----------
CLOSED END
----------
Alliance World Dollar
Government Fund
Semi-Annual Report
April 30, 2000
AllianceCapital [LOGO](R)
The Investment Professional's Choice
<PAGE>
Investment Products Offered
-------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
-------------------------
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
LETTER TO SHAREHOLDERS
June 13, 2000
Dear Shareholder:
We are pleased to report to you on the performance, investment strategy and
outlook of the Alliance World Dollar Government Fund (the "Fund"). This report
provides information for the semi-annual reporting period ended April 30, 2000.
Investment Objectives and Policies
The Fund is designed for investors who seek high current income and capital
appreciation. The Fund invests primarily in high-yielding, high-risk debt
obligations of developing countries that we expect to benefit from improving
economic and credit fundamentals.
Investment Results
The following table shows how the Fund performed over the past six- and 12-month
periods. For comparison, we have included the JP Morgan Emerging Markets Bond
Index Plus (JPM EMBI+), a standard measure of the performance of a basket of
unmanaged emerging market debt securities.
Your Fund outperformed the benchmark during the six- and 12-month periods ended
April 30, 2000. During both the six- and 12-month periods, our emerging market
exposure and security selection enhanced performance. In addition, performance
was also enhanced by the reduction of the Fund's holdings in U.S. Treasury
strips.
INVESTMENT RESULTS*
Periods Ended April 30, 2000
--------------------------
Total Returns
--------------------------
6 Months 12 Months
--------------------------------------------------------------------------------
Alliance
World Dollar
Government
Fund 21.44% 23.39%
--------------------------------------------------------------------------------
JP Morgan
Emerging
Markets
Bond Index
Plus 14.43% 18.49%
--------------------------------------------------------------------------------
* The Fund's investment results represent total returns for the periods
shown and are based on the net asset value (NAV) as of April 30, 2000. All
fees and expenses related to the operation of the Fund have been deducted.
Returns for the Fund include the reinvestment of any distributions paid
during the period. Past performance is no guarantee of future results.
The JP Morgan Emerging Markets Bond Index Plus (JPM EMBI+) is composed of
dollar-denominated restructured sovereign bonds; a large percentage of the
index is made up of Brady bonds. An investor cannot invest directly in an
index, and its results are not indicative of any specific investment,
including Alliance World Dollar Government Fund.
Additional investment results appear on pages 5-7.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 1
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
Market Overview
The global macroeconomic outlook continues to brighten. The U.S. economy grew
7.4% during the final quarter of 1999 and 5.4% during the first quarter of 2000.
Consumer spending appears to have accelerated in 2000 year-to-date, as consumers
remain confident. The Consumer Price Index (CPI) touched 3.7% in March on a
year-over-year basis, more than double the 1.6% rate in February 2000. In April,
consumer prices steadied, helped by the drop in oil prices from a high in March.
With economic activity remaining strong, the U.S. Federal Reserve enacted four
25 basis-point rate hikes, moving interest rates to 6.50%.
The euro area is enjoying a virtuous circle of falling unemployment, improved
consumer confidence and spending, and stronger economic growth. European
governments are maintaining fiscal discipline while adopting business-friendly
reforms. Japan is expected to finally grow as corporate restructuring,
stimulating public policies and a technology investment boom are supporting a
still-fragile economy. Consumer and business spend ing are accelerating, and a
self-sustained recovery could be under way later this year. Strength in the
developed economies is spilling over to East Asia, Latin America, and emerging
Europe. In the currency markets, the dollar broke through parity with the euro
in late January and ended April at a high of $0.91. During the six-month period
under review, the euro traded between $0.91-$1.05. The dollar steadily
strengthened against the yen, trading between the (Yen)101-(Yen)111 range for
the period.
