UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-06554
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME
TRUST, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: September 30, 2006
Date of reporting period: September 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
- -------------------------------------------------------------------------------
ANNUAL REPORT
- -------------------------------------------------------------------------------
AllianceBernstein Global Government Income Trust
Annual Report
September 30, 2006
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
This shareholder report must be preceded or accompanied by the Fund's
prospectus for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P.,
the manager of the AllianceBernstein funds, and is a member of the NASD.
AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.
November 20, 2006
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Global Government Income Trust (the "Fund") for the annual
reporting period ended September 30, 2006. Prior to February 1, 2006, the Fund
was named AllianceBernstein Americas Government Income Trust.
Investment Objectives and Policies
This open-end fund seeks to generate current income consistent with
preservation of capital. The Fund invests, under normal circumstances, at least
80% of its assets in government securities. The Fund invests, under normal
circumstances, at least 65% of its net assets in debt securities issued or
guaranteed by governments of countries that are members of the Organization of
Economic Co-operation and Development, or OECD. The Fund may invest in debt
securities with a range of maturities from short- to long-term. Under normal
circumstances, the Fund invests at least 80% of its assets in fixed-income
securities rated investment grade at the time of investment.
Investment Results
The table on page 6 shows the Fund's performance compared to its new benchmark,
the Lehman Brothers (LB) Global Treasury Index (hedged to the U.S. dollar),
along with the Fund's old benchmark, a composite consisting of 50% LB
Government Index and 50% J.P. Morgan Emerging Markets Bond Index Plus (EMBI+)
Latin Only, and the individual components of the composite. In February of
2006, the Fund's investment guidelines were changed to include a broader
spectrum of government securities from around the world. As a result, the
benchmark was changed to one that includes global government securities.
The Fund's Class A shares outperformed its new benchmark, the LB Global
Treasury Index (hedged to the U.S. dollar) for the 12-month period ended
September 30, 2006. The Fund's emerging market exposure, as well as its
holdings in local Brazilian, Mexican and Canadian debt, contributed positively
to performance for the period. Within the local markets, Brazil returned
19.41%, Mexico returned 11.39% and Canada returned 4.41%, all outperforming the
benchmark for the 12-month period.
The Fund underperformed its new benchmark for the six-month period ended
September 30, 2006. During the six-month period, Fund performance was dampened
by its local currency holdings, which performed poorly in the second quarter.
Additionally, the Fund's overweight positions in the U.K., Poland and Sweden,
which underperformed the Index, as well as the Fund's underweight of U.S.
Treasuries during the rally in the final quarter, also dampened performance for
the six-month period.
Market Review and Investment Strategy
The developed global government bond market posted modest returns during the
12-month period ended September 30, 2006, returning 3.36%, according to the LB
Global Treasury Index (hedged to the U.S. dollar). Global government bond
returns were generally weak-to-negative in the first three quarters of the
12-month period, buffeted by higher global interest rates, stronger global
growth and continued
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 1
rate hikes by the U.S. Federal Reserve, European Central Bank (ECB), Bank of
Japan and other central banks.
In the third quarter, however, both global fixed-income and equity markets
bounced back strongly sparked by evidence of a cooling global economy,
declining long-term yields and the first U.S. monetary-policy shift in more
than two years. The global economic growth cycle peaked in the first half of
2006 with the second half slowdown centered in the U.S., stemming from a sharp
decline in the housing market.
In the U.S., the Federal Reserve left the Fed funds rate unchanged at 5.25% in
August and September, following 425 basis points of consecutive rate hikes.
U.S. Treasury yields ended the 12-month period higher with the 10-year yield at
4.63%, representing a gain of 30 basis points. The U.S. Treasury yield curve
remained flat with the yield spread between the two- and 30-year yield at only
8 basis points. With strong growth and rising rates throughout most of the
12-month period, U.S. Treasuries underperformed the index, posting a modest
return of 3.09% for the period.
In Europe, growth remained comfortably above trend. Solid domestic demand
helped European economies reduce their reliance on exports, making them less
vulnerable to a slowdown in global growth. During the 12-month period, the ECB
increased official interest rates 1% in quarter-point increments. Inflation in
the euro area fell to its lowest point in more than two years, while business
and consumer confidence soared to a five-year high. The European 10-year yield
gained 56 basis points to end the 12-month period at 3.71%. With relatively
stronger growth and interest rate hikes by the ECB, euro-area government bonds
returned a weak 1.98% for the period.
Japanese government bonds posted a stronger return of 4.92%. A recovery in
economic growth during the year prompted the Bank of Japan to declare an end to
"quantitative easing" in favor of a renewed focus on interest-rate management.
Japan's above-trend economic growth allowed the Bank of Japan to finally raise
the key lending rate in July to 0.25%, the first increase in more than five
years. During the period, Japanese yields rose more modestly with the 10-year
yield gaining 19 basis points to end the 12-month period at 1.68%.
U.S. dollar-denominated emerging market debt returned 7.81% for the 12-month
period, according to the J.P. Morgan Emerging Markets Bond Index Global,
significantly outperforming developed global government bond markets. Dollar
reserve accumulation in major emerging market countries and positive
supply-demand technicals continued to support the sector. Similar to developed
government bond markets, emerging market debt suffered periods of negative
performance in the first half of 2006, due to the cumulative effects of U.S.
interest rate hikes prior to a strong rebound in the third quarter.
Top performing emerging market countries (U.S. dollar-denominated) held within
the Fund included the most weighted country, Brazil, which re-
2 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
turned 14.59% for the 12-month period ended September 30, 2006, followed by
Peru, which returned 6.23%, Mexico, which returned 5.04% and Turkey, which
returned 4.04%. Countries with smaller weightings within the Fund also
performed well, including Indonesia, which returned 15.90%, the Philippines, at
16.94%, Argentina, at 22.53%, Panama, at 7.71% and Colombia, at 7.14%. As
mentioned in the Fund's performance review, local currency debt in many
countries performed even better, due to the strength of many local currencies
versus the U.S.
Within the Fund's developed government market holdings during the 12-month
period, the Fund's Global Fixed Income Investment team (the "team") favored
Sweden, the U.K. and Canada (in both local currency and hedged terms). Local
Canadian debt was held throughout the period, as the Canadian currency was
supported by strong commodity prices and positive fundamentals, such as a
declining Federal debt. The Fund was underweighted in European government debt,
which underperformed during the period. Emerging market debt countries within
the Fund included both U.S. dollar and local currency debt in Brazil, Mexico
and Peru. Brazil's creditworthiness was enhanced by extensive dollar reserve
accumulation and a reduction of its debt-to-GDP ratio through the scheduled
repurchase of approximately US$24 billion of bonds. Brazil's intent to reach
investment-grade status was evidenced by improvements in its local debt
structure and the central bank's announcement not to issue dollar debt through
2008. Moody's recently upgraded Brazil's sovereign credit rating from Ba3 to
Ba2, placing the country two steps below investment grade. The speed and depth
of Brazil's rate cuts in response to declining GDP growth and well-contained
inflation also made its debt attractive. The team also favored Peru during the
12-month period due to continued strong growth, low debt and low inflation.
The Fund also held small emerging market positions in Panama and Argentina.
Panama's economy strengthened, helped by canal-related fees, services and
expansion. Panama continued to be strongly levered to regional and global
growth. Argentina continued to post strong growth during the period with GDP at
7.9% in the second quarter. Exports remained solid with the economy benefiting
from soft commodity prices.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 3
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our
website at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein Investments at 800.227.4618. You should read the prospectus
carefully before you invest.
All fees and expenses related to the operation of the Fund have been deducted.
NAV returns do not reflect sales charges; if sales charges were reflected, the
Fund's quoted performance would be lower. SEC returns reflect the applicable
sales charges for each share class: a 4.25% maximum front-end sales charge for
Class A shares; the applicable contingent deferred sales charge for Class B
shares (3% year 1, 2% year 2, 1% year 3, 0% year 4); a 1% 1 year contingent
deferred sales charge for Class C shares. Performance assumes reinvestment of
distributions and does not account for taxes.
Benchmark Disclosure
Neither the Lehman Brothers (LB) Global Treasury Index (hedged to the U.S.
dollar), the LB Government Index, nor the J.P. Morgan Emerging Markets Bond
Index Plus Latin Only (JPM EMBI + Latin Only) reflects fees and expenses
associated with the active management of a mutual fund portfolio. The LB Global
Treasury Index (hedged to the U.S. dollar) is a basket of Treasury securities
from approximately 35 global developed countries and approximately 1,000
different issues. The Composite benchmark represents a 50%/50% blend of both
the LB Government Index and the JPM EMBI+ Latin Only. The LB Government Index
is composed of the LB Treasury Index and the LB Agency Index. The unmanaged JPM
EMBI+ Latin Only is composed of dollar-denominated restructured sovereign bonds
of emerging markets in Latin America; a large percentage of the Index is made
up of Brady Bonds. An investor cannot invest directly in an index, and its
results are not indicative of the performance for any specific investment,
including the Fund.
(Historical Performance continued on next page)
4 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
HISTORICAL PERFORMANCE
(continued from previous page)
A Word About Risk
The Fund invests a significant amount of its assets in foreign securities which
may magnify fluctuations due to changes in foreign exchange rates and the
possibility of political and economic uncertainties in foreign countries. These
risks may be magnified for investments in emerging markets. Since the Fund is
non-diversified, it can invest more of its assets in a smaller number of
countries, making the Fund more susceptible to risks associated with a single
economic, political or regulatory occurrence than a more diversified portfolio
might be. To increase yield, the Fund can use leverage, a speculative
technique, which may increase share price fluctuation. Price fluctuation in the
Fund's portfolio securities may be caused by changes in the general level of
interest rates or changes in bond credit quality ratings. Please note, as
interest rates rise, existing bond prices fall and can cause the value of an
investment in the Fund to decline. Changes in interest rates have a greater
effect on bonds with longer maturities than on those with shorter maturities.
High yield bonds, otherwise known as "junk bonds," involve a greater risk of
default and price volatility than other bonds. Investing in below-investment
grade securities presents special risks, including credit risk. Investments in
the Fund are not guaranteed because of fluctuation in the net asset value of
the underlying fixed-income related investments. Similar to direct bond
ownership, bond funds have the same interest rate, inflation and credit risks
that are associated with the underlying bonds owned by the Fund. Fund
purchasers should understand that, in contrast to owning individual bonds,
there are ongoing fees and expenses associated with owning shares of bond
funds. While the Fund invests principally in bonds and other fixed-income
securities, in order to achieve its investment objectives, the Fund may at
times use certain types of investment derivatives, such as options, futures,
forwards and swaps. These instruments involve risks different from, and in
certain cases, greater than, the risks presented by more traditional
investments. These risks are fully discussed in the Fund's prospectus.
(Historical Performance continued on next page)
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 5
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK
PERIODS ENDED SEPTEMBER 30, 2006
Returns
6 Months 12 Months
AllianceBernstein Global Government
Income Trust
Class A 2.71% 3.90%
Class B 2.33% 3.28%
Class C 2.20% 3.15%
Lehman Brothers Global Treasury Index-
Hedged to the U.S. Dollar 3.34% 3.36%
Composite: 50% Lehman Brothers Government
Index and 50% J.P. Morgan EMBI+ Latin Only 4.24% 6.82%
Lehman Brothers Government Index 3.56% 3.30%
J.P. Morgan EMBI+ Latin Only 4.92% 10.33%
GROWTH OF A $10,000 INVESTMENT IN THE FUND
9/30/96 - 9/30/06
AllianceBernstein Global Government Income Trust Class A: $25,007
JPM EMBI+ Latin Only: $26,523
Composite: $23,279
LB Global Treasury Index (hedged in USD): $18,693
LB Government Index: $18,296
[THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL]
AllianceBernstein
Global Government LB Global
Income Trust Treasury Index LB Government JPM EMBI+
Class A (hedged in USD) Composite Index Latin Only
- -------------------------------------------------------------------------------
9/30/96 $9,575 $10,000 $10,000 $10,000 $10,000
9/30/97 $12,008 $11,107 $11,731 $10,916 $12,545
9/30/98 $11,932 $12,642 $11,555 $12,399 $10,465
9/30/99 $13,515 $12,752 $12,605 $12,189 $12,544
9/30/00 $15,611 $13,624 $14,409 $13,064 $15,234
9/30/01 $17,034 $14,998 $15,032 $14,796 $14,532
9/30/02 $17,193 $16,034 $14,549 $16,282 $12,138
9/30/03 $20,547 $16,581 $18,449 $16,860 $18,216
9/30/04 $21,517 $17,065 $20,061 $17,284 $20,941
9/30/05 $24,062 $18,085 $21,793 $17,711 $24,038
9/30/06 $25,007 $18,693 $23,279 $18,296 $26,523
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Global Government Income Trust Class A shares (from 9/30/96
to 9/30/06) as compared to the performance of the Fund's new benchmark, the LB
Global Treasury Index (hedged to the U.S. dollar), its old benchmark, a
composite consisting of 50% LB Government Index and 50% J.P. Morgan Emerging
Markets Bond Index Plus Latin Only, and the individual components of the
composite. 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 distributions.
