ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
SEMI-ANNUAL REPORT
FEBRUARY 28, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
April 2, 1997
Dear Shareholder:
The Global Dollar Government Fund's semi-annual reporting period closed on
February 28, 1997. Although the pace of price appreciation of emerging markets
debt securities has slowed, we are pleased to report that due to your Fund's
investment in the strongest performing of these markets, your Fund's returns
have again placed it at the top of all general world income funds tracked by
Lipper Analytical Services. Based on Class A shares' total return over the
trailing 12 months, your Fund received the #1 rank out of a universe of 136
funds. Over the last three years, your Fund also achieved the #1 rank out of a
universe of 79 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 February
28, 1997. 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.
INVESTMENT RESULTS*
Period Ended February 28, 1997
TOTAL RETURN
6 MONTHS 12 MONTHS
---------- ----------
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
Class A 21.72% 42.57%
Class B 21.31% 41.54%
Class C 21.32% 41.57%
JPM EMERGING MARKETS BOND INDEX 19.96% 39.88%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF FEBRUARY 28,
1997. 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 AND ITS COMPARATIVE
INDEX INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD. THE
INDEX IS UNMANAGED AND REFLECTS NO FEES OR EXPENSES. ADDITIONAL INVESTMENT
RESULTS APPEAR ON PAGE 3.
ECONOMIC REVIEW
The U.S. economy finished 1996 on a strong note. After moderating in the third
quarter, the economy picked up speed as 1996 came to a close, led by a rebound
in consumer spending. The annualized gain in retail sales of merchandise jumped
to 4.8% in the fourth quarter, up from only 0.9% in the third quarter. An
unexpected surge in export growth also added to year-end Gross Domestic Product
(GDP) growth. The production side of the economy showed strength too.
Industrial production grew at an annualized pace of 6.0% and payroll growth
increased to 217,000 new jobs per month, up from third quarter's average of
171,000 per month. In all, growth in aggregate output (as measured by GDP),
which dipped to 2.1% in the third quarter, accelerated to 3.8% during the final
three months of 1996.
Recently released data indicate that the economic strength at the end of 1996
has carried over into 1997, buoyed by continued strength in the labor markets.
Non-farm payrolls increased more than expected to 339,000 new jobs in February
and the unemployment rate edged down to 5.3%. Retail sales figures remained
strong during the first two months of 1997 and consumer confidence remains
elevated. Overall, GDP growth is likely to be 3% or more in the first quarter
of this year.
Inflation news continues to be generally favorable. After moving slightly
higher at the end of 1996, consumer and producer price gains both retreated in
early 1997. Through February, consumer prices were up 3% year-over-year while
producer prices were up just 2.2% for the same period. Nonetheless, the Federal
Reserve raised interest rates 0.25% recently in a preemptive strike against
what were viewed as mounting inflationary pressures.
INVESTMENT OUTLOOK
Our outlook for the U.S. economy assumes that while economic growth accelerated
at the end of 1996, it will moderate again towards mid-1997. As this occurs,
potential upward pressures on inflation should dissipate. Until clear signs of
a slowing economy emerge, concerns about inflation will keep U.S. interest
rates near the upper end of their recent range. The Fed remains vigilant
against signs of accelerating inflation, therefore additional rate increases
cannot be ruled out. Given these concerns about the economic outlook, further
near-term
1
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
weakness in bond prices and higher bond yields cannot be overlooked. However,
such developments would only facilitate the economic slowing we see later in
1997.
Overall, we remain positive on emerging market debt. Higher U.S. interest rates
may produce temporary weakness in emerging market debt prices, however, the
fundamental economics remain sound for this fixed-income sector and should
support additional gains in the upcoming year.
In Argentina, the economy is gaining momentum and is on track for at least 5.0%
growth this year, after 4.4% growth in 1996. The strength of the economic
expansion is producing a rapid increase in tax revenues while fiscal
expenditures remain largely unchanged from last year's levels. Perhaps most
remarkable is that the current economic expansion is taking place while the
budget deficit is being cut in half and inflation is virtually non-existent.
