CLOSED END
Alliance World
Dollar Government
Fund II
Semi-Annual Report
September 30, 2000
[GRAPHIC OMITTED]
Alliance Capital[LOGO](R)
The Investment Professional's Choice
<PAGE>
Investment Products Offered
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o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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----------------------
LETTER TO SHAREHOLDERS
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LETTER TO SHAREHOLDERS
November 1, 2000
Dear Shareholder:
This report contains the performance, investment strategy and outlook of
Alliance World Dollar Government Fund II (the "Fund") for the semi-annual
reporting period ended September 30, 2000.
Investment Objective and Policies
This closed-end fund is designed for investors who seek high current income and
capital appreciation. To achieve this objective, it invests primarily in high
yielding, high risk sovereign debt and U.S. corporate fixed-income obligations
that we expect to benefit from improving economic and credit fundamentals.
Fund Performance
The following table shows the Fund's performance over the past six- and 12-month
periods. For comparison, we have included the J.P. Morgan Emerging Markets Bond
Index Plus (JPM EMBI+), which is a standard measure of the performance of a
basket of unmanaged emerging market debt securities.
Over the past six-month period ended September 30, 2000, the Fund underperformed
the benchmark, but still outperformed the benchmark over the 12-month period.
During the six-month period, our security selection cost us relative performance
versus the benchmark. In particular, our Turkish and Brazilian holdings dampened
performance relative to the benchmark. Though Brazilian debt in general
performed well during the period, the longer maturity Brazilian debt that we
held underperformed shorter maturity Brazilian debt.
INVESTMENT RESULTS*
Periods Ended September 30, 2000
-------------------
Total Returns
-------------------
6 Months 12 Months
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Alliance World
Dollar
Government
Fund II 4.05% 36.99%
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J.P. Morgan
Emerging
Markets Bond
Index Plus 5.67% 28.03%
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* The Fund's investment results represent total returns for the periods
shown and are based on the net asset value (NAV) of the Fund as of
September 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 J.P. 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. The index is unmanaged and reflects
no fees or expenses. An investor cannot invest directly in an index, and
its results are not indicative of any specific investment, including
Alliance World Dollar Government Fund II.
Additional investment results appear on pages 4-6.
Investment Strategy
Over the past six-month period, we maintained our overweight position in Russia
due to the successful completion of its restructuring negotiations with debt
holders and the prospect for effective political leadership from
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ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 1
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
President Vladimir Putin. We increased our positions in Mexico as that country's
credit quality continued to improve and its economy benefited from strong U.S.
economic growth. Significant progress on fiscal reforms along with a healthy
economic recovery in Brazil led us to increase our position in Brazilian
government bonds. In addition, we reduced our position in Argentina and trimmed
our exposure in the Philippines in light of disappointments surrounding their
fiscal deficits.
Market Overview
After a strong first half of the year, the global economy lost some momentum
during the third quarter. Past interest rate increases, stable-to-lower stock
prices, and higher oil prices generally dampened global growth. Monetary policy
makers retained their tightening bias, but appeared to be nearing the end of
their tightening cycle.
During the six-month period, emerging market debt, as represented by the JPM
EMBI+, posted a return of 10.5% as global economic growth remained strong. Most
individual country returns, as represented by the JPM EMBI+ country components,
were positive during the period, with Ecuador posting the largest gain of 41% as
a result of a successful debt restructuring. Other individual outperformers
included Russia, Venezuela, Mexico and Brazil, with gains of 11%, 11%, 7% and
6%, respectively. On the back of growing political and economic uncertainties,
Colombia and the Philippines were the only negative performers with losses of
1%.
In Eastern Europe, Russian debt performed well as the economy strengthened on
the back of higher oil prices, aggressive economic reforms and the successful
completion of its debt exchange at the end of August.
Within the Latin American region, rising oil prices boosted performance of
Venezuelan debt (Venezuela is very dependent on oil exports). Mexican debt
performance was boosted by strong economic performance, a credit rating upgrade
to investment-grade quality, and a peaceful election. Brazilian debt performed
well as the Brazilian government exceeded its International Monetary Fund (IMF)
fiscal target by posting a fiscal surplus for the first five months of the year.
Also, the Central Bank of Brazil has taken an aggressive stand on cutting
interest rates, which is a key element in assuring that recent improvements in
the fiscal balance are maintained.