See Historical Performance and Benchmark Disclosures on pages 4-5.
(Historical Performance continued on next page)
6 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF SEPTEMBER 30, 2006
NAV Returns SEC Returns
Class A
1 Year 3.90% -0.50%
5 Years 7.97% 7.04%
10 Years 10.07% 9.60%
SEC Yield* 4.92%
Class B
1 Year 3.28% 0.34%
5 Years 7.16% 7.16%
10 Years(a) 9.53% 9.53%
SEC Yield* 4.42%
Class C
1 Year 3.15% 2.17%
5 Years 7.20% 7.20%
10 Years 9.25% 9.25%
SEC Yield* 4.42%
SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST
RECENT CALENDAR QUARTER-END (SEPTEMBER 30, 2006)
Class A Shares
1 Year -0.50%
5 Years 7.04%
10 Years 9.60%
Class B Shares
1 Year 0.34%
5 Years 7.16%
10 Years(a) 9.53%
Class C Shares
1 Year 2.17%
5 Years 7.20%
10 Years 9.25%
* SEC Yields are calculated based on SEC guidelines for the 30-day period
ended September 30, 2006.
(a) Assumes conversion of Class B shares into Class A shares after six years.
See Historical Performance disclosures on pages 4-5.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 7
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual
expenses. You may use the information in this line, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
annual rate of return of 5% before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds by comparing this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
April 1, 2006 September 30, 2006 During Period*
----------------------- --------------------------- -----------------------
Actual Hypothetical Actual Hypothetical** Actual Hypothetical
------ ------------ --------- -------------- ------ ------------
Class A $1,000 $1,000 $1,027.06 $1,019.85 $5.28 $5.27
Class B $1,000 $1,000 $1,023.32 $1,016.19 $8.98 $8.95
Class C $1,000 $1,000 $1,022.04 $1,016.29 $8.87 $8.85
* Expenses are equal to the classes' annualized expense ratios of 1.04%,
1.77%, and 1.75%, respectively, multiplied by the average account value over
the period, multiplied by 183/365 (to reflect the one-half year period).
** Assumes 5% return before expenses.
8 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
PORTFOLIO SUMMARY
September 30, 2006
PORTFOLIO STATISTICS
Net Assets ($mil): $1,469.4
SECURITY TYPE BREAKDOWN*
[ ] 81.6% Sovereign [PIE CHART OMITTED]
[ ] 16.7% U.S. Government and Sponsored Agency Obligations
[ ] 1.7% Short-Term
* All data are as of September 30, 2006. The Fund's security type breakdown is
expressed as a percentage of total investments and may vary over time.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 9
PORTFOLIO OF INVESTMENTS
September 30, 2006
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
GOVERNMENT/AGENCY
OBLIGATIONS-103.7%
Argentina-1.0%
Republic of Argentina
5.59%, 8/03/12(a)(b) US$ 10,334 $9,533,135
8.28%, 12/31/33(b) 5,272 5,079,682
-----------
Total Argentinian Securities
(cost $14,164,422) 14,612,817
Australia-2.7%
Commonwealth of Australia
6.00%, 2/15/17(b)
(cost $40,500,279) AUD 51,837 40,110,094
Brazil-8.3%
Brazilian Real Credit Linked Note
Zero Coupon, 9/20/07(b) BRL 139,046 56,669,462
Federal Republic of Brazil
8.25%, 1/20/34(b) US$ 5,530 6,318,025
8.88%, 4/15/24(b) 1,768 2,126,020
12.50%, 1/05/16(b) BRL 121,935 56,500,719
Total Brazilian Securities
(cost $107,266,663) 121,614,226
Canada-2.9%
Government of Canada
2.75%, 12/01/07(b) CAD 16,804 14,821,797
4.25%, 9/01/09(b) 17,283 15,609,668
Province of Ontario
2.00%, 12/01/36(b) 6,000 5,461,060
5.60%, 6/02/35(b) 6,882 7,185,972
Total Canadian Securities
(cost $40,594,389) 43,078,497
Colombia-1.0%
Republic of Colombia
11.75%, 3/01/10(b) COP 6,027,000 2,695,421
11.75%, 2/25/20(b) US$ 8,228 11,478,060
Total Colombian Securities
(cost $10,354,400) 14,173,481
Costa Rica-0.3%
Costa Rican Colon Credit Linked Note
Zero Coupon, 1/12/07(b)
(cost $3,842,805) CRC 2,007,600 3,721,296
10 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Dominican Republic-0.3%
Dominican Peso Credit Linked Note
Zero Coupon, 3/12/07(b)
(cost $4,917,406) DOP 172,325 $4,841,921
El Salvador-0.3%
Republic of El Salvador
7.65%, 6/15/35(b)(c) US$ 1,889 2,025,953
8.50%, 7/25/11(b)(c) 1,950 2,159,625
Total Salvadoran Securities
(cost $3,948,830) 4,185,578
Germany-3.3%
Deutsche Bundesrepublik
6.50%, 7/04/27(b)
(cost $46,542,157) EUR 28,000 48,385,694
Indonesia-1.2%
Indonesian Rupiah Credit Linked Note
11.00%, 10/15/14(b) IDR 70,498,625 7,642,129
12.90%, 6/15/22(b) 70,203,600 7,630,993
Republic of Indonesia
6.88%, 3/09/17(b)(c) US$ 2,996 3,063,410
Total Indonesian Securities
(cost $18,333,579) 18,336,532
Japan-3.3%
Government of Japan
0.80%, 9/10/15(b)
(cost $50,535,373) JPY 5,910,250 49,088,222
Mexico-12.7%
Mexican Bonos
8.00%, 12/24/08-12/07/23(b) MXN 1,224,745 109,168,205
9.00%, 12/24/09-12/20/12(b) 576,086 54,417,362
10.00%, 12/05/24(b) 217,539 22,520,980
Total Mexican Securities
(cost $160,780,645) 186,106,547
New Zealand-0.3%
New Zealand Government
6.00%, 7/15/08(b)
(cost $3,814,133) NZD 5,840 3,771,278
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 11
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Norway-3.2%
Kingdom of Norway
5.50%, 5/15/09(b) NOK 133,265 $21,195,232
6.00%, 5/16/11(b) 160,000 26,558,564
Total Norwegian Securities
(cost $51,209,740) 47,753,796
Panama-0.9%
Republic of Panama
6.70%, 1/26/36(b)
(cost $10,058,468) US$ 13,350 13,350,000
Peru-4.6%
Peru Bono Soberano
7.84%, 8/12/20(b) PEN 13,000 4,245,747
8.60%, 8/12/17(b) 22,510 7,761,016
9.91%, 5/05/15(b) 48,440 17,897,690
Republic of Peru
8.20%, 8/12/26(b) 30,663 10,204,963
8.38%, 5/03/16(b) US$ 3,343 3,844,450
8.75%, 11/21/33(b) 8,131 9,960,475
9.88%, 2/06/15(b) 11,665 14,435,437
Total Peruvian Securities
(cost $61,232,779) 68,349,778
Philippines-1.1%
Republic of Philippines
10.63%, 3/16/25(b)
(cost $16,031,375) 12,500 16,643,750
Poland-12.0%
Republic of Poland
5.75%, 9/23/22(b) PLN 51,792 16,538,247
6.25%, 10/24/15(b) 475,300 159,498,274
Total Polish Securities
(cost $175,562,570) 176,036,521
South Africa-2.6%
Republic of South Africa
13.00%, 8/31/10(b)
(cost $47,879,483) ZAR 250,000 37,552,881
South Korea-4.3%
South Korean Won Credit Linked Note
5.00%, 3/10/11(b)(d) US$ 32,750 33,126,625
5.00%, 3/10/11(b) KRW 27,587,875 29,592,377
Total Korean Won Securities
(cost $62,675,594) 62,719,002
12 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
Sweden-11.8%
Kingdom of Sweden
5.00%, 1/28/09(b) SEK 400,000 $56,450,810
5.25%, 3/15/11(b) 800,000 116,624,250
Total Swedish Securities
(cost $169,854,199) 173,075,060
Turkey-1.7%
New Turkish Lira Credit Linked Note
Zero Coupon, 3/08/07(b) TRY 24,430 15,082,992
Zero Coupon, 6/28/07(b) 5,735 3,349,772
Zero Coupon, 6/28/07(b) 2,509 1,465,579
Republic of Turkey
Zero Coupon, 9/05/07(b) 9,000 4,952,526
Total Turkish Securities
(cost $26,342,745) 24,850,869
United Kingdom-5.3%
United Kingdom Treasury Note
5.00%, 9/07/14(b)
(cost $73,747,509) GBP 40,300 77,523,191
United States-17.7%
Federal Home Loan Mortgage Corp.
30 Year TBA
6.50%, 10/01/34 US$ 116,950 119,106,324
Federal National Mortgage Association
5.50%, 6/01/20(b) 35,194 35,254,613
5.50%, 6/01/20(b) 49,773 49,859,211
U.S. Treasury Strips
Zero Coupon, 11/15/21(b)(e) 115,000 55,231,510
Total United States Securities
(cost $248,273,316) 259,451,658
Uruguay-0.7%
Republic of Uruguay
5.00%, 9/14/18(b) UYU 83,500 3,530,877
7.50%, 3/15/15(b) US$ 6,501 6,787,044
Total Uruguayan Securities
(cost $8,552,698) 10,317,921
Venezuela-0.2%
Republic of Venezuela
6.51%, 4/20/11(a)(b)(c) 2,095 2,072,374
8.50%, 10/08/14(b) 1,338 1,481,835
Total Venezuelan Securities
(cost $2,977,160) 3,554,209
Total Government/Agency Obligations
(cost $1,459,992,717) 1,523,204,819
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 13
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENT-1.7%
Repurchase Agreement-1.7%
Deutsche Bank
5.25%, dated 9/29/06, due 10/02/06
in the amount of $25,811,288
(cost $25,800,000; collateralized
by $25,830,000 FFCB, 5.25%,
due 12/04/07, value $26,333,659)(b) US$ 25,800 $25,800,000
Total Investments-105.4%
(cost $1,485,792,717) 1,549,004,819
Other assets less liabilities-(5.4%) (79,606,618)
NET ASSETS-100% $ 1,469,398,201
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
U.S. $ U.S. $
Contract Value on Value at Unrealized
Amount Origination September 30, Appreciation/
(000) Date 2006 (Depreciation)
- -----------------------------------------------------------------------------------------------
Buy Contracts:
Canadian Dollar,
settling 10/11/06 95,162 $ 85,043,307 $ 85,162,132 $118,825
South African Rand,
settling 10/03/06 253,028 32,956,987 32,486,375 (470,612)
Sale Contracts:
Australian Dollar,
settling 10/17/06 23,062 17,320,350 17,182,621 137,729
British Pound,
settling 10/16/06 41,043 77,719,945 76,859,850 860,095
Canadian Dollar,
settling 10/11/06 77,664 69,492,639 69,502,552 (9,913)
Euro Dollar,
settling 10/27/06 28,044 35,649,856 35,610,557 39,299
Japanese Yen,
settling 10/31/06 5,875,670 50,622,676 49,957,428 665,248
Korean Won,
settling 11/14/06 31,513,268 32,828,031 33,339,789 (511,758)
settling 12/15/06 27,473,404 28,643,490 29,087,775 (444,285)
Mexican Peso,
settling 10/10/06 803,122 73,610,012 73,025,699 584,313
settling 11/30/06 887,839 80,157,091 80,516,485 (359,394)
Norwegian Kroner,
settling 11/10/06 314,872 48,098,546 48,354,065 (255,519)
14 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D) (continued)
U.S. $ U.S. $
Contract Value on Value at Unrealized
Amount Origination September 30, Appreciation/
(000) Date 2006 (Depreciation)
- -----------------------------------------------------------------------------------------------
Sale Contracts:
continued
Polish Zloty,
settling 10/10/06 579,018 $192,960,618 $184,937,933 $8,022,685
South African Rand,
settling 10/03/06 253,028 35,654,354 32,486,375 3,167,979
settling 11/09/06 180,389 23,290,087 23,084,948 205,139
Swedish Krona,
settling 11/21/06 1,289,680 178,734,932 176,641,950 2,092,982
FINANCIAL FUTURES CONTRACTS SOLD (see Note D)
Value at
Number of Expiration Original September 30, Unrealized
Type Contracts Month Value 2006 Depreciation
- -------------------------------------------------------------------------------
U.S. Treasury
Note
10 Yr Futures 615 December 2006 $65,862,656 $66,458,438 $(595,782)
(a) Coupon rate adjusts on a predetermined schedule to a rate based on a
specific Index. Stated interest rate was in effect at September 30, 2006.
