ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
ANNUAL REPORT
OCTOBER 31, 1995
LETTER TO SHAREHOLDERS ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
December 4, 1995
Dear Shareholder:
The U.S. bond market continued its impressive, broad-based rally over the past
six months. The rally strengthened despite strong third quarter gross domestic
product (GDP) 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 rose sharply during the
six-month reporting period.
FUND PERFORMANCE
Alliance World Dollar Government Fund (New York Stock Exchange symbol: 'AWG')
benefited significantly from the recent bond market price gains. For the twelve
months ended October 31, 1995, the Fund posted a total return of +21.92% on a
net asset value basis. Over the same period, the unmanaged J.P. Morgan Emerging
Markets Bond Index returned +8.01%. Most of the gain has been achieved over the
past six months as emerging market debt prices recovered from the difficult
market conditions that existed in late 1994 and early 1995. AWG's six-month
total return was +20.65% on a net asset value basis, compared with the Index's
return of +16.33%. The Fund paid dividends totaling $0.645 per share during the
previous six months, or $.1075 per month.
ECONOMIC REVIEW
While the U.S. economy slowed in the first half of 1995, growth reaccelerated
in the third quarter due to larger than expected increases in residential
housing, government spending and business inventories. For the quarter, GDP
rose 4.2%, up from 1.3% in the second quarter. Despite the jump in GDP,
economic indicators remain mixed. Consumer spending on durable goods
(especially automobiles and home furnishings) grew at an 11.7% annual rate
during the third quarter, helping overall personal consumption expenditures
rise 2.9%. However, retail sales remained weak as stores continued to offer
price discounts to reluctant shoppers. Real disposable income slowed to 3.5% in
October and personal debt levels continue to escalate. Growth also remained
sluggish in the manufacturing sector. Monthly industrial production fell
slightly in October after gains in August and September.
Concerns regarding inflation have largely subsided. Broad price indices such as
the Consumer Price Index and Producer Price Index have risen very modestly and
labor costs remain under control. The favorable inflation outlook and the
chance of a significant federal government deficit reduction package may allow
the Federal Reserve to cut interest rates in the months ahead.
BOND MARKET REVIEW
Since we last reported, the U.S. bond market continued to post significant
gains across nearly all fixed income sectors. The rally was fueled largely by
the aforementioned economic developments. Investment grade and high yield
corporate securities offered the highest total return (income plus price
appreciation). Treasury and mortgage obligations also performed well, though
mortgage returns were tempered by higher prepayment activity. Across all major
sectors of the U.S. fixed income market, longer-duration securities
outperformed shorter-duration securities as interest rates for all maturities
declined.
Outside the U.S., emerging market and other foreign debt prices have rebounded
sharply since March. The rebound is due, in part, to the favorable U.S.
interest rate environment and some improvement in the Mexican and Argentine
economic outlook.
INVESTMENT OUTLOOK
It is our view that U.S. economic growth will moderate in the fourth quarter,
to an annual growth rate of approximately 2.7%. This projected growth rate is
not expected to add significantly to inflationary pressures, and if our
forecast proves correct the result should be further gains in U.S. bond prices.
In emerging markets, we expect Brazil, Argentina and Poland to outperform
during the period ahead. Brazilian debt prices should rise as the country
continues its steady economic progress and gradually implements fiscal and
administrative reforms. If successful, the government's plan would reduce the
budget deficit and allow real interest rates to decline. In addition, a
proposed Brazilian debt buy-back program should help boost bond prices over
the near term. In Argentina, the government is implementing a plan to
increase federal revenues, improve the fiscal position of the provincial
governments and obtain new financing from domestic and international
1
ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
markets. These sound economic policies combined with Argentina's stable
political environment should support higher bond prices despite the country's
current economic difficulties. In Poland, current economic conditions are very
favorable as inflation remains low and exports boom. As a result, we expect the
Polish economy to continue to expand and its debt obligations to outperform
other non-Latin debt in the period ahead.
