ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
SEMI-ANNUAL REPORT
FEBRUARY 28, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
April 27, 1998
Dear Shareholder:
The Global Dollar Government Fund's semi-annual reporting period closed on
February 28, 1998. Although returns in the emerging market debt sector have
been robust over the past several years, economic and financial turmoil in
Southeast Asia impacted financial markets in October and erased most of the
gains for this period. Concern over the events in Asia rippled throughout world
markets and spurred investors to reduce their risk positions.
INVESTMENT RESULTS
The following table shows how your Fund performed for the periods ended
February 28, 1998. For comparison, we have provided returns for the unmanaged
J.P. Morgan (JPM) Emerging Markets Bond Index, which measures performance of
the overall Brady bond market. This 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
are Brady bonds.
Your Fund underperformed its benchmark for the six month period ended February
28, 1998 because the Fund's spread duration was higher than its benchmark and
credit spreads widened as a result of the Asian crisis. Spread duration is a
measure of price sensitivity to changes in a country's credit risk profile.
Additionally, your Fund's performance was negatively impacted by an
overweighted position in Russia which lagged relative to other emerging market
countries.
INVESTMENT RESULTS*
Periods Ended February 28, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
Class A -0.86% 5.90%
Class B -1.15% 5.21%
Class C -1.13% 5.24%
JPM EMERGING MARKETS BOND INDEX 3.03% 13.09%
* 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,
1998. 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 3.
ECONOMIC REVIEW
The U.S. economy continued to be fundamentally strong and grew at a solid pace
over the past six months. Total growth, as measured by the Gross Domestic
Product (GDP), was 3.7% for the fourth quarter of 1997, following the third
quarter's 3.1% pace. The GDP for all of 1997 was 3.8%, the strongest growth
recorded since 1988. As it has all year, the labor market remained tight and
fueled economic growth. The unemployment rate dropped to a 24 year low of 4.6%
in February and hovered near 20-year lows throughout most of the period. The
economy continued to generate new jobs at an accelerated pace. For 1997, the
U.S. economy created 3.2 million new jobs with over one million jobs added in
the fourth quarter alone.
Inflation remained remarkably absent for this late in an expansion as a strong
dollar, lower import prices and greater efficiency in production neutralized a
tight labor market. The Commerce Department reported that through February, the
producer price index (PPI) was down 1.7% from year earlier levels while the
consumer
1
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
price index (CPI) posted a modest 1.4% gain for the same time period. Falling
oil and energy prices contributed to the tame price index results. Although
inflation for the period has been well behaved, the strong economy and record
employment levels have prompted fears of inflationary pressures.
Overseas, developments in Southeast Asia roiled the world's financial markets.
Economic problems, which began in Thailand, quickly spread to Malaysia,
Indonesia, the Philippines and South Korea. Fast growth, fueled by strong
capital inflows, and overvalued currencies, combined to produce large external
trade deficits, property and stock market bubbles, and overextended banking
systems. Immediate policy responses in the affected countries were often
inadequate and/or poorly articulated resulting in additional volatility which
spread to other markets in the region and created a ripple effect felt in the
emerging countries, the U.S. and Europe. While the U.S. economy remains strong
bolstered by domestic demand, the Federal Reserve Board has left interest rates
unchanged until the economic effects from the turmoil in Asia become clearer.
INVESTMENT OUTLOOK
Our outlook for the U.S. remains optimistic. We expect domestic growth to slow
from its 1997 pace to a more sustainable 2.5% rate in 1998. While the domestic
economy remains strong in the first quarter, we expect the economic impact from
Asia will further temper U.S. growth during the second half of this year as
exports to that region slow. Meanwhile, the recent decline in interest rates
should moderate the anticipated slowing and provide stimulus to the economy to
ensure continued growth. The Federal Reserve is unlikely to raise interest
rates in the short term in light of the likelihood of slowing growth and the
desire to keep global liquidity at high levels.
We believe that the developing markets should continue to provide substantial
investment opportunities. However, country selection is critical in identifying
investment opportunities and superior performance.
