-------------------------
MULTI-SECTOR FIXED INCOME
-------------------------
Alliance Global Strategic
Income Trust
Semi-Annual Report
April 30, 2000
AllianceCapital [LOGO](R)
The Investment Professional's Choice
<PAGE>
Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
---------------------------
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
LETTER TO SHAREHOLDERS
June 19, 2000
Dear Shareholder:
We are pleased to report to you on the strategy, performance and outlook of the
Alliance Global Strategic Income Trust for the semi-annual reporting period
ended April 30, 2000.
Investment Objectives and Policies
Alliance Global Strategic Income Trust (the "Fund") seeks to provide high
current monthly income and capital appreciation. The Fund 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 Performance
The following table shows how the Fund performed over the past six- and 12-month
periods. 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 Multi-Sector Income Funds Average, which reflects the
average performance of a group of funds with similar investment objectives to
the Fund.
During the six-month period under review, your Fund outperformed both the
U.S.-only Lehman Brothers Aggregate Bond Index and the Lipper Multi-Sector
Income Funds Average. The Fund's increased exposure in the U.S. government bond
market and the decreased exposure in the European government bond market and
emerging market security selection contributed positively to the Fund's
performance. Our holdings in Russia also helped performance. Russia performed
well during the period as a result of higher oil prices, a favorable debt
rescheduling agreement and new leadership.
INVESTMENT RESULTS*
Periods Ended April 30, 2000
--------------------
Total Returns
--------------------
6 Months 12 Months
--------------------------------------------------------------------------------
Alliance Global
Strategic
Income Trust
Class A 6.60% 5.07%
--------------------------------------------------------------------------------
Class B 6.24% 4.26%
--------------------------------------------------------------------------------
Class C 6.34% 4.36%
--------------------------------------------------------------------------------
Lehman Brothers
Aggregate
Bond Index 1.42% 1.26%
--------------------------------------------------------------------------------
Lipper Multi-
Sector Income
Funds Average 1.24% -1.10%
--------------------------------------------------------------------------------
* The Fund's investment results represent total returns for the periods
shown and are based on the net asset value of each class of shares as of
April 30, 2000. All fees and expenses related to the operation of the Fund
have been deducted, but no adjustment has been made for sales charges that
may apply when shares are purchased or redeemed. Returns for the Fund
include the reinvestment of any distributions paid during the period. Past
performance is no guarantee of future results.
The unmanaged Lipper Multi-Sector Income Funds Average reflects the
performance of 124 funds for the six-month period and 120 funds for the
12-month period ended April 30, 2000. The Lipper
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ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 1
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
Multi-Sector Income Funds Average has generally similar investment
objectives to your Fund, although investment policies for the various
funds may differ. The unmanaged Lehman Brothers Aggregate Bond Index is
composed of the Lehman Brothers Mortgage-Backed Securities Index, the
Lehman Brothers Asset-Backed Securities Index and the Lehman Brothers
Government/Corporate Bond Index. It is a broad measure of the performance
of taxable bonds in the U.S. market, with maturities of at least one year.
An investor cannot invest directly in an index or an average, and its
results are not indicative of any specific investment, including Alliance
Global Strategic Income Trust.
Additional investment results appear on pages 6-10.
Market Overview
During the six-month period under review, the global bond market appreciated
2.20% as measured by the J.P. Morgan Global Government Bond Index (hedged). The
global macroeconomic outlook continued to brighten. Strength in the developed
economies spread over to East Asia, Latin America, and emerging Europe.
In the U.S., consumer spending appears to have accelerated in 2000 year-to-date,
as consumer confidence remains high. In April, consumer prices steadied, helped
by the drop in oil prices from their high in March. With economic activity
remaining strong, the U.S. Federal Reserve enacted four 25 basis-point rate
hikes.
The euro area is still enjoying a virtuous circle of falling unemployment,
improved consumer confidence and spending, and stronger economic growth. Similar
to the U.S., European monetary policymakers have also maintained their
aggressive attitudes, with the European Central Bank pushing up its repo rate by
another 50 basis points to 3.50% in mid-March.
After a mini-recession during the second half of 1999, Japan's economy appears
to have moved into positive territory during the first quarter of 2000.
Production data have been strong, and household and business spending are
accelerating. However, the economy remains fragile and still too dependent on
public spending and exports. The Bank of Japan has recently reconsidered
changing its "zero-rate" policy, but that idea has been met with stiff political
resistance both within and outside of Japan.
Emerging market debt performed well during the six-month period as global
economic growth continued to improve. During the period, the emerging market
debt sector posted returns of 14.43% as measured by the J.P. Morgan Emerging
Market Bond Index Plus (JPM EMBI+). Russia outperformed during the period due to
a positive change in political leadership, higher oil prices, and a favorable
debt rescheduling agreement. Turkey also posted positive gains of 11.35%, as
measured by the JPM EMBI+, as the country received a boost to a B+ rating. The
upgrade in the rating stemmed from a
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2 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
favorable review received by the International Monetary Fund for Turkey's
implementation of privatization programs and the consensus of a single
presidential candidate by all political parties. Other individual outperformers,
according to the JPM EMBI+, were Mexico (which returned 12.11%) and Argentina
(which returned 8.53%). The worst performing country, according to the index,
was Columbia, posting a return of -6.42%.
In the currency markets, the dollar broke through parity with the euro in late
January and ended in April with a high of $0.91. During the six-month period,
the euro traded between $0.91-$1.05. The dollar strengthened steadily against
the yen, trading between the (Yen)101-(Yen)111 range for the period.
Outside of the government markets, credit-sensitive and mortgage-backed sectors
underperformed U.S. Treasury Securities with similar duration. Investment grade
corporate bonds underperformed largely because of the widening of interest rate
swap spreads as opposed to credit quality related issues. The U.S. high yield
and European high yield markets underperformed other sectors due to low demand,
mutual fund outflows and equity market volatility.
Investment Strategy
During the period under review, we increased our allocation in U.S. government
bonds to take advantage of the Treasury buy-back program and initiated a
position in Agency pass-through securities (representing pooled debt obligations
repackaged as shares that pass income from debtors through the intermediary to
investors).