We continue to believe that AWG's strategy will provide superior relative
investment results for long-term shareholders. We appreciate your continued
investment in the Fund and look forward to reporting to you again in the coming
months.
Sincerely,
John D. Carifa
Chairman
Wayne D. Lyski
President
2
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S.$VALUE
- ----------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-95.5%
COLLATERALIZED BRADY BONDS*-71.2%
ARGENTINA-8.1%
Republic of Argentina Euro Par Bonds
5.00%, 3/31/23(a)
(cost $8,053,702) $17,450 $8,348,734
BRAZIL-18.7%
Republic of Brazil Par Bonds Series ZL
4.25%, 4/15/24(a)
(cost $18,240,086) 39,500 19,231,563
BULGARIA-9.9%
Republic of Bulgaria Discount Bonds FRN
6.75%, 7/28/24(b)
(cost $9,396,541) 20,000 10,125,000
ECUADOR-9.2%
Republic of Ecuador Discount Bonds FRN
6.8125%, 2/28/25(b)
(cost $9,556,497) 19,000 9,458,390
MEXICO-5.4%
United Mexican States
Euro Par Bonds Series A
6.25%, 12/31/19
(cost $5,593,875) 9,500 5,593,125
NIGERIA-5.7%
CCentral Bank of Nigeria Par Bonds
6.25%, 11/15/20(a)
(cost $5,385,541) 12,500 5,859,375
PHILLIPINES-4.5%
Central Bank of the Phillipines Par Bonds
5.75%, 12/01/17(a)
(cost $4,645,968) 6,250 4,587,891
POLAND-4.3%
Republic of Poland Par Bonds
2.75%, 10/27/24(a)
(cost $4,292,199) $10,000 $4,425,000
VENEZUELA-5.4%
Republic of Venezuela Par Bonds
6.75%, 3/31/20
Series W-A 4,250 2,196,719
Series W-B 6,500 3,359,687
Total Venezuelan Securities
(cost $5,484,291) 5,556,406
Total Collateralized Brady Bonds
(cost $70,648,700) 73,185,484
NON-COLLATERALIZED BRADY BONDS-6.3%
ECUADOR-0.1%
Republic of Ecuador PDI Bonds FRN
6.8125%, 2/27/15(b)(c)(d)
(cost $59,448) 228 75,171
POLAND-6.2%
Republic of Poland PDI Bonds
3.75%, 10/27/14(a)
(cost $5,977,536) 10,000 6,437,500
Total Non-Collateralized Brady Bonds
(cost $6,036,984) 6,512,671
LOAN PARTICIPATIONS & ASSIGNMENTS-14.4%
ALGERIA-1.1%
Algeria Refinancing Trust Loan Assignment
Series B 7.1875%, 3/04/97
(cost $2,688,947) 3,000 1,110,000
3
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S.$VALUE
- ----------------------------------------------------------------------
MOROCCO-7.0%
Kingdom of Morocco Loan Participation FRN
6.6875%, 1/01/09(b)
(cost $5,740,207) $12,000 $7,155,000
RUSSIA-6.3%
Vneshekonombank Loan Assignment(e)
(cost $6,361,975) 20,000 6,487,500
Total Loan Participations & Assignments
(cost $14,791,129) 14,752,500
OTHER SOVEREIGN DEBT-RELATED-3.6%
Bayerische Landesbank Spread Note
U.S. Treasury Bond 7.825%, 2/15/25 vs.
Brazil Par Bonds 4.00%, 4/15/24
9.125%, 3/28/96(f) 2,000 1,729,800
Morgan Guaranty Trust Co.