Emerging market debt performed well during the six-month period under review as
global economic growth continued to improve. The emerging market debt sector
posted a return of +14.43% as measured by the JPM EMBI+ during the six month
period. Most individual country returns, also as measured by the JPM EMBI+
weightings, were positive during the period, with Russia posting the largest
gains of +89.32%. With a recovering economy and a new government in place, the
Russian government now is able to focus on enacting economic reforms,
resurrecting International Monetary Fund (IMF) negotiations, and progressing
on closing their restructuring negotiations with debt holders. Another
outperformer during this period was Ecuador (+13.19%), stemming from an IMF
announcement of a package in the amount of $900 million over the next year.
Other individual outperformers were Peru (+12.47%) and Mexico (+12.11%). The
worst performing country was Columbia, posting a return of -6.42%. The prospects
for the implementation of economic structural reforms in Columbia to prevent
further credit deterioration have
--------------------------------------------------------------------------------
2 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
been overshadowed by a corruption scandal in Congress. President Pastrana has
called for a referendum on political reform, which could lead to dissolution
of the current Congress.
Investment Strategy
Over the six-month period ended April 30, 2000, the Fund's holdings of U.S.
Treasuries were decreased as the risk of tighter monetary policy by the Federal
Reserve dampened valuations. We increased our allocation to Latin America in
addition to refining the focus of our holdings in that region. We increased our
exposure to Mexico as the country was upgraded to investment-grade status in
March. The upgrade reflected Mexico's lower foreign currency debt burden
underpinned by a well-integrated export sector. The country's progress toward a
multiparty democracy and the widespread consensus in the government on the
importance of sound financial policies also contributed to its upgrade. In
addition, we have also increased our exposure to Turkey as the country also was
upgraded to a B+ rating. The rating boost stems from the favorable review
received from the IMF for Turkey's implementation of privatization programs and
the consensus among all political parties on a single presidential candidate.
Outlook
In the coming months, we expect the U.S. economy to remain relatively strong and
the global economy to continue to strengthen. We believe that ongoing reforms
and a favorable economic backdrop will make the emerging market sector the best
performing of fixed-income securities. Stronger global growth coupled with
recent firming in commodity prices will continue to provide the environment
necessary for emerging countries to further improve their credit profiles.
Emerging European countries are enjoying healthy recoveries in the aftermath of
the Russian economic turmoil and the Asian crisis. We forecast 3.5% growth for
this region in 2000. With improving global growth and liquidity conditions, we
expect East Asian growth to reach 6.5% in 2000, following a similar pace in
1999. Labor market conditions are improving, boosting consumer spending, while
export earnings are driving investment expenditures. The Latin American region
should continue its recovery momentum, as we look for this region to head toward
4.0% growth with moderate inflation over the next year.
The underlying fundamentals of a growing economy, low inflation and relatively
low (though trending upwards) interest rates remain supportive of high yield.
Another strong year in the equity markets could engender some rebalancing of
portfolios in 2000 toward fixed income, and high yield in particular, thereby
improving demand.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 3
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
[PHOTO] John D. Carifa
[PHOTO] Wayne D. Lyski
Portfolio Manager, Wayne D. Lyski, oversees fixed-income investment at Alliance
and manages assets in both domestic and international markets. Mr. Lyski has
over 26 years on investment experience.
We currently view the high-yield market as relatively
inexpensive compared to other fixed-income sectors and expect over a medium- to
longer-term time horizon for the high-yield sector to perform well.
Thank you for your continued interest and investment in Alliance World Dollar
Government Fund. We look forward to reporting to you again on market activity
and the Fund's investment results in the coming periods.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Wayne D. Lyski
Wayne D. Lyski
President
--------------------------------------------------------------------------------
4 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE WORLD DOLLAR GOVERNMENT FUND
GROWTH OF A $10,000 INVESTMENT
11/30/92* TO 4/30/00
[MOUNTAIN CHART OMITTED]
[The following table was depicted as a mountain chart in the printed material.]
4/30/00
Benchmarks $28,654
Alliance World Dollar Government Fund (NAV) $28,044
** This chart illustrates the total value of an assumed $10,000 investment in
Alliance World Dollar Government Fund (NAV) (from 11/30/92 to 4/30/00) as
compared to the performance of appropriate benchmarks. For the period
11/30/92 through 4/30/94, the Fund's benchmark is represented by the J.P.
