<PAGE>
LETTER TO SHAREHOLDERS Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
January 25, 1995
Dear Shareholder:
Since we last reported to you in May, continued tightening in U.S. monetary
policy by the Federal Reserve and political and economic events in Mexico,
Argentina and Canada have triggered declining bond prices with high price
volatility in these markets. Stricter U.S. monetary policy placed downward
pressure on domestic and international bond prices for most of the year.
Adding to this price pressure is the Mexican government's recent decision to
abandon its currency trading band and float the peso. This unexpected action
led to significant price declines for all Mexican debt obligations. While
this dramatic shift in Mexican economic policy may prove beneficial to the
long-term performance of the economy, it negatively impacted the net asset
value of your Fund.
For the fiscal year ended November 30, 1994, Alliance North American
Government Income Trust had total returns of -11.32% (Class A) and -11.89%
(Class B and Class C), based on the net asset value. In the six-month period
since we last reported, your Fund returned -5.62% (Class A), -5.99% (Class B)
and -6.00% (Class C), based on the net asset value. Average annual total
returns since inception in March 1992 were +3.46% (Class A) and +2.75% (Class
B); Class C shares, which were introduced on May 3, 1993, returned -2.52%.
During the fiscal year, the Fund paid dividends totaling $0.996 per Class A
share and $0.926 per Class B and Class C share. Additional investment
results for your Fund, including through December 31, appear on page 3.
U.S. ECONOMIC AND INTEREST RATE ENVIRONMENT
Early last year, the Federal Reserve shifted monetary policy to reflect its
view that inflation had become a serious concern. Through the end of
November, the Federal Reserve raised short-term interest rates six times in
an attempt to slow U.S. economic expansion and quell inflationary pressures.
During the twelve-month period ended November 30, two-year U.S. Treasury
yields rose from 4.22% to 7.40%, a 3.18% increase, and thirty-year U.S.
Treasury yields rose from 6.30% to 8.00%, a 1.70% increase. However, over
the past six months, we have seen some moderation in interest rate
volatility. Since May, two-year U.S. Treasurys rose from 5.99% to 7.40%, a
1.41% increase, and thirty-year U.S. Treasurys rose from 7.43 to 8.00%, or a
0.57% increase.
ECONOMIC CRISIS IN MEXICO
The Mexican government's decision to float the peso has resulted in a 39%
depreciation of its currency against the U.S. dollar since December 20. This
decline, which was in addition to the 10.5% devaluation that had occurred
over the previous 11 months, led to the collapse of the government's economic
strategy, which had been established by former President Salinas. The
Mexican government floated the peso in hopes of improving the trade deficit,
lowering interest rates and halting the depletion of its currency reserves.
However, in taking such action, the government has raised the likelihood of
higher inflation and lower growth in 1995, and has severely shaken investor
confidence in their economic programs.
President Ernesto Zedillo Ponce de Leon's economic rescue plan includes
defending the peso with the use of an international aid package, cutting
government spending, limiting wage increases and privatizing several
state-owned facilities. To be successful, the government's plan must
maintain the price advantages that come with a substantial currency
devaluation, without setting off inflation. Results from the program may
begin to appear in the second half of the year.
While economic fundamentals remain strong in Argentina, it is likely that the
spill over from the peso devaluation and uncertainty regarding the May 1995
presidential elections will lead to further short-term price volatility. The
devaluation of the peso is likely to result in higher Argentinean interest
rates as investors demand increased protection from Latin American currency
risk. The resulting downward pressure on prices should ease as economic
problems in Mexico subside. The Mexican crisis has also compounded the
weakness of the Canadian dollar, which has been weighed down by the country's
budget deficits and uncertainty over Quebec's status. As
<PAGE>
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
the peso stabilizes, the Canadian dollar should strengthen and more closely
reflect the country's economic strength. Canada enjoyed rapid economic growth
and very low inflation in 1994 and we forecast further growth with minimal price
pressure in 1995.
INVESTMENT OUTLOOK
We are forecasting a healthy but less robust U.S. economy in 1995. Our
estimate for annual GDP growth is 2.5%, with inflation, as measured by the
Consumer Price Index, to crest at 4.0% during the second half of 1995. The
Federal Reserve has repeatedly shown its willingness to raise short-term
interest rates to combat inflationary pressures and expectations. The
firming of monetary policy has been followed despite indications that U.S.
economic growth is moderating from its rapid pace in 1994. The Federal
Reserve's objective is to bring the rate of economic expansion down to non-inf
lationary levels, generally estimated to be GDP growth of less than 2.5%.
Slower growth and a strong anti-inflationary posture by the Federal Reserve
should brighten the 1995 outlook for the U.S. bond markets.
Despite recent events in Mexico, the long-term outlook for Mexico, Argentina
and Canada indicates the continuation of export-led economic growth.
Economic fundamentals remain strong in these countries and the long-term
impact of the North American Free Trade Agreement should continue to boost
economic activity and increase regional trade. Until the uncertainty
surrounding the U.S.'s congressional aid package to Mexico is resolved, in
the nearer-term its markets will likely remain volatile with potential
further downward pressure on prices. It is our view, however, that investors
who hold a long-term outlook should be rewarded.
