ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
ANNUAL REPORT
AUGUST 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
October 3, 1997
Dear Shareholder:
The Global Dollar Government Fund's annual reporting period closed on August
31, 1997. Although returns for the emerging market debt sector were solid over
the past six months, they have slowed dramatically from their pace of the past
several periods as we projected in our last report to you dated February 28,
1997.
In spite of this, your Fund continued to perform well, achieving a top 10
ranking among all general world income funds tracked by Lipper Analytical
Services over the past 12 month period and since inception. Based on Class A
shares' return over the past 12 months, your Fund was ranked 2nd out of a
universe of 137 funds. Since your Fund's inception (February 25, 1994), your
Fund ranked 1st out of a universe of 73 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 for the periods ended August
31, 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 the Index consists of
dollar-denominated restructured sovereign bonds, of which a large percentage
are Brady bonds. Your Fund's performance trailed that of its benchmark for the
most recent period. This recent underperformance dampened the Fund's 12-month
returns, bringing them more in-line with the 12-month return of the index.
INVESTMENT RESULTS*
Period Ended August 31, 1997
TOTAL RETURN
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
Class A 6.82% 30.04%
Class B 6.44% 29.14%
Class C 6.46% 29.17%
JPM EMERGING MARKETS BOND INDEX 9.76% 31.67%
* 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 AUGUST 31, 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. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE J.P. MORGAN EMERGING MARKETS BOND INDEX IS COMPOSED OF DOLLAR-DENOMINATED
RESTRUCTURED SOVEREIGN BONDS; A LARGE PERCENTAGE OF THE INDEX IS MADE UP OF
BRADY BONDS. THE INDEX IS UNMANAGED AND REFLECTS NO FEES OR EXPENSES. AN
INVESTOR CANNOT INVEST DIRECTLY IN THE INDEX.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
ECONOMIC REVIEW
The U.S. economy continued to perform strongly since our last report. Led by
continued strength in the labor market, the unemployment rate dropped to
20-year lows during the first quarter and wages continued to climb. In response
to continued economic strength and what were viewed as mounting inflationary
pressures, the Federal Reserve Bank raised short-term interest rates in March.
Overall, economic growth, which had risen to 4.3% at the end of 1996, further
accelerated to 4.9% during the first three months of 1997.
More recent data show that the economy slowed in the second quarter but
continued to grow at a robust clip. The Commerce Department, which had
initially estimated second quarter growth at 2.2%, revised up its estimate for
the spring quarter's Gross Domestic Product (GDP) growth to 3.3%. The main
causes for this revision were significant upward corrections in exports and the
1
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
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rate of inventory growth. Although the growth contributions from these
components are unlikely to be repeated during the second half of 1997, the
stronger growth rate reveals that the U.S. economy entered the third quarter
with much more momentum than originally thought. Preliminary data indicate that
the labor market remains strong with an estimated 200,000 jobs created in
August (adjusted for the effects of the UPS strike). Meanwhile, consumer
confidence remains near its recent highs and consumer spending continues to be
strong.
In spite of an increase in wage pressures, inflation remained very well-behaved
during the period. Consumer prices increased at a 1.6% annual rate in the first
eight months of the year and are up 2.2% from the same period last year.
Wholesale inflation, as measured by the Producer Price Index, fell for an
unprecedented seven months in a row before finally showing an increase in
August. Overall, producer prices are down 0.2% from year earlier levels.
MARKET REVIEW
The U.S. bond market posted modest gains over the past six months. After
trading lower during the first quarter on fears that overly robust growth would
ignite inflation, the market rebounded over the summer. Data released during
the second quarter, indicating that the economy had slowed from its
unsustainable first quarter pace and inflation remained dormant, helped ease
investor concerns and pushed bond prices higher. Interest rates, which peaked
in late spring following the Fed's decision to raise the Fed Funds rate, ended
the period lower on all maturities.
The emerging market economies, benefiting from generally stable worldwide
interest rates, moved into their second year of healthy growth and low
inflation. With sustained strength in export markets, the benefits of reform
have begun to penetrate more deeply into the emerging market economies.