Morgan Emerging Markets Bond Index. From 4/30/94 through 4/30/00, the
Fund's benchmark is represented by the J.P. Morgan Emerging Markets Bond
Index Plus. (The inception date for the J.P. Morgan Emerging Markets Bond
Index Plus is 12/31/93. Therefore, it is used as the Fund's benchmark for
the first time beginning 4/30/94.) The chart assumes the reinvestment of
dividends and capital gains. Past performance is not indicative of future
results, and is not representative of future gain or loss in capital value
or dividend income.
The J.P. Morgan Emerging Markets Bond Index and the J.P. Morgan Emerging
Markets Bond Index Plus are composed of dollar-denominated restructured
sovereign bonds; a large percentage of the indices are made up of Brady
bonds.
When comparing Alliance World Dollar Government Fund to the indices shown
above, you should note that no charges or expenses are reflected in the
performance of the indices. An investor cannot invest directly in an index
its results are not indicative of any specific investment, including
Alliance World Dollar Government Fund.
* Closest month-end after Fund's inception date of 11/2/92.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 5
<PAGE>
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE WORLD DOLLAR GOVERNMENT FUND (NAV)
HISTORY OF RETURNS
YEARLY PERIODS ENDED 4/30/00
[BAR CHART OMITTED]
[The following table was depicted as a bar chart in the printed material.]
Alliance World Dollar Government Fund--
Yearly Periods Ended 4/30
--------------------------------------------------------------------------------
Alliance World Dollar
Government Fund Benchmarks
--------------------------------------------------------------------------------
4/30/93* 22.67% 11.01%
4/30/94 0.34% 6.87%
4/30/95 1.76% 3.19%
4/30/96 41.38% 41.20%
4/30/97 35.95% 31.83%
4/30/98 18.26% 14.87%
4/30/99 -20.22% -8.85%
4/30/00 23.39% 18.49%
** Past performance is no guarantee of future results. The Fund's investment
results represent total returns and are based on the net asset value. All
fees and expense related to the operation of the Fund have been deducted.
Returns for the Fund include the reinvestment of any distributions paid
during the period. (The inception date for the J.P. Morgan Emerging
Markets Bond Index Plus is 12/31/93. Therefore, it is used as the Fund's
benchmark for the first time beginning 4/30/94.) The J.P. Morgan Emerging
Markets Bond Index and the J.P. Morgan Emerging Markets Bond Index Plus
are composed of dollar-denominated restructured sovereign bonds; a large
percentage of the indices are made up of Brady bonds. An investor cannot
invest directly in an index, and its results are not indicative of any
specific investment, including Alliance World Dollar Government Fund.
* From inception (11/2/92 for Fund and 10/31/92 for Index).
