<DOCUMENT>
<TYPE>N-2
<SEQUENCE>1
<FILENAME>em00250261aa3.txt
<TEXT>



<PAGE>

     As filed with the Securities and Exchange Commission on
                         October 5, 2001

                                           File Nos.  333-_______
                                                        811-07732

               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                            FORM N-2
                (Check appropriate box or boxes)

 X    REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_____
_____    Pre-Effective Amendment No. ________

_____    Post-Effective Amendment No. ________

                             and/or

_____     REGISTRATION STATEMENT UNDER THE INVESTMENT
                     COMPANY ACT OF 1940

  X      Amendment No. 3
_____

         Alliance World Dollar Government Fund II, Inc.
-----------------------------------------------------------------
       (Exact Name of Registrant as Specified in Charter)

     1345 Avenue of the Americas, New York, New York  10105
-----------------------------------------------------------------
            (Address of Principal Executive Offices)

                         (212) 969-1000
-----------------------------------------------------------------
                 (Registrant's Telephone Number)

                      EDMUND P. BERGAN, JR.
             Alliance Capital Management Corporation
                   1345 Avenue of the Americas
                    New York, New York  10105
             (Name and Address of Agent for Service)

                  Copies of Communications to:
                      Patricia A. Poglinco
                       Seward & Kissel LLP
                     One Battery Park Plaza
                    New York, New York 10004




<PAGE>

Approximate date of proposed public offering: As soon as
practicable after the effective date of this Registration
Statement.

If any securities being registered on this form will be offered
on a delayed or continuous basis in reliance on Rule 415 under
the Securities Act of 1933, other than securities offered in
connection with a dividend reinvestment plan, check the following
box.

It is proposed that this filing will become effective (check
appropriate box):

     X when declared effective pursuant to section 8(c)
    __ immediately upon filing pursuant to paragraph (b)
    __ on (date) pursuant to paragraph (b)
    __ 60 days after filing pursuant to paragraph (a)__ on (date)
pursuant to paragraph (a)

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

                                    PROPOSED      PROPOSED
                                    MAXIMUM       MAXIMUM
                     AMOUNT         OFFERING      AGGREGATE      AMOUNT OF
TITLE OF SECURITIES  BEING          PRICE PER     OFFERING       REGISTRATION
BEING REGISTERED     REGISTERED(1)  UNIT(2)       PRICE(2)       FEE

Common Stock,
 $.01 par value        24,328,240   $9.645     $234,645,874.80     $58,661.46

(1) Includes 4,865,648 shares subject to oversubscription
    privilege.
(2) Estimated solely for purposes of calculating the registration
    fee in accordance with Rule 457(c) under the Securities Act
    of 1933, as amended, on the basis of a market price per share
    on October 3, 2001.

The Registrant hereby amends this Registration Statement under
the Securities Act of 1933 on such dates as may be necessary to
delay its effective date until the Registrant shall file a
further amendment which specifically states that this
Registration shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act
of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.



<PAGE>

PROSPECTUS

         ALLIANCE WORLD DOLLAR GOVERNMENT FUND II, INC.
                19,462,592 SHARES OF COMMON STOCK
                ISSUABLE UPON EXERCISE OF RIGHTS
                     TO SUBSCRIBE FOR SHARES
                         _______________

         Alliance World Dollar Government Fund II, Inc., a
Maryland corporation (the "Fund"), is issuing to its stockholders
rights to purchase additional shares.  You will receive one right
for each share of common stock you own on the record date, which
is November ___, 2001.  You need four rights to purchase one
share at the subscription price per share.  Record date
stockholders who receive less than four rights, however, will be
entitled to purchase one share.  If you exercise all your rights
you will be entitled to subscribe for additional shares not
acquired by other stockholders.  The Fund may increase the number
of shares subject to subscription by up to 25% of the shares
available pursuant to the offer, or 4,865,648 shares, for an
aggregate total of 24,328,240 shares.  The rights are not
transferable; you may not purchase or sell them and they will not
trade on the New York Stock Exchange (the "NYSE") or any other
exchange.  The shares to be issued pursuant to the rights will
trade on the NYSE under the symbol "AWF."

         The subscription price per share will be [____]% of the
lower of:

         (1)  the average of the last reported sales price of a
              share on the NYSE on the expiration date of the
              offer and on the previous four business days, and

         (2)  the net asset value ("NAV") per share as of the
              close of business on the expiration date of the
              offer.

         You will not know the actual subscription price at the
time you exercise your rights.  Once you subscribe for shares and
the Fund receives payment or a guarantee of payment, you will not
be able to change your decision.

         THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON DECEMBER     , 2001, UNLESS EXTENDED TO NOT LATER THAN
DECEMBER     , 2001.

         The Fund is a non-diversified, closed-end management
investment company whose primary investment objective is to seek
high current income.  Its secondary investment objective is
capital appreciation.  The Fund invests primarily in U.S. dollar-
denominated sovereign debt obligations of emerging market


                                1



<PAGE>

countries and in high yielding, high risk U.S. corporate fixed
income securities.

         Substantially all of the Fund's investments will be in
high yield, high risk debt securities that are low-rated (i.e.,
below investment grade) or unrated and in both cases that are
considered to be predominantly speculative as regards the
issuer's capacity to pay interest and repay principal.  SEE "RISK
FACTORS AND SPECIAL CONSIDERATIONS" BEGINNING ON PAGE __ OR PAGE
__ OF THIS PROSPECTUS.  The Fund may utilize leverage through the
investment techniques of reverse repurchase agreements and dollar
rolls and through borrowing.  SEE "INVESTMENT OBJECTIVES AND
POLICIES - REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS" AND "-
- BORROWING".

         If you do not exercise your rights, you will, upon the
completion of the offer, own a smaller proportional interest in
the Fund than you do now.  Because the subscription price per
share will be less than the NAV on the expiration date and
because the Fund will incur expenses related to the offering,
record date stockholders will also experience an immediate
dilution, which could be substantial, of the aggregate NAV of
their shares.  This dilution will disproportionately affect
record date stockholders who do not exercise their rights in
full.  In addition, there also may be substantial additional
dilution to the extent that the Fund increases the number of
shares subject to subscription by up to 25% in order to satisfy
over-subscription requests.  The Fund cannot state precisely the
extent of this dilution because the Fund does not know what the
NAV will be when the offer expires, how many rights will be
exercised or the exact expenses of the offer.

                      ---------------------

  NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
     SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE
   SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
          COMPLETE.  ANY REPRESENTATION TO THE CONTRARY
                     IS A CRIMINAL OFFENSE.

                     Estimated                   Estimated
                     Subscription  Estimated     Proceeds to
                     Price (1)     Sales Load(2) the Fund (3)(4)
                     -----------   ------------  ---------------

Per Share..........  $[__________] $[__________] $[__________]
Total Maximum(5)...  $[__________] $[__________] $[__________]

         This Prospectus sets forth concisely the information
about the Fund that a prospective investor should know before
investing and should be retained for future reference.  A


                                2



<PAGE>

statement of additional information dated November      , 2001
(the "Statement of Additional Information") containing additional
information about the Fund has been filed with the Securities and
Exchange Commission (the "SEC") and legally forms a part of this
Prospectus.  The table of contents of the Statement of Additional
Information appears on page [     ] of this Prospectus.  You may
obtain a copy of the Statement of Additional Information without
charge by contacting Georgeson Shareholder Communications, Inc.,
the Fund's information agent for the offer.  You can also view
the Prospectus and Statement of Additional Information as filed
on the SEC's World Wide Web site on the Internet at
http://www.sec.gov.

         If you have questions or need further information about
the offer, please call the information agent collect at
[_____________________] (for banks and brokers) and toll free at
[_____________________] (for all others).

                        [DEALER MANAGER]

The date of this Prospectus is November      , 2001.

(1)      Estimated on the basis of [____]% of the lower of the
         average of the last reported sales price of a share on
         the NYSE on _____________, 2001 and on the previous four
         business days and the NAV per share as of _____________,
         2001.  Actual amounts may vary due to rounding.

(2)      In connection with the offer, the Fund will pay [     ],
         the dealer manager for the offer, a fee for its
         financial advisory services and marketing assistance
         equal to [____]% of the subscription price per share.
         The Fund will also pay broker-dealers, including [
         ], fees for their soliciting efforts equal to [____]% of
         the subscription price per share.  The Fund has agreed
         to indemnify [_____________________________] against
         certain liabilities, including liabilities under the
         Securities Act.

(3)      Before deduction of offering expenses incurred by the
         Fund, estimated at $[__________] including an aggregate
         of up to $[__________] to be paid to [       ] as
         partial reimbursement for its expenses.

(4)      Funds received by check prior to the final due date of
         this offer will be deposited into a segregated interest-
         bearing account pending allocation and distribution of
         shares.  Interest on subscription moneys will be paid to
         the Fund regardless of whether shares are issued by the
         Fund.



                                3



<PAGE>

(5)      Assumes all rights are exercised at the estimated
         subscription price.  The Fund may increase the number of
         shares subject to subscription by up to 25% of the
         shares offered.  If the Fund increases the number of
         shares subject to subscription by 25%, the aggregate
         maximum estimated subscription price, estimated sales
         load and estimated proceeds will be $[__________],
         $[__________] and $[__________], respectively.

                         _______________











































                                4



<PAGE>

                       PROSPECTUS SUMMARY

         You should read the entire Prospectus, including the
Statement of Additional Information which legally forms part of
this Prospectus, before you decide whether to exercise your
rights.

PURPOSES OF THE OFFER

         The Board of Directors of the Fund has determined that
it is in the best interests of the Fund and its existing
stockholders to increase the assets of the Fund available for
investment, thereby allowing the Fund to more fully take
advantage of available investment opportunities.  In reaching its
decision, the Board of Directors was advised by Alliance Capital
Management L.P., the Fund's investment adviser, referred to in
this Prospectus as Alliance, or the Adviser, that the
availability of new capital would permit the Fund to take
advantage of investment opportunities without being required to
sell current portfolio positions that it desires to retain. The
Board of Directors also took into account that a well-subscribed
rights offering would likely slightly reduce the Fund's expense
ratio, which would be of long-term benefit to stockholders.  In
addition, the Board of Directors considered that this rights
offering could result in an improvement in the liquidity of the
trading market for the Fund's shares on the NYSE. The Board also
considered that this rights offering would give record date
stockholders the opportunity to purchase shares at a price below
the then current market price per share and NAV, and might
increase the level of market interest in the Fund. The Board also
considered, among other things, the proposed terms of the offer,
the expenses of the offer, and its dilutive effect on exercising
and non-exercising record date stockholders.

         There can be no assurance that the offer will be
successful or that by increasing the size of the Fund, its
expense ratio will be lowered.

         Alliance, as the Adviser and the Administrator, will
benefit from the offer because it receives fees based on the net
assets of the Fund, which will increase as a result of the offer.
In addition, [________________] will receive a dealer manager fee
and soliciting dealer fees as described below and other brokers
and dealers will also receive soliciting dealer fees.

         The Fund may choose to make additional rights offerings
in the future for a number of shares and on terms which may or
may not be similar to this offer.





                                5



<PAGE>

IMPORTANT TERMS OF THE OFFER

Total number of shares available
for primary subscription:...................19,462,592

Total number of shares available to
cover over-subscription requests:...........4,865,648

Number of rights you will receive
for each outstanding share you
own on the record date:.....................One right for every
                                            one share

Number of shares you may purchase
with your rights at the subscription
price per share:............................One share for every
                                            four rights.  Record
                                            date stockholders who
                                            receive less than
                                            four rights will be
                                            entitled to purchase
                                            one share

Subscription price:.........................[___%] of the lower
                                            of (1) the average of
                                            the last reported
                                            sales price per share
                                            on the NYSE on the
                                            expiration date and
                                            on the preceding four
                                            business days and (2)
                                            the NAV per share on
                                            the expiration date

HOW TO EXERCISE RIGHTS

         To exercise your rights, please follow the following
instructions:

         --   If you do not own your shares through a broker,
              bank or other nominee, you should have received a
              subscription certificate.  The subscription
              certificate elicits the necessary information to
              enable you to exercise your rights.   Please
              complete and sign the subscription certificate.
              Mail it in the envelope provided or deliver the
              completed and signed subscription certificate with
              payment in full to [____________________], the
              subscription agent for the offer, at the address
              indicated on the subscription certificate.  Your
              completed and signed subscription certificate and


                                6



<PAGE>

              payment must be received by the expiration date,
              which is December     , 2001 (unless extended).
              You should calculate the total payment on the basis
              of an estimated subscription price of $[_________]
              per share.  If you do not own your shares through a
              broker, bank or other nominee and have not received
              a subscription certificate, please contact
              Georgeson Shareholder Communications, the
              information agent for the offer, collect at
              ____________________ (for banks and brokers) and
              toll free at ____________________ (for all others).

         --   If you own your shares through a broker or other
              nominee, please contact your broker, banker or
              trust company.  It can arrange to exercise rights
              on your behalf and to guarantee payment and
              delivery of a properly completed and executed
              subscription certificate pursuant to a notice of
              guaranteed delivery by the close of business on the
              expiration date.  A fee may be charged for this
              service.  The notice of guaranteed delivery must be
              received on or before the expiration date, which is
              December     , 2001 (unless extended).

IMPORTANT DATES TO REMEMBER

         Please note that the dates in the table below may change
if the offer is extended.

EVENT                                            DATE
----------------------------------------------------------------
Record date......................................[________]
Subscription period..............................[________]
Payment for shares or notice of guaranteed
  delivery due...................................[________]
Expiration and pricing date......................[________]
Payment for guarantees of delivery due...........[________]
Confirmation to participants.....................[________]
Final payment for shares.........................[________]

OVER-SUBSCRIPTION PRIVILEGE

         If you exercise all your rights, you may subscribe for
shares which were not subscribed for by other stockholders.  If
sufficient shares are not available to honor all requests for
over-subscriptions, the Fund may increase the number of shares
available for subscription by up to 25% of the shares available
pursuant to the offer, or 4,865,648 shares, in order to satisfy
these over-subscription requests.  Available shares will be
allocated ratably among those who over-subscribe based on the
number of rights originally issued to them.


                                7



<PAGE>

RIGHTS MAY NOT BE PURCHASED OR SOLD

         You may not purchase or sell the rights and they will
not trade on any exchange.  If you do not exercise your rights
before the conclusion of the rights offer, your rights will
expire without value.

RESTRICTIONS ON FOREIGN STOCKHOLDERS

         The Fund will not mail subscription certificates to
stockholders whose record addresses are outside the United
States.  [_______] will hold the rights to which subscription
certificates relate for foreign stockholder accounts until
instructions are received to exercise the rights.  If no
instructions are received prior to the expiration date, these
rights will expire.

FURTHER INFORMATION

         If you have any questions or inquiries relating to the
offer, please contact the information agent at:

         GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
         Wall Street Plaza
         New York, New York 10005
         Banks and Brokers Call Collect: ____________________
         All Others Call Toll Free: ____________________

OFFERING FEES AND EXPENSES

         [__________] will act as the dealer manager for the
offer.  The Fund will pay [____________] a fee for its financial
advisory services and marketing assistance equal to [_____%] of
the subscription price per share.  The Fund will also pay broker-
dealers, including [____________], fees for their soliciting
efforts equal to [_____%] of the subscription price per share.
Other offering expenses incurred by the Fund are estimated at
$[_________] which includes up to $[_______________] that may be
paid to [____________] as partial reimbursement for its expenses
relating to the offer.

USE OF PROCEEDS

         We estimate the net proceeds of the offer to be
approximately $[__________].  If the Fund increases the number of
shares subject to subscription by up to 25% in order to satisfy
over-subscription requests, the additional net proceeds will be
approximately $[__________].

         The Fund's investment adviser anticipates that it will
take up to three months for the Fund to invest these proceeds in


                                8



<PAGE>

accordance with its investment objective and policies under
current market conditions.

INFORMATION REGARDING THE FUND

         The Fund has been engaged in business as a non-
diversified, closed-end management investment company since
July 27, 1993.  The Fund's primary investment objective is to
seek high current income.  Its secondary investment objective is
capital appreciation.  In seeking to achieve these objectives,
the Fund will normally invest at least 80% of its total assets in
U.S. dollar-denominated debt securities issued or guaranteed by
foreign governments, including participations in loans between
foreign governments and financial institutions, and interests in
entities organized and operated for the purpose of restructuring
the investment characteristics of instruments issued or
guaranteed by foreign governments ("Sovereign Debt Obligations").
The balance of the Fund's investment portfolio, up to 20% of its
total assets, may be invested in high yielding, high risk U.S.
corporate fixed income securities.

         There can be no assurance that the Fund will achieve its
investment objective.  The shares are listed and traded on the
New York Stock Exchange under the symbol "AWF." As of
September 30, 2001, the net assets were approximately $[_______]
million.

INVESTMENT ADVISER AND ADMINISTRATOR

         The Fund's investment adviser is Alliance Capital
Management L.P. ("Alliance" or the "Adviser"), located at 1345
Avenue of the Americas, New York, New York  10105.  The Adviser
also acts as the Fund's administrator (the "Administrator").

ADVISORY AND ADMINISTRATION FEES

         The Fund pays the Adviser aggregate annual fees for
investment advice equal to 1.00% of its average weekly net
assets.  The Fund also pays the Administrator aggregate annual
fees for administrative services equal to .15% of its average
weekly net assets.

         Since Alliance as the Adviser and Administrator receives
fees based on the Fund's net assets, it will benefit from the
increase in assets that will result from the offer.