We appreciate your investment in North American Government Income Trust and
look forward to reporting its progress to you in the coming months.
Sincerely,
[SIGNATURE]
John D. Carifa
Chairman and President
[SIGNATURE]
Wayne D. Lyski
Senior Vice President
2
<PAGE>
INVESTMENT RESULTS Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
<TABLE>
Average Annual Total Return as of November 30, 1994
<CAPTION>
CLASS A SHARES
Without With
Sales Charge Sales Charge
<S> <C> <C>
* One Year -11.32% -15.09%
* Since Inception* + 3.46 + 1.81
SEC Yield 11.44%
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES
Without With
Sales Charge Sales Charge
<S> <C> <C>
* One Year -11.89% -14.26%
* Since Inception* + 2.75 + 2.46
SEC Yield 11.23%
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES
<S> <C>
* One Year -11.89%
* Since Inception* - 2.52
SEC Yield 11.23%
</TABLE>
<TABLE>
Average Annual Total Return as of December 31, 1994
<CAPTION>
CLASS A SHARES
Without With
Sales Charge Sales Charge
<S> <C> <C>
* One Year -30.24% -33.22%
* Since Inception* - 4.69 - 6.16
SEC Yield 13.61%
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES
Without With
Sales Charge Sales Charge
<S> <C> <C>
* One Year -30.80% -32.67%
* Since Inception* - 5.40 - 5.65
SEC Yield 12.74%
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES
<S> <C>
* One Year -30.79%
* Since Inception* -14.68
SEC Yield 12.76%
</TABLE>
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares--with and without the effect of
the 4.25% maximum sales charge (Class A) or 3% contingent deferred sales charge
(Class B); Class C shares are not subject to front-end or contingent deferred
sales charges. 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. Yields are for the
30 days ended November 30 and December 31, 1994, respectively.
*Inception: 3/27/92, Class A and Class B; 5/3/93, Class C.
3
<PAGE>
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
$10,000 INVESTMENT OVER LIFE OF FUND:
3/31/92 TO 11/30/94
[TABULAR REPRESENTATION OF MOUNTAIN CHART]
<TABLE>
<CAPTION>
3/31/92 6/30/92 9/30/92 12/31/92 3/31/93 6/30/93 9/30/93 12/31/93 3/31/94 6/30/94 9/30/94
11/30/94
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
North American
Government
Income Trust:
Class A: 10,000 9,700 9,960 10,120 10,700 11,050 11,440 12,010 11,030 10,470 10,900
10,470
LB Aggregate 10,000 10,346 10,940 11,082 11,724 12,086 12,625 12,665 12,368 11,939 11,985
11,772
LB Intermediate-
Term Government 10,000 10,346 11,118 11,233 11,816 12,093 12,527 12,598 12,431 12,181 12,279
12,125
</TABLE>
This chart illustrates the total value of an assumed investment in Alliance
North American Government Income Trust Class A shares (since inception) after
deducting the maximum 4.25% sales charge, and with dividends and capital gains
reinvested. Performance for Class B and Class C shares will vary from the
results shown above due to differences in expenses charged to those classes.
Results should not be considered representative of future gain or loss in
capital value or dividend income.
The Lehman Brothers Aggregate Index is composed of the Mortgage Backed
Securities Index, the Asset Backed Securities Index and the combination
Government/Corporate Bond Index.
The Lehman Brothers Intermediate-Term Government Index is composed of
U.S. government agency and Treasury securities with maturities of one to ten
years.
When comparing Alliance North American Government Income Trust to the
two indexes shown above, you should note that the Fund's performance reflects
the maximum sales charge of 4.25% while no such charges are reflected in the
performance of the index.
Fund performance updated through December 31, 1994, appears on the
preceding page.
4
<PAGE>
PORTFOLIO OF INVESTMENTS
November 30, 1994 Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) U.S.$ Value
<S> <C> <C> <C>
ARGENTINA-26.7%
GOVERNMENT
OBLIGATIONS-26.7%
Bonos De Inversion y
Crecimiento
19.51%, 5/01/01 (FRN) ARS $156,077 $165,099,411
Republic of Argentina
Pensioner-Bocon Series I
3.10%, 4/01/01 (FRN). 222,484 110,321,709
Pensioner-Bocon Series II
3.10%, 9/01/02 (FRN) 165,186 68,649,022
Supplier-Bocon
3.10%, 4/01/07 (FRN). 755,271 273,453,165
Total Argentina Securities ------------
(cost $869,961,279).. 617,523,307
------------
BRAZIL-0.1%
AGENCY OBLIGATIONS-0.1%
Siderrurgica Brasileisa
6.00%, 8/15/99(d)
(cost $1,341,166).... CRZ 8,256* 1,450,492
------------
CANADA-12.5%
GOVERNMENT/AGENCY-12.5%
Government of Alberta
Telephone Co.