The U.S. government market was influenced primarily by two events in the first
quarter of 2000. The Federal Reserve Board raised short-term interest rates and
the U.S. Treasury began the repurchasing of Treasury securities in the open
market. (The Treasury buy-back program is part of a long term government plan to
lower outstanding debt while there is a government budget surplus). The
buy-backs, combined with a planned reduction in future government debt issuance,
had a dramatic effect on the shape of the U.S. yield curve. Two-year Treasury
yields rose from 5.78% to 6.67%, while 30-year Treasury yields fell from 6.16%
to 5.96%.
We decreased our allocation to European government debt, as there were
heightened fears that the European Central Bank would increase interest rates
due to stronger than expected growth. Conversely, we increased our allocation in
European corporate debt, specifically in the cable, utility and communications
sectors. Within the emerging market sectors, we improved the diversity and
liquidity of the Fund by purchasing Republic of Turkey and United Mexican
States, both of which received ratings upgrades, with Mexico upgraded to
investment-grade status. In addition, we initiated positions in Venezuela and
the Philippines as we believe that stronger global growth coupled with firm
commodity prices will continue to provide
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ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 3
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
the environment necessary for emerging countries to gradually improve their
credit profiles.
Outlook
In the period ahead, we expect the U.S. economy to remain relatively strong and
the global economy to continue to strengthen. Higher borrowing costs and a less
exuberant stock market should help to cool overheated U.S. domestic demand.
Japan is expected to finally produce positive growth reports as corporate
restructuring, stimulating public policies and a technology investment boom are
supporting a still-fragile economy. Consumer and business spending are
accelerating, and a self-sustaining recovery could be under way later this year.
Japan's gross domestic product (GDP) growth is expected to accelerate from 0.6%
in 1999 to 1.5% in 2000. The emerging European countries are enjoying healthy
recoveries in the aftermath of the Russian economic turmoil and the Asian
crisis. The main driver of growth in this region will be driven by
technology-induced productivity. We forecast 3.5% GDP growth for this region in
2000.
With improving global growth and liquidity conditions, we expect East Asian
growth to reach 6.5% in 2000 following a similar pace in 1999. Labor market
conditions are improving, boosting consumer spending, while export earnings are
driving investment expenditures. The Latin American region will continue its
recovery momentum as we look for this region to head toward 4% growth with
moderate inflation over the next year. We believe that ongoing reforms and a
favorable economic backdrop will make the emerging market sector the best
performing sector of fixed income securities. Stronger global growth coupled
with recent firming in commodity prices will continue to provide the environment
necessary for emerging countries to further improve their credit profiles.
We currently view the high-yield market as relatively inexpensive compared to
other fixed-income sectors and expect over a medium to longer-term time horizon
the high-yield sector to perform well. Although attractive from a valuation
standpoint, the U.S. high-yield market struggles under the weight of poor
technical conditions. The European high-yield market is more attractive from a
technical perspective even though it has outperformed the U.S. high yield market
recently.
Currencies have been caught in strong crosscurrents as investors struggle with
much uncertainty. Given the unstable dynamics of these markets, we expect the
yen/euro relationship to remain steady with a six-month target of $0.95 for the
euro and (Yen)120 for the dollar.
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4 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
Thank you for your continued interest and investment in the 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 and President
/s/ Douglas Peebles
Douglas Peebles
Vice President
[PHOTO OMITTED] John D.
Carifa
[PHOTO OMITTED] Douglas
Peebles
Portfolio Manager Douglas Peebles is a Senior Vice President and has over 13
years of investment experience.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 5
<PAGE>
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
GROWTH OF A $10,000 INVESTMENT
1/31/96* To 4/30/00
[MOUNTAIN CHART OMITTED]
Alliance Global Strategic Income
Trust Class A: $14,434
Lehman Brothers Aggregate
Bond Index: $12,401
Lipper Multi-Sector Income
Funds Average: $12,371
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 4/30/00)
as compared to the performance of an appropriate broad-based index and the
Lipper Multi-Sector Income Funds Average. The chart reflects the deduction of
the maximum 4.25% sales charge from the initial $10,000 investment in the Fund
and assumes the reinvestment of dividends and capital gains. Performance for
Class B, Class C and Advisor Class shares will vary from the results shown above
due to differences in expenses charged to those classes. Past performance is not
indicative of future results, and is not representative of future gain or loss
in capital value or dividend income.
The unmanaged Lehman Brothers AggregateBond Index is composed of the Lehman
Brothers Mortgage-Backed Securities Index, the Lehman Brothers Asset-Backed
Securities Index and the Lehman BrothersGovernment/Corporate Bond Index.
The Lipper Multi-Sector Income Funds Average reflects performance of 56 funds
(based on the number of funds in the average from 1/31/96 to 4/30/00). These
funds have generally similar investment objectives to Alliance Global Strategic
Income Trust, although the investment policies of some funds included in the
average may vary.
When comparing Alliance Global Strategic Income Trust to the index and average
shown above, you should note that no charges or expenses are reflected in the
performance of the index. Lipper results include fees and expenses. An investor
cannot invest directly in an index or an average and its results are not
indicative of any specific investment, including Alliance Global Strategic
Income Trust.
* Closest month-end after Fund's Class A share inception date of 1/9/96.
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6 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
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PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
April 30, 2000 (unaudited)
INCEPTION DATE PORTFOLIO STATISTICS
(Class A Shares) Assets ($mil): 165.1
1/9/96
SECURITY TYPE BREAKDOWN
Security Type
0.9% Brady Bond
8.3% Federal Agency
25.5% Sovereign [PIE CHART OMITTED]
17.4% Treasury
0.8% Warrants
7.6% Yankee Bonds
2.4% Preferred Stock
Corporate
0.3% Public Utilities--Telephone
0.3% Consumer Manufacturing
1.4% Service
1.8% Broadcasting/Media
1.9% Cable
2.9% Automotive
1.5% Communications--Fixed
3.5% Banking
4.6% Communications
4.8% Financial
Time Deposit
14.1%
HOLDINGS TYPE BREAKDOWN [PIE CHART OMITTED]
0.8% Equity
99.2% Fixed Income
All data as of April 30, 2000. The Fund's breakdowns are expressed as a
percentage of the portfolio's total investments and may vary over time.