DISTRIBUTIONS

         The Fund intends to distribute monthly its net
investment income.  Net short-term capital gains and long-term



                                9



<PAGE>

capital gains, if any, will normally be distributed to
stockholders at least annually.

RISK FACTORS AND SPECIAL CONSIDERATIONS

         You should consider the following factors, as well as
other information in this Prospectus, before making an investment
in the Fund under this offer.

YOU WILL INCUR IMMEDIATE DILUTION AS A RESULT OF THIS OFFER,
WHICH DILUTION COULD BE SUBSTANTIAL.  If you do not exercise all
your rights, after the offer you will own a smaller proportional
interest in the Fund.  If the Fund increases the number of shares
subject to subscription to satisfy oversubscriptions, you will
own a smaller proportional interest in the Fund even if you
exercise all of your rights.  In addition, whether or not you
exercise your rights, the NAV per share of your shares will be
reduced as a result of the offer because:

         --   the shares offered will be sold at less than their
              then current NAV

         --   you will indirectly bear the expenses of the offer

         --   the number of shares outstanding after the offer
              will have increased proportionately more than the
              increase in the size of the net assets

         You will incur a greater dilution in NAV per share if
you do not exercise your rights than if you do.

PRINCIPAL INVESTMENT RISKS.  In this summary, we describe the
principal risks that may affect the Fund's portfolio as a whole.
The Fund could be subject to additional principal risks because
the types of investments made by the Fund can change over time.
This Prospectus has additional descriptions of investments that
appear in bold types in the discussions under "Investment
Objectives and Policies" or "Risk Factors and Special
Considerations."  These sections also include more information
about the Fund, its investments and related risks.

    Other important things for you to note:

         --   You may lose money by investing in the Fund.

         --   An investment in the Fund is not a deposit in a
              bank and is not insured or guaranteed by the
              Federal Deposit Insurance Corporation or any other
              government agency.




                               10



<PAGE>

         Among the principal risks of investing in the Fund are
interest rate risk, credit risk, market risk, leveraging risk
derivatives risk, foreign risk, emerging market risk, currency
risk, liquidity risk and management risk.  Interest rate risk is
the risk that changes in interest rates will affect the value of
the Fund's investments in fixed income securities.  Increases in
interest rates may cause the value of the Fund's investments to
decline.  Credit risk is the risk that the issuer or the
guarantor of a debt security or the counterparty to a derivatives
contract will be unable or unwilling to make timely payments of
interest or principal or to otherwise honor its obligations.
Because the Fund invests in lower-rated securities, it has
significantly more credit risk than other types of bond funds.
The Fund is also subject to market risk which is the risk that
the value of the Fund's investments will fluctuate as the bond
markets fluctuate and that prices overall will decline over
shorter or longer-term periods.  Because the Fund uses derivative
strategies and other leveraging techniques speculatively to
enhance returns, it is subject to greater risk and its returns
may be more volatile than other funds, particularly in periods of
market declines.

         The Fund's investments in foreign securities have
foreign risk, which is the risk that investments in issuers
located in foreign countries may have greater price volatility
and less liquidity.  Foreign risk includes currency risk, which
is the risk that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies could negatively affect the
value of the Fund's investments.  Because the Fund invests in
emerging markets and in developing countries, the Fund's returns
will be significantly more volatile and may differ substantially
from returns in the U.S. bond markets generally.   Your
investment also has the risk that market changes or other factors
affecting emerging markets or developing countries, including
political instability and unpredictable economic conditions, may
have a significant effect on the Fund's NAV.

         Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing the Fund from
selling out of these illiquid securities at an advantageous
price.  The Fund is subject to liquidity risk because derivatives
and securities involving substantial interest rate and credit
risk tend to involve greater liquidity risk.

         The Fund is subject to management risk because it is an
actively managed investment Fund.  There can be no guarantee that
the Adviser's investment decisions will produce desired results.

         Additionally, the Fund is "non-diversified" which means
that it invests in a smaller number of securities than many other
funds.  As a result, changes in the value of a single security


                               11



<PAGE>

may have a more significant effect, either negative or positive,
on the Fund's NAV.

         The Fund's shares recently have traded at a discount to
NAV.  Shares of closed-end management investment companies
frequently trade at a discount from their NAV (the market price
per share is less than the NAV per share).  This characteristic
is a risk separate and distinct from the risk that the Fund's NAV
will decrease as a result of its investment activities and may be
greater for investors expecting to sell their shares relatively
soon after completion of this offering.  The Fund cannot predict
whether its shares will trade at, above or below NAV in the
future.

         There is no guarantee that the Fund will be able to
maintain its current level of dividends and distributions.





































                               12



<PAGE>

                       EXPENSE INFORMATION

         The following table sets forth certain fees and expenses
of the Fund.

STOCKHOLDER TRANSACTION EXPENSES
Sales load (as a percentage of the
subscription price per share) (1)................[_________]%

ANNUAL EXPENSES (as a percentage of net assets)
 ATTRIBUTABLE TO COMMON SHARES
 Management fees.................................[_________]%
 Administration fees.............................[_________]%
 Other expenses..................................[_________]%
TOTAL ANNUAL EXPENSES (2)........................[_________]%

EXAMPLE                 1 Year    3 Years   5 Years  10 Years
----------------------------------------------------------------
You would pay the
following expenses on
a $1,000 investment
assuming a 5% annual
return (3)..............$[______] $[______] $[______]   $[______]

----------------------
(1) The Fund will pay [_________________] a fee for financial
    advisory services and marketing assistance equal to [_____%]
    of the subscription price per share.  The Fund will also pay
    broker-dealers, including [                ], fees for their
    soliciting efforts equal to [_____%] of the subscription
    price per share.  Since these fees will be paid by the Fund,
    you will indirectly bear this fee as a stockholder of the
    Fund, even if you do not exercise your rights.

(2) Based upon estimated amounts for the current fiscal year and
    on the net assets of the Fund after giving effect to the
    anticipated net proceeds of the offer, including proceeds
    from the issuance of up to 25% of the shares under the over-
    subscription privilege.  This figure includes expenses of the
    Fund incurred in connection with the offer, estimated at
    $[_______].

(3) The Example reflects the sales load and other expenses of the
    Fund incurred in connection with the offer and assumes that
    all of the rights are exercised and that all dividends and
    distributions are reinvested.

         The purpose of the foregoing table is to assist the
investor in understanding the various costs and expenses that an
investor in the Fund will bear directly or indirectly.  The
Example set forth above assumes reinvestment of all dividends and


                               13



<PAGE>

other distributions at NAV, payment of a [___]% sales load and
annual expense ratio of [___]%.  The table above and the
assumption in the Example of a 5% annual return are required by
SEC regulations applicable to all management investment
companies.  Your annual return may be more or less than the 5%
used in this Example.  In addition, while the Example assumes
reinvestment of all dividends and other distributions at NAV,
participants in the Dividend Reinvestment Plan may receive shares
purchased or issued at a price or value different from NAV.

         THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
FUTURE EXPENSES, AND THE FUND'S ACTUAL EXPENSES MAY BE MORE OR
LESS THAN THOSE SHOWN.

                      FINANCIAL HIGHLIGHTS

         The following table describes selected financial data
for a share of common stock outstanding throughout each period
presented.  The per share operating performance and ratios for
each of the periods, have been derived from financial statements
audited by Ernst & Young LLP, the Fund's independent auditors, as
stated in their report, which legally forms a part of the
Statement of Additional Information.  The following information
should be read in conjunction with the financial statements and
notes, which legally forms a part of the Prospectus and are
included in the Fund's March 31, 2001 Annual Report which is
available without charge by calling the Fund at (212) 969-2232 or
by contacting the Fund at 1345 Avenue of the Americas, New York,
New York 10105.

[To be filed by subsequent amendment]



         Set forth below is information with respect to the
common stock as of October 31, 2001:

_______________________________________________________________
   (1)             (2)            (3)                 (4)
                                                     AMOUNT
                                                   OUTSTANDING
                             AMOUNT HELD BY       EXCLUSIVE OF
TITLE OF          AMOUNT     FUND OR FOR ITS      AMOUNT SHOWN
  CLASS         AUTHORIZED       ACCOUNT            UNDER (3)
________________________________________________________________

Common Stock,    100,000,000*     0 Shares      77,850,368 Shares
                 Shares

*As discussed under "Common Stock," at a Special Meeting to be
held on November 7, 2001, the Fund's stockholders will consider a


                               14



<PAGE>

proposal to amend the Fund's charter to increase the number of
authorized shares of Common Stock to 300,000,000 shares.

                   TRADING AND NAV INFORMATION

         The Fund's shares have traded at times at a discount and
at times at a premium to NAV.  The Fund's shares recently have
been trading at a discount to NAV.  As discussed below, shares of
closed-end investment companies frequently trade at a discount
from NAV.

         The outstanding shares are listed and traded on the
NYSE.  The following table sets forth for the quarters indicated
the high and low sales prices on the NYSE per share of common
stock and the NAV and the premium or discount from NAV at which
the common stock was trading, expressed as a percentage of NAV,
at each of the high and low sales prices provided.


                                                            Premium/Discount
                           Market Price(1)       NAV         as % of NAV(2)
                           ______________        ___        ________________
   Quarter Ended           High     Low      High     Low      High     Low
_____________________________________________________________________________

June 30, 1999.............10.5625   9.3125    9.34    7.83     13.09%   18.93%
September 30, 1999.........9.9375   8.8125    9.11    8.45      9.08%    4.29%
December 31, 1999..........9.0625   8.25     10.25    8.61    -11.59    -4.18%
March 31, 2000.............9.1875   8.5625   11.15    9.95    -17.60   -13.94%
June 30, 2000..............9.50     8.375    10.79    9.60    -11.96%  -12.76%
September 30, 2000.........9.75     8.875    11.05   10.34    -11.76   -14.17%
December 31, 2000..........9.0625   8.1875   10.63    9.90    -14.75   -17.30%
March 31, 2001.............9.60     8.8125   11.15   10.16    -13.90%  -13.26%
June 30, 2001.............10.96     8.81     11.09    9.73     -1.17%   -9.46%
September 30, 2001........
Through
November __, 2001.........

(1) As reported by the NYSE.

(2) Based on the Fund's computations.

         The Fund's NAV at the close of business on _________,
2001 (the last trading date on which the Fund publicly reported
its NAV prior to the announcement of the offer) and on November
__, 2001 (the last trading date on which the Fund publicly
reported its NAV prior to the date of this Prospectus) was
$[_____] and $[_____], respectively.  The last reported sales
price of the Fund's shares on the NYSE on those dates was
$[______] and $[______], respectively.



                               15



<PAGE>

                            THE FUND

         The Fund is a non-diversified, closed-end management
company.  Its shares are traded on the NYSE under the symbol
"AWF".

         The Fund was incorporated under the laws of the State of
Maryland on May 20, 1993 and is registered under the 1940 Act.
It commenced investment operations on July 27, 1993 after an
initial public offering of 60,000,000 shares of Common Stock.
The net proceeds of the offering were approximately $934,650,000.
There are currently 77,850,368 shares of Common Stock
outstanding.  The Fund's principal office is located at 1345
Avenue of the Americas, New York, New York 10105.  The Adviser is
registered with the SEC under the Investment Advisers Act of
1940, as amended.

                            THE OFFER

PURPOSES OF THE OFFER

         The Board of Directors of the Fund has determined that
it is in the best interests of the Fund and its existing
stockholders to increase the assets of the Fund available for
investment, thereby allowing the Fund to more fully take
advantage of available investment opportunities.  In reaching its
decision, the Board of Directors was advised by the Adviser that
the availability of new capital would permit the Fund to take
advantage of investment opportunities without being required to
sell current portfolio positions that it desires to retain.  The
Board of Directors also took into account that a well-subscribed
rights offering would likely reduce the Fund's expense ratio,
which would be of long-term benefit to stockholders.  In
addition, the Board of Directors considered that this rights
offering could result in an improvement in the liquidity of the
trading market for the Fund's shares on the NYSE. The Board also
considered that this rights offering would give record date
stockholders the opportunity to purchase shares at a price below
the then current market price per share and NAV and might
increase the level of market interest in the Fund.  The Board
also considered, among other things, the proposed terms of the
offer, the expenses of the offer, and its dilutive effect on
exercising and non-exercising record date stockholders.

         There can be no assurance that the offer will provide
any of the benefits listed above.

         The Fund may choose to make additional rights offerings
from time to time for a number of shares and on terms which may
or may not be similar to the offer.  Any such future offering
will be made in accordance with the 1940 Act.


                               16



<PAGE>

TERMS OF THE OFFER

         The Fund is issuing to its stockholders rights to
purchase additional shares.  You will receive one right for each
share you own on the record date, which is November ___, 2001.
You need four rights to purchase one share at the subscription
price per share.  Record date stockholders who receive less than
four rights, however, will be entitled to purchase one share.
You may exercise your rights to acquire shares at any time during
the subscription period, which begins on November ___, 2001 and
ends at 5.00 p.m., New York City time, on December ___, 2001,
unless extended by the Fund to 5:00 p.m., New York City time, on
a date which will be no later than December ___, 2001.  The right
of a stockholder of record to acquire one share for every four
rights during the subscription period at the subscription price
is called the "primary subscription."

         Rights are evidenced by subscription certificates.  The
Fund will send subscription certificates to all persons whose
names appear on the list of stockholders of the Fund on November
___, 2001, the record date of the offer.

         If you exercise all your rights, you may subscribe for
additional shares.  Shares available for purchase pursuant to
this over-subscription privilege are subject to allotment and
increase.  The over-subscription privilege is more fully
described below.  For purposes of determining the maximum number
of shares you may acquire pursuant to the offer, if your shares
are held of record by Cede, as nominee for The Depository Trust
Company, or by any other depository or nominee, you will be
deemed to be the holder of the rights that are issued to Cede or
such other depository or nominee on your behalf.

         Fractional shares will not be issued.  After the
exercise of rights, record date stockholders who have remaining
less than four rights will not be able to purchase a share upon
exercise of these remaining rights, which will expire without any
residual value.  Record date stockholders who receive less than
four rights, however, may purchase one share at the subscription
price.  Record date stockholders may request additional shares
under the over-subscription privilege described below.

IMPORTANT DATES TO REMEMBER

         Please note that the dates in the table below may change
if the offer is extended.
EVENT                                            DATE
----------------------------------------------------------------
Record date......................................
Subscription period..............................
Payment for shares or notice of guaranteed


                               17



<PAGE>

  delivery due...................................
Expiration and pricing date......................
Payment for guarantees of delivery due...........
Confirmation to participants.....................
Final payment for shares.........................

OVER-SUBSCRIPTION PRIVILEGE

         If shares remain available for purchase after all
stockholders have had a chance to exercise their rights pursuant
to the primary subscription, the Fund will offer such shares to
stockholders who have exercised all their rights and who desire
to acquire additional shares.  You may subscribe for those
additional shares pursuant to the over-subscription privilege
only if you exercise all your rights pursuant to the primary
subscription.  If you exercise all your rights and wish to
subscribe for additional shares, please indicate on the
subscription certificate the number of additional shares desired
through the over-subscription privilege.

         If sufficient shares remain from unexercised rights, all
over-subscriptions may be honored in full.

         If sufficient shares are not available to honor all
over-subscription requests, the Fund may issue up to an
additional 4,865,648 shares, representing 25% of the shares
available pursuant to the primary subscription, to satisfy over-
subscription requests.  Whether or not the Fund issues these
additional shares, if there are not enough shares available to
honor all over-subscriptions, the available shares will be
allocated among you and all the other stockholders who subscribe
for additional shares pursuant to the over-subscription privilege
in proportion to the number of rights issued to you and such
stockholders.  The allocation process may involve a series of
allocations in order to assure that the total number of shares
available for over-subscriptions is distributed on a pro rata
basis.

         The Fund will not sell any shares that are not
subscribed for under the primary subscription or the over-
subscription privilege.

SUBSCRIPTION PRICE

         You may purchase one share for every four rights at the
subscription price.  The subscription price is [___%] of the
lower of:

         (1)  the average of the last reported sales price of a
share on the NYSE on the expiration date of the offer and on the
four preceding business days; and


                               18



<PAGE>

         (2)  the NAV per share as of the close of business on
the expiration date of the offer.

         For example, if the average of the last reported sales
price on the NYSE on December [____], 2001 and on the four
preceding business days of a share of the Fund's common stock is
$[____], and the NAV as of the close of business on the pricing
date is $[____], the subscription price will be $[____].  If,
however, the average of the last reported sales price of a share
on that exchange on December ___, 2001 and on the four preceding
business days thereof is $[____], and the NAV as of the close of
business on December [___], 2001 is $[____], the subscription
price will be $[____].

         The Fund announced the offer on ___________, 2001.  The
last reported NAV per share of common stock at the close of
business on _____________, 2001 (the last trading date on which
the Fund publicly reported its NAV prior to the announcement of
the offer) and November ___, 2001 (the last trading date on which
the Fund publicly reported its NAV prior to the date of this
Prospectus) was $[____] and $[____], respectively, and the last
reported sales price of a share on the NYSE on those dates was
$[____] and $[____], respectively.  The Fund paid a dividend of
$[_______] per share on ___________, 2001.

RIGHTS MAY NOT BE PURCHASED OR SOLD

         The rights are non-transferable.  You may not purchase
or sell them.  The rights will not trade on the NYSE or any other
exchange.  The shares to be issued upon exercise of the rights,
however, will trade on the NYSE under the symbol "AWF."  If you
do not exercise your rights before the conclusion of the rights
offer, your rights will expire without value.