Spread Note
U.S. Treasury Bond 6.25%, 8/15/23
vs. Argentina Par Bonds 5.00%,
3/31/23 9.00%, 1/19/96(f) 671 407,132
Indexed Notes(g)
Indexed to Ivory Coast Restructured
Loan Assignment 9.00%, 12/19/95 $ 1,393 $1,391,473
Indexed to Ivory Coast Unrestructured
Loan Assignment 9.00%, 12/19/95 180 172,859
Total Other Sovereign Debt-Related
(cost $4,243,453) 3,701,264
Total Sovereign Debt Obligations
(cost $95,720,266) 98,151,919
TREASURY SECURITY-36.5%
U.S. Treasury Bond Zero coupon, 2/15/03
(cost $36,577,913) 57,500 37,452,050
TIME DEPOSIT-2.8%
Bank of New York
5.6875%, 11/01/95
(cost $2,863,000) 2,863 2,863,000
TOTAL INVESTMENTS-134.8%
(cost $135,161,179) 138,466,969
Other assets less liabilities-(34.8%) (35,710,211)
NET ASSETS-100% $102,756,758
* Sovereign debt obligations issued as part of debt restructurings that are
collateralized in full as to principal due at maturity by U.S. Treasury zero
coupon obligations which have the same maturity as the Brady Bond.
(a) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at October 31, 1995.
(b) Coupon will fluctuate based upon an interest rate index. Stated interest
rate in effect at October 31, 1995.
(c) Coupon consists of 3.00% cash payment and 3.8125% paid-in-kind.
(d) Restricted security.
(e) Non-income producing security.
(f) The redemption value of these securities is indexed to the spread between
the referenced treasury yield and the referenced emerging market debt yield.
(g) The redemption value of these securities is linked to the change in the
bid price of the referenced emerging market debt.
Glossary of Terms:
FRN - Floating rate note.
PDI - Past due interest.
See notes to financial statements.
4
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $135,161,179) $138,466,969
Interest receivable 2,204,044
Deferred organization expenses and other assets 40,546
Total assets 140,711,559
LIABILITIES
Payable for investment securities purchased 37,661,258
Unrealized depreciation on interest rate swap contract 86,400
Advisory fee payable 86,213
Administrative fee payable 12,932
Accrued expenses and other liabilities 107,998
Total liabilities 37,954,801
NET ASSETS (equivalent to $11.88 per share, based on 8,652,707
shares outstanding) $102,756,758
COMPOSITION OF NET ASSETS
Capital stock, at par $ 86,527
Additional paid-in capital 119,218,745
Undistributed net investment income 764,729
Accumulated net realized loss on investments (20,532,633)
Net unrealized appreciation of investments and other assets 3,219,390
$102,756,758
NET ASSET VALUE PER SHARE $11.88
See notes to financial statements.
5
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995 ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest $14,335,477
EXPENSES
Advisory fee $915,252
Administrative fee 137,289
Audit and legal 91,841
Custodian 78,689
Transfer agency 73,539
Printing 32,036
Directors' fees 25,718
Registration 17,974
Amortization of organization expenses 17,885
Miscellaneous 24,503
Total expenses 1,414,726
Net investment income 12,920,751
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions (10,415,111)
Net change in unrealized depreciation of
investments and other assets 16,574,731
Net gain on investments 6,159,620
NET INCREASE IN NET ASSETS FROM OPERATIONS $19,080,371
See notes to financial statements.
6
STATEMENT OF CHANGES
IN NET ASSETS ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 12,920,751 $10,733,241
Net realized loss on investment transactions (10,415,111) (9,633,653)
Net change in unrealized appreciation
(depreciation) of investments and other assets 16,574,731 (37,262,374)
Net increase (decrease) in net assets from
operations 19,080,371 (36,162,786)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividends from net investment income (12,156,022) (11,284,327)
Distributions from net realized gains -0- (36,979,502)
Distributions in excess of net realized gains -0- (752,869)
Tax return of capital distribution -0- (1,930,057)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting in issuance
of Common Stock 2,304,564 16,015,296
Total increase (decrease) 9,228,913 (71,094,245)
NET ASSETS
Beginning of year 93,527,845 164,622,090
End of year(including undistributed net investment
income of $764,729 at October 31, 1995) $102,756,758 $93,527,845
See notes to financial statements.