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ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 7
<PAGE>
-----------------
PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
April 30, 2000 (unaudited)
UNDERLYING CURRENCY BREAKDOWN
AS OF APRIL 30, 2000
1.3% Australian Dollar
2.8% German Mark
14.8% Euro
0.8% British Pound
0.9% Greek Drachma
1.3% Mexican Peso [PIE CHART OMITTED]
0.5% Polish Zloty
1.0% Turkish Lira
60.5% U.S. Dollars
2.0% South African Rand
14.1% Short-Term
All data as of April 30, 2000. The Fund's breakdowns are expressed as a
percentage of the portfolio's total investments and may vary over time.
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8 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE GLOBAL STRATEGIC INCOME TRUST
HISTORY OF RETURNS
YEARLY PERIODS ENDED 4/30
[BAR CHART OMITTED]
Alliance Global Strategic Income Trust--
Yearly Periods Ended 4/30
--------------------------------------------------------------------------------
Alliance Global Strategic Lehman Brothers
Income Trust Aggregate Bond Index
--------------------------------------------------------------------------------
4/30/96* 5.47% -2.33%
4/30/97 20.03% 7.08%
4/30/98 16.72% 10.91%
4/30/99 1.77% 6.27%
4/30/00 5.07% 1.26%
Past performance is no guarantee of future results. The Fund's investment
results represent total returns for Class A shares and are based on the
net asset value. All fees and expenses related to the operation of the
Fund have been deducted. Returns for the Fund include the reinvestment of
any distributed paid during the period. The unmanaged Lehman Brothers
Aggregate Bond Index is composed of the Lehman Brothers Mortgage-Backed
Securities Index, the Lehman Brothers Asset-Backed Securities Index and
the Lehman Brothers Government/Corporate Bond Index. It is a broad measure
of the performance of taxable bonds in the U.S. market with maturities of
at least one year. An investor cannot invest directly in an index, and its
results are not indicative of any specific investment, including Alliance
Global Strategic Income Trust.
* From inception (1/9/96 for Fund and 12/31/95 for Index)
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 9
<PAGE>
------------------
INVESTMENT RESULTS
------------------
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF APRIL 30, 2000
Class A Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 5.07% 0.60%
Since Inception* 11.20% 10.10%
SEC Yield** 6.58%
Class B Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 4.26% 0.45%
Since Inception* 10.56% 10.56%
SEC Yield** 6.20%
Class C Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 4.36% 3.40%
Since Inception* 10.59% 10.59%
SEC Yield** 6.20%
SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END (MARCH 31, 2000)
Class A Class B Class C
--------------------------------------------------------------------------------
1 Year 4.58% 4.40% 7.37%
Since Inception* 10.76% 11.29% 11.29%
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 (3% year 1, 2% year 2, 1% year 3, 0% 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.
The Fund invests a significant amount of its assets in foreign securities and
emerging markets which could result in substantial volatility due to political
and economic uncertainty.
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 Classes B and C.
** SEC yields are based on SEC guidelines and are calculated on 30 days ended
April 30, 2000.
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10 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
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PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
April 30, 2000 (unaudited)
Shares or
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Australia-1.4%
Government Obligation-1.4%
Government of Australia
10.00%, 10/15/02(a)
(cost $2,585,160).............. AUD 3,600 $ 2,271,443
---------------
Brazil-3.3%
Government Obligation-3.3%
Republic of Brazil
12.25%, 3/06/30
(cost $5,555,055).............. US$ 6,000 5,452,800
---------------
Cayman Islands-1.7%
Preferred Stock-1.7%
Centaur Funding Corp.
9.08%, 4/21/20(b)
(cost $2,889,211).............. 2,800 2,802,615
---------------
Chile-1.6%
Corporate Debt Obligation-1.6%
Empresa Nacional de Electric, SA
7.88%, 2/01/27(a)
(cost $2,898,120).............. 3,000 2,573,340
---------------
Dominican Republic-1.3%
Corporate Debt Obligation-1.3%
Tricom, SA
11.38%, 9/01/04(a)
(cost $1,834,767).............. 2,000 2,077,500
---------------
France-1.7%
Government Obligation-1.7%
Government of France
4.50%, 7/12/03(a)
(cost $3,696,605).............. EUR 3,201 2,882,394
---------------
Germany-5.3%
Government Obligations-5.3%
Republic of Germany
5.38%, 1/04/10................. 7,000 6,405,134
6.25%, 1/04/30(a).............. 2,350 2,334,722
---------------
Total German Securities
(cost $9,068,787).............. 8,739,856
---------------
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ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 11
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Greece-1.0%
Government Obligation-1.0%
Hellenic Republic
8.90%, 4/01/03(a)
(cost $2,025,292).............. GRD 550,000 $ 1,603,553
---------------
Hong Kong-0.9%
Corporate Debt Obligations-0.9%
Asian Development Bank
5.59%, 7/16/18(a).............. US$ 1,000 956,335
Guangdong Enterprises
8.88%, 5/22/07(b)(c)........... 1,500 600,000
---------------
Total Hong Kong Securities
(cost $1,579,042).............. 1,556,335
---------------
Hungary-1.6%
Corporate Debt Obligation-1.6%
Euronet Services, Inc.