EXPIRATION OF THE OFFER AND RIGHTS

         The offer will expire at 5:00 p.m., New York City time,
on December ___, 2001 unless the Fund extends it until 5:00 p.m.,
New York City time, to a date not later than December ___, 2001.
Rights will expire at that time and thereafter you will no longer
be able to exercise them.  Since the expiration date for exercise
of the rights and the pricing date of the shares subscribed will
be the same date, you will not know the purchase price when you
decide to acquire shares.

         If the Fund decides to extend the offer, it will make an
announcement to that effect as promptly as practicable.  The Fund
may elect to extend the offer, for example, if it determines that
stockholders require extra time to exercise their rights in a
timely fashion.  The Fund will not, unless otherwise required by
law, have any obligation to publish, advertise or otherwise


                               19



<PAGE>

communicate any such announcement other than by making a release
to the Dow Jones News Service or such other means of announcement
as the Fund deems appropriate.

SUBSCRIPTION AGENT

         The subscription agent, EquiServe Trust Company, N.A.,
will receive for its administrative, processing, invoicing and
other services as subscription agent, a fee estimated to be
approximately $50,000 plus reimbursement for its out-of-pocket
expenses related to the offer.  The subscription agent is also
the Fund's transfer agent, dividend-paying agent and registrar
with respect to the common stock.  If you have any questions
regarding subscription certificates, please contact Georgeson
Shareholder Communications, the information agent for the offer,
at [(800) 223-2064.] You must send completed subscription
certificates together with payment of the estimated subscription
price to [_________] by one of the methods described below.

(1)                                 By Overnight, Certified
    By First Class Mail:            or Express Mail:
    ----------------------          -----------------------

    EquiServe Trust Company, N.A.   EquiServe Trust Company, N.A.
    Corporate Reorganization        Corporate Reorganization
    P.O. Box 9573                   40 Campanelli Drive
    Boston, MA 02205-9573           Braintree, MA 02184

              By Hand:
              Securities Transfer & Reporting Services, Inc.
              c/o EquiServe Trust Company, N.A.
              100 William Street
              Galleria
              New York, NY 10038

(2) By Facsimile (Telecopy):
    -----------------------
    For Notice Of Guaranteed Delivery Only
    (___) ___-____ with the original Subscription Certificate to
    be sent by method (1) above.  Confirm facsimile by telephone
    at (___) ___-____.

         The Fund will accept only subscription certificates
actually received on a timely basis.  DELIVERY TO AN ADDRESS
OTHER THAN THOSE SET FORTH ABOVE DOES NOT CONSTITUTE GOOD
DELIVERY.







                               20



<PAGE>

HOW TO EXERCISE RIGHTS

         Rights will be evidenced by subscription certificates.
Except as described below under "Restrictions on Foreign
Stockholders," the Fund will mail subscription certificates
directly to you if your shares are registered in your name or, if
you own your shares through a broker, depository or nominee, to
Cede or such other depository or nominee.  You may exercise your
rights by either:

    --   completing and signing a subscription certificate and
         mailing it in the envelope provided, together with
         payment for the shares to the subscription agent, or

    --   contacting your broker, banker or trust company, which
         can guarantee payment and delivery of a properly
         completed and executed subscription certificate before
         December __, 2001.  A fee may be charged for this
         service.

         Fractional shares will not be issued.  After the
exercise of rights, record date stockholders who have remaining
less than four rights will not be able to purchase a share upon
exercise of these remaining rights, which will expire without any
residual value.  Record date stockholders who receive less than
four rights, however, may purchase one share at the subscription
price.  Record date stockholders may request additional shares
under the over-subscription privilege.

         The subscription agent must have received at its office
indicated above completed subscription certificates or notices of
guaranteed delivery prior to 5:00 p.m., New York City time, on
December __, 2001.

         IF YOU DO NOT OWN YOUR SHARES THROUGH A BROKER OR OTHER
NOMINEE.  As a record holder, you can choose between two options
set forth under "Payment for Shares" below.  If time is of the
essence, option (2) will permit delivery of the completed
subscription certificate and payment after December ___, 2001.

         IF YOU OWN YOUR SHARES THROUGH A BROKER OR OTHER
NOMINEE.  You must contact that broker or nominee to exercise
your rights.  In that case, the nominee will complete the
subscription certificate on your behalf and arrange for proper
payment by one of the methods set forth under "Payment for
Shares".

         IF YOU ARE A NOMINEE.  If you hold shares for the
account of others, you should notify the beneficial owners of
such shares as soon as possible to obtain instructions.  If the
beneficial owner so instructs, you should complete the


                               21



<PAGE>

subscription certificate and submit it to the subscription agent
with proper payment.

RESTRICTIONS ON FOREIGN STOCKHOLDERS

         The Fund will not mail subscription certificates to
stockholders whose record addresses are outside the United
States.  For these purposes, the United States includes its
territories and possessions and the District of Columbia.  The
rights to which those subscription certificates relate will be
held by [____________________] for foreign stockholders' accounts
until instructions are received to exercise the rights.  If no
instructions are received prior to December __, 2001, such rights
will expire.

INFORMATION AGENT

         If you have any questions or inquiries relating to the
offer, please contact the information agent at:

         GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
         Wall Street Plaza
         New York, New York 10005
         Banks and Brokers Call Collect: [____________]
         All Others Call Toll Free: [_______________]

         You may also contact your broker or nominee for
information with respect to the offer.

         The Fund will pay the information agent for its services
in connection with the offer a fee estimated to be approximately
$38,500 including reimbursement for its out-of-pocket expenses.

PAYMENT FOR SHARES

         You may choose between the following methods of payment
to exercise your rights:

         (1)  You can send the completed subscription certificate
together with payment for shares to the subscription agent.  You
should calculate the total payment on the basis of an estimated
subscription price of $[_____] per share.  To be accepted, your
payment accompanied by a properly executed and completed
subscription certificate must be received by the subscription
agent prior to 5:00 p.m., New York City time, on December ___,
2001.

         If you pay using this method, please make sure that your
payment:




                               22



<PAGE>

         --   is made in United States dollars by money order or
              check drawn on a bank located in the United States

         --   is made to "Alliance World Dollar Government Fund
              II, Inc."

         --   accompanies an executed subscription certificate.

         (2)  Alternatively, you may contact your broker, bank or
trust company and request that it sends on your behalf a notice
of guaranteed delivery by facsimile or otherwise to the
subscription agent.  The subscription agent will accept all
notices of guaranteed delivery received from brokers, banks,
trust companies or NYSE members prior to 5:00 p.m., New York City
time, on December __, 2001.  The notice must guarantee delivery
to the subscription agent of (a) payment of the full subscription
price for the shares subscribed for pursuant to the primary
subscription and any additional shares subscribed for pursuant to
the over-subscription privilege, and (b) a properly completed and
executed subscription certificate.  The subscription agent will
not honor a notice of guaranteed delivery if a properly completed
and executed subscription certificate, together with payment, is
not received by the close of business on December __, 2001.

         No later than December __, 2001, the subscription agent
will send a confirmation to each stockholder or, if the
stockholder's shares are held by Cede or any other depository or
nominee, to Cede or such depository or nominee.  This
confirmation will show:

         --   the number of shares you acquired pursuant to the
              primary subscription;

         --   the number of shares, if any, you acquired pursuant
              to the over-subscription privilege;

         --   the per share and total purchase price for the
              shares; and

         --   any additional amount that you must pay to the Fund
              or any excess to be refunded by the Fund to you.

         You will not receive any other evidence of title unless
you have requested a stock certificate at the time of exercise of
the rights.  You must ensure that the subscription agent receives
any additional payment required from you before December __,
2001.  The subscription agent will mail any excess payment owed
to you within a reasonable time after the expiration date.  The
Fund will not pay interest on any excess payment.  All your
payments to the Fund must be in U.S. Dollars by money order or



                               23



<PAGE>

check drawn on a bank located in the United States of America and
payable to Alliance World Dollar Government Fund II, Inc.

         The subscription agent will deposit all checks received
by it prior to the final due date into a segregated interest-
bearing account pending distribution of the shares.  Interest
will accrue to the benefit of the Fund regardless of whether
shares are issued or not by the Fund.

         Issuance and delivery of evidence of title for the
shares purchased are subject to collection of checks and actual
payment pursuant to any notice of guaranteed delivery.

         YOU WILL HAVE NO RIGHT TO RESCIND YOUR SUBSCRIPTION
AFTER RECEIPT OF YOUR PAYMENT FOR SHARES BY THE SUBSCRIPTION
AGENT.

         If you subscribe for shares and do not pay any
additional amounts due, the Fund may:

         (1)  sell these shares to other stockholders;

         (2)  sell you only the number of shares your payment
covers; and/or

         (3)  exercise any and all other rights or remedies to
which it may be entitled to collect the additional amount due,
including enforcing any guaranty of payment.

         You may choose the method of delivery of subscription
certificates and payment of the subscription price from those
indicated above.  Whichever method you choose, you will make
delivery and payment at your own risk.  If you use mail,
subscription certificates and payment should be sent by
registered mail and properly insured, with return receipt
requested.  Please allow a sufficient number of days to ensure
delivery to the Fund and clearance of payment prior to 5:00 p.m.,
New York City time, on the last applicable payment date.  Because
uncertified personal checks may take at least five business days
to clear, you are strongly urged to pay, or arrange for payment,
by means of certified or cashier's check or money order.

         The Fund will determine all questions concerning the
timeliness, validity, form and eligibility of any exercise of
rights.  The Fund's determinations will be final and binding.
The Fund may waive any defect or irregularity, or permit a defect
or irregularity to be corrected within such time as it may
determine.  The Fund may also reject the purported exercise of
any right.  Subscriptions will not be deemed to have been
received or accepted until all irregularities have been waived or
cured within such time as the Fund determines.  The Fund will not


                               24



<PAGE>

be under any duty to give notification of any defect or
irregularity related to the submission of subscription
certificates.  The Fund will not incur any liability for failure
to give any such notification.

DELIVERY OF STOCK CERTIFICATES

         The Fund will issue certificates for shares acquired
through subscription only upon request.  If a request is made,
stock certificates will be mailed promptly after
________________, 2001 and after payment for the shares
subscribed for has cleared.  If you are a participant in the
Fund's dividend reinvestment and cash purchase plan, your shares
will be credited to your account in the plan.  The Fund will not
issue certificates for subscription shares credited to plan
accounts.  If your shares are held of record by Cede or by any
other depository or nominee on your behalf or your broker-
dealer's behalf, the shares that you acquire will be credited to
the account of Cede or such other depository or nominee.

OFFERING FEES AND EXPENSES

         [_______________] will act as the dealer manager for the
offer pursuant to a dealer manager agreement with the Fund.  [
] will provide financial advisory services and marketing
assistance in connection with the offer.  Together with its
associated broker-dealers, [______________] will also solicit the
exercise of rights and participation in the over-subscription
privilege.  The Fund will pay [                 ] a fee for its
financial advisory services and marketing assistance equal to
[______]% of the subscription price for each share issued.  The
Fund will also pay broker-dealers, including [
], fees for their soliciting efforts equal to [_____]% of the
subscription price for each share issued.

         The Fund has agreed to indemnify [_________________] or
contribute to losses arising out of certain liabilities,
including liabilities under the Securities Act.  [
] will not be liable to the Fund in rendering the services
described above except for any act of bad faith, willful
misconduct or gross negligence on its part or reckless disregard
of its obligations and duties.

         Other offering expenses incurred by the Fund are
estimated at $[__________] which includes up to $[__________]
that may be paid to [                  ] as partial reimbursement
for its expenses related to the offer.






                               25



<PAGE>

NOTICE OF NAV DECLINE

         The Fund has undertaken to suspend the offer until it
amends this Prospectus if, subsequent to ________, 2001 (the
effective date of the Fund's registration statement), the Fund's
NAV declines more than 10% from its NAV as of that date.  In such
event, the Fund would extend the expiration date and notify
record date stockholders that the NAV has declined more than 10%,
that the offer is suspended and that exercising rights holders
may cancel their exercise of rights.

EMPLOYEE BENEFIT PLAN CONSIDERATIONS

         Stockholders who are employee benefit plans subject to
the Employee Retirement Income Security Act of 1974, as amended,
(including corporate savings and 401(k) plans, Keogh or H.R. 10
plans of self-employed individuals and individual retirement
accounts (collectively, "Retirement Plans"), should be aware that
additions to the Retirement Plan (other than rollovers or
trustee-to-trustee transfers from other Retirement Plans) in
order to exercise rights would be treated as contributions to the
Retirement Plan and, when taken together with contributions
previously made, may result in, among other things, excise taxes
for excess or nondeductible contributions.  In the case of
Retirement Plans qualified under section 401(a) of the Code and
certain other Retirement Plans, additional cash contributions
could cause the maximum contribution limitations of section 415
of the Code or other qualification rules to be violated.  They
may also be a reportable distribution and there may be other
adverse tax and ERISA consequences if rights are sold or
transferred by a Retirement Plan.

         Retirement Plans and other tax exempt entities should
also be aware that, if they borrow in order to finance their
exercise of rights, they may become subject to the tax on
unrelated taxable income under section 511 of the Code with
respect to any income they subsequently derive with respect to
the shares acquired pursuant to such exercise.

         ERISA contains fiduciary responsibility requirements,
and ERISA and the Code contain prohibited transaction rules, that
may bear upon the exercise of rights.  Due to the complexity of
these rules and the penalties for noncompliance, Retirement Plans
should consult with their counsel and other advisors regarding
the consequences under ERISA and the Code of their exercise of
rights.







                               26



<PAGE>

FEDERAL INCOME TAX CONSEQUENCES

         For United States federal income tax purposes, neither
the receipt nor the exercise of the rights will result in taxable
income to you.  Moreover, you will not realize a loss if you do
not exercise the rights.  The holding period for a share acquired
upon exercise of a right begins with the date of exercise.  The
basis for determining gain or loss upon the sale of a share
acquired upon the exercise of a right will be equal to the sum
of:

         --   the subscription price per share,

         --   any servicing fee charged to you by your broker,
              bank or trust company, and

         --   the basis, if any, in the rights that you
              exercised.

         A gain or loss recognized upon a sale of a share
acquired upon the exercise of a right will be a capital gain or
loss assuming the share is held as a capital asset at the time of
sale.  This gain or loss will be a long-term capital gain or loss
if the share has been held at the time of sale for more than one
year.

         As noted above, your basis in shares issued under the
offer includes your basis in the rights underlying those shares.
The basis of the rights will be zero unless you elect to allocate
your basis of previously owned shares to the rights issued in the
offer.  This allocation is based upon the relative fair market
value of such shares and the rights as of the date of
distribution of the rights.  Thus, if you make such an election
and the rights are later exercised or sold, the basis in the
shares you originally owned will be reduced by an amount equal to
the basis you allocated to the rights.  This election must be
made in a statement attached to your federal income tax return
for the year in which the offer occurs.  If you do not exercise
or sell the rights, however, you will not be able to recognize a
loss or to allocate a portion of your basis in the shares to the
unexercised rights.

         The foregoing is a general summary of the material
United States federal income tax consequences of the receipt and
exercise of rights.  The discussion is based upon applicable
provisions of the U.S. Internal Revenue Code of 1986, as amended
(the "Code"), U.S. Treasury regulations and other authorities
currently in effect, and does not cover state, local or foreign
taxes.  The Code and regulations are subject to change by
legislative or administrative action.  You should consult your
tax advisors regarding specific questions as to federal, state,


                               27



<PAGE>

local or foreign taxes.  You should also review the discussion of
certain tax considerations affecting yourself and the Fund set
forth under "Taxation."

INVESTMENT ADVISORY AND ADMINISTRATION FEES

         The Adviser will benefit from the offer because the
investment advisory and administrative fees are based on the net
assets of the Fund.  Assuming all rights are exercised at the
estimated subscription price, including up to an additional 25%
of the shares which may be issued to satisfy over-subscriptions,
the annual compensation to be received by Alliance as the Adviser
and Administrator would be increased by approximately
$[__________].  Actual compensation paid may vary depending on
the number of shares purchased and investment return.

DIVIDENDS

         The Fund does not expect to pay dividends or other
distributions with respect to the shares acquired pursuant to
rights until _______________ 2001.

                         USE OF PROCEEDS

         Assuming the Fund sells all shares offered pursuant to
the primary subscription at the estimated subscription price, the
net proceeds of the offer are estimated to be $[_______________],
after payment of the dealer manager's fees, the soliciting fees
and the estimated offering expenses.  The Fund will pay these
expenses, which will reduce the NAV per share.  If the Fund
increases the number of shares subject to the offer by 25%, or
[__________] shares, in order to satisfy over-subscription
requests, the additional net proceeds will be approximately
$[__________].  The Adviser expects that, under current market
conditions, the Fund will invest substantially all of the net
proceeds of the offer in accordance with its investment objective
and policies approximately within three months from the date of
receipt.  Pending such investment, the proceeds will be invested
in certain short-term debt instruments.

               INVESTMENT OBJECTIVES AND POLICIES

GENERAL

         The Fund's primary investment objective is to seek high
current income.  Its secondary investment objective is capital
appreciation.  In seeking to achieve these objectives, the Fund
will normally invest at least 80% of its total assets in U.S.
dollar-denominated debt securities issued or guaranteed by
foreign governments, including participations in loans between
foreign governments and financial institutions and interests in


                               28



<PAGE>

entities organized and operated for the purpose of restructuring
the investment characteristics of instruments issued or
guaranteed by foreign governments ("Sovereign Debt Obligations").
The balance of the Fund's investment portfolio, up to 20% of its
total assets, may be invested in U.S. corporate fixed income
securities.

