ALLIANCE WORLD INCOME TRUST, INC.
ANNUAL REPORT
OCTOBER 31, 1995
LETTER TO SHAREHOLDERS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
December 4, 1995
Dear Shareholder:
The U.S. bond market continued its broad-based rally over the past six months.
The rally strengthened despite strong third quarter gross domestic product
growth, as restrained inflationary pressures and expectations for a more
accommodative monetary policy buoyed investor confidence. Outside the U.S.,
emerging market and other foreign debt prices also rose during the six-month
reporting period.
MARKET REVIEW
As expected a year ago, the Federal Reserve's monetary tightening that began
early in 1994 came to an end as economic growth moderated to more sustainable
levels. Short-term interest rates stabilized following the late December 1994
Mexican peso crisis and the increase in the federal funds rate in February of
1995. Longer-term interest rates declined sharply in April as evidence of a
slowing, but still healthy, economy mounted and inflationary fears receded.
Lower interest rates combined with significant corporate earnings growth has
supported a strong rally in stocks and across nearly all sectors of the fixed
income markets for most of 1995. Inflation remains at very low levels and
progress is underway in Washington to balance the U.S. fiscal budget.
The rally in the U.S. bond market has been fueled largely by favorable economic
developments. Investment grade and high yield corporate securities offered the
highest total return, but across all major sectors of the U.S. fixed income
market longer-duration securities outperformed shorter-duration securities as
rates on all maturities declined.
Emerging market and other foreign debt prices have rebounded sharply since
March due in part to the favorable U.S. interest rate environment and some
improvement in the Mexican and Argentine economic outlook.
INVESTMENT RESULTS
Alliance World Income Trust benefited from 1995's bond market price gains. Most
of the Fund's gain has been achieved over the past six months, however, as debt
prices worldwide recovered from the difficult market conditions that existed in
late 1994 and early 1995. In the table below, your Fund's performance over the
fiscal reporting period ended October 31, 1995, is compared with the short
maturity U.S. government bond market, represented by the Merrill Lynch (ML) 1-3
Year Government Bond Index, and the Lipper Short World Multi-Market Income
Funds Average, which reflects performance of 44 funds (complete descriptions of
these unmanaged benchmarks appear on page 3):
Total Return as of October 31, 1995
12 Months 6 Months
--------- --------
ALLIANCE WORLD INCOME TRUST -6.35% +2.47%
ML 1-3 Year Index +2.17% +1.39%
Lipper Short World MM
Income Funds Avg. +3.18% +4.58%
The Fund's total returns are based on the net asset values of each class of
shares as of October 31; additional investment results appear on page 3. As of
October 31, the Fund's net assets were distributed as follows:
PORTFOLIO DISTRIBUTION BY COUNTRY
U.S. - 87.0%
New Zealand - 7.3%
Mexico - 5.7%
INVESTMENT OUTLOOK
In the following pages is a discussion with Douglas Peebles, your Fund's
portfolio manager. Mr. Peebles provides an update on the current political and
economic situation in Mexico, on new areas of investment for the Fund since we
last reported and on the areas that he expects will provide future
opportunities. We appreciate your investment in the Fund and look forward to
updating you on its progress in the coming period.
Sincerely,
John D. Carifa
Chairman and President
1
INTERVIEW WITH PORTFOLIO MANAGER
DOUGLAS J. PEEBLES, VICE PRESIDENT ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
Q: THE FUND HAS MADE POSITIVE STRIDES OVER THE LAST SIX MONTHS. WHAT
CONTRIBUTED TO THE IMPROVEMENT IN THE FUND'S TOTAL RETURN?
MR. PEEBLES: The high percentage of the Fund's assets invested in U.S.
short-term securities was the biggest factor. These assets performed well
during the last six months due to the strong rally in the U.S. bond market that
resulted from a decline in interest rates. The strong price appreciation in
fixed income markets outside the U.S. was also a positive factor despite the
portfolio's low exposure outside the U.S. Overall, the very short maturity of
the Fund did limit the benefit of these gains versus securities with longer
maturities, but the rally was strong even at the short ends of global yield
curves.
