ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
SEMI-ANNUAL REPORT
FEBRUARY 28, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
April 29, 1999
Dear Shareholder:
This report provides an update of the strategy, performance and outlook of
Alliance Global Dollar Government Fund (the "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.
INVESTMENT PERFORMANCE
The following table shows how your Fund performed over the past six- and
12-month periods ended February 28, 1999. For comparison, we have included the
returns for the Fund's benchmark index, as represented by the unmanaged JP
Morgan Emerging Markets Bond Index (JPM EMBI), which provides a broad measure
of the performance of a basket of emerging market debt securities.
Over the six-month period ended February 28, 1999, your Fund's Class A shares
outperformed the JPM EMBI, primarily due to the Fund's relative underweighting
in Brazil, which benefited performance. During the 12-month period, your Fund
underperformed the benchmark primarily as a result of our overweight position
in Russia earlier in the Fund's fiscal year.
INVESTMENT RESULTS*
Periods Ended February 28, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE GLOBAL DOLLAR
GOVERNMENT FUND
Class A 18.68% -26.46%
Class B 18.55% -26.98%
Class C 18.78% -26.82%
JP MORGAN EMERGING MARKETS
BOND INDEX 14.54% -16.17%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF FEBRUARY 28, 1999. 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 JP 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
During the six-month period ended February 28, 1999, global markets stabilized
after the volatility arising from the crisis in Russia and general uncertainty
in global capital markets. Successive interest rate cuts by the Federal Reserve
and other central banks, as well as the continued strength of the U.S. economy,
improved the global economic climate. Although significant trouble spots
remained, fear of global recession early in the period was replaced with
cautious optimism.
After the initial impact on the global markets from Russia's devaluation and
default on its domestic debt subsided, attention refocused on Brazil's economic
troubles. Emerging market debt prices reached their lows in mid-September then
quickly rebounded. Individual emerging market debt prices decoupled from
Russia's fiscal problems and improved as the U.S. and other countries began
easing monetary policy. Investor sentiment improved as the interest rate easing
supplied confidence which spurred activity in global financial markets and
benefited asset prices. Individual country selection became important as
emerging market asset prices diverged and price movements became more dependent
upon individual country fundamentals than on indiscriminate perceptions of
uncertainty.
In January of 1999, emerging market debt prices fell once again as Brazil's
devaluation of its currency, the real, renewed investor concern. Asset prices
in Latin markets were negatively affected for the month, before rebounding in
February. Ecuador was also faced with internal problems as policy mistakes and
external factors contributed to its own fiscal crisis.
1
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
During the six-month period ended February 28, 1999, fixed income markets in
non-Latin countries outperformed those in Latin countries. Top performers among
the emerging market debt sectors included Bulgaria (+53.20%), South Korea
(+51.06%) and Venezuela (+48.41%). South Korea benefited from an upgrade in its
credit rating to investment grade. Venezuela was aided by waning fears of both
a debt moratorium and the devaluation of its currency, the bolivar.
Market-friendly statements made by the newly elected president regarding
Venezuela's economic policies also provided further confidence.
For the period under review, all emerging market debt sectors posted positive
returns with the exception of Russia (-14.84%) and Ecuador (-2.12%). Russia
continued to be plagued with investor concern over its ability to service its
external debt, and Ecuador continued to wrestle with concerns regarding the
progress of an International Monetary Fund package and the recent depreciation
of its currency. However, after suffering from the instability in late summer,
emerging debt markets, in aggregate, rebounded posting an advance of +14.54%
over the six-month period, as measured by the JPM EMBI.
INVESTMENT STRATEGY
Over the six-month period ended February 28, 1999, we further diversified the
Fund by adding new exposure to the Dominican Republic, Jamaica, China and
Malaysia. We increased the Fund's existing exposure to Argentina and Mexico as
prospects improved in those countries. We reduced the Fund's exposure to Brazil
due to its current economic crisis and financial condition. We generally
favored higher-yielding credit as most global markets stabilized further
throughout the period.
OUTLOOK
We believe the risk of global recession has diminished after the wave of
official interest rate cuts around the world. However, global growth should
continue to slow and inflation will remain subdued as the consequences of
excess productive capacity are felt. U.S. economic activity is expected to
moderate throughout the year, from the robust rate of the fourth quarter of
1998, with growth estimates centered around 3.6% for 1999. With healthy U.S.
economic growth and low U.S. inflation, we do not expect any near-term changes
in interest rates by the Federal Reserve.