         Sovereign Debt Obligations held by the Fund will take
the form of bonds, notes, bills, debentures, warrants, short-term
paper, loan participations, loan assignments and interests issued
by entities organized and operated for the purpose of
restructuring the investment characteristics of other Sovereign
Debt Obligations.  Sovereign Debt Obligations held by the Fund
generally will not be traded on a securities exchange.  The U.S.
corporate fixed income securities held by the Fund will include
debt securities, convertible securities and preferred stocks of
corporate issuers. The Fund is not subject to restrictions on the
maturities of the securities it holds.

         Substantially all of the Fund's investments in Sovereign
Debt Obligations and U.S. corporate fixed income securities will
be in high yield, high risk debt securities that are low-rated
(i.e., below investment grade) or unrated and in both cases that
are considered to be predominantly speculative as regards the
issuer's capacity to pay interest and repay principal.  See "Risk
Factors and Special Considerations."

         The Fund's investment objective and its policy of
investing at least 65% of its total assets in Sovereign Debt
Obligations are fundamental and cannot be changed without the
approval of a majority of the Fund's outstanding voting
securities, which, as used in this Prospectus, means the lesser
of (i) 67% of the shares represented at a meeting at which more
than 50% of the outstanding shares are present in person or
represented by proxy or (ii) more than 50% of the outstanding
shares.  The Fund's investment policies that are not designated
as fundamental policies may be changed by the Fund without
stockholder approval, but the Fund will not change its investment
policies without contemporaneous notice to its stockholders.  The
Fund is designed primarily for long-term investment, and
investors should not consider it a trading vehicle.  As with all
such investment companies, there can be no assurance that the
Fund's investment objectives will be achieved.  The Fund's policy
of investing at least 80% of its total assets in Sovereign Debt
Obligations may not be changed without 60 days' prior written
notice to shareholders.

         For temporary defensive purposes, the Fund may vary from
its investment policies during periods in which conditions in the
securities markets for Sovereign Debt Obligations or other
economic or political conditions warrant.  Under such


                               29



<PAGE>

circumstances, the Fund may reduce its position in Sovereign Debt
Obligations and invest without limit in (i) debt securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities ("U.S. Government Securities") and (ii) the
following U.S. dollar-denominated investments: (a) indebtedness
rated Aa or better by Moody's Investors Service, Inc. ("Moody's")
or AA or better by Standard & Poor's Ratings Services ("S&P"), or
if not so rated, of equivalent investment quality as determined
by the Adviser, (b) certificates of deposit, bankers' acceptances
and interest-bearing savings deposits of banks having total
assets of more than $1 billion and which are members of the
Federal Deposit Insurance Corporation and (c) commercial paper of
prime quality rated A-1 or better by S&P or Prime 1 or better by
Moody's or, if not so rated, issued by companies which have an
outstanding debt issue rated AA or better by S&P or Aa or better
by Moody's. The Fund may also at any time, with respect to up to
[20]% of its total assets, temporarily invest funds awaiting
reinvestment or held for reserves for dividends and other
distributions to stockholders in such U.S. dollar-denominated
money market instruments.

SOVEREIGN DEBT OBLIGATIONS

         The Fund will emphasize investments in the Sovereign
Debt Obligations of countries that are considered emerging market
countries at the time of purchase.  As used in this Prospectus,
an "emerging market country" is any country that is considered to
be an emerging or developing country by the International Bank
for Reconstruction and Development (more commonly referred to as
the "World Bank").  In selecting and allocating assets among the
countries in which the Fund will invest, the Adviser will develop
a long-term view of those countries and will engage in an
analysis of sovereign risk by focusing on factors such as a
country's public finances, monetary policy, external accounts,
financial markets, stability of exchange rate policy and labor
conditions.  The Fund is not required to invest any specified
minimum amount of its total assets in Sovereign Debt Obligations
of issuers located in any particular country. The Adviser
anticipates that the countries that will provide investment
opportunities for the Fund include, among others, Argentina,
Bolivia, Brazil, Bulgaria, Colombia, Costa Rica, the Dominican
Republic, Ecuador, Korea, Mexico, Morocco, Nigeria, Panama, Peru,
the Philippines, Poland, Qatar, Russia, Thailand, Turkey,
Ukraine, Uruguay and Venezuela.  The Fund will not invest 25% or
more of its total assets in the Sovereign Debt Obligations of any
one of Argentina, Brazil, Mexico, Morocco, the Philippines,
Russia or Venezuela (or of any other single foreign country), and
the Fund does not expect to invest more than 5% of its total
assets in the Sovereign Debt Obligations of any other single
foreign country.  Information about certain of these countries
appears in the Statement of Additional Information.


                               30



<PAGE>

         A substantial portion of the Fund's investments
(including most Brady Bonds, described below) will be in (i)
securities which were initially issued at a discount from their
face value (collectively, "Discount Obligations") and (ii)
securities purchased by the Fund at a price less than their
stated face amount or, in the case of Discount Obligations, at a
price less than their issue price plus the portion of "original
issue discount" previously accrued thereon, i.e., purchased at a
"market discount." Under current federal tax law and in
furtherance of its primary investment objective of seeking high
current income, the Fund will accrue as current income each year
a portion of the original issue and/or market discount at which
each such obligation is purchased by the Fund even though the
Fund does not receive during the year cash interest payments on
the obligation corresponding to the accrued discount.  Under the
minimum distribution requirements of the Code, the Fund may be
required to pay out as an income distribution each year an amount
significantly greater than the total amount of cash interest
which the Fund has actually received as interest during the year.
Such distributions will be made from the cash assets of the Fund,
from borrowings or by liquidation of portfolio securities, if
necessary.  The risks associated with holding securities not
readily marketable may be accentuated at such times.  See
"Investment Objectives and Policies--Borrowing," "Special Risk
Considerations--Securities Not Readily Marketable" and "Taxation-
-United States Federal Income Taxation of the Fund--Discount
Obligations."

         Brady Bonds.  The Fund may invest in certain debt
obligations customarily referred to as "Brady Bonds," which are
created through the exchange of existing commercial bank loans to
foreign entities for new obligations in connection with debt
restructurings under a plan introduced by former U.S. Secretary
of the Treasury, Nicholas F. Brady (the "Brady Plan").  Brady
Bonds may be collateralized or uncollateralized and issued in
various currencies (although most are dollar-denominated) and
they are actively traded in the over-the-counter secondary
market.  The Fund may invest in either collateralized or
uncollateralized Brady Bonds.  Collateralized Brady Bonds are
collateralized in full as to principal due at maturity by zero
coupon obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities having the same maturity
("Collateralized Brady Bonds").

         Interest payments on Brady Bonds generally are
collateralized by cash or securities in an amount that, in the
case of fixed rate bonds, is equal to at least one year of
rolling interest payments or, in the case of floating rate bonds,
initially is equal to at least one year's rolling interest
payments based on, the applicable interest rate at that time and
is adjusted at regular intervals thereafter.  Certain Brady Bonds


                               31



<PAGE>

are entitled to "value recovery payments" in certain
circumstances, which in effect constitute supplemental interest
payments but generally are not collateralized.  Brady Bonds are
often viewed as having three or four valuation components: (i)
the collateralized repayment of principal at final maturity; (ii)
the collateralized interest payments; (iii) the uncollateralized
interest payments; and (iv) any uncollateralized repayment of
principal at maturity (these uncollateralized amounts constitute
the "residual risk").  In the event of a default with respect to
Collateralized Brady Bonds as a result of which the payment
obligations of the issuer are accelerated, the U.S. Treasury zero
coupon obligations held as collateral for the payment of
principal will not be distributed to investors, nor will such
obligations be sold and the proceeds distributed.  The collateral
will be held by the collateral agent to the scheduled maturity of
the defaulted Brady Bonds, which will continue to be outstanding,
at which time the face amount of the collateral will equal the
principal payments which would have then been due on the Brady
Bonds in the normal course.  In addition, in light of the
residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by
public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds are to be viewed as speculative.

         Structured Securities.  The Fund may invest up to 25% of
its total assets in interests in entities organized and operated
solely for the purpose of restructuring the investment
characteristics of Sovereign Debt Obligations.  This type of
restructuring involves the deposit with or purchase by an entity,
such as a corporation or trust, of specified instruments (such as
commercial bank loans or Brady Bonds) and the issuance by that
entity of one or more classes of securities ("Structured
Securities") backed by, or representing interests in, the
underlying instruments.  The cash flow on the underlying
instruments may be apportioned among the newly issued Structured
Securities to create securities with different investment
characteristics such as varying maturities, payment priorities
and interest rate provisions, and the extent of the payments made
with respect to Structured Securities is dependent on the extent
of the cash flow on the underlying instruments.  Because
Structured Securities of the type in which the Fund anticipates
it will invest typically involve no credit enhancement, their
credit risk generally will be equivalent to that of the
underlying instruments.

         The Fund is permitted to invest in a class of Structured
Securities that is either subordinated or unsubordinated to the
right of payment of another class.  Subordinated Structured
Securities typically have higher yields and present greater risks
than unsubordinated Structured Securities.



                               32



<PAGE>

         Loan Participations and Assignments.  The Fund may
invest in fixed and floating rate loans ("Loans") arranged
through private negotiations between an issuer of Sovereign Debt
Obligations and one or more financial institutions ("Lenders").
The Fund's investments in Loans are expected in most instances to
be in the form of participations in Loans ("Participations") and
assignments of all or a portion of Loans ("Assignments") from
third parties.  The Fund may invest up to 25% of its total assets
in Participations and Assignments.  The government that is the
borrower on the Loan will be considered by the Fund to be the
issuer of a Participation or Assignment for purposes of the
Fund's fundamental investment policy that it will not invest 25%
or more of its total assets in securities of issuers conducting
their principal business activities in the same industry (i.e.,
foreign government).  The Fund's investment in Participations
typically will result in the Fund having a contractual
relationship only with the Lender and not with the borrower.  The
Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the
Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower.  In connection with
purchasing Participations, the Fund generally will have no right
to enforce compliance by the borrower with the terms of the loan
agreement relating to the Loan, nor any rights of set-off against
the borrower, and the Fund may not directly benefit from any
collateral supporting the Loan in which it has purchased the
Participation.  As a result, the Fund may be subject to the
credit risk of both the borrower and the Lender that is selling
the Participation.  In the event of the insolvency of the Lender
selling a Participation, the Fund may be treated as a general
creditor of the Lender and may not benefit from any set-off
between the Lender and the borrower.  Certain Participations may
be structured in a manner designed to avoid purchasers of
Participations being subject to the credit risk of the Lender
with respect to the Participation, but even under such a
structure, in the event of the Lender's insolvency, the Lender's
servicing of the Participation may be delayed and the
assignability of the Participation impaired.  The Fund will
acquire Participations only if the Lender interpositioned between
the Fund and the borrower is a Lender having total assets of more
than $25 billion and whose senior unsecured debt is rated
investment grade or higher (i.e., Baa or higher by Moody's or BBB
or higher by S&P).

         When the Fund purchases Assignments from Lenders it will
acquire direct rights against the borrower on the Loan.  Because
Assignments are arranged through private negotiations between
potential assignees and potential assignors, however, the rights
and obligations acquired by the Fund as the purchaser of an
Assignment may differ from, and be more limited than, those held
by the assigning Lender.  The assignability of certain Sovereign


                               33



<PAGE>

Debt Obligations is restricted by the governing documentation as
to the nature of the assignee such that the only way in which the
Fund may acquire an interest in a Loan is through a Participation
and not an Assignment.  The Fund may have difficulty disposing of
Assignments and Participations because to do so it will have to
assign such securities to a third party.  Because there is no
liquid market for such securities, the Fund anticipates that such
securities could be sold only to a limited number of
institutional investors.  The lack of a liquid secondary market
may have an adverse impact on the value of such securities and
the Fund's ability to dispose of particular Assignments or
Participations when necessary to meet the Fund's liquidity needs
or in response to a specific economic event such as a
deterioration in the creditworthiness of the borrower.  The lack
of a liquid secondary market for Assignments and Participations
also may make it more difficult for the Fund to assign a value to
these securities for purposes of valuing the Fund's portfolio and
calculating its NAV.

U.S. CORPORATE FIXED INCOME SECURITIES

         The Fund may invest up to 20% of its total assets in
U.S. corporate fixed income securities which include debt
securities, convertible securities and preferred stocks of
corporate issuers.  Differing yields on fixed income securities
of the same maturity are a function of several factors, including
the relative financial strength of the issuers.  Higher yields
are generally available from securities in the lower rating
categories.  When the spread between the yields of lower rated
obligations and those of more highly rated issuers is relatively
narrow, the Fund may invest in the latter since they may provide
attractive returns with somewhat less risk.  The Fund will invest
in high yielding, high risk lower rated securities (i.e.,
securities rated lower than Baa by Moody's or BBB by S&P) and in
comparable unrated securities.  Such high yielding, high risk
securities are commonly referred to as "junk bonds".  Unrated
securities will be considered for investment by the Fund when the
Adviser believes that the financial condition of the issuers of
such obligations and the protection afforded by the terms of the
obligations themselves limit the risk to the Fund to a degree
comparable to that of rated securities which are consistent with
the Fund's investment objectives and policies.  See "Risk Factors
and Special Considerations" for a description of the speculative
characteristics of securities in the lower rating categories and
for a discussion of the risks associated with the Fund's
investments in U.S. corporate fixed income securities.







                               34



<PAGE>

OTHER POLICIES

         Securities Not Readily Marketable.  The Fund may invest
up to 50% of its total assets in securities that are not readily
marketable.  These securities include, among others, (i) direct
placements or other securities which are subject to legal or
contractual restrictions on resale or for which there is no
readily available market (e.g., trading in the security is
suspended or, in the case of unlisted securities, market makers
do not exist or will not entertain bids or offers), and (ii)
repurchase agreements not terminable within seven days.
Securities eligible for resale under Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"), that have
legal or contractual restrictions on resale but have a readily
available market are not deemed securities not readily marketable
for purposes of this limitation.  The Adviser will monitor such
securities and in reaching decisions concerning their
marketability will consider, among other things, the following
factors: (i) the frequency of trades and quotes for the security;
(ii) the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; (iii)
dealer undertakings to make a market in the security; (iv) the
nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer); and (v) any
applicable SEC interpretation or position with respect to such
type of securities.

         Direct placements of debt securities have frequently
resulted in higher yields and restrictive covenants providing
greater protection for the purchaser.  An issuer is often willing
to create more attractive features in its securities issued
privately because it has averted the expense and delay involved
in a public offering of its securities.  Also, adverse conditions
in the public securities markets may at certain times preclude a
public offering of an issuer's securities.

ADDITIONAL INVESTMENT POLICIES

         Interest Rate Transactions.  The Fund may enter into
interest rate swaps and may purchase or sell (i.e., write)
interest rate caps and floors.  The Fund expects to enter into
these transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio.  The Fund may
also enter into these transactions to protect against any
increase in the price of securities the Fund anticipates
purchasing at a later date.  The Fund does not intend to use
these transactions in a speculative manner.  Interest rate swaps
involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (e.g., an
exchange of floating rate payments for fixed-rate payments).  The


                               35



<PAGE>

purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually-based
principal amount from the party selling the interest rate cap.

         The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a
contractually-based principal amount from the party selling the
interest rate floor.

         The Fund may enter into interest rate swaps, caps and
floors on either an asset-based or liability-based basis,
depending on whether it is hedging its assets or its liabilities,
and will usually enter into interest rate swaps on a net basis
(i.e., the two payment streams are netted out), with the Fund
receiving or paying, as the case may be, only the net amount of
the two payments.  The net amount of the excess, if any, of the
Fund's obligations over its entitlements with respect to each
interest rate swap will be accrued on a daily basis, and an
amount of cash and/or liquid securities having an aggregate NAV
at least equal to the accrued excess will be maintained in a
segregated account by the Fund's custodian.  If the Fund enters
into an interest rate swap on other than a net basis, the Fund
will maintain a segregated account in the full amount accrued on
a daily basis of the Fund's obligations with respect to the swap.
The Fund will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying
ability of the other party thereto is rated in the highest rating
category of at least one nationally recognized statistical rating
organization at the time of entering into the transaction.  The
Adviser will monitor the creditworthiness of counterparties to
its interest rate swap, cap and floor transactions on an ongoing
basis.  If there is a default by the other party to such a
transaction, the Fund will have contractual remedies pursuant to
the agreements related to the transaction.  The swap market has
grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and agents
utilizing standardized swap documentation.  The Adviser has
determined that, as a result, the swap market has become
relatively liquid.  Caps and floors are more recent innovations
for which standardized documentation has not yet been developed
and, accordingly, they are less liquid than swaps.  To the extent
the Fund sells caps and floors, it will maintain in a segregated
account cash and/or liquid securities having an aggregate NAV at
least equal to the full amount, accrued on a daily basis, of the
Fund's obligations with respect to the caps or floors.  The use
of interest rate swaps is a highly specialized activity, which
involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions.  If
the Adviser is incorrect in its forecasts of market values,


                               36



<PAGE>

interest rates and other applicable factors, the investment
performance of the Fund would diminish compared with what it
would have been if these investment techniques were not utilized.
Moreover, even if the Adviser is correct in its forecasts, there
is a risk that the swap position may correlate imperfectly with
the price of the asset or liability being hedged.

