ALLIANCE
- --------------------------------------------------------------------------------
GLOBAL STRATEGIC
- --------------------------------------------------------------------------------
INCOME TRUST
- --------------------------------------------------------------------------------
Annual Report
October 31, 1998
Alliance Capital [LOGO](R)
<PAGE>
LETTER TO SHAREHOLDERS Alliance Global Strategic Income Trust
================================================================================
December 28, 1998
Dear Shareholder:
We are pleased to report to you on our strategy, performance and outlook for
Alliance Global Strategic Income Trust for the annual reporting period ended
October 31, 1998. The Fund is designed for investors who seek high current
income and capital appreciation. To achieve this objective, the Fund invests in
a wide variety of fixed income markets including U.S. government, agency and
corporate securities, U.S. dollar-denominated government bonds of emerging
market countries, and non-U.S. dollar denominated bonds of developed and
emerging markets.
MARKET OVERVIEW
During the six-month period ended October 31, 1998, global markets suffered from
heightened concerns about recession as the financial and economic turmoil in
Asia spread to Russia and Latin America.
In the United States, robust growth moderated over the period as a consequence
of the global economic slowdown. Manufacturing remained weak while consumer
spending continued to provide fuel for the economy. Growth for the second and
third quarters were 1.80% and 3.30%, respectively. Inflation continued to be
benign and employment strong throughout the period. The Federal Reserve, as a
hedge against a slowing global economy, lowered interest rates three times by a
quarter of a percentage point each time from 5.50% to 4.75%.
The U.S. bond market, which posted solid gains, provided a safe haven for
investors seeking liquidity during periods of global volatility. As investors
became more risk averse, U.S. Treasuries outperformed other U.S. fixed income
sectors. Treasury yields reached record lows prior to rebounding at the end of
the period. The corporate sector, particularly low grade corporates, suffered
from the flight to quality.
In the emerging markets, debt prices fell over the six-month period ended
October 31, 1998 when renewed volatility in Asia and fiscal problems in Russia
heightened investor concerns about all higher yielding asset classes. Investor
confidence was briefly restored in July when the International Monetary Fund
(IMF) approved an emergency loan package for the Russian government. However,
the downward fall of emerging market debt prices resumed and accelerated in
August after the Russian government devalued the ruble and defaulted on its
domestic debt. This surprise move by the Russian government led to a general
sell-off of emerging market assets as investors moved to lower their portfolios'
risk exposure. In September, investor concern shifted to Brazil, which, like
Russia, has a semi-fixed currency regime and deficits in both its fiscal and
current accounts. After reaching a low in September, emerging market debt prices
rebounded in October as the U.S. and other industrial countries began easing
monetary policy.
In the developed markets outside of the U.S., government bond returns were
augmented by investors' aversion to risk. Traditional safe haven markets
benefited from both the flight to quality and the increased probability of
monetary easing, while non-safe haven countries suffered from low liquidity. On
a hedged basis, only New Zealand and Japan posted stronger gains than the U.S.
Treasury market.
In Europe, slower than expected growth, combined with low inflation, led to
increased expectations of official interest rate cuts, which drove yields lower.
All 11 first round European Monetary Union (EMU) countries posted strong returns
in both local and hedged terms. As the EMU inception date approached, the
marketplace became less discriminating in its treatment of these 11 markets
based on country specific fundamentals.
In Japan, economic problems deepened. Second and third quarter Gross Domestic
Product (GDP) growth fell 0.8% and 2.6%, respectively as the newly elected
government failed to take credible action towards stimulating its economy. The
benchmark Japanese Government Bond yield fell below 1.00%, as investors fled
risky investments and braced for deflationary shocks.
In the Dollar bloc countries (Australia, New Zealand and Canada) growth slowed
and inflation remained low as a result of falling commodity prices and falling
demand from Asia. The New Zealand bond market posted the strongest returns of
the three markets, as it continued to benefit from sharp rate cuts made by the
central bank to stop the economy from slipping into recession. In Canada, a weak
currency and low liquidity helped place the Canadian bond market as the worst
performing on both a local and hedged basis.
1
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
INVESTMENT STRATEGY
During the period under review, we decreased our debt holdings in Australia and
increased our allocations to the European countries. Additional German
government bonds, as well as French and Italian bonds, were added to the Fund's
portfolio in anticipation of further interest rate cuts as the 11 members of the
EMU moved toward convergence. As interest rate reductions were also anticipated
for the U.K., we increased the Fund's U.K. allocation to an overweight position.
Our government holdings in the emerging market sector were trimmed over the
six-month period ended October 31, 1998 as investor confidence in that sector
was shaken. As an alternative, we increased our allocation to U.S. Treasuries.
INVESTMENT RESULTS
The following table shows how your Fund performed over the past six- and
12-month periods ended October 31, 1998. For comparison, we have included the
Lehman Brothers Aggregate Bond Index, a standard measure of the performance of a
basket of unmanaged debt securities, and the Lipper Average of Multi-Sector
Income Funds, which reflects the average performance of a group of funds with
similar investment objectives.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS*
Periods Ended October 31, 1998
Total Returns
6 Months 12 Months
-------- ---------
Alliance Global Strategic
Income Trust
Class A -6.38% 1.00%
Class B -6.77% 0.27%
Class C -6.77% 0.27%
Lipper Multi-Sector
Income Funds
Average -5.09% -0.96%
Lehman Brothers
Aggregate Bond
Index 5.55% 9.34%
* The Fund's investment results represent total returns and are based on the
net asset value of each class of shares as of October 31, 1998. Total
returns for Advisor Class shares will differ due to different expenses
associated with that class. 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. Past
performance is no guarantee of future results.