The second factor involved the decline in the value of the Japanese yen of
approximately 20% from its peak in June. Since we have been using the yen as a
hedge currency, this worked quite nicely in the Fund's favor.
Q: WHAT ARE YOU EXPECTING FOR MAJOR CURRENCIES OVER THE NEAR TERM?
MR. PEEBLES: Our currency outlook is really more of an outlook on the U.S.
dollar. We are expecting the dollar to appreciate versus both the Japanese yen
and the German deutschemark.
The long-standing U.S. trade deficit appears to have peaked, which should
benefit the dollar, but, more importantly, the outlook for our budget deficit
compared to the Japanese and German budget deficits is very favorable. The poor
fiscal situations in Europe and Japan will impede economic growth in these
regions which should contribute to weaker currencies. Also, in the U.S.,
structural reform in both the labor market and in the corporate sector have far
outweighed any reforms undertaken in Europe or Japan. In Europe the social
welfare system remains far too large in the current competitive global
environment, and Japanese markets for goods and services remain closed to
global competition, thus hindering its economy. For these reasons we look for
the dollar to appreciate.
Q: SUBSEQUENT TO THE OCTOBER 31 REPORTING PERIOD, YOU INITIATED EXPOSURE TO THE
THAI BAHT. WHY HAVE YOU ESTABLISHED A POSITION IN THIS CURRENCY?
MR. PEEBLES: The East Asian region has had the strongest overall economic
growth of any region in the world in the last 10 years or so. In our view, this
strong growth pattern should continue over the next decade and specifically, we
believe exposure to the Thai Baht will benefit the Fund's performance.
There are a couple of major events that have already helped spur growth in
countries such as Thailand. First, The People's Republic of China is beginning
to open up its market to outsiders and Thailand will benefit because of its
broadly educated population, relatively cheap labor force and established
manufacturing base.
Also, many Japanese companies have started to outsource their manufacturing
into Thailand as the cost structures there are a fraction of those in Japan.
Consequently, foreign direct investment in Thailand by the Japanese can be
expected to remain at high levels.
Q: THE PORTFOLIO'S EXPOSURE TO MEXICO IS A BIT LOWER THAN IT WAS IN APRIL. ARE
THERE STILL OPPORTUNITIES IN MEXICO?
MR. PEEBLES: In our view the Mexican peso remains very cheap and real interest
rates remain attractive-that is why the Fund is still invested in Mexico.
However, the political situation, the banking sector, and the monetary policies
of the Mexican officials all remain quite nebulous. We must have a clearer
picture of how some of the outstanding issues will be worked out before we
commit more of the Fund's assets to Mexico.
Q: OVERALL, WHAT IS YOUR OUTLOOK FOR GLOBAL FIXED INCOME INVESTING GOING
FORWARD?
MR. PEEBLES: Our outlook continues to be relatively favorable. The last move in
official interest rates by all three of the world's major central banks, the
U.S. Federal Reserve, the German Bundesbank and the Bank of Japan, was to lower
rates, which we believe could be repeated when monetary policy is next reviewed.
2
INVESTMENT RESULTS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1995
. One Year -6.35%
. Since Inception* +1.91%
. SEC Yield 5.78%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares. Past performance does not guarantee
future results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Yield is for the 30 days ended October 31, 1995.
* Inception: 12/90.
GROWTH OF A $10,000 INVESTMENT: 12/31/90 TO 10/31/95
ML 1-3 Year Government Index
Lipper Short World
Multi-Market Income
Funds Average
World Income Trust: $10,956
$14,000
$13,000$12,000
$11,000$10,000
$9,000
12/31/90 10/31/95
This chart illustrates the total value of an assumed $10,000 investment in
Alliance World Income Trust (from inception) with dividends and capital gains
reinvested. Results should not be considered representative of future gain or
loss in capital value or dividend income.
The Merrill Lynch 1-3 Year Government Index is composed of U.S. Government
agency and Treasury securities with maturities of one to three years.
The Lipper Short World Multi-Market Income Funds Average reflects performance
of 44 funds that invest in non-U.S. dollar and U.S. dollar debt instruments.