9.60%, 7/07/98....... CA$ 4,500 3,355,661
Government of Canada
6.25%, 2/01/98....... 7,000 4,776,740
7.50%, 7/01/97....... 9,950 7,106,575
7.50%, 12/01/03...... 50,000 32,836,635
8.00%, 6/01/23....... 130,000 82,823,914
Hydro-Quebec
7.00%, 6/01/04....... 50,000 29,903,689
Ontario Hydro
10.00%, 3/19/01...... 50,000 37,539,524
11.00%, 10/01/97..... 1,500 1,155,188
Province of Alberta
7.75%, 2/04/98....... 20,000 14,174,087
Province of Manitoba
11.00%, 8/15/00...... 20,000 15,713,611
Province of Ontario
7.50%, 2/07/24 ...... CA$ 25,000 $14,257,678
8.75%, 4/16/97 ...... 4,500 3,290,896
Province of Quebec
8.50%, 4/01/97 ...... 9,500 6,909,468
Province of Saskatchewan
8.125%, 2/04/97 ..... 10,000 7,210,612
9.00%, 12/11/96 ..... 8,000 5,871,997
9.50%, 8/16/04 ...... 20,000 14,344,176
11.00%, 1/09/01 ..... 10,000 7,784,118
Total Canadian Securities ------------
(cost $332,824,857) . 289,054,569
------------
MEXICO-40.1%
GOVERNMENT/AGENCY-34.7%
Bankers Acceptances
Nacional Financiera S.N.C.
15.00%, 8/13/98(b) .. MXP 80,180 14,069,689
15.25%, 12/15/94(b) . 150,000 43,353,019
15.25%, 12/29/94(b) . 36,764 10,550,124
16.09%, 2/23/95(b) .. 35,749 9,928,730
16.50%, 2/26/03(b) .. 414,125 39,240,290
16.95%, 12/24/03(b) . 81,401 7,716,191
17.50%, 12/11/03(b) . 55,253 5,251,427
Mexican Ajustabonos
5.07%, 11/28/96 (a) . 31,500 11,391,826
Mexican Treasury Bills
10.37%, 12/29/94(b) . 66,291 19,090,223
10.38%, 12/22/94(b) . 116,115 33,532,592
10.40%, 1/05/95(b) .. 140,821 40,439,309
10.62%, 1/12/95(b) .. 180,703 51,747,231
10.74%, 3/02/95(b) .. 134,800 37,866,570
10.77%, 12/15/94(b) . 257,633 74,611,112
10.79%, 2/16/95(b) .. 271,000 76,536,525
11.10%, 1/11/96(b) .. 38,741 9,691,831
11.45%, 1/26/95(b) .. 25,000 7,119,397
11.49%, 12/08/94(b) . 183,224 53,212,531
13.11%, 10/05/95(b) . 150,000 38,847,969
13.85%, 8/10/95(b) .. 171,006 45,198,482
14.00%, 6/01/95(b) .. 83,132 22,551,917
5
<PAGE>
PORTFOLIO OF INVESTMENTS (cont.)
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
Principal
Amount
(000) U.S.$ Value
14.53%, 2/09/95(b) .. MXP 53,673 $ 15,200,292
15.25%, 5/25/95(b) .. 50,000 13,599,840
15.29, 6/08/95(b) ... 96,553 26,124,057
15.30%, 4/12/95(b) .. 30,000 8,291,437
15.30%, 4/20/95(b) .. 87,519 24,123,715
15.58, 6/15/95(b) ... 100,000 26,985,612
15.80%, 6/22/95(b) .. 134,740 36,265,290
------------
802,537,228
------------
REPURCHASE
AGREEMENT-5.4%
Citibank Mexico
16.70%, dated 11/28/94
due 12/05/94
collateralized by $124,355,851
Nacional Financiera
Bankers Acceptance
Zero coupon, due 12/08/94
value $123,784,523
proceeds $124,236,026 425,228 123,846,704
Total Mexican Securities -----------
(cost $984,409,416) . 926,383,932
-----------
UNITED STATES-35.3%
U.S. TREASURY
SECURITIES-19.1%
U.S. Treasury Bond
11.50%, 11/15/95 .... US$ 76,000 79,206,250
U.S. Treasury Notes
8.00%, 1/15/97 ...... 13,500 13,641,328
8.25%, 7/15/98 ...... 80,000 81,237,500
9.375%, 4/15/96 ..... 85,000 87,377,344
10.50%, 8/15/95 ..... 92,500 94,913,672
11.25%, 2/15/95 ..... 13,980 14,132,906
U.S. Treasury Strips
Zero coupon, 2/15/15 277,975 55,386,730
Zero coupon, 8/15/20 14,400 1,849,552
Zero coupon, 11/15/21 115,100 13,731,432
-----------
441,476,714
-----------
MORTGAGE BACKED
SECURITIES-7.9%
Government National
Mortgage Association
7.00%, 8/15/23-11/15/23 US$ 94,903 $84,344,857
7.50%, 6/15/23 ...... 8,548 7,867,229
8.00%, 2/15/23-2/15/24 64,906 61,681,151
9.00%, 9/15/24 ...... 12,836 12,904,749
9.75%, 6/15/24 ...... 16,616 17,192,169
-----------
183,990,155
-----------
COLLATARIZED MORTGAGE
OBLIGATIONS-1.8%
Federal Home Loan
Mortgage Corp.