7
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance World Dollar Government Fund, Inc. (the 'Fund') was incorporated under
the laws of the State of Maryland on August 20, 1992 and is registered under
the Investment Company Act of 1940, as a non-diversified, closed-end management
investment company. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Listed securities not
traded and securities traded in the over-the-counter market, including listed
debt securities whose primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked price
provided by the principal market makers. Publicly traded Sovereign Debt
Obligations are typically traded internationally on the over-the-counter
market. Because of the nature of the markets for Sovereign Debt Obligations,
quotations from several sources will be obtained so that the Fund's portfolio
investments will not generally be priced by a single source. Readily marketable
Sovereign Debt Obligations may be valued on the basis of prices provided by a
pricing service when such prices are believed by the Adviser to reflect the
fair value of such securities.
Securities for which market quotations are not readily available and restricted
securities which are subject to limitations as to their resale 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 fair value, unless this method does not represent fair value.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $90,000 have been deferred and are being
amortized on a straight-line basis through November, 1997.
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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. 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.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
NOTE B: ADVISORY AND ADMINISTRATIVE FEES
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the 'Adviser') a monthly fee equal to the annualized
rate of 1% of the Fund's average weekly net assets.
Under the terms of an Admistrative Agreement, the Fund pays Alliance Capital
Management L.P., (the 'Administrator') a monthly fee equal to the annualized
rate of .15 of 1% of the Fund's average weekly net assets.
The Administrator provides administrative functions to the Fund as well as
other clerical services. The Administrator also prepares financial and
regulatory reports for the Fund.
8
ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $537,138,805 and $541,686,835, respectively, for the year ended
October 31, 1995.
At October 31, 1995, the cost of investments for federal income tax purposes
was $136,833,857. Accordingly, gross unrealized appreciation of investments was
$4,378,183 and gross unrealized depreciation of investments was $2,745,071
resulting in net unrealized appreciation of $1,633,112 (excluding swap
contracts). At October 31, 1995, the Fund had a capital loss carryforward of
$18,376,086 which expires in the year 2003.
NOTE D: INTEREST RATE SWAP AGREEMENT
The Fund enters into interest rate swaps on sovereign debt obligations to
protect itself from interest rate fluctuations on the underlying floating rate
debt instruments. 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 another party 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 interest 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.
The Fund records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as
interest income (or as an offset to interest income). Fluctuations in the value
of swap contracts are recorded for financial statement purposes as unrealized
appreciation or depreciation on interest rate swap contracts.
At October 31, 1995, the Fund had an outstanding interest rate swap contract
with the following terms:
RATE TYPE
---------------------
PAYMENTS PAYMENTS
SWAP NOTIONAL TERMINATION MADE BY RECEIVED BY UNREALIZED
COUNTERPARTY AMOUNT DATE THE FUND THE FUND DEPRECIATION
- ------------ ------------- ----------- -------- ----------- ------------
Morgan US$12,000,000 1/01/09 Floating+ 6.8526% $86,400
Guaranty
NOTE E: CAPITAL STOCK
There are 100,000,000 shares of $0.01 par value Common Stock authorized.
Of the 8,652,707 shares outstanding at October 31, 1995, the Adviser owned
7,200 shares. During the years ended October 31, 1995 and 1994, the Fund issued
212,897 and 985,961 shares, respectively, in connection with the Fund's
dividend reinvestment plan.
+ Floating is composed of LIBOR (London Interbank Offered Rate) plus a fixed
amount of .8125%.
9
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
NOTE F: CONCENTRATION OF RISK
Investing in securities of foreign governments involves special risks which
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of many foreign governments and their
markets may be less liquid and their prices more volatile than those of the
United States government. The Fund invests in the sovereign debt obligations of
countries that are considered emerging market countries at the time of
purchase. Therefore, the Fund is susceptible to governmental factors and
economic and debt restructuring developments adversely affecting the economies
of these emerging market countries. In addition, these debt obligations may be
less liquid and subject to greater volatility than debt obligations of more
developed countries.