The funds tracked by Lipper Analytical Services have generally similar
investment objectives to Alliance World Income Trust, though some of the funds
may have somewhat different investment policies.
3
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S.$VALUE
- ------------------------------------------------------------------
MEXICO-9.1%
GOVERNMENT OBLIGATION-9.1%
Mexican Treasury Bills
46.50%, 11/01/95(a)(b) MXP 13,250 $ 1,876,989
38.00%, 1/04/96(a)(b) 10,000 1,307,943
45.00%, 2/08/96(a)(b) 14,890 1,879,433
Total Mexican Securities
(cost $5,578,441) 5,064,365
NEW ZEALAND-7.3%
GOVERNMENT OBLIGATION-7.3%
Government of New Zealand
8.00%, 11/15/95(a)
(cost $3,893,406) NZ$ 6,200 4,091,392
UNITED STATES-86.9%
DEBT OBLIGATIONS-57.2%
Abbey National
5.61%, 12/22/95(a)(b) US$ 3,000 2,978,901
ABN - AMRO
5.67%, 11/03/95(a)(b) 2,500 2,498,820
Bank One Funding
5.72%, 11/30/95(a)(b) 3,000 2,986,509
BBV Finance
5.63%, 12/15/95(a)(b) 3,000 2,981,154
Caisse Des Depots Et Consign
5.69%, 12/28/95(a)(b) 3,000 2,990,223
Commerzbank
5.68%, 12/29/95(a)(b) 2,000 1,993,408
Commonwealth Bank of Australia
5.67%, 11/01/95(a)(b) 3,000 2,999,748
Deutsche Bank Financial
5.70%, 11/13/95(a)(b) 3,000 2,993,619
SMM Trust Co., Ltd.
6.25%, 11/22/96 FRN(a)(b)(c) US$ 3,500(a) 3,498,950
Svenska Handelsbanken
5.71%, 11/16/95(a)(b) 3,000 2,992,272
Toronto Dominion
5.68%, 12/08/95(a)(b) 3,000 2,983,557
31,897,161
GOVERNMENT OBLIGATION-14.3%
US Treasury Bill
5.27%, 12/14/95(a)(b) 8,000 7,951,721
CERTIFICATES OF DEPOSIT-10.7%
National Bank of Detroit
5.75%, 11/10/95(a) 3,000 3,000,000
Societe Generale Bank
5.75%, 12/18/95(a) 3,000 3,000,000
6,000,000
TIME DEPOSITS-4.7%
Wachovia Bank
5.90%, 11/01/95 1,400 1,400,000
WestDeutsche Landesbank
5.56%, 1/09/96 1,200 1,200,000
2,600,000
Total United States Securities
(cost $48,420,170) 48,448,882
TOTAL INVESTMENTS-103.3%
(cost $57,892,017) 57,604,639
Other assets less liabilities-(3.3%) (1,826,698)
NET ASSETS-100% $55,777,941
(a) Security, or portion thereof, has been segregated to collateralize forward
exchange currency contracts. This collateral has a total market value of
approximately $55,004,639.
(b) Annualized yield to maturity at purchase date.
(c) Stated interest rate in effect at October 31, 1995.
Glossary:
FRN - Floating Rate Note.
See notes to financials.
4
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $57,892,017) $57,604,639
Cash 91,302
Receivable for investment securities sold 7,982,833
Interest receivable 277,974
Unrealized appreciation of forward exchange currency contracts 200,349
Deferred organization expenses 2,103
Total assets 66,159,200
LIABILITIES
Payable for investment securities purchased 9,830,031
Payable for capital stock redeemed 156,561
Dividend payable 103,295
Distribution fee payable 32,563
Advisory fee payable 23,443
Accrued expenses and other liabilities 235,366
Total liabilities 10,381,259
NET ASSETS $55,777,941
COMPOSITION OF NET ASSETS
Capital stock, at par $ 67,336
Additional paid-in capital 59,588,446
Undistributed net investment income 345,602
Accumulated net realized loss on investments, options and
foreign currency transactions (4,135,663)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (87,780)
$55,777,941
NET ASSET VALUE PER SHARE (based on 33,667,867 shares outstanding) $1.66
See notes to financial statements.
