ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
ANNUAL REPORT
AUGUST 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
October 29, 1999
Dear Shareholder:
We are pleased to report to you on the performance, investment strategy and
outlook for the Alliance Global Dollar Government Fund (the "Fund"). The Fund's
objective is to provide investors with a high level of current income and,
secondarily, capital appreciation. The Fund invests primarily in a
non-diversified portfolio of sovereign debt obligations and U.S. and non-U.S.
corporate fixed-income securities. Substantially all of the Fund's assets are
invested in lower-rated securities.
INVESTMENT PERFORMANCE
The following table shows how your Fund performed over the six- and
twelve-month periods ended August 31, 1999. For comparison, we have included
the returns for the J.P. Morgan Emerging Markets Bond Index (JPM EMBI), which
provides a broad measure of the performance of a basket of emerging market debt
securities.
We are pleased to report that your Fund outperformed the benchmark for both the
six- and twelve month-periods ended August 31, 1999. Our overweighting of
Russia, the best performing market during the period, enhanced the Fund's
performance.
INVESTMENT RESULTS*
Periods Ended August 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
Class A 9.05% 29.40%
Class B 8.70% 28.85%
Class C 8.49% 28.85%
J.P. MORGAN EMERGING MARKETS BOND INDEX 7.10% 22.66%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF AUGUST 31, 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 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
The outlook for the global economy continued to brighten during the last six
months. Economic weakness in Latin America proved less severe than anticipated
and growth in the Asian economies picked up speed while developed countries
showed signs of strengthening growth coupled with low inflation. U.S. economic
growth downshifted but remained strong, while inflation and unemployment stayed
low. With economic activity remaining strong and global liquidity concerns
abating, the Federal Reserve adopted a monetary policy tightening bias in May
and increased the Federal Funds rate by 25 basis points in June followed by
another 25 basis points in August. For the six months ended August 31, the U.S.
yield curve flattened as short- and intermediate-term rates rose more than
long-term rates. The two-year U.S. Treasury yield rose from 5.20% to 5.73%,
while the thirty-year Treasury yield rose from 5.67% to 6.07%. The U.S. dollar
weakened versus the Japanese yen and strengthened against the euro.
Emerging market debt performed well over the period as global economic growth
improved and commodity prices firmed. The emerging market debt sector, as
represented by the JPM EMBI, gained 7.10%, outperforming the traditional bond
market sectors during the six-month period. Most individual country returns
within the JPM EMBI were positive during the period with Russia posting the
largest gains (+89.13%). Other individual outperformers included Brazil
(+16.76%) and Venezuela (+13.91%). Rising oil prices helped the performance of
Russian and Venezuelan debt as both countries are heavily dependent on oil
exports. Russian bond prices were also helped by indications that the
government will restructure its outstanding debt. Ecuador's debt posted the
worst performance, declining by 5.17% after the government delayed making
interest payments on its debt.
1
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
INVESTMENT STRATEGY
Over the six-month period ended August 31, 1999, we maintained our large
position in Mexico, which we believe will benefit from strong economic growth
and the possibility of an increase of its credit rating to investment grade. We
reduced our holdings in Ecuador as economic problems and questions regarding
their ability to make interest payments on their outstanding debt surfaced. We
increased our exposure to Russia, as the outlook for the Russian economy
improved.
OUTLOOK
The global economy continues to gather momentum. We expect the U.S. economy to
remain strong through year-end and into the millennium. Growth estimates for
1999 are close to 4.0%, with growth moderating somewhat next year toward 3.5%.
The risk of tighter monetary policy in the U.S. remains. Positive inflation
fundamentals, however, will keep long-term interest rates trading in a range
around 6.0%. While we believe there are structural forces in the marketplace
rendering credit markets less liquid, the passing of Y2K should alleviate some
liquidity pressures, causing non-Treasury spreads to narrow somewhat from
current levels. The overall credit-quality environment, however, is no longer
improving in aggregate. Over the longer term, this is negative for
credit-sensitive spreads.
Stronger global growth coupled with the recent firming in commodity prices will
continue to provide the environment necessary for emerging countries to
gradually improve their credit profiles. We continue to believe that Mexico
will move to investment-grade status in the year 2000. Also, the credit
fundamentals continue to improve in the southeast Asian economies.