12.38%, 7/01/06(a)(d)(e)
(cost $1,963,908).............. DEM 8,000 2,568,039
---------------
Italy-1.0%
Government Obligations-1.0%
Republic of Italy
6.25%, 3/01/02(a).............. EUR 1,033 963,813
8.25%, 7/01/01(a).............. 775 733,785
---------------
Total Italian Securities
(cost $2,114,969).............. 1,697,598
---------------
Luxembourg-0.9%
Corporate Debt Obligations-0.9%
Carrier1 International, SA Series B
13.25%, 2/15/09(a)............. US$ 1,000 980,000
PTC International Finance II, SA
11.25%, 12/01/09(b)............ EUR 500 484,522
---------------
Total Luxembourg Securities
(cost $1,555,042).............. 1,464,522
---------------
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12 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
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------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Mexico-5.6%
Government Obligations-5.6%
Mexican Cetes
25.73%, 7/13/00(a)(f).......... MXP 22,362 $ 2,308,149
United Mexican States
11.38%, 9/15/16(a)............. US$ 6,100 6,893,000
---------------
Total Mexican Securities
(cost $9,717,416).............. 9,201,149
---------------
Netherlands-4.2%
Corporate Debt Obligations-4.2%
Netia Holdings, BV
Series B
11.00%, 11/01/07(d)............ DEM 1,750 590,254
Robert Fleming, BV
6.56%, 11/29/49................ US$ 2,500 2,032,727
United Pan Europe Communications
10.88%, 8/01/09(b)............. EUR 1,000 837,108
Versatel Telecom, BV
11.25%, 3/30/10(b)............. 1,000 889,427
13.25%, 5/15/08(a)............. US$ 1,250 1,275,000
warrants, expiring
5/15/08(b)(g) ................. 2,750 1,347,500
---------------
Total Dutch Securities
(cost $6,068,153).............. 6,972,016
---------------
Norway-0.3%
Corporate Debt Obligation-0.3%
Enitel ASA
12.50%, 4/15/10(b)
(cost $479,750)................ EUR 500 466,324
---------------
Panama-0.6%
Government Obligation-0.6%
Republic of Panama
9.38%, 4/01/29(a)
(cost $999,216)................ US$ 1,000 942,500
---------------
Philippines-1.8%
Corporate Debt Obligation-1.8%
Bangko Sentral Pilipanas
8.60%, 6/15/27(a)
(cost $3,332,692).............. 4,000 3,040,000
---------------
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ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 13
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Poland-1.1%
Government Obligations-1.1%
Government of Poland
8.50%, 10/12/04(a)............ US$ 5,000 $ 925,615
10.00%, 6/12/04(a)............. PLN 5,000 972,595
---------------
Total Polish Securities
(cost $2,145,513).............. 1,898,210
---------------
Russia-2.1%
Government Obligation-2.1%
Russian Federation-WI
2.25%, 3/31/30(b)
(cost $3,312,060).............. US$ 10,200 3,442,500
---------------
South Africa-2.1%
Corporate Debt Obligations-1.3%
Development Bank of South Africa
Zero coupon, 12/31/27(a)....... ZAR 50,000 165,917
European Bank for Reconstruction &
Development
Zero coupon, 12/31/29(a)(h).... 50,000 169,604
International Bank for Reconstruction &
Development
Zero Coupon, 12/31/25(a)....... 350,000 1,594,499
Zero Coupon, 2/17/26(a)(h)..... 50,000 227,122
---------------
2,157,142
---------------
Government Obligation-0.8%
Republic of South Africa
13.00%, 8/31/10................ 9,750 1,319,316
---------------
Total South African Securities
(cost $8,191,624).............. 3,476,458
---------------
Turkey-2.6%
Government Obligations-2.6%
Government of Turkey Series 24T4
72.00%, 10/03/01(a)............ TRL 810,000,000 1,737,229
Republic of Turkey
11.88%, 1/15/30................ US$ 2,400 2,599,500
---------------
Total Turkish Securities
(cost $4,406,564).............. 4,336,729
---------------
United Kingdom-16.8%
Corporate Debt Obligation-0.8%
RSL Communications Plc.
10.00%, 3/15/08(a)(d)(e)....... DEM 5,000 1,279,367
---------------
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14 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
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------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Preferred Stocks-0.8%
Abbey National Bank Plc.
7.76%(a)....................... GBP 400 $ 794,427
Bank of Scotland
9.25%(a)....................... 300 601,662
---------------
1,396,089
---------------
Time Deposit-15.2%
First National Bank of London
6.00%, 5/01/00................. US$ 25,100 25,100,000
---------------
Total United Kingdom Securities
(cost $28,686,267)............. 27,775,456
---------------
United States-47.8%
Corporate Debt Obligations-20.1%
@Entertainment, Inc. Series B
14.50%, 2/01/09(b)(d).......... US$ 5,120 3,148,800
Auburn Hills Trust
12.00%, 5/01/20(a)............. 2,200 3,177,438
Colo.Com, separable Unit
13.88%, 3/15/10(b)............. 1,500 1,537,500
Derby Cycle Corp.
9.38%, 5/15/08(a)(e)........... DEM 1,700 577,344
Dresdner Funding Trust
5.79%, 6/30/11(b).............. EUR 2,000 1,670,627
Federal-Mogul Corp.
7.50, 1/15/09(b)............... US$ 2,500 1,890,618
Ford Motor Credit Co.
7.50%, 3/15/05(a).............. 6,000 5,938,578
Global Telesystems Europe, Ltd.
11.00%, 12/01/09(b)............ EUR 2,500 2,044,265
IBJ Preferred Capital Co.
8.79, 12/29/49(b).............. US$ 5,000 4,606,345
Iridium LLC Capital Corp. Series B
14.00%, 7/15/05(b)(c).......... 2,000 65,000
KBC Bank Funding Trust
9.86%, 11/29/49(b)............. 1,985 2,032,388
Level 3 Communications, Inc.
11.25%, 3/15/10(b)............. EUR 1,500 1,306,844
NTL Communications Corp. Series B
10.75%, 11/15/09(d)............ 6,300 3,324,775
Viatel, Inc.
11.15%, 4/15/08(a)............. 1,000 409,398
11.50%, 3/15/09(a)............. 2,000 1,546,830
---------------
33,276,750
---------------
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 15
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Government Agency Obligations-8.9%
Federal National Mortgage Association
7.00%, TBA..................... US$ 7,500 $ 7,175,400
8.00%, TBA..................... 7,500 7,488,300
---------------
14,663,700
---------------
U.S. Government Obligations-18.8%
U.S. Treasury Bonds
8.13%, 8/15/19(a)............. 3,000 3,604,680
10.38%, 11/15/12(a)............ 12,000 14,610,000
13.25%, 5/15/14(a)............. 4,120 5,945,654
U.S. Treasury Note
7.50%, 11/15/01(a)............. 6,750 6,825,938
---------------
30,986,272
---------------
Common Stock-0.0%
OpTel, Inc.(b)(g)................. 500 5
---------------
Total United States Securities
(cost $83,120,205)............. 78,926,727
---------------
Venezuela-0.9%
Government Obligation-0.9%
Republic of Venezuela Series A
6.56%, 3/31/20(a)
(cost $1,491,765).............. 2,000 1,545,000
---------------
Total Investments-107.6%
(cost $189,717,183)............ 177,713,064
Other liabilities less
assets-(7.6)% (12,568,552)
---------------
Net Assets-100%................... $ 165,144,512
===============
(a) Securities, or a portion thereof, with an aggregate market value of
$87,052,470 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,
2000, these securities amounted to $29,172,388 or 17.66% of net assets.