5
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995 ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $11,773) $ 5,856,735
EXPENSES
Advisory fee $ 451,385
Distribution fee 624,994
Audit and legal 131,274
Administrative 117,374
Custodian 102,423
Transfer agency 88,540
Registration 32,011
Amortization of organization expenses 30,908
Printing 23,401
Directors' fee 21,090
Miscellaneous 9,860
Total expenses 1,633,260
Less: Fees waived by Adviser and Distributor (263,886)
Net expenses 1,369,374
Net investment income 4,487,361
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (2,640,608)
Net realized loss on options and foreign currency transactions (8,608,776)
Net change in unrealized appreciation (depreciation) of:
Investments 266,102
Options and foreign currency denominated assets and liabilities 81,670
Net loss on investments and foreign currency transactions (10,901,612)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(6,414,251)
See notes to financial statements.
6
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 4,487,361 $ 4,704,704
Net realized loss on investments, options
and foreign currency transactions (11,249,384) (1,871,590)
Net change in unrealized depreciation of
investments, options and foreign currency
denominated assets and liabilities 347,772 567,711
Net increase (decrease) in net assets from
operations (6,414,251) 3,400,825
DIVIDENDS TO SHAREHOLDERS
Net investment income -0- (3,536,509)
Tax return of capital (4,174,324) (1,463,462)
CAPITAL STOCK TRANSACTIONS
Net decrease (36,943,380) (44,713,749)
Total decrease (47,531,955) (46,312,895)
NET ASSETS
Beginning of year 103,309,896 149,622,791
End of year (including undistributed net
investment income of $345,602
at October 31, 1995) $55,777,941 $103,309,896
See notes to financial statements.
7
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance World Income Trust, Inc. (the "Fund"), was incorporated in the State
of Maryland on October 29, 1990 as a non-diversified, open-end investment
company. The following is a summary of significant accounting policies followed
by the Fund.
1. SECURITY VALUATION
Investments are stated at value. Investments for which market quotations are
readily available are valued at the closing price on the day of valuation or,
if no such closing price is available, at the mean of the last bid and ask
price quoted on such day. Options are valued at market value or fair value
using methods determined by the Board of Directors. Securities for which market
quotations are not readily available are valued in good faith at fair value
using methods determined by the Board of Directors. Securities which mature in
60 days or less are valued at amortized cost, which approximates market value,
unless this method does not represent fair value. Restricted securities are
valued at fair value as determined by the Board of Directors. In determining
fair value, consideration is given to cost, operating and other financial data.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward foreign exchange currency contracts are translated into U.S. dollars at
the mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
Net realized loss on options and foreign currency transactions of $8,608,776
represent foreign exchange gains and losses from sales and maturities of
securities, holdings of foreign currencies, options on foreign currencies,
exchange gains and losses realized between the trade and settlement dates on
security transactions, and the difference between the amounts of interest
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net change in unrealized appreciation (depreciation) foreign
currency denominated assets and liabilities represents net currency gains and
losses from valuing foreign currency denominated assets and liabilities at
period end exchange rates.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $153,000 have been deferred and are
being amortized on a straight-line basis through December 1995.
4. 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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Security transactions are accounted for on
the date securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. The Fund accretes discounts as
adjustments to interest income.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
7. RECLASSIFICATIONS OF NET ASSETS
As of October 31, 1995, differences totalling ($32,565) and ($10,072,238) were
reclassified from undistributed net investment income and accumulated net
realized loss on investments to additional paid-in-capital, respectively. These
reclassifications were the result of permanent book to tax differences
resulting from foreign currency losses and tax return of capital distributions.
These reclasses had no effect on net investment income, net realized gains and
losses and net assets.
8
ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of
.65 of 1% of the average daily net assets of the Fund. Such fee is accrued
daily and paid monthly. For the year ended October 31, 1995, the Adviser agreed
to waive a portion of its advisory fee. The amount of such fee waiver was
$111,110.