--------------------------------------------------------------------------------
6 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
-----------------
PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
April 30, 2000 (unaudited)
INCEPTION DATE PORTFOLIO STATISTICS
11/2/92 Assets ($mil): $90.3
SECURITY TYPE [PIE CHART OMITTED]
49.77% Sovereign
20.81% Brady Bonds
3.09% Loan Participation
20.27% U.S. Government Obligation
6.06% Time Deposit
HOLDINGS BY ISSUER COUNTRY [PIE CHART OMITTED]
11.69% Argentina
14.28% Brazil
3.19% Bulgaria
2.28% Columbia
11.89% Mexico
3.09% Morocco
2.87% Panama
0.13% Peru
2.17% Philippines
13.24% Russia
1.17% South Africa
3.85% Turkey
26.33% United States
3.82% Venezuela
All data as of April 30, 2000. Security type and country breakdown are expressed
as a percentage of total investments and may vary over time.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 7
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
April 30, 2000 (unaudited)
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Sovereign Debt Obligations-101.0%
Other Sovereign Debt Obligations-68.2%
Argentina-16.0%
Republic of Argentina
11.75%, 4/07/09 .............................. $ 5,450 $ 5,348,085
12.00%, 2/01/20 .............................. 1,500 1,479,450
12.125%, 2/25/19 ............................. 7,700 7,646,100
-------------
14,473,635
-------------
Brazil-1.3%
Republic of Brazil
Global Bonds
12.75%, 1/15/20 .............................. 1,250 1,198,500
-------------
Columbia-3.1%
Republic of Columbia
8.375%, 2/15/27 .............................. 2,500 1,575,000
9.75%, 4/23/09 ............................... 1,500 1,245,000
-------------
2,820,000
-------------
Mexico-14.4%
United Mexican States
9.75%, 4/06/05 ............................... 2,000 2,066,000
10.375%, 2/17/09 ............................. 4,850 5,107,050
11.375%, 9/15/16 ............................. 5,150 5,819,500
-------------
12,992,550
-------------
Panama-2.2%
Republic of Panama
9.375%, 4/01/29 .............................. 2,100 1,979,250
-------------
Philippines-3.0%
Republic of Philippines
9.875%, 1/15/19 .............................. 2,000 1,767,600
10.625%, 3/16/25 ............................. 1,000 927,500
-------------
2,695,100
-------------
Russia-18.1%
Russian Federation
11.00%, 7/24/18(a) ........................... 1,400 997,500
12.75%, 6/24/28 .............................. 4,800 3,888,000
Russian Federation WI
2.25%, 3/31/30(a) ............................ 24,100 8,133,750
Russian Ministry of Finance
3.00%, 5/14/03 ............................... 7,000 3,377,500
-------------
16,396,750
-------------
--------------------------------------------------------------------------------
8 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
South Africa-1.6%
Republic of South Africa
9.125%, 5/19/09 .............................. $ 1,500 $ 1,455,000
-------------
Turkey-5.3%
Republic of Turkey
11.875%, 1/15/30 ............................. 4,400 4,765,750
-------------
Venezuela-3.2%
Republic of Venezuela
9.25%, 9/15/27 ............................... 2,350 1,501,180
13.625%, 8/15/18 ............................. 1,500 1,357,500
-------------
2,858,680
-------------
Total Other Sovereign Debt Obligations
(cost $60,026,985) ........................... 61,635,215
-------------
Non-Collateralized Brady Bonds-19.5%
Brazil-14.9%
Republic of Brazil C-Bonds
8.00%, 4/15/14 ............................... 1,092 782,120
Republic of Brazil DCB FRN
Series L Bearer Bond
7.438%, 4/15/12 .............................. 11,000 7,906,800
Republic of Brazil DCB FRN
Series L Registered Bond
7.438%, 4/15/12 .............................. 6,600 4,744,080
-------------
13,433,000
-------------
Bulgaria-2.7%
Republic of Bulgaria
IAB FRN PDI
7.063%, 7/28/11 .............................. 3,200 2,416,000
-------------
Panama-1.7%
Republic of Panama
Registered Bond
4.25%, 7/17/14(b) ............................ 2,000 1,575,000
-------------
Peru-0.2%
Republic of Peru PDI
4.50%, 3/07/17(a)(b) ......................... 250 166,875
-------------
Total Non-Collateralized Brady Bonds
(cost $16,610,515) ........................... 17,590,875
-------------
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 9