NOTE G: QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
NET INCREASE
NET REALIZED (DECREASE)
AND UNREALIZED IN NET ASSETS
NET INVESTMENT GAIN (LOSS) ON RESULTING FROM MARKET PRICE
INCOME INVESTMENTS OPERATIONS ON NYSE
---------------- ------------------- ------------------- -----------------
TOTAL PER TOTAL PER TOTAL PER
QUARTER ENDED (000) SHARE (000) SHARE (000) SHARE HIGH LOW
- ---------------- ------- ----- --------- -------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
October 31, 1995 $ 3,075 $ .36 $ 5,381 $ .63 $ 8,456 $ .99 $11.875 $10.750
July 31, 1995 3,204 .37 7,517 .87 10,721 1.24 $11.875 $11.000
April 30, 1995 3,766 .44 2,102 .24 5,868 .68 $11.375 $ 9.000
January 31, 1995 2,876 .34 (8,841) (1.03) (5,965) (.69) $13.000 $ 9.875
$12,921 $1.51 $ 6,159 $ .71 $ 19,080 $ 2.22
October 31, 1994 $ 1,660 $ .20 $ 242 $ .04 $ 1,902 $ .24 $13.875 $13.000
July 31, 1994 3,600 .43 (4,126) (.49) (526) (.06) $15.250 $13.000
April 30, 1994 2,583 .31 (47,700) (5.78) (45,117) (5.47) $18.250 $14.000
January 31, 1994 2,890 .38 4,688 .57 7,578 .95 $22.500 $17.500
$10,733 $1.32 $(46,896) $(5.66) $(36,163) $(4.34)
</TABLE>
10
FINANCIAL HIGHLIGHTS ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD
YEAR ENDED YEAR ENDED NOV.2,1992*
OCTOBER 31, OCTOBER 31, TO
1995 1994 OCT.31,1993
----------- ---------- ------------
Net asset value, beginning of period $11.08 $22.09 $13.82(a)
INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.51(b) 1.32 1.54
Net realized and unrealized gain (loss)
on investments .71 (5.66) 8.19
Net increase (decrease) in net asset
value from operations 2.22 (4.34) 9.73
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (1.42) (1.39) (1.46)
Distributions from net realized gains -0- (4.96) -0-
Distributions in excess of net realized gains -0- (.09) -0-
Tax return of capital distribution -0- (.23) -0-
Total distributions (1.42) (6.67) (1.46)
Net asset value, end of period $11.88 $11.08 $22.09
Market value, end of period $11.75 $13.00 $20.375
TOTAL RETURN
Total investment return based on:
Market value 2.78%(c) (7.52)% 59.14%
Net asset value 21.92% (27.29)% 72.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $102,757 $93,528 $164,622
Ratio of expenses to average net assets 1.55% 1.43% 1.44%(d)
Ratio of net investment income to
average net assets 14.12% 9.08% 9.79%(d)
Portfolio turnover rate 441% 395% 417%
* Commencement of operations.
(a) Net of offering costs of $.13.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
the period reported. Dividends and distributions, if any, are assumed, for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's Dividend Reinvestment Plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to the net asset value from the beginning to
the end of such periods. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such periods. Total investment return calculated for a period of less than one
year is not annualized.
(d) Annualized.
11
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance World Dollar Government Fund, Inc., 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 Dollar Government Fund, 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 the
indicated periods, in conformity with generally accepted accounting principles.
Ernst & Young LLP
New York, New York
December 15, 1995
12
ADDITIONAL INFORMATION ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
Shareholders whose shares are registered in their own names will automatically
be participants in the Dividend Reinvestment and Cash Purchase Plan (the
'Plan'), pursuant to which dividends and capital gain distributions to
shareholders will be paid in or reinvested in additional shares of the Fund.
First Data Investor Services Group, Inc. (the 'Agent') will act as agent for
participants under the Plan. Shareholders whose shares are held in the name of
a broker or nominee should contact such broker or nominee to determine whether
or how they may participate in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(I) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue new
shares at the greater of net asset value or 95% of the then current market
price.