Ser 1663 Trust PV (I/O)
9.50%, 5/15/21 (e)... 6,537 6,647,070
Ser 13 Trust SB (I/O)
20.00%, 11/25/15 (e). 3,545 2,130,163
Ser 29 Trust SD (I/O)
28.00%, 4/25/24 (e).. 2,327 1,072,056
Federal National Mortgage
Association
Ser. '93 Trust-121 PH (I/O)
9.50%, 1/25/19 (e) .. 12,381 12,904,965
Ser. '93 Trust-141 PJ (I/O)
9.50%, 6/25/19 (e) .. 3,124 3,247,863
Ser. '93 Trust-149 SD (I/O)
11.00%, 8/25/98 (e) . 5,145 4,073,446
Ser. '94 Trust-19 SE (I/O)
15.00%, 1/25/24 (e) . 8,275 5,505,620
Ser. '93 Trust- 202 SL (I/O)
20.00%, 11/25/23 (e) 4,156 2,088,260
Ser. '94 Trust-19 FG (I/O)
20.00%, 1/25/24 (e) . 1,882 2,055,967
U.S. Veterans Affair
Trust 1992-2 (I/O)
10.00%, 9/15/22 (e) . 1,713 1,693,051
-----------
41,418,461
-----------
6
<PAGE>
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
Principal
Amount
(000) U.S.$ Value
- -------------------------------------------------------------------------------
STRIPPED MORTGAGE
BACKED SECURITIES-1.1%
Federal National
Mortgage Association
Zero coupon, 10/09/19 US$ 200,000 $ 25,574,744
FEDERAL AGENCY ------------
SECURITIES-1.7%
Small Business
Administration
BS92-1G (I/O)
8.10%, 4/15/17(c)(e) FRN 1,544 1,574,965
BS92-5A (I/O)
8.36%, 11/15/17(c)(e) FRN 4,890 4,478,368
Student Loan Marketing
Association
15.00%, 9/13/95 ....... 30,320 32,171,642
-----------
38,224,975
-----------
REPURCHASE
AGREEMENT-3.7%
Citicorp
5.62%, dated 11/30/94
due 12/01/94
collateralized by
$87,710,000
U.S. Treasury Note
7.50%, 10/31/99
value $85,658,159
proceeds $85,126,287 US$ 85,113 $ 85,113,000
Total United States ------------
Securities
(cost $860,093,341) 815,798,049
TOTAL INVESTMENTS-114.7% ------------
(cost $ 3,048,630,059) 2,650,210,349
Other assets less
liabilities-(14.7%) ... (337,356,353)
--------------
NET ASSETS-100%.......... $2,312,853,996
==============
</TABLE>
* Units
(a) Interest payment adjusted quarterly based on Mexico's inflation rate on
the date of interest payment.
(b) Annualized yield to maturity at purchase date.
(c) Illiquid security, valued at fair value (see Notes A & G).
(d) Security is exempt from registration under Rule 144A of the Securities AcT
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1994 this security amounted to $1,450,492 or 0.1% of net assets.
(e) Interest rate represents yield to maturity.
Glossary of terms:
FRN Floating Rate Note, states interest rate in effect at November
30, 1994.
(I/O) Interest only.
See notes to financial statements.
7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1994 Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $3,048,630,059) $2,650,210,349
Interest receivable ..................................... 25,982,252
Receivable for capital stock sold ....................... 8,185,804
Deferred organization expenses .......................... 155,749
Other assets ............................................ 189,247
--------------
Total assets ............................................ 2,684,723,401
--------------
LIABILITIES
Loan payable ............................................ 250,000,000
Payable for investment securities purchased ............. 92,644,143
Payable for capital stock redeemed ...................... 11,551,767
Dividend payable ........................................ 11,067,543
Loan interest payable ................................... 2,624,236
Advisory fee payable .................................... 1,394,032
Distribution fee payable ................................ 344,705
Accrued expenses ........................................ 2,242,979
--------------
Total liabilities ....................................... 371,869,405
--------------
NET ASSETS ................................................ $2,312,853,996
==============
COMPOSITION OF NET ASSETS
Capital stock, at par ................................... $ 284,398
Additional paid-in capital .............................. 2,829,075,728
Distributions in excess of net investment income ........ (11,259,508)
Accumulated net realized loss on investments and
foreign currency transactions ......................... (106,760,154)
Net unrealized depreciation of investments and
foreign currency denominated assets and liabilities ... (398,486,468)
--------------
$2,312,853,996
==============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($303,537,881/37,350,505 shares of capital stock
issued and outstanding) ............................... $8.13
Sales charge - 4.25% of public offering price ........... .36
-----
Maximum offering price .................................. $8.49
=====
Class B Shares
Net asset value and offering price per share
($1,639,602,166/201,564,747 shares of capital
stock issued and outstanding) ......................... $8.13
=====
Class C Shares
Net asset value, redemption and offering price per
share ($369,713,949/45,482,189 shares of capital
stock issued and outstanding) ......................... $8.13
=====
</TABLE>
See notes to financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS
Year Ended November 30, 1994
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Interest (net of foreign
taxes withheld of $882,439) $ 311,145,435
EXPENSES
Advisory fee ................ 16,529,719
Distribution fee-Class A .... 945,382
Distribution fee-Class B .... 16,742,873
Distribution fee-Class C .... 4,184,135
Interest expense ............ 8,095,179
Custodian ................... 4,073,443
Transfer agency ............. 3,588,501
Registration ................ 626,348
Printing .................... 313,194
Taxes ....................... 225,124
Administrative .............. 151,007
Audit and legal ............. 115,056
Amortization of
organization expenses ..... 67,189
Directors' fees ............. 19,184
Miscellaneous ............... 46,938
------------
Total expenses .............. 55,723,272
-------------
Net investment income ....... 255,422,163
-------------
REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
Net realized loss on
investment transactions ... (106,583,131)
Net realized loss on foreign
currency transactions ..... (65,881,211)
Net change in unrealized
appreciation of investments (418,842,831)
Net change in unrealized
depreciation of foreign
currency denominated
assets and liabilities .... 52,765
-------------
Net loss on investments ... (591,254,408)
-------------
NET DECREASE IN NET
ASSETS FROM OPERATIONS ...... $(335,832,245)
=============
</TABLE>
See notes to financial statements.