The unmanaged Lehman Brothers Aggregate Bond Index is composed of the
Mortgage-Backed Securities Index, the Asset-Backed Securities Index and
the Government/Corporate Bond Index. The unmanaged Lipper Multi-Sector
Income Funds Average reflects the performance of 98 funds for the
six-month period and 90 funds for the 12-month period ended October 31,
1998. The Average has generally similar investment objectives to your
Fund, although investment policies for the various funds may differ. An
investor cannot invest directly in the Index or Average.
Additional investment results appear on page 4.
- --------------------------------------------------------------------------------
As of October 31, 1998, the Fund's total investments based on issuing country
were distributed as follows:
PORTFOLIO DISTRIBUTION BY COUNTRY
[The following table was depicted as a pie chart in the printed material.]
Other 13.75%
United States 37.94%
Mexico 2.86%
Ecuador 3.17%
Norway 3.80%
Sweden 4.33%
Argentina 5.10%
France 6.43%
Italy 6.45%
Germany 6.77%
United Kingdom 9.40%
Over the past six-month period, your Fund underperformed both of its benchmarks.
On a 12-month basis, your Fund underperformed the U.S. based Lehman Brothers
Aggregate Bond Index and outperformed the Lipper Multi-Sector Income Funds
Average, which holds market segments similar to the Fund.
Over the six-month period, our holdings in Russia dampened performance. The
Russian market posted the worst returns among the emerging markets over the six-
and 12-month periods as a result of the government defaulting on its debt and
the devaluation of the ruble. Our allocation to U.S. and U.K. positions,
particularly U.S. Treasuries, enhanced performance.
2
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
ECONOMIC OUTLOOK
While the outlook for global recession has diminished, we continue to project a
slower growth trajectory to the global economy in 1999.
In the U.S., economic activity is expected to slow further with growth estimates
centered around 2% for the next year. Further interest rate reductions to
sustain growth by the Federal Reserve are likely in 1999. U.S. interest rates,
as well as inflation, should remain low and the U.S. Treasury market will
continue to provide a safe haven during times of volatility.
In Europe, growth is expected to slow to less than 2% in 1999 from 2.4% in 1998.
Inflation should remain benign. Recent interest rate reductions in Europe may be
followed by additional rate cuts in 1999 to offset the effects of the global
slowdown.
Our outlook for emerging market debt has improved during the past month as a
concerted effort by the Group of Seven (G7) industrial countries has been made
to avert further spread of economic and financial malaise. First, the U.S.
Federal Reserve, along with other G7 countries, has begun easing monetary policy
in an effort to lower the risk of slower economic growth. Second, the Japanese
yen has strengthened sharply against the U.S. dollar, relieving pressure on
exchange rates and interest rates elsewhere in Asia. Finally, after a favorable
outcome in recent presidential elections, Brazil, with 40 billion dollars of
assistance from the IMF, has been hastily addressing its fiscal problems,
helping restore investor confidence in global markets. Though these positive
developments have caused a significant rebound in emerging market debt prices
recently, emerging market economies continue to be very sensitive to global
economic growth, financial market liquidity and commodity prices.
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 the coming periods.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Douglas Peebles
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
<PAGE>
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
market countries and non-U.S. dollar-denominated bonds of developed and emerging
markets.
Investment Results
================================================================================
NAV and SEC Total Returns as of October 31, 1998
----------------------
Class A Shares
----------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year 1.00% -3.30%
Since Inception* 12.25% 10.54%
SEC Yield** 6.68%
----------------------
Class B Shares
----------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year 0.27% -2.40%
Since Inception* 11.74% 11.42%
SEC Yield** 6.30%
----------------------
Class C Shares
----------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year 0.27% -0.62%
Since Inception* 11.75% 11.75%
SEC Yield** 6.30%
SEC Total Returns as of the most recent quarter-end (September 30, 1998)
Class A Class B Class C
------- ------- -------
1 Year -6.00% -5.05% -3.32%
Since Inception* 10.56% 11.53% 11.87%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total returns 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: 1/9/96, Class A; 3/21/96, Class B and C.
** SEC Yields are based on SEC guidelines and are calculated on 30 days ended
October 31, 1998.
4
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
GROWTH OF A $10,000 INVESTMENT
1/31/96* TO 10/31/98
[GRAPH OMITTED]
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Global Strategic Income Trust Class A shares (from 1/31/96 to 10/31/98)
as compared to the performance of an appropriate broad-based index. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains. Performance for Class B and Class C shares will vary from the
results shown above due to differences in expenses charged to those classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The unmanaged Lehman Brothers Aggregate Bond Index is composed of the
Mortgage-Backed Securities Index, the Asset-Backed Securities Index and the
Government/Corporate Bond Index.
The unmanaged Lipper Multi-Sector Income Funds Average reflects
performance of 56 funds. These funds have generally similar investment
objectives to Alliance Global Strategic Income Trust, although the investment
policies of some funds included in the average may vary.