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
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, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 29.40% 24.00%
Five Years 7.11% 6.17%
Since Inception* 5.69% 4.87%
SEC Yield** 12.91%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 28.85% 25.85%
Five Years 6.31% 6.31%
Since Inception* 4.89% 4.89%
SEC Yield** 12.63%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 28.85% 27.85%
Five Years 6.33% 6.33%
Since Inception* 4.92% 4.92%
SEC Yield** 12.64%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (SEPTEMBER
30, 1999)
CLASS A CLASS B CLASS C
------------ ------------ ------------
1 Year 18.92% 20.08% 22.29%
5 Years 6.38% 6.45% 6.51%
Since Inception* 5.18% 5.16% 5.21%
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 share classes.
** SEC yields are based on SEC guidelines and are calculated on 30 days ended
August 31, 1999.
3
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
GROWTH OF A $10,000 INVESTMENT
2/28/94* TO 8/31/99
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
J.P. MORGAN EMERGING MARKETS BOND INDEX: $16,210
GLOBAL DOLLARGOVERNMENT FUND CLASS A: $12,993
2/28/94 8/31/94 8/31/95 8/31/96 8/31/97 8/31/98 8/31/99
This chart illustrates the total value of an assumed $10,000 investment in
Alliance GlobalDollar Government Fund Class A shares (from 2/28/94 to 8/31/99)
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 EmergingMarkets 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.
Alliance Global Dollar Government Fund
J.P. Morgan Emerging Markets Bond Index
* Closest month-end after the Fund's Class A share inception date of 2/25/94.
4
PORTFOLIO OF INVESTMENTS
August 31, 1999 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
SOVEREIGN DEBT
OBLIGATIONS-78.2%
OTHER SOVEREIGN
DEBT OBLIGATIONS-54.6%
ARGENTINA-8.5%
Republic of Argentina
11.75%, 4/07/09 ....................... $ 7,800 $ 7,147,140
12.125%, 2/25/19 ...................... 6,480 6,042,600
Republic of Argentina
Series XW
11.00%, 12/04/05 ...................... 3,875 3,545,625
Warrants, expiring
12/03/99 (a) .......................... 3,000 25,000
Warrants, expiring
2/25/00 (a) ........................... 23,000 217,360
------------
16,977,725
------------
BRAZIL-1.0%
Republic of Brazil
10.125%, 5/15/27 ...................... 2,634 1,866,979
------------
COLOMBIA-2.2%
Republic of Colombia
9.75%, 4/23/09 ........................ 5,400 4,347,000
------------
MALAYSIA-1.5%
Government of Malaysia
8.75%, 6/1/09 ......................... 3,000 3,008,700
------------
MEXICO-17.0%
United Mexican States
9.75%, 4/06/05 ........................ 15,000 15,105,000
10.375%, 2/17/09 (b) .................. 18,650 18,845,825
------------
33,950,825
------------
PANAMA-4.1%
Republic of Panama
9.375%, 4/01/29 ....................... 8,800 8,228,000
------------
PHILIPPINES-2.9%
Bangko Sentral Pilipinas
8.60%, 6/15/27 ........................ 4,000 3,030,000
Republic of the Philippines
9.875%, 1/15/19 ....................... 3,000 2,823,900
------------
5,853,900
------------
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
RUSSIA-12.8%
Russian Federation
11.00%, 7/24/18 ....................... $ 6,100 $ 2,897,500
12.75%, 6/24/28 ....................... 16,900 8,957,000
Russian IAN FRN
6.0625%, 12/15/15 (a)(c) .............. 10,473 1,518,598
Russian Ministry of Finance
3.00%, 5/14/03 ........................ 16,200 3,078,000
12.75%, 6/24/28 ....................... 10,000 5,300,000
Russia Principal Loan FRN
6.0625%, 12/15/20 (a)(c) .............. 34,350 3,778,500
------------
25,529,598
------------
TURKEY-2.3%
Republic of Turkey
12.00%, 12/15/08 ...................... 3,500 3,486,875
12.375%, 6/15/09 ...................... 1,000 987,500
------------
4,474,375
------------
VENEZUELA-2.3%
Republic of Venezuela
9.25%, 9/15/27 ........................ 7,700 4,630,010
------------
Total Other Sovereign Debt
Obligations
(cost $114,227,791) ................... 108,867,112