Declining unemployment has relieved some political pressures and strengthened
the commitment to the ongoing process of reform and revitalization. Price
performance for the period was strong, although down from its recent highs in
most developing countries, as foreign investment returned to 1993 levels and
the risk premium on investments narrowed.
INVESTMENT OUTLOOK
We expect economic activity to slow towards the end of 1997. Consumer
confidence has reached new highs, real income is growing solidly, and the labor
market remains strong, with unemployment at 4.9%. With multi-quarter growth
trending above the level historically considered to be non-inflationary,
Federal Reserve policy makers will continue to closely monitor inflationary
pressures with a predisposition towards increasing rates at the first sign of
economic overheating.
Given our expectations for relatively stable growth, inflation and monetary
policy worldwide, the developing markets should provide investment
opportunities as the process of reform and integration continues. However, the
generic risk premiums for these countries are more rationally aligned with
economic fundamentals than they have been for some time and caution is
warranted. We believe that country selection will be more critical to superior
investment performance than it has been during the last several quarters.
The picture in Latin America continues to be one of strong growth and low
inflation. In Brazil, inflation fell in August and is expected to register
4.5%-5% for all of 1997. Elections in Mexico produced a majority for the
opposition party in the lower house of Congress for the first time in 70 years.
The transition to a pluralistic democracy will be watched closely, but so far
foreign investment has remained strong. The Mexican economy grew at a 7.0% rate
during the first half of 1997, while inflation and interest rates have
continued to fall. Inflation in Argentina remained near zero. A recent report
by the International Monetary Fund (IMF) highlighted that the economy was
growing rapidly and that Argentina was less vulnerable to external shocks than
it was after the 1994 Mexican peso devaluation.
In Russia, the economy appears to be expanding. The GDP in August 1997 showed a
0.7% increase since August 1996. Industrial production showed a similar
pattern, increasing 3.0% year-over-year in August, following a 3.4%
year-over-year increase in July. Continued economic growth, along with the
restructuring of Russia's London Club debt, should support continued gains in
the prices of Russian bonds.
2
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
In Southeast Asia, the recent devaluation of the Thai baht has exposed
significant problems in the Thai economy, particularly within the financial
sector. Difficulties have also begun to appear in Malaysia and to a lesser
extent in Indonesia and the Philippines. The IMF's decision to step in and
provide funds to shore up the shaky Thai financial sector should help prevent
the crisis from spreading further. While the near-term economic picture for
these countries is bleak, we are optimistic about the long-term investment
value in this region since favorable fundamentals are still in place.
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.
3
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 AUGUST 31, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 30.04% 24.56%
Since Inception* 16.40% 14.98%
SEC Yield** 8.00%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 29.14% 26.14%
Since Inception* 15.46% 15.46%
SEC Yield** 7.63%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 29.17% 28.17%
Since Inception* 15.49% 15.49%
SEC Yield** 7.63%
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 August 31, 1997.
4
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
GROWTH OF A $10,000 INVESTMENT
2/28/94* TO 8/31/97
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
J.P. MORGAN EMERGING MARKETS BOND INDEX: $17,526
GLOBAL DOLLAR GOVERNMENT FUND CLASS A: $16,346
2/28/94 8/31/94 8/31/95 8/31/96 8/31/97
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Global Dollar Government Fund Class A shares (from 2/28/94 to 8/31/97)
as compared to the performance of an appropriate broad-based index. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains. Performance for Class B and Class C shares will vary from the
results shown above due to differences in expenses charged to those classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The J.P. Morgan Emerging Markets Bond Index 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 no charges or expenses are reflected in the performance of
the index.
Global Dollar Government Fund
J.P.Morgan Emerging Markets Bond Index
* Month-end nearest to Fund's inception date of 2/25/94.