When comparing Alliance Global Strategic Income Trust 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.
- --------------------------------------------------------------------------------
* Month-end nearest to Fund's Class A share inception date of 1/9/96.
5
<PAGE>
PORTFOLIO OF INVESTMENTS
October 31, 1998 Alliance Global Strategic Income Trust
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
ARGENTINA-5.0%
CORPORATE DEBT
OBLIGATIONS-3.5%
CIA Radiocomunic Moviles
9.25%, 5/08/08 (a)....... US$ 3,000 $ 2,640,000
Perez Companc, SA
8.13%, 7/15/07 (a)(b).... 1,000 837,500
------------
3,477,500
------------
GOVERNMENT
OBLIGATION-1.5%
Republic of Argentina
Pensioner-Bocon
Series 1 FRN
3.05%, 4/01/07 (b)....... ARS 2,386 1,493,538
------------
Total Argentinian Securities
(cost $5,896,262)........ 4,971,038
------------
BRAZIL-0.3%
CORPORATE DEBT
OBLIGATION-0.3%
Trikem, SA
10.63%, 7/24/07 (a)(b)
(cost $499,901).......... US$ 500 265,000
------------
CANADA-2.6%
CORPORATE DEBT
OBLIGATION-0.3%
Clearnet Communications
10.40%, 5/15/08 (b)(c)... CAD 1,000 281,918
------------
GOVERNMENT
OBLIGATION-2.3%
Government of Canada
5.25%, 9/01/03........... 3,500 2,316,397
------------
Total Canadian Securities
(cost $2,741,648)........ 2,598,315
------------
COLOMBIA-0.9%
GOVERNMENT
OBLIGATION-0.9%
Republic of Colombia
8.63%, 4/01/08
(cost $1,209,888)........ US$ 1,200 933,000
------------
DENMARK-2.8%
GOVERNMENT
OBLIGATION-2.8%
Kingdom of Denmark
7.00%, 11/15/07 (b)
(cost $2,445,808)........ DKK 15,000 2,779,820
------------
DOMINICAN
REPUBLIC-1.5%
CORPORATE DEBT
OBLIGATION-1.5%
Tricom, SA
11.38%, 9/01/04 (a)
(cost $1,791,404)........ US$ 2,000 $ 1,505,000
------------
ECUADOR-3.1%
CORPORATE DEBT
OBLIGATION-0.4%
Conecel Holdings, Ltd.
14.00%, 10/01/00
(a)(b)(d)................ 1,000 375,000
------------
GOVERNMENT
OBLIGATION-2.7%
Ecuador Global
3.50%, 2/28/25........... 6,000 2,715,000
------------
Total Ecuadorian Securities
(cost $3,591,845)........ 3,090,000
------------
FRANCE-6.3%
CORPORATE DEBT
OBLIGATION-0.7%
Remy Cointreau, SA
10.00%, 7/30/05 (a)(b)... XEU 750 685,779
------------
GOVERNMENT
OBLIGATIONS-5.6%
Government of France
4.50%, 7/12/03 (b)....... FRF 21,000 3,890,849
8.50%, 10/25/08 (b)...... 7,000 1,688,113
------------
5,578,962
------------
Total French Securities
(cost $6,223,504)........ 6,264,741
------------
GERMANY-6.6%
GOVERNMENT
OBLIGATION-6.6%
Republic of Germany
6.00%, 7/04/07 (b)
(cost $6,566,752)........ DEM 9,700 6,597,265
------------
HONG KONG-0.7%
CORPORATE DEBT
OBLIGATION-0.7%
DAO Heng Bank
7.75%, 1/24/07 (a) (b)
(cost $830,469).......... US$ 1,000 763,316
------------
6
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
ITALY-6.3%
GOVERNMENT
OBLIGATIONS-6.3%
Republic of Italy
6.25%, 3/01/02 (b)....... ITL 2,000,000 $ 1,312,147
6.25%, 5/15/02 (b)....... 6,000,000 3,949,623
8.25%, 7/01/01 (b)....... 1,500,000 1,018,897
------------
Total Italian Securities
(cost $5,625,543)........ 6,280,667
------------
MEXICO-2.8%
CORPORATE DEBT
OBLIGATION-0.8%
Petroleos Mexicanos
9.25%, 3/30/18 (a)....... US$ 1,000 815,000
------------
GOVERNMENT
OBLIGATIONS-2.0%
Mexican Treasury Bills
25.80%, 6/03/99 (b)(e)... MXP 5,050 413,446
20.35%, 11/19/98 (b)(e).. 7,312 710,699
United Mexican States
8.75%, 5/30/02 (b)....... GBP 600 846,258
------------
1,970,403
------------
Total Mexican Securities
(cost $3,323,024)........ 2,785,403
------------
NETHERLANDS-1.9%
CORPORATE DEBT
OBLIGATIONS-1.9%
Versatel Telecom, BV
13.25%, 5/15/08.......... US$ 2,000 1,860,000
warrants,
expiring 5/15/08......... 2 20,000
------------
Total Dutch Securities
(cost $1,920,493)........ 1,880,000
------------
NORWAY-3.7%
GOVERNMENT
OBLIGATIONS-3.7%
Kingdom of Norway
5.75%, 11/30/04 (b)...... NOK 23,000 3,165,861
9.00%, 1/31/99 (b)....... 3,900 530,623
------------
Total Norwegian Securities
(cost $3,703,772)........ 3,696,484
------------
POLAND-1.0%
CORPORATE DEBT
OBLIGATIONS-1.0%
Central Euro Media
8.13%, 8/15/04........... DEM 1,410 489,495
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Netia Holdings, BV
Series B
11.00%, 11/01/07
(a)(b)(c)................ DEM 2,000 $ 567,530