9
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1994 1993
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS
Net investment income ......... $ 255,422,163 $ 89,907,351
Net realized gain (loss) on
investments and foreign
currency transactions ....... (172,464,342) 20,784,982
Net change in unrealized
appreciation (depreciation)
of investments and
foreign currency denominated
assets and liabilities ...... (418,790,066) 29,478,124
------------- -------------
Net increase (decrease)
in net assets from operations (335,832,245) 140,170,457
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A ..................... (31,066,379) (16,666,513)
Class B ..................... (153,207,280) (65,236,310)
Class C ..................... (38,260,122) (7,397,475)
Return of capital
Class A ..................... (6,559,363) -0-
Class B ..................... (32,407,917) -0-
Class C ..................... (7,957,809) -0-
Net realized gains on
investments
Class A ..................... -0- (99,425)
Class B ..................... -0- (341,106)
CAPITAL STOCK TRANSACTIONS
Net increase .................. 1,026,091,221 1,563,605,726
-------------- --------------
Total increase ................ 420,800,106 1,614,035,354
NET ASSETS
Beginning of year ............. 1,892,053,890 278,018,536
-------------- --------------
End of year ................... $2,312,853,996 $1,892,053,890
============== ==============
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF CASH FLOWS
Year Ended November 30, 1994
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN CASH FROM:
OPERATING ACTIVITIES:
Interest received ................ $ 140,511,035
Interest expense paid ............ (5,860,389)
Operating expenses paid .......... (46,850,693)
---------------
Net increase in cash from
operating activities .......... $ 87,799,953
INVESTING ACTIVITIES:
Purchase of short-term
portfolio investments, net .... (138,859,704)
Purchase of long-term
portfolio investments ......... (3,807,800,451)
Proceeds from disposition of
long-term portfolio investments 2,893,279,957
---------------
Net decrease in cash from
investing activities .......... (1,053,380,198)
FINANCING ACTIVITIES*:
Net proceeds from capital
stock transactions ............ 945,988,819
Net proceeds from loan payable ... 200,000,000
Cash dividends paid .............. (134,004,970)
---------------
Net increase in cash from
financing activities .......... 1,011,983,849
Effect of exchange rate on cash .. (53,735,606)
---------------
Net decrease in cash ............. (7,332,002)
Cash at beginning of year ........ 7,332,002
---------------
Cash at end of year .............. $ -0-
===============
- -------------------------------------------------------------------------------
RECONCILIATION OF NET
DECREASE IN NET ASSETS
FROM OPERATIONS TO NET
INCREASE IN CASH FROM
OPERATING ACTIVITIES:
Net decrease in net assets
resulting from operations ........ $ (335,832,245)
ADJUSTMENTS:
Increase in interest receivable .... $ (5,446,538)
Net realized loss on securities .... 106,583,131
Net change in unrealized
depreciation ..................... 418,790,066
Accretion of bond discount ......... (166,070,301)
Increase in accrued expenses
and other liabilities ............ 3,894,629
Net realized loss on foreign
currency transactions ............ 65,881,211
---------------
Total adjustments .................. 423,632,198
---------------
Net increase in cash from
operating activities ............. $ 87,799,953
===============
</TABLE>
* Non-cash financing activities not included herein consist of reinvestment
of dividends.
See notes to financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1994 Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
NOTE A: Significant Accounting Policies
Alliance North American Government Income Trust, Inc. (the "Fund"), was
incorporated in the State of Maryland on February 3, 1992 as a non-diversified,
open-end investment company. On February 23, 1993, the creation of a third class
of shares, Class C, was approved by the Board of Directors. The Fund currently
offers three classes of shares, Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge of up to 4.25%. Class B shares are
sold with a contingent deferred sales charge which declines from 3% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares six years after the end of the calendar
month of purchase. Class C shares are sold without an initial or contingent
deferred sales charge. All three classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. Distribution of Class C shares
commenced on May 3, 1993. The following is a summary of significant accounting
policies followed by the Fund.
