ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
ANNUAL REPORT
AUGUST 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
October 26, 1998
Dear Shareholder:
We are pleased to report to you on our investment strategy, performance and
outlook for the Alliance Global Dollar Government Fund. The Fund's objective is
to provide investors with a high level of total return by seeking both high
current income and capital appreciation. To achieve its objective, the Fund
invests primarily in a non-diversified portfolio of sovereign debt obligations
and in U.S. and non-U.S. corporate fixed-income securities. The majority of the
Fund's assets are invested in securities with low credit ratings.
INVESTMENT PERFORMANCE
The following table shows how your Fund performed over the past six- and
12-month periods ended August 31, 1998. For comparison, we have included the
returns for the Fund's benchmark, the unmanaged J.P. Morgan Emerging Markets
Bond Index, which provides a broad measure of the performance of a basket of
emerging market debt securities.
Over the past six- and 12-month periods, your Fund underperformed the benchmark
as a result of our overweight positions in Russia and Venezuela.
INVESTMENT RESULTS*
Periods Ended August 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
--------- ----------
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
Class A -38.02% -38.56%
Class B -38.40% -39.11%
Class C -38.39% -39.09%
J.P. MORGAN EMERGING MARKETS BOND INDEX -26.81% -24.59%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF AUGUST 31, 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 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 A TOTAL RETURN INDEX THAT
TRACKS THE TRADED MARKET FOR U.S. DOLLAR-DENOMINATED BRADY AND OTHER SIMILAR
SOVEREIGN RESTRUCTURED BONDS TRADED IN EMERGING MARKETS. THE INDEX IS UNMANAGED
AND REFLECTS NO FEES OR EXPENSES. AN INVESTOR CANNOT INVEST DIRECTLY IN AN
INDEX.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
MARKET OVERVIEW
In the emerging markets, debt prices fell over the six-month period ended
August 31, 1998. Strong gains made in the first quarter of 1998 were erased in
the second quarter when renewed volatility in Asia, weakness in the yen and
fiscal problems in Russia heightened investor concerns about all
higher-yielding asset classes. Investor confidence was briefly restored in
July, when the International Monetary Fund approved an emergency loan package
for the Russian government. However, the downward fall in emerging market debt
prices resumed and accelerated in August, when the Russian government devalued
the ruble and defaulted on its domestic debt. This surprise move by the Russian
government led to a general sell-off of emerging market assets, as investors
moved to lower their portfolios' risk exposure. Russia was the worst performing
market over the six-month period ended August 31, 1998.
Venezuela was the worst performing Latin American debt market. Venezuela's
dependency on oil exports has hurt its current account during this time period
when oil prices continued to fall. In addition, upcoming elections in Venezuela
have led to political uncertainty.
INVESTMENT STRATEGY
Over the six-month period ended August 31, 1998, we increased holdings in Latin
America, in particular Brazil, as part of our long-term strategy of investing
in the emerging markets with strong long-term fundamentals. We believe the
underlying fundamentals in Latin America do not justify the current valuations
and, therefore, we expect debt prices there to continue rising over the long
term. We decreased our holdings in Russia as the government's fiscal situation
deteriorated.
OUTLOOK
Investor focus has now turned to Brazil, where economic fundamentals are
stronger than in Russia. The one troubling
1
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
similarity is Brazil's large amount of short-term local currency government
debt which matures in the coming months and must be rolled over. Fortunately,
much of this debt is held by Brazilian investors, making the roll-over of this
debt more likely. In addition, Brazil has over US$60 billion in foreign
reserves, which will help the government maintain financial stability.
We believe the current pressure on emerging market economies has more to do
with global economic conditions, than with poor policy steps. We see the future
health of emerging markets as dependent on what the Group of Seven
Industrialized Nations* (G-7) does. First, Japan must take steps to stabilize
their economy and fix the financial mess that has frozen the efficient
functioning of local business. At the same time, the other G-7 countries must
lower interest rates and inject needed liquidity into the global financial
system. Until these things happen, we expect emerging market debt price
volatility to remain elevated.
Thank you for your continued interest and investment in the 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
* The Group of Seven Industrialized Nations includes Canada, France,
Germany, Italy, Japan, the United Kingdom, and the United States.
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
_______________________________________________________________________________
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -38.56% -41.16%
Since Inception* 1.05% 0.09%
SEC Yield** 14.34%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -39.11% -40.53%
Since Inception* 0.22% 0.22%
SEC Yield** 13.60%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -39.09% -39.56%
Since Inception* 0.25% 0.25%
SEC Yield** 13.62%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT
QUARTER-END (JUNE 30, 1998)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year -10.32% -9.27% -7.79%
3 Years 17.53% 18.06% 18.33%
Since Inception* 9.75% 9.94% 9.97%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) 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, 1998.
3
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
GROWTH OF A $10,000 INVESTMENT
2/28/94* TO 8/31/98
$19,000
$17,000
$15,000
$13,000
$11,000
$10,000
$9,000
J.P. MORGAN EMERGING MARKETS BOND INDEX: $13,217
GLOBAL DOLLAR GOVERNMENT FUND CLASS A: $10,042
2/28/94 8/31/94 8/31/95 8/31/96 8/31/97 8/31/98
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 8/31/98)
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.
4
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1998 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-76.0%
OTHER SOVEREIGN DEBT OBLIGATIONS-48.5%
ARGENTINA-15.2%
Government of Argentina
9.75%, 9/19/27 $20,500 $ 13,530,000
Republic of Argentina
11.375%, 1/30/17 10,000 7,100,000
------------
20,630,000
BRAZIL-10.0%
Republic of Brazil
10.125%, 5/15/27 24,134 13,575,375
COLOMBIA-3.1%
Republic of Colombia
8.625%, 4/01/08 5,500 4,248,750
MEXICO-11.1%
United Mexican States
11.50%, 5/15/26 18,000 15,120,000
PHILIPPINES-3.2%
Bangko Sentral Pilipinas
8.60%, 6/15/27 7,000 4,357,500
RUSSIA-5.9%
Russian IAN FRN
6.625%, 12/15/15 54,939 7,966,140
Total Other Sovereign Debt Obligations
(cost $117,972,606) 65,897,765
NON-COLLATERALIZED BRADY BONDS-23.0%
BRAZIL-7.7%
Republic of Brazil C - Bonds
8.00%, 4/15/14 (a) 19,724 10,404,183
BULGARIA-3.6%
Republic of Bulgaria IAB FRN
6.688%, 7/28/11 11,000 4,840,000
ECUADOR-3.7%
Republic of Ecuador PDI
6.625%, 2/27/15 (b) 16,183 5,057,106
PANAMA-2.6%
Republic of Panama PDI FRN
6.688%, 7/17/16 (c) 5,801 3,574,928
PERU-2.8%
Republic of Peru FLIRB
3.25%, 3/07/17(d)(e) 2,750 1,113,750
Republic of Peru PDI
4.00%, 3/07/17(d) 5,450 2,629,625
------------
3,743,375
POLAND-2.6%
Republic of Poland PDI
4.00%, 10/27/14 (d) 4,500 3,526,875
Total Non-Collateralized Brady Bonds
(cost $47,531,248) 31,146,467
LOAN PARTICIPATION-4.5%
MOROCCO-4.5%
Kingdom of Morocco
Loan Participation FRN
Series A
6.563%, 1/01/09
(cost $8,622,267) 10,000 6,125,000
Total Sovereign Debt Obligations
(cost $174,126,121) 103,169,232
CORPORATE DEBT OBLIGATIONS-19.8%
Autopistas del Sol, SA
Series B
10.25%, 8/01/09 (e) 2,500 1,843,750
Banco Nacional De Desenvolvimiento
Economico
10.80%, 6/16/08 (e) 5,000 3,962,500
Cellco Finance
15.00%, 8/01/05 (e) 3,000 2,250,000
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
Consorcio Ecuatoriano Telecom
14.00%, 5/01/02 $ 5,000 $ 4,500,000
Fuji LLC
Series A
9.87%, 12/31/49 (d)(e) 4,800 3,221,098
Grupo Mexicano de Desarrollo, SA
8.25%, 2/17/01(f) 7,900 1,580,000
Korea Electric Power Corp
7.75%, 4/01/13 10,000 6,422,950
OPP Petroquimica, SA
11.50%, 2/23/04 (e) 4,000 3,050,000
Total Corporate Debt Obligations
(cost $39,037,257) 26,830,298
TOTAL INVESTMENTS-95.8%
(cost $213,163,378) 129,999,530
Other assets less liabilities-4.2% 5,736,206
NET ASSETS-100% $ 135,735,736
(a) Coupon consists of 5.00% cash payment and 3.00% paid-in-kind.
(b) Coupon consists of 3.25% cash payment and 3.375% paid-in-kind.
(c) Coupon consists of 4.00% cash payment and 2.6875% paid-in-kind.
(d) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at August 31, 1998.
(e) 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, 1998,
these securities amounted to $15,441,098 representing 11.4% of net assets.
(f) Security is in default and is non-income producing.
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.
6
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $213,163,378) $129,999,530
Cash 4,248,014
Interest receivable 5,759,727
Receivable for investment securities sold 4,887,301
Receivable for capital stock sold 1,974,406
Deferred organization expenses 14,571
Total assets 146,883,549
LIABILITIES
Payable for investment securities purchased 8,675,750
Payable for capital stock redeemed 1,423,626
Dividends payable 631,325
Distribution fee payable 127,085
Advisory fee payable 114,041
Accrued expenses 175,986
Total liabilities 11,147,813
NET ASSETS $135,735,736
COMPOSITION OF NET ASSETS
Capital stock, at par $ 26,881
Additional paid-in capital 237,854,757
Distributions in excess of net investment income (1,308,519)
Accumulated net realized loss on investment transactions (17,673,535)
Net unrealized depreciation on investments (83,163,848)
$135,735,736
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($32,365,054/6,415,267 shares of capital stock
issued and outstanding) $5.05
Sales charge--4.25% of public offering price .22
Maximum offering price $5.27
CLASS B SHARES
Net asset value and offering price per share
($79,659,873/15,771,930 shares of capital stock
issued and outstanding) $5.05
CLASS C SHARES
Net asset value and offering price per share
($23,710,809/4,694,270 shares of capital stock
issued and outstanding) $5.05
See notes to financial statements.
7
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 18,859,179
EXPENSES
Advisory fee $ 1,416,679
Distribution fee - Class A 133,931
Distribution fee - Class B 1,095,512
Distribution fee - Class C 346,957
Transfer agency 305,774
Custodian 150,190
Administrative 129,156
Audit and legal 111,460
Printing 48,839
Registration 43,437
Amortization of organization expenses 37,967
Directors' fees 28,000
Miscellaneous 4,557
Total expenses 3,852,459
Net investment income 15,006,720
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (14,298,058)
Net change in unrealized appreciation
of investments (86,796,871)
Net loss on investment transactions (101,094,929)
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (86,088,209)
See notes to financial statements.
8
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1998 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 15,006,720 $ 10,841,923
Net realized gain (loss) on investment
transactions (14,298,058) 25,072,434
Net change in unrealized appreciation
of investments (86,796,871) (2,022,190)
Net increase (decrease) in net assets
from operations (86,088,209) 33,892,167
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (3,780,424) (2,634,591)
Class B (8,514,602) (7,289,193)
Class C (2,711,694) (1,690,490)
Distributions in excess of net
investment income
Class A (227,100) -0-
Class B (511,493) -0-
Class C (162,898) -0-
Tax return of capital
Class A (795,457) -0-
Class B (1,807,258) -0-
Class C (585,977) -0-
Net realized gains on investments
Class A (5,147,027) (2,507,271)
Class B (12,345,658) (8,869,881)
Class C (4,432,421) (1,923,846)
COMMON STOCK TRANSACTIONS
Net increase 106,923,018 24,886,994
Total increase (decrease) (20,187,200) 33,863,889
NET ASSETS
Beginning of year 155,922,936 122,059,047
End of year $ 135,735,736 $ 155,922,936
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998 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 exchange 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 accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such
10
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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 a tax
return of capital, resulted in a net decrease in distributions in excess of net
investment income, a decrease in net realized gain on investments and a
corresponding decrease in additional paid-in capital. This reclassification had
no effect on net assets.
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 $199,082 for the year ended August 31, 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 $54,043 from the sale of Class A shares and $15,790, $162,429 and
$28,333 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class A, Class B and Class C shares, respectively, for the year
ended August 31, 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 $4,281,388, and $860,038 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 $423,016,546 and $319,572,599,
respectively, for the year ended August 31, 1998. There were purchases of
$16,284,063 and sales of $16,290,625 of U.S. government and government agency
obligations for the year ended August 31, 1998.
At August 31, 1998, the cost of investments for federal income tax purposes was
$215,050,292. Accordingly, gross unrealized appreciation of investments was $0
and gross unrealized depreciation was $85,050,762 resulting in net unrealized
depreciation of $85,050,762.
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
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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 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. 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.
There were no transactions in options written for the year ended August 31,
1998.
NOTE E: CAPITAL STOCK
There are 9,000,000,000 shares of $.001 par value capital stock authorized,
dividend 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,
1998 1997 1998 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 4,813,019 2,355,226 $ 40,513,709 $ 32,050,908
Shares issued in
reinvestment of
dividends and
distributions 728,102 280,933 6,175,196 2,821,501
Shares converted
from Class B 259,021 915,289 2,196,430 1,852,148
Shares redeemed (2,902,346) (2,356,535) (23,845,164) (24,578,204)
Net increase 2,897,796 1,194,913 $ 25,040,171 $ 12,146,353
CLASS B
Shares sold 11,711,770 3,870,353 $ 98,025,012 $ 40,316,286
Shares issued in
reinvestment of
dividends and
distributions 1,070,901 558,197 9,074,872 5,572,998
Shares converted
to Class A (259,021) (915,289) (2,196,430) (1,852,148)
Shares redeemed (5,528,229) (3,156,236) (44,595,809) (40,778,794)
Net increase 6,995,421 357,025 $ 60,307,645 $ 3,258,342
CLASS C
Shares sold 4,751,772 1,335,877 $ 41,402,517 $ 13,969,049
Shares issued in
reinvestment of
dividends and
distributions 559,509 157,884 4,741,446 1,583,319
Shares redeemed (2,979,293) (580,894) (24,568,761) (6,070,069)
Net increase 2,331,988 912,867 $ 21,575,202 $ 9,482,299
12
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.