The Mexican economy also continues to perform strongly, led by sharp increases
in production and manufacturing. Growth is expected to remain strong at around
4.0% in 1997 and inflation and interest rates should both decline during the
upcoming year. Investor confidence in Mexico's economic policies is growing.
The decision to prepay the remaining $3.5 billion owed to the U.S. for the 1995
peso bailout further underscores the government's commitment to sound economic
policies and is another positive step in their efforts to restore Mexico's
credibility in international capital markets.
In Russia, recent data indicate that the economy is beginning to grow.
Inflation remains on a downward trend and reserves have increased considerably.
The government has reinforced its commitment to pursuing a market oriented
economy with the naming of an aggressive, reform-minded cabinet.
The recent decision by Moody's to assign a Baa 1 rating (investment grade) to
Panama's sovereign debt recognizes the sound economic policies being pursued by
that country and should support significant price gains in the debt securities
of that country in the upcoming year.
Thank you for your continued interest and investment in Alliance Global Dollar
Government Fund. We look forward to reporting its 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
_______________________________________________________________________________
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 RETURNS AS OF FEBRUARY 28, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 42.57% 36.49%
Since Inception* 16.84% 15.18%
SEC Yield** 8.40%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 41.54% 38.54%
Since Inception* 15.88% 15.88%
SEC Yield** 8.05%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 41.57% 40.57%
Since Inception* 15.91% 15.91%
SEC Yield** 8.06%
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares, with and without the effect
of the 4.25% maximum front-end sales charge for Class A or applicable
contingent deferred sales charge for Class B (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.
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: 2/25/94 for all Classes.
** Yields are for the 30 days ended February 28, 1997.
3
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1997 (UNAUDITED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- --------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-82.2%
NON-COLLATERALIZED BRADY BONDS-33.0%
BULGARIA-3.3%
Bulgaria IAB FRN 6.5625%, 7/28/11 $ 7,500 $ 4,523,438
ECUADOR-2.9%
Republic of Ecuador PDI FRN
6.4375%, 2/27/15 (a) 6,458 4,015,965
PANAMA-9.8%
Republic of Panama PDI VRN
6.5625%, 7/17/16 (a)(b) 10,141 8,594,121
Republic of Panama IRB VRN
3.50%, 7/17/14 (a)(b) 6,500 4,858,750
------------
13,452,871
PERU-5.1%
Republic of Peru FLIRB-WI
3.25%, 3/15/16 (b) 7,500 4,443,750
Republic of Peru PDI-WI
3.00%, 12/29/49 (b) 4,000 2,570,000
------------
7,013,750
VENEZUELA-11.9%
Republic of Venezuela FLIRB FRN
6.625%, 3/31/07 18,000 16,470,000
Total Non-Collateralized Brady Bonds
(cost $39,266,399) 45,476,024
SOVEREIGN DEBT RELATED-28.6%
ARGENTINA-5.5%
Republic of Argentina Global Bond
11.375%, 1/30/17 7,100 7,570,375
BRAZIL-10.8%
Republic of Brazil C-Bonds
8.00%, 4/15/14 (c) 18,723 14,832,418
MEXICO-8.8%
United Mexican States
11.50%, 5/15/26 10,900 12,186,200
RUSSIA-3.5%
Russia Principal Loans-WI FRN
12/15/20 (b)(d) 8,000 4,865,000
Total Sovereign Debt Related
(cost $36,160,035) 39,453,993
OTHER SOVEREIGN DEBT RELATED-12.3%
Morgan Guaranty Trust Co.