------------
NON-COLLATERALIZED
BRADY BONDS-13.7%
ARGENTINA-2.8%
Republic of Argentina
PDI FRB
5.9375%, 3/31/05 ...................... 4,650 3,964,125
Republic of Argentina
PDI FRB, Series L
5.9375%, 3/31/05 ...................... 1,860 1,585,650
------------
5,549,775
------------
5
PORTFOLIO OF INVESTMENTS (continued) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
BRAZIL-3.1%
Republic of Brazil
DCB FRN, Series L
Registered Bond
5.9375%, 4/15/12 ...................... $ 600 $ 339,000
Republic of Brazil C - Bonds
8.00%, 4/15/14 (d) .................... 9,562 5,725,870
------------
6,064,870
------------
BULGARIA-4.1%
Republic of Bulgaria
IAB FRN
6.50%, 7/28/11 ........................ 12,000 8,235,600
------------
PERU-3.7%
Republic of Peru FLIRB
3.75%, 3/07/17 (e)(f) ................. 8,250 4,207,500
Republic of Peru PDI
4.50%, 3/07/17 (e)(f) ................. 5,450 3,168,085
------------
7,375,585
------------
Total Non-Collateralized
Brady Bonds
(cost $27,504,760) .................... 27,225,830
------------
COLLATERALIZED
BRADY BONDS-6.3%
BRAZIL-4.0%
Republic of Brazil
Discount FRN
5.875%, 4/15/24 ....................... 15,000 7,987,500
------------
VENEZUELA-2.3%
Republic of Venenzuela
Discount Series W-B
FRN
6.00%, 3/31/20 (g) .................... 7,700 4,639,250
------------
Total Collateralized
Brady Bonds
(cost $13,357,604) .................... 12,626,750
------------
LOAN PARTICIPATION-3.6%
MOROCCO-3.6%
Kingdom of Morocco
Loan Participation
FRN Series A
5.90625%, 1/01/09
(cost $7,882,074) ..................... 9,048 7,260,714
------------
Total Sovereign Debt
Obligations
(cost $162,972,229) ................... 155,980,406
------------
CORPORATE DEBT
OBLIGATIONS-13.5%
Alestra, SA
12.625%, 5/15/09 (e) .................. 500 466,250
Autopistas del Sol, SA
Series B
10.25%, 8/01/09 (e) ................... 2,500 1,631,250
Banco Nacional De
Desenvolvimiento
Economico
15.224%, 6/16/08 (e) .................. 4,300 3,504,500
Bayan Telecommunications
13.50%, 7/15/06 (e) ................... 1,000 935,000
Cellco Finance
15.00%, 8/01/05 (e) ................... 3,000 3,142,500
Conecel Holdings Ltd.
FRN 16.50%,
10/01/00 (a)(c)(e)(h) ................. 1,000 150,000
Consorcio Ecuatoriano
Telecom
14.00%, 5/01/02 (a)(c) ................ 5,500 1,925,000
Grupo Mexicano de
Desarrollo, SA
8.25%, 2/17/01 (e) .................... 7,900 1,422,000
Guangdong Enterprises
8.875%, 5/22/07 (e) ................... 6,450 1,773,750
Korea Development Bank
FRN
8.008%, 6/16/03 (e) ................... 1,600 1,568,000
6
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Netia Holdings B.V.
Series B
11.25%, 11/01/07 (i) .............. $ 4,500 $ 2,801,250
Samsung Electronics Co.
7.45%, 10/01/02 (e) ............... 3,500 3,358,499
Tricom
11.375%, 9/01/04 .................. 2,750 2,399,375
Viatel Inc.
11.50%, 3/15/09 (e) ............... 1,800 1,777,500
------------
Total Corporate Debt
Obligations
(cost $37,393,608) ................ 26,854,874
------------
TIME DEPOSIT-0.3%
Bank Of New York
4.75%, 9/01/99
(cost $666,000) ................... 666 666,000
------------
TOTAL INVESTMENTS-92.0%
(cost $201,031,837) ............... 183,501,280
Other assets less
liabilities-8.0% .................. 16,065,245
------------
NET ASSETS-100% ...................... $199,566,525
============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Security trades with warrants expiring February 17, 2009.
(c) Security is in default.
(d) Coupon consists of 5.00% cash payment and 3.00% paid-in-kind.
(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,
1999, these securities amounted to $27,104,834 representing 13.58% of net
assets.
(f) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at August 31, 1999.
(g) Security trades with oil warrants expiring March 31, 2020.
(h) Security trades with warrants expiring October 1, 2000.
(i) 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:
DCB - Debt Conversion Bond.
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.