(c) Security is in default and is non-income producing.
(d) 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.
(e) Will be converted to Euro based upon a predetermined schedule.
(f) Annualized yield to maturity at purchase date.
(g) Non-income producing security.
(h) Unit consists of 1 senior discount note and 2.77 junior subordinate
debentures.
Glossary:
TBA - To Be Announced
WI - When Issued
See notes to financial statements.
--------------------------------------------------------------------------------
16 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
April 30, 2000 (unaudited)
Assets
Investments in securities, at value
(cost $189,717,183) .............................. $ 177,713,064
Receivable for investment securities sold............ 26,972,471
Interest receivable.................................. 3,558,593
Receivable for capital stock sold.................... 1,832,493
Unrealized appreciation of forward exchange
currency contracts................................ 1,779,889
Deferred organization expenses....................... 22,059
---------------
Total assets......................................... 211,878,569
---------------
Liabilities
Due to custodian..................................... 579,791
Payable for investment securities purchased.......... 44,424,508
Payable for capital stock sold....................... 786,817
Dividend payable..................................... 416,018
Distribution fee payable............................. 111,028
Advisory fee payable................................. 101,010
Accrued expenses and other liabilities............... 314,885
---------------
Total liabilities.................................... 46,734,057
---------------
Net Assets........................................... $ 165,144,512
===============
Composition of Net Assets
Capital stock, at par................................ $ 16,423
Additional paid-in capital........................... 177,342,777
Distributions in excess of net investment income..... (1,749,799)
Accumulated net realized gain on investments and
foreign currency transactions..................... 53,527
Net unrealized depreciation of investments and
foreign currency denominated assets and
liabilities ...................................... (10,518,416)
---------------
$ 165,144,512
===============
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($38,028,457 / 3,779,085 shares of capital stock
issued and outstanding)........................... $10.06
Sales charge--4.25% of public offering price......... .45
------
Maximum offering price............................... $10.51
======
Class B Shares
Net asset value and offering price per share
($94,885,257 / 9,438,743 shares of capital stock
issued and outstanding)........................... $10.05
======
Class C Shares
Net asset value and offering price per share
($29,881,232 / 2,971,596 shares of capital stock
issued and outstanding)........................... $10.06
======
Advisor Class Shares
Net asset value, redemption and offering price per
share ($2,349,566 / 233,338 shares of capital
stock issued and outstanding)..................... $10.07
======
See notes to financial statements.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 17
<PAGE>
-----------------------
STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2000 (unaudited)
Investment Income
Interest (net of foreign taxes
withheld of $94,294)................. $ 7,843,671
Dividends (net of foreign taxes
withheld of $5,243).................. 110,746 $ 7,954,417
---------------
Expenses
Advisory fee............................ 565,705
Distribution fee - Class A.............. 52,600
Distribution fee - Class B.............. 437,605
Distribution fee - Class C.............. 131,990
Custodian............................... 133,195
Transfer agency......................... 114,223
Administration.......................... 80,199
Registration............................ 42,051
Printing................................ 37,375
Audit and legal......................... 33,456
Amortization of organization expenses... 14,924
Directors' fees......................... 10,522
Miscellaneous........................... 6,714
---------------
Total expenses.......................... 1,660,559
---------------
Net investment income................... 6,293,858
---------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized loss on investment
transactions......................... (547,345)
Net realized gain on foreign currency
transactions......................... 2,726,418
Net change in unrealized appreciation/
depreciation of:
Investments........................ (363,216)
Foreign currency denominated assets
and liabilities.................. 611,121
---------------
Net gain on investments................. 2,426,978
---------------
Net Increase in Net Assets
from Operations...................... $ 8,720,836
===============
See notes to financial statements.
--------------------------------------------------------------------------------
18 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
Six Months
Ended Year Ended
April 30, 2000 October 31,
(unaudited) 1999
-------------- ---------------
Increase (Decrease) in Net Assets
from Operations
Net investment income................... $ 6,293,858 $ 10,189,620
Net realized gain (loss) on investments
and foreign currency transactions.... 2,179,073 (1,185,910)
Net change in unrealized appreciation/
depreciation of investments and
foreign currency denominated assets
and liabilities...................... 247,905 (2,250,079)
-------------- ---------------
Net increase in net assets from
operations........................... 8,720,836 6,753,631
Dividends and Distributions to
Shareholders from:
Net investment income
Class A.............................. (1,721,318) (2,526,820)
Class B.............................. (3,999,779) (5,848,991)
Class C.............................. (1,204,548) (1,694,862)
Advisor Class........................ (94,894) (118,947)
Distributions in excess of net
investment income
Class A.............................. -0- (75,442)
Class B.............................. -0- (262,528)
Class C.............................. -0- (78,399)
Advisor Class........................ -0- (5,051)
Capital Stock Transactions
Net increase............................ 26,589,335 40,879,087
-------------- ---------------
Total increase.......................... 28,289,632 37,021,678
Net Assets
Beginning of year....................... 136,854,880 99,833,202
-------------- ---------------
End of period........................... $ 165,144,512 $ 136,854,880
============== ===============
See notes to financial statements.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 19
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
April 30, 2000 (unaudited)
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 may be subject to a contingent deferred sales charge of 1%.
Class B shares are currently sold with a contingent deferred sales charge which
declines from 4% to zero depending on the period of time the shares are held.
Class B shares will automatically convert to Class A shares eight years after
the end of the calendar month of purchase. Class C shares are subject to a
contingent deferred sales charge of 1% on redemptions made within the first year
after purchase. Advisor Class shares are sold without an initial or contingent
deferred sales charge and are not subject to ongoing distribution expenses.