         There is no limit on the amount of interest rate swap
transactions that may be entered into by the Fund.  These
transactions do not involve the delivery of securities or other
underlying assets or principal.  Accordingly, the risk of loss
with respect to interest rate swaps is limited to the net amount
of interest payments that the Fund is contractually obligated to
make, if any.  If the other party to an interest rate swap
defaults, the Fund's risk of loss is the net amount of interest
payments that the Fund contractually is entitled to receive, if
any.  The Fund may purchase and sell caps and floors without
limitation, subject to the segregated account requirement
described above.

         Forward Commitments.  The Fund may enter into forward
commitments for the purchase or sale of securities.  Such
transactions may include purchases on a "when-issued" basis or
purchases or sales on a "delayed delivery" basis.  In some cases,
a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a debt
restructuring (i.e., a "when, as and if issued" trade).

         When forward commitment transactions are negotiated, the
price, which generally is expressed in yield terms, is fixed at
the time the commitment is made, but delivery and payment for the
securities take place at a later date.  Normally, the settlement
date occurs within two months after the transaction, but delayed
settlements beyond two months may be negotiated.  Securities
purchased or sold under a forward commitment are subject to
market fluctuation, and no interest accrues to the purchaser
prior to the settlement date.  At the time the Fund enters into a
forward commitment, it will record the transaction and thereafter
reflect the value of the security purchased or, if a sale, the
proceeds to be received, in determining its NAV.  Any unrealized
appreciation or depreciation reflected in such valuation of a
"when, as and if issued" security would be cancelled in the event
that the required condition did not occur and the trade was
cancelled.

         The use of forward commitments enables the Fund to
protect against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling
bond prices, the Fund might sell securities in its portfolio on a
forward commitment basis to limit its exposure to falling bond
prices.  In periods of falling interest rates and rising bond


                               37



<PAGE>

prices, the Fund might sell a security in its portfolio and
purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.  However, if the Adviser were to
forecast incorrectly the direction of interest rate movements,
the Fund might be required to complete such when-issued or
forward transactions at prices less favorable than current market
values.  No forward commitments will be made by the Fund if, as a
result, the Fund's aggregate commitments under such transactions
would be more than 30% of the then current value of the Fund's
total assets.

         The Fund's right to receive or deliver a security under
a forward commitment may be sold prior to the settlement date,
but the Fund will enter into forward commitments only with the
intention of actually receiving or delivering the securities, as
the case may be.  To facilitate such transactions, the Fund's
custodian will maintain, in a segregated account of the Fund,
cash and/or liquid securities having value equal to, or greater
than, any commitments to purchase securities on a forward
commitment basis and, with respect to forward commitments to sell
portfolio securities of the Fund, the portfolio securities
themselves.  If the Fund, however, chooses to dispose of the
right to receive or deliver a security subject to a forward
commitment prior to the settlement date of the transaction, it
may incur a gain or loss.  In the event the other party to a
forward commitment transaction were to default, the Fund might
lose the opportunity to invest money at favorable rates or to
dispose of securities at favorable prices.

         Reverse Repurchase Agreements and Dollar Rolls.  The
Fund may also use reverse repurchase agreements and dollar rolls
as part of its investment strategy.  Reverse repurchase
agreements involve sales by the Fund of portfolio assets
concurrently with an agreement by the Fund to repurchase the same
assets at a later date at a fixed price.  Generally, the effect
of such a transaction is that the Fund can recover all or most of
the cash invested in the portfolio securities involved during the
term of the reverse repurchase agreement, while it will be able
to keep the interest income associated with those portfolio
securities.  Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction
is less than the cost of otherwise obtaining the cash.

         The Fund may enter into dollar rolls in which the Fund
sells securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar
(same type and coupon) securities on a specified future date.
During the roll period, the Fund foregoes principal and interest
paid on the securities.  The Fund is compensated by the
difference between the current sales price and the lower forward


                               38



<PAGE>

price for the future purchase (often referred to as the "drop")
as well as by the interest earned on the cash proceeds of the
initial sale.

         Reverse repurchase agreements and dollar rolls involve
the risk that the market value of the securities the Fund is
obligated to repurchase under the agreement may decline below the
repurchase price.  In the event the buyer of securities under a
reverse repurchase agreement or dollar roll files for bankruptcy
or becomes insolvent, the Fund's use of the proceeds of the
agreement may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities.

         Reverse repurchase agreements and dollar rolls are
speculative techniques and are considered borrowings by the Fund.
Under the requirements of the 1940 Act, the Fund is required to
maintain an asset coverage of at least 300% of all borrowings.
The Fund does not expect to engage in reverse repurchase
agreements and dollar rolls with respect to greater than 33% of
the Fund's total assets less liabilities (other than the amount
borrowed).  See "Borrowing" below.

         Standby Commitment Agreements.  The Fund may from time
to time enter into standby commitment agreements.  Such
agreements commit the Fund, for a stated period of time, to
purchase a stated amount of a security which may be issued and
sold to the Fund at the option of the issuer.  The price and
coupon of the security are fixed at the time of the commitment.
At the time of entering into the agreement the Fund is paid a
commitment fee, regardless of whether or not the security
ultimately is issued, which is typically approximately 0.5% of
the aggregate purchase price of the security which the Fund has
committed to purchase.  The Fund will enter into such agreements
only for the purpose of investing in the security underlying the
commitment at a yield and price which are considered advantageous
to the Fund and which are unavailable on a firm commitment basis.
The Fund will not enter into a standby commitment with a
remaining term in excess of 45 days and will limit its investment
in such commitments so that the aggregate purchase price of the
securities subject to the commitments, together with the value of
portfolio securities that are not readily marketable, will not
exceed 50% of its assets taken at the time of acquisition of such
commitment of security.

         There can be no assurance that the securities subject to
a standby commitment will be issued and the value of the
security, if issued, on the delivery date may be more or less
than its purchase price.  Since the issuance of the security
underlying the commitment is at the option of the issuer, the
Fund will bear the risk of capital loss in the event the value of


                               39



<PAGE>

the security declines and may not benefit from an appreciation in
the value of the security during the commitment period if the
issuer decides not to issue and sell the security to the Fund.

         The purchase of a security subject to a standby
commitment agreement and the related commitment fee will be
recorded on the date on which the security can reasonably be
expected to be issued and the value of the security will
thereafter be reflected in the calculation of the Fund's NAV.
The cost basis of the security will be adjusted by the amount of
the commitment fee.  In the event the security is not issued, the
commitment fee will be recorded as income on the expiration date
of the standby commitment.

         Short Sales.  The Fund may make short sales of
securities or maintain a short position only for the purpose of
deferring realization of gain or loss for U.S. federal income tax
purposes, provided that at all times when a short position is
open the Fund owns an equal amount of such securities of the same
issue as, and equal in amount to, the securities sold short.  In
addition, the Fund may not make a short sale if more than 10% of
the Fund's net assets (taken at market value) is held as
collateral for short sales at any one time.  If the price of the
security sold short increases between the time of the short sale
and the time the Fund replaces the borrowed security, the Fund
will incur a loss; conversely, if the price declines, the Fund
will realize a capital gain.  Although the Fund's gain is limited
to the price at which it sold the security short, its potential
loss is unlimited.  See "Investment Restrictions" in the
Statement of Additional Information.

         General.  The successful use of the foregoing investment
practices draws upon the Adviser's special skills and experience
with respect to such instruments and usually depends on the
Adviser's ability to forecast interest rate movements correctly.
Should interest rates move in an unexpected manner, the Fund may
not achieve the anticipated benefits of these practices or may
realize losses and, thus, be in a worse position than if such
strategies had not been used.  In addition, the correlation
between movements in the prices of such instruments and movements
in the price of the securities hedged or used for cover will not
be perfect and could produce unanticipated losses.

         Future Developments.  The Fund may, following written
notice to its stockholders, take advantage of other investment
practices which are not at present contemplated for use by the
Fund or which currently are not available but which may be
developed, to the extent such investment practices are both
consistent with the Fund's investment objectives and legally
permissible for the Fund.  Such investment practices, if they



                               40



<PAGE>

arise, may involve risks that exceed those involved in the
activities described above.

BORROWING

         The Fund may borrow from a bank or other entity in a
privately arranged transaction to the maximum extent permitted
under the 1940 Act, but only in order to finance the repurchase
and/or tenders of its shares or to pay distributions for purposes
of complying with the Code.  See "Risk Factors and Special
Considerations--Borrowing," "Tender Offers and Share Repurchases;
Conversion to Open-End Status" and "Taxation--United States
Federal Income Taxes--General." The 1940 Act requires the Fund to
maintain "asset coverage" of not less than 300% of its "senior
securities representing indebtedness" as those terms are defined
and used in the 1940 Act.  In addition, the Fund may not pay any
cash dividends or make any cash distributions to stockholders if,
after the distribution, there would be less than 300% asset
coverage of a senior security representing indebtedness for
borrowings (excluding for this purpose certain evidences of
indebtedness made by a bank or other entity and privately
arranged, and not intended to be publicly distributed).  This
limitation on the Fund's ability to make distributions could
under certain circumstances impair the Fund's ability to maintain
its qualification as a regulated investment company for federal
income tax purposes and could subject the Fund to corporate
federal income taxes for the year or years in which it fails to
so qualify.  See "Taxation--General."

         The Fund may also borrow for temporary purposes in an
amount not exceeding 5% of the value of the total assets of the
Fund.  Such borrowings are not subject to the asset coverage
restrictions set forth in the preceding paragraph.  See
"Investment Restrictions" in the Statement of Additional
Information.  The Fund may also borrow through the use of reverse
repurchase agreements and dollar rolls.  See "Reverse Repurchase
Agreements and Dollar Rolls" above.

PORTFOLIO TURNOVER

         The portfolio turnover rate for the Fund is included in
the Financial Highlights section.  The Fund is actively managed
and, in some cases in response to market conditions, the Fund's
portfolio turnover may exceed 100%.  A higher rate of portfolio
turnover increases brokerage and other expenses, which must be
borne by the Fund and its stockholders.  High portfolio turnover
also may result in realization of substantial net short-term
capital gains, which, when distributed, are taxable to
stockholders.




                               41



<PAGE>

             RISK FACTORS AND SPECIAL CONSIDERATIONS

         Please consider carefully the matters set forth below.
You should read the entire Prospectus and the Statement of
Additional Information before you decide whether to exercise your
rights.

DILUTION AND THE EFFECT OF NON-PARTICIPATION IN THE OFFER

         If you do not exercise all your rights, when the offer
is over you will own a smaller proportional interest in the Fund.
In addition, whether or not you exercise your rights, the per
share NAV of your shares will be diluted (reduced) immediately as
a result of the offer because:

         --   the shares offered will be sold at less than their
              then current NAV

         --   you will indirectly bear the expenses of the offer

         --   the number of shares outstanding after the offer
              will have increased proportionately more than the
              increase in the size of the net assets.

         This dilution may be substantial and will increase if
the share price declines in relation to the NAV as shown by the
following examples:

    Scenario 1: Shares trade above per share NAV (premium) (1)

Share Price......................................$
NAV .............................................$
Subscription Price ([__________]% of NAV)........$
Reduction in NAV ($) (2).........................$
Reduction in NAV (%).............................  %


    Scenario 2: Shares trade below per share NAV at the time the
offer expires (discount) (1)


Share Price......................................$
NAV .............................................$
5-day average share price (3)....................$
Subscription Price ([______]% of 5-day
 average share price)............................$
Reduction in NAV ($) (4).........................$
Reduction in NAV (%)............................. %





                               42



<PAGE>

------------------------
(1)      Both examples assume full primary and over-subscription
         privilege exercised.  Actual amounts may vary due to
         rounding.

(2)      Assumes $[_______________] in estimated offering
         expenses (including sales load).

(3)      The expiration date and the four preceding business
         days.

(4)      Assumes $[_______________] in estimated offering
         expenses (including sales load).

         You will incur a greater dilution in NAV per share if
you do not exercise your rights than if you do.

INVESTMENTS IN LOWER-RATED SECURITIES

         Substantially all of the Fund's assets will be invested
in high yield, high risk debt securities that are rated in the
lower rating categories (i.e., below investment grade) or which
are unrated but are of comparable quality as determined by the
Adviser.  Securities of this quality are commonly referred to as
junk bonds.  However, certain of the Sovereign Debt Obligations
in which the Fund may invest have characteristics, such as credit
enhancement, not typically associated with securities of this
quality.  Currently, the securities in which the Fund will invest
substantially all of its assets are generally considered to have
a credit quality below investment grade by generally recognized
credit rating organizations such as Moody's and S&P.  Debt
securities rated below investment grade are those rated Ba 1 or
lower by Moody's or BB+ or lower by S&P and are considered by
those organizations to be subject to greater risk of loss of
principal and interest than higher-rated securities and are
considered to be predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal, which may
in any case decline during sustained periods of deteriorating
economic conditions or rising interest rates.  The Fund may
invest in securities having the lowest ratings for
non-subordinated debt instruments assigned by Moody's or S&P
(i.e., rated C by Moody's or CCC or lower by S&P) and in unrated
securities of comparable investment quality.  These securities
are considered to have extremely poor prospects of ever attaining
any real investment standing, to have a current identifiable
vulnerability to default, to be unlikely to have the capacity to
pay interest and repay principal when due in the event of adverse
business, financial or economic conditions, and/or to be in
default or not current in the payment of interest or principal.




                               43



<PAGE>

         Lower-rated securities generally are considered to be
subject to greater market risk than higher-rated securities in
times of deteriorating economic conditions.  In addition,
lower-rated securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions
than investment grade securities, although the market values of
securities rated below investment grade and comparable unrated
securities tend to react less to fluctuations in interest rate
levels than do those of higher-rated securities.  The market for
lower-rated securities may be thinner and less active than that
for higher-quality securities, which can adversely affect the
prices at which these securities can be sold.  To the extent that
there is no established secondary market for lower-rated
securities, the Adviser may experience difficulty in valuing such
securities and, in turn, the Fund's assets.  In addition, adverse
publicity and investor perceptions about lower-rated securities,
whether or not based on fundamental analysis, may tend to
decrease the market value and liquidity of such lower-rated
securities.  Transaction costs with respect to lower-rated
securities may be higher, and in some cases information may be
less available, than is the case with investment grade securities

         Many fixed income securities, including certain U.S.
corporate fixed income securities in which the Fund may invest,
contain call or buy-back features which permit the issuer of the
security to call or repurchase it.  Such securities may present
risks based on payment expectations.  If an issuer exercises such
a "call option" and redeems the security, the Fund may have to
replace the called security with a lower yielding security,
resulting in a decreased rate of return for the Fund.

         The ratings of fixed income securities by Moody's and
S&P are a generally accepted barometer of credit risk.  They are,
however, subject to certain limitations from an investor's
standpoint.  The rating of an issuer is heavily weighted by past
developments and does not necessarily reflect probable future
conditions.  There is frequently a lag between the time a rating
is assigned and the time it is updated.  In addition, there may
be varying degrees of difference in credit risk of securities
within each rating category.  See the Statement for Additional
Information for a description of such ratings.

         Non-rated securities will also be considered for
investment by the Fund when the Adviser believes that the
financial condition of the issuers of such securities, or the
protection afforded by the terms of the securities themselves,
limits the risk to the Fund to a degree comparable to that of
rated securities which are consistent with the Fund's objectives
and policies.




                               44



<PAGE>

         The Adviser will try to reduce the risk inherent in the
Fund's investment approach through credit analysis,
diversification and attention to current developments and trends
in interest rates and economic conditions.  However, there can be
no assurance that losses will not occur.  Since the risk of
default is higher for lower-quality securities, the Adviser's
research and credit analysis are a correspondingly important
aspect of its program for managing the Fund's securities.  In
considering investments for the Fund, the Adviser will attempt to
identify those high-yielding securities whose financial condition
is adequate to meet future obligations, has improved, or is
expected to improve in the future.  The Adviser's analysis
focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the
experience and managerial strength of the issuer.

         In seeking to achieve the Fund's primary objective,
there will be times, such as during periods of rising interest
rates, when depreciation and realization of capital losses on
securities in the Fund's portfolio will be unavoidable.
Moreover, medium- and lower-rated securities and non-rated
securities of comparable quality may be subject to wider
fluctuations in yield and market values than higher-rated
securities under certain market conditions.  Such fluctuations
after a security is acquired do not affect the cash income
received from that security but are reflected in the NAV of the
Fund.

SOVEREIGN DEBT OBLIGATIONS

         Extent of Trading Markets.  No established secondary
markets may exist for many of the Sovereign Debt Obligations in
which the Fund will invest. Reduced secondary market liquidity
may have an adverse effect on the market price and the Fund's
ability to dispose of particular instruments when necessary to
meet its liquidity requirements or in response to specific
economic events such as a deterioration in the creditworthiness
of the issuer.  Reduced secondary market liquidity for certain
Sovereign Debt Obligations may also make it more difficult for
the Fund to obtain accurate market quotations for purposes of
valuing its portfolio.  Market quotations are generally available
on many Sovereign Debt Obligations only from a limited number of
dealers and may not necessarily represent firm bids of those
dealers or prices for actual sales.

         Economic and Political Factors.  By investing in
Sovereign Debt Obligations, the Fund will be exposed to the
direct or indirect consequences of political, social and economic
changes in various countries.  Political changes in a country may
affect the willingness of a foreign government to make or provide
for timely payments of its obligations.  The country's economic


                               45



<PAGE>

status, as reflected, among other things, in its inflation rate,
the amount of its external debt and its gross domestic product,
will also affect the government's ability to honor its
obligations.