7
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $201,031,837) ......................... $ 183,501,280
Cash ............................................................................ 23,417
Income receivable ............................................................... 7,088,710
Receivable for investment securities sold ....................................... 16,724,135
Receivable for capital stock sold ............................................... 583,344
-------------
Total assets .................................................................... 207,920,886
-------------
LIABILITIES
Payable for investment securities purchased ..................................... 6,488,733
Dividends payable ............................................................... 724,082
Payable for capital stock redeemed .............................................. 711,209
Accrued expenses ................................................................ 430,337
-------------
Total liabilities ............................................................... 8,354,361
-------------
NET ASSETS ......................................................................... $ 199,566,525
=============
COMPOSITION OF NET ASSETS
Capital stock, at par ........................................................... $ 34,849
Additional paid-in capital ...................................................... 282,300,860
Distributions in excess of net investment income ................................ (2,479,757)
Accumulated net realized loss on investment transactions ........................ (62,758,870)
Net unrealized depreciation on investments ...................................... (17,530,557)
-------------
$ 199,566,525
=============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share ($50,539,846 / 8,877,371 shares of
capital stock issued and outstanding) ......................................... $ 5.69
Sales charge--4.25% of public offering price .................................... .25
-------------
Maximum offering price .......................................................... $ 5.94
=============
Class B Shares
Net asset value and offering price per share ($110,002,790 / 19,177,608 shares of
capital stock issued and outstanding) ......................................... $ 5.74
=============
Class C Shares
Net asset value and offering price per share ($39,023,889 / 6,793,740 shares of
capital stock issued and outstanding) ......................................... $ 5.74
=============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
8
STATEMENT OF OPERATIONS
Year Ended August 31, 1999 ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest....................................................... $ 26,927,631
EXPENSES
Advisory fee................................................... $1,452,578
Distribution fee - Class A..................................... 146,503
Distribution fee - Class B..................................... 1,084,463
Distribution fee - Class C..................................... 363,963
Transfer agency................................................ 391,872
Audit and legal................................................ 223,204
Custodian...................................................... 135,423
Administrative................................................. 129,485
Registration................................................... 88,266
Printing....................................................... 49,968
Directors' fees................................................ 24,558
Amortization of organization expenses.......................... 14,571
Miscellaneous.................................................. 14,744
----------
Total expenses................................................. 4,119,598
------------
Net investment income.......................................... 22,808,033
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions................... (45,085,335)
Net change in unrealized depreciation of investments........... 65,633,291
------------
Net gain on investment transactions............................ 20,547,956
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS........................ $ 43,355,989
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
9
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, August 31,
1999 1998
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income................................................ $ 22,808,033 $ 15,006,720
Net realized loss on investment transactions......................... (45,085,335) (14,298,058)
Net change in unrealized appreciation (depreciation)of investments... 65,633,291 (86,796,871)
-------------- --------------
Net increase (decrease) in net assets from operations................ 43,355,989 (86,088,209)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A............................................................ (6,183,246) (3,780,424)
Class B............................................................ (12,454,582) (8,514,602)
Class C............................................................ (4,170,205) (2,711,694)
Distributions in excess of net investment income
Class A............................................................ (317,642) (227,100)
Class B............................................................ (639,811) (511,493)
Class C............................................................ (214,230) (162,898)
Tax return of capital
Class A............................................................ (301,209) (795,457)
Class B............................................................ (606,708) (1,807,258)
Class C............................................................ (203,145) (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......................................................... 45,565,578 106,923,018
-------------- --------------
Total increase (decrease)............................................ 63,830,789 (20,187,200)
NET ASSETS
Beginning of year.................................................... 135,735,736 155,922,936
-------------- --------------
End of year.......................................................... $ 199,566,525 $ 135,735,736
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
August 31, 1999 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 amortized
on a straight-line basis through February 1999. Organization expenses have been
fully amortized as of August 31, 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 dividends and capital gains distributions are determined in accordance
with federal tax regulations
11
NOTES TO FINANCIAL STATEMENTS
(continued) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
and may differ from those determined in accordance with generally accepted
accounting principles. To the extent these differences are permanent, such
amounts are reclassified within the capital accounts based on their federal tax
basis treatment; temporary differences do not require such reclassification.
During the current fiscal year, permanent differences, primarily due to a tax
return of capital, resulted in a net decrease in distributions in excess of net
invesment income 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 $271,773 for the year ended August 31, 1999.