5
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1997 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-74.3%
NON-COLLATERALIZED BRADY BONDS-31.5%
BULGARIA-8.6%
Republic of Bulgaria
IAB FRN 6.6875%, 7/28/11 $17,500 $ 13,480,469
PANAMA-5.0%
Republic of Panama
IRB 3.75%, 7/17/14(a) 10,000 7,737,500
PERU-7.8%
Republic of Peru FLIRB
3.25%, 3/07/17(a)(b) 7,500 4,471,875
Republic of Peru PDI
4.00%, 3/07/17(a)(b) 11,700 7,678,125
------------
12,150,000
POLAND-4.9%
Republic of Poland PDI
4.00%, 10/27/14(a) 9,000 7,661,250
VENEZUELA-5.2%
Republic of Venezuela
FLIRB FRN 6.72%, 3/31/07 8,571 8,035,722
Total Non-Collateralized Brady Bonds
(cost $45,060,982) 49,064,941
OTHER SOVEREIGN DEBT OBLIGATIONS-17.3%
ARGENTINA-3.8%
Republic of Argentina Global Bond
11.375%, 1/30/17 5,000 5,855,000
BRAZIL-5.9%
Republic of Brazil Global Bond
10.125%, 5/15/27 9,484 9,235,045
MEXICO-3.7%
United Mexican States
11.375%, 9/15/16 5,000 5,807,500
RUSSIA-3.9%
Russia Principal Loans - WI FRN
12/15/20(b)(c) 8,500 6,143,906
Total Other Sovereign Debt Obligations
(cost $25,999,404) 27,041,451
SOVEREIGN DEBT RELATED-12.9%
Morgan Guaranty Trust Co. Indexed Note
Linked to Russian US$ Vneshekonombank
Loan Assignment 14.00%, 10/15/97(d)
(cost $20,961,250) 20,961 20,053,628
COLLATERALIZED BRADY BOND(E)-6.7%
ECUADOR-6.7%
Republic of Ecuador Par Bonds FRN
3.50%, 2/28/25 (cost $10,273,890) 20,000 10,500,000
LOAN PARTICIPATION-5.9%
MOROCCO-5.9%
Kingdom of Morocco Loan Participation
FRN 6.8125%, 1/01/09 (cost $8,542,237) 10,000 9,200,000
Total Sovereign Debt Obligations
(cost $110,837,763) 115,860,020
6
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-19.8%
Altos Hornos de Mexico
11.875%, 4/30/04(b) $5,000 $ 5,475,000
Consorcio Ecuatoriano Telecom
14.00%, 5/01/02(b) 5,000 5,381,250
First Chicago/Lennar Trust
8.12%, 5/29/08(b) 5,000 4,823,440
Global Telesystems Group
8.75%, 6/30/00 1,000 1,005,000
Grupo Mexicano de Desarrollo, SA
8.25%, 2/17/01(f) 7,900 3,278,500
Innova S de R.L.
12.875%, 4/01/07(b) 5,000 5,287,500
MCII Holding
12.00%, 11/15/02 1,450 1,315,875
OPP Petroquimica, SA
11.50%, 2/23/04(b) 4,000 4,230,000
Total Corporate Debt Obligations
(cost $32,185,799) 30,796,565
TIME DEPOSIT-5.3%
Bank of New York
5.25%, 9/02/97 (cost $8,259,000) 8,259 8,259,000
TOTAL INVESTMENTS-99.4%
(cost $151,282,562) 154,915,585
Other assets less liabilities-0.6% 1,007,351
NET ASSETS-100% $155,922,936
(a) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at August 31, 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 August 31, 1997,
these securities amounted to $43,491,096 or 27.9% of net assets.
(c) An interest rate based on the six-month Libor Rate plus 81.25 basis points
will take effect upon issuance of bonds.
(d) 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.
(e) Sovereign debt obligation issued as part of debt restructuring that is
collateralized in full as to principal due at maturity by a U.S. Treasury zero
coupon obligation which has the same maturity as the Brady Bond.
(f) Non-income producing security.
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.
WI - When issued.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1997 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $151,282,562) $154,915,585
Cash 517
Receivable for investment securities sold 8,899,125
Interest receivable 3,077,226
Receivable for capital stock sold 1,679,479
Deferred organization expenses 52,538
Total assets 168,624,470
LIABILITIES
Payable for investment securities purchased 10,862,500
Payable for capital stock redeemed 757,541
Dividends payable 382,755
Distribution fee payable 111,352
Advisory fee payable 99,999
Accrued expenses 161,512
Other liabilities 325,875
Total liabilities 12,701,534
NET ASSETS $155,922,936
COMPOSITION OF NET ASSETS
Capital stock, at par $ 14,656
Additional paid-in capital 134,132,658
Distributions in excess of net investment income (407,030)
Accumulated net realized gain on investment transactions
and options written 18,549,629
Net unrealized appreciation of investments 3,633,023
$155,922,936
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($37,416,029/
3,517,471 shares of capital stock issued and outstanding) $10.64
Sales charge--4.25% of public offering price .47
Maximum offering price $11.11
CLASS B SHARES
Net asset value and offering price per share ($93,377,224/
8,776,509 shares of capital stock issued and outstanding) $10.64
CLASS C SHARES
Net asset value and offering price per share ($25,129,683/
2,362,282 shares of capital stock issued and outstanding) $10.64
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1997 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $13,712,818
EXPENSES
Advisory fee $1,022,246
Distribution fee - Class A 87,392
Distribution fee - Class B 870,564
Distribution fee - Class C 201,123
Transfer agency 187,207
Administrative 148,685
Custodian 93,050
Audit and legal 88,621
Registration 51,154
Printing 46,751
Amortization of organization expenses 37,967
Directors' fees 27,282
Miscellaneous 8,853
Total expenses 2,870,895
Net investment income 10,841,923
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 24,943,434
Net realized gain on options written 129,000
Net change in unrealized appreciation of investments (2,022,190)
Net gain on investment transactions 23,050,244
NET INCREASE IN NET ASSETS FROM OPERATIONS $33,892,167
See notes to financial statements.
9
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1997 1996
-------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 10,841,923 $ 8,873,964
Net gain on investment transactions and
options written 25,072,434 16,314,439
Net change in unrealized appreciation
(depreciation)of investments (2,022,190) 7,093,642
Net increase in net assets from operations 33,892,167 32,282,045
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,634,591) (1,743,599)
Class B (7,289,193) (7,143,965)
Class C (1,690,490) (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 24,886,994 16,019,751
Total increase 33,863,889 38,303,536
NET ASSETS
Beginning of year 122,059,047 83,755,511
End of year $155,922,936 $122,059,047
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Global Dollar Government Fund, Inc. (the "Fund"), was incorporated in
the state of Maryland on December 2, 1993, as a non-diversified, open-end
management investment 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 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. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the shares of such class, except that the Fund's Class
B and Class C shares bear higher distribution and transfer agent fees than
Class A shares.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to short-term capital gains, resulted in a net increase in
distributions in excess of net investment income and a corresponding decrease
in accumulated net realized gain on investments. This reclassification had no
effect on net assets.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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 transfer agency agreement with Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Adviser) to provide personnel and facilities to
perform transfer agency services for the Fund. Compensation under this
agreement amounted to $119,742 for the year ended August 31, 1997. 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 $29,069 from the sale of Class A shares and $264,244 and $9,336 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B and Class C shares, respectively, for the year ended August 31, 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 $2,214,590, and
$460,747 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
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 $370,691,347 and $376,704,050,
respectively, for the year ended August 31, 1997. There were purchases of
$8,548,223 and sales of $8,237,891 of U.S. government and government agency
obligations for the year ended August 31, 1997.
At August 31, 1997, the cost of securities for federal income tax purposes was
$151,798,180. Accordingly, gross unrealized appreciation of investments was
$7,499,623 and gross unrealized depreciation was $4,382,218 resulting in net
unrealized appreciation of $3,117,405.