         Many countries providing investment opportunities for
the Fund have experienced substantial, and in some periods
extremely high, rates of inflation for many years.  Inflation and
rapid fluctuations in inflation rates have had and may continue
to have adverse effects on the economies and securities markets
of certain of these countries.  In an attempt to control
inflation, wage and price controls have been imposed in certain
countries.  The following table shows annual percentage changes
from consumer price indices of Argentina, Brazil, Mexico,
Morocco, the Philippines, Russia and Venezuela for the periods
shown.

Country                 1997    1998   1999   2000   2001
-------                 ----    ----   ----   ----   ----




__________
Source:

         Investing in Sovereign Debt Obligations involves
economic and political risks.  The Sovereign Debt Obligations in
which the Fund will invest in most cases pertain to countries
that are among the world's largest debtors to commercial banks,
foreign governments, international financial organizations and
other financial institutions.  In recent years, the governments
of some of these countries have encountered difficulties in
servicing their external debt obligations, which led to defaults
on certain obligations and the restructuring of certain
indebtedness.  Restructuring arrangements have included, among
other things, reducing and rescheduling interest and principal
payments by negotiating new or amended credit agreements or
converting outstanding principal and unpaid interest to Brady
Bonds, and obtaining new credit to finance interest payments.
Certain governments have not been able to make payments of
interest on or principal of Sovereign Debt Obligations as those
payments have come due.  Obligations arising from past
restructuring agreements may affect the economic performance and
political and social stability of those issuers.

         Central banks and other governmental authorities which
control the servicing of Sovereign Debt Obligations may not be
willing or able to permit the payment of the principal or
interest when due in accordance with the terms of the
obligations.  As a result, the issuers of Sovereign Debt


                               46



<PAGE>

Obligations may default on their obligations.  Defaults on
certain Sovereign Debt Obligations have occurred in the past.
Holders of certain Sovereign Debt Obligations may be requested to
participate in the restructuring and rescheduling of these
obligations and to extend further loans to the issuers.  The
interests of holders of Sovereign Debt Obligations could be
adversely affected in the course of restructuring arrangements or
by certain other factors referred to below.  Furthermore, some of
the participants in the secondary market for Sovereign Debt
Obligations may also be directly involved in negotiating the
terms of these arrangements and may therefore have access to
information not available to other market participants.

         The ability of governments to make timely payments on
their obligations is likely to be influenced strongly by the
issuer's balance of payments, including export performance, and
its access to international credits and investments.  A country
whose exports are concentrated in a few commodities could be
vulnerable to a decline in the international prices of one or
more of those commodities.  Increased protectionism on the part
of a country's trading partners could also adversely affect the
country's exports and diminish its trade account surplus, if any.
To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments
denominated in dollars could be adversely affected.

         To the extent that a country develops a trade deficit,
it will need to depend on continuing loans from foreign
governments, multilateral organizations or private commercial
banks, aid payments from foreign governments and on inflows of
foreign investment.  The access of a country to these forms of
external funding may not be certain, and a withdrawal of external
funding could adversely affect the capacity of a government to
make payments on its obligations.  In addition, the cost of
servicing debt obligations can be affected by a change in
international interest rates since the majority of these
obligations carry interest rates that are adjusted periodically
based upon international rates.

         Another factor bearing on the ability of a country to
repay Sovereign Debt Obligations is the level of the country's
international reserves.  Fluctuations in the level of these
reserves can affect the amount of foreign exchange readily
available for external debt payments and, thus, could have a
bearing on the capacity of the country to make payments on its
Sovereign Debt Obligations.

         Expropriation, confiscatory taxation, nationalization,
political, economic or social instability or other similar
developments, such as military coups, have occurred in the past



                               47



<PAGE>

in countries in which the Fund will invest and could adversely
affect the Fund's assets should these conditions or events recur.

         Investment Controls and Repatriation.  Foreign
investment in certain Sovereign Debt Obligations is restricted or
controlled to varying degrees.  These restrictions or controls
may at times limit or preclude foreign investment in certain
Sovereign Debt Obligations and increase the costs and expenses of
the Fund.  Certain countries in which the Fund will invest
require governmental approval prior to investments by foreign
persons, limit the amount of investment by foreign persons in a
particular issuer, limit the investment by foreign persons only
to a specific class of securities of an issuer that may have less
advantageous rights than the classes available for purchase by
domiciliaries of the countries and/or impose additional taxes on
foreign investors.

         Certain countries other than those on which the Fund
will focus its investments may require governmental approval for
the repatriation of investment income, capital or the proceeds of
sales of securities by foreign investors.  In addition, if a
deterioration occurs in a country's balance of payments, the
country could impose temporary restrictions on foreign capital
remittances.  The Fund could be adversely affected by delays in,
or a refusal to grant, any required governmental approval for
repatriation of capital, as well as by the application to the
Fund of any restrictions on investments.  Investing in local
markets may require the Fund to adopt special procedures, seek
local government approvals or take other actions, each of which
may involve additional costs to the Fund.

         Other Characteristics of Investment in Foreign Issuers.
Foreign issuers are subject to accounting, auditing and financial
standards and requirements that differ, in some cases
significantly, from those applicable to U.S. issuers. In
particular, the assets and profits appearing on the financial
statements of a foreign issuer may not reflect its financial
position or results of operations in the way they would be
reflected had the financial statements been prepared in
accordance with U.S. generally accepted accounting principles.
In addition, for an issuer that keeps accounting records in local
currency, inflation accounting rules in some of the countries in
which the Fund will invest require, for both tax and accounting
purposes, that certain assets and liabilities be restated on the
issuer's balance sheet in order to express items in terms of
currency of constant purchasing power.  Inflation accounting may
indirectly generate losses or profits.  Consequently, financial
data may be materially affected by restatements for inflation and
may not accurately reflect the real condition of those issuers
and securities markets.  Substantially less information is



                               48



<PAGE>

publicly available about certain non-U.S. issuers than is
available about U.S. issuers.

         The Fund is permitted to invest in Sovereign Debt
Obligations that are not current in the payment of interest or
principal or are in default, so long as the Adviser believes it
to be consistent with the Fund's investment objectives.  The Fund
may have limited legal recourse in the event of a default with
respect to certain Sovereign Debt Obligations it holds.  For
example, remedies from defaults on certain Sovereign Debt
Obligations, unlike those on private debt, must, in some cases,
be pursued in the courts of the defaulting party itself.  Legal
recourse therefore may be significantly diminished.  Bankruptcy,
moratorium and other similar laws applicable to issuers of
Sovereign Debt Obligations may be substantially different from
those applicable to issuers of private debt obligations.  The
political context, expressed as the willingness of an issuer of
Sovereign Debt Obligations to meet the terms of the debt
obligation, for example, is of considerable importance.  In
addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of
securities issued by foreign governments in the event of default
under commercial bank loan agreements.

         Income from certain investments held by the Fund could
be reduced by foreign income taxes, including withholding taxes.
It is impossible to determine the effective rate of foreign tax
in advance.  The Fund's NAV may also be affected by changes in
the rates or methods of taxation applicable to the Fund or to
entities in which the Fund has invested.  The Adviser generally
will consider the cost of any taxes in determining whether to
acquire any particular investments, but can provide no assurance
that the tax treatment of investments held by the Fund will not
be subject to change.

U.S. CORPORATE FIXED INCOME SECURITIES

         The U.S. corporate fixed income securities in which the
Fund will invest may include securities issued in connection with
corporate restructurings such as takeovers or leveraged buyouts,
which may pose particular risks.  Securities issued to finance
corporate restructurings may have special credit risks due to the
highly leveraged conditions of the issuer.  In addition, such
issuers may lose experienced management as a result of the
restructuring.  Finally, the market price of such securities may
be more volatile to the extent that expected benefits from the
restructuring do not materialize.  The Fund may also invest in
U.S. corporate fixed income securities that are not current in
the payment of interest or principal or are in default, so long
as the Adviser believes such investment is consistent with the
Fund's investment objectives.  The Fund's rights with respect to


                               49



<PAGE>

defaults on such securities will be subject to applicable U.S.
bankruptcy, moratorium and other similar laws.

SECURITIES NOT READILY MARKETABLE

         The Fund may invest up to 50% of its total assets in
securities which are not readily marketable.  Because of the
absence of a trading market for these investments, the Fund may
not be able to realize their value upon sale.  See "Investment
Objectives and Policies--Securities Not Readily Marketable." The
risks associated with these investments will be accentuated in
situations in which the Fund's operations require cash, such as
when the Fund tenders for its shares of Common Stock or pays
distributions, and could result in the Fund borrowing to meet
short-term cash requirements or incurring capital losses on the
sale of these investments.

NON-DIVERSIFIED STATUS

         The Fund is a "non-diversified" investment company,
which means the Fund is not limited in the proportion of its
assets that may be invested in the securities of a single issuer.
However, the Fund intends to conduct its operations so as to
qualify to be taxed as a "regulated investment company" for
purposes of the Code, which will relieve the Fund of any
liability for federal income tax to the extent its earnings are
distributed to stockholders.  See "Taxation--General."  To so
qualify, among other requirements, the Fund will limit its
investments so that, at the close of each quarter of the taxable
year, (i) not more than 25% of the market value of the Fund's
total assets will be invested in the securities of a single
issuer (other than U.S. Government Securities or securities of
other regulated investment companies), and (ii) at least 50% of
the market value of its total assets is represented by cash, U.S.
Government Securities, securities of other regulated investment
companies and other securities with respect to which the Fund's
investment is limited in respect to any one issuer, to an amount
not greater than 5% of the market value of the Fund's total
assets and not own greater than 10% of the outstanding voting
securities of such issuer.  Investments in U.S. Government
Securities are not subject to these limitations.  Because the
Fund, as a non-diversified investment company, may invest in a
smaller number of individual issuers than a diversified
investment company, an investment in the Fund may, under certain
circumstances, present greater risk to an investor than an
investment in a diversified investment company.

         Securities issued or guaranteed by foreign governments
are not treated like U.S. Government Securities for purposes of
the diversification tests described in the preceding paragraph,
but instead are subject to these tests in the same manner as the


                               50



<PAGE>

securities of non-governmental issuers.  In this regard,
Sovereign Debt Obligations issued by different issuers located in
the same country are often treated as issued by a single issuer
for purposes of these diversification tests.  Certain issuers of
Structured Securities and Participations may be treated as
separate issuers for purposes of these tests.

DEBT SECURITIES

         The net-asset value of the Fund's shares will change as
the general levels of interest rates fluctuate.  When interest
rates decline, the value of a portfolio primarily invested in
debt securities can be expected to rise.  Conversely, when
interest rates rise, the value of a portfolio primarily invested
in debt securities can be expected to decline.  Certain debt
securities in which the Fund may invest are floating-rate debt
securities.  To the extent that the Fund does not enter into
interest rate swaps with respect to such floating-rate debt
securities, the Fund may be subject to greater risk during
periods of declining interest rates.

BORROWING

         The Fund may borrow from a bank or other entity in a
privately arranged transaction to the maximum extent permitted
under the 1940 Act, but only to finance the repurchase and/or
tenders for its shares or to pay distributions for purposes of
complying with the Code.  See "Tender Offers and Share
Repurchases; Conversion to Open End Status." Borrowing creates an
opportunity for the Fund to finance the limited activities
described above without the requirement that portfolio securities
be liquidated at a time when it would be disadvantageous to do
so.  Any investment income or gains on, or savings in transaction
costs made through the retention of, portfolio securities in
excess of the interest paid on and the other costs of the
borrowings will cause the net income or NAV per share of the
Fund's Common Stock to be greater than would otherwise be the
case.  On the other hand, if the income or gain, if any, on the
securities retained fails to cover the interest paid on and the
other costs of the borrowing, the net income or NAV per share of
the Fund's Common Stock will be less than would otherwise be the
case.

FUND SHARES MAY TRADE AT A DISCOUNT TO NAV

         Shares of closed-end investment companies frequently
trade at a discount to NAV.  This characteristic of shares of a
closed-end fund is a risk separate and distinct from the risk
that its NAV may decrease.  Since the commencement of operations,
the shares have generally traded in the market at a discount to
NAV.  See "Common Stock." The risk of purchasing shares of a


                               51



<PAGE>

closed-end fund that might trade at a discount is more pronounced
for investors who wish to sell their shares in a relatively short
period of time.  For those investors, realization of a gain or
loss on their investments is likely to be more dependent upon the
existence of a premium or discount than upon portfolio
performance.

                     MANAGEMENT OF THE FUND

THE INVESTMENT ADVISER

         The Fund's investment adviser is Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, New York
10105.  The Adviser is a leading global investment management
firm supervising client accounts with assets as of June 30, 2001
totaling approximately $465 billion (of which more than $176
billion represented the assets of investment companies).  The
Adviser provides diversified investment management and related
services globally to a broad range of clients including
institutional investors such as corporate and public employee
pension funds, endowment funds, domestic and foreign institutions
and governments and affiliates, private clients, consisting of
high net worth individuals, trusts and estates, charitable
foundations, partnerships, private and family corporations and
other entities, individual investors by means of retail mutual
funds sponsored by the Adviser, and institutional investors by
means of in-depth research, portfolio strategy, trading and
brokerage-related services.

         Alliance Capital Management Corporation is the general
partner of the Adviser and an indirect wholly-owned subsidiary of
AXA Financial, Inc. ("AXA Financial").  As of June 30,  2001,
AXA, its wholly-owned subsidiaries, AXA Financial and The
Equitable Life Assurance Society of the United States
("Equitable") and some subsidiaries of Equitable (other than the
Adviser and its subsidiaries) were the beneficial owners of
128,476,020 units of the Adviser or approximately 51.8% of the
issued and outstanding units of the Adviser and 1,544,356 units
of Alliance Capital Management Holding L.P. ("Alliance Holding")
or  approximately 2.1% of the issued and outstanding Alliance
Holding units.  Alliance Holding is an entity the business of
which consists of holding units of the Adviser and engaging in
related activities.  As of June 30, 2001, SCB Partners Inc., a
wholly-owned subsidiary of SCB Inc., was the owner of 40.8
million units of the Adviser or approximately 16.5% of the issued
and outstanding units of the Adviser.  The business and assets of
SCB Inc., formerly known as Sanford C. Bernstein, Inc., were
acquired by the Adviser on October 2, 2000.

         As of June 30, 2001 AXA and its subsidiaries owned all
of the issued and outstanding shares of the common stock of AXA


                               52



<PAGE>

Financial.  AXA Financial owns all of the issued and outstanding
shares of Equitable.  For insurance regulatory purposes all
shares of common stock of AXA Financial beneficially owned by AXA
and its affiliates have been deposited into a voting trust.

         AXA, a French company, is the holding company for an
international group of insurance and related financial services
companies.  AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance.  The
insurance operations are diverse geographically with activities
principally in Western Europe, North America, the Asia/Pacific
area, and, to a lesser extent, in Africa and South America.  AXA
is also engaged in asset management, real estate and other
financial services activities principally in the United States,
as well as in Western Europe and the Asia/Pacific area.

DIRECTORS AND OFFICERS

         The business and affairs of the Fund are managed under
the direction of its Board of Directors, and day to day
operations are conducted through or under the direction of its
officers.  For information regarding the directors and officers,
see "Management--Directors and Officers" in the Statement of
Additional Information.

PORTFOLIO MANAGEMENT

         Wayne D. Lyski is primarily responsible for the day-to-
day management of the Fund's portfolio.  He is Executive Vice
President of ACMC with which he has been associated since 1983.

LEGAL PROCEEDINGS

         On April 25, 2001, an amended class action complaint
entitled Miller et al. v. Mitchell Hutchins Asset Management,
Inc. et al. (the "amended Miller complaint"), was filed in
federal district court in the Southern District of Illinois
against the Adviser, Alliance Fund Distributors, Inc. ("AFD") and
other defendants alleging violations of the 1940 Act and breaches
of common law fiduciary duty.

         The allegations in the amended Miller complaint concern
six mutual funds with which the Adviser has investment advisory
agreements, including the Alliance Premier Growth Fund, Alliance
Health Care Fund, Alliance Growth Fund, Alliance Quasar Fund,
Alliance Fund and Alliance Disciplined Value Fund.  The principal
allegations of the amended complaint are that (i) certain
advisory agreements concerning these funds were negotiated,
approved and executed in violation of the 1940 Act, in particular
because certain directors of these funds should be deemed
interested under the 1940 Act, (ii) the distribution plans for


                               53



<PAGE>

these funds were negotiated, approved and executed in violation
of the 1940 Act, and (iii) the advisory fees and distribution
fees paid to the Adviser and AFD, respectively, are excessive
and, therefore, constitute a breach of fiduciary duty.

         The Adviser and AFD believe that the plaintiffs'
allegations are without merit and intend to vigorously defend
against these allegations.  At the present time, management of
the Adviser and AFD are unable to estimate the impact, if any,
that the outcome of this action may have on the Adviser's results
of operations or financial condition.

         On June 22, 2001, an amended class action complaint
entitled Nelson et al. v. AIM Advisors et al. (the "amended
Nelson complaint"), was filed in federal district court in the
Southern District of Illinois against the Adviser, AFD and
numerous other defendants in the mutual fund industry alleging
violations of the 1940 Act and breaches of common law fiduciary
duty.

         The allegations in the amended Nelson complaint concern
three mutual funds with which the Adviser has investment advisory
agreements, including Alliance Premier Growth Fund, Alliance
Growth Fund and Alliance Quasar Fund.  The principal allegations
of the amended complaint are that (i) certain advisory agreements
concerning these funds were negotiated, approved and executed in
violation of the 1940 Act, in particular because certain
directors of these funds should be deemed interested under the
1940 Act, (ii) the distribution plans for these funds were
negotiated, approved and executed in violation of the 1940 Act,
and (iii) the advisory and distribution fees paid to the Adviser
and AFD, respectively, are excessive and, therefore, constitute a
breach of fiduciary duty.