In the emerging markets, increased uncertainty has been somewhat mitigated by
improving sentiment regarding Brazil, a rise in oil prices and the continued
strength of U.S. equity markets. A recent interest rate cut by Brazil's central
bank has recently bolstered investor confidence. However, we expect continued
sensitivity to emerging market risk. Country selection will be important as
divergence of performance, founded on individual country credit fundamentals,
replaces indiscriminate investments in and out of the emerging markets based on
broad investor perceptions. We continue to remain concerned about the effects
that slower global growth and low commodity prices will have on emerging
markets. In this environment, despite improvements over the past six months, we
expect emerging market debt prices to remain sensitive to both internal and
external events.
Thank you for your continued interest and investment in Alliance Global Dollar
Government Fund. We look forward to reporting its progress to you in the coming
months.
Sincerely,
John D. Carifa
Chairman
Wayne D. Lyski
President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
Alliance Global Dollar Government Fund seeks primarily a high level of current
income and, secondarily, capital appreciation. It invests primarily in a
non-diversified portfolio of sovereign debt obligations and in U.S. and
non-U.S. corporate fixed-income securities. Substantially all of the Fund's
assets are invested in lower-rated securities.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF FEBRUARY 28, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -26.46% -29.56%
Five Years 4.47% 3.57%
Since Inception* 4.46% 3.56%
SEC Yield** 13.24%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -26.98% -28.92%
Five Years 3.67% 3.67%
Since Inception* 3.66% 3.66%
SEC Yield** 13.01%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -26.82% -27.47%
Five Years 3.73% 3.73%
Since Inception* 3.72% 3.72%
SEC Yield** 12.99%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(DECEMBER 31, 1998)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year -25.37% -24.77% -23.37%
3 Years 4.28% 4.78% 5.01%
Since Inception* 4.37% 4.47% 4.50%
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.
** SEC yields are based on SEC guidelines and are calculated on 30 days ended
February 28, 1999.
3
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1999 (UNAUDITED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-81.3%
OTHER SOVEREIGN DEBT OBLIGATIONS-50.1%
ARGENTINA-21.2%
Province of Tucuman
9.45%, 8/01/04 (a) $ 3,929 $ 3,123,204
Republic of Argentina
12.125%, 2/25/19 22,880 22,536,800
Warrants, expiring 2/25/00 2,500 6,250
Republic of Argentina
11.375%, 1/30/17 14,000 12,670,000
Republic of Argentina Series XW
11.00%, 12/04/05 2,500 2,253,125
------------
40,589,379
BRAZIL-0.9%
Republic of Brazil
10.125%, 5/15/27 2,634 1,666,005
COLOMBIA-3.4%
Republic of Colombia
8.625%, 4/01/08 7,600 6,469,500
JAMAICA-2.5%
Government of Jamaica
9.625%, 7/02/02 (a) 2,000 1,820,000
10.875%, 6/10/05 (a) 3,395 2,987,600
------------
4,807,600
MEXICO-16.1%
United Mexican States
10.375%, 2/17/09 (b) 17,900 17,273,500
United Mexican States
11.50%, 5/15/26 13,000 13,617,500
------------
30,891,000
PHILIPPINES-3.0%
Bangko Sentral Pilipinas
8.60%, 6/15/27 7,000 5,845,000
RUSSIA-3.0%
Russian Federation
11.00%, 7/24/18 (a) 12,500 2,937,500
Russian IAN FRN
5.9688%, 12/15/15 25,023 2,564,867
Russia Principal Loan FRN
5.9688%, 12/15/20 (c) 5,000 337,500
------------
5,839,867
Total Other Sovereign Debt Obligations
(cost $112,757,186) 96,108,351
NON-COLLATERALIZED BRADY BONDS-16.3%
ARGENTINA-2.0%
Republic of Argentina PDI FRB
6.1875%, 3/31/05 4,700 3,863,400
BRAZIL-3.1%
Republic of Brazil C-Bonds
8.00%, 4/15/14 (d) 10,599 6,014,694
BULGARIA-4.8%
Republic of Bulgaria IAB FRN
6.688%, 7/28/11 13,500 9,180,000
PANAMA-3.3%
Republic of Panama PDI FRN
5.9375%, 7/17/16 (e)(f) 8,554 6,384,149
4
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
PERU-3.1%
Republic of Peru PDI
4.00%, 3/07/17 (a)(g) $ 5,450 $ 3,174,625
Republic of Peru FLIRB
3.25%, 3/07/17 (a)(g) 5,250 2,808,750
------------
5,983,375
Total Non-Collateralized Brady Bonds
(cost $33,503,750) 31,425,618
COLLATERALIZED BRADY BONDS-11.0%
BRAZIL-4.2%
Republic of Brazil Discount FRN
6.125%, 4/15/24 15,000 8,082,000
ECUADOR-4.2%
Republic of Ecuador PDI FRN
6.00%, 2/28/25 18,000 8,123,400
MEXICO-0.9%
United Mexican States