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Loan Participation-4.2%
Morocco-4.2%
Kingdom of Morocco
Loan Participation FRN
Series A
3.018%, 1/01/09
(cost $2,408,554) ............................ $ 4,286 $ 3,825,000
-------------
Collateralized Brady Bonds(c)-9.1%
Brazil-3.4%
Republic of Brazil FRN
Registered Bond
7.375%, 4/15/24 .............................. 4,000 3,052,500
-------------
Bulgaria-1.7%
Republic of Bulgaria
Discount Bonds FRN
7.063%, 7/28/24 .............................. 2,000 1,530,000
-------------
Mexico-1.9%
United Mexican States
Series W-A
6.25%, 12/31/19(d) ........................... 2,100 1,727,250
-------------
Venezuela-2.1%
Republic of Venezuela
Discount Bonds
Series W-A FRN
7.375%, 3/31/20(e) ........................... 1,500 1,175,026
Series W-B FRN
6.875%, 3/31/20(e) ........................... 1,000 696,300
-------------
1,871,326
-------------
Total Collateralized Brady Bonds
(cost $7,745,331) ............................ 8,181,076
-------------
Total Sovereign Debt Obligations
(cost $86,791,385) ........................... 91,232,166
-------------
U.S. Government Obligation-27.8%
U.S. Treasury Strip
Zero coupon, 2/15/03
(cost $25,410,046) ........................... 30,100 25,113,635
-------------
Time Deposit-8.3%
Bank of New York
6.063%, 5/01/00
(cost $7,502,000) ............................ 7,502 7,502,000
-------------
--------------------------------------------------------------------------------
10 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
U.S. $ Value
--------------------------------------------------------------------------------
Total Investments-137.1%
(cost $119,703,431) .......................... $ 123,847,801
Other assets less liabilities-(37.1%) .......... (33,524,939)
-------------
Net Assets-100% ................................ $ 90,322,862
=============
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
2000, these securities amounted to $9,298,125 representing 10.3% of net
assets.
(b) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at April 30, 2000.
(c) 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.
(d) Security trades with value recovery rights expiring June 30, 2003.
(e) Security trades with oil warrants expiring March 31, 2020.
Glossary of Terms:
DCB - Debt Conversion Bond.
FRN - Floating Rate Note.
IAB - Interest Arrears Bond.
PDI - Past Due Interest.
WI - When Issued.
See notes to financial statements.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 11
<PAGE>
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
April 30, 2000 (unaudited)
Assets
Investments in securities, at value (cost $119,703,431) ....... $ 123,847,801
Cash .......................................................... 108
Receivable for investment securities sold ..................... 11,221,329
Interest receivable ........................................... 1,831,872
Other assets .................................................. 16,233
-------------
Total assets .................................................. 136,917,343
-------------
Liabilities
Payable for investment securities purchased ................... 45,179,168
Unrealized depreciation on interest rate swap contract ........ 1,037,307
Advisory fee payable .......................................... 75,554
Administrative fee payable .................................... 11,332
Accrued expenses .............................................. 291,120
-------------
Total liabilities ............................................. 46,594,481
-------------
Net Assets .................................................... $ 90,322,862
=============
Composition of Net Assets
Capital stock, at par ......................................... $ 85,226
Additional paid-in capital .................................... 114,585,188
Distributions in excess of net investment income .............. (352,221)
Accumulated net realized loss on investment
transactions ................................................ (27,102,394)
Net unrealized appreciation on investments and
other assets ................................................ 3,107,063
-------------
$ 90,322,862
=============
Net Asset Value Per Share
(based on 8,522,580 shares outstanding) ..................... $10.60
======
See notes to financial statements.