In Russia, we remain positive on the market and the underlying economic
fundamentals as reforms continue. However, the latest cabinet shake-up by
President Boris Yelstin has caused political uncertainty and the issue of
succession has re-ignited.
In Brazil, preliminary data suggests a 1% contraction in 1997 fourth quarter
GDP figures, slowing 1997 growth to 3%. However, the Brazilian government is
credited with strong policy responses, including the defense of their currency
from devaluation and the passage of an emergency fiscal reform package.
Venezuela, affected most recently by the dramatic drop in oil prices, remains
sound on a macro-economic level. The Venezuelan economy, however, continues to
be plagued by persistent high inflation, which is not expected to dissipate
this year.
In Mexico and Argentina, economic growth remains robust. Both countries will
have to monitor their trade deficits carefully as export growth slows and
import growth remains rapid. It is expected that economic growth in these
countries will slow in response to economic policy action to curtail a rapidly
rising trade deficit.
Expectations are for a negative 2.0% growth in 1998 for Korea, following a
positive 5.5% growth in 1997. Korea has been credited for the early recognition
of its fiscal problems, whereas other Asian nations have responded more slowly.
Korea met the International Monetary Fund's (IMF) requirements by implementing
strong measures to address its fiscal woes. As a result, Korea is on an
improving trend with the expectation of a credit rating upgrade to investment
grade status perhaps in 1998 and the possibility of modest growth by mid-1999.
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
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, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 5.90% 1.42%
Since Inception* 14.01% 12.79%
SEC Yield** 8.13%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 5.21% 2.73%
Since Inception* 13.12% 13.12%
SEC Yield** 7.77%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 5.24% 4.41%
Since Inception* 13.15% 13.15%
SEC Yield** 7.78%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(DECEMBER 31, 1997)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year 4.38% 5.73% 7.47%
3 Year 22.20% 22.75% 23.06%
Since Inception* 12.59% 12.98% 13.01%
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. SEC average annual total returns for the period
shown reflect reinvestment of all distributions and deduction of the maximum
4.25% front-end sales charges and applicable contingent deferred sales charges.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 2/25/94 for all Classes.
** Yields are for the 30 days ended February 28, 1998.
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
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1998 (UNAUDITED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-75.9%
OTHER SOVEREIGN DEBT OBLIGATIONS-61.2%
ARGENTINA-12.2%
Government of Argentina
9.75%, 9/19/27 $20,250 $ 20,189,250
Republic of Argentina
11.375%, 1/30/17 5,000 5,697,500
------------
25,886,750
BRAZIL-11.0%
Republic of Brazil
10.125%, 5/15/27 24,134 23,476,348
MEXICO-10.4%
United Mexican States
11.50%, 5/15/26 18,000 22,104,000
PHILIPPINES-3.0%
Bangko Sentral Pilipinas
8.60%, 6/15/27 7,000 6,300,000
RUSSIA- 14.0%
Russian IAN FRN
6.719%, 12/15/15 5,350 3,694,844
Russian Principal Loans FRN
6.71875%, 12/15/20 44,000 26,228,400
------------
29,923,244
TURKEY-3.2%
Republic of Turkey
9.875%, 2/23/05(a) 7,000 6,921,250
VENEZUELA -7.4 %
Government of Venezuela
9.25%, 9/15/27 17,500 15,715,000
Total Other Sovereign Debt Obligations
(cost $132,761,960) 130,326,592
NON-COLLATERALIZED BRADY BONDS-10.6%
BULGARIA-4.0%
Republic of Bulgaria IAB FRN
6.563%, 7/28/11 11,000 8,425,313
PANAMA-2.2%
Republic of Panama PDI FRN
6.563%, 7/17/16 5,728 4,732,830