The Adviser has agreed under the terms of the advisory agreement, to reimburse
the Fund to the extent that its aggregate expenses (exclusive of interest,
taxes, brokerage, distribution fees, and extraordinary expenses) exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund believes that the most restrictive expense ratio limitation
currently imposed by any state is 2 1/2% of the first $30 million of the Fund's
average daily net assets, 2% of the next $70 million of the Fund's average
daily net assets and 1 1/2% of its average daily net assets in excess of $100
million. No reimbursement was required by the Adviser for the year ended
October 31, 1995. Pursuant to the advisory agreement, the Fund also paid
$117,374 to the Adviser representing the costs of certain legal and accounting
services provided to the Fund by the Adviser for the year ended October 31,
1995.
The Fund compensates Alliance Fund Services, Inc. (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. Such compensation
amounted to $88,540 for the year ended October 31, 1995.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .90 of 1% of the average daily net assets of the Fund. Such fee
is accrued daily and paid monthly. For the year ended October 31, 1995, the
Distributor agreed to waive a portion of its distribution fee. The amount of
such fee waiver was $152,776. The Agreement provides that the Distributor will
use such payments in their entirety for distribution assistance and promotional
activities. 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
The Fund enters into forward exchange currency contracts for investment
purposes and to hedge its exposure to changes in foreign currency exchange
rates on its foreign portfolio holdings and to hedge certain firm purchase and
sale commitments denominated in foreign currencies. A forward exchange currency
contract is a commitment to purchase or sell a foreign currency at a future
date at a negotiated forward rate. The gain or loss arising from the difference
between the original contracts and the closing of such contracts is included in
realized gains or losses from foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or government securities in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges. Risks may
arise from the potential inability of a 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.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
At October 31, 1995, the Fund had outstanding forward exchange currency
contracts, as follows:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
------- ---------- ---------- --------------
FOREIGN CURRENCY BUY CONTRACTS
- ------------------------------
Australian Dollars,
expiring 12/18/95 4,600 $3,465,736 $3,497,390 $ 31,654
British Pounds,
expiring 1/25/96 810 1,275,467 1,278,088 2,621
Canadian Dollars,
expiring 11/17/95 750 546,050 558,181 12,131
Deutsche Marks,
expiring 12/04/95-1/22/96 6,300 4,426,956 4,490,094 63,138
Japanese Yen,
expiring 1/11/96 140,000 1,430,981 1,384,758 (46,223)
New Zealand Dollars,
expiring 11/06/95 2,707 1,805,278 1,785,841 (19,437)
Thailand Baht,
expiring 6/28/96 30,000 1,171,646 1,162,324 (9,322)
FOREIGN CURRENCY SALE CONTRACTS
- -------------------------------
British Pounds,
expiring 1/25/96 810 1,271,700 1,277,986 (6,286)
Canadian Dollars,
expiring 11/17/95 4,250 3,175,330 3,163,893 11,437
Deutsche Marks,
expiring 1/22/96 9,138 2,710,463 2,851,973 (141,510)
Japanese Yen,
expiring 1/11/96 310,000 3,457,935 3,065,325 392,610
New Zealand Dollars,
expiring 11/15/95-11/21/95 5,200 3,376,662 3,427,771 (51,109)
Swiss Francs,
expiring 12/04/95-1/18/96 5,139 4,510,067 4,549,422 (39,355)
$200,349
For hedging purposes, the Fund purchases and writes (sells) put and call
options on U.S. and foreign government securities and foreign currencies that
are traded on U.S. and foreign securities exchanges and over-the-counter
markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of 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 writing options which expire unexercised
are recorded by the Fund on the expiration
10
ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
date as realized gains from option transactions. The difference between the
premium and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized gain, or if the
premium is less than the amount paid for the closing purchase transaction, as a
realized loss. If a call option is exercised, the premium 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 reduces the cost basis of the security or currency purchased by the
Fund. In writing an option, the Fund bears the market risk of an unfavorable
change in the price of the security or currency underlying the written option.
Exercise of an option written by the Fund could result in the Fund selling or
buying a security or currency at a price different from the current market
value.
Transactions in options written for the year ended October 31, 1995 were as
follows:
NUMBER OF
CONTRACTS PREMIUMS
--------- ---------
Options outstanding at beginning of year -0- $ -0-
Options written 2 10,533
Options expired (2) (10,533)
Options outstanding atend of year -0- $ -0-
At October 31,1995, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $231,764 and gross unrealized
depreciation of investments was $519,142, resulting in net unrealized
depreciation of $287,378 (excluding foreign currency transactions).
For federal income tax purposes, the Fund had a capital loss carryforward at
October 31, 1995 of $4,135,663 of which $23,238 expires in 1997, $293,011 in
1998, $104,550 in 1999, $833,703 in 2000, $240,553 in the year 2002, and
$2,640,608 in 2003.
NOTE E: CAPITAL STOCK
There are 3,000,000,000 shares of $.002 par value capital stock authorized.
Transactions in capital stock were as follows:
SHARES AMOUNT
-------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------ ------------ ------------- -------------
Shares sold 1,085,952 2,858,942 $ 1,896,175 $ 5,387,971
Shares issued in
reinvestment of
dividends and
distributions 1,306,475 1,480,493 2,239,687 2,789,287
Shares issued in
connection with
the acquisition
of Alliance
Multi-Market
Income Trust, Inc -0- 6,394,561 -0- 12,128,360
Shares redeemed (23,684,048) (34,551,165) (41,079,242) (65,019,367)
Net decrease (21,291,621) (23,817,169) $(36,943,380) $(44,713,749)
NOTE F: ACQUISITION OF THE ALLIANCE MULTI-MARKET INCOME TRUST, INC.
On September 1, 1994, the Fund acquired all the net assets of the Alliance
Multi-Market Income Trust, Inc., ("AMIT") pursuant to a plan of reorganization
approved by AMIT's shareholders on August 26, 1994. The acquisition was
accomplished by a tax-free exchange of 6,394,561 shares of the Fund for
6,522,868 shares of AMIT on September 1, 1994. The aggregate net assets of the
Fund and AMIT immediately before the acquisition were $98,723,196 and
$11,362,742 (including unrealized depreciation of $765,618), respectively.
Immediately after the acquisition the combined net assets of the Fund amounted
to $110,752,410.
11
FINANCIAL HIGHLIGHTS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDINGTHROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
DECEMBER 3,
1990 (A)
YEAR ENDED OCTOBER 31, TO
----------------------------------------- OCTOBER 31,
1995 1994 1993 1992 1991
--------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.88 $1.90 $1.91 $1.98 $2.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .11(d) .18 .22 .19. 14
Net realized and unrealized loss on investments
and foreign currency transactions (.23) (.12) (.16) (.17) (.03)
Net increase (decrease) in net asset value from
operations (.12) .06 .06 .02 .11
LESS:DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income and other
sources -0- (.05) (.07) (.09) (.13)
Tax return of capital (.10) (.03) -0- -0- -0-
Total dividends and distributions (.10) (.08) (.07) (.09) (.13)
Net asset value, end of period $1.66 $1.88 $1.90 $1.91 $1.98
TOTAL RETURN:
Total investment return based on net asset value(b) (6.35)% 3.27% 3.51% 1.26% 6.08%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $55,778 $103,310 $149,623 $318,716 $1,059,222
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.97% 1.70% 1.54% 1.59% 1.85%(c)
Expenses, before waivers/reimbursements 2.35% 2.08% 1.92% 1.87% 1.85%(c)
Net investment income 6.46% 3.96% 5.14% 7.21% 7.29%(c)
</TABLE>
(a) Commencement of operations.
(b) 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. Total investment return calculated
for a period of less than one year is not annualized.
(c) Annualized.
(d) Based on average shares outstanding.
12
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLLIANCE WORLD INCOME TRUST, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance World Income Trust, Inc. (the "Fund"), including the portfolio of
investments, as of October 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance World Income Trust, Inc. at October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
New York, New York
December 11, 1995
13
ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
DOUGLAS J. PEEBLES, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
PRINCIPAL UNDERWRITERS
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800)-221-5692
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
14
ALLIANCE WORLD INCOME TRUST, INC.
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
WITAR