Indexed Note Linked Russian US$
Vneshekonombank Loan Assignment
14.00%, 4/22/97 (e)
(cost $17,783,750) 17,784 16,917,681
COLLATERALIZED BRADY BONDS (F)-8.3%
ECUADOR-2.3%
Republic of Ecuador Par Bonds FRN
3.25%, 2/28/25 7,000 3,163,125
NIGERIA-3.0%
Central Bank of Nigeria Par Bonds VRN
6.25%, 11/15/20 (g) 6,000 4,091,250
VENEZUELA-3.0%
Republic of Venezuela Par Bonds Series W-A
6.75%, 3/31/20 (h) 5,500 4,245,312
Total Collateralized Brady Bonds
(cost $10,843,018) 11,499,687
4
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
Total Sovereign Debt Obligations
(cost $104,053,202) $113,347,385
CORPORATE DEBT OBLIGATIONS-16.4%
Grupo Mexicano Desarollo
8.25%, 2/17/01 $7,900 5,767,000
Home Holdings, Inc.
7.75%, 12/15/98 5,450 2,234,500
8.625%, 12/15/03 600 153,000
OPP Petroquimica, S.A.
11.50%, 2/23/04 (b) 4,000 4,090,000
Philippine Long Distance Telephone
8.35%, 3/06/17 5,000 4,858,450
Unisys Corp.
11.75%, 10/15/04 5,000 5,462,500
Total Corporate Debt Obligations
(cost $24,292,611) 22,565,450
U.S. GOVERNMENT OBLIGATION-2.8%
U.S. Treasury Bond,
6.625%, 2/15/27
(cost $4,002,520) 4,000 3,913,748
TIME DEPOSIT-2.9%
Bank of New York 5.0625%, 3/03/97
(cost $4,030,000) 4,030 4,030,000
TOTAL INVESTMENTS-104.3%
(cost $136,378,333) 143,856,583
Other assets less liabilities-(4.3%) (5,989,333)
NET ASSETS-100% $137,867,250
(a) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at February 28, 1997.
(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 February 28, 1997,
these securities amounted to $29,421,621 representing 21.3% of net assets.
(c) Coupon consists of 4.5% cash payment and 3.5% paid in kind.
(d) An interest rate based on the six month Libor Rate plus 81.25 basis points
will take effect upon issuance of bonds.
(e) Principal amount represents par value at purchase date. The redemption
value of this security is linked to the change in the bid price of the
referenced emerging market debt.
(f) 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.
(g) Security trades with oil warrants expiring November 15, 2020.
(h) Security trades with oil warrants expiring April 15, 2020.
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 statements.
5
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997 (UNAUDITED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $136,378,333) $143,856,583
Cash 147
Receivable for investment securities sold 44,121,533
Interest receivable 4,010,952
Receivable for capital stock sold 1,425,569
Deferred organization expenses 71,470
Total assets 193,486,254
LIABILITIES
Payable for investment securities purchased 54,631,601
Payable for capital stock redeemed 365,584
Dividends payable 347,359
Distribution fee payable 96,080
Advisory fee payable 84,236
Accrued expenses 94,144
Total liabilities 55,619,004
NET ASSETS $137,867,250
COMPOSITION OF NET ASSETS
Capital stock, at par $ 13,217
Additional paid-in capital 118,983,108
Distributions in excess of net investment income (704,337)
Accumulated net realized gain on investments 12,093,309
Net unrealized appreciation of investments and other assets 7,481,953
$137,867,250
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($29,015,357/
2,781,677 shares of capital stock issued and outstanding) $10.43
Sales charge--4.25% of public offering price .46
Maximum offering price $10.89
CLASS B SHARES
Net asset value and offering price per share ($88,505,709/
8,484,927 shares of capital stock issued and outstanding) $10.43
CLASS C SHARES
Net asset value and offering price per share ($20,346,184/
1,950,552 shares of capital stock issued and outstanding) $10.43
See notes to financial statements.