------------
Total Polish Securities
(cost $1,483,477)........ 1,057,025
------------
QUATAR-0.4%
CORPORATE DEBT
OBLIGATION-0.4%
Ras Laffan Liquid
Natural Gas
8.29%, 3/15/14 (b)
(cost $462,945).......... US$ 450 355,434
------------
RUSSIA-0.6%
GOVERNMENT
OBLIGATIONS-0.6%
Russian IAN FRN
6.625%, 12/15/15 (b)..... 34 3,303
Russian Principal Loans
FRN
6.625%, 12/15/20 (f)..... 8,000 610,400
------------
Total Russian Securities
(cost $4,303,239)........ 613,703
------------
SOUTH AFRICA-0.6%
CORPORATE DEBT
OBLIGATIONS-0.6%
Development Bank of
South Africa
18.59%, 12/31/27 (b)..... ZAR 50,000 160,786
European Bank for
Reconstruction &
Development
Zero coupon, 12/31/29
(b)(g)................... 50,000 205,449
International Bank for
Reconstruction &
Development
Zero coupon, 2/17/26
(b)(g)................... 50,000 266,190
------------
Total South African
Securities
(cost $1,435,830)........ 632,425
------------
7
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) Alliance Global Strategic Income Trust
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
SWEDEN-4.2%
GOVERNMENT
OBLIGATIONS-4.2%
Government of Sweden
8.00%, 8/15/07 (b)....... SEK 6,500 $ 1,033,129
10.25%, 5/05/03 (b)...... 20,000 3,180,909
------------
Total Swedish Securities
(cost $4,155,816)........ 4,214,038
------------
UNITED KINGDOM-9.2%
CORPORATE DEBT
OBLIGATIONS-3.7%
HMV Media Group Plc.
10.88%, 5/15/08 (a)...... US$ 1,250 1,680,378
Ineos Plc.
8.63%, 4/30/05 (b)....... DEM 700 329,439
RSL Communications Plc.
10.00%, 3/15/08 (b)(c)... 3,000 1,086,760
William Hill Finance
10.63%, 4/30/08 (a)(b)... GBP 400 595,310
------------
3,691,887
------------
GOVERNMENT
OBLIGATION-5.5%
U. K. Treasury Gilts
9.00%, 10/13/08 (b)...... GBP 2,500 5,461,751
------------
Total United Kingdom
Securities
(cost $9,772,468)........ 9,153,638
------------
UNITED STATES-37.0%
CONVERTIBLE BOND-0.0%
Viatel, Inc.
10.00%, 4/15/11 (a)...... DEM 38 12,337
------------
CORPORATE DEBT
OBLIGATIONS-10.6%
Asian Development Bank
5.59%, 7/16/18........... US$ 1,000 1,022,480
Comcast Cable
Communications
8.88%, 5/01/17........... 1,500 1,827,315
Derby Cycle Corp.
9.38%, 5/15/08 (b)....... DEM 700 335,990
Federal-Mogul Corp.
7.88%, 7/01/10........... US$ 1,000 977,190
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
InterAmericas Communication
14.00%, 10/27/07
(a)(b)(h)................ US$ 500 $ 237,500
ICO Global Communication
15.00%, 8/01/05.......... 1,000 620,000
Iridium LLC Capital Corp.
Series B
14.00%, 7/15/05 (a)(b)... 500 427,500
Series D
10.88%, 7/15/05.......... 500 380,000
Niagara Mohawk Power
Series F
7.63%, 10/01/05.......... 1,000 1,031,476
NTL, Inc.
9.50%, 4/01/08........... GBP 1,850 2,539,610
OpTel Inc.
Series B
13.00%, 2/15/05 (b)(i)... US$ 500 487,500
Providian Capital I
9.53%, 2/01/27 (a)(b).... 400 455,419
Viatel, Inc.
12.40%, 4/15/08 (a)(b)(c) DEM 700 198,635
------------
10,540,615
------------
PREFERRED STOCKS-2.6%
Fuji JGB Inv. LLC
9.87%, 12/31/49 (a)...... 1,500 878,793
Nextel Communications
Series E
11.13%, 2/15/10 (a)(b)(j) 1 919,590
Tokai Capital Co. LLC
9.98%, 12/29/49 (a)...... 1,000 791,883
------------
2,590,266
------------
U.S. GOVERNMENT
AGENCY
OBLIGATION-3.5%
FNMA
6.88%, 6/07/02 (b)....... GBP 2,000 3,475,432
------------
8
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS-19.8%
U.S. Treasury Bonds
3.625%, 4/15/28 (TIPS)... US$ 2,018 $ 2,019,092
13.75%, 8/15/04.......... 6,000 8,776,878
U.S. Treasury Notes
5.50%, 2/15/08........... 4,500 4,805,158
5.75%, 4/30/03........... 4,000 4,226,252
------------
19,827,380
------------
TIME DEPOSIT-0.5%
Dresdner Bank
5.56%, 11/02/98.......... 500 500,000
------------
Total United States
Securities
(cost $37,753,751)....... $ 36,946,030
------------
TOTAL INVESTMENTS-97.5%
(cost $105,737,839)...... 97,382,342
Other assets less
liabilities-2.5%......... 2,450,860
------------
NET ASSETS-100%............. $ 99,833,202
============
- --------------------------------------------------------------------------------
(a) 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 October 31,
1998, these securities amounted to $15,006,904 or 15.03% of net assets.
