
(d) 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. Total investment return calculated
for a period of less than one year is not annualized.
(e) Annualized.
(f) Commencement of distribution.
18
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
_______________________________________________________________________________
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
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
DOUGLAS J. PEEBLES, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JUAN J. RODRIGUEZ, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
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
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
19
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
20