6
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 6,476,896
EXPENSES
Advisory fee $487,163
Distribution fee - Class A 38,977
Distribution fee - Class B 430,998
Distribution fee - Class C 88,628
Transfer agency 89,427
Administrative 74,837
Audit and legal 51,067
Custodian 49,734
Registration 25,040
Amortization of organization expenses 19,036
Directors' fees 13,960
Printing 10,367
Miscellaneous 3,979
Total expenses 1,383,213
Net investment income 5,093,683
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 17,802,610
Net realized gain on options written 129,000
Net change in unrealized appreciation of:
Investments 1,824,167
Options written and other assets 2,573
Net gain on investments 19,758,350
NET INCREASE IN NET ASSETS FROM OPERATIONS $24,852,033
See notes to financial statements.
7
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
FEB. 28, 1997 AUGUST 31,
(UNAUDITED) 1996
--------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 5,093,683 $ 8,873,964
Net gain on investment transaction and
options written 17,931,610 16,314,439
Net change in unrealized appreciation of
investments, options written and other assets 1,826,740 7,093,642
Net increase in net assets from operations 24,852,033 32,282,045
DIVIDENDS ANDDISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,163,476) (1,743,599)
Class B (3,576,972) (7,143,965)
Class C (738,389) (1,110,696)
Net realized gain on investments
Class A (2,507,271) -0-
Class B (8,869,881) -0-
Class C (1,923,846) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 9,736,005 16,019,751
Total increase 15,808,203 38,303,536
NET ASSETS
Beginning of year 122,059,047 83,755,511
End of period $137,867,250 $122,059,047
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997 (UNAUDITED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Dollar Government Fund (the "Fund"), was incorporated in the
state of Maryland on December 2, 1993, as a non-diversified, open-end
investment management company. The Fund offers Class A, Class B and Class C
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase will be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 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 which
mature in 60 days or less are valued at amortized cost, which approximates
market value, unless this method does not represent fair value. Securities for
which market quotations are not readily available and restricted securities are
valued in good faith, at fair value, using methods determined by the Board of
Directors. In determining fair value, consideration is given to cost, operating
and other financial data.
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 INVESTMENT TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on the
ex-dividend date. Investment transactions are accounted for on the date
securities are purchased or sold. Investment gains and losses are determined on
the identified cost basis. The Fund accretes discount as an adjustment to
interest income.
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.
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 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 $56,146 for the six months ended February 28, 1997.
Alliance Fund
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE GLOBAL DOLLAR GOVERNMENT 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 $10,395 from the sale of Class A shares and $181,114 and $2,865 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B and Class C shares, respectively, for the six months ended February 28,
1997.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 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 $1,979,691, and
$386,042 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 $114,940,911 and $119,193,467,
respectively, for the six months ended February 28, 1997. There were purchases
of $8,548,223 and sales of $4,452,891 of U.S. government and government agency
obligations for the six months ended February 28, 1997.
At February 28, 1997, the cost of securities for federal income tax purposes
was the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $11,567,506 and gross unrealized
depreciation was $4,089,256 resulting in net unrealized appreciation of
$7,478,250.
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 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.
10
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
Transactions in options written for the six months ended February 28, 1997 were
as follows:
NUMBER OF
CONTRACTS PREMIUM
--------- ----------
Options outstanding at beginning of period -0- $ -0-
Options written 1 129,000
Options terminated in closing purchase transactions -0- -0-
Options expired (1) (129,000)
Options outstanding at February 28, 1997 -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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEB. 28,1997 AUG. 31, FEB. 28,1997 AUG. 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 1,432,794 1,363,669 $14,954,153 $12,569,826
Shares issued in
reinvestment of
dividends and
distributions 206,798 85,808 2,052,613 781,047
Shares converted
from Class B 85,944 117,519 910,649 1,117,859
Shares redeemed (1,266,417) (743,378) (13,476,810) (6,805,919)
Net increase 459,119 823,618 $ 4,440,605 $ 7,662,813
CLASS B
Shares sold 2,002,441 3,761,917 $20,911,193 $34,187,398
Shares issued in
reinvestment of
dividends and
distributions 443,977 190,811 4,390,796 1,732,815
Shares converted
to Class A (85,944) (117,519) (910,649) (1,117,859)
Shares redeemed (2,295,031) (3,193,598) (24,317,632) (29,160,515)
Net increase 65,443 641,611 $ 73,708 $ 5,641,839
CLASS C
Shares sold 697,484 935,207 $ 7,367,097 $ 8,691,207
Shares issued in
reinvestment of
dividends and
distributions 115,302 42,568 1,141,838 388,548
Shares redeemed (311,649) (691,498) (3,287,243) (6,364,656)
Net increase 501,137 286,277 $ 5,221,692 $ 2,715,099
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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.