Discount Series D FRN
6.0975%, 12/31/19 2,000 1,615,000
VENEZUELA-1.7%
Republic of Venenzuela
Discount Series W-B FRN
5.875%, 3/31/20 5,000 3,212,500
Total Collateralized Brady Bonds
(cost $21,961,035) 21,032,900
LOAN PARTICIPATION-3.9%
MOROCCO-3.9%
Kingdom of Morocco Loan
Participation FRN Series A
6.563%, 1/01/09
(cost $8,252,816) 9,524 7,428,571
Total Sovereign Debt Obligations
(cost $176,474,787) 155,995,440
CORPORATE DEBT OBLIGATIONS-16.1%
Autopistas del Sol, SA Series B
10.25%, 8/01/09 (a) 2,500 1,881,250
Banco Nacional De Desenvolvimiento
Economico
15.224%, 6/16/08 (a) 8,300 5,934,500
Cellco Finance
15.00%, 8/01/05 (a) 2,000 1,895,000
Conecel Holdings Ltd. FRN
16.50%, 10/01/00 (a)(h) 1,000 275,000
Consorcio Ecuatoriano Telecom
14.00%, 5/01/02 6,000 2,370,000
Guangdong Enterprises
8.875%, 5/22/07 (a) 6,450 2,051,803
Grupo Mexicano de Desarrollo, SA
8.25%, 2/17/01 (i) 7,900 1,382,500
Korea Development Bank FRN
8.889%, 6/16/03 (a) 2,500 2,418,750
Netia Holdings B.V.
10.25%, 11/01/07 2,000 1,825,000
Netia Holdings B.V. Series B
11.25%, 11/01/07 (j) 5,500 3,533,750
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
Samsung Electronics Co.
7.45%, 10/01/02 (a) $ 3,500 $ 3,250,370
Tenaga Nasional Berhad
7.625%, 4/29/37 (a) 3,000 2,538,150
Tricom SA
11.375%, 9/01/04 1,750 1,537,812
Total Corporate Debt Obligations
(cost $41,213,434) 30,893,885
TOTAL INVESTMENTS-97.4%
(cost $217,688,221) 186,889,325
Other assets less liabilities-2.6% 4,933,124
NET ASSETS-100% $191,822,449
(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, 1999,
these securities amounted to $37,096,502 representing 19.3% of net assets.
(b) Security trades with warrants expiring February 17, 2009.
(c) Coupon consists of 5.9688% paid-in-kind.
(d) Coupon consists of 5.00% cash payment and 3.00% paid-in-kind.
(e) Coupon consists of 4% cash payment and 1.9375% paid-in-kind.
(f) Security trades with warrants expiring July 17, 2016.
(g) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at February 28, 1999.
(h) Security trades with warrants expiring October 1, 2000.
(i) Security is in default and is non-income producing.
(j) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective.
Glossary of Terms:
FLIRB - Front Loaded Interest Reduction Bond.
FRB - Floating Rate 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
FEBRUARY 28, 1999 (UNAUDITED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $217,688,221) $ 186,889,325
Cash 21,359,821
Income receivable 5,410,499
Receivable for investment securities sold 1,786,979
Receivable for capital stock sold 1,511,048
Total assets 216,957,672
LIABILITIES
Payable for investment securities purchased 22,985,810
Dividends payable 1,557,225
Payable for capital stock redeemed 364,973
Accrued expenses 227,215
Total liabilities 25,135,223
NET ASSETS $ 191,822,449
COMPOSITION OF NET ASSETS
Capital stock, at par $ 34,285
Additional paid-in capital 280,026,565
Distributions in excess of net investment income (2,759,866)
Accumulated net realized loss on investment transactions (54,679,639)
Net unrealized depreciation on investments (30,798,896)
$ 191,822,449
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($49,910,383 / 8,957,790 shares of
capital stock issued and outstanding) $5.57
Sales charge--4.25% of public offering price .25
Maximum offering price $5.82
CLASS B SHARES
Net asset value and offering price per share
($106,740,635 / 19,057,224 shares of
capital stock issued and outstanding) $5.60
CLASS C SHARES
Net asset value and offering price per share
($35,171,431 / 6,270,005 shares of
capital stock issued and outstanding) $5.61
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1999 (UNAUDITED)
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 13,179,207
EXPENSES
Advisory fee $ 679,339
Distribution fee - Class A 68,865
Distribution fee - Class B 511,587
Distribution fee - Class C 164,645
Transfer agency 172,702
Audit and legal 92,224
Custodian 73,940
Administrative 63,187
Registration 33,501
Printing 15,196
Amortization of organization expenses 14,571
Directors' fees 11,766
Miscellaneous 3,529
Total expenses 1,905,052
Net investment income 11,274,155
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions (37,006,104)
Net change in unrealized depreciation of investments 52,364,952
Net gain on investment transactions 15,358,848
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 26,633,003
See notes to financial statements.
