ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
ANNUAL REPORT
AUGUST 31, 1996
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
October 28, 1996
Dear Shareholder:
The Global Dollar Government Fund's annual reporting period closed on August
31, 1996. Thanks to the continued rally in emerging market debt and your Fund's
investment in the strongest performing of these markets, we are pleased to
report that your Fund's returns have again placed it at the top of all general
world income funds tracked by Lipper. Over the trailing 12 months, your Fund
received the #1 rank out of a universe of 164 funds. Since inception in
February 1994, your Fund was ranked #7 out of 100 funds. Lipper rankings are
based on total returns at net asset value, without the imposition of the
maximum 4.25% sales charge, which would reduce total return figures.
INVESTMENT RESULTS
The following table shows how your Fund performed in the periods ended August
31. For comparison, we have shown returns for the unmanaged J.P. Morgan (JPM)
Emerging Markets Bond Index, which measures performance of the overall Brady
bond market. The Index provides an appropriate broad-based comparison for the
Global Dollar Government Fund because it consists of dollar-denominated
restructured sovereign bonds, of which a large percentage is represented by
Brady bonds.
THROUGH AUGUST 31, 1996
SIX MONTHS TWELVE MONTHS
---------- -------------
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
Class A +17.13% +38.47%
Class B +16.69% +37.36%
Class C +16.70% +37.40%
JPM EMERGING MARKETS BOND INDEX +16.60% +34.47%
ECONOMIC REVIEW
Rebounding from a slowdown at the end of 1995, the U.S. economy gathered steam
as 1996 progressed. Non-farm payrolls rose by an average of 236,500 during the
first half of the year while unemployment dipped to a six-year low of 5.3% in
June. Consumer confidence remained elevated and helped fuel strong retail sales
throughout the first half of the year. Industrial production maintained its
momentum through the summer, posting a 3.9% year over year increase in
activity, although the National Association of Purchasing Managers survey
dropped to 50.2 (a score below 50 indicates a slowing manufacturing sector).
These factors combined to produce GDP growth during the first quarter of 2.0%
followed by "overheated" growth of 4.7% for the second quarter. More recent
data has depicted an economy that is healthy but slowing from its strong first
half pace.
In the spring, higher food and energy prices caused inflation to rise. However,
after briefly touching 3% in July, Consumer Price Index (CPI) inflation
retreated to 2.9% in August while core CPI (excluding the volatile food and
energy components), estimated at 2.7%, hovered near a 30-year low. The Federal
Reserve has been in a holding pattern since January and is expected to maintain
that stance for the foreseeable future.
INVESTMENT OUTLOOK
For the remainder of the year, we expect U.S. economic growth to subside from
the rapid pace of the second quarter to a more sustainable level of 2%-2.5%. As
this occurs, recent upward pressure on inflation should dissipate. Until clear
signs of a slowing economy emerge, concerns about inflation will keep U.S.
interest rates within their recent ranges with a tendency toward the lower end
of the yield range. Outside of the U.S., we continue to have a favorable
outlook for emerging market debt. However, as risk premiums for this asset
class have narrowed from their highs at the end of 1994, we expect the pace of
price appreciation of these securities to slow somewhat.
In Mexico and Argentina, the success of economic programs undertaken since the
peso devaluation two years ago has led to lower inflation, improving current
account deficits and growing investor confidence, all factors which should
support higher bond prices in these markets in the future.
In Russia, current economic indicators show encouraging signs of improvement.
Reserves have increased considerably in the past two years and the current
account surplus continues to grow. We expect the impact of market-oriented
reforms to be more noticeable in 1997 and produce further spread tightening
(and hence price appre-
1
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
ciation) in Russian securities. Investments in emerging markets securities are
always speculative and the risk elements in the current Russian situation have
been well publicized. However, we believe Russian sovereign debt obligations
are a compelling long-term investment opportunity. Numerous factors lead us to
this opinion, including the recent credit ratings of Russian debt by both
Moody's and Standard & Poor's, successful steps toward the restructuring of
Russia's external debt, the receding likelihood of reactionary economic
policies and the growing representation of Russia in the emerging market bond
indices. In this regard, at our recommendation the Fund's Board of Directors
recently approved an increase to up to 25% of the Fund's total assets that may
be invested in U.S. Dollar-denominated Russian sovereign debt obligations, thus
positioning the Fund to afford its shareholders greater access to this
opportunity.