For the year ended August 31, 1999, the Fund's expenses were reduced by $18,074
under an expense offset arrangement with Alliance Fund Services.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor has advised the
Fund that it has received front-end sales charges of $46,799 from the sale of
Class A shares and $1,287, $228,380 and $53,260 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, 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 average daily net assets attributable to Class A
shares and 1% of the average daily net assets attributable to the 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 advised
the Fund that it has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $5,156,115 and $1,148,688 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 $358,513,380 and $328,905,886,
respectively, for the year ended August 31, 1999. There were no purchases or
sales of U.S. government or government agency obligations for the year ended
August 31, 1999.
At August 31, 1999, the cost of investments for federal income tax purposes was
$202,615,464. Accordingly, gross unrealized appreciation of investments was
$5,058,792 and gross unrealized depreciation was $24,172,976 resulting in net
unrealized depreciation of $19,114,184.
At August 31, 1999 the Fund had a net capital loss carryforward of $16,783,909
which expires in the year 2007.
Capital losses incurred after October 31 ("post October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
$44,391,334 during the fiscal year 1999. To the extent that the carryover losses
are used to offset future capital
12
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
gains, it is probable that the gain so offset will not be distributed to
shareholders.
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.
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,
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:
<TABLE>
<CAPTION>
---------------------------------- ----------------------------------
SHARES AMOUNT
---------------------------------- ----------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
1999 1998 1999 1998
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold....................... 8,939,122 4,813,019 $ 51,029,072 $ 40,513,709
Shares issued in reinvestment of
dividends and distributions.... 577,502 728,102 3,335,568 6,175,196
Shares converted from Class B..... 280,097 259,021 1,604,367 2,196,430
Shares redeemed................... (7,334,617) (2,902,346) (42,253,263) (23,845,164)
-------------- -------------- -------------- --------------
Net increase...................... 2,462,104 2,897,796 $ 13,715,744 $ 25,040,171
============== ============== ============== ==============
Class B
Shares sold....................... 9,146,871 11,711,770 $ 52,340,160 $ 98,025,012
Shares issued in reinvestment of
dividends and distributions.... 799,008 1,070,901 4,638,409 9,074,872
Shares converted to Class A....... (278,458) (259,021) (1,604,367) (2,196,430)
Shares redeemed................... (6,261,743) (5,528,229) (35,910,082) (44,595,809)
-------------- -------------- -------------- --------------
Net increase...................... 3,405,678 6,995,421 $ 19,464,120 $ 60,307,645
============== ============== ============== ==============
</TABLE>
13
NOTES TO FINANCIAL STATEMENTS
(continued) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
<TABLE>
<CAPTION>
---------------------------------- ----------------------------------
SHARES AMOUNT
---------------------------------- ----------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
1999 1998 1999 1998
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class C
Shares sold....................... 7,263,526 4,751,772 $ 41,875,188 $ 41,402,517
Shares issued in reinvestment of
dividends and distributions.... 402,610 559,509 2,342,968 4,741,446
Shares redeemed................... (5,566,666) (2,979,293) (31,832,442) (24,568,761)
-------------- -------------- -------------- --------------
Net increase...................... 2,099,470 2,331,988 $ 12,385,714 $ 21,575,202
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
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 year ended August 31, 1999.