8
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
FEB. 28, 1999 AUGUST 31,
(UNAUDITED) 1998
---------------- ----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 11,274,155 $ 15,006,720
Net realized loss on investment
transactions (37,006,104) (14,298,058)
Net change in unrealized appreciation
(depreciation)of investments 52,364,952 (86,796,871)
Net increase (decrease) in net assets
from operations 26,633,003 (86,088,209)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (3,461,546) (3,780,424)
Class B (7,003,574) (8,514,602)
Class C (2,260,382) (2,711,694)
Distributions in excess of net
investment income
Class A -0- (227,100)
Class B -0- (511,493)
Class C -0- (162,898)
Tax return of capital
Class A -0- (795,457)
Class B -0- (1,807,258)
Class C -0- (585,977)
Net realized gains on investments
Class A -0- (5,147,027)
Class B -0- (12,345,658)
Class C -0- (4,432,421)
COMMON STOCK TRANSACTIONS
Net increase 42,179,212 106,923,018
Total increase (decrease) 56,086,713 (20,187,200)
NET ASSETS
Beginning of year 135,735,736 155,922,936
End of period $ 191,822,449 $ 135,735,736
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (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 may 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. Based on the operations of the Fund
as of the semi-
10
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
annual date and its distribution policy, the Fund may have a tax return of
capital at year end. At this time, the amount of this tax return of capital is
not estimable.
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 $134,484 for the six months ended February 28, 1999.
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 $28,430 from the sale of Class A shares and $94,847
and $32,901 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the six months
ended February 28, 1999.
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 $5,007,951, and $1,008,728 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 $550,960,303 and $0, respectively,
for the six months ended February 28, 1999. There were purchases of
$177,154,455 and sales of $137,204,177 of U.S. government and government agency
obligations for the six months ended February 28, 1999.
At February 28, 1999, the cost of investments for federal income tax purposes
was $219,004,032. Accordingly, gross unrealized appreciation of investments was
$1,731,322 and gross unrealized depreciation was $33,846,029 resulting in net
unrealized depreciation of $32,114,707.
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 the exercise of put options are decreased
by the premiums paid.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
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 six months ended February
28, 1999.
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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEB. 28, 1999 AUGUST 31, FEB. 28, 1999 AUGUST 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 4,915,851 4,813,019 $ 27,687,760 $ 40,513,709
Shares issued in
reinvestment of
dividends and
distributions 310,667 728,102 1,771,077 6,175,196
Shares converted
from Class B 95,767 259,021 532,495 2,196,430
Shares redeemed (2,779,762) (2,902,346) (15,693,845) (23,845,164)
Net increase 2,542,523 2,897,796 $ 14,297,487 $ 25,040,171
CLASS B
Shares sold 6,572,310 11,711,770 $ 37,129,204 $ 98,025,012
Shares issued in
reinvestment of
dividends and
distributions 419,162 1,070,901 2,396,699 9,074,872
Shares converted
to Class A (95,767) (259,021) (532,495) (2,196,430)
Shares redeemed (3,610,411) (5,528,229) (20,368,150) (44,595,809)
Net increase 3,285,294 6,995,421 $ 18,625,258 $ 60,307,645
CLASS C
Shares sold 5,555,943 4,751,772 $ 31,797,985 $ 41,402,517
Shares issued in
reinvestment of
dividends and
distributions 208,363 559,509 1,183,466 4,741,446
Shares redeemed (4,188,571) (2,979,293) (23,724,984) (24,568,761)
Net increase 1,575,735 2,331,988 $ 9,256,467 $ 21,575,202
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 the possibility of future political and economic
developments which could adversely affect the value of such securities.
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 six months ended February 28, 1999.