(b) Securities, or a portion thereof, with an aggregate market value of
$53,390,164, have been segregated to collateralize forward exchange
currency contracts.
(c) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective
until final maturity.
(d) Consists of $1,000,000 notes and 6,750 shares of warrants.
(e) Annualized yield to maturity at purchase date.
(f) Coupon consists of 3.3125% cash payments and 3.3125% paid-in-kind Russian
IAN.
(g) Unit consists of 1 senior discount note and 2.77 junior subordinate
debentures.
(h) Consists of $500,000 notes and 17,500 shares of warrants.
(i) Consists of $500,000 senior notes and 500 shares of common stock.
(j) PIK (paid-in-kind) preferred quarterly stock payments.
Glossary of terms:
FNMA - Federal National Mortgage Association.
FRN - Floating Rate Note.
IAN - Interest Arrears Note.
TIPS - Treasury Inflation Protection Securities.
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998 Alliance Global Strategic Income Trust
================================================================================
ASSETS
Investments in securities, at value (cost $105,737,839)....... $ 97,382,342
Cash, at value (cost $1,230,712).............................. 1,256,387
Interest receivable........................................... 2,563,805
Receivable for capital stock sold............................. 628,772
Receivable for investment securities sold..................... 23,858
Deferred organization expenses................................ 66,913
-------------
Total assets.................................................. 101,922,077
-------------
LIABILITIES
Payable for investment securities purchased................... 1,201,559
Dividend payable.............................................. 279,966
Payable for capital stock sold................................ 162,128
Distribution fee payable...................................... 67,483
Advisory fee payable.......................................... 62,356
Unrealized depreciation of forward exchange currency
contracts................................................... 34,083
Accrued expenses and other liabilities........................ 281,300
-------------
Total liabilities............................................. 2,088,875
-------------
NET ASSETS....................................................... $ 99,833,202
=============
COMPOSITION OF NET ASSETS
Capital stock, at par......................................... $ 9,816
Additional paid-in capital.................................... 109,879,922
Distributions in excess of net investment income.............. (1,602,856)
Accumulated net realized gain on investments and foreign
currency transactions....................................... 62,562
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities................. (8,516,242)
-------------
$ 99,833,202
=============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($24,575,972 / 2,415,307 shares of capital stock issued
and outstanding)............................................ $10.18
Sales charge--4.25% of public offering price.................. 0.45
------
Maximum offering price........................................ $10.63
======
Class B Shares
Net asset value and offering price per share
($58,057,633 / 5,709,444 shares of capital stock issued
and outstanding)............................................ $10.17
======
Class C Shares
Net asset value and offering price per share
($16,066,634 / 1,579,754 shares of capital stock issued
and outstanding)............................................ $10.17
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($1,132,963 / 111,290 shares of capital stock
issued and outstanding)..................................... $10.18
======
- --------------------------------------------------------------------------------
See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
Year Ended October 31, 1998 Alliance Global Strategic Income Trust
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................. $ 6,143,594
EXPENSES
Advisory fee......................................................... $ 512,829
Distribution fee - Class A........................................... 59,801
Distribution fee - Class B........................................... 389,539
Distribution fee - Class C........................................... 86,600
Custodian............................................................ 175,497
Administration....................................................... 129,000
Transfer agency...................................................... 114,817
Audit and legal...................................................... 108,088
Registration......................................................... 56,072
Printing............................................................. 48,087
Directors' fees...................................................... 30,245
Amortization of organization expenses................................ 29,930
Miscellaneous........................................................ 5,536
--------------
Total expenses....................................................... 1,746,041
Less: expenses waived and assumed by Adviser (see Note B)............ (129,000)
--------------
Net expenses......................................................... 1,617,041
--------------
Net investment income................................................ 4,526,553
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions......................... 1,298,527
Net realized loss on foreign currency transactions................... (1,222,354)
Net change in unrealized depreciation of:
Investments........................................................ (7,942,139)
Foreign currency denominated assets and liabilities................ 87,741
--------------
Net loss on investments.............................................. (7,778,225)
--------------
NET DECREASE IN NET ASSETS FROM OPERATIONS.............................. $ (3,251,672)
==============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS Alliance Global Strategic Income Trust
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, October 31,
1998 1997
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income................................................ $ 4,526,553 $ 1,111,926
Net realized gain on investments and foreign currency transactions... 76,173 1,785,344
Net change in unrealized appreciation (depreciation) of investments and
foreign currency denominated assets and liabilities................ (7,854,398) (827,989)
-------------- --------------
Net increase (decrease) in net assets from operations................ (3,251,672) 2,069,281
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A............................................................ (1,411,993) (382,874)
Class B............................................................ (2,495,352) (581,432)
Class C............................................................ (556,457) (147,620)
Advisor Class...................................................... (62,751) -0-
Distributions in excess of net investment income
Class A............................................................ (488,490) (142,461)
Class B............................................................ (964,594) (253,949)
Class C............................................................ (214,532) (64,814)
Advisor Class...................................................... (17,887) -0-
Net realized gain on investments
Class A............................................................ (429,062) (22,494)
Class B............................................................ (663,991) (23,190)
Class C............................................................ (138,457) (10,520)
CAPITAL STOCK TRANSACTIONS
Net increase......................................................... 74,331,248 31,913,077
-------------- --------------
Total increase....................................................... 63,636,010 32,353,004
NET ASSETS
Beginning of year.................................................... 36,197,192 3,844,188
-------------- --------------
End of year (including undistributed net investment income of $70,179
at October 31, 1997)............................................... $ 99,833,202 $ 36,197,192
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 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, Class C and Advisor Class shares. Class A shares are sold with a
front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000.