PERU-4.4%
Republic of Peru FLIRB
3.25%, 3/07/17(a)(b) 9,250 5,619,375
Republic of Peru PDI
4.00%, 3/07/17(a)(b) 5,450 3,665,125
------------
9,284,500
Total Non-Collateralized Brady Bonds
(cost $20,989,342) 22,442,643
LOAN PARTICIPATION-4.1%
MOROCCO-4.1%
Kingdom of Morocco
Loan Participation FRN Series A
6.656%, 1/01/09
(cost $8,581,388) 10,000 8,787,500
Total Sovereign Debt Obligations
(cost $162,332,690) 161,556,735
CORPORATE DEBT OBLIGATIONS-9.3%
Consorcio Ecuatoriano Telecom
14.00%, 5/01/02(a) 5,000 5,169,150
Grupo Mexicano de Desarollo, SA
8.25%, 2/17/01(c) 7,900 2,370,000
4
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
Korea Electric Power Corp
7.75%, 4/01/13 $5,000 $ 4,235,300
Multicanal, SA
10.50%, 2/01/07 4,000 4,229,840
OPP Petroquimica, SA
11.50%, 2/23/04(a) 4,000 3,880,000
Total Corporate Debt Obligations
(cost $23,935,626) 19,884,290
U.S. GOVERNMENT OBLIGATION-2.9%
U.S. Treasury Bond,
6.125%, 11/15/27
(cost $6,218,438) 6,000 6,170,628
TIME DEPOSIT-7.6%
Bank of New York
5.125%, 3/02/98
(cost $16,165,000) 16,165 16,165,000
TOTAL INVESTMENTS-95.7%
(cost $208,651,754) 203,776,653
Other assets less liabilities-4.3% 9,146,417
NET ASSETS-100% $ 212,923,070
(a) 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, 1998,
these securities amounted to $25,254,900 or 11.9% of net assets.
(b) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at February 28, 1998.
(c) Non-income producing security.
Glossary of Terms:
FLIRB - Front Loaded Interest Reduction Bond.
FRN - Floating Rate Note.
IAB - Interest Arrears Bond.
IAN - Interest Arrears Note.
PDI - Past Due Interest.
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (UNAUDITED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ASSETS
Investment in securities, at value (cost $208,651,754) $ 203,776,653
Cash 703
Receivable for investment securities sold 18,366,774
Interest receivable 4,775,414
Receivable for capital stock sold 4,243,039
Deferred organization expenses 33,606
Total assets 231,196,189
LIABILITIES
Payable for investment securities purchased 16,223,020
Dividends payable 1,275,035
Payable for capital stock redeemed 386,718
Distribution fee payable 132,497
Advisory fee payable 118,735
Accrued expenses 137,114
Total liabilities 18,273,119
NET ASSETS $ 212,923,070
COMPOSITION OF NET ASSETS
Capital stock, at par $ 24,650
Additional paid-in capital 221,109,360
Distributions in excess of net investment income (1,888,614)
Accumulated net realized loss on investment transactions (1,447,225)
Net unrealized depreciation of investments (4,875,101)
$ 212,923,070
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($49,673,222/
5,753,229 shares of capital stock issued and outstanding) $8.63
Sales charge--4.25% of public offering price .38
Maximum offering price $9.01
CLASS B SHARES
Net asset value and offering price per share ($120,084,500/
13,899,709 shares of capital stock issued and outstanding) $8.64
CLASS C SHARES
Net asset value and offering price per share ($43,165,348/
4,996,756 shares of capital stock issued and outstanding) $8.64
See notes to financial statements.
6
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 8,089,229
EXPENSES
Advisory fee $ 619,350
Distribution fee - Class A 59,322
Distribution fee - Class B 475,487
Distribution fee - Class C 152,575
Transfer agency 115,633
Administrative 68,724
Audit and legal 55,020
Custodian 46,884
Registration 22,844
Printing 20,292
Amortization of organization expenses 18,932
Directors' fees 13,147
Miscellaneous 4,384
Total expenses 1,672,594
Net investment income 6,416,635
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 2,395,931
Net change in unrealized appreciation
of investments (8,508,124)
Net loss on investment transactions (6,112,193)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 304,442
See notes to financial statements.
7
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
FEB. 28, 1998 AUG. 31,
(UNAUDITED) 1997
------------- -------------
INCREASE (DECREASE)IN NET ASSETS FROM OPERATIONS
Net investment income $ 6,416,635 $ 10,841,923
Net realized gain on investment transactions
and options written 2,395,931 25,072,434
Net change in unrealized appreciation
of investments (8,508,124) (2,022,190)
Net increase in net assets from operations 304,442 33,892,167
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,015,213) (2,634,591)
Class B (4,436,847) (7,289,193)
Class C (1,446,159) (1,690,490)
Net realized gain on investments
Class A (5,264,678) (2,507,271)
Class B (12,603,684) (8,869,881)
Class C (4,524,423) (1,923,846)
CAPITAL STOCK TRANSACTIONS
Net increase 86,986,696 24,886,994
Total increase 57,000,134 33,863,889
NET ASSETS
Beginning of year 155,922,936 122,059,047
End of period $ 212,923,070 $ 155,922,936
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (UNAUDITED) 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. The financial
statements have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sale price or, if there was no sale on
such day, the last bid price quoted on such day. If no bid prices are quoted,
then the security is valued at the mean of the bid and asked prices as obtained
on that day from one or more dealers regularly making a market in that
security. Securities traded on the over-the-counter market, securities listed
on a foreign securities market whose operations are similar to the United
States over-the-counter market and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter are valued at
the mean of the closing bid and asked prices provided by two or more dealers
regularly making a market in such securities. U.S. government securities and
other debt securities which mature in 60 days or less are valued at amortized
cost unless this method does not represent fair value. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by, or in accordance with procedures approved by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities.
2. 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 any, 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
9
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
accordance with generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences, do
not require such reclassification.
NOTE B: ADVISORY 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 $63,644 for the six months ended February 28, 1998.
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 $20,653 from the sale of Class A shares and $15,734,
$62,155 and $8,756 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the six months ended February 28, 1998.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays 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 $3,401,764, and $734,225 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 $254,483,884 and $193,811,910,
respectively, for the six months ended February 28, 1998. There were purchases
of $16,284,063 and sales of $10,103,125 of U.S. government and government
agency obligations for the six months ended February 28, 1998.
At February 28, 1998, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $4,835,147 and gross unrealized
depreciation was $9,710,248 resulting in net unrealized depreciation of
$4,875,101.
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 the premium and a 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
10
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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 received and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a call
option is exercised, the premium received is added to the proceeds from the
sale of the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium received
reduces the cost basis of the security or currency purchased by the Fund. The
risk involved in writing an option is that, if the option were exercised, the
underlying security would then be purchased or sold by the Fund at a
disadvantageous price.
There were no transactions in options written for the six months ended February
28, 1998.
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, 1998 AUG. 31, FEB. 28, 1998 AUG. 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 2,873,991 2,355,226 $ 25,375,004 $ 32,050,908
Shares issued in
reinvestment of
dividends and
distributions 548,848 280,933 4,761,768 2,821,501
Shares converted
from Class B 140,366 915,289 1,315,882 1,852,148
Shares redeemed (1,327,447) (2,356,535) (11,954,895) (24,578,204)
Net increase 2,235,758 1,194,913 $ 19,497,759 $ 12,146,353
CLASS B
Shares sold 6,481,623 3,870,353 $ 56,139,116 $ 40,316,286
Shares issued in
reinvestment of
dividends and
distributions 805,348 558,197 6,983,794 5,572,998
Shares converted
to Class A (140,366) (915,289) (1,315,882) (1,852,148)
Shares redeemed (2,023,405) (3,156,236) (18,127,060) (40,778,794)
Net increase 5,123,200 357,025 $ 43,679,968 $ 3,258,342
CLASS C
Shares sold 2,967,434 1,335,877 $ 26,902,808 $ 13,969,049
Shares issued in
reinvestment of
dividends and
distributions 434,941 157,884 3,754,781 1,583,319
Shares redeemed (767,901) (580,894) (6,848,620) (6,070,069)
Net increase 2,634,474 912,867 $ 23,808,969 $ 9,482,299
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 EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
SIX MONTHS FEBRUARY 25,
ENDED 1994(A)
FEBRUARY 28, YEAR ENDED AUGUST 31, TO
1998 ------------------------------------- AUGUST 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.64 $10.01 $ 8.02 $ 9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .38(b) .88(b) .84 .86 .45
Net realized and unrealized gain (loss)
on investment transactions (.54) 1.85 2.10 (1.10) (.86)
Net increase (decrease) in net
asset value from operations (.16) 2.73 2.94 (.24) (.41)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.47) (.95) (.95) (.88) (.45)
Distributions from net realized
gain on investments (1.38) (1.15) -0- -0- -0-
Total dividends and distributions (1.85) (2.10) (.95) (.88) (.45)
Net asset value, end of period $ 8.63 $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on
net asset value (c) (.86)% 30.04% 38.47% (1.48)% (3.77)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $49,673 $37,416 $23,253 $12,020 $10,995
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 1.49%(d) 1.55% 1.65% 1.93% .75%(d)
Expenses, before waivers
and reimbursements 1.49%(d) 1.55% 1.65% 1.93% 1.91%(d)
Net investment income 8.30%(d) 8.49% 9.23% 11.25% 9.82%(d)
Portfolio turnover rate 124% 314% 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 EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
SIX MONTHS FEBRUARY 25,
ENDED 1994(A)
FEBRUARY 28, YEAR ENDED AUGUST 31, TO
1998 ------------------------------------- AUGUST 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.64 $10.01 $ 8.02 $ 9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .35(b) .81(b) .78 .80 .42
Net realized and unrealized gain (loss)
on investment transactions (.53) 1.84 2.08 (1.11) (.86)
Net increase (decrease) in net
asset value from operations (.18) 2.65 2.86 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.87) (.87) (.81) (.42)
Distributions from net realized
gain on investments (1.38) (1.15) -0- -0- -0-
Total dividends and distributions (1.82) (2.02) (.87) (.81) (.42)
Net asset value, end of period $ 8.64 $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on
net asset value (c) (1.15)% 29.14% 37.36% (2.40)% (4.17)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $120,085 $93,377 $84,295 $62,406 $47,030
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 2.20%(d) 2.26% 2.37% 2.64% 1.45%(d)
Expenses, before waivers
and reimbursements 2.20%(d) 2.26% 2.37% 2.64% 2.63%(d)
Net investment income 7.61%(d) 7.81% 8.57% 10.52% 9.11%(d)
Portfolio turnover rate 124% 314% 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 EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS FEBRUARY 25,
ENDED 1994(A)
FEBRUARY 28, YEAR ENDED AUGUST 31, TO
1998 ------------------------------------- AUGUST 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.64 $10.01 $ 8.02 $ 9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .35(b) .82(b) .77 .79 .42
Net realized and unrealized gain (loss)
on investment transactions (.53) 1.84 2.10 (1.10) (.86)
Net increase (decrease) in net
asset value from operations (.18) 2.66 2.87 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.44) (.88) (.88) (.81) (.42)
Distributions from net realized
gain on investments (1.38) (1.15) -0- -0- -0-
Total dividends and distributions (1.82) (2.03) (.88) (.81) (.42)
Net asset value, end of period $ 8.64 $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on
net asset value (c) (1.13)% 29.17% 37.40% (2.36)% (4.16)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $43,165 $25,130 $14,511 $9,330 $10,404
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements 2.18%(d) 2.25% 2.35% 2.63% 1.45%(d)
Expenses, before waivers
and reimbursements 2.18%(d) 2.25% 2.35% 2.63% 2.59%(d)
Net investment income 7.59%(d) 7.82% 8.52% 10.46% 9.05%(d)
Portfolio turnover rate 124% 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.
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)
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 High Yield Fund
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 Environment 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 Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage 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
Massachusetts 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