(b) Positions, or a portion thereof, with an aggregate market value of
$1,426,830,057 have been segregated to collateralize forward currency exchange
contracts.
(c) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At September 30, 2006, the aggregate market value of these securities
amounted to $9,321,362 or 0.6% of net assets.
(d) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate was in effect at September 30, 2006.
(e) Positions, or a portion thereof, with an aggregate market value of
$720,411 have been segregated to collateralize margin requirements for the open
futures contracts.
Glossary of Terms:
FFCB - Federal Farm Credit Bank
TBA - (To Be Assigned)-Securities are purchased on a forward commitment
with an appropriate principal amount (generally +/-1.0%) and no definite
maturity date. The actual principal amount and maturity date will be determined
upon settlement when the specific mortgage pools are assigned.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 15
Currency Abbreviations:
AUD - Australian Dollar
BRL - Brazilian Real
CAD - Canadian Dollar
COP - Colombian Peso
CRC - Costa Rican Colon
DOP - Dominican Peso
EUR - Euro Dollar
GBP - Great British Pound
IDR - Indonesian Rupiah
JPY - Japanese Yen
KRW - Korean Won
MXN - Mexican Peso
NOK - Norwegian Kroner
NZD - New Zealand Dollar
PEN - Peruvian New Sol
PLN - Polish Zloty
SEK - Swedish Krona
TRY - New Turkish Lira
US$ - United States Dollar
UYU - Uruguayan Peso
ZAR - South African Rand
See notes to financial statements.
16 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
STATEMENT OF ASSETS & LIABILITIES
September 30, 2006
Assets
Investments in securities, at value (cost $1,485,792,717) $1,549,004,819
Cash 2,417,963
Foreign cash, at value (cost $4,639,829) 4,620,816
Interest receivable 26,414,451
Unrealized appreciation of forward currency exchange
contracts 15,894,294
Receivable for capital stock sold 5,541,088
Receivable for variation margin on futures contracts 57,656
Total assets 1,603,951,087
Liabilities
Payable for investment securities purchased 120,779,014
Payable for capital stock redeemed 7,756,499
Dividends payable 2,368,470
Unrealized depreciation of forward currency exchange
contracts 2,051,481
Advisory fee payable 611,858
Distribution fee payable 201,987
Transfer Agent fee payable 156,222
Administrative fee payable 25,562
Accrued expenses and other liabilities 601,793
Total liabilities 134,552,886
Net Assets $1,469,398,201
Composition of Net Assets
Capital stock, at par $194,786
Additional paid-in capital 1,613,164,146
Distributions in excess of net investment income (38,815,497)
Accumulated net realized loss on investments
and foreign currency transactions (181,561,807)
Net unrealized appreciation of investments
and foreign currency denominated assets and liabilities 76,416,573
$1,469,398,201
Net Asset Value Per Share--9 billion shares of capital stock authorized,
$.001 par value
Shares Net Asset
Class Net Assets Outstanding Value
- -------------------------------------------------------------------------------
A $935,900,468 124,122,436 $7.54*
B $277,450,281 36,806,936 $7.54
C $256,047,452 33,857,125 $7.56
* The maximum offering price per share for Class A shares was $7.87 which
reflects a sales charge of 4.25 %.
See notes to financial statements.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 17
STATEMENT OF OPERATIONS
Year Ended September 30, 2006
Investment Income
Interest (net of foreign taxes withheld
of $123,860) $105,108,933
Expenses
Advisory fee $7,679,406
Distribution fee--Class A 2,847,177
Distribution fee--Class B 3,310,391
Distribution fee--Class C 2,557,831
Transfer agency--Class A 1,088,539
Transfer agency--Class B 458,047
Transfer agency--Class C 306,796
Custodian 1,102,984
Printing 365,107
Registration 102,481
Administrative 98,000
Legal 94,748
Audit 92,849
Directors' fees 30,360
Miscellaneous 53,392
Total expenses before interest expense 20,188,108
Interest expense 3,345
Total expenses 20,191,453
Less: expense offset arrangement
(see Note B) (46,190)
Net expenses 20,145,263
Net investment income 84,963,670
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions 46,003,015
Futures contracts 3,853,109
Swap contracts (246,343)
Written options 510,445
Foreign currency transactions 858,779
Net change in unrealized
appreciation/depreciation of:
Investments (102,155,037)
Futures contracts (2,298,584)
Swap contracts 181,737
Foreign currency denominated assets
and liabilities 21,558,350
Net loss on investments and
foreign currency transactions (31,734,529)
Net Increase in Net Assets
from Operations $53,229,141
See notes to financial statements.
18 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, September 30,
2006 2005
Increase (Decrease) in Net Assets
from Operations
Net investment income $84,963,670 $102,855,317
Net realized gain (loss) on investments
and foreign currency transactions 50,979,005 (4,634,866)
Net change in unrealized
appreciation/depreciation of
investments and foreign currency
denominated assets and liabilities (82,713,534) 75,060,668
Net increase in net assets from
operations 53,229,141 173,281,119
Dividends to Shareholders from
Net investment income
Class A (55,136,184) (63,028,146)
Class B (16,880,473) (25,124,988)
Class C (12,981,346) (14,692,112)
Capital Stock Transactions
Net decrease (82,204,747) (171,591,238)
Total decrease (113,973,609) (101,155,365)
Net Assets
Beginning of period 1,583,371,810 1,684,527,175
End of period (including distributions in
excess of net investment income of
($38,815,497) and ($47,952,220),
respectively) $1,469,398,201 $1,583,371,810
See notes to financial statements.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 19
NOTES TO FINANCIAL STATEMENTS
September 30, 2006
NOTE A
Significant Accounting Policies
AllianceBernstein Global Government Income Trust, Inc. (the "Fund"), formerly
AllianceBernstein Americas Government Income Trust, Inc., was incorporated as a
Maryland corporation on February 3, 1992 and is registered under the Investment
Company Act of 1940 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 sold currently 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 the classes bear different distribution and transfer agency expenses. Each
class has exclusive voting rights with respect to its distribution plan. The
financial statements have been prepared in conformity with U.S. 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 are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange (other than securities listed on the NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities listed only on NASDAQ are valued in
accordance with the NASDAQ Official Closing Price; listed put or call options
are valued at the last sale price. If there has been no sale on that day, such
securities will be valued at the closing bid prices on that day; open futures
contracts and options thereon are valued using
20 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
the closing settlement price or, in the absence of such a price, the most
recent quoted bid price. If there are no quotations available for the day of
valuation, the last available closing settlement price is used; securities
traded in the over-the-counter market, ("OTC") are valued at the mean of the
current bid and asked prices as reported by the National Quotation Bureau or
other comparable sources; U.S. Government securities and other debt instruments
having 60 days or less remaining until maturity are valued at amortized cost if
their original maturity was 60 days or less; or by amortizing their fair value
as of the 61st day prior to maturity if their original term to maturity
exceeded 60 days; fixed-income securities, including mortgage backed and asset
backed securities, may be valued on the basis of prices provided by a pricing
service or at a price obtained from one or more of the major broker/dealers. In
cases where broker/dealer quotes are obtained, AllianceBernstein, L.P. (prior
to February 24, 2006 known as Alliance Capital Management, L.P.) (the
"Adviser") may establish procedures whereby changes in market yields or spreads
are used to adjust, on a daily basis, a recently obtained quoted price on a
security; and OTC and other derivatives are valued on the basis of a quoted bid
price or spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Currency Translation
Asset and liabilities denominated in foreign currencies and commitments under
forward currency exchange contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at the rates of
exchange prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on foreign investment transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 21
the U.S. dollar equivalent amounts actually received or paid. Net unrealized
currency gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of
unrealized appreciation and depreciation of investments and foreign currency
denominated assets and liabilities.
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. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the trade date securities are purchased or sold. Investment gains and losses
are determined on the identified cost basis. The Fund amortizes premiums and
accretes discounts as adjustments to interest income.
5. Class Allocations
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 net assets of such class, except for class specific
expenses which are allocated to the respective class. Realized and unrealized
gains and losses are allocated among the various share classes based on their
respective net assets.
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
U.S. 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.
7. Repurchase Agreements
It is the Fund's policy that its custodian or designated subcustodian take
control of securities as collateral under repurchase agreements and to
determine on a daily basis that the value of such securities are sufficient to
cover the value of the repurchase agreements. If the seller defaults and the
value of the collateral
22 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
declines, or if bankruptcy proceedings are commenced with respect to seller of
the security, realization of collateral by the Fund may be delayed or limited.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .50% of the first $2.5 billion, .45% of
the next $2.5 billion and .40% in excess of $5 billion, of the Fund's average
daily adjusted net assets. Prior to September 7, 2004, the Fund paid the
Adviser an advisory fee at an annual rate of .65% of the Fund's average daily
adjusted net assets. The fee is accrued daily and paid monthly.
Pursuant to the advisory agreement, the Fund may reimburse the Adviser for
certain legal and accounting services provided to the Fund by the Adviser. For
the year ended September 30, 2006, such fees amounted to $98,000.
The Fund compensates AllianceBernstein Investor Services, Inc. (prior to
February 24, 2006 known as Alliance Global Investor Services, Inc.) ("ABIS"), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. ABIS may make payments to intermediaries that provide omnibus account
services, sub-accounting services and/or networking services. The compensation
retained by ABIS amounted to $961,297 for the year ended September 30, 2006.
For the year ended September 30, 2006, the Fund's expenses were reduced by
$46,190 under an expense offset arrangement with ABIS.
AllianceBernstein Investments, Inc. (prior to February 24, 2006 known as
AllianceBernstein Investment Research and Management, Inc.) (the
"Distributor"), 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 retained front-end sales charges of $110,658 from the sales of Class A
shares and received $1,666, $200,837 and $62,354 in contingent deferred sales
charges imposed upon redemptions by shareholders of Class A, Class B and Class
C shares, respectively, for the year ended September 30, 2006.
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 distribution and servicing fees to the Distributor at
an annual rate of up to .30% 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 pro-
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 23
vides 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 amounts of $29,089,591 and $8,706,811 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 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)
for the year ended September 30, 2006, were as follows:
Purchases Sales
Investment securities (excluding
U.S. government securities) $1,444,674,176 $1,203,663,264
U.S. government securities 104,856,723 601,416,406
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding foreign currency contracts,
options written, futures and swap contracts) are as follows:
Cost $1,485,940,536
Gross unrealized appreciation $82,285,940
Gross unrealized depreciation (19,221,657)
Net unrealized appreciation $63,064,283
1. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse affects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments and the imperfect correlation between movements in the
price of the future contracts and movements in the price of the securities
hedged or used for cover.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin with the broker, as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in the value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized gains or
losses. Risks may arise from the potential inability of a counterparty to meet
the terms of the contract. When the contract is closed, the Fund records a
realized gain or loss equal
24 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
to the difference between the value of the contract at the time it was opened
and the time it was closed.
2. Forward Currency Exchange Contracts
The Fund may enter into forward currency exchange contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, to hedge certain firm purchase and sales commitments
denominated in foreign currencies and for investment purposes. A forward
currency exchange contract is a commitment to purchase or sell a foreign
currency on a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contract and the closing of
such contract would be included in net realized gain or loss on foreign
currency transactions.
Fluctuations in the value of open forward currency exchange contracts are
recorded for financial reporting purposes as unrealized appreciation and
depreciation by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value at
least equal to the aggregate amount of the Fund's commitments under forward
currency exchange contracts entered into with respect to position hedges.
Risks may arise from the potential inability of the counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars reflects the total exposure the Fund has in that particular currency
contract.