--------------------------------------------------------------------------------
12 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
-----------------------
STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2000 (unaudited)
Investment Income
Interest ........................................ $ 6,076,209
Expenses
Advisory fee .................................... $438,169
Administrative fee .............................. 65,725
Custodian ....................................... 51,624
Audit and legal ................................. 33,627
Printing ........................................ 32,716
Directors' fees ................................. 18,046
Transfer agency ................................. 14,806
Miscellaneous ................................... 9,810
-----------
Total expenses .................................. 664,523
-----------
Net investment income ........................... 5,411,686
-----------
Realized and Unrealized Gain
on Investments
Net realized gain on investment
transactions .................................. 7,992,529
Net change in unrealized appreciation/
depreciation of investments and
other assets .................................. 2,799,625
-----------
Net gain on investment transactions ............. 10,792,154
-----------
Net Increase In Net Assets From
Operations .................................... $16,203,840
===========
See notes to financial statements.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 13
<PAGE>
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
Six Months Ended Year Ended
April 30, 2000 October 31,
(unaudited) 1999
------------ ------------
Increase (Decrease) in Net Assets
from Operations
Net investment income ........................ $ 5,411,686 $ 10,511,700
Net realized gain (loss) on investment
transactions ............................... 7,992,529 (32,050,605)
Net change in unrealized
appreciation/depreciation of
investments and other assets ............... 2,799,625 32,409,186
------------ ------------
Net increase in net assets from operations ... 16,203,840 10,870,281
Dividends and Distributions to
Shareholders from:
Net investment income ........................ (5,624,523) (10,511,700)
Distributions in excess of net investment
income ..................................... -0- (1,326,448)
Tax return of capital ........................ -0- (353,706)
Distributions in excess of net realized gains
on investments ............................. -0- (6,004,088)
Common Stock Transactions
Reinvestment of dividends resulting in
issuance of Common Stock ................... -0- 4,119,075
------------ ------------
Total increase (decrease) .................... 10,579,317 (3,206,586)
Net Assets
Beginning of year ............................ 79,743,545 82,950,131
------------ ------------
End of period ................................ $ 90,322,862 $ 79,743,545
============ ============
See notes to financial statements.
--------------------------------------------------------------------------------
14 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
April 30, 2000 (unaudited)
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 financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sale price or, if there was no sale on such day, the
last bid price quoted on such day. If no bid prices are quoted, then the
security is valued at the mean of the bid and asked prices as obtained on that
day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market, securities listed on a foreign
securities exchange whose operations are similar to the United States
over-the-counter market, securities listed on a national securities exchange
whose primary market is believed to be over-the-counter are valued at the mean
of the closing bid and asked price provided by two or more dealers regularly
making a market in such securities. U.S. government securities and other debt
securities which mature in 60 days or less are valued at amortized cost unless
this method does not represent fair value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by, or in accordance with procedures approved by, the Board of
Directors. Fixed income securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such securities.
2. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. 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 discount as an
adjustment to interest income.
4. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accor-
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 15
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
dance with federal tax regulations and may differ from those determined in
accordance with generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences, do
not require such reclassification.
NOTE B
Advisory, Administrative Fees and
Other Affiliated Transactions
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. ("Alliance") an advisory fee equal to the annualized
rate of 1% of the Fund's average weekly net assets.
Under the terms of an Administration Agreement, the Fund pays Alliance a monthly
fee equal to the annualized rate of .15 of 1% of the Fund's average weekly net
assets. Alliance provides administrative functions as well as other clerical
services to the Fund and prepares financial and regulatory reports.
The Fund entered into a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Adviser, whereby the Fund reimburses
AFS for costs relating to servicing phone inquiries for the Fund. During the six
months ended April 30, 2000, the Fund reimbursed AFS $1,035, relating to
shareholder servicing costs.
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $59,938,923 and $56,899,695,
respectively, for the six months ended April 30, 2000. There were purchases of
$224,282,324 and sales of $223,841,961 of U.S. government obligations for the
six months ended April 30, 2000.
At April 30, 2000, the cost of investments for federal in come tax purposes was
substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $6,170,188 and
gross unrealized depreciation of investments was $2,025,818 resulting in net
unrealized appreciation of $4,144,370 (excluding swap contract).
At October 31, 1999, the Fund had a capital loss carryforward of $31,336,121
which expires in the year 2007.
1. Interest Rate Swap Agreement
The Fund enters into interest rate swaps to protect itself from interest rate
fluctuations on certain underlying floating rate debt instruments and for
investment purposes. A swap is an agreement that obligates two parties to
exchange a series of cash flows at specified intervals based upon or calculated
by reference to changes in specified prices or rates for a specified amount of
an underlying asset. The payment flows are usually netted against each other,
with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by the
failure of a counter party is gener-
--------------------------------------------------------------------------------
16 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
ally 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 of investments.