1. Security Valuation
Investments are stated at value. Portfolio securities traded on a national
securities exchange are valued at the last sale price on such exchange on the
day of valuation or, if there was no sale on such day, the last bid price
quoted on such day. Securities traded on the over the counter market are
valued at the mean of the closing bid and asked price provided by the
principal market makers. Securities for which market quotations are not
readily available are valued in good faith at fair value using methods
determined by the Board of Directors. Securities which mature in 60 days or
less are valued at amortized cost, which approximates market value, unless
this method does not represent fair value.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments
under forward foreign exchange currency contracts are translated into U.S.
dollars at the mean of the quoted bid and asked price of such currencies
against the U.S. dollar. Purchases and sales of portfolio securities are
translated at the rates of exchange prevailing when such securities were
acquired or sold. Income and expenses are translated at rates of exchange
prevailing when accrued.
Net foreign exchange losses of $65,881,211 represents foreign exchange gains
and losses from sales and maturities of securities, holding of foreign
currencies, exchange gains and losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of interest recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized currency gains
and losses from valuing foreign currency denominated assets and liabilities
at period end exchange rates are reflected as a component of unrealized
depreciation of investments and foreign currency denominated assets and
liabilities.
3. Organization Expenses
Organization expenses of approximately $331,965 have been deferred and are
being amortized on a straight-line basis through March, 1997.
4. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes
are required.
5. Investment Income and Security Transactions
Interest income is accrued daily. Security transactions are accounted for on
the date securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. The Fund accretes discounts as
adjustments to interest income.
6. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Distributions in excess of net investment income represent
distributions recognized in accordance with generally accepted accounting
principles but recognized in future periods for tax purposes.
12
<PAGE>
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
7. Concentration of Risk
The investments in Emerging Markets may involve greater risks than
investments in more developed markets and the prices of such investments may
be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of the funds'
investments and the income they generate, as well as the funds' ability to
repatriate such amounts. At November 30, 1994, the fund had investments in
Mexican government and debt obligations totaling $926,383,932, which
represents approximately 40% of net assets.
8. Change in Accounting for Distribution to Shareholders
Effective December 1, 1993, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
As a result, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations.
These differences are primarily due to differing treatments for foreign
currency transactions and the temporary timing differences related to
recognition of loss from transactions. For the year ended November 30, 1994,
the cumulative effect of such differences resulted in a decrease of
$45,126,940 in accumulated net realized loss and a corresponding increase to
undistributed net investment income. Permanent book and tax differences
relating to tax returns of capital distributions have been reclassified to
paid-in capital. The cumulative effect of such differences as of November
30, 1994, totaled $46,925,089 and was reclassified from undistributed net
investment income to paid-in capital. Net investment income, net realized
gains and net assets were not effected by these changes.
- -------------------------------------------------------------------------------
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
.65 of 1% of the average adjusted daily net assets of the Fund. Such fee is
accrued daily and paid monthly.
The Adviser has agreed under the terms of the advisory agreement, to
reimburse the Fund to the extent that its aggregate expenses (exclusive of
interest, taxes, brokerage, distribution fee, and extraordinary expenses)
exceed the limits prescribed by any state in which the Fund's shares are
qualified for sale. The Fund believes that the most restrictive expense
ratio limitation currently imposed by any state is 2 1/2% of the first $30
million of the Fund's average daily net assets, 2% of the next $70 million of
its average daily net assets and 1 1/2% of its average daily net assets in
excess of $100 million. No such reimbursement was required for the year
ended November 30, 1994. Pursuant to the advisory agreement, the Fund paid
to the Adviser $151,007 representing the cost of certain legal and accounting
services provided to the Fund by the Adviser.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary
of the Adviser) for providing personnel and facilities to perform transfer
agency services for the Fund. Such compensation amounted to $2,283,908 for
the year ended November 30, 1994.
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 $348,161 from the sale of Class A shares and
$3,094,728 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B shares for the year ended November 30, 1994.
- -------------------------------------------------------------------------------
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 for Class A,
Class B and Class C shares. Under the Agreement the Fund pays a distribution
fee to the Distributor at an annual rate of up to .30% of the average
daily net assets attributable to the Class A shares and 1% of the average
daily net assets attributable to Class B and Class C shares. Such fee is
accrued daily and paid monthly. The Agreement provides that the Distributor
will use such payments in their entirety for distribution assistance and
promotional activities. The
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $29,558,594 and $2,355,558 for Class B
and 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 year 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) aggregated $3,807,800,451 and $2,893,279,957, respectively, for
the year ended November 30, 1994. At November 30, 1994, the cost of
investments for federal income tax purposes was $3,084,771,288. Accordingly,
gross unrealized appreciation of investments was $2,452,168 and gross
unrealized depreciation of investments was $437,013,107, resulting in the net
unrealized depreciation of $434,560,939. At November 30, 1994 the Fund had a
capital loss carryforward of $70,618,925, which expires in the year 2002.
- -------------------------------------------------------------------------------
NOTE E: Bank Borrowing
The Fund entered into a Revolving Credit Agreement with Credit Lyonnais of
New York on June 29, 1994. The maximum credit available under the renewed
credit facility is $250,000,000 and requires no collateralization. The loan
outstanding, under the renewed Credit Agreement at November 30, 1994 was
$250,000,000 with a related weighted average annualized coupon rate of
6.095%. On December 28, 1994, $100,000,000 will mature with the balance of
$150,000,000 maturing on January 13, 1995. Interest payments on current
borrowings are based on the London Interbank Offered Rate. The Fund is also
obligated to pay Credit Lyonnaise of New York a commitment fee, computed at
the rate 5/16 of 1% per annum on the daily average unused portion of the
revolving credit. The average monthly amount of the loan outstanding during
the year ended November 30, 1994 was approximately $141,666,667 with a
weighted average annualized interest rate of 5.6%. The maximum amount of
such a loan outstanding at any time during the year was $250,000,000.