14
FINANCIAL HIGHLIGHTS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
Selected Data For A Share of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 5.05 $ 10.64 $ 10.01 $ 8.02 $ 9.14
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income ............................... .71(a) .73(a) .88(a) .84 .86
Net realized and unrealized gain (loss) on investment
transactions .................................... .74 (4.03) 1.85 2.10 (1.10)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value from
operations ...................................... 1.45 (3.30) 2.73 2.94 (.24)
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................ (.74) (.73) (.95) (.95) (.88)
Tax return of capital ............................... (.03) (.15) -0- -0- -0-
Distributions in excess of net investment income .... (.04) (.04) -0- -0- -0-
Distributions from net realized gain on investments . -0- (1.37) (1.15) -0- -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ................... (.81) (2.29) (2.10) (.95) (.88)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................ $ 5.69 $ 5.05 $ 10.64 $ 10.01 $ 8.02
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (b) 29.40% (38.56)% 30.04% 38.47% (1.48)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $ 50,540 $ 32,365 $ 37,416 $ 23,253 $ 12,020
Ratio of expenses to average net assets ............. 1.59% 1.48% 1.55% 1.65% 1.93%
Ratio of net investment income to average net assets 12.34% 8.51% 8.49% 9.23% 11.25%
Portfolio turnover rate ............................. 179% 188% 314% 315% 301%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (continued) ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
Selected Data For A Share of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
--------------------------------------------------------------
CLASS B
--------------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 5.05 $ 10.64 $ 10.01 $ 8.02 $ 9.14
-------- ------- ------- ------- -------
Income From Investment Operations
Net investment income ............................... .67(a) .67(a) .81(a) .78 .80
Net realized and unrealized gain (loss) on investment
transactions .................................... .76 (4.05) 1.84 2.08 (1.11)
-------- ------- ------- ------- -------
Net increase (decrease) in net asset value from
operations ...................................... 1.43 (3.38) 2.65 2.86 (.31)
-------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ................ (.68) (.67) (.87) (.87) (.81)
Tax return of capital ............................... (.03) (.14) -0- -0- -0-
Distributions in excess of net investment income .... (.03) (.04) -0- -0- -0-
Distributions from net realized gain on investments . -0- (1.36) (1.15) -0- -0-
-------- ------- ------- ------- -------
Total dividends and distributions ................... (.74) (2.21) (2.02) (.87) (.81)
-------- ------- ------- ------- -------
Net asset value, end of year ........................ $ 5.74 $ 5.05 $ 10.64 $ 10.01 $ 8.02
======== ======= ======= ======= =======
Total Return
Total investment return based on net asset value (b) 28.85% (39.11)% 29.14% 37.36% (2.40)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $110,003 $79,660 $93,377 $84,295 $62,406
Ratio of expenses to average net assets ............. 2.31% 2.22% 2.26% 2.37% 2.64%
Ratio of net investment income to average net assets 11.59% 7.78% 7.81% 8.57% 10.52%
Portfolio turnover rate ............................. 179% 188% 314% 315% 301%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 17.
16
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
Selected Data For A Share of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
CLASS C
-------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 5.05 $ 10.64 $ 10.01 $ 8.02 $ 9.14
--------- ---------- --------- ---------- ---------
Income From Investment Operations
Net investment income ............................... .67(a) .67(a) .82(a) .77 .79
Net realized and unrealized gain (loss) on investment
transactions .................................... .76 (4.05) 1.84 2.10 (1.10)
--------- ---------- --------- ---------- ---------
Net increase (decrease) in net asset value from
operations ...................................... 1.43 (3.38) 2.66 2.87 (.31)
--------- ---------- --------- ---------- ---------
Less: Dividends and Distributions
Dividends from net investment income ................ (.68) (.67) (.88) (.88) (.81)
Tax return of capital ............................... (.03) (.14) -0- -0- -0-
Distributions in excess of net investment income .... (.03) (.04) -0- -0- -0-
Distributions from net realized gain on investments . -0- (1.36) (1.15) -0- -0-
--------- ---------- --------- ---------- ---------
Total dividends and distributions ................... (.74) (2.21) (2.03) (.88) (.81)
--------- ---------- --------- ---------- ---------
Net asset value, end of year ........................ $ 5.74 $ 5.05 $ 10.64 $ 10.01 $ 8.02
========= ========== ========= ========== =========
Total Return
Total investment return based on net asset value (b) 28.85% (39.09)% 29.17% 37.40% (2.36)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $ 39,024 $ 23,711 $ 25,130 $ 14,511 $ 9,330
Ratio of expenses to average net assets ............. 2.30% 2.19% 2.25% 2.35% 2.63%
Ratio of net investment income to average net assets 11.56% 7.75% 7.82% 8.52% 10.46%
Portfolio turnover rate ............................. 179% 188% 314% 315% 301%
</TABLE>
- --------------------------------------------------------------------------------
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the year, reinvestment of all
dividends and distributions at net asset value during the year, and
redemption on the last day of the year. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total
investment return.
17
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
================================================================================
To the Shareholders and Board of Directors
Alliance Global Dollar Government Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Alliance
Global Dollar Government Fund, Inc. (the "Fund"), including the portfolio of
investments, as of August 31, 1999, 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 and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1999, by correspondence with the custodian and
others. 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, 1999, 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.
/s/ Ernst & Young LLP
New York, New York
October 8, 1999
18
ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
WAYNE D. LYSKI, PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
PAUL J. DENOON, VICE PRESIDENT
VICKI L. FULLER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JUAN J. RODRIGUEZ, CONTROLLER
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
CUSTODIAN
THE BANK OF NEW YORK
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.
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.
GDGAR899