Advisor Class shares are offered to investors participating in fee-based
programs and to certain retirement plan accounts. All four classes of shares
have identical voting, dividend, liquidation and other rights 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) or on the
NASDAQ Stock Market, Inc. 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 (but
excluding securities traded on the NASDAQ Stock Market, Inc.) are valued at the
mean of the closing bid and asked prices pro-
--------------------------------------------------------------------------------
20 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
vided 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 gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of investments and foreign
currency contracts, the holding of foreign currencies, currency gains or losses
realized between the trade and settlement dates on foreign security
transactions, and the difference between the amounts of dividends, interest and
foreign taxes receivable recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized currency
gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation (depreciation) of investments and foreign currency
denominated assets and liabilities.
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 outstanding 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 Advisor Class shares (Advisor Class shares also 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
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 21
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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.
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 waive its fees and bear certain expenses to the extent
necessary to limit total operating expenses on an annual basis to 1.90%, 2.60%,
2.60% and 1.60% of the daily average net assets for the Class A, Class B, Class
C and Advisor Class shares, respectively.
Pursuant to the Advisory Agreement, the Fund paid $80,199 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended April 30, 2000.
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 $65,506, for the six months ended April 30, 2000.
For the six months ended April 30, 2000, the Fund's expenses were reduced by
$3,592 under an expense offset arrangement with Alliance Fund Services, Inc.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of the Adviser serves as the Distributor of the Fund's shares. The Distributor
has advised the Fund that it has received front-end sales charges of $10,606
from the sale of Class A shares and $173,925 and $11,286 in contingent deferred
sales charges imposed upon redemption by shareholders of Class B and Class C
shares, respectively, for the six months ended April 30, 2000.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .30 of 1% of the 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. There are no distribution and servicing fees
on the Advisor Class shares. The fees are accrued daily
--------------------------------------------------------------------------------
22 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
and paid monthly. The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and promotional
activities. The Distributor has advised the Fund that it has incurred expenses
in excess of the distribution costs reimbursed by the Fund in the amount of
$5,633,325 and $858,637 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 $238,023,438 and $206,308,613,
respectively, for the six months ended April 30, 2000. There were purchases of
$115,321,722 and sales of $78,744,870 of U.S. government and government agency
obligations for the six months ended April 30, 2000.
At April 30, 2000, the cost of investments for federal income tax purposes was
substantially the same as the costs for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $3,674,431 and
gross unrealized depreciation of investments was $15,678,550 resulting in net
unrealized depreciation of $12,004,119 (excluding foreign currency
transactions).
At October 31, 1999, the Fund had a net capital loss carryforward of $2,125,545
which expires in the year 2007.
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.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 23
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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, 2000, the Fund had outstanding forward exchange currency contracts,
as follows:
Contract Value on U.S. $ Unrealized
Amount Origination Current Appreciation/
(000) Date Value (Depreciation)
-----------------------------------------------------
Forward Exchange
Currency Buy
Contracts
Australian Dollars,
settling 5/01/00 2,523 $ 1,529,528 $ 1,473,198 $ (56,330)
Canadian Dollars,
settling 5/10/00 179 122,907 121,148 (1,759)
Euro,
settling 5/25/00-6/26/00 7,538 7,092,709 6,870,243 (222,466)
Forward Exchange
Currency Sale
Contracts
Australian Dollars,
settling 5/01/00 2,523 1,546,076 1,473,198 72,878
British Pound,
settling 6/06/00 1,032 1,645,767 1,607,986 37,781
Euro,
settling 5/25/00-6/26/00 38,623 37,151,364 35,201,579 1,949,785
----------
$1,779,889
==========
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
--------------------------------------------------------------------------------
24 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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 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 six months ended April
30, 2000, the Fund did not engage in any options transactions.
3. Interest Rate Swap Agreements
The Fund enters into currency and interest rate swaps to protect itself from
foreign currency and interest rate fluctuations on the underlying debt
instruments. A swap is an agreement that obligates two parties to exchange a
series of cash flows at specified intervals based upon or calculated by
reference to changes in specified prices or rates for a specified amount of an
underlying asset. The payment flows are usually netted against each other, with
the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by the
failure of a counterparty is generally limited to the net interest payment to be
received by the Fund, and/or the termination value at the end of the contract.
Therefore, the Fund considers the creditworthiness of each counterparty to a
swap contract in evaluating potential credit risk. Additionally, risks may arise
from unanticipated movements in interest rates or in the value of the foreign
securities or currencies.
The Fund records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as interest
income (or as an offset to interest income). Fluctuations in the value of
investments are recorded for financial statement purposes as unrealized
appreciation or depreciation of investments. Realized gains and losses from
terminated swaps are included in net realized gains on investment transactions.