- -------------------------------------------------------------------------------
NOTE F: Capital Stock
There are 9,000,000,000 shares of $.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Each class consists of 3,000,000,000 authorized shares. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Class A
Shares sold .................... 21,946,095 23,926,416 $ 209,028,752 $ 241,848,294
Shares issued in reinvestment of
dividends and distributions .. 2,295,482 842,710 21,111,814 8,516,064
Shares redeemed ................ (12,811,114) (5,211,249) (116,080,684) (52,789,887)
----------- ----------- ------------- --------------
Net increase ................... 11,430,463 19,557,877 $ 114,059,882 $ 197,574,471
=========== =========== ============= ==============
Class B
Shares sold .................... 102,755,123 110,345,139 $ 992,033,470 $1,118,317,277
Shares issued in reinvestment of
dividends and distributions 9,573,189 2,753,590 87,838,691 27,879,736
Shares redeemed ................ (37,684,580) (8,487,258) (335,913,399) (86,308,398)
----------- ----------- ------------- --------------
Net increase ................... 74,643,732 104,611,471 $ 743,958,762 $1,059,888,615
=========== =========== ============= ==============
</TABLE>
14
<PAGE>
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES AMOUNT
Year Ended May 3, 1993* Year Ended May 3, 1993*
November 30, to November 30, November 30, to November 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
CLASS C
Shares sold .................... 48,593,915 37,455,454 $ 476,032,862 $382,620,422
Shares issued in reinvestment
of dividends and distributions 3,227,731 348,918 29,684,779 3,575,370
Shares redeemed ................ (36,333,163) (7,810,666) (337,645,064) (80,053,152)
----------- ---------- ------------- ------------
Net increase ................... 15,488,483 29,993,706 $ 168,072,577 $306,142,640
=========== ========== ============= ============
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NOTE G: Illiquid Securities
Date
Security Acquired Cost
<S> <C> <C>
Small Business Administration
BS92-1G (1/O)
8.10%, 4/15/17 FRN.............. 7/22/92 $1,543,683
BS92-5A (I/O)
8.36%, 11/15/17 FRN............. 10/02/92 4,889,557
</TABLE>
The securities shown above are illiquid and have been valued at fair value
in accordance with the procedures described in Note A. The value of these
securities at November 30, 1994 was $6,053,333, representing 0.3% of net assets.
- -------------------------------------------------------------------------------
NOTE H: Repurchase Agreements
The Fund may enter into repurchase agreements, pertaining to the types of
securities in which it invests with member banks of the Federal Reserve
System and with broker dealers who are recognized as primary dealers in U.S.
government securities by the Federal Reserve Bank of New York. The Fund's
Board of Directors has established procedures which are periodically reviewed
by the Board to monitor the creditworthiness of the dealers with which the
Fund enters into repurchase agreement transactions. The Fund always requires
continual maintenance by its custodian for its account in the Federal Reserve
Treasury Book Entry System of collateral in an amount equal to or in excess
of the resale price in each agreement.
In the event a vendor defaults on its repurchase obligation, the Fund might
suffer a loss to the extent that the proceeds from the sale of the collateral
were less than the repurchase price.
- -------------------------------------------------------------------------------
NOTE I: Subsequent Events
1. Mexican Devaluation
Subsequent to November 30, 1994 and through January 20, 1995, the Fund's net
asset value per share declined by approximately 28%, primarily due to the
devaluation of the Mexican peso.
2. Litigation
Subsequent to November 30, 1994 several complaints, seeking class-action
status on behalf of the Fund's shareholders, have been filed against the
Fund, the Adviser and others. The actions allege violations of federal
securities laws, fraud, negligence, negligent misrepresentations and
omissions, breach of fiduciary duty and breach of contract in connection with
the Fund's investments in Mexican and Argentine securities and seek
unspecified damages and costs. The ultimate effect on the fund, if any, of
these actions is not determinable at this time.
* Commencement of distribution.
15
<PAGE>
FINANCIAL HIGHLIGHTS Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Class A
Year Ended Year Ended March 27, 1992*
November 30, November 30, to
1994 1993 November 30, 1992
<S> <C> <C> <C>
Net asset value, beginning
of period ....................... $10.35 $ 9.70 $10.00
------ ------ ------
Income From Investment Operations
Net investment income ............. 1.02 1.09 .69(a)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ........... (2.12) .66 (.31)
------ ------ ------
Net increase (decrease) in net
asset value from
operations ...................... (1.10) 1.75 .38
------ ------ ------
Less: Distributions
Dividends from net
investment income ............... (.91) (1.09) (.68)
------ ------ ------
Return of capital ................. (.21) -0- -0-
------ ------ ------
Distribution from net
realized gains .................. -0- (.01) -0-
------ ------ ------
Total dividends and
distributions ................... (1.12) (1.10) (.68)
------ ------ ------
Net asset value,
end of period ................... $ 8.13 $10.35 $ 9.70
====== ====== ======
Total Return
Total investment return
based on net asset value (d) .... (11.32)% 18.99% 3.49%
====== ======= ======
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ................. $303,538 $268,233 $61,702
Ratio of expenses to
average net assets .............. 1.70% 1.61% 2.45%(b)(c)
Ratio of expenses to
average net assets .............. 1.37% 1.33% 1.66%(b)
Ratio of net investment
income to average net assets .... 11.22% 10.77% 10.93%(b)(c)
Portfolio turnover rate ........... 131% 254% 86%
</TABLE>
See footnote summary on page 18.