3. Option Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. and foreign government securities and foreign
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 25
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's selling or buying a security or currency at a price different from the
current market value. Transactions in written options for the year ended
September 30, 2006 were as follows:
Number of Premium
Contracts Received
Options outstanding at
September 30, 2005 17,364,000 $(179,202)
Options written 28,608,000 (331,244)
Options terminated in closing
purchase transactions (20,875,000) 236,628
Options expired (25,097,000) 273,818
Options outstanding at
September 30, 2006 -0- $-0-
4. Swap Agreements
The Fund may enter into swaps to hedge its exposure to foreign currency
interest rates and credit risk or for investment purposes. A swap is an
agreement that obligates two parties to exchange a series of cash flows at
specified intervals based upon or calculated by reference to changes in
specified prices or rates for a specified amount of an underlying asset. The
payment flows are usually netted against each other, with the difference being
paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interim payment
to be received by the Fund, and/or the termination value at the end of the
contract. Therefore, the Fund considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the underlying securities or currencies.
As of October 1, 2003, the Portfolios have adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. The Fund accrues for the interim payments on
swap contracts on a daily basis, with the net amount recorded within unreal-
26 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
ized appreciation/depreciation of swap contracts on the statement of assets and
liabilities. Once the interim payments are settled in cash, the net amount is
recorded as realized gain/loss on swaps, in addition to realized gain/loss
recorded upon the termination of swaps contracts on the statements of
operations. Prior to October 1, 2003, these interim payments were reflected
within interest income in the statement of operations. Fluctuations in the
value of swap contracts are recorded as a component of net change in unrealized
appreciation/depreciation of investments.
The Fund may enter into credit default swaps. The Fund may purchase credit
protection on the referenced obligation of the credit default swap ("Buy
Contract") or provide credit protection on the referenced obligation of the
credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap
provides upon the occurrence of a credit event, as defined in the swap
agreement, for the Fund to buy/(sell) from/(to) the counterparty at the
notional amount (the "Notional Amount") and receive/(deliver) the principal
amount of the referenced obligation. If a credit event occurs, the maximum
payout amount for a Sale Contract is limited to the Notional Amount of the swap
contract ("Maximum Payout Amount"). During the term of the swap agreement, the
Fund receives/(pays) semi-annual fixed payments from/(to) the respective
counterparty, calculated at the agreed upon interest rate applied to the
Notional Amount. These interim payments are recorded within unrealized
appreciation/depreciation of swap contracts on the statement of assets and
liabilities.
Credit default swaps may involve greater risks than if a Fund had invested in
the referenced obligation directly. Credit default swaps are subject to general
market risk, liquidity risk, counterparty risk and credit risk. If the Fund is
a buyer and no credit event occurs, it will lose its investment. In addition,
if the Fund is a seller and a credit event occurs, the value of the referenced
obligation received by the Fund coupled with the periodic payments previously
received, may be less than the Maximum Payout Amount it pays to the buyer,
resulting in a loss to the Fund.
At September 30, 2006, the Fund had no Sale Contracts outstanding.
In certain circumstances, the Fund may hold Sale Contracts on the same
referenced obligation and with the same counterparty it has purchased credit
protection, which may reduce its obligation to make payments on Sale Contracts,
if a credit event occurs. The Fund had no Buy Contracts outstanding as of
September 30, 2006.
5. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 27
with the custodian containing liquid assets having at least equal to the
repurchase price.
For the year ended September 30, 2006, the average amount of reverse repurchase
agreements outstanding was $90,640 and the daily weighted average annual
interest rate was 3.69%.
NOTE E
Capital Stock
Each class consists of 3,000,000,000 authorized shares. Transactions in capital
shares for each class were as follows:
Shares Amount
--------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
September 30, September 30, September 30, September 30,
2006 2005 2006 2005
------------ ------------ -------------- --------------
Class A
Shares sold 18,821,158 10,573,774 $142,691,485 $79,517,459
Shares issued in
reinvestment
of dividends
and distributions 4,517,628 4,082,809 34,111,951 29,916,957
Shares converted
from Class B 5,824,434 7,703,362 43,913,319 57,827,493
Shares redeemed (29,628,950) (27,878,859) (223,316,894) (207,952,705)
Net decrease (465,730) (5,518,914) $(2,600,139) $(40,690,796)
Class B
Shares sold 4,175,416 4,427,842 $31,669,693 $33,157,946
Shares issued in
reinvestment
of dividends
and distributions 1,467,044 1,674,043 11,082,539 12,443,631
Shares converted
to Class A (5,827,279) (7,728,725) (43,913,319) (57,827,493)
Shares redeemed (11,666,493) (14,471,457) (87,918,271) (107,817,977)
Net decrease (11,851,312) (16,098,297) $(89,079,358) $(120,043,893)
Class C
Shares sold 7,115,093 3,714,213 $54,090,877 $27,866,586
Shares issued
in reinvestment
of dividends
and distributions 992,845 1,065,900 7,518,215 8,028,962
Shares redeemed (6,903,938) (6,246,148) (52,134,342) (46,752,097)
Net increase
(decrease) 1,204,000 (1,466,035) $9,474,750 $(10,856,549)
28 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
NOTE F
Security Lending
The Fund may make secured loans of portfolio securities to brokers, dealers and
financial institutions, provided that cash, liquid high-grade debt securities
or bank letters of credit equal to at least 100% of the market values of the
securities loaned is deposited and maintained by the borrower with the Fund.
The risks in lending portfolio securities, as with other extensions of credit,
consist of possible loss of rights in the collateral should the borrower fail
financially. In determining whether to lend securities to a particular
borrower, the Adviser will consider all relevant facts and circumstances,
including the creditworthiness of the borrower. While securities are on loan,
the borrower will pay the Fund any income earned thereon and the Fund may
invest any cash collateral in portfolio securities, thereby earning additional
income, or receive an agreed upon amount of income from a borrower who has
delivered equivalent collateral. When such securities are borrowed against
cash, the Fund agrees to pay the borrower of such securities a "rebate rate"
for the use of the cash the borrower has pledged as collateral. As of September
30, 2006, the Fund had no securities on loan.
NOTE G
Risks Involved in Investing in the Fund
Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes
in interest rates will affect the value of the Fund's investments in
fixed-income debt securities such as bonds or notes. Increases in interest
rates may cause the value of the Fund's investments to decline. Credit risk is
the risk that the issuer or guarantor of a debt security, or the counterparty
to a derivative contract, will be unable or unwilling to make timely principal
and/or interest payments, or to otherwise honor its obligations. The degree of
risk for a particular security may be reflected in its credit risk rating.
Credit risk is greater for medium quality and lower-rated securities.
Lower-rated debt securities and similar unrated securities (commonly known as
"junk bonds") have speculative elements or are predominantly speculative risks.
Concentration of Risk--Investing in securities of foreign companies or foreign
governments involves special risks which include changes in foreign currency
exchange rates and the possibility of future political and economic
developments which could adversely affect the value of such securities.
Moreover, securities of many foreign companies or foreign governments and their
markets may be less liquid and their prices more volatile than those of
comparable U.S. companies or of the U.S. government.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 29
claims or losses pursuant to these indemnification provisions and expects the
risk of loss thereunder to be remote.
NOTE H
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $250 million revolving credit facility (the "Facility")
intended 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
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended September 30, 2006.
NOTE I
Distributions to Shareholders
The tax character of distributions paid for the year ending September 30, 2006
and September 30, 2005 were as follows:
2006 2005
Distributions paid from:
Ordinary income $84,998,003 $102,845,246
Total taxable distributions 84,998,003 102,845,246
Tax return of capital -0- -0-
Total distributions paid $84,998,003 $102,845,246
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Undistributed ordinary income $16,420,612
Accumulated capital and other losses (182,151,422)(a)
Unrealized appreciation/(depreciation) 62,065,679(b)
Total accumulated earnings/(deficit) $(103,665,131)(c)
(a) On September 30, 2006, the Fund had a net capital loss carryforward of
$182,151,422, of which $169,551,829 expires in the year 2009 and $12,599,593
expires in the year 2010. To the extent future capital gains are offset by
capital loss carryforwards, such gains will not be distributed. During the
fiscal year, the Fund utilized capital loss carryforwards of $38,057,799. As of
September 30, 2006, the Fund had deferred tax straddle losses of $37,927,130.
(b) The difference between book-basis and tax basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales, the realization for tax purposes of unrealized
gains/losses on certain derivative instruments, the difference between book and
tax amortization methods for premium and the difference between book and tax
treatment of swap income.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable to dividends payable.
30 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
During the current fiscal year, permanent differences, primarily due to the tax
treatment of bond premium, the tax treatment of swap income and the tax
treatment of foreign currency gains and losses, resulted in a net decrease in
distributions in excess of net investment income and a increase in accumulated
net realized loss on investments and foreign currency transactions. This
reclassification had no effect on net assets.
NOTE J
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of New York Attorney General ("NYAG") have
been investigating practices in the mutual fund industry identified as "market
timing" and "late trading" of mutual fund shares. Certain other regulatory
authorities have also been conducting investigations into these practices
within the industry and have requested that the Adviser provide information to
them. The Adviser has been cooperating and will continue to cooperate with all
of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order and the NYAG Order
contemplate that the Adviser's registered investment company clients, including
the Fund, will introduce governance and compliance changes.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 31
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
the Adviser's Board, directed and oversaw an internal investigation and a
comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent
Directors") have conducted an investigation of the above-mentioned matters with
the advice of an independent economic consultant and independent counsel.
On October 2, 2003, a purported class action complaint entitled Hindo, et al.
v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. The Hindo Complaint was filed in the United
States District Court for the Southern District of New York by alleged
shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges
that certain of the Alliance defendants failed to disclose that they improperly
allowed certain hedge funds and other unidentified parties to engage in "late
trading" and "market timing" of AllianceBernstein Fund securities, violating
Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the
Exchange Act and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an
unspecified amount of compensatory damages and rescission of their contracts
with the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, 43 additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. The
plaintiffs in such lawsuits have asserted a variety of theories for recovery
including, but not limited to, violations of the Securities Act, the Exchange
Act, the Advisers Act, the Investment Company Act, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), certain state securities
laws and common law. All state court actions against the Adviser either were
voluntarily dismissed or removed to federal court. On February 20, 2004, the
Judicial Panel on Multidistrict Litigation transferred all actions to the
United States District Court for the District of Maryland (the "Mutual Fund
MDL").
32 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual allegations, which appear to be based in large part on the SEC Order
and the NYAG Order.
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual
fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing
their agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The derivative claims brought on behalf of Alliance Holding remain
pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commissioner") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Holding, and various other defendants not
affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court
of Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was
transferred to the Mutual Fund MDL.
On August 30, 2005, the West Virginia Securities Commissioner signed a Summary
Order to Cease and Desist, and Notice of Right to Hearing addressed to the
Adviser and Alliance Holding. The Summary Order claims that the Adviser and
Alliance Holding violated the West Virginia Uniform Securities Act, and makes
factual allegations generally similar to those in the Commission Order and the
NYAGOrder. On January 26, 2006, the Adviser, Alliance Holding, and various
unaffiliated defendants filed a Petition for Writ of Prohibition and Order
Suspending Proceedings in West Virginia state court seeking to vacate the
Summary Order and for other relief. The court denied the writ and in September
2006 the Supreme Court of Appeals declined the defendants' petition for appeal.
On September 22, 2006, Alliance and Alliance Holding filed an answer and motion
to dismiss the Summary Order wih the Securities Commissioner.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 33
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA
Financial, Inc., AllianceBernstein Investment Research & Management, Inc.,
certain current and former directors of the AllianceBernstein Mutual Funds, and
unnamed Doe defendants. The Aucoin Complaint names certain of the
AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was
filed in the United States District Court for the Southern District of New York
by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin
Complaint alleges, among other things, (i) that certain of the defendants
improperly authorized the payment of excessive commissions and other fees from
fund assets to broker-dealers in exchange for preferential marketing services,
(ii) that certain of the defendants misrepresented and omitted from
registration statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as control
persons of other defendants. The Aucoin Complaint asserts claims for violation
of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206
and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding
and abetting breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amount of compensatory damages and punitive damages, rescission of
their contracts with the Adviser, including recovery of all fees paid to the
Adviser pursuant to such contracts, an accounting of all fund-related fees,
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical to the Aucoin
Complaint, and (iii) are brought on behalf of shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs' claim under Section 36(b) of the Investment Company Act. On January
11, 2006, the District Court granted defendants' motion for reconsideration and
dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court
denied plaintiffs' motion for leave to file an amended complaint. On July 5,
2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was
withdrawn by stipulation, with plaintiffs reserving the right to reinstate it
at a later date.