With respect to purchases of $1,000,000 or more, Class A shares redeemed within
one year of purchase will be subject to a contingent deferred sales charge of
1%. Class B shares are currently sold with a contingent deferred sales charge
which declines from 4% to zero depending on the period of time the shares are
held. Class B shares will automatically convert to Class A shares eight years
after the end of the calendar month of purchase. Class 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 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 financial
statements have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sale price or, if there was no sale on such day, the
last bid price quoted on such day. If no bid prices are quoted, then the
security is valued at the mean of the bid and asked prices as obtained on that
day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market, securities listed on a foreign
securities market whose operations are similar to the United States
over-the-counter market and securities listed on a national securities exchange
whose primary market is believed to be over-the-counter are valued at the mean
of the closing bid and asked prices provided by two or more dealers regularly
making a market in such securities. U.S. government securities and other debt
securities which mature in 60 days or less are valued at amortized cost unless
this method does not represent fair value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by, or in accordance with procedures approved by, the Board of
Directors. Fixed income securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such securities.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated 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 or losses on foreign currency transactions represent foreign
exchange gains and losses from sales and maturities of securities and forward
exchange currency contracts, holdings of foreign currencies, exchange gains and
losses realized between the trade and settlement dates on investment
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 (depreciation) of foreign currency denomi-
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Global Strategic Income Trust
================================================================================
nated 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 any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the shares 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. 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 discounts as an
adjustment to interest income.
7. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to foreign currency gains, resulted in a net decrease in
accumulated net realized gain on investments and foreign currency transactions
and a corresponding decrease in distributions in excess of net investment
income. This reclassification had no effect on net assets.
- --------------------------------------------------------------------------------
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 of 1.90%, 2.60%, 2.60%
and 1.60% of the average daily net assets for the Class A, Class B, Class C and
Advisor Class shares, respectively.
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 year ended October 31, 1998, the Adviser agreed to waive fees for certain
legal and accounting services in the amount of $129,000.
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. Such compensation
amounted to $52,472 for the year ended October 31, 1998.
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 $14,823 from the sale of Class A shares and $113,731,
and $6,451 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the year ended
October 31, 1998.
- --------------------------------------------------------------------------------
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
14
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
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. There is no distribution
fee on the Advisor Class shares. The fees are accrued daily and paid monthly.
The Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The Distributor
has incurred expenses in excess of the distribution costs reimbursed by the Fund
in the amount of $3,116,405 and $401,676 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 $151,498,782 and $102,827,854,
respectively, for the year ended October 31, 1998. There were purchases of
$26,914,764 and sales of $11,823,344 of U.S. government and government agency
obligations for the year ended October 31, 1998.
At October 31, 1998, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $2,472,813 and gross unrealized
depreciation of investments was $10,828,310, resulting in net unrealized
depreciation of $8,355,497 (excluding foreign currency transactions).
1. Forward Exchange Currency Contracts
The Fund enters into forward exchange currency contracts to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio holdings,
to hedge certain firm purchase and sales commitments denominated in foreign
currencies and for investment purposes. 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 assets in a separate account of the Fund having a value equal to
the aggregate amount of the Fund's commitments under forward exchange currency
contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the terms
of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At October 31, 1998, the Fund had outstanding forward exchange currency
contracts, as follows:
<TABLE>
<CAPTION>
U.S. $
Contract Value on U.S. $ Unrealized
Amount Origination Current Appreciation
(000) Date Value (Depreciation)
-------- ----------- ------- --------------
<S> <C> <C> <C> <C>
Forward Exchange Currency
Buy Contracts
Canadian Dollars,
settling 12/15/98.............. 2,579 $1,677,575 $1,671,693 $ (5,882)
Danish Krone,
settling 12/03/98.............. 30,374 4,849,620 4,823,436 (26,184)
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Global Strategic Income Trust
================================================================================
<TABLE>
<CAPTION>
U.S. $
Contract Value on U.S. $ Unrealized
Amount Origination Current Appreciation
(000) Date Value (Depreciation)
-------- ----------- ------- --------------
<S> <C> <C> <C> <C>
Forward Exchange Currency
Buy Contracts (continued)
Deutsche Marks,
settling 11/27/98.............. 2,464 $1,502,332 $1,489,343 $ (12,989)
Japanese Yen,
settling 11/19/98.............. 379,600 3,222,411 3,264,666 42,255
Forward Exchange Currency
Sale Contracts
British Pounds,
settling 11/17/98.............. 8,727 14,607,128 14,598,642 8,486
Canadian Dollars,
settling 12/15/98.............. 6,809 4,410,638 4,413,182 (2,544)
Danish Krone,
settling 11/03/98-12/03/98..... 46,760 7,129,492 7,427,080 (297,588)
Deutsche Marks,
settling 12/18/98.............. 44,260 27,070,258 26,780,829 289,429
European Currency Unit,
settling 11/30/98.............. 750 880,425 891,466 (11,041)
French Francs,
settling 12/18/98.............. 20,922 3,843,089 3,773,664 69,425
Japanese Yen,
settling 11/19/98.............. 379,600 3,263,692 3,264,666 (974)
Swedish Krona,
settling 11/19/98.............. 31,869 3,998,669 4,085,145 (86,476)
----------
$ (34,083)
==========
</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 received and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a call
option is exercised, the premium received is added
16
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
to the proceeds 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 received 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. For the year ended October 31, 1998, the Fund did
not engage in any options transactions.