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
12
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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, 1997 were as
follows:
NUMBER OF
CONTRACTS PREMIUM
----------- -----------
Options outstanding at beginning of year -0- $ -0-
Options written 1 129,000
Options terminated in closing purchase transactions -0- -0-
Options expired (1) (129,000)
Options outstanding at August 31, 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
--------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 2,355,226 1,363,669 $ 32,050,908 $ 12,569,826
Shares issued in
reinvestment of
dividends and
distributions 280,933 85,808 2,821,501 781,047
Shares converted
from Class B 915,289 117,519 1,852,148 1,117,859
Shares redeemed (2,356,535) (743,378) (24,578,204) (6,805,919)
Net increase 1,194,913 823,618 $ 12,146,353 $ 7,662,813
CLASS B
Shares sold 3,870,353 3,761,917 $ 40,316,286 $ 34,187,398
Shares issued in
reinvestment of
dividends and
distributions 558,197 190,811 5,572,998 1,732,815
Shares converted
to Class A (915,289) (117,519) (1,852,148) (1,117,859)
Shares redeemed (3,156,236) (3,193,598) (40,778,794) (29,160,515)
Net increase 357,025 641,611 $ 3,258,342 $ 5,641,839
CLASS C
Shares sold 1,335,877 935,207 $ 13,969,049 $ 8,691,207
Shares issued in
reinvestment of
dividends and
distributions 157,884 42,568 1,583,319 388,548
Shares redeemed (580,894) (691,498) (6,070,069) (6,364,656)
Net increase 912,867 286,277 $ 9,482,299 $ 2,715,099
13
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.
14
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
YEAR ENDED AUGUST 31, FEB. 25,
--------------------------------- 1994(a) TO
1997 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 .88(b) .84 .86 .45
Net realized and unrealized gain (loss)
on investments 1.85 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations 2.73 2.94 (.24) (.41)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.95) (.95) (.88) (.45)
Distributions from net realized gain
on investments (1.15) -0- -0- -0-
Total dividends and distributions (2.10) (.95) (.88) (.45)
Net asset value, end of period $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (c) 30.04% 38.47% (1.48)% (3.77)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $37,416 $23,253 $12,020 $10,995
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.55% 1.65% 1.93% .75%(d)
Expenses, before waivers and reimbursements 1.55% 1.65% 1.93% 1.91%(d)
Net investment income 8.49% 9.23% 11.25% 9.82%(d)
Portfolio turnover rate 314% 315% 301% 100%
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------
YEAR ENDED AUGUST 31, FEB. 25,
--------------------------------- 1994(a) TO
1997 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 .81(b) .78 .80 .42
Net realized and unrealized gain (loss)
on investments 1.84 2.08 (1.11) (.86)
Net increase (decrease) in net asset
value from operations 2.65 2.86 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.87) (.87) (.81) (.42)
Distributions from net realized gain
on investments (1.15) -0- -0- -0-
Total dividends and distributions (2.02) (.87) (.81) (.42)
Net asset value, end of period $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (c) 29.14% 37.36% (2.40)% (4.17)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $93,377 $84,295 $62,406 $47,030
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 2.26% 2.37% 2.64% 1.45%(d)
Expenses, before waivers and reimbursements 2.26% 2.37% 2.64% 2.63%(d)
Net investment income 7.81% 8.57% 10.52% 9.11%(d)
Portfolio turnover rate 314% 315% 301% 100%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------
YEAR ENDED AUGUST 31, FEB. 25,
--------------------------------- 1994(a) TO
1997 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 .82(b) .77 .79 .42
Net realized and unrealized gain (loss)
on investments 1.84 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations 2.66 2.87 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.88) (.88) (.81) (.42)
Distributions from net realized gain
on investments (1.15) -0- -0- -0-
Total dividends and distributions (2.03) (.88) (.81) (.42)
Net asset value, end of period $10.64 $10.01 $8.02 $9.14
TOTAL RETURN
Total investment return based on net
asset value (c) 29.17% 37.40% (2.36)% (4.16)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $25,130 $14,511 $9,330 $10,404
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 2.25% 2.35% 2.63% 1.45%(d)
Expenses, before waivers and reimbursements 2.25% 2.35% 2.63% 2.59%(d)
Net investment income 7.82% 8.52% 10.46% 9.05%(d)
Portfolio turnover rate 314% 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.
17
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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, 1997, 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, 1997, 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, 1997, 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, 1997
18
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)
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.
19
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.
GDGAR