34 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell
investments held by those funds to provide for sufficient liquidity and could
also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds. However, the Adviser believes that these
matters are not likely to have a material adverse effect on its ability to
perform advisory services relating to the AllianceBernstein Mutual Funds.
NOTE K
Recent Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in
the course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and is to
be applied to all open tax years as of the effective date. At this time,
management is evaluating the implications of FIN 48 and its impact on the
financial statements has not yet been determined.
On September 20, 2006, the FASB released Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an
authoritative definition of fair value, sets out a framework for measuring fair
value, and requires additional disclosures about fair-value measurements. The
application of FAS 157 is required for fiscal years beginning after November
15, 2007 and interim periods within those fiscal years. At this time,
management is evaluating the implications of FAS 157 and its impact on the
financial statements has not yet been determined.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 35
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
-------------------------------------------------------------------------------------
December Year Ended
Year Ended September 30, 1, 2002 to November 30,
------------------------------------------- September ----------------------
2006 2005 2004(a) 30, 2003(b) 2002(c) 2001
-------------------------------------------------------------------------------------
Net asset value, beginning of
period $7.69 $7.35 $7.54 $6.86 $7.07 $7.55
Income From Investment
Operations
Net investment income(d) .44 .50 .50(e) .44 .56 .77
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions (.15) .34 (.16) .73 (.11) (.50)
Net increase in net asset value
from operations .29 .84 .34 1.17 .45 .27
Less: Dividends and
Distributions
Dividends from net investment
income (.44) (.50) (.53) (.49) (.60) (.75)
Tax return of capital -0- -0- -0- -0- (.06) -0-
Total dividends and distributions (.44) (.50) (.53) (.49) (.66) (.75)
Net asset value, end of period $7.54 $7.69 $7.35 $7.54 $6.86 $7.07
Total Return
Total investment return based
on net asset value(f) 3.90% 11.83% 4.72% 17.48% 6.69% 3.32%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $935,901 $957,697 $956,690 $1,060,244 $947,300 $1,009,606
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.04%(g) 1.05% 1.25% 1.49%(h) 1.57% 1.96%
Expenses, before waivers/
reimbursements 1.04%(g) 1.05% 1.41% 1.49%(h) 1.57% 1.96%
Expenses, before waivers/
reimbursements excluding
interest expense 1.04%(g) 1.05% 1.27% 1.26%(h) 1.28% 1.23%
Net investment income 5.81%(g) 6.78% 6.80%(e) 7.28%(h) 8.19% 10.07%
Portfolio turnover rate 104% 66% 76% 60% 160% 315%
See footnote summary on page 39.
36 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
-------------------------------------------------------------------------------------
December Year Ended
Year Ended September 30, 1, 2002 to November 30,
------------------------------------------- September ----------------------
2006 2005 2004(a) 30, 2003(b) 2002(c) 2001
-------------------------------------------------------------------------------------
Net asset value,beginning of
period $7.68 $7.35 $7.54 $6.86 $7.07 $7.58
Income From Investment
Operations
Net investment income(d) .38 .44 .45(e) .40 .51 .69
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions (.14) .33 (.16) .73 (.11) (.50)
Net increase in net asset value
from operations .24 .77 .29 1.13 .40 .19
Less: Dividends and
Distributions
Dividends from net investment
income (.38) (.44) (.48) (.45) (.55) (.70)
Tax return of capital -0- -0- -0- -0- (.06) -0-
Total dividends and distributions (.38) (.44) (.48) (.45) (.61) (.70)
Net asset value, end of period $7.54 $7.68 $7.35 $7.54 $6.86 $7.07
Total Return
Total investment return based
on net asset value(f) 3.28% 11.04% 3.98% 16.84% 5.92% 2.20%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $277,450 $373,923 $476,171 $696,043 $740,782 $888,457
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.76%(g) 1.77% 1.98% 2.21%(h) 2.28% 2.66%
Expenses, before waivers/
reimbursements 1.76%(g) 1.77% 2.15% 2.21%(h) 2.28% 2.66%
Expenses, before waivers/
reimbursements excluding
interest expense 1.76%(g) 1.77% 1.99% 1.98%(h) 2.00% 1.94%
Net investment income 5.10%(g) 5.82% 6.07%(e) 6.59%(h) 7.47% 9.06%
Portfolio turnover rate 104% 66% 76% 60% 160% 315%
See footnote summary on page 39.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 37
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
-------------------------------------------------------------------------------------
December Year Ended
Year Ended September 30, 1, 2002 to November 30,
------------------------------------------- September ----------------------
2006 2005 2004(a) 30, 2003(b) 2002(c) 2001
-------------------------------------------------------------------------------------
Net asset value, beginning of
period $7.71 $7.38 $7.57 $6.88 $7.09 $7.58
Income From Investment
Operations
Net investment income(d) .38 .44 .45(e) .40 .52 .71
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions (.15) .34 (.16) .74 (.12) (.50)
Net increase in net asset value
from operations .23 .78 .29 1.14 .40 .21
Less: Dividends and
Distributions
Dividends from net investment
income (.38) (.45) (.48) (.45) (.55) (.70)
Tax return of capital -0- -0- -0- -0- (.06) -0-
Total dividends and distributions (.38) (.45) (.48) (.45) (.61) (.70)
Net asset value, end of period $7.56 $7.71 $7.38 $7.57 $6.88 $7.09
Total Return
Total investment return based on
net asset value(f) 3.15% 10.87% 3.97% 16.94% 5.91% 2.48%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $256,047 $251,752 $251,666 $295,295 $277,015 $310,985
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.74%(g) 1.76% 1.96% 2.20%(h) 2.27% 2.65%
Expenses, before waivers/
reimbursements 1.74%(g) 1.76% 2.12% 2.20%(h) 2.27% 2.65%
Expenses, before waivers/
reimbursements excluding
interest expense 1.74%(g) 1.76% 1.97% 1.97%(h) 1.99% 1.93%
Net investment income 5.07%(g) 5.88% 6.07%(e) 6.56%(h) 7.45% 9.34%
Portfolio turnover rate 104% 66% 76% 60% 160% 315%
See footnote summary on page 39.
38 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
(a) As of October 1, 2003, the Fund has adopted the method of accounting for
interim payments on swap contracts in accordance with Financial Accounting
Standards Board Statement No. 133. These interim payments are reflected within
net realized and unrealized gain (loss) on swap contracts, however, prior to
October 1, 2003, these interim payments were reflected within interest
income/expense on the statement of operations. The effect of this change for
the fiscal year ended September 30, 2004, was to decrease net investment income
per share by $0.0002 for Class A, B and C and increase net realized and
unrealized gain (loss) on investment transactions per share by $0.0002 for
Class A, B and C. Consequently, the ratios of net investment income to average
net assets were decreased by 0.003% for Class A, B and C, respectively.
(b) The Fund changed its fiscal year end from November 30 to September 30.
(c) As required, effective December 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. The effect of this change for the year ended
November 30, 2002 was to decrease net investment income per share by $.04,
decrease net realized and unrealized loss on investments per share by $.04 for
Class A, B and C, respectively, and decrease the ratio of net investment income
to average net assets from 8.83% to 8.19% for Class A, from 8.10% to 7.47% for
Class B and from 8.09% to 7.45% for Class C. Per share, ratios and supplemental
data for periods prior to December 1, 2001 have not been restated to reflect
this change in presentation.
(d) Based on average shares outstanding.
(e) Net of waivers/reimbursement by the Adviser.
(f) 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 charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total return does not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. Total
investment return calculated for a period of less than one year is not
annualized.
(g) The ratio includes expenses attributable to costs of proxy solicitation.
(h) Annualized.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 39
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of AllianceBernstein
Global Government Income Trust
We have audited the accompanying statement of assets and liabilities of
AllianceBernstein Global Government Income Trust (the "Fund"), including the
portfolio of investments, as of September 30, 2006, 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 the standards of the Public Company
Accounting Oversight Board (United States). 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. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of September 30, 2006 by correspondence
with the custodian and others or by other appropriate auditing procedures where
replies from others were not received. 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
AllianceBernstein Global Government Income Trust, Inc. at September 30, 2006,
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 U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
November 17, 2006
40 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
BOARD OF DIRECTORS
William H. Foulk, Jr.(1),Chairman
Marc O.Mayer,President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Marshall C. Turner, Jr.(1)
OFFICERS(2)
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Paul J. DeNoon(2), Vice President
Scott DiMaggio(2), Vice President
Michael L. Mon(2), Vice President
Douglas J. Peebles(2), Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and Chief Financial Officer
Vincent S. Noto, Controller
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Principal Underwriter
AllianceBernstein Investments, Inc.
1345 Avenue of the Americas
New York, NY 10105
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Transfer Agent
AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-free (800) 221-5672
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
(1) Member of the Audit Committee, the Governance and Nominating Committee and
the Independent Directors Committee.
(2) The management of and investment decisions for the Fund's portfolio are
made by the Global Fixed Income Investment Team. Mr. Paul J. DeNoon, Mr. Scott
DiMaggio, Mr. Michael L. Mon and Mr. Douglas J. Peebles are the investment
professionals with the most significant responsibility for the day-to-day
management of the Fund's portfolio.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 41
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
AGE OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- -----------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O.Mayer, + Executive Vice President of 111 SCB Partners
1345 Avenue of the the Adviser since 2001, and Inc. and
Americas, Executive Managing Director of SCB Inc.
New York, NY 10105 AllianceBernstein Investments, Inc.
49 ("ABI") since 2003; prior thereto, he
(2003) was head of AllianceBernstein
Institutional Investments, a unit of
the Adviser from 2001-2003.
Prior thereto, Chief Executive
Officer of Sanford C. Bernstein &
Co., LLC (institutional research
and brokerage arm of Bernstein &
Co., LLC) ("SCB & Co.") and its
predecessor since prior to 2001.
DISINTERESTED DIRECTORS
Chairman of the Board Investment Adviser and an 113 None
William H. Foulk, Jr., #, ** Independent Consultant. He
P.O. Box 5060 was formerly Senior Manager
Greenwich, CT 06831-0505 of Barrett Associates, Inc., a
74 registered investment adviser,
(1992) with which he had been associated
since prior to 2001. He was formerly
Deputy Comptroller and Chief
Investment Officer of the State of
New York and, prior thereto, Chief
Investment Officer of the New York
Bank for Savings.
Ruth Block, #, ++ Formerly, Executive Vice President 100 None
500 SE Mizner Blvd. and Chief Insurance Officer of The
Boca Raton, FL 33432 Equitable Life Assurance Society
76 of the United States; Chairman and
(1992) Chief Executive Officer of Evlico
(insurance); Director of Avon, BP
(oil and gas), Ecolab Incorporated
(specialty chemicals), Tandem
Financial Group and Donaldson,
Lufkin & Jenrette Securities
Corporation; and Governor at
Large, National Association of
Securities Dealers, Inc.
42 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
AGE OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- -----------------------------------------------------------------------------------------------
David H. Dievler, # Independent Consultant. Until 112 None
P.O. Box 167 December 1994, he was Senior
Spring Lake, NJ 07762 Vice President of AllianceBernstein
77 Corporation ("AB Corp.") (formerly,
(1992) Alliance Capital Management
Corporation) responsible for mutual
fund administration. Prior to joining
AB Corp. in 1984, he was Chief
Financial Officer of Eberstadt Asset
Management since 1968. Prior to
that, he was a Senior Manager at
Price Waterhouse & Co. Member of
the American Institute of Certified
Public Accountants since 1953.
John H. Dobkin, # Consultant. Formerly, President 111 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
64 Senior Advisor from June
(1992) 1999-June 2000 and President
of Historic Hudson Valley (historic
preservation) from December 1989-
May 1999. Previously, Director of the
National Academy of Design and
during 1988-1992, Director and
Chairman of the Audit Committee of
AB Corp. (formerly Alliance Capital
Management Corporation).
Michael J. Downey, # Consultant since January 2004. 111 Asia Pacific
c/o AllianceBernstein L.P. Formerly, managing partner of Fund, Inc.,
Attn: Philip L. Kirstein Lexington Capital, LLC (investment and The
1345 Avenue of the advisory firm) from December 1997 Merger Fund
Americas until December 2003. Prior thereto,
New York, NY 10105 Chairman and CEOof Prudential
62 Mutual Fund Management from
(2005) 1987 to 1993.