Polish bonds, which have experienced substantial price appreciation since
receiving an investment grade rating earlier this year, appear to be near their
peak, and we have begun reducing our exposure in this market.
In the months ahead, some factors which could impact emerging market bond
prices will be the possible resumption of the Mexican privatization program,
International Monetary Fund negotiations with the new coalition government in
Turkey, continued market reforms in Russia and expected S&P and Moody's ratings
outcomes on six to eight countries' debt.
Thank you for your continued interest and investment in Alliance Global Dollar
Government Fund. We look forward to reporting the Fund's progress to you in the
coming months.
Sincerely,
John D. Carifa
Chairman
Wayne D. Lyski
President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
Alliance Global Dollar Government Fund seeks primarily a high level of current
income and, secondarily, capital appreciation. It invests primarily in a
non-diversified portfolio of sovereign debt obligations and in U.S. and
non-U.S. corporate fixed-income securities. Substantially all of the Fund's
assets are invested in lower-rated securities.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF AUGUST 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 38.47% 32.52%
. Since Inception* 11.40% 9.51%
SEC Yield 8.09%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 37.36% 34.36%
. Since Inception* 10.45% 10.11%
SEC Yield 7.74%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 37.40% 36.40%
. Since Inception* 10.48% 10.48%
SEC Yield 7.74%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares-with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
Class C shares purchased prior to July 1, 1996 are not subject to front-end or
contingent deferred sales charges. Class C shares purchased on or after July 1,
1996 are subject to a contingent deferred sales charge of 1% on redemptions
made within the first year after purchase. 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 August 31, 1996.
* Inception: 2/25/94 for all Classes.
3
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
$10,000 INVESTMENT OVER LIFE OF FUND:
2/28/94 TO 8/31/96
$13,000
$12,000
$11,000
$10,000
$9,000
$8,000
$7,000
JPM EMBI: $12,892
GLOBAL DOLLAR GOV'T
CLASS A: $12,572
2/28/94 8/31/96
This chart illustrates the total value of an assumed investment in Alliance
Global Dollar Government Fund 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.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The J.P. Morgan Emerging Markets Bond Index (JPM EMBI) is an unmanaged index
composed of dollar denominated restructured sovereign bonds; a large percentage
of the index is made up of Brady bonds.
When comparing Alliance Global Dollar Government Fund to the index 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.
_________ Global Dollar Gov't Class A
- --------- JPM EMBI
4
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS89.5%
COLLATERALIZED BRADY BONDS(A)22.5%
ECUADOR4.3%
Republic of Ecuador Discount Bonds FRN
6.50%, 2/28/25(b) $ 9,000 $ 5,194,687
MEXICO2.3%
United Mexican States Euro Par Bonds Ser. A
6.25%, 12/31/19(c) 4,300 2,843,375
NIGERIA4.5%
Central Bank of Nigeria Par Bonds VRN
6.25%, 11/15/20(b)(d) 10,000 5,493,750
VENEZUELA11.4%
Republic of Venezuela Par Bonds Series A
FLIRB FRN