Outlook
Globally, economic growth is moderating and inflation remains low. In the U.S.,
with economic growth moderating, we do not expect any additional interest rate
hikes in 2000. Despite the inevitable variation across countries, we believe
that most emerging market governments remain committed to necessary economic and
financial reforms. In Brazil, we believe that economic growth will improve and
inflation will remain muted. In Mexico, recently released third quarter data
confirmed positive economic fundamentals. Public finances are in strong
conditions, third quarter economic gain moderated somewhat and inflation is
declining slowly. We believe that Russia
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2 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
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----------------------
LETTER TO SHAREHOLDERS
----------------------
remains committed to structural reforms. Going forward, we believe this asset
class will continue to produce attractive returns, albeit with considerable
volatility over the medium-term.
Thank you for your continued interest and investment in Alliance World Dollar
Government Fund II. We look forward to reporting its progress to you again in
the coming periods.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Wayne D. Lyski
Wayne D. Lyski
President
[PHOTO] John D.
Carifa
[PHOTO] Wayne D.
Lyski
Portfolio Manager, Wayne D. Lyski, oversees fixed-income investments at Alliance
and manages assets in both domestic and international markets.
Mr. Lyski has over 26 years of investment experience.
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ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 3
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PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE WORLD DOLLAR GOVERNMENT FUND II (NAV)
GROWTH OF A $10,000 INVESTMENT
7/31/93* TO 9/30/00
[MOUNTAIN CHART OMITTED]
JPM EMBI + Index: $23,133
Alliance World Dollar Government Fund II: $20,781
This chart illustrates the total value of an assumed $10,000 investment in
Alliance World Dollar Government Fund II at net asset value (NAV) (from 7/31/93
to 9/30/00) as compared to the performance of an appropriate index. The index is
from inception of the J.P. Morgan Emerging Markets Bond Index Plus (JPM EMBI+),
which was 1/1/94. For the period 7/31/93 through 9/30/94, the J.P. Morgan
Emerging Markets Bond Index was used, all other periods use the JPM EMBI+
benchmark. 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 unmanaged JPM EMBI+ is composed of dollar-denominated restructured sovereign
bonds; a large percentage of the index is made up of Brady bonds. When comparing
Alliance World Dollar Government Fund II to the index shown above, you should
note that no charges or expenses are reflected in the performance of the index.
An investor cannot invest directly in an index, and its results are not
indicative of any specific investment, including Alliance World Dollar
Government Fund II.
* Closest month-end after Fund's inception date of 7/28/93.
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4 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
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PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE WORLD DOLLAR GOVERNMENT FUND II (NAV)
HISTORY OF RETURNS
YEARLY PERIODS ENDED 9/30
[BAR CHART OMITTED]
Alliance World Dollar Government Fund II (NAV)--
Yearly Periods Ended 9/30
--------------------------------------------------------------------------------
Alliance World Dollar J.P. Morgan Emerging
Government Fund II (NAV) Markets Bond Index Plus
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9/30/93* 5.16% n/a
9/30/94* -1.06% n/a
9/30/95 2.90% 5.21%
9/30/96 37.17% 41.81%
9/30/97 32.41% 26.23%
9/30/98 -38.92% -25.29%
9/30/99 27.90% 23.00%
9/30/00 36.99% 28.03%
Past performance is no guarantee of future results. The Fund's investment
results represent total returns and are based on the Fund's net asset value
(NAV). 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.
The unmanaged J.P. 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. When comparing Alliance World Dollar
Government Fund II to the index shown above, you should note that no charges or
expenses are reflected in the performance of the index. An investor cannot
invest directly in an index, and its results are not indicative of any specific
investment, including Alliance World Dollar Government Fund II.
* The Fund's return for the period ended 9/30/93 is from the Fund's
inception date of 7/28/93 through 9/30/93. The J.P. Morgan Emerging
Markets Bond Index Plus was not available (n/a) until 1/1/94. Therefore,
returns for the benchmark are unavailable for the yearly periods ended
9/30/93 and 9/30/94. The benchmark's return for the yearly period ended
9/30/95 is from 9/30/94 through 9/30/95.