- --------------------------------------------------------------------------------
NOTE E: Capital Stock
There are 12,000,000,000 shares of $0.001 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:
<TABLE>
<CAPTION>
--------------------------------- ---------------------------------
SHARES AMOUNT
--------------------------------- ---------------------------------
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold....................... 1,598,361 1,031,467 $ 17,759,050 $ 11,857,018
Shares issued in reinvestment of
dividends and distributions.... 132,962 23,531 1,459,025 268,816
Shares converted from Class B..... 14,015 3,566 151,910 40,424
Shares redeemed................... (460,665) (139,876) (4,969,798) (1,591,569)
-------------- -------------- -------------- --------------
Net increase...................... 1,284,673 918,688 $ 14,400,187 $ 10,574,689
============== ============== ============== ==============
Class B
Shares sold....................... 4,986,132 1,904,244 $ 55,353,973 $ 21,544,554
Shares issued in reinvestment of
dividends and distributions.... 142,636 26,698 1,558,164 304,645
Shares converted to Class A....... (14,015) (3,566) (151,910) (40,424)
Shares redeemed................... (1,050,901) (355,663) (11,262,473) (4,010,478)
-------------- -------------- -------------- --------------
Net increase...................... 4,063,852 1,571,713 $ 45,497,754 $ 17,798,297
============== ============== ============== ==============
Class C
Shares sold....................... 1,453,523 425,583 $ 15,925,299 $ 4,822,709
Shares issued in reinvestment of
dividends and distributions.... 24,272 5,283 264,273 60,139
Shares redeemed................... (281,009) (117,161) (3,002,847) (1,342,757)
-------------- -------------- -------------- --------------
Net increase...................... 1,196,786 313,705 $ 13,186,725 $ 3,540,091
============== ============== ============== ==============
</TABLE>
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Global Strategic Income Trust
================================================================================
<TABLE>
<CAPTION>
--------------------------------- ---------------------------------
SHARES AMOUNT
--------------------------------- ---------------------------------
December 18, 1997* December 18, 1997*
to to
October 31, 1998 October 31, 1998
---------------- ----------------
<S> <C> <C>
Advisor Class
Shares sold....................... 105,163 $ 1,180,306
Shares issued in reinvestment of
dividends and distributions.... 6,251 67,683
Shares redeemed................... (124) (1,407)
-------------- --------------
Net increase...................... 111,290 $ 1,246,582
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
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 for 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 October 31, 1998.
- --------------------------------------------------------------------------------
* Commencement of distribution.
18
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Global Strategic Income Trust
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-------------------------------------------
CLASS A
-------------------------------------------
Year Ended October 31, January 9, 1996(a)
----------------------- to
1998 1997 October 31, 1996
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period....................... $11.46 $ 10.83 $ 10.00
------ ------- -------
Income From Investment Operations
Net investment income (b)(c)............................... .78 .74 .69
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.64) 1.02 .95
------ ------- -------
Net increase in net asset value from operations............ .14 1.76 1.64
------ ------- -------
Less: Dividends and Distributions
Dividends from net investment income....................... (.78) (.75) (.81)
Distributions in excess of net investment income........... (.28) (.28) -0-
Distributions from net realized gains on investments....... (.36) (.10) -0-
------ ------- -------
Total dividends and distributions.......................... (1.42) (1.13) (.81)
------ ------- -------
Net asset value, end of period............................. $10.18 $ 11.46 $ 10.83
====== ======= =======
Total Return
Total investment return based on net asset value (d)....... 1.00% 16.83% 17.31%
Ratios/Supplemental Data
Net assets, end of period (000's omitted).................. $24,576 $12,954 $2,295
Ratio to average net assets of:
Expenses, net of waivers/reimbursements................. 1.89% 1.90% 1.90%(e)
Expenses, before waivers/reimbursements................. 2.08% 4.06% 19.20%(e)
Net investment income................................... 7.08% 6.56% 8.36%(e)
Portfolio turnover rate.................................... 183% 417% 282%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 22.