         The Adviser and AFD believe that the plaintiffs'
allegations are without merit and intend to vigorously defend
against these allegations.  At the present time, management of
the Adviser and AFD are unable to estimate the impact, if any,
that the outcome of this action may have on the Adviser's results
of operations or financial condition.

ADMINISTRATOR

         The Fund's administrator is Alliance Capital Management
L.P. (in such capacity, the "Administrator").  The Administrator
provides certain administrative, clerical and accounting services
to the Fund, including the provision of office facilities and
personnel to assist the officers of the Fund in the performance
of the following services:  overseeing the determination and
publication of the Fund's net asset value, as described under
"Net Asset Value" in the Statement of Additional Information;


                               54



<PAGE>

overseeing maintenance of the books and records of the Fund
required by Rule 31a-1(b)(4) under the 1940 Act; preparation of
the Fund's federal, state and local tax returns; preparation of
financial information for the Fund's proxy statements and
quarterly and annual reports to stockholders and otherwise;
preparation of the Fund's periodic financial reports to the SEC,
and responding to stockholder inquiries relating to the Fund.  As
compensation for its services, the Fund will pay the
Administrator a monthly fee at an annualized rate of .15% of the
Fund's average weekly net assets.

                            TAXATION

         The Fund intends to continue to qualify, and elect to be
treated, as a regulated investment company under the Code.  The
Fund therefore intends to distribute all its net investment
income and net capital gains each year (thereby avoiding all
federal income and excise taxes).  Such distributions will be
taxable as ordinary income and long-term capital gains,
respectively, to stockholders of the Fund who are subject to tax.
After the end of each taxable year, the Fund will notify
stockholders of the federal income tax status of any
distributions made by the Fund during such year.

              TENDER OFFERS AND SHARE REPURCHASES;
                  CONVERSION TO OPEN-END STATUS

TENDER OFFERS AND SHARE REPURCHASES

         Shares of closed-end investment companies frequently
trade at a discount from net asset value but may trade at a
premium.  The Fund cannot predict whether the shares will trade
at, below or above net asset value.  In recognition of the
possibility that the Fund's shares might trade at a discount, the
Fund's Board of Directors has determined that it would be in the
interest of stockholders for the Fund to have the ability to take
action to attempt to reduce or eliminate market value discounts
from net asset value.  To that end, the Board contemplates that
the Fund would from time to time take action either (i) to
repurchase shares of its Common Stock in the open market or (ii)
to make an offer to purchase its shares of Common Stock from all
beneficial holders of its shares at a price per share equal to
the net asset value per share of the Common Stock determined at
the close of business on the day the offer terminates (a "Tender
Offer").  The Board intends each quarter to consider the making
of a Tender Offer or open market repurchases of the Fund's shares
if the shares have been trading at a discount to net asset value
in excess of 5%, determined on the basis of the discount as of
the last trading day in each week during a period of 12 calendar
weeks preceding the Board's quarterly meeting.  The Board may at



                               55



<PAGE>

any time, however, decide that the Fund should not make a Tender
Offer or repurchase its shares in the open market.

         In addition, the Fund will commence a Tender Offer
during the fourth quarter of 2003 (the "2003 Tender Offer").
However, the Board has established a policy that, if shares of
the Fund's Common Stock are traded on the principal securities
exchange where listed at or above net asset value or at an
average discount from net asset value of less than 5%, determined
on the basis of the discount as of the last trading day in each
week during a period of 12 calendar weeks prior to September 1,
2003, the Fund will not proceed with the 2003 Tender Offer.  In
the event the Fund commences the 2003 Tender Offer, if the Board
of Directors determines not to purchase shares of Common Stock
pursuant to either Tender Offer for any of the reasons set forth
below, the Fund will commence one or more additional offers to
purchase its shares (a "Subsequent Offer").  Notwithstanding the
possibility of the commencement of more than one Tender Offer,
the Fund intends to consummate only one Tender Offer during any
given calendar year.  Subject to the Fund's investment
restriction with respect to borrowings, the Fund may borrow money
to finance repurchases of shares or Tender Offers or any
Subsequent Offer.  See "Investment Objectives and Policies-
-Borrowing" and "Investment Restrictions." Interest on any such
borrowings will reduce the Fund's net income.

         Even if a Tender Offer or Subsequent Offer has been
made, it is the Board's announced policy, which may be changed by
the Board, not to purchase shares pursuant to a Tender Offer or
any Subsequent Offer or effect share repurchases if (i) such
transactions, if consummated, would (a) result in the delisting
of the Fund's Common Stock from the New York Stock Exchange (the
New York Stock Exchange having advised the Fund that it would
consider delisting if the aggregate market value of the Fund's
outstanding publicly held Common Stock is less than $5,000,000,
the number of publicly held shares of Common Stock falls below
600,000 or the number of round-lot holders falls below 1,200) or
(b) impair the Fund's status as a regulated investment company
under the Code (which would make the Fund a taxable entity,
causing the Fund's income to be taxed at the corporate level in
addition to the taxation of stockholders who receive dividends
from the Fund); (ii) the Fund would not be able to liquidate
portfolio securities in an orderly manner and consistent with the
Fund's investment objectives and policies in order to purchase
Common Stock tendered pursuant to the Tender Offer or any
Subsequent Offer; or (iii) there is any (a) material legal action
or proceeding instituted or threatened which challenges, in the
Board's judgment, the Tender Offer or any Subsequent Offer or
otherwise materially adversely affects the Fund, (b) suspension
of or limitation on prices for trading securities generally on
the New York Stock Exchange or any foreign exchange on which


                               56



<PAGE>

portfolio securities of the Fund are traded, (c) declaration of a
banking moratorium by federal, state or foreign authorities or
any suspension of payment by banks in the United States, New York
State or in a foreign country which is material to the Fund, (d)
limitation which affects the Fund or the issuers of its portfolio
securities imposed by federal, state or foreign authorities on
the extension of credit by lending institutions or on the
exchange of foreign currencies, (e) commencement of war, armed
hostilities or other international or national calamity directly
or indirectly involving the United States or any foreign country
which is material to the Fund, or (f) other event or condition
which, in the Board's judgment, would have a material adverse
effect on the Fund or its stockholders if shares of Common Stock
tendered pursuant to the Tender Offer or any Subsequent Offer
were purchased.  The Board of Directors may modify these
conditions in light of experience.

         If the Fund has not purchased all shares tendered
pursuant to the 2003 Tender Offer or any Subsequent Offer with
respect to the 2003 Tender Offer by March 31, 2004, the Fund's
Charter requires the Board of Directors to submit to stockholders
by no later than July 31, 2004 another proposal to convert the
Fund to an open-end investment company.  In the event stockholder
approval of a proposal to convert the Fund to an open-end
investment company is not obtained, the Fund will continue as a
closed-end investment company.

         Tender Offers and any Subsequent Offers will be made and
stockholders notified in accordance with the requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act,
either by publication or mailing or both.  The offering documents
will contain such information as is prescribed by such laws and
the rules and regulations promulgated thereunder.  A stockholder
wishing to accept a Tender Offer or any Subsequent Offers will be
required to tender all (but not less than all) of the shares
owned by such stockholder (or shares attributed to the
stockholder for federal income tax purposes under section 318 of
the Code).  Persons tendering shares may be required to pay a
service charge by check payable to the Fund to help defray the
costs associated with such Offers.  If a service charge is
imposed, it will be imposed upon each tendering stockholder any
of whose tendered shares are purchased in the offer and will be
imposed regardless of the number of shares purchased.  During the
period of a Tender Offer or any Subsequent Offer, the Fund's
stockholders will be able to obtain the Fund's current net asset
value by use of a toll-free telephone number.

         The Fund will repurchase shares of the Fund's Common
Stock on the open market only when it can do so at prices below
the then current net asset value per share.  Although the Board
of Directors believes that share repurchases generally would have


                               57



<PAGE>

a favorable effect on the market price of the Fund's shares of
Common Stock, it should be recognized that the acquisition of
shares by the Fund will decrease its total assets and therefore
may increase the Fund's expense ratio.

         General.  The fact that the Fund's shares may be the
subject of share repurchases or one or more Tender Offers may
enhance their attractiveness to investors, thereby reducing the
spread between market price and net asset value that might
otherwise exist.  Sellers may be less inclined to accept a
significant discount if they have some prospect of being able to
receive net asset value in conjunction with a possible Tender
Offer.  There can be no assurance that repurchases of the Fund's
shares of Common Stock or the prospect of Tender Offers or any
Subsequent Offer will result in the shares of Common Stock
trading at a price equal to their net asset value.  The market
price of the Fund's shares of Common Stock has varied, and the
Fund expects that such price will continue to vary, from net
asset value from time to time.  The market price of the Fund's
shares of Common Stock is determined by, among other things, the
relative demand for and supply of such shares in the market, the
Fund's investment performance, the Fund's dividends and yield,
and investor perception of the Fund's overall attractiveness as
an investment as compared with other investment alternatives.

         Shares of Common Stock repurchased by the Fund pursuant
to a Tender Offer, a Subsequent Offer or otherwise, will be
retired and will be authorized and unissued shares.

         To consummate a Tender Offer or any Subsequent Offer in
order to repurchase its shares of Common Stock, the Fund may be
required to liquidate portfolio securities, and realize gains or
losses, at a time when the Adviser would otherwise consider it
disadvantageous to do so.  In such event, gains may be realized
on securities held for less than three months.  In order to
qualify as a regulated investment company under the Code the Fund
must limit such gains and, accordingly, the amount of gain that
the Fund could realize in the ordinary course of its portfolio
management from sales of other securities held for less than
three months would be reduced.  This may adversely affect the
Fund's yield.  See "Taxation."

CONVERSION TO OPEN-END STATUS

         Conversion of the Fund to an open-end investment company
would require an amendment to the Fund's Charter.  Prior to
October 1, 2003, an amendment to convert the Fund to an open-end
investment company would require the affirmative vote of the
holders of at least 75% of the outstanding shares of the Fund or
a majority of such shares if the amendment has been approved by
two-thirds of the total number of directors fixed in accordance


                               58



<PAGE>

with the Bylaws.  After September 30, 2003 and prior to January
1, 2005, such an amendment would require the affirmative vote of
the holders of a majority of the Fund's outstanding shares.  If
the Fund continues as a closed-end investment company after
December 31, 2004, conversion of the Fund to an open-end
investment company would require the affirmative vote of the
holders of at least 75% of the outstanding shares of the Fund or
a majority of such shares if the amendment has been approved by
two-thirds of the total number of directors fixed in accordance
with the Bylaws.

         The 1940 Act also requires conversion of the Fund to an
open-end investment company to be voted upon by stockholders and
requires approval of the conversion by a majority of the Fund's
outstanding voting securities.  See "Investment Objectives and
Policies."

         Stockholders of an open-end investment company may
require the company to redeem shares at any time (except in
certain circumstances as authorized by or under the 1940 Act) at
their next determined net asset value, less such redemption
charges, if any, as might be in effect at the time of a
redemption.  All redemptions will be made in cash.  If the Fund
is converted to an open-end investment company, it could be
required to liquidate portfolio securities to meet requests for
redemption and the shares of the Fund would no longer be listed
on the New York Stock Exchange.  Conversion to an open-end
company would also require changes in certain of the Fund's
investment policies and restrictions, such as those relating to
the borrowing of money and the purchase of securities that are
not readily marketable.

         The Board of Directors has determined that the 75%
voting requirements described above, which are greater than the
minimum requirement under Maryland law or the 1940 Act, are in
the best interests of stockholders generally.  Reference should
be made to the Fund's Charter and Bylaws on file with the SEC for
the full text of these provisions to which the foregoing
description is subject.

                   DIVIDENDS AND DISTRIBUTIONS

         The Fund intends to distribute all its net investment
income.  Dividends from such net investment income will be
declared and distributed monthly to stockholders subject to
solvency requirements under Maryland law.  All net realized long-
or short-term capital gains, if any, will be distributed to
stockholders at least annually.  To the extent practicable, the
Fund will attempt to maintain a constant level of monthly
distributions to stockholders although there can be no assurances
that it will be able to do so.  In order to maintain such monthly


                               59



<PAGE>

distributions, short-term capital gains may from time to time be
included in monthly distributions.  From time to time, the Fund
also may pay out less than the entire amount of net investment
income and net realized short-term capital gains earned in any
particular period.  Any such amount retained by the Fund would be
available to stabilize future distributions.  As a result, the
distributions paid by the Fund for any particular month may be
more or less than the amount of net investment income and net
realized short-term capital gains actually earned by the Fund
during such period.  However, with respect to any taxable year,
the Fund does not intend to make distributions in excess of net
investment income and net realized capital gains earned through
such year.

                   DIVIDEND REINVESTMENT PLAN

         Pursuant to the Fund's Dividend Reinvestment Plan (the
"Plan") all stockholders whose shares are registered in their own
names will have all distributions reinvested automatically in
additional shares of the Fund by State Street Bank and Trust
Company (the "Plan Agent"), as agent under the Plan, unless a
stockholder elects to receive cash.  Generally, stockholders
whose shares are held in the name of a broker or nominee will
automatically have distributions reinvested by the broker or the
nominee in additional shares under the Plan, unless the
stockholder elects to receive distributions in cash.  If the
service is not available, such distributions will be paid in
cash.  Certain brokers or nominees may require a stockholder to
elect to participate in the Plan to the extent such stockholder
desires to participate.

         The Plan Agent will furnish each person who buys shares
of Common Stock in the Offering with written information relating
to the Plan.  Included in such information will be procedures for
electing to receive dividends and distributions in cash (or, in
the case of shares held in the name of a broker or a nominee who
does not participate in the Plan, for electing to participate in
the Plan).  Stockholders whose shares are held in the name of a
broker or nominee should contact the broker or nominee for
details.  All distributions to investors who elect not to
participate in the Plan will be paid by check mailed directly to
the record holder by or under the direction of State Street Bank
and Trust Company, as the dividend paying agent.

         If the Board authorizes an income distribution or
determines to make a capital gain distribution payable either in
shares or in cash, as holders of the shares may have elected,
non-participants in the Plan will receive cash and participants
in the Plan will receive the equivalent in shares of the Fund
valued as follows:



                               60



<PAGE>

    (i)  If the shares are trading at net asset value or at a
         premium above net asset value at the time of valuation,
         the Fund will issue new shares at the greater of net
         asset value or 95% of the then current market price.

    (ii) If the shares are trading at a discount from net asset
         value at the time of valuation, the Plan Agent will
         receive the dividend or distribution in cash and apply
         it to the purchase of the Fund's shares in the open
         market, on the New York Stock Exchange or elsewhere, for
         the participants' accounts.  Such purchase will be made
         on or shortly after the payment date for such dividend
         or distribution and in no event more than 30 days after
         such date except where temporary curtailment or
         suspension of purchase is necessary to comply with
         federal securities laws.  If, before the Plan Agent has
         completed its purchases, the market price exceeds the
         net asset value of a share of Common Stock, the average
         purchase price per share paid by the Plan Agent may
         exceed the net asset value of the Fund's shares,
         resulting in the acquisition of fewer shares than if the
         dividend or distribution had been in shares issued by
         the Fund.

         The Plan Agent maintains all stockholder accounts in the
Plan and furnishes written confirmations of all transactions in
the account, including information needed by stockholders for
personal and tax records.  Shares in the account of each Plan
participant will be held by the Plan Agent in the name of the
participant and each stockholder's proxy will include those
shares purchased pursuant to the Plan.  Share certificates will
not be issued in the name of individual Plan participants.

         There is no direct charge to participants for
reinvesting dividends and capital gains distributions.  The fees
of the Plan Agent for handling the reinvestment of dividends and
capital gains distributions will be paid by the Fund.  There will
be no brokerage charges with respect to shares issued directly by
the Fund as a result of dividends or capital gains distributions
payable either in shares or in cash.  However, each participant
will bear a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection
with the reinvestment of dividends or capital gains distributions
paid in cash.

         The automatic reinvestment of income and capital gains
distributions will not relieve participants of any income tax
that may be payable on such income and capital gains
distributions.




                               61



<PAGE>

         Experience under the Plan may indicate that changes are
desirable.  Accordingly, the Fund reserves the right to amend or
terminate the Plan as applied to any income or capital gain
distributions paid subsequent to written notice of the change
sent to the Plan participants at least 90 days before the date of
such income or capital gain distribution.  The Plan may also be
amended or terminated by the Plan Agent, with the Fund's prior
consent, on at least 90 days' written notice to Plan
participants.  All correspondence concerning the Plan should be
directed by mail to State Street Bank and Trust Company, c/o
Alliance World Dollar Government Fund II, Inc., P.O. Box 8200,
Boston, Massachusetts 02266.