(ii) If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or elsewhere,
for the participants' accounts. Such purchases will be made on or shortly after
the payment date for such dividend or distribution and in no event more than 30
days after such date except where temporary curtailment or suspension of
purchase is necessary to comply with Federal securities laws. If, before the
Plan agent has completed its purchases, the market price exceeds the net asset
value of a share of Common Stock, the average purchase price per share paid by
the Plan agent may exceed the net asset value of the Fund's shares of Common
Stock, resulting in the acquisition of fewer shares than if the dividend or
distribution had been paid in shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of
the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average cost,
including brokerage commissions, of any shares purchased in the open market
plus the cost of any shares issued by the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent
to written notice of the change sent to participants in the Plan at least 90
days before the record date for such dividend or distribution. The Plan may
also be amended or terminated by the Agent on at least 90 days' written notice
to participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at First Data Investor Services Group, Inc., P.O. Box
1376, Boston, Massachusetts 02104.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change
of control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change in the person
primarily responsible for the day-to-day management of the Fund's portfolio,
who is Wayne D. Lyski, the President of the Fund.
13
ADDITIONAL INFORMATION (CONTINUED) ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
SUPPLEMENTAL PROXY INFORMATION
The Annual Meeting of Shareholders of The Alliance World Dollar Government
Fund, Inc. was held on Friday, March 3, 1995. The description of each proposal
and number of shares voted at the meeting are as follows:
SHARES VOTED
SHARES WITHOUT
VOTED FOR AUTHORITY
--------- -----------
1.To elect directors: Class One Directors
(term expires in 1998)
David H. Dievler 7,033,783 200,620
Clifford L. Michel 7,035,747 198,656
SHARES SHARES
SHARES VOTED VOTED
VOTED FOR AGAINST ABSTAIN
--------- ------- -------
2.To ratify the selection of Ernst & Young LLP
as the Fund's independent auditors for the
Fund's fiscal year ending October 31,1995: 7,038,555 59,287 136,561
14
ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN
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
WAYNE D. LYSKI, PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
PAUL J. DENOON, VICE PRESIDENT
VICKI L. FULLER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JOSEPH J. MANTINEO, CONTROLLER
ADMINISTRATOR
ALLIANCE CAPITAL MANAGEMENT, L.P.
1345 Avenue of the Americas
New York, NY 10105
CUSTODIAN
THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286
DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
FIRST DATA INVESTOR SERVICES GROUP, INC.
(FORMALLY THE SHAREHOLDER SERVICES GROUP, INC.)
53 State Street
Boston, MA 02109
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its Common Stock in the open market.
This report, including the financial statements herein, is transmitted to the
shareholders of Alliance World Dollar Government Fund, Inc. for their
information. The financial information included herein is taken from the
records of the Fund. This is not a prospectus, circular or representation
intended for use in the purchase of shares of the Fund or any securities
mentioned in this report.
15
ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
Summary of General Information
THE FUND
Alliance World Dollar Government Fund, Inc. is a closed-end management
investment company which seeks high current income from investment in debt
obligations of countries with emerging economies whose recent interest rates
are higher than those of the United States.
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transactions Section of newspapers each day, under the
designation 'Alliance Wrld'. The Fund's NYSE trading symbol is 'AWG'. Weekly
comparative net asset value (NAV) and market price information about the Fund
is published each Monday in THE WALL STREET JOURNAL and each Saturday in the
NEW YORK TIMES and BARRON'S and other newspapers in a table called 'Closed-End
Funds.' Additional information about the Fund is available by calling
1-800-247-4154.
DIVIDEND REINVESTMENT PLAN
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains distributions in additional Fund shares. For a copy of the Plan
Brochure, please write to the Plan Agent, First Data Investor Services Group,
Inc., P.O. Box 1376, Boston, MA 02104.
ALLIANCE WORLD DOLLAR GOVERNMENT FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
WDGAR