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ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 5
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PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
September 30, 2000 (unaudited)
INCEPTION DATE
7/28/93
PORTFOLIO STATISTICS
Net Assets ($mil): $824.3
SECURITY TYPE BREAKDOWN*
80.88% Sovereign Debt Obligations
8.38% Brady Bonds
6.99% Time Deposit [PIE CHART]
3.62% Yankee Bonds
0.13% Common Stock
COUNTRY BREAKDOWN*
20.88% Russia
19.71% Brazil
18.27% Mexico
7.12% United States [PIE CHART]
4.45% Turkey
4.29% Qatar
3.78% Argentina
3.55% Panama
3.33% Bulgaria
3.26% Venezuela
3.09% Ecuador
3.03% Colombia
2.64% Philippines
1.75% Peru
0.85% Hong Kong
* All data as of September 30, 2000. The Fund's security type and country
breakdowns may vary over time. These breakdowns are expressed as a
percentage of total investments.
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6 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
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PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
September 30, 2000 (unaudited)
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Sovereign Debt Obligations-90.8%
Other Sovereign Debt Obligations-82.3%
Argentina-3.9%
Republic of Argentina
10.25%, 7/21/30(a)....................... $ 39,000 $ 31,738,200
-------------
Brazil-15.7%
Republic of Brazil
11.00%, 8/17/40.......................... 142,260 113,281,638
12.25%, 3/06/30.......................... 18,240 16,507,200
-------------
129,788,838
-------------
Colombia-3.1%
Republic of Colombia
8.625%, 4/01/08.......................... 4,715 3,630,550
9.75%, 4/23/09(a)........................ 25,700 21,767,000
-------------
25,397,550
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Ecuador-3.1%
Republic of Ecuador
12.00%, 11/15/12(b)...................... 37,000 25,900,000
-------------
Mexico-16.7%
United Mexican States Global Bond
Series A
9.875%, 2/01/10.......................... 7,500 7,959,750
11.375%, 9/15/16......................... 112,000 129,920,000
-------------
137,879,750
-------------
Panama-3.6%
Republic of Panama
9.375%, 4/01/29.......................... 30,000 28,839,000
10.75%, 5/15/20.......................... 1,000 976,300
-------------
29,815,300
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Philippines-2.7%
Republic of Philippines
9.875%, 1/15/19.......................... 27,000 22,140,000
-------------
Qatar-4.4%
State of Qatar
9.75%, 6/15/30(b)........................ 35,000 35,962,500
-------------
Russia-21.3%
Russian Federation
2.25%, 3/31/30(b)(c)..................... 409,375 158,121,094
Russian Ministry of Finance
3.00%, 5/14/03........................... 30,000 17,064,000
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175,185,094
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ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 7
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Turkey-4.5%
Republic of Turkey
11.75%, 6/15/10.......................... $20,000 $ 19,925,000
12.375%, 6/15/09......................... 17,000 17,446,250
-------------
37,371,250
-------------
Venezuela-3.3%
Republic of Venezuela
9.25%, 9/15/27........................... 40,467 27,367,832
-------------
Total Other Sovereign Debt Obligations
(cost $669,853,088)...................... 678,546,314
-------------
Collateralized Brady Bonds(d)-6.7%
Brazil-3.3%
Republic of Brazil Discount Bonds FRN
7.375%, 4/15/24.......................... 35,000 27,695,500
-------------
Bulgaria-3.4%
Republic of Bulgaria Discount Bonds FRN
7.75%, 7/28/24........................... 36,500 27,922,500
-------------
Total Collateralized Brady Bonds
(cost $56,741,223)....................... 55,618,000
-------------
Non-Collateralized Brady Bonds-1.8%
Peru-1.8%
Republic of Peru FLIRB
3.75%, 3/07/17(c)........................ 2,600 1,462,500
3.75%, 3/07/17(b)(c)..................... 23,450 13,190,625
-------------
Total Non-Collateralized Brady Bonds
(cost $14,882,694)....................... 14,653,125
-------------
Total Sovereign Debt Obligations
(cost $741,477,005)...................... 748,817,439
-------------
Corporate Debt Obligations-3.7%
Grupo Mexicano de Desarrollo, SA
8.25%, 2/17/01(b)(e)..................... 7,329 2,198,770
Guangdong Enterprises Holdings
8.875%, 5/22/07(b)(e) ................... 17,850 7,140,000
Mexico City Toluca Toll Road
11.00%, 5/19/02.......................... 19,672 13,180,561
Trikem, SA
10.625%, 7/24/07(b) ..................... 10,000 7,875,000
-------------
Total Corporate Debt Obligations
(cost $44,513,596)....................... 30,394,331
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8 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
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------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Shares or
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
Common Stock-0.1%
Pegasus Media & Communications, Inc.(f)
(cost $35,817)........................... 22,564 $ 1,090,123
-------------
Time Deposit-7.1%
Bank of New York
5.50%, 10/02/00.......................... $14,500 14,500,000
Societe Generale
6.5625%, 10/02/00........................ 44,100 44,100,000
-------------
Total Time Deposit
(cost $58,600,000)....................... 58,600,000
-------------
Total Investments-101.7%
(cost $844,626,418)...................... 838,901,893
Other assets less liabilities-(1.7%)........ (14,585,422)
-------------
Net Assets-100%............................. $ 824,316,471
=============
(a) Securities, or portions thereof, with an aggregate market value of
$25,012,076, have been segregated to collateralize reverse repurchase
agreements.