19
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Global Strategic Income Trust
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-------------------------------------------
CLASS B
-------------------------------------------
Year Ended October 31, March 21, 1996(f)
----------------------- to
1998 1997 October 31, 1996
----------------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period....................... $11.46 $ 10.83 $ 9.97
------ ------- -------
Income From Investment Operations
Net investment income (b)(c)............................... .69 .66 .41
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.63) 1.03 1.01
------ ------- -------
Net increase in net asset value from operations............ .06 1.69 1.42
------ ------- -------
Less: Dividends and Distributions
Dividends from net investment income....................... (.69) (.67) (.56)
Distributions in excess of net investment income........... (.30) (.29) -0-
Distributions from net realized gains on investments....... (.36) (.10) -0-
------ ------- -------
Total dividends and distributions.......................... (1.35) (1.06) (.56)
------ ------- -------
Net asset value, end of period............................. $10.17 $ 11.46 $ 10.83
====== ======= =======
Total Return
Total investment return based on net asset value (d)....... .27% 16.12% 14.47%
Ratios/Supplemental Data
Net assets, end of period (000's omitted).................. $58,058 $18,855 $800
Ratio to average net assets of:
Expenses, net of waivers/reimbursements................. 2.58% 2.60% 2.60%(e)
Expenses, before waivers/reimbursements................. 2.76% 4.76% 19.57%(e)
Net investment income................................... 6.41% 5.86% 7.26%(e)
Portfolio turnover rate.................................... 183% 417% 282%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 22.
20
<PAGE>
Alliance Global Strategic Income Trust
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-------------------------------------------
CLASS C
-------------------------------------------
Year Ended October 31, March 21, 1996(f)
----------------------- to
1998 1997 October 31, 1996
----------------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period....................... $11.46 $ 10.83 $ 9.97
------ ------- -------
Income From Investment Operations
Net investment income (b)(c)............................... .68 .66 .39
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.62) 1.03 1.03
------ ------- -------
Net increase in net asset value from operations............ .06 1.69 1.42
------ ------- -------
Less: Dividends and Distributions
Dividends from net investment income....................... (.68) (.67) (.56)
Distributions in excess of net investment income........... (.31) (.29) -0-
Distributions from net realized gains on investments....... (.36) (.10) -0-
------ ------- -------
Total dividends and distributions.......................... (1.35) (1.06) (.56)
------ ------- -------
Net asset value, end of period............................. $10.17 $ 11.46 $ 10.83
====== ======= =======
Total Return
Total investment return based on net asset value (d)....... .27% 16.12% 14.47%
Ratios/Supplemental Data
Net assets, end of period (000's omitted).................. $16,067 $4,388 $750
Ratio to average net assets of:
Expenses, net of waivers/reimbursements................. 2.58% 2.60% 2.60%(e)
Expenses, before waivers/reimbursements................. 2.77% 4.77% 19.49%(e)
Net investment income................................... 6.43% 5.86% 7.03%(e)
Portfolio turnover rate.................................... 183% 417% 282%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 22.
21
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Global Strategic Income Trust
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
----------------
ADVISOR
CLASS
----------------
December 18,
1997(f)
to
October 31, 1998
----------------
Net asset value, beginning of period............................ $ 11.09
-------
Income From Investment Operations
Net investment income (b)(c).................................... .85
Net realized and unrealized loss on investments and
foreign currency transactions................................ (.84)
-------
Net increase in net asset value from operations................. .01
-------
Less: Dividends and Distributions
Dividends from net investment income............................ (.85)
Distributions in excess of net investment income................ (.07)
-------
Total dividends and distributions............................... (.92)
-------
Net asset value, end of period.................................. $ 10.18
=======
Total Return
Total investment return based on net asset value(d)............. .07%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)....................... $ 1,133
Ratio to average net assets of:
Expenses, net of waivers/reimbursements...................... 1.58%(e)
Expenses, before waivers/reimbursements...................... 1.77%(e)
Net investment income........................................ 7.64%(e)
Portfolio turnover rate......................................... 183%
- --------------------------------------------------------------------------------
(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.
22
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS Alliance Global Strategic Income Trust
================================================================================
To the Shareholders and Board of Directors
Alliance Global Strategic Income Trust, Inc.
We have audited the accompanying statement of assets and liabilities of Alliance
Global Strategic Income Trust, Inc. (the "Fund"), including the portfolio of
investments, as of October 31, 1998, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Global Strategic Income Trust, Inc. at October 31, 1998, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
December 2, 1998
23
<PAGE>
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.
24
<PAGE>
THE ALLIANCE FAMILY OF MUTUAL FUNDS
================================================================================
Fixed Income
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
Tax-Free Income
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Money Market
AFD Exchange Reserves
Growth
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
Growth & Income
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
Aggressive Growth
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
International
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
Institutional
Premier Growth
Quasar
Real Estate Investment
Closed-End Funds
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund The Southern Africa Fund
Cash Management Services
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
25
<PAGE>
(This page left intentionally blank.)
<PAGE>
(This page left intentionally blank.)
<PAGE>
---------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST BULK RATE
1345 Avenue of the Americas U.S. POSTAGE
New York, NY 10105 PAID
(800) 221-5672 New York, NY
Permit No. 7131
---------------
AllianceCapital [LOGO](R)
This report is intended solely for distribution to current shareholders of the
Fund.
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
GSIAR