6.375%, 3/31/07(b)(e) 18,000 13,888,125
Total Collateralized Brady Bonds
(cost $25,977,984) 27,419,937
NON-COLLATERALIZED BRADY BONDS9.7%
BULGARIA4.3%
Bulgaria IAB FRN
6.6875%, 7/28/11(b) 11,300 5,194,469
PANAMA5.4%
Republic of Panama IRB VRN
3.50%, 7/17/14(b)(h) 11,000 6,613,750
Total Non-Collateralized Brady Bonds
(cost $11,153,470) 11,808,219
LOAN PARTICIPATION & ASSIGNMENT15.1%
MOROCCO6.1%
Kingdom of Morocco Restructuring &
Consolidation
Loan Participation FRN
6.4375%, 1/01/09(b) 10,000 7,450,000
RUSSIA9.0%
Vneshekonombank Loan Assignment(f) 18,000 10,935,000
Total Loan Participation & Assignment
(cost $16,468,322) 18,385,000
OTHER SOVEREIGN DEBT OBLIGATIONS36.3%
ARGENTINA4.9%
Republic of Argentina Bocon Prevision FRN
5.40625%, 4/01/01(b) 6,726 5,998,606
BRAZIL8.0%
Republic of Brazil C- Bonds
8.00%, 4/15/14(g) 15,154 9,764,899
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
COLOMBIA4.4%
Republic of Colombia
8.70%, 2/15/16 $ 6,000 $ 5,391,288
MEXICO11.5%
United Mexican States
11.50%, 5/15/26 14,600 14,070,750
PERU5.1%
Peru FLIRB-WI
3.25%, 3/15/16(h) 7,500 3,487,500
Peru PDI-WI
4.00%, 12/29/49(h) 5,000 2,668,750
Total Peruvian Securities 6,156,250
ROMANIA2.4%
National Bank of Romania
9.75%, 6/25/99(h) 3,000 2,966,250
Total Other Sovereign Debt Obligations
(cost $42,850,557) 44,348,043
OTHER SOVEREIGN DEBT RELATED5.9%
Morgan Guaranty Trust Indexed to Russian
Vneshekonombank Loan Assignment
14.00%, 2/28/97(i)
(cost $7,260,000) 7,260 7,257,822
Total Sovereign Debt Obligations
(cost $103,710,333) 109,219,021
CONTRACTS OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS9.1%
YANKEE OBLIGATIONS5.5%
Grupo Televisa, S.A.
11.875%, 5/15/06(h) $ 2,500 $ 2,631,250
OPP Petroquimica, S.A.
11.50%, 2/23/04(h) 4,000 4,010,000
Total Yankee Obligations 6,641,250
FINANCIAL3.6%
Home Holdings, Inc.
7.75%, 12/15/98 5,450 4,414,500
Total Corporate Debt Obligations
(cost $10,780,605) 11,055,750
CALL OPTION PURCHASED0.0%
United Mexican States expiring October 1996
@ $70.3125 (cost $135,000) 1 5,250
6
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
TIME DEPOSITS1.7%
Bank of New York 5.0625%, 9/03/96
(cost $2,100,000) $ 2,100 $ 2,100,000
TOTAL INVESTMENTS100.3%
(cost $116,725,938) $122,380,021
Other assets less liabilities(0.3%) (320,974)
NET ASSETS100% $122,059,047
(a) Sovereign debt obligations issued as part of debt restructuring that are
collateralized in full as to principal due at maturity by U.S. Treasury zero
coupon obligations which have the same maturity as the Brady Bond.
(b) Stated interest rate in effect at August 31, 1996.
(c) Security trades with value recovery rights expiring June 30, 2003.
(d) Security trades with oil warrants expiring 11/15/20.
(e) Security trades with oil warrants expiring 4/15/20.
(f) Non-income producing security.
(g) Coupon consists of 3.5% cash payment and 4.5% paid in kind.
(h) 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 August 31, 1996,
these securities amounted to $22,377,500 representing 18.3% of net assets.
(i) The redemption value of this security is indexed to the bid price of the
referenced loan assignment.
Glossary of Terms:
FLIRB - Front loaded interest reduction bond.
FRN - Floating rate note.
IAB - Interest arrears bond.
IRB - Interest reduction bond.
PDI - Past due interest.
VRN - Variable rate note.
WI - When issued.
See notes to financial staterments.