(b) 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 September 30,
2000, these securities amounted to $250,387,989 or 30.4% of net assets.
(c) Coupon increases periodically based upon a predetermined schedule. Stated
interest rate in effect at September 30, 2000.
(d) Sovereign debt obligations issued as part of debt restructuring 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.
(e) Security is in default and is non-income producing.
(f) Non-income producing security.
Glossary of Terms:
FLIRB -Front Loaded Interest Reduction Bond.
FRN -Floating Rate Note.
See notes to financial statements.
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ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 9
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---------------------------------
STATEMENT OF ASSETS & LIABILITIES
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
September 30, 2000 (unaudited)
Assets
Investments in securities, at value
(cost $844,626,418) ..................................... $ 838,901,893
Receivable for investment securities sold .................. 91,506,807
Interest receivable ........................................ 18,925,507
Other assets ............................................... 50,635
---------------
Total assets ............................................... 949,384,842
---------------
Liabilities
Due to custodian ........................................... 368,552
Reverse repurchase agreements .............................. 24,426,111
Payable for investment securities purchased ................ 98,971,505
Advisory fee payable ....................................... 773,828
Administrative fee payable ................................. 205,747
Interest payable on reverse repurchase agreements .......... 10,733
Accrued expenses ........................................... 311,895
---------------
Total liabilities .......................................... 125,068,371
---------------
Net Assets ................................................. $ 824,316,471
===============
Composition of Net Assets
Capital stock, at par ...................................... $ 778,503
Additional paid-in capital ................................. 1,048,473,894
Distributions in excess of net investment income ........... (8,906,530)
Accumulated net realized loss on investment
transactions ............................................ (210,304,871)
Net unrealized depreciation on investment transactions ..... (5,724,525)
---------------
$ 824,316,471
===============
Net Asset Value Per Share
(based on 77,850,368 shares outstanding) ................ $10.59
======
See notes to financial statements.
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10 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
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STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Six Months Ended September 30, 2000 (unaudited)
Investment Income
Interest .................................... $ 46,131,200
Expenses
Advisory fee ................................ $ 4,125,673
Administrative fee .......................... 618,851
Custodian ................................... 209,390
Transfer agency ............................. 138,503
Audit and legal ............................. 120,762
Printing .................................... 85,658
Registration ................................ 27,040
Directors' fees ............................. 20,832
Miscellaneous ............................... 6,701
------------
Total expenses before interest .............. 5,353,410
Interest expense ............................ 862,551
------------
Total expenses .............................. 6,215,961
------------
Net investment income ....................... 39,915,239
------------
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on investment
transactions ............................. 3,792,921
Net change in unrealized
appreciation/depreciation of
investments .............................. (17,629,774)
------------
Net loss on investment transactions ......... (13,836,853)
------------
Net Increase in Net Assets
from Operations .......................... $ 26,078,386
============
See notes to financial statements.
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ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 11
<PAGE>
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
Six Months
Ended
September 30, Year Ended
2000 March 31,
(unaudited) 2000
============= =============
Increase (Decrease) in Net Assets
from Operations
Net investment income ........................ $ 39,915,239 $ 89,482,238
Net realized gain (loss) on investment
transactions .............................. 3,792,921 (81,592,245)
Net change in unrealized
appreciation/depreciation of
investment transactions ................... (17,629,774) 259,550,920
------------- -------------
Net increase in net assets from operations ... 26,078,386 267,440,913
Dividends and Distributions to
Shareholders
Dividends from net investment income ......... (45,151,894) (85,169,265)
Tax return of capital ........................ -0- (3,407,497)
Common Stock Transactions
Reinvestment of dividends resulting in
issuance of Common Stock .................. -0- 12,559,183
------------- -------------
Total increase (decrease) .................... (19,073,508) 191,423,334
Net Assets
Beginning of period .......................... 843,389,979 651,966,645
------------- -------------
End of period ................................ $ 824,316,471 $ 843,389,979
============= =============
See notes to financial statements.