D. James Guzy, # Chairman of the Board of PLX 111 Intel Corporation
P.O. Box 128 Technology (semi-conductors) (semi-conductors),
Glenbrook, NV 89413 and of SRC Computers, Inc., Cirrus Logic
70 with which he has been associated Corporation
(2005) since prior to 2001. He is also (semi-conductors),
President of the Arbor Company and the Davis
(private family investments). Selected
Advisors Group
of Mutual Funds
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 43
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS
AGE OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- -----------------------------------------------------------------------------------------------
Nancy P. Jacklin, # Formerly, U.S. Executive 111 None
4046 Chancery Court. NW Director of the International
Washington, DC 20007 Monetary Fund (December
58 2002- May 2006); Partner,
(2006) Clifford Chance (1992-2002);
Senior Counsel, International
Banking and Finance, and
Associate General Counsel,
Citicorp (1985-1992); Assistant
General Counsel (International),
Federal Reserve Board of
Governors (1982-1985); and
Attorney Advisor, U.S. Depart-
ment of the Treasury (1973-1982).
Member of the Bar of the District
of Columbia and of New York; and
member of the Council on Foreign
Relations.
Marshall C. Turner, Jr., #Principal of Turner Venture Associates 111 The George
220 Montgomery Street (venture capital and consulting) Lucas
Penthouse 10 since prior to 2001. From 2003 until Educational
San Francisco, CA May 31, 2006, he was CEO of Toppan Foundation;
94104-3402 Photomasks, Inc., Austin, Texas and National
65 (semi-conductor manufacturing Datacast, Inc.
(2005) services).
* There is no stated term of office for the Fund's Directors.
# Member of the Audit Committee, Governance and Nominating Committee and
Independent Directors Committee.
** Member of the Fair Value Pricing Committee.
+ Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his
position as Executive Vice President of the Adviser.
++ Ms. Block was an "interested person", as defined in the 1940 Act, from July
22, 1992 until October 21, 2004 by reason of her ownership of securities of a
control person of the Adviser. Ms. Block received shares of The Equitable
Companies Incorporated ("Equitable") as part of the demutualization of The
Equitable Life Assurance Society of the United States in 1992. Ms. Block's
Equitable shares were subsequently converted through a corporate action into
American Depositary Shares of AXA, which were sold for approximately $2,400 on
October 21, 2004. Equitable and AXA are control persons of the Adviser.
44 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND AGE HELD WITH FUND DURING PAST 5 YEARS**
- -------------------------------------------------------------------------------
Marc O.Mayer, President and Chief See biography above.
49 Executive Officer
Philip L. Kirstein, Senior Vice President Senior Vice President and Independent
61 and Independent Compliance Officer of the
Compliance Officer AllianceBernstein Funds, with which he
has been associated since October
2004. Prior thereto, he was Of Counsel
to Kirkpatrick & Lockhart, LLP from
October 2003 to October 2004, and
General Counsel of Merrill Lynch
Investment Managers, L.P. since prior
to 2001 until March 2003.
Paul J. DeNoon, Vice President Senior Vice President of the Adviser,**
44 with which he has been associated
since prior to 2001.
Scott DiMaggio, Vice President Vice President of the Adviser,** with
35 which he has been associated since
prior to 2001.
Michael L. Mon, Vice President Vice President of the Adviser,** with
37 which he has been associated since
prior to 2001.
Douglas J. Peebles, Vice President Executive Vice President of the
41 Adviser,** with which he has been
associated since prior to 2001.
Emilie D. Wrapp, Secretary Senior Vice President, Assistant
51 General Counsel and Assistant
Secretary of ABI,** with which she has
been associated since prior to 2001.
Joseph J. Mantineo, Treasurer and Chief Senior Vice President of ABIS,**
47 Financial Officer with which he has been associated
since prior to 2001.
Vincent S. Noto, Controller Vice President of ABIS,** with which
41 he has been associated since prior to
2001.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** The Adviser, ABI, ABIS and SCB&Co. are affiliates of the Fund.
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and Officers and is available without
charge upon request. Contact your financial representative or AllianceBernstein
at 1-800-227-4618 for a free prospectus or SAI.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 45
Information Regarding the Review and Approval of the Fund's Advisory Agreement
The Fund's disinterested directors (the "directors") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser at a
meeting held on September 13, 2006.
In preparation for the meeting, the directors had requested from the Adviser
and received and evaluated extensive materials, including performance and
expense information for other investment companies with similar investment
objectives derived from data compiled by Lipper Inc. ("Lipper"), which is not
affiliated with the Adviser. The directors also reviewed an independent
evaluation from the Fund's Senior Officer (who is also the Fund's Independent
Compliance Officer) of the reasonableness of the advisory fees in the Fund's
Advisory Agreement (as contemplated by the September 2004 Assurance of
Discontinuance between the Adviser and the New York Attorney General) wherein
the Senior Officer concluded that such fees were reasonable. In addition, the
directors received a presentation from the Adviser and had an opportunity to
ask representatives of the Adviser various questions relevant to the proposed
approval. The directors noted that the Senior Officer's evaluation considered
the following factors: management fees charged to institutional and other
clients of the Adviser for like services; management fees charged by other
mutual fund companies for like services; cost to the Adviser and its affiliates
of supplying services pursuant to the Advisory Agreement, excluding any
intra-corporate profit; profit margins of the Adviser and its affiliates from
supplying such services; possible economies of scale as the Fund grows larger;
and nature and quality of the Adviser's services including the performance of
the Fund.
Prior to voting, the directors reviewed the proposed continuance of the
Advisory Agreement with management and with experienced counsel who are
independent of the Adviser and received a memorandum from such counsel
discussing the legal standards for their consideration of the proposed
continuance. The directors also discussed the proposed continuance in a private
session at which only the directors, their independent counsel and the Fund's
Independent Compliance Officer were present. In reaching their determinations
relating to continuance of the Advisory Agreement, the directors considered all
factors they believed relevant, including the following:
1. information comparing the performance of the Fund to other investment
companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance,
administrative and other services rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the
Fund and all investment companies in the AllianceBernstein Funds complex;
46 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
4. the costs borne by, and profitability of, the Adviser and its
affiliates in providing services to the Fund and to all investment companies in
the AllianceBernstein Funds complex;
5. comparative fee and expense data for the Fund and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the
extent the Fund grows and whether fee levels reflect any economies of scale for
the benefit of investors;
7. the Adviser's policies and practices regarding allocation of
portfolio transactions of the Fund;
8. information about "revenue sharing" arrangements that the Adviser has
entered into in respect of the Fund;
9. portfolio turnover rates for the Fund compared to other investment
companies with similar investment objectives;
10. fall-out benefits which the Adviser and its affiliates receive from
their relationships with the Fund;
11. the Adviser's representation that there are no institutional products
managed by the Adviser which have a substantially similar investment style as
the Fund;
12. the Senior Officer's evaluation of the reasonableness of the fee
payable to the Adviser in the Advisory Agreement.
13. the professional experience and qualifications of the Fund's
portfolio management team and other senior personnel of the Adviser; and
14. the terms of the Advisory Agreement.
The directors also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Fund gained from their experience as
directors or trustees of most of the registered investment companies advised by
the Adviser, their overall confidence in the Adviser's integrity and competence
they have gained from that experience and the Adviser's responsiveness to
concerns raised by them in the past, including the Adviser's willingness to
consider and implement organizational and operational changes designed to
improve investment results and the services provided to the AllianceBernstein
Funds.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 47
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and different directors may
have attributed different weights to the various factors.
The directors determined that the overall arrangements between the Fund and the
Adviser, as provided in the Advisory Agreement, were fair and reasonable in
light of the services performed, expenses incurred and such other matters as
the directors considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the directors
reaching their determinations to approve the continuance of the Advisory
Agreement (including their determinations that the Adviser should continue to
be the investment adviser for the Fund, and that the fees payable to the
Adviser pursuant to the Advisory Agreement are appropriate) were separately
discussed by the directors.
Nature, Extent and Quality of Services Provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser, subject to
the oversight of the directors, administers the Fund's business and other
affairs. The Adviser manages the investment of the assets of the Fund,
including making purchases and sales of portfolio securities consistent with
the Fund's investment objective and policies. Under the Advisory Agreement, the
Adviser also provides the Fund with such office space, administrative and other
services (exclusive of, and in addition to, any such services provided by any
others retained by the Fund) and executive and other personnel as are necessary
for the Fund's operations. The Adviser pays all of the compensation of
directors of the Fund who are affiliated persons of the Adviser and of the
officers of the Fund.
The directors also considered that the Advisory Agreement provides that the
Fund will reimburse the Adviser for the cost of certain clerical, accounting,
administrative and other services provided at the Fund's request by employees
of the Adviser or its affiliates. Requests for these "at no more than cost"
reimbursements are approved by the directors on a quarterly basis and (to the
extent requested and paid) result in a higher rate of total compensation from
the Fund to the Adviser than the fee rates stated in the Fund's Advisory
Agreement.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided by advisers of funds had expanded over time as a result of regulatory
and other developments. The directors noted, for example, that the Adviser is
responsible for maintaining and monitoring its own and, to varying degrees, the
Fund's compliance programs, and that these compliance programs have recently
been refined and enhanced in light of new regulatory requirements. The
directors considered the quality of the in-house investment research
capabilities of the Adviser and the other resources it has dedicated to
performing services for the
48 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
Fund. The quality of administrative and other services, including the Adviser's
role in coordinating the activities of the Fund's other service providers, also
were considered. The directors also considered the Adviser's response to recent
regulatory compliance issues affecting a number of the investment companies in
the AllianceBernstein Funds complex. The directors concluded that, overall,
they were satisfied with the nature, extent and quality of services provided to
the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues, expenses and related notes
indicating the profitability of the Fund to the Adviser for calendar years 2004
and 2005 that had been prepared with an updated expense allocation methodology.
The directors noted that the updated methodology differed in various respects
from the methodology used in prior years. The directors reviewed the
assumptions and methods of allocation used by the Adviser in preparing
fund-specific profitability data, and noted the Adviser's representation to
them that it believed that the methods of allocation used in preparing the
profitability information were reasonable and appropriate and that the Adviser
had previously discussed with the directors that there is no generally accepted
allocation methodology for information of this type.
The directors recognized that it is difficult to make comparisons of
profitability from fund advisory contracts because comparative information is
not generally publicly available and is affected by numerous factors, including
the structure of the particular adviser, the types of funds it manages, its
business mix, numerous assumptions regarding allocations and the adviser's
capital structure and cost of capital. In considering profitability
information, the directors considered the effect of fall-out benefits on the
Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser
has entered into with certain entities that distribute shares of the Fund. The
directors focused on the profitability of the Adviser's relationship with the
Fund before taxes and distribution expenses. The directors recognized that the
Adviser should generally be entitled to earn a reasonable level of profits for
the services it provides to the Fund and, based on their review, concluded that
they were satisfied that the Adviser's level of profitability from its
relationship with the Fund was not excessive.
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many of
the brokers and dealers that execute purchases and sales of securities on
behalf of its clients on an agency basis. The directors noted that since the
Fund does not engage in brokerage transactions, the Adviser does not receive
soft dollar benefits in respect of portfolio transactions of the Fund.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 49
The directors also considered that the Distributor, which is a wholly-owned
subsidiary of the Adviser, receives 12b-1 fees from the Fund in respect of
classes of shares of the Fund that are subject to the Fund's 12b-1 plan and
retains a portion of such 12b-1 fees, and receives all or a portion of the
sales charges on sales or redemptions of certain classes of shares. The
directors also noted that certain affiliates of the Adviser distribute shares
of the Fund and receive compensation in that connection and that a subsidiary
of the Adviser provides transfer agency services to the Fund and receives
compensation from the Fund for such services.
The directors recognized that the Adviser's profitability would be somewhat
lower if the Adviser's affiliates did not receive the benefits described above.
The directors understood that the Adviser also might derive reputational and
other benefits from its association with the Fund.
Investment Result
In addition to the information reviewed by the directors in connection with the
meeting, the directors receive detailed comparative performance information for
the Fund at each regular Board meeting during the year. At the meeting, the
directors reviewed information from a report prepared by Lipper showing
performance of the Class A Shares of the Fund as compared to a group of 5 to 4
funds (depending on the year) in its Lipper category selected by Lipper (the
"Performance Group") and as compared to a universe of 20 to 4 funds (depending
on the year) in its Lipper category selected by Lipper (the "Performance
Universe") for periods ended June 30, 2006 over the 1-, 3-, 5- and 10-year
periods. The directors also reviewed information prepared by the Adviser
showing performance of the Class A Shares of the Fund as compared to the Lehman
Brothers Global Government Bond Index (unhedged) (the "Index") for periods
ended June 30, 2006 over the year to date ("YTD"), 1-, 3- and 5-year periods
(information was not available for the 10-year and since inception periods
(March 1992 inception)). The directors noted that in the Performance Group
comparison the Fund was in the 2nd quintile in the 1-year period, 3rd quintile
in the 3-year period, 5th quintile in the 5-year period and 1 out of 4 in the
10-year period, and in the Performance Universe comparison the Fund was in the
1st quintile in the 1- and 10-year periods, 2nd quintile in the 3-year period
and 4th quintile in the 5-year period. The comparative information showed that
the Fund outperformed the Index in the 1- and 3-year periods and underperformed
the Index in the YTD and 5-year periods. Based on their review, the directors
concluded that the Fund's relative performance over time was satisfactory.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by the Fund to the Adviser
and information prepared by Lipper concerning fee rates paid by other funds in
the same Lipper category as the Fund at a common asset level. The directors
recognized that it is difficult to make comparisons of advisory fees because
there are variations in the services that are included in the fees paid by
other funds.
50 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
The Adviser informed the directors that there are no institutional products
managed by it which have a substantially similar investment style as the Fund.
The directors reviewed information in the Adviser's Form ADV and noted that it
charged institutional clients lower fees for advising comparably sized accounts
using strategies that differ from those of the Fund but which involve
investments in securities of the same type that the Fund invests in (i.e.,
fixed income taxable securities). They had previously received an oral
presentation from the Adviser that supplemented such information. The directors
noted that the Adviser advises a portfolio of another AllianceBernstein fund
with a substantially similar investment style as the Fund for the same fee rate
schedule as the Fund.
The Adviser reviewed with the directors the significant differences in the
scope of services it provides to institutional clients and to the Fund. For
example, the Advisory Agreement requires the Adviser to provide, in addition to
investment advice, office facilities and officers (including officers to
provide required certifications). The Adviser also coordinates the provision of
services to the Fund by non-affiliated service providers and is responsible for
the compensation of the Fund's Independent Compliance Officer and certain
related expenses. The provision of these non-advisory services involves costs
and exposure to liability. The Adviser explained that many of these services
normally are not provided to non-investment company clients, and that fees
charged to the Fund reflect the costs and risks of the additional obligations.
The Adviser also noted that since the Fund is constantly issuing and redeeming
its shares, it is more difficult to manage than an institutional account, where
the assets are relatively stable. In light of these facts, the directors did
not place significant weight on these fee comparisons.
The directors also considered the total expense ratio of the Class A shares of
the Fund in comparison to the fees and expenses of funds within two comparison
groups of funds in the same Lipper category created by Lipper: an Expense Group
and an Expense Universe. Lipper described an Expense Group as a representative
sample of comparable funds and an Expense Universe as a broader group,
consisting of all funds in the Fund's investment classification/objective with
a similar load type as the Fund. The directors noted that because of the small
number of funds in the Fund's Lipper category, at the request of the Adviser
and the Fund's Senior Officer, Lipper had expanded the Expense Group to include
peers that had a similar (but not the same) Lipper investment objective/
classification. The Expense Universe for the Fund was expanded by Lipper
pursuant to Lipper's standard guidelines and not at the request of the Adviser
or the Fund's Senior Officer. The Class A expense ratio of the Fund was based
on the Fund's latest fiscal year expense ratio. The directors recognized that
the expense ratio information for the Fund potentially reflected on the
Adviser's provision of services, as the Adviser is responsible for coordinating
services provided to the Fund by others. The directors noted that it was likely
that the expense ratios of some funds in the Fund's Lipper category also were
lowered by waivers or reimbursements by those funds' investment advisers, which
in some cases were voluntary and perhaps temporary.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 51
The information reviewed by the directors showed that the Fund's at approximate
current size contractual effective fee rate of 50 basis points was materially
lower than the Expense Group median. The directors noted that the latest fiscal
year administrative expense reimbursement by the Fund pursuant to the Advisory
Agreement was 1 basis point. The directors also noted that the Fund's total
expense ratio was slightly lower than the Expense Group median and materially
lower than the Expense Universe median. The directors concluded that the Fund's
expense ratio was satisfactory.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains
breakpoints so that, if assets were to increase over the breakpoint levels, the
fee rates would be reduced on the incremental assets. The directors also
considered a presentation by an independent consultant discussing economies of
scale issues in the mutual fund industry. The directors believe that economies
of scale are realized (if at all) by the Adviser across a variety of products
and services, and not only in respect of a single fund. The directors noted
that there is no uniform methodology for establishing breakpoints that give
effect to fund-specific services provided by the Adviser and to the economies
of scale that the Adviser may realize in its overall mutual fund business or
those components of it which directly or indirectly affect the Fund's
operations. The directors observed that in the mutual fund industry as a whole,
as well as among funds similar to the Fund, there is no uniformity or pattern
in the fees and asset levels at which breakpoints (if any) apply. Depending on
the age and size of a particular fund and its adviser's cost structure,
different conclusions can be drawn as to whether there are economies of scale
to be realized at any particular level of assets, notwithstanding the intuitive
conclusion that such economies exist, or will be realized at some level of
total assets. Moreover, because different advisers have different cost
structures and service models, it is difficult to draw meaningful conclusions
from the comparison of a fund's advisory fee breakpoints with those of
comparable funds. The directors also noted that the advisory agreements for
many funds do not have breakpoints at all. Having taken these factors into
account, the directors concluded that the Fund's breakpoint arrangements would
result in a sharing of economies of scale in the event of a very significant
increase in the Fund's net assets.
52 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1)
The following is a summary of the evaluation of the Investment Advisory
Agreement between AllianceBernstein L.P. (the "Adviser") and the
AllianceBernstein Global Government Income Trust (the "Fund"),(2) prepared by
Philip L. Kirstein, the Senior Officer of the Fund for the Directors of the
Fund, as required by an August 2004 agreement between the Adviser and the New
York State Attorney General (the "NYAG"). The Senior Officer's evaluation of
the Investment Advisory Agreement is not meant to diminish the responsibility
or authority of the Board of Directors of the Fund to perform its duties
pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and
applicable state law. The purpose of the summary is to provide shareholders
with a synopsis of the independent evaluation of the reasonableness of the
advisory fees proposed to be paid by the Fund which was provided to the
Directors in connection with their review of the proposed approval of the
continuance of the Investment Advisory Agreement. The Senior Officer's
evaluation considered the following factors:
1. Advisory fees charged to institutional and other clients of the
Adviser for like services;
2. Advisory fees charged by other mutual fund companies for like
services;
3. Costs to the Adviser and its affiliates of supplying services
pursuant to the advisory agreement, excluding any intra-corporate profit;
4. Profit margins of the Adviser and its affiliates from supplying such
services;
5. Possible economies of scale as the Fund grows larger; and
6. Nature and quality of the Adviser's services including the
performance of the Fund.
FUND ADVISORY FEES, EXPENSE REIMBURSEMENTS & RATIOS
The Adviser proposed that the Fund pay the advisory fee set forth in the table
below for receiving the services to be provided pursuant to the Investment
Advisory Agreement. The fee schedule below, implemented in January 2004 in
consideration of the Adviser's settlement with the NYAG in December 2003 is
(1) It should be noted that the information in the fee summary was completed
on October 23, 2006 and presented to the Board of Directors on October
31-November 2, 2006.
(2) Future references to the Fund do not include "AllianceBernstein."
References in the fee summary pertaining to performance and expense ratios
refer to the Class A shares of the Fund.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 53
based on a master schedule that contemplates eight categories of funds with
almost all funds in each category having the same advisory schedule.(3)
Net Assets
Advisory Fee Based on % of 09/30/06
Category Average Daily Net Assets ($MIL) Fund
- -------------------------------------------------------------------------------
High 50 bp on 1st $2.5 billion $1,470.5 Global Government
Income 45 bp on next $2.5 billion Income Trust
40 bp on the balance
The Adviser is reimbursed as specified in the Investment Advisory Agreement for
certain clerical, legal, accounting, administrative and other services provided
to the Fund. During the Fund's most recently completed fiscal year, the Adviser
received $93,000 (0.01% of the Fund's average daily net assets) for such
services.
Set forth below are the Fund's total expense ratios as of the Fund's most
recent semi-annual period:
Fund Total Expense Ratio(4) Fiscal Year End
- -------------------------------------------------------------------------------
Global Government Class A 1.03% September 30
Income Trust Class B 1.75%
Class C 1.73%
I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The advisory fees charged to investment companies which the Adviser manages and
sponsors are normally higher than those charged to similar sized institutional
accounts, including pension plans and sub-advised investment companies. The fee
differential reflects, among other things, different services provided to such
clients, and different liabilities assumed. Services provided by the Adviser to
the Fund that are not provided to non-investment company clients include
providing office space and personnel to serve as Fund Officers, who among other
responsibilities make the certifications required under the Sarbanes-Oxley Act
of 2002, and coordinating with and monitoring the Fund's third party service
providers such as Fund counsel, auditors, custodians, transfer agents and
pricing services. The accounting, administrative, legal and compliance
requirements for the Fund are more costly than those for institutional assets
due to the greater complexities and time required for investment companies,
although as previously noted, a portion of these expenses are reimbursed by the
Fund to the Adviser. Also, retail mutual funds managed by the Adviser are
widely held. Servicing the Fund's investors is more time consuming and labor
intensive compared to institutional clients since the Adviser needs to
communicate with a more extensive network of financial intermediaries and
shareholders. In addition, managing the cash flow of
(3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages,
were affected by the Adviser's settlement with the NYAG.
(4) Annualized.
54 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
an investment company may be more difficult than that of a stable pool of
assets, such as an institutional account with little cash movement in either
direction, particularly, if a fund is in net redemption and the Adviser is
frequently forced to sell securities to raise cash for redemptions. However,
managing a fund with positive cash flow may be easier at times than managing a
stable pool of assets. Finally, in recent years, investment advisers have been
sued by institutional clients and have suffered reputational damage both by the
attendant publicity and outcomes other than complete victories. Accordingly,
the legal and reputational risks associated with institutional accounts are
greater than previously thought, although still not equal to those related to
the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, it is worth considering information regarding the
advisory fees charged to institutional accounts with substantially similar
investment styles as the Fund. However, with respect to the Fund, the Adviser
represented that there is no institutional product in the Form ADV that has a
substantially similar investment style as the Fund.
The adviser also manages the AllianceBernstein Variable Products Series Fund,
Inc. ("AVPS"), which is available through variable annuity and variable life
contracts offered by other financial institutions and offers policyholders the
option to utilize certain AVPS portfolios as the investment option underlying
their insurance contracts. Set forth below is the fee schedule of the AVPS
portfolio that has a substantially similar investment style as the Fund:(5)
Fund AVPS Portfolio Fee Schedule
- -------------------------------------------------------------------------------
Global Government Americas Government 0.50% on first $2.5 billion
Income Trust(6) Income Portfolio 0.45% on next $2.5 billion
0.40% on the balance
The Adviser represented that it does not sub-advise any registered investment
company that has a similar investment strategy as the Fund.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES.
Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the
Adviser, compared the fees charged to the Fund with fees charged to other
investment companies for similar services by other investment advisers.
Lipper's
(5) It should be noted that AVPS was affected by the settlement between the
Adviser and the NYAG.
(6) The AVPS portfolio is a clone of the Fund.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 55
analysis included the Fund's ranking with respect to the proposed advisory
fee(7) relative to the median of the Fund's Lipper Expense Group ("EG")(8) at
the approximate current asset level of the Fund.
Lipper describes an EG as a representative sample of comparable funds. Lipper's
standard methodology for screening funds to be included in an EG entails the
consideration of several fund criteria, including fund type, investment
classification/objective, load type and similar 12b-1/non-12b-1 service fees,
asset (size) comparability, and expense components and attributes. An EG will
typically consist of seven to twenty funds. However, because the Fund's
original EG had an insufficient number of peers, at the request of the Adviser
and the Senior Officer, Lipper expanded the Fund's EG to include peers that had
a similar (but not the same) Lipper investment classification/objective.
Contractual Lipper
Management Expense Group
Fund Fee(9) Median Rank
- -------------------------------------------------------------------------------
Global Government
Income Trust(10) 0.500 0.603 1/8
Because Lipper had expanded the Fund's EG, under Lipper's standard guidelines,
the Fund's Lipper Expense Universe ("EU") was also expanded to include
universes of those peers that had a similar (but not the same) Lipper
investment objective/classification.(11) A "normal" EU will include funds that
have the same investment objective/classification as the subject fund.(12) Set
forth below is a
(7) The Fund's contractual management fee is calculated by Lipper using the
Fund's contractual management fee rate at a hypothetical asset level. The
hypothetical asset level is based on the combined net assets of all classes of
the Fund, rounded up to the next $25 million. Lipper's total expense ratio
information is based on the most recent annual report except as otherwise
noted. A ranking of "1" means that the Fund has the lowest effective fee rate
in the Lipper peer group.
(8) Lipper does not consider average account size when constructing EGs. Funds
with relatively small average account sizes tend to have higher transfer agent
expense ratio than comparable sized funds that have relatively large average
account sizes. Note that there are limitations on Lipper expense category data
because different funds categorize expenses differently.
(9) The contractual management fee does not reflect any expense reimbursements
made by the Fund to the Adviser for certain clerical, legal, accounting,
administrative, and other services.
(10) The Fund's EG includes the Fund, four other Global Income funds and three
other International Income funds.
(11) The expansion of the Fund's EU was not requested by the Adviser or the
Senior Officer. They requested that only the EGs be expanded.
(12) Except for asset size comparability, Lipper uses the same criteria for
selecting a Lipper Expense Group when selecting a Lipper Expense Universe.
Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the
same adviser to be represented by more than just one fund.
56 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
comparison of the Fund's total expense ratio and the medians of the Fund's EGs
and EUs. The Fund's total expense ratio rankings are also shown:
Expense Lipper Exp. Lipper Lipper Exp. Lipper
Ratio Group Group Universe Universe
Fund (%)(13) Median (%) Rank Median (%) Rank
- -------------------------------------------------------------------------------
Global Government
Income Trust(14) 1.054 1.080 3/8 1.185 6/23
Based on this analysis, the Fund has a more favorable ranking on a management
fee basis than it does on a total expense ratio basis.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
A consultant was retained by the Senior Officer to work with the Adviser's
personnel to align the Adviser's two profitability reporting systems. The
alignment, which now has been completed, allows the Adviser's management and
the Directors to receive consistent presentations of the financial results and
profitability although the two profitability reporting systems operate
independently. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The profitability information for the Fund prepared by the Adviser for the
Board of Directors was reviewed by the Senior Officer and the consultant. The
Adviser's profitability from providing investment advisory services to the Fund
increased during calendar year 2005, relative to 2004.
In addition to the Adviser's direct profits from managing the Fund, certain of
the Adviser's affiliates have business relationships with the Fund and may earn
a profit from providing other services to the Fund. The courts have referred to
this type of business opportunity as "fall-out benefits" to the Adviser and
indicated that such benefits should be factored into the evaluation of the
total relationship between the Fund and the Adviser. Neither case law nor
common business practice precludes the Adviser's affiliates from earning a
reasonable profit on this type of relationship provided the affiliates' charges
and services are competitive. These affiliates provide transfer agent and
distribution related services to the Fund and receive transfer agent fees, Rule
12b-1 payments, front-end sales loads and contingent deferred sales charges
("CDSC").
AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is
the Fund's principal underwriter. ABI and the Adviser have disclosed in the
Fund's
(13) Most recently completed fiscal year Class A share total expense ratio.
(14) The Fund's EU includes all other retail front end load Global Income funds
and International Income funds, excluding outliers.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 57
prospectus that they may make revenue sharing payments from their own
resources, in addition to resources derived from sales loads and Rule 12b-1
fees, to firms that sell shares of the Fund. In 2005, ABI paid approximately
0.042% of the average monthly assets of the AllianceBernstein Mutual Funds or
approximately $18.0 million for distribution services and educational support
(revenue sharing payments). For 2006, it is anticipated, ABI will pay
approximately 0.04% of the average monthly assets of the AllianceBernstein
Mutual Funds or approximately $17.5 million.(15) During the Fund's most
recently completed fiscal year, ABI received from the Fund $94,828, $9,497,207
and $338,478 in front-end sales charges, Rule 12b-1 and CDSC fees, respectively.
Fees and reimbursements for out of pocket expenses charged by AllianceBernstein
Investor Services, Inc. ("ABIS"), the affiliated transfer agent for the Fund,
are charged on a per account basis, based on the level of service provided and
the class of share held by the account. ABIS also receives a fee per
shareholder sub-account for each account maintained by an intermediary on an
omnibus basis. ABIS' after-tax profitability increased in 2005 in comparison to
2004. During the Fund's most recently completed fiscal year, ABIS received
$1,000,866 in fees from the Fund.(16)
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedules being
proposed reflect a sharing of economies of scale to the extent they exist.
Based on some of the professional literature that has considered economies of
scale in the mutual fund industry, it is thought that to the extent economies
of scale exist, they may more often exist across a fund family as opposed to a
specific fund. This is because the costs incurred by the Adviser, such as
investment research or technology for trading or compliance systems can be
spread across a greater asset base as the fund family increases in size. It is
also possible that as the level of services required to operate a successful
investment company has increased over time, and advisory firms have made such
investments in their business to provide improved services, there may be a
sharing of economies of scale without a reduction in advisory fees.
(15) ABI currently inserts the "Advance" in quarterly account statements and
pays the incremental costs associated with the mailing. The incremental cost is
less than what an "independent mailing" would cost.
(16) The fees disclosed are net of any expense offsets with ABIS. An expense
offset is created by the interest earned on the positive cash balance that
occur within the transfer agent account as there is a one day lag with regards
to money movement from the shareholder's account to the transfer agent's
account and then the transfer agent's account to the Fund's account. During the
Fund's most recently completed fiscal year, the fees paid by the Fund to ABIS
were reduced by $11,698 under the offset agreement between the Fund and ABIS.
58 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
An independent consultant, retained by the Senior Officer, made a presentation
to the Board of Directors regarding possible economies of scale or scope in the
mutual fund industry. Based on the presentation, it was evident that fund
management companies benefit from economies of scale. However, due to the lack
of cost data, researchers had to infer facts about the costs from the behavior
of fund expenses; there was a lack of consensus among researchers as to whether
economies of scale were being passed on to the shareholders. In the meantime,
it is clear that to the extent a fund's assets were to exceed the initial
breakpoint its shareholders would benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES, INCLUDING THE PERFORMANCE OF
THE FUND
With assets under management of approximately $659 billion as of September 30,
2006, the Adviser has the investment experience to manage and provide
non-investment services (described in Section I) to the Fund.
The information below shows the 1, 3, 5 and 10 year performance returns and
rankings of the Fund(17) relative to the Fund's Lipper Performance Group ("PG")
and Lipper Performance Universe ("PU")(18) for the periods ended June 30,
2006.(19)
Fund
Return PG Median PU Median PG Rank PU Rank
- -------------------------------------------------------------------------------
1 year 1.60 0.48 0.22 2/5 4/20
3 year 5.15 5.14 3.94 3/5 5/19
5 year 6.80 7.72 7.26 5/5 10/16
10 year 10.22 6.63 5.26 1/4 1/14
(17) The performance returns and rankings are for the Class A shares of the
Fund. It should be noted that the performance returns of the Fund that is shown
was provided by the Adviser. Lipper maintains its own database that includes
the Fund's performance returns. However, differences in the distribution price
(ex-date versus payable date) and rounding differences may cause the Adviser's
own performance returns of the Fund to be one or two basis points different
from Lipper. To maintain consistency in this evaluation, the performance
returns of the Fund, as reported by the Adviser, are provided instead of Lipper.
(18) The Fund's PG and PU are not identical to the Fund's EG and EU. The Fund's
PG only includes peers from the Fund's EG that have the same Lipper investment
classification/objective as the Fund. Funds with negative management fees are
excluded from EUs but not necessarily from PUs. In addition, PUs only include
funds of the same Lipper investment objective/classification as the Fund, in
contrast to EUs, which include funds of similar but not the same investment
objective/classification.
(19) Note that the current Lipper investment classification/objective dictates
the PG and PU throughout the life of the Fund even if a Fund may have had a
different investment classification/objective at different points in time.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 59
Set forth below are the 1, 3, 5, 10 year and since inception performance
returns of the Fund (in bold) versus its benchmark:(20)
Periods Ending June 30, 2006
Annualized Performance
- -------------------------------------------------------------------------------
1 3 5 10 Since
Funds Year Year Year Year Inception
- -------------------------------------------------------------------------------
Global Government Income Trust 1.60 5.15 6.80 10.22 8.65
Lehman Brothers Global Government -0.04 4.22 8.17 N/A N/A
Bond Index (unhedged)
CONCLUSION:
Based on the factors discussed above the Senior Officer's conclusion is that
the proposed advisory fee for the Fund is reasonable and within the range of
what would have been negotiated at arms-length in light of all the surrounding
circumstances. This conclusion in respect of the Fund is based on an evaluation
of all of these factors and no single factor was dispositive.
Dated: November 15, 2006
(20) The Adviser provided fund and benchmark performance return information for
periods through June 30, 2006.
60 o ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- ---------------------------------------------
Wealth Strategies Funds
- ---------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- ---------------------------------------------
Blended Style Funds
- ---------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- ---------------------------------------------
Growth Funds
- ---------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China '97 Fund
International Growth Fund
International Research Growth Fund
- ---------------------------------------------
Value Funds
- ---------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Real Estate Investment Fund
Small/Mid-Cap Value Fund
Utility Income Fund
Value Fund
- ---------------------------------------------
Global & International
- ---------------------------------------------
Global Value Fund
International Value Fund
- ---------------------------------------------
Taxable Bond Funds
- ---------------------------------------------
Global Government Income Trust*
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Intermediate Bond Portfolio*
Short Duration Portfolio
U.S. Government Portfolio
- ---------------------------------------------
Municipal Bond Funds
- ---------------------------------------------
National Michigan
Insured National Minnesota
Arizona New Jersey
California New York
Insured California Ohio
Florida Pennsylvania
Massachusetts Virginia
- ---------------------------------------------
Intermediate Municipal Bond Funds
- ---------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- ---------------------------------------------
Closed-End Funds
- ---------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
- ---------------------------------------------
Retirement Strategies Funds
- ---------------------------------------------
2000 Retirement Strategy
2005 Retirement Strategy
2010 Retirement Strategy
2015 Retirement Strategy
2020 Retirement Strategy
2025 Retirement Strategy
2030 Retirement Strategy
2035 Retirement Strategy
2040 Retirement Strategy
2045 Retirement Strategy
We also offer Exchange Reserves,** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our website at
www.alliancebernstein.com or call us at 800.227.4618 for a current prospectus.
You should read the prospectus carefully before you invest.
* Prior to February 1, 2006, Global Government Income Trust was named
Americas Government Income Trust and Intermediate Bond Portfolio was named
Quality Bond Portfolio.
** An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST o 61
ALLIANCEBERNSTEIN GLOBAL GOVERNMENT INCOME TRUST
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
GGIT-0151-0906
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant's code of ethics is filed herewith as
Exhibit 12(a)(1).
(b) During the period covered by this report, no material amendments were made
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent registered public accounting firm Ernst & Young LLP, for the Fund's
last two fiscal years for professional services rendered for: (i) the audit of
the Fund's annual financial statements included in the Fund's annual report to
stockholders; (ii) assurance and related services that are reasonably related
to the performance of the audit of the Fund's financial statements and are not
reported under (i), which include advice and education related to accounting
and auditing issues and quarterly press release review (for those Funds which
issue press releases), and preferred stock maintenance testing (for those Funds
that issue preferred stock); and (iii) tax compliance, tax advice and tax
return preparation.
Audit-Related
Audit Fees Fees TaxFees
---------- ------------- ------
2005 $56,000 $4,257 $18,304
2006 $60,500 $5,771 $19,275
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or
after May 6, 2003, the Fund's Audit Committee policies and procedures require
the pre-approval of all audit and non-audit services provided to the Fund by
the Fund's independent registered public accounting firm. The Fund's Audit
Committee policies and procedures also require pre-approval of all audit and
non-audit services provided to the Adviser and Service Affiliates to the extent
that these services are directly related to the operations or financial
reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to
the Fund, the Fund's Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the
Fund, which include preparing an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column Pre-
approved by the Audit
All Fees for Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit-Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates (Tax Fees)
---------------------- ------------
2005 $897,457 [$190,264]
($171,960)
($18,304)
2006 $686,534 [$156,561]
($137,286)
($19,275)
(h) The Audit Committee of the Fund has considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent registered public accounting firm to the Adviser and Service
Affiliates is compatible with maintaining the auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2
hereof
12 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Global Government Income Trust, Inc.
By: /s/ Marc O. Mayer
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Marc O. Mayer
President
Date: November 28, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
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Marc O. Mayer
President
Date: November 28, 2005
By: /s/ Joseph J. Mantineo
-----------------------
Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: November 28, 2006