NOTE G: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility") to
provide short-term financing if necessary, subject to certain restrictions in
connection with abnormal redemption activity. Commitment fees related to the
Facility are paid by the participating funds and are included in the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended August 31, 1998.
13
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
FEBRUARY 25,
1994(A)
YEAR ENDED AUGUST 31, TO
-------------------------------------------------- AUGUST 31,
1998 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 .73(b) .88(b) .84 .86 .45
Net realized and unrealized gain (loss)
on investment transactions (4.03) 1.85 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations (3.30) 2.73 2.94 (.24) (.41)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.73) (.95) (.95) (.88) (.45)
Tax return of capital (.15) -0- -0- -0- -0-
Distributions in excess of net
investment income (.04) -0- -0- -0- -0-
Distributions from net realized gain
on investments (1.37) (1.15) -0- -0- -0-
Total dividends and distributions (2.29) (2.10) (.95) (.88) (.45)
Net asset value, end of period $ 5.05 $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (c) (38.56)% 30.04% 38.47% (1.48)% (3.77)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $32,365 $37,416 $23,253 $12,020 $10,995
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 1.48% 1.55% 1.65% 1.93% .75%(d)
Expenses, before waivers and
reimbursements 1.48% 1.55% 1.65% 1.93% 1.91%(d)
Net investment income 8.51% 8.49% 9.23% 11.25% 9.82%(d)
Portfolio turnover rate 188% 314% 315% 301% 100%
</TABLE>
See footnote summary on page 16.
14
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
FEBRUARY 25,
1994(A)
YEAR ENDED AUGUST 31, TO
-------------------------------------------------- AUGUST 31,
1998 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 .67(b) .81(b) .78 .80 .42
Net realized and unrealized gain (loss)
on investment transactions (4.05) 1.84 2.08 (1.11) (.86)
Net increase (decrease) in net asset
value from operations (3.38) 2.65 2.86 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.67) (.87) (.87) (.81) (.42)
Tax return of capital (.14) -0- -0- -0- -0-
Distributions in excess of net
investment income (.04) -0- -0- -0- -0-
Distributions from net realized gain
on investments (1.36) (1.15) -0- -0- -0-
Total dividends and distributions (2.21) (2.02) (.87) (.81) (.42)
Net asset value, end of period $ 5.05 $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (c) (39.11)% 29.14% 37.36% (2.40)% (4.17)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $79,660 $93,377 $84,295 $62,406 $47,030
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 2.22% 2.26% 2.37% 2.64% 1.45%(d)
Expenses, before waivers and
reimbursements 2.22% 2.26% 2.37% 2.64% 2.63%(d)
Net investment income 7.78% 7.81% 8.57% 10.52% 9.11%(d)
Portfolio turnover rate 188% 314% 315% 301% 100%
</TABLE>
See footnote summary on page 16.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
FEBRUARY 25,
1994(A)
YEAR ENDED AUGUST 31, TO
-------------------------------------------------- AUGUST 31,
1998 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 .67(b) .82(b) .77 .79 .42
Net realized and unrealized gain (loss)
on investment transactions (4.05) 1.84 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations (3.38) 2.66 2.87 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.67) (.88) (.88) (.81) (.42)
Tax return of capital (.14) -0- -0- -0- -0-
Distributions in excess of net
investment income (.04) -0- -0- -0- -0-
Distributions from net realized gain
on investments (1.36) (1.15) -0- -0- -0-
Total dividends and distributions (2.21) (2.03) (.88) (.81) (.42)
Net asset value, end of period $ 5.05 $10.64 $10.01 $ 8.02 $ 9.14
TOTAL RETURN
Total investment return based on net
asset value (c) (39.09)% 29.17% 37.40% (2.36)% (4.16)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $23,711 $25,130 $14,511 $9,330 $10,404
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 2.19% 2.25% 2.35% 2.63% 1.45%(d)
Expenses, before waivers and
reimbursements 2.19% 2.25% 2.35% 2.63% 2.59%(d)
Net investment income 7.75% 7.82% 8.52% 10.46% 9.05%(d)
Portfolio turnover rate 188% 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.
16
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, 1998, 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, 1998, 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, 1998, 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 5, 1998
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $3,446,649 of the capital gain distributions paid by the Fund
during the fiscal year August 31, 1998 are subject to a maximum tax rate of 28%.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 1999.
17
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
One 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.
18
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 Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Strategic Balanced 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 International Premier Growth 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
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