At April 30, 2000, the Fund had no outstanding interest rate swap contracts.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 25
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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:
------------------------------- ---------------------------------
Shares Amount
------------------------------- ---------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2000 October 31, April 30, 2000 October 31,
(unaudited) 1999 (unaudited) 1999
-----------------------------------------------------------------
Class A
Shares sold 1,424,766 2,169,162 $ 14,512,651 $ 22,169,720
--------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 113,973 149,679 1,159,640 1,524,262
--------------------------------------------------------------------------------
Shares converted
from Class B 18,654 25,906 189,884 261,732
--------------------------------------------------------------------------------
Shares redeemed (1,189,876) (1,348,486) (12,024,959) (13,762,106)
--------------------------------------------------------------------------------
Net increase 367,517 996,261 $ 3,837,216 $ 10,193,608
================================================================================
Class B
Shares sold 2,707,436 3,834,483 $ 27,500,398 $ 39,159,037
--------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 185,194 220,611 1,883,048 2,246,476
--------------------------------------------------------------------------------
Shares converted
to Class A (18,654) (25,906) (189,884) (261,732)
--------------------------------------------------------------------------------
Shares redeemed (1,422,724) (1,751,141) (14,446,798) (17,916,604)
--------------------------------------------------------------------------------
Net increase 1,451,252 2,278,047 $ 14,746,764 $ 23,227,177
================================================================================
Class C
Shares sold 1,159,811 1,669,635 $ 11,800,300 $ 17,120,813
--------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 65,503 62,703 666,067 636,061
--------------------------------------------------------------------------------
Shares redeemed (535,525) (1,030,285) (5,432,205) (10,563,627)
--------------------------------------------------------------------------------
Net increase 689,789 702,053 $ 7,034,162 $ 7,193,247
================================================================================
--------------------------------------------------------------------------------
26 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
------------------------------- ---------------------------------
Shares Amount
------------------------------- ---------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2000 October 31, April 30, 2000 October 31,
(unaudited) 1999 (unaudited) 1999
-----------------------------------------------------------------
Advisor Class
Shares sold 98,304 49,768 $ 992,157 $ 514,645
--------------------------------------------------------------------------------
Shares issued
in reinvestment of
dividends and
distributions 8,894 11,472 90,757 117,493
--------------------------------------------------------------------------------
Shares redeemed (10,913) (35,477) (111,721) (367,083)
--------------------------------------------------------------------------------
Net increase 96,285 25,763 $ 971,193 $ 265,055
================================================================================
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 six months ended April 30, 2000.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 27
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Class A
-----------------------------------------------------------------------------------------
Six Months
Ended January 9,
April 30, Year Ended October 31, 1996(a) to
2000 -------------------------------------------------- October 31,
(unaudited) 1999 1998 1997 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $ 9.91 $ 10.18 $ 11.46 $ 10.83 $ 10.00
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income(b) ...... .43 .94 .78(c) .74(c) .69(c)
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ................ .22 (.22) (.64) 1.02 .95
-----------------------------------------------------------------------------------------
Net increase in net asset
value from operations ....... .65 .72 .14 1.76 1.64
-----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ........... (.50) (.94) (.78) (.75) (.81)
Distributions in excess of
net investment income ....... -0- (.05) (.28) (.28) -0-
Distributions from net
realized gains on
investments ................. -0- -0- (.36) (.10) -0-
-----------------------------------------------------------------------------------------
Total dividends and
distributions ............... (.50) (.99) (1.42) (1.13) (.81)
-----------------------------------------------------------------------------------------
Net asset value,
end of period ............... $ 10.06 $ 9.91 $ 10.18 $ 11.46 $ 10.83
=========================================================================================
Total Return
Total investment return
based on net asset
value(d) .................... 6.60% 7.17% 1.00% 16.83% 17.31%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ............. $ 38,028 $ 33,813 $ 24,576 $ 12,954 $ 2,295
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements ............ 1.67%(e) 1.77% 1.89% 1.90% 1.90%(e)
Expenses, before waivers/
reimbursements ............ 1.67%(e) 1.77% 2.08% 4.06% 19.20%(e)
Net investment income ....... 8.85%(e) 9.34% 7.08% 6.56% 8.36%(e)
Portfolio turnover rate ....... 305% 254% 183% 417% 282%
</TABLE>
See footnote summary on page 31.
--------------------------------------------------------------------------------
28 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Class B
-----------------------------------------------------------------------------------------
Six Months
Ended March 21,
April 30, Year Ended October 31, 1996(f) to
2000 -------------------------------------------------- October 31,
(unaudited) 1999 1998 1997 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $ 9.90 $ 10.17 $ 11.46 $ 10.83 $ 9.97
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income(b) ...... .40 .87 .69(c) .66(c) .41(c)
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ................ .21 (.22) (.63) 1.03 1.01
-----------------------------------------------------------------------------------------
Net increase in net asset
value from operations ....... .61 .65 .06 1.69 1.42
-----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ........... (.46) (.87) (.69) (.67) (.56)
Distributions in excess of
net investment
income ...................... -0- (.05) (.30) (.29) -0-
Distributions from net
realized gains on
investments ................. -0- -0- (.36) (.10) -0-
-----------------------------------------------------------------------------------------
Total dividends and
distributions ............... (.46) (.92) (1.35) (1.06) (.56)
-----------------------------------------------------------------------------------------
Net asset value,
end of period ............... $ 10.05 $ 9.90 $ 10.17 $ 11.46 $ 10.83
=========================================================================================
Total Return
Total investment return
based on net asset
value(d) .................... 6.24% 6.44% .27% 16.12% 14.47%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ............. $ 94,885 $ 79,085 $ 58,058 $ 18,855 $ 800
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements ............ 2.39%(e) 2.47% 2.58% 2.60% 2.60%(e)
Expenses, before waivers/
reimbursements ............ 2.39%(e) 2.47% 2.76% 4.76% 19.57%(e)
Net investment income ....... 8.17%(e) 8.54% 6.41% 5.86% 7.26%(e)
Portfolio turnover rate ....... 305% 254% 183% 417% 282%
</TABLE>
See footnote summary on page 31.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 29
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Class C
-----------------------------------------------------------------------------------------
Six Months
Ended March 21,
April 30, Year Ended October 31, 1996(f) to
2000 -------------------------------------------------- October 31,
(unaudited) 1999 1998 1997 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $ 9.90 $ 10.17 $ 11.46 $ 10.83 $ 9.97
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income(b) ...... .40 .88 .68(c) .66(c) .39(c)
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ................ .22 (.23) (.62) 1.03 1.03
-----------------------------------------------------------------------------------------
Net increase in net asset
value from operations ....... .62 .65 .06 1.69 1.42
-----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ........... (.46) (.88) (.68) (.67) (.56)
Distributions in excess of
net investment income ....... -0- (.04) (.31) (.29) -0-
Distributions from net
realized gains on
investments ................. -0- -0- (.36) (.10) -0-
-----------------------------------------------------------------------------------------
Total dividends and
distributions ............... (.46) (.92) (1.35) (1.06) (.56)
-----------------------------------------------------------------------------------------
Net asset value,
end of period ............... $ 10.06 $ 9.90 $ 10.17 $ 11.46 $ 10.83
=========================================================================================
Total Return
Total investment return
based on net asset
value(d) .................... 6.34% 6.44% .27% 16.12% 14.47%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ............. $ 29,881 $ 22,598 $ 16,067 $ 4,388 $ 750
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements ............ 2.36%(e) 2.46% 2.58% 2.60% 2.60%(e)
Expenses, before waivers/
reimbursements ............ 2.36%(e) 2.46% 2.77% 4.77% 19.49%(e)
Net investment income ....... 8.17%(e) 8.52% 6.43% 5.86% 7.03%(e)
Portfolio turnover rate ....... 305% 254% 183% 417% 282%
</TABLE>
See footnote summary on page 31.