13
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 FEB. 25,
ENDED 1994(A)
FEB. 28, YEAR ENDED AUGUST 31, TO
1999 -------------------------------------------------- AUGUST 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.05 $10.64 $10.01 $8.02 $9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .37(b) .73(b) .88(b) .84 .86 .45
Net realized and unrealized gain (loss)
on investment transactions .58 (4.03) 1.85 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations .95 (3.30) 2.73 2.94 (.24) (.41)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.43) (.73) (.95) (.95) (.88) (.45)
Tax return of capital -0- (.15) -0- -0- -0- -0-
Distributions in excess of net investment
income -0- (.04) -0- -0- -0- -0-
Distributions from net realized gain on
investments -0- (1.37) (1.15) -0- -0- -0-
Total dividends and distributions (.43) (2.29) (2.10) (.95) (.88) (.45)
Net asset value, end of period $5.57 $5.05 $10.64 $10.01 $8.02 $9.14
TOTAL RETURN
Total investment return based on net
asset value (c) 18.68% (38.56)% 30.04% 38.47% (1.48)% (3.77)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $49,910 $32,365 $37,416 $23,253 $12,020 $10,995
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 1.57%(d) 1.48% 1.55% 1.65% 1.93% .75%(d)
Expenses, before waivers and
reimbursements 1.57%(d) 1.48% 1.55% 1.65% 1.93% 1.91%(d)
Net investment income 12.98%(d) 8.51% 8.49% 9.23% 11.25% 9.82%(d)
Portfolio turnover rate 78% 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
------------------------------------------------------------------------------
SIX MONTHS FEB. 25,
ENDED 1994(A)
FEB. 28, YEAR ENDED AUGUST 31, TO
1999 -------------------------------------------------- AUGUST 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.05 $10.64 $10.01 $8.02 $9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .35(b) .67(b) .81(b) .78 .80 .42
Net realized and unrealized gain (loss)
on investment transactions .59 (4.05) 1.84 2.08 (1.11) (.86)
Net increase (decrease) in net asset
value from operations .94 (3.38) 2.65 2.86 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.39) (.67) (.87) (.87) (.81) (.42)
Tax return of capital -0- (.14) -0- -0- -0- -0-
Distributions in excess of net
investment income -0- (.04) -0- -0- -0- -0-
Distributions from net realized gain on
investments -0- (1.36) (1.15) -0- -0- -0-
Total dividends and distributions (.39) (2.21) (2.02) (.87) (.81) (.42)
Net asset value, end of period $5.60 $5.05 $10.64 $10.01 $8.02 $9.14
TOTAL RETURN
Total investment return based on
net asset value (c) 18.55% (39.11)% 29.14% 37.36% (2.40)% (4.17)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $106,741 $79,660 $93,377 $84,295 $62,406 $47,030
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 2.28%(d) 2.22% 2.26% 2.37% 2.64% 1.45%(d)
Expenses, before waivers and
reimbursements 2.28%(d) 2.22% 2.26% 2.37% 2.64% 2.63%(d)
Net investment income 12.26%(d) 7.78% 7.81% 8.57% 10.52% 9.11%(d)
Portfolio turnover rate 78% 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
------------------------------------------------------------------------------
SIX MONTHS FEB. 25,
ENDED 1994(A)
FEB. 28, YEAR ENDED AUGUST 31, TO
1999 -------------------------------------------------- AUGUST 31,
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.05 $10.64 $10.01 $8.02 $9.14 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .34(b) .67(b) .82(b) .77 .79 .42
Net realized and unrealized gain (loss)
on investment transactions .61 (4.05) 1.84 2.10 (1.10) (.86)
Net increase (decrease) in net asset
value from operations .95 (3.38) 2.66 2.87 (.31) (.44)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.39) (.67) (.88) (.88) (.81) (.42)
Tax return of capital -0- (.14) -0- -0- -0- -0-
Distributions in excess of net
investment income -0- (.04) -0- -0- -0- -0-
Distributions from net realized gain on
investments -0- (1.36) (1.15) -0- -0- -0-
Total dividends and distributions (.39) (2.21) (2.03) (.88) (.81) (.42)
Net asset value, end of period $5.61 $5.05 $10.64 $10.01 $8.02 $9.14
TOTAL RETURN
Total investment return based on
net asset value (c) 18.78% (39.09)% 29.17% 37.40% (2.36)% (4.16)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $35,171 $23,711 $25,130 $14,511 $9,330 $10,404
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 2.28%(d) 2.19% 2.25% 2.35% 2.63% 1.45%(d)
Expenses, before waivers and
reimbursements 2.28%(d) 2.19% 2.25% 2.35% 2.63% 2.59%(d)
Net investment income 12.28%(d) 7.75% 7.82% 8.52% 10.46% 9.05%(d)
Portfolio turnover rate 78% 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
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 LLP
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.
17
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 U.S. Government Fund
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
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors 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 International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
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
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Trust Portfolio
Treasury Portfolio
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
18
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