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12 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2000 (unaudited)
NOTE A
Significant Accounting Policies
Alliance World Dollar Government Fund II (the "Fund") was incorporated under the
laws of the State of Maryland on May 20, 1993 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 accounting principles generally accepted in the United States, 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 and 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 prices 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 provision for federal income or excise taxes is
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 accordance with
federal tax regulations and may differ from those determined in accordance
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ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 13
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
with accounting principles generally accepted in the United States. 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 the 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 the Administration 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 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 September 30, 2000, the Fund reimbursed AFS $7,230, relating to
shareholder servicing costs.
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments,
U.S. government securities and U.S. government agencies) aggregated $874,750,921
and $863,516,356, respectively, for the six months ended September 30, 2000.
There were no purchases or sales of U.S. government and government agency
obligations for the six months ended September 30, 2000.
At September 30, 2000, the cost of Selected Data For A Share Of Common Stock
Outstanding Throughout Each Period investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $19,835,625 and
gross unrealized depreciation of investments was $25,560,150, resulting in net
unrealized depreciation of $5,724,525.
At March 31, 2000, the Fund had a capital loss carryforward of $146,700,849, of
which $103,516,115 expires in the year 2007 and $43,184,734 expires in the year
2008.
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
$65,550,215 during fiscal year 2000. To the extent that the carryover losses are
used to offset future capital gains, it is probable that these gains will not be
distributed to shareholders.
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14 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Swap Agreements
The Fund enters into swaps on sovereign debt obligations to protect itself from
interest rate fluctuations on the 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 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 underlying value of the
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 a component of net
change in unrealized appreciation of investments and swap contracts.
At September 30, 2000 the Fund did not have any outstanding swap agreements.
NOTE D
Capital Stock
There are 100,000,000 shares of $0.01 par value common stock authorized.
Of the 77,850,368 shares outstanding at September 30, 2000, the Adviser owned
7,200 shares. During the six months ended September 30, 2000, the Fund issued no
shares in connection with the Fund's dividend reinvestment plan. During the year
ended March 31, 2000, the Fund issued 1,365,986 shares in connection with the
Fund's dividend reinvestment plan.
NOTE E
Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing liquid assets having a value at least
equal to the repurchase price.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 15
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
For the six months ended September 30, 2000, the Fund had entered into the
following reverse repurchase agreements:
Amount Broker Interest Rate Maturity
============= ========================= ============= ================
$8,240,764 Deutsche Morgan Grenfell 5.88% October 5, 2000
$5,358,347 Merrill Lynch & Co. 5.88% October 5, 2000
$4,095,000 Deutsche Morgan Grenfell 6.00% October 5, 2000
$6,732,000 JP Morgan & Co. 5.50% October 10, 2000
For the six months ended September 30, 2000, the maximum amount of reverse
repurchase agreements outstanding was $170,396,169, the average amount
outstanding was approximately $51,049,069, and the daily weighted average
interest rate was 5.66%.
NOTE F
Concentration of Risk
Investing in securities of foreign companies and foreign governments involves
special risks, which include changes in foreign exchange rates and the
possibility of future political and economic developments which could adversely
affect the value of such securities. Moreover, securities of many foreign
companies and foreign governments and their markets may be less liquid and their
prices more volatile than those of comparable U.S. companies and the United
States government.