At April 30, 2000, the Fund had an outstanding interest rate swap contract with
the following terms:
Rate Type
--------------------
Payments
Payments received
Swap Notional Termination made by by the Unrealized
Counterparty Amount Date the Fund Fund Depreciation
------------ -------- ----------- -------- -------- ------------
Morgan Guaranty US$9,530,473 1/01/09 LIBOR+ 6.8526% $(1,037,307)
+ LIBOR (London Interbank Offered Rate).
NOTE D
Capital Stock
There are 100,000,000 shares of $0.01 par value Common Stock authorized. Of the
8,522,580 shares outstanding at April 30, 2000, Alliance owned 7,200 shares.
During the six months ended April 30, 2000, no shares were issued in connection
with the Fund's dividend reinvestment plan. During the year ended October 31,
1999, the Fund issued 406,076 shares in connection with the dividend
reinvestment plan.
NOTE E
Concentration of Risk
Investing in securities of foreign governments involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign governments and their markets may be less liquid and their prices
more volatile than those of the United States government.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 17
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Oustanding Throughout Each Period.
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended October 31,
2000 ---------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year ................ $ 9.36 $ 10.22 $ 16.03 $ 15.50 $ 11.88 $ 11.08
------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment income .............. .63(a) 1.26(a) 1.47(a) 1.61 1.46 1.51(a)
Net realized and unrealized
gain (loss) on investment
transactions ..................... 1.27 .08 (3.57) .50 3.50 .71
------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value from operations ...... 1.90 1.34 (2.10) 2.11 4.96 2.22
------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ................ (.66) (1.26) (1.65) (1.58) (1.34) (1.42)
Distributions in excess of
net investment income ............ -0- (.16) -0- -0- -0- -0-
Tax return of capital .............. -0- (.04) -0- -0- -0- -0-
Distributions from net
realized gains ................... -0- -0- (2.06) -0- -0- -0-
Distributions in excess of net
realized gains on investments .... -0- (.74) -0- -0- -0- -0-
------------------------------------------------------------------------------------
Total dividends and distributions .. (.66) (2.20) (3.71) (1.58) (1.34) (1.42)
------------------------------------------------------------------------------------
Net asset value, end of period ..... $ 10.60 $ 9.36 $ 10.22 $ 16.03 $ 15.50 $ 11.88
------------------------------------------------------------------------------------
Market value, end of period ........ $ 9.38 $ 9.625 $ 12.625 $ 15.875 $ 13.625 $ 11.75
====================================================================================
Total Return
Total investment return based on:(b)
Market value ..................... 4.39% (5.64)% 1.91% 28.74% 28.49% 2.78%
Net asset value .................. 21.44% 13.30% (18.32)% 14.24% 44.57% 21.92%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .................. $ 90,323 $ 79,744 $ 82,950 $ 138,709 $ 134,140 $ 102,757
Ratio of expenses to average
net assets ....................... 1.52%(c) 1.76% 1.52% 1.43% 1.70% 1.55%
Ratio of net investment income
to average net assets ............ 13.87%(c) 13.46% 10.54% 9.50% 10.84% 14.12%
Portfolio turnover rate ............ 258% 435% 264% 281% 352% 441%
</TABLE>
See footnote summary on page 19.
--------------------------------------------------------------------------------
18 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
(a) Based on average shares outstanding.
(b) 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 less than one year is not
annualized.
(c) Annualized.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 19
<PAGE>
----------------------
ADDITIONAL INFORMATION
----------------------
ADDITIONAL INFORMATION
Supplementary Proxy Information
The Annual Meeting of Shareholders of The Alliance World Dollar Government Fund
was held on March 28, 2000. The description of each proposal and number of
shares are as follows:
Voted
Abstain/
Voted Authority
For Withheld
================================================================================
1. To elect directors: Class Three Directors
(term expires in 2003)
Ruth Block 7,305,956 127,015
John D. Carifa 7,309,268 123,703
Robert C. White 7,299,555 133,416
Voted
Abstain/
Voted Voted Authority
For Against Withheld
================================================================================
2. To ratify the selection of
Ernst & Young LLP
as the Fund's independent
auditors for the
Fund's fiscal year
ending October 31, 2000: 7,341,604 39,480 51,887
--------------------------------------------------------------------------------
20 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------
GLOSSARY OF INVESTMENT TERMS
basis point (bp)
One basis point equals 0.01%.