12
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEB. 25, 1994(A)
FEB. 28, 1997 ------------------------ TO
(UNAUDITED) 1996 1995 AUGUST 31,1994
---------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.01 $8.02 $ 9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .44(b) .84 .86 .45
Net realized and unrealized gain (loss)
on investments 1.60 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations 2.04 2.94 (.24) (.41)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.95) (.88) (.45)
Distributions from net realized gain
on investments (1.15) -0- -0- -0-
Total dividends and distributions (1.62) (.95) (.88) (.45)
Net asset value, end of period $10.43 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (c) 21.72% 38.47% (1.48)% (3.77)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $29,015 $23,253 $12,020 $10,995
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 1.56%(d) 1.65% 1.93% .75%(d)
Expenses, before waivers and
reimbursements 1.56%(d) 1.65% 1.93% 1.91%(d)
Net investment income 8.40%(d) 9.23% 11.25% 9.82%(d)
Portfolio turnover rate 106% 315% 301% 100%
</TABLE>
See footnote summary on page 15.
13
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEB. 25,1994(A)
FEB. 28, 1997 ------------------------ TO
(UNAUDITED) 1996 1995 AUG. 31,1994
--------------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.01 $8.02 $9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .40(b) .78 .80 .42
Net realized and unrealized gain (loss)
on investments 1.61 2.08 (1.11) (.86)
Net increase (decrease) in net asset
value from operations 2.01 2.86 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.87) (.81) (.42)
Distributions from net realized gain
on investments (1.15) -0- -0- -0-
Total dividends and distributions (1.59) (.87) (.81) (.42)
Net asset value, end of period $10.43 $10.01 $8.02 $9.14
TOTAL RETURN
Total investment return based on net
asset value (c) 21.31% 37.36% (2.40)% (4.17)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $88,506 $84,295 $62,406 $47,030
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 2.27%(d) 2.37% 2.64% 1.45%(d)
Expenses, before waivers and
reimbursements 2.27%(d) 2.37% 2.64% 2.63%(d)
Net investment income 7.70%(d) 8.57% 10.52% 9.11%(d)
Portfolio turnover rate 106% 315% 301% 100%
</TABLE>
See footnote summary on page 15.
14
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEB. 25,1994(A)
FEB. 28,1997 ------------------------ TO
(UNAUDITED) 1996 1995 AUG. 31,1994
--------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.01 $8.02 $9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .41(b) .77 .79 .42
Net realized and unrealized gain (loss)
on investments 1.60 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations 2.01 2.87 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.88) (.81) (.42)
Distributions from net realized gain
on investments (1.15) -0- -0- -0-
Total dividends and distributions (1.59) (.88) (.81) (.42)
Net asset value, end of period $10.43 $10.01 $8.02 $9.14
TOTAL RETURN
Total investment return based on net
asset value (c) 21.32% 37.40% (2.36)% (4.16)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $20,346 $14,511 $9,330 $10,404
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 2.27%(d) 2.35% 2.63% 1.45%(d)
Expenses, before waivers and
reimbursements 2.27%(d) 2.35% 2.63% 2.59%(d)
Net investment income 7.70%(d) 8.52% 10.46% 9.05%(d)
Portfolio turnover rate 106% 315% 301% 100%
</TABLE>
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) 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.
(d) Annualized.
15
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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)
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, NY 10286
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
16
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
17
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
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.
GDGSR