16
<PAGE>
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Class B
Year Ended Year Ended March 27, 1992*
November 30, November 30, to
1994 1993 November 30, 1992
<S> <C> <C> <C>
Net asset value,
beginning of period ........... $10.35 $ 9.70 $10.00
------ ------- ------
Income From Investment Operations
Net investment income ........... .96 1.01 .64(a)
Net realized and unrealized
gain (loss)on investments and
foreign currency transactions . (2.13) .67 (.31)
------ ------- ------
Net increase (decrease) in net
asset value from
operations .................... (1.17) 1.68 .33
------ ------- ------
Less: Distributions
Dividends from net
investment income ............. (.84) (1.02) (.63)
Return of capital ............... (.21) -0- -0-
------ ------- ------
Distribution from net
realized gains ................ -0- (.01) -0-
------ ------- ------
Total dividends and
distributions ................. (1.05) (1.03) (.63)
------ ------- ------
Net asset value,
end of period ................. $ 8.13 $10.35 $ 9.70
====== ====== ======
Total Return
Total investment return
based on net asset value (d) .. (11.89)% 18.15% 3.30%
====== ====== ======
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ...............$1,639,602 $1,313,591 $216,317
Ratio of expenses to
average net assets ............ 2.41% 2.31% 3.13%(b)(c)
Ratio of expenses to average
net assets excluding interest
expense (see Note E) .......... 2.07% 2.04% 2.35%(b)
Ratio of net investment
income to average net assets .. 10.53% 10.01% 10.16%(b)(c)
Portfolio turnover rate ......... 131% 254% 86%
</TABLE>
See footnote summary on page 18.
17
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Class C
Year Ended May 3, 1993**
November 30, to November 30,
1994 1993
<S> <C> <C>
Net asset value, beginning of
period .......................... $10.34 $10.04
------ ------
Income From Investment Operations
Net investment income ............. .96 .58
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ........... (2.12) .30
------ ------
Net increase (decrease) in net
asset value from operations ..... (1.16) .88
------ ------
Less: Distributions
Dividends from net
investment income ............... (.84) (.58)
Return of capital ................. (.21) -0-
------ ------
Total dividends and
distributions ................... (1.05) (.58)
------ ------
Net asset value,
end of period ................... $ 8.13 $10.34
====== ======
Total Return
Total investment return
based on net asset value (d) .... (11.89)% 9.00%
====== ======
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ................. $369,714 $310,230
Ratio of expenses to
average net assets .............. 2.39% 2.21%(b)
Ratio of expenses to average net
assets excluding interest
expense (see Note E) ............ 2.06% 2.04%(b)
Ratio of net investment
income to average net assets .... 10.46% 9.74%(b)
Portfolio turnover rate ........... 131% 254%
</TABLE>
* Commencement of operations.
** Commencement of distribution.
(a) Net of expenses waived by the Adviser.
(b) Annualized.
(c) If the Fund had borne all expenses, the ratios of expenses to average
net assets would have been 2.49% and 3.16% for Class A and Class B shares,
respectively. The ratios of net investment income to average net assets
would have been 10.89% and 10.12% for Class A and Class B shares,
respectively.
(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. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return calculated for a period
of less than one year is not annualized.
18
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Alliance North American Government Income Trust, Inc.
We have audited the accompanying statement of assets and liabilities of
Alliance North American Government Income Trust, Inc. (the "Fund"), including
the portfolio of investments, as of November 30, 1994, and the related
statement of operations and cash flows 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 November 30, 1994, 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 North American Government Income Trust, Inc. at November 30, 1994,
the results of its operations and its cash flows 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 years, in conformity
with generally accepted accounting principles.
[SIGNATURE]
New York, New York
January 20, 1995
19
<PAGE>
Alliance North American Government Income Trust, Inc.
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler
John H. Dobkin (1)
William H. Foulk, Jr. (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Robert C. White (1)
OFFICERS
Wayne D. Lyski, Senior Vice President
Robert M. Sinche, Senior Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Patrick J. Farrell, Controller
CUSTODIAN
Brown Brothers Harriman and Co.
40 Water Street
Boston, MA 02109
TRANSFER AGENT
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
PRINCIPAL UNDERWRITER
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
BULK RATE
U.S. POSTAGE
PAID
New York, NY.
Permit No. 8048
Alliance North American Government Income Trust
Annual Report
November 30, 1994
[LOGO]
Mutual funds without the Mystery.SM
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
Mutual funds without the MysterySM
This report is distributed solely to shareholders of the Fund
and is not to be used as sales literature.
Registration Mark
These registered service marks used under license from the
owner,
Alliance Capital Management L.P.
NAGAR