--------------------------------------------------------------------------------
16 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months
Ended
September 30, Year Ended March 31,
2000 --------------------------------------------------------------------
(unaudited) 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .......... $10.83 $ 8.52 $13.82 $13.77 $11.96 $ 9.53
-----------------------------------------------------------------------------------------
Income From
Investment Operations
Net investment income ........... .52 1.16(a) 1.20(a) 1.30(a) 1.21 1.25(a)
Net realized and unrealized
gain (loss) on investments
and swap contracts ........... (.18) 2.29 (5.06) 1.70 2.32 2.49
---------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ................... .34 3.45 (3.86) 3.00 3.53 3.74
---------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ............ (.58) (1.10) (1.44) (1.42) (1.21) (1.25)
Distributions in excess of net
investment income ............ -0- -0- -0- -0- (.51) (.06)
Tax return of capital ........... -0- (.04) -0- -0- -0- -0-
Distributions from net realized
gain on investments .......... -0- -0- -0- (1.53) -0- -0-
---------------------------------------------------------------------------------------
Total dividends and distributions (.58) (1.14) (1.44) (2.95) (1.72) (1.31)
---------------------------------------------------------------------------------------
Net asset value, end of period .. $10.59 $10.83 $ 8.52 $13.82 $13.77 $11.96
=======================================================================================
Market value, end of period ..... $ 9.063 $ 9.188 $ 9.375 $13.75 $13.375 $12.375
=======================================================================================
Total Return
Total investment return
based on:(b)
Market value ................. 4.96% 11.15% (20.95)% 26.49% 23.11% 33.51%
Net asset value .............. 4.05% 44.16% (28.44)% 23.48% 31.15% 40.48%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) .............. $824,316 $843,390 $651,967 $1,029,791 $991,503 $860,842
Ratio of expenses to average
net assets ................... 1.51%(c) 1.51% 1.31% 1.26% 1.29% 1.30%
Ratio of expenses to average
net assets, excluding
interest expense ............. 1.30%(c) 1.30% 1.31% 1.26% 1.29% 1.30%
Ratio of net investment income
to average net assets ........ 9.73%(c) 12.33% 11.89% 8.92% 8.92% 10.99%
Portfolio turnover rate ......... 113% 217% 262% 327% 257% 395%
</TABLE>
See footnote summary on page 18.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 17
<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 of less than one year is
not annualized.
(c) Annualized.
--------------------------------------------------------------------------------
18 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
<PAGE>
----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------
GLOSSARY OF INVESTMENT TERMS
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
Bonds are issued by governments or corporations 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.
capital
Cash or goods that are used to generate income. Also, the net worth of a
business (the amount by which its assets exceed its liabilities).
common stock
A type of security that represents ownership in a public company.
credit rating
Credit ratings are issued by independent organizations, such as Standard &
Poor's Ratings group or Moody's Investors Services. These groups attempt to
assess the likliehood 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.
equity
Another term for stock.
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.
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding. NAV can be used in reference to either an
individual share or the entire assets of a mutual fund.
portfolio
The collection of securities that make up a fund's or an investor's investments.
sector
A group of securities that are similar with respect to maturity, type, rating,
industry and/or coupon. 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 II o 19
<PAGE>
----------------
ALLIANCE CAPITAL
----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $474
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 38 of the FORTUNE 100 companies and public retirement funds in 35
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 585
investment professionals in 28 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 10/2/00.
--------------------------------------------------------------------------------
20 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
<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
Gregory Dube, 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
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110-1520
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.
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 II 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.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 21
<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
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield 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
Closed-End Funds
All-Market Advantage Fund
The Austria Fund
ACM Government Income Fund
ACM Government Opportunity Fund
The Korean Investment Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
The Southern Africa Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
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.
--------------------------------------------------------------------------------
22 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
<PAGE>
------------------------------
SUMMARY OF GENERAL INFORMATION
------------------------------
SUMMARY OF GENERAL INFORMATION
Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 426-5523. The Fund also distributes its daily
net asset value (NAV) to various financial publications or independent
organizations such as Lipper Analytical Services, Inc., Morningstar, Inc. and
Bloomberg. Daily market prices for the Fund's shares are published in the New
York Stock Exchange Composite Transactions Section of different newspapers each
day. The Fund's NYSE trading symbol is "AWF". Weekly comparative net asset value
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
If your shares are held in your own name, you will automatically be a
participant in the Plan unless you elect to receive cash. If your shares are
held in nominee or street name through a broker or nominee who provides this
service, you will also automatically be a participant in the Plan. If your
shares are held in the name of a broker or nominee who does not provide this
service, you will need to instruct them to participate in the Plan on your
behalf or your distributions will not be reinvested. In such case, you will
receive your distributions in cash.
For questions concerning shareholder account information, or if you would like a
brochure describing the Dividend Reinvestment Plan, please call State Street
Bank and Trust Company at (800) 219-4218.
--------------------------------------------------------------------------------
ALLIANCE WORLD DOLLAR GOVERNMENT FUND II o 23
<PAGE>
NOTES
--------------------------------------------------------------------------------
24 o ALLIANCE WORLD DOLLAR GOVERNMENT FUND II
<PAGE>
Alliance World Dollar Government Fund II
1345 Avenue of the Americas
New York, NY 10105
Alliance Capital[LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
WDGIISR900