                          COMMON STOCK

         The Fund is authorized to issue 100,000,000 shares of
Common Stock, $.01 par value per share.  The Board of Directors
has approved a proposed amendment to the Fund's charter providing
for an increase in the number of authorized shares of Common
Stock to 300,000,000 (the "Charter Amendment") and recommended
the Charter Amendment to stockholders for their approval.
Stockholders will vote on this proposal at a Special Meeting to
be held on November 8, 2001.  The Board of Directors has approved
a non-transferable rights offering that would permit the Fund's
stockholders to subscribe for up to a maximum of 24,328,240
shares of Common Stock and has authorized a Pricing Committee of
the Board, in its discretion, to increase the number of shares
that may be issued upon the exercise of rights up to a maximum
aggregate of 32,437,654 shares, including shares that may be
issued in the discretion of the Pricing Committee at the
termination of the rights offering to satisfy over-subscription
requests.  Within these limits, the ultimate size and other terms
of the rights offering will be determined by the Pricing
Committee shortly before the commencement of the offering on the
basis of market conditions at that time.  The offer is not
contingent upon the approval of the proposed Charter Amendment by
stockholders and would not be withdrawn by reason of the failure
of the Charter Amendment to receive stockholder approval.

         The Fund's shares have no preemptive, conversion,
exchange, appraisal or redemption rights.  Each share has equal
voting, dividend, distribution and liquidation rights.  The
shares outstanding are, and the shares offered hereby when issued
will be, fully paid and nonassessable.  Stockholders are entitled
to one vote per share.  All voting rights for the election of
Directors are noncumulative, which means that the holders of more
than 50% of the shares can elect 100% of the Directors then
nominated for election if they choose to do so and, in such
event, the holders of the remaining shares will not be able to
elect any Directors.  The foregoing description and the
description under "Certain Anti-Takeover Provisions of the


                               62



<PAGE>

Charter and Bylaws" are subject to the provisions contained in
the Fund's Charter and Bylaws.

         The Fund has no present intention of offering additional
shares, except under the dividend reinvestment plan.  See
"Dividend Reinvestment Plan." Other offerings of the Fund's
shares, if made, will require approval of its Board of Directors.
Any additional offering will be subject to the requirements of
the 1940 Act that shares may not be sold at a price below the
then current net asset value, exclusive of underwriting discounts
and commissions, except in connection with an offering to
existing stockholders or with the consent of the holders of a
majority of the Fund's outstanding voting securities.

CERTAIN ANTI-TAKEOVER PROVISIONS OF THE CHARTER AND BYLAWS

         The Fund presently has provisions in its Charter and
Bylaws (together, the "Charter Documents") that are intended to
limit (i) the ability of other entities or persons to acquire
control of the Fund, (ii) the Fund's freedom to engage in certain
transactions or (iii) the ability of the Fund's Directors or
stockholders to amend the Charter Documents or effect changes in
the Fund's management.  These provisions of the Charter Documents
may be regarded as "anti-takeover" provisions.  The Board of
Directors is divided into three classes.  [The term of office of
the first class expired on the date of the second annual meeting
of stockholders, the term of office of the second class expired
on the date of the third annual meeting of stockholders and the
term of office of the third class expired on the date of the
fourth annual meeting of stockholders.  Upon the expiration of
the term of office of each class as set forth above, the
Directors in such class were elected for a term of three years to
succeed the Directors whose terms of office expired.]
Accordingly, only those Directors in one class may be changed in
any one year, and it would require two years to change a majority
of the Board of Directors (although under Maryland law procedures
are available for the removal of Directors even if they are not
then standing for re-election, and under SEC regulations,
procedures are available for including stockholder proposals in
management's annual proxy statement).  The classification of the
Board of Directors is intended to have the effect of maintaining
the continuity of management and, thus, make it more difficult
for the Fund's stockholders to change the majority of the
Directors.  A director may be removed from office only by a vote
of at least 75% of the outstanding shares of the Fund entitled to
vote for the election of Directors.  Under Maryland law and the
Fund's Charter, the affirmative vote of the holders of a majority
of the votes entitled to be cast is required for the
consolidation of the Fund with another corporation, a merger of
the Fund with or into another corporation (except for certain
mergers in which the Fund is the successor), a statutory share


                               63



<PAGE>

exchange in which the Fund is not the successor, a sale or
transfer of all or substantially all of the Fund's assets, the
dissolution of the Fund and any amendment to the Fund's Charter
(except for amendments to certain provisions of the Charter that
require the affirmative vote of 75% of the votes entitled to be
cast).  The affirmative vote of 75% (which is higher than that
required under Maryland law or the 1940 Act) of the outstanding
shares of Common Stock of the Fund is required to authorize the
liquidation or dissolution of the Fund in the absence of approval
of the liquidation or dissolution by a majority of the Continuing
Directors of the Fund (defined for this purpose as those
Directors who are either members of the Board of Directors on the
date of the closing of the initial public offering of the shares
of the Fund's Common Stock or subsequently become Directors and
whose election, or nomination for election by the Fund's
stockholders, has been approved by the Continuing Directors then
on the Board).  In addition, the affirmative vote of 75% (which
is higher than that required under Maryland law or the 1940 Act)
of the outstanding shares of Common Stock of the Fund is required
generally to authorize any of the following transactions
involving a corporation, person or entity that is directly, or
indirectly through affiliates, the beneficial owner of more than
5% of the outstanding shares of the Fund (a "Principal
Stockholder"), or to amend the provisions of the Charter relating
to such transactions:

         (i)  merger, consolidation or statutory share exchange
         of the Fund with or into any other corporation;

         (ii) issuance of any securities of the Fund to any
         Principal Stockholder for cash except upon (a)
         reinvestment of dividends pursuant to a dividend
         reinvestment plan or (b) issuance of any securities
         pursuant to the exercise of any stock subscription
         rights distributed by the Fund;

         (iii)sale, lease or exchange of all or any substantial
         part of the assets of the Fund to any Principal
         Stockholder (except assets having an aggregate fair
         market value of less than $1,000,000); or

         (iv) sale, lease or exchange to the Fund or any
         subsidiary of the Fund, in exchange for securities of
         the Fund, of any assets of any Principal Stockholder
         (except assets having an aggregate fair market value of
         less than $1,000,000).

         However, such vote would not be required when, under
certain conditions, the Continuing Directors approve the
transactions described in items (i)-(iv) above, although in
certain cases involving merger, consolidation or statutory share


                               64



<PAGE>

exchange or sale of all or substantially all of the Fund's
assets, the affirmative vote of a majority of the outstanding
shares of the Fund would nevertheless be required.

         The provisions of the Charter Documents described above
and the Fund's right to make open market repurchases of or Tender
Offers for its Common Stock could have the effect of depriving
the stockholders of the Fund of opportunities to sell their
shares at a premium over prevailing market prices by discouraging
a third party from seeking to obtain control of the Fund in a
tender offer or similar transaction.  See "Tender Offers and
Repurchases; Conversion to Open-End Status--Conversion to Open-
End Status." The overall effect of these provisions is to render
more difficult the accomplishment of a merger or the assumption
of control by a Principal Stockholder.  However, they provide the
advantage of potentially requiring persons seeking control of the
Fund to negotiate with its management regarding the price to be
paid and facilitating continuity of the Fund's management,
objectives and policies.  The Board of Directors of the Fund has
considered the foregoing anti-takeover provisions and concluded
that they are in the best interests of the Fund and its
stockholders.

    TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR

         The transfer agent, dividend disbursing agent and
registrar for the common stock is State Street Bank and Trust
Company, 225 Franklin Street, Boston, MA 02110-1520.

                            CUSTODIAN

         The Fund's securities and cash are held by The Bank of
New York, One Wall Street, New York, NY 10286, as custodian.

                    DISTRIBUTION ARRANGEMENTS

                          [TO BE ADDED]

                             EXPERTS

         The financial statements of the Fund as of March 31,
2001 have been incorporated by reference into the Statement of
Additional Information in reliance on the report of Ernst & Young
LLP, independent auditors, given on the authority of said firm as
experts in auditing and accounting.  Ernst & Young LLP is located
at 787 Seventh Avenue, New York, New York 10019.







                               65



<PAGE>

                         LEGAL OPINIONS

         With respect to matters of United States law, the
validity of the shares offered hereby will be passed on for the
Fund by Seward & Kissel LLP, New York, New York.  Counsel for the
Fund and the dealer manager may rely, as to certain matters of
Maryland law, on Ballard Spahr Andrews & Ingersoll, LLP,
Baltimore, Maryland.

                       FURTHER INFORMATION

         Further information concerning these securities and
their issuer may be found in the Registration Statement of which
this Prospectus constitutes a part on file with the SEC.  The SEC
maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains the Prospectus, material
incorporated by reference and other information regarding
registrants, such as the Fund, that file electronically with the
SEC.  The Registration Statement may also be inspected without
charge at the SEC's office in Washington, D.C., and copies of all
or any part thereof may be obtained from such office after
payment of the fees prescribed by the SEC.

         The Fund is subject to the informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act, and in
accordance therewith files reports and other information with the
SEC.  Such reports and other information can be inspected and
copied at the public reference facilities maintained by the SEC
at 450 Fifth Street, NW, Washington, D.C. 20549 and the SEC's
regional offices at [Seven World Trade Center], New York, New
York 10048.  Copies of such materials can be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, NW,
Washington, D.C. 20549 at prescribed rates.  Such reports and
other information concerning the Fund also may be inspected at
the offices of the NYSE and are available on the SEC's World Wide
Web site on the Internet at http://www.sec.gov.

















                               66



<PAGE>

                        TABLE OF CONTENTS
               STATEMENT OF ADDITIONAL INFORMATION

                                                             PAGE
Certain Investment Practices.....................................
Investment Restrictions..........................................
Management.......................................................
Net Asset Value..................................................
Portfolio Transactions...........................................
Dividend Reinvestment Plan.......................................
Taxation.........................................................
Common Stock.....................................................
Financial Statements.............................................








































                               67



<PAGE>


         YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN
THIS DOCUMENT OR THAT THE FUND HAS REFERRED YOU TO.  THE FUND HAS
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT.  THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER, SOLICITATION OR SALE IS NOT
PERMITTED.  YOU SHOULD NOT ASSUME THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE FUND SINCE SUCH
DATE.
                        ----------------


                        TABLE OF CONTENTS

                                                             PAGE


         ALLIANCE WORLD DOLLAR GOVERNMENT FUND II, INC.


                      19,462,592 SHARES OF


                  COMMON STOCK ($.01 PAR VALUE)
    ISSUABLE UPON EXERCISE OF RIGHTS TO SUBSCRIBE FOR SHARES

                         ---------------
                           PROSPECTUS
                         ---------------

                        [Dealer Manager]




















                               68



<PAGE>

         ALLIANCE WORLD DOLLAR GOVERNMENT FUND II, INC.

               STATEMENT OF ADDITIONAL INFORMATION

         Alliance World Dollar Government Fund II, Inc., a
Maryland corporation (the "Fund"), is a non-diversified, closed-
end management investment company with a primary investment
objective of seeking high current income and a secondary
investment objective of capital appreciation. In seeking to
achieve these objectives, the Fund invests primarily in U.S.
dollar-denominated sovereign debt obligations of emerging market
countries and in high yielding, high risk U.S. corporate fixed
income securities.

         This Statement of Additional Information is not a
prospectus, but you should read it in conjunction with the
prospectus for the Fund dated November     , 2001 (the
"Prospectus"). This Statement of Additional Information does not
include all information that you should consider before
purchasing shares, and you should obtain and read the Prospectus
prior to purchasing shares.  You may obtain a copy of the
Prospectus without charge, by calling [                ], and
from outside the United States, by calling [                 ] or
by contacting the Fund at 1345 Avenue of the Americas, New York,
New York 10105.  This Statement of Additional Information
incorporates by reference the entire Prospectus.

                        TABLE OF CONTENTS

CERTAIN INVESTMENT PRACTICES....................................2
INVESTMENT RESTRICTIONS.........................................4
MANAGEMENT......................................................6
NET ASSET VALUE................................................13
PORTFOLIO TRANSACTIONS.........................................14
TAXATION.......................................................14
COMMON STOCK...................................................23
FINANCIAL STATEMENTS...........................................23

         The Prospectus and this Statement of Additional
Information omit certain of the information contained in the
registration statement filed with the Securities and Exchange
Commission ("SEC"), Washington, D.C. You may obtain the
registration statement from the Securities and Exchange
Commission upon payment of the fee prescribed, or inspect it at
the Securities and Exchange Commission's office at no charge.

                         _______________

        This Statement of Additional Information is dated
                        November __, 2001






<PAGE>

                  CERTAIN INVESTMENT PRACTICES

STRUCTURED SECURITIES

         Certain issuers of Structured Securities may be deemed
to be "investment companies" as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"). As a result, the Fund's
investment in these Structured Securities may be limited by the
restrictions contained in the 1940 Act described below under
"Investment in Other Investment Companies."

INVESTMENT IN OTHER INVESTMENT COMPANIES

         The Fund may invest in other investment companies whose
investment objectives and policies are consistent with those of
the Fund. In accordance with the 1940 Act, the Fund may invest up
to 10% of its total assets in securities of other investment
companies. In addition, under the 1940 Act the Fund may not own
more than 3% of the total outstanding voting stock of any
investment company and not more than 5% of the value of the
Fund's total assets may be invested in the securities of any
investment company. If the Fund acquires shares in investment
companies, shareholders would bear both their proportionate share
of expenses in the Fund (including management and advisory fees)
and, indirectly, the expenses of such investment companies
(including management and advisory fees).

WARRANTS

         The Fund may invest in warrants, which are securities
permitting, but not obligating, their holder to subscribe for
other securities. The Fund may invest in warrants for debt
securities or warrants for equity securities that are acquired as
units with debt instruments. Warrants do not carry with them the
right to dividends or voting rights with respect to the
securities that they entitle their holder to purchase, and they
do not represent any rights in the assets of the issuer. As a
result, an investment in warrants may be considered more
speculative than certain other types of investments. In addition,
the value of a warrant does not necessarily change with the value
of the underlying securities, and a warrant ceases to have value
if it is not exercised prior to its expiration date. The Fund
does not intend to retain in its portfolio any common stock
received upon the exercise of a warrant and will sell the common
stock as promptly as practicable and in a manner that it believes
will reduce its risk of a loss in connection with the sale. The
Fund does not intend to retain in its portfolio any warrant for
equity securities acquired, as a unit with a debt instrument if
the warrant begins to trade separately from the related debt
instrument.



                                2



<PAGE>

MAINTENANCE OF SEGREGATED ACCOUNT

         The Fund may determine to maintain a segregated account
with its custodian consisting of cash or liquid securities in
connection with certain transactions that otherwise may result in
the issuance of a "senior security" within the meaning of the
1940 Act. See "Investment Objective and Policies?Borrowing" in
the Prospectus. These transactions include uncovered options,
interest rate swaps (other than those entered into on a net
basis), reverse repurchase agreements, dollar rolls, standby
commitments to purchase securities, forward commitments to
purchase or sell securities and sales of interest rate caps and
floors. Maintenance of such a segregated account may have the
effect of limiting the Fund's ability to engage in such
transaction.

LOANS OF PORTFOLIO SECURITIES

         The Fund may make secured loans of its Portfolio
securities to entities with which it can enter into repurchase
agreements, provided that cash and/or liquid high grade debt
securities equal to at least 100% of the market value of the
securities loaned are deposited and maintained by the borrower
with the Fund. See "Repurchase Agreements" below. The risks in
lending portfolio securities, as with other extensions of credit,
consist of possible loss of rights in the collateral should the
borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance Capital Management
L.P. (the "Adviser") (subject to review by the Board of
Directors) will consider all relevant facts and circumstances,
including the creditworthiness of the borrower. While securities
are on loan, the borrower will pay the Fund any income earned
thereon and the Fund may invest any cash collateral in portfolio
securities, thereby earning additional income, or receive an
agreed upon amount of income from a borrower who has delivered
equivalent collateral. The Fund may pay reasonable finders',
administrative and custodial fees in connection with a loan. The
Fund will not lend portfolio securities in excess of 30% of the
value of its total assets, nor will the Fund lend its portfolio
securities to any officer, director, employee or affiliate of the
Fund or the Adviser. The Board of Directors will monitor the
Fund's lending of portfolio securities.

REPURCHASE AGREEMENTS

         The Fund may enter into repurchase agreements pertaining
to the types of securities in which it invests with member banks
of the Federal Reserve System or "primary dealers" (as designated
by the Federal Reserve Bank of New York) in securities in which
the Fund may invest. The Fund may enter into repurchase
agreements with respect to up to 35% of its total assets.


                                3



<PAGE>

Currently, the Fund intends to enter into repurchase agreements
only with its custodian and such primary dealers. A repurchase
agreement arises when a buyer such as the Fund purchases a
security and simultaneously agrees to resell the security to the
vendor at an agreed-upon future date, normally one day or a few
days later. The resale price is greater than the purchase price,
reflecting an agreed-upon interest rate which is effective for
the period of time the buyer's money is invested in the security
and which is related to the current market rate rather than the
coupon rate on the purchased security. Such agreements permit the
Fund to keep all of its assets at work while retaining
"overnight" flexibility in pursuit of investments of a longer-
term nature. The Fund requires continual maintenance by its
custodian for its account in the Federal Reserve/Treasury Book
Entry System of collateral in an amount equal to, or in excess
of, the resale price. In the event a vendor defaulted on its
repurchase obligation, the Fund might suffer a loss to the extent
that the proceeds from the sale of the collateral were less than
the repurchase price. In the event of a vendor's bankruptcy, the
Fund might be delayed in, or prevented from, selling the
collateral for the Fund's benefit. The Fund's Board of Directors
has established procedures, which periodically will be reviewed
by the Board, pursuant to which the Adviser monitors the
creditworthiness of the dealers with which the Fund enters into
repurchase agreement transactions.

                     INVESTMENT RESTRICTIONS

         The Fund has adopted the following investment
restrictions, which may not be changed without the approval of
the holders of a majority of the Fund's outstