ALLIANCE WORLD INCOME TRUST, INC.
ANNUAL REPORT
OCTOBER 31, 1996
LETTER TO SHAREHOLDERS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
December 16, 1996
Dear Shareholder:
Slow worldwide economic growth, combined with extremely low inflation, have
provided an attractive environment for global bond investments. In the
non-dollar developed markets, fixed income returns have been very strong
throughout the fiscal year. The dollar-denominated markets of Canada and
Australia produced excellent returns, as did the higher yielding European
markets of Italy, Spain and Sweden.
INVESTMENT RESULTS
In spite of sluggish domestic bond market returns, the emerging market and
non-U.S. bond markets continued their strong performance over the past six
months. Alliance World Income Trust was positioned to capitalize on gains in
both of these sectors and posted good returns over the most recent reporting
period. Low growth and inflation rates combined with dramatic fiscal tightening
produced interest rate cuts and higher bond prices in both Canada and
Australia. In Mexico, the economy continued to show impressive signs of growth,
increasing investor confidence and producing strong gains in the bond market.
For the six months ended October 31, 1996, World Income Trust returned 2.84% on
a net asset value basis. For comparison, we have shown the performance for the
short maturity U.S. government bond market, represented by the unmanaged
Merrill Lynch (ML) 1-3 Year Government Bond Index, and for the Lipper Short
World Multi-Market Income Funds Average, which reflects the performance of 35
funds. This peer group has generally similar investment objectives to World
Income Trust, though investment policies for the various funds - particularly
the average maturities of their portfolios - may differ significantly.
TOTAL RETURN
PERIOD ENDED OCTOBER 31, 1996
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE WORLD INCOME TRUST 2.84% 6.98%
MERRILL LYNCH 1-3 YEAR GOVERNMENT BOND INDEX 3.75% 5.91%
LIPPER SHORT WORLD MULTI-MARKET INCOME FUNDS AVERAGE 5.20% 9.44%
TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES AS OF OCTOBER 31, 1996;
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3. THE MERRILL LYNCH 1-3 YEAR
GOVERNMENT BOND INDEX IS UNMANAGED.
As of October 31, 1996, the Fund's net assets were distributed as follows:
PORTFOLIO DISTRIBUTION BY COUNTRY
COUNTRY PORTFOLIO %
- ------- -----------
U.S. 78.5%
Mexico 5.3%
Australia 5.1%
New Zealand 4.9%
Canada 3.3%
Czech Republic 2.9%
MARKET REVIEW
The Japanese economy produced what proved to be an unsustainably large growth
rate of 12.2% in the first quarter of 1996. Growth has since slowed
precipitously, and the Japanese authorities have continued their policy of
leaving official interest rates at the extremely low level of 0.50%. To ensure
that the Japanese economic recovery will be sustainable, authorities are
willing to err on the cautious side, potentially leaving rates too low for too
long. Two consequences have arisen in direct response to this policy of
artificially low rates in Japan. First, the Japanese yen has continued to
weaken, falling by another 8.5% over the past six months. Second, these low
rates have created a large build-up of liquidity which has spilled over into
the global markets, improving investment returns in many different asset
classes.
1
ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
The strong performance of both the Australian and Canadian markets has been
most impressive given the relatively poor performance of the U.S. Treasury
market. Historically, the Australian and Canadian markets have not performed
well in an environment of low Treasury prices. However, lower growth and
inflation rates combined with drastic fiscal tightening and improvements in
their respective trade accounts have allowed for significant interest rate cuts
in Australia and Canada, even though the U.S. Federal Reserve has not lowered
U.S. rates at all. In fact, official rates in Canada are currently more than
2.0% below rates in the U.S. Given the high unemployment rates and large output
gaps in these markets, we believe inflation will remain controlled. Therefore,
Australian and Canadian securities should continue to outperform U.S. debt.
In Europe, the driving force behind excellent bond market returns has been the
quest for monetary union. This has brought about a period of severe fiscal
retrenchment in Europe, even though many of their economies remain sluggish.
With fiscal policy so restrained, monetary policy, in the form of lower
interest rates, has been the only macroeconomic tool authorities have to
stimulate growth. This combination of tight fiscal policy and loose monetary
policy has led to stronger bond markets and weaker currencies. The U.S. dollar
has performed quite well against the core European currencies over the last six
months and we anticipate a continuation of this for the foreseeable future.
As European nations get closer and closer to forming a single currency, their
bond yields have begun to converge. We believe that monetary union will, in
fact, take place over the next few years and that this convergence will
continue. From time-to-time, market volatility is likely to lead to short-term
divergence in European yield spreads, and we will look to opportunistically add
to the portfolio's positions during these periods.
The Swiss economy continues to remain very weak. This has been caused, in part,
by the tremendous overvaluation of the Swiss franc. In September, the Swiss
National Bank cut their official discount rate to 1.0% in an attempt to weaken
the franc and relieve the ailing Swiss economy. The interest rate cut has
succeeded in reining in the franc, and the portfolio has benefited from this
move. We have used the Swiss franc as a hedge currency versus our other
European exposure, and will continue to do so as it provides a positive yield
advantage and depreciation potential.
U.S. ECONOMIC OUTLOOK
Our outlook for the U.S. monetary policy is for unchanged rates over the coming
six months. In non-dollar markets there could be some limited additional
declines in official rates. Thus, for short-term investors, the U.S. market is
likely to prove the most attractive over the near term, even though the
domestic economic fundamentals continue to be the strongest of any country in
the developed world. Our large position in the U.S. should remain intact.
Thank you for your continued interest and investment in Alliance World Income
Trust. We look forward to reporting to you again on market activity and the
Trust's investment results in coming periods.
Sincerely,
John D. Carifa
Chairman and President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
Alliance World Income Trust seeks the highest level of current income through
investment in a portfolio of high-quality debt securities having remaining
maturities of not more than one year. It invests primarily in a non-diversified
portfolio of debt securities denominated in the U.S. dollar and selected
foreign currencies. While the Fund normally will maintain a substantial portion
of its assets in debt securities denominated in foreign currencies, the Fund
will invest at least 35% of its net assets in U.S. dollar-denominated
securities.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1996
. One Year 6.98%
. Five Years 1.63%
. Since Inception* 2.35%
. SEC Yield** 4.85%
The average annual total returns reflect reinvestment 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.
* Inception: 12/90.
** Yield is for the 30 days ended October 31, 1996.
3
ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
ALLIANCE WORLD INCOME TRUST
GROWTH OF A $10,000 INVESTMENT:
12/31/90 TO 10/31/96
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
ML 1-3 YEAR GOVERNMENT INDEX
LIPPER SHORT WORLD MULTI-MARKET INCOME FUNDS AVERAGE
WORLD INCOME TRUST: $11,451
12/31/90 10/31/96
This chart illustrates the total value of an assumed $10,000 investment in
Alliance World Income Trust (from inception) as compared to the performance of
an appropriate broad-based index. The chart reflects the deduction of the
maximum 4.25% sales charge from the initial $10,000 investment in the Fund and
assumes the reinvestment of dividends and capital gains. 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 35 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.
When comparing Alliance World Income Trust to the index and average shown
above, you should note that no charges or expenses are reflected in the
performance of the index.
World Income Trust
ML 1-3 Year Government Index
Lipper Short World Multi-Market Income Funds Average
4
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
AUSTRALIA-5.1%
GOVERNMENT OBLIGATION-5.1%
Australian Treasury Bill
7.46%, 11/07/96 (a) (b)
(cost $2,272,134) AU$ 2,875 $ 2,274,876
CANADA-3.3%
GOVERNMENT OBLIGATION-3.3%
Government of Canada Treasury Bill
3.20%, 1/30/97 (b)
(cost $1,479,633) CA$ 2,000 1,480,040
CZECH REPUBLIC-2.9%
DEBT OBLIGATION-2.9%
International Bank For Reconstruction
& Development 11.50%, 10/09/97
(cost $1,302,750) CZK 35,000 1,302,583
MEXICO-5.3%
GOVERNMENT OBLIGATION-5.3%
Mexican Treasury Bill
33.00%, 12/26/96 (a) (b)
(cost $2,526,011) MXP 20,104 2,394,762
NEW ZEALAND-4.9%
GOVERNMENT OBLIGATION-4.9%
Government of New Zealand
9.00%, 11/15/96 (a)
(cost $2,017,222) NZ$ 3,100 2,193,095
UNITED STATES-78.5%
GOVERNMENT OBLIGATIONS-60.0%
Federal Home Loan Mortgage Corp.
Zero coupon, 11/12/96 (a) US$ 13,500 13,477,972
Zero coupon, 11/20/96 (a) 13,500 13,463,093
------------
26,941,065
DEBT OBLIGATION-7.8%
SMM Trust Co., Ltd. FRN
5.625%, 11/22/96 (a) (c) 3,500 3,499,650
TIME DEPOSIT-10.7%
Societe Generale 5.65%, 11/01/96 4,800 4,800,000
Total United States Securities
(cost $35,243,165) 35,240,715
TOTAL INVESTMENTS-100.0%
(cost $44,840,915) 44,886,071
Other assets less liabilities-0.0% 4,139
NET ASSETS-100% $44,890,210
(a) Securities, or portion thereof, with an aggregate market value of
$37,303,448 have been segregated to collateralize forward exchange currency
contracts.
(b) Annualized yield to maturity at purchase date.
(c) Stated interest rate in effect at October 31, 1996.
Glossary:
FRN - Floating Rate Note.
See notes to financials.
5
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $44,840,915 ) $44,886,071
Cash 77,795
Interest receivable 140,306
Unrealized appreciation of forward exchange currency contracts 71,169
Total assets 45,175,341
LIABILITIES
Dividend payable 82,246
Distribution fee payable 25,986
Advisory fee payable 18,461
Payable for capital stock redeemed 2,510
Accrued expenses 155,928
Total liabilities 285,131
NET ASSETS $44,890,210
COMPOSITION OF NET ASSETS
Capital stock, at par $ 53,876
Additional paid-in capital 49,249,103
Distributions in excess of net investment income (348,274)
Accumulated net realized loss on investments and foreign
currency transactions (4,183,063)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 118,568
$44,890,210
NET ASSET VALUE PER SHARE (based on 26,938,247 shares outstanding) $1.67
See notes to financial statements.
6
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996 ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest $3,634,040
EXPENSES
Advisory fee $ 316,077
Distribution fee 437,644
Administrative 143,138
Custodian 100,803
Audit and legal 100,056
Transfer agency 52,232
Registration 23,218
Directors' fees 20,573
Printing 9,282
Amortization of organization expenses 2,103
Miscellaneous 1,317
Total expenses 1,206,443
Less: Fees waived by Adviser and Distributor (184,783)
Net expenses 1,021,660
Net investment income 2,612,380
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (47,400)
Net realized gain on foreign currency transactions 522,607
Net change in unrealized appreciation (depreciation) of:
Investments 332,534
Foreign currrency denominated assets and liabilities (126,186)
Net gain on investments and foreign currency transactions 681,555
NET INCREASE IN NET ASSETS FROM OPERATIONS $3,293,935
See notes to financial statements.
7
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 2,612,380 $ 4,487,361
Net realized gain (loss) on investments and
foreign currency transactions 475,207 (11,249,384)
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 206,348 347,772
Net increase (decrease) in net assets from
operations 3,293,935 (6,414,251)
DIVIDENDS TO SHAREHOLDERS
Net investment income (3,023,315) -0-
Tax return of capital -0- (4,174,324)
CAPITAL STOCK TRANSACTIONS
Net decrease (11,158,351) (36,943,380)
Total decrease (10,887,731) (47,531,955)
NET ASSETS
Beginning of year 55,777,941 103,309,896
End of year (including undistributed net
investment income of $345,602 at
October 31, 1995) $ 44,890,210 $ 55,777,941
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 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 management
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 which mature in
60 days or less are valued at amortized cost, which approximates market value,
unless this method does not represent fair value. Securities for which market
quotations are not readily available and restricted securities are valued in
good faith at fair value using methods 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 gain on foreign currency transactions represents foreign exchange
gains and losses from sales and maturities of securities, holdings of 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)
of 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 were
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 INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund accretes 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. RECLASSIFICATION OF NET ASSETS
As of October 31, 1996, the Fund reclassified certain components of net assets.
The reclassification resulted in increases to additional paid-in capital,
distributions in excess of net investment income, and accumulated net realized
loss on investments and foreign currency transactions of $805,548, $282,941 and
$522,607, respectively. These reclassifications were the result of permanent
book to tax differences resulting primarily from foreign currency gains. Net
assets were not affected by the change.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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, 1996, the Adviser agreed
to waive a portion of its advisory fee. The amount of such fee waiver was
$77,804.
Pursuant to the advisory agreement, the Fund paid $143,138 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, 1996.
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 $45,028 for the year ended October 31, 1996.
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, 1996, the
Distributor agreed to waive a portion of its distribution fee. The amount of
such fee waiver was $106,979. 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
1. FORWARD EXCHANGE CURRENCY CONTRACTS
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 other liquid high quality debt 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. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
10
ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
At October 31, 1996, 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
Deutsche Marks,
expiring 1/27/97 4,387 $2,902,989 $2,913,873 $ 10,884
FOREIGN CURRENCY SALE CONTRACTS
Australian Dollars,
expiring 11/07/96 2,800 2,222,080 2,218,506 3,574
Japanese Yen,
expiring 11/07/96 185,000 1,666,667 1,626,607 40,060
New Zealand Dollars,
expiring 11/15/96 3,100 2,174,340 2,190,176 (15,836)
Swiss Francs,
expiring 01/06/97 3,776 3,042,784 3,010,297 32,487
---------
$ 71,169
2. OPTION TRANSACTIONS
For hedging and investment purposes, the Fund purchases and writes (sells) put
and call options on U.S. and foreign government securities and foreign
currencies that are traded on U.S. and foreign securities exchanges and
over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of 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 options
written. 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. There were no transactions in
written options for the year ended October 31, 1996.
At October 31, 1996, 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 $179,022 and gross unrealized
depreciation of investments was $133,866, resulting in net unrealized
appreciation of $45,156 (excluding foreign currency transactions).
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
For federal income tax purposes, the Fund had a capital loss carryforward at
October 31, 1996 of $4,183,063 of which $4,135,663 expires in the year 2002,
and $47,400 expires 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,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 592,826 1,085,952 $ 987,152 $ 1,896,175
Shares issued in
reinvestment of
dividends 798,519 1,306,475 1,327,317 2,239,687
Shares redeemed (8,120,965) (23,684,048) (13,472,820) (41,079,242)
Net decrease (6,729,620) (21,291,621) $(11,158,351) $(36,943,380)
12
FINANCIAL HIGHLIGHTS ALLIANCE WORLD INCOME TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.66 $1.88 $1.90 $1.91 $1.98
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .09(a) .11(a) .18 .22 .19
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .02 (.23) (.12) (.16) (.17)
Net increase (decrease) in net asset
value from operations .11 (.12) .06 .06 .02
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income
and other sources (.10) -0- (.05) (.07) (.09)
Tax return of capital -0- (.10) (.03) -0- -0-
Total dividends and distributions (.10) (.10) (.08) (.07) (.09)
Net asset value, end of year $1.67 $1.66 $1.88 $1.90 $1.91
TOTAL RETURN:
Total investment return based on net
asset value(b) 6.98% (6.35)% 3.27% 3.51% 1.26%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $44,890 $55,778 $103,310 $149,623 $318,716
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 2.10% 1.97% 1.70% 1.54% 1.59%
Expenses, before waivers/reimbursements 2.48% 2.35% 2.08% 1.92% 1.87%
Net investment income 5.37% 6.46% 3.96% 5.14% 7.21%
</TABLE>
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the 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.
13
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, 1996, 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, 1996, 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, 1996, 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 12, 1996
14
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)
DONALD J. ROBINSON (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
JUAN J. RODRIGUEZ, 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.
15
ALLIANCE WORLD INCOME TRUST, INC.
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
INVESTING 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