7
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $116,725,938) $122,380,021
Cash 2,896,171
Receivable for investment securities sold 6,074,758
Interest receivable 2,582,874
Receivable for capital stock sold 933,980
Deferred organization expenses 90,506
Total assets 134,958,310
LIABILITIES
Payable for investment securities purchased 11,518,189
Payable for capital stock redeemed 731,902
Dividends payable 319,183
Distribution fee payable 89,538
Advisory fee payable 77,127
Accrued expenses 163,324
Total liabilities 12,899,263
NET ASSETS $122,059,047
COMPOSITION OF NET ASSETS
Capital stock, at par $ 12,191
Additional paid-in capital 109,248,129
Distributions in excess of net investment income (319,183)
Accumulated net realized gain on investments 7,462,697
Net unrealized appreciation of investments and other assets 5,655,213
$122,059,047
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($23,253,594/
2,322,558 shares of capital stock issued and outstanding) $10.01
Sales charge-4.25% of public offering price .44
Maximum offering price $10.45
CLASS B SHARES
Net asset value and offering price per share ($84,294,774/
8,419,484 shares of capital stock issued and outstanding) $10.01
CLASS C SHARES
Net asset value and offering price per share ($14,510,679/
1,449,415 shares of capital stock issued and outstanding) $10.01
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1996 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest $11,176,303
EXPENSES
Advisory fee $767,581
Distribution fee - Class A 50,349
Distribution fee - Class B 740,160
Distribution fee - Class C 115,452
Administrative 160,997
Transfer agency 142,614
Custodian 86,664
Audit and legal 79,284
Registration 62,933
Amortization of organization expenses 38,071
Printing 34,821
Directors' fees 17,198
Miscellaneous 6,215
Total expenses 2,302,339
Net investment income 8,873,964
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 16,156,939
Net realized gain on options written 157,500
Net change in unrealized appreciation (depreciation) of:
Investments 7,249,404
Options written and other assets (155,762)
Net gain on investments 23,408,081
NET INCREASE IN NET ASSETS FROM OPERATIONS $32,282,045
See notes to financial statements.
9
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1996 1995
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 8,873,964 $ 7,403,586
Net gain (loss) on investments 16,314,439 (6,232,470)
Net change in unrealized appreciation
(depreciation) of investments and other assets 7,093,642 (2,422,506)
Net increase (decrease) in net assets from
operations 32,282,045 (1,251,390)
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,743,599) (1,208,666)
Class B (7,143,965) (5,358,271)
Class C (1,110,696) (975,155)
CAPITAL STOCK TRANSACTIONS
Net increase 16,019,751 24,118,989
Total increase 38,303,536 15,325,507
NET ASSETS
Beginning of year 83,755,511 68,430,004
End of year $122,059,047 $83,755,511
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Dollar Government Fund, Inc. (the "Fund"), organized as a
Maryland corporation on December 2, 1993, is registered under the Investment
Company Act of 1940 as an open-end, non-diversified management investment
company. Prior to the commencement of operations on February 25, 1994, the Fund
had no operations other than the sale to Alliance Capital Management L.P. (the
"Adviser") of 10,000 shares of Class A and 10 shares of Class B and Class C
shares of common stock for the aggregate amount of $100,200 on January 21,
1994. The Fund offers three classes of 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 purchased on or after July 1, 1996 are subject to a
contingent deferred sales charge of 1% on redemptions made within the first
year after purchase. All three classes of shares have identical voting,
dividend, liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last sales 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. Listed securities not
traded and securities traded in the over-the-counter market, including listed
debt securities whose primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked price
provided by the principal market makers. Publicly traded Sovereign Debt
Obligations are typically traded internationally on the over-the-counter
market. Readily marketable Sovereign Debt Obligations may be valued on the
basis of prices provided by a pricing service when such prices are believed by
the Adviser to reflect the fair value of such securities. Securities for which
market quotations are not readily available and restricted securities which are
subject to limitations as to their resale are valued in good faith, at fair
value, using methods determined by the Board of Directors. In determining fair
value, consideration is given to cost, operating and other financial data.
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. ORGANIZATION EXPENSES
Organization expenses of approximately $184,000 have been deferred and are
being amortized on a straight-line basis through February, 1999.
3. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on the
ex-dividend date. 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 discount as an adjustment to
interest income.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
6. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
During the year, the Fund reclassified certain components of net assets. The
reclassification was the result of a recharacterization of short-term capital
gains to ordinary income. The reclassification resulted in a net decrease to
accumulated net realized gain on investments and a corresponding decrease to
distributions in excess of net investment income of $940,750. Net assets were
not affected by the reclassification.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
NOTE B: ADVISORY AND ADMINISTRATIVE FEES
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") a monthly fee equal to the annualized
rate of .75 of 1% of the average adjusted daily net assets of the Fund. Such
fee will be accrued daily and paid monthly. The Adviser has agreed, under the
terms of the investment advisory agreement, to reimburse the Fund to the extent
that the aggregate annual expenses (exclusive of interest, taxes, brokerage,
distribution services fees and extraordinary expenses, all to the extent
permitted by applicable state law and regulation) exceed the limits prescribed
by any state in which the Fund's shares are qualified for sale. The Adviser
believes that the most restrictive expense ratio limitation imposed by any
state is 2.5% of the first $30 million of its average daily net assets, 2% of
the next $70 million of its average daily net assets and 1.5% of its average
daily net assets in excess of $100 million.
No such reimbursement was required for the year ended August 31, 1996. The Fund
has a service agreement with Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Investment Adviser) to provide personnel and facilities to
perform transfer agency services for the Fund. Compensation under this
agreement amounted to $90,671 for the year ended August 31, 1996. 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 $4,005 from the sale of Class A shares and $303,873 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class B
shares for the year ended August 31, 1996.
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 1% of the Fund's
average daily net assets attributable to Class A shares and 1% of the average
daily net assets attributable to both Class B and Class C shares. The fees are
accrued daily and paid monthly. The Agreement provides that the Distributor
will use such payments in their entirety for distribution assistance and
promotional activities. The Distributor has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $1,921,057, and
$294,686 for Class B and Class C shares, respectively; such costs may be
recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs, incurred by the Distributor, beyond the
current fiscal year for Class A shares. The Agreement also provides that the
Investment 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 Securities) aggregated $285,494,997 and $268,054,913,
respectively, for the year ended August 31, 1996.
At August 31, 1996, the cost of securities for federal income tax purposes was
$116,738,316. Accordingly, gross unrealized appreciation of investments was
$6,553,594 and gross unrealized depreciation was $911,889 resulting in net
unrealized appreciation of $5,641,705.
1. OPTIONS 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
12
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
purchased are accounted for in the same manner as portfolio securities. The
cost of securities acquired through the exercise of call options is increased
by premiums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from options
written. The difference between the premium and the amount paid on effecting a
closing purchase transaction, including brokerage commissions, is also treated
as a realized gain, or if the premium is less than the amount paid for the
closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security or currency in determining whether the Fund has realized a gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security or currency purchased by the Fund. In writing an option, the Fund
bears the market risk of an unfavorable change in the price of the security or
currency underlying the written option. Exercise of an option written by the
Fund could result in the Fund selling or buying a security or currency at a
price different from the current market value.
Transactions in options written for the year ended August 31, 1996 were as
follows:
NUMBER OF
CONTRACTS PREMIUM
--------- ----------
Options outstanding at beginning of period 1 $ 588,600
Options written 1 124,500
Options terminated in closing purchase transactions (2) (713,100)
Options outstanding at August 31, 1996 -0- $ -0-
NOTE E: 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:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 1,363,669 939,599 $ 12,569,826 $ 7,111,993
Shares issued in
reinvestment of
dividends 85,808 87,837 781,047 681,938
Shares converted
from Class B 117,519 -0- 1,117,859 -0-
Shares redeemed (743,378) (731,811) (6,805,919) (5,661,952)
Net increase 823,618 295,625 $ 7,662,813 $ 2,131,979
CLASS B
Shares sold 3,761,917 4,834,175 $ 34,187,398 $ 38,167,334
Shares issued in
reinvestment of
dividends 190,811 304,146 1,732,815 2,379,932
Shares converted
to Class A (117,519) -0- (1,117,859) -0-
Shares redeemed (3,193,598) (2,504,226) (29,160,515) (18,823,774)
Net increase 641,611 2,634,095 $ 5,641,839 $ 21,723,492
13
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995 1996 1995
------------ ------------ -------------- --------------
CLASS C
Shares sold 935,207 1,184,103 $ 8,691,207 $ 9,605,468
Shares issued in
reinvestment of
dividends 42,568 70,463 388,548 554,186
Shares redeemed (691,498) (1,229,437) (6,364,656) (9,896,136)
Net increase 286,277 25,129 $ 2,715,099 $ 263,518
NOTE F: CONCENTRATION OF RISK
Investing in securities of foreign companies and foreign governments involves
special risks which include revaluation of currency and future adverse
political and economic developments. Moreover, securities of many foreign
companies and foreign governments and their markets may be less liquid and
their prices more volatile than those of comparable U.S. companies and the
United States government. The Fund invests in the Sovereign Debt Obligations of
countries that are considered emerging market countries at the time of
purchase. Therefore, the Fund is susceptible to governmental factors and
economic and debt restructuring developments adversely affecting the economies
of these emerging market countries. In addition, these debt obligations may be
less liquid and subject to greater volatility than debt obligations of more
developed countries.