--------------------------------------------------------------------------------
30 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------------
Advisor Class
--------------------------------------------------
Six Months
Ended Year December 18,
April 30, Ended 1997(f) to
2000 October 31, October 31,
(unaudited) 1999 1998
--------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period .... $ 9.92 $ 10.18 $ 11.09
--------------------------------------------------
Income From Investment Operations
Net investment income(b) ................ .48 .98 .85(c)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .......................... .19 (.22) (.84)
--------------------------------------------------
Net increase in net asset value from
operations ............................ .67 .76 .01
--------------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income .... (.52) (.98) (.85)
Distributions in excess of net investment
income ................................ -0- (.04) (.07)
--------------------------------------------------
Total dividends and distributions ....... (.52) (1.02) (.92)
--------------------------------------------------
Net asset value, end of period .......... $ 10.07 $ 9.92 $ 10.18
==================================================
Total Return
Total investment return based on net
asset value(d) ........................ 6.75% 7.58% .07%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ....................... $ 2,350 $ 1,359 $ 1,133
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements ........................ 1.31%(e) 1.45% 1.58%(e)
Expenses, before waivers/
reimbursements ........................ 1.31%(e) 1.45% 1.77%(e)
Net investment income ................. 9.30%(e) 9.52% 7.64%(e)
Portfolio turnover rate ................. 305% 254% 183%
</TABLE>
(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.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 31
<PAGE>
----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------
GLOSSARY OF INVESTMENT TERMS
benchmark
A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.
bond
Bonds are issued by governments or corporations when they need to raise cash.
Bonds are sold, or issued, to investors and have a maturity date, which is the
date the issuer is obligated to repay the investor for the principal, or face
amount, of the Bond. Bonds also pay interest until maturity. Bonds are also
called fixed-income securities
common stock
A type of security that represents ownership in a public company.
Consumer Price Index (CPI)
An index that measures the cost of living. The CPI is published by the U.S.
Bureau of Labor Statistics.
debt securities
A bond
index
A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
monetary policy
The regulation of the money supply and interest rates by a country's central
bank with the purpose of controlling inflation and stabilizing currency
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding.
portfolio
The collection of securities that make up a Fund's or an investor's investments.
yield
The rate of return on an asset, usually referring to dividend or interest
payments, expressed as a percentage of current market price.
--------------------------------------------------------------------------------
32 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
----------------
ALLIANCE CAPITAL
----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $394
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 28 of the FORTUNE 100 companies and public retirement funds in 33
states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 276
investment professionals in 22 investment offices worldwide. Our commitment to
this process means that our mutual fund shareholders have their portfolios
managed by the same experienced analysts and portfolio managers who manage the
pension funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 3/31/00.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 33
<PAGE>
--------------------------------
ALLIANCE CAPITAL AT YOUR SERVICE
--------------------------------
ALLIANCE CAPITAL AT YOUR SERVICE
At Alliance Capital, shareholder satisfaction is among our top priorities.
That's why we provide our shareholders with a wide variety of products and
time-saving services to meet their needs.
o Low Minimum Investments
You can begin investing in Alliance Capital funds with as little as $250
(except for Alliance Select Investor Series Premier Portfolio and Alliance
Select Investor Series Technology Portfolio, which generally have a
$10,000 minimum initial investment) and may make subsequent investments of
$50 or more.
o Automatic Reinvestment
You may choose to reinvest fund dividend and capital-gains distributions
automatically at no charge.
o Automatic Investment Program
Build your investment account by having money automatically transferred
from your bank account on a regular basis.
o Dividend Direction Plans
You may cross-invest dividends from one fund into the same class of shares
in any other fund without incurring a sales charge. This can be a good way
to diversify your assets.
o The Alliance Advance
A quarterly newsletter discussing investment strategies, economic news and
other matters that could affect your mutual fund investment.
o Auto Exchange
You may choose to automatically exchange money from one Alliance Capital
fund to another on a regular basis. This can be a good way to dollar cost
average*, helping you to invest with discipline.
o Systematic Withdrawals
Regular checks for specified amounts can be sent to you or to your
brokerage or bank account.
o A Choice of Purchase Plans
Most funds are available in A, B, and C Class shares. Many funds are also
available in Advisor Class shares.
o Telephone Transaction
Purchases, transfers and redemptions can be made by calling (800)
221-5672. Our knowledgeable representatives are available to assist you
Monday through Friday from 8:30 a.m. to 8:00 p.m. Eastern Standard Time.
o Alliance Answer: 24-Hour Information
For your convenience, our computerized audio response system is available
to you 24-hours a day by calling (800) 251-0539. Using any touch tone
phone, you can hear share prices, get account balances, review details of
your last transaction, obtain dividend information, order
statements/checkbooks, review fund objectives, literature and Watchlist
information, order additional copies of statements and request additional
year-end tax forms (available from February 1 to May 31).
o Alliance Capital on the World Wide Web at www.alliancecapital.com. Here,
you can access updated account information, make additional investments,
request more information, exchange between Alliance funds and view fund
performance, press releases and articles.
* Dollar cost averaging does not assure a profit nor protect against loss in
a declining market. Since this strategy involves continuous investments in
securities, regardless of fluctuating prices, investors should consider
their financial ability to invest during periods of low price levels.
--------------------------------------------------------------------------------
34 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
------------------
BOARD OF DIRECTORS
------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
William H. Foulk, Jr.(1)
Dr. James M. Hester(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
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 and 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 LLP
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.
--------------------------------------------------------------------------------
ALLIANCE GLOBAL STRATEGIC INCOME TRUST o 35
<PAGE>
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Balanced Shares
Conservative Investors Fund
Disciplined Value Fund
Growth & Income Fund
Growth Fund
Growth Investors Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Real Estate Investment Fund
Technology Fund
The Alliance Fund
Utility Income Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Limited Maturity Government Fund
Mortgage Securities Income Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
--------------------------------------------------------------------------------
36 o ALLIANCE GLOBAL STRATEGIC INCOME TRUST
<PAGE>
Alliance Global Strategic Income Trust -----------------
1345 Avenue of the Americas BULK RATE
New York, NY 10105 U.S. POSTAGE
(800) 221-5672 PAID
New York, NY
Permit No. 7131
-----------------
AllianceCapital [LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
GSIFSR400