benchmark
A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.
bond
Governments or corporations issue bonds when they need to raise cash. Bonds are
sold, or issued, to investors and have a maturity date, which is the date the
issuer is obligated to repay the investor for the principal, or face amount, of
the bond. Bonds also pay interest until maturity. Bonds are also called
fixed-income securities
consumer price index (CPI)
An index that measures the cost of living. The CPI is published by the U.S.
Bureau of Labor Statistics.
credit rating
Credit ratings are issued by independent organizations, such as the Standard &
Poor's Ratings group or Moody's Investors Service. These groups attempt to
assess the likelihood that the issuer of the bond will be able to make timely
payments of principal and interest on the bond, based on such factors as the
issuer's financial condition and any collateral securing these obligations.
Ratings typically range from AAA, which is the highest rating, to D, which is
the lowest rating.
current yield
The ratio of interest to the current market price of the bond, expressed as a
percentage.
equity
Another term for stock.
fixed-income security
A bond.
fixed rate
The interest rate does not change during the entire term of the loan.
index
A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
long-term debt
Loans and obligations with a maturity greater than one year.
portfolio
The collection of securities that make up a fund's or an investor's investments.
price-to-earnings (P/E) ratio
What an investor pays for a security versus a company's earnings per share of
outstanding stock.
sector
Refers to a distinct part of the economy, for example, the technology sector.
yield
The rate of return on an asset, usually referring to dividend or interest
payments, expressed as a percentage of current market price.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 21
<PAGE>
----------------
ALLIANCE CAPITAL
----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $394
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 28 of the FORTUNE 100 companies and public retirement funds in 33
states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 276
investment professionals in 22 investment offices worldwide. Our commitment to
this process means that our mutual fund shareholders have their portfolios
managed by the same experienced analysts and portfolio managers who manage the
pension funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 3/31/00.
--------------------------------------------------------------------------------
22 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
------------------
BOARD OF DIRECTORS
------------------
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)
Donald J. Robinson(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
Juan J. Rodriguez, Controller
Administrator
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Dividend Paying Agent,
Transfer Agent and Registrar
First Data Investor Services
Group, Inc.
(formerly The Shareholder Services
Group, Inc.)
53 State Street
Boston, MA 02109
Independent Auditors
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 23
<PAGE>
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Balanced Shares
Conservative Investors Fund
Disciplined Value Fund
Growth & Income Fund
Growth Fund
Growth Investors Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Real Estate Investment Fund
Technology Fund
The Alliance Fund
Utility Income Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Limited Maturity Government Fund
Mortgage Securities Income Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
--------------------------------------------------------------------------------
24 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND
<PAGE>
------------------------------
SUMMARY OF GENERAL INFORMATION
------------------------------
SUMMARY OF GENERAL
INFORMATION
Alliance World Dollar Government Fund
Summary of General Information
The Fund
Alliance World Dollar Government Fund 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
The daily net asset value of the Fund's shares is avail able from the Fund's
Transfer Agent by calling 1-800-331-1710. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper, Inc., Morningstar, Inc. and Bloomberg.
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Trans actions 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, each Sunday in the New York
Times and each Saturday in Barron's and other newspapers in a table called
"Closed-End Funds."
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic re investment of dividends and
capital gains distributions in additional Fund shares.
For questions concerning shareholder account information, or if you would like a
brochure describing the Dividend Reinvestment Plan, please call First Data
Investor Services Group at 1-800-331-1710.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND o 25
<PAGE>
----------------
Alliance World Dollar Government Fund BULK RATE
1345 Avenue of the Americas U.S. POSTAGE
New York, NY 10105 PAID
New York, NY
AllianceCapital [LOGO](R) Permit No. 7131
The Investment Professional's Choice -----------------
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
WDGSR400