14
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
CLASS A
----------------------------------
FEB. 25,
YEAR ENDED AUGUST 31, 1994(C) TO
-------------------- AUG. 31,
1996 1995 1994
-------- ---------- ------------
Net asset value, beginning of period $ 8.02 $ 9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .84 .86 .45
Net realized and unrealized gain (loss)
on investments 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations 2.94 (.24) (.41)
LESS: DISTRIBUTIONS
Dividends from net investment income (.95) (.88) (.45)
Total dividends (.95) (.88) (.45)
Net asset value, end of period $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (a) 38.47% (1.48)% (3.77)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $23,253 $12,020 $10,995
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.65% 1.93% .75%(b)
Expenses, before waivers and reimbursements 1.65% 1.93% 1.91%(b)
Net investment income 9.23% 11.25% 9.82%(b)
Portfolio turnover rate 315% 301% 100%
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
CLASS B
----------------------------------
FEB. 25,
YEAR ENDED AUGUST 31, 1994(C) TO
-------------------- AUG. 31,
1996 1995 1994
-------- ---------- ------------
Net asset value, beginning of period $ 8.02 $ 9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .78 .80 .42
Net realized and unrealized gain (loss)
on investments 2.08 (1.11) (.86)
Net increase (decrease) in net asset
value from operations 2.86 (.31) (.44)
LESS: DISTRIBUTIONS
Dividends from net investment income (.87) (.81) (.42)
Total dividends (.87) (.81) (.42)
Net asset value, end of period $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (a) 37.36% (2.40)% (4.17)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $84,295 $62,406 $47,030
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 2.37% 2.64% 1.45%(b)
Expenses, before waivers and reimbursements 2.37% 2.64% 2.63%(b)
Net investment income 8.57% 10.52% 9.11%(b)
Portfolio turnover rate 315% 301% 100%
See footnote summary on page 17.
16
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
CLASS C
----------------------------------
FEB. 25,
YEAR ENDED AUGUST 31, 1994(C) TO
-------------------- AUG. 31,
1996 1995 1994
-------- ---------- -----------
Net asset value, beginning of period $ 8.02 $ 9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .77 .79 .42
Net realized and unrealized gain (loss)
on investments 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations 2.87 (.31) (.44)
LESS: DISTRIBUTIONS
Dividends from net investment income (.88) (.81) (.42)
Total dividends (.88) (.81) (.42)
Net asset value, end of period $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (a) 37.40% (2.36)% (4.16)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,511 $9,330 $10,404
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 2.35% 2.63% 1.45%(b)
Expenses, before waivers and reimbursements 2.35% 2.63% 2.59%(b)
Net investment income 8.52% 10.46% 9.05%(b)
Portfolio turnover rate 315% 301% 100%
(a) 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 charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(b) Annualized.
(c) Commencement of operations.
17
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Global Dollar Government Fund, Inc., (the "Fund"), including the
portfolio of investments, as of August 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Global Dollar Government Fund, Inc. at August 31, 1996, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the indicated periods, in conformity with generally accepted accounting
principles.
New York, New York
October 7, 1996
18
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
MR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
ROBERT C. WHITE (1)
OFFICERS
WAYNE D. LYSKI, PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
PAUL J. DENOON, VICE PRESIDENT
VICKI L. FULLER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JUAN J. RODRIGUEZ, CONTROLLER
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
CUSTODIAN
THE BANK OF NEW YORK
48 Wall Street
New York, N.Y. 10286
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
19
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
INVESTING WITHOUT THE MYSTERY.
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
GDGAR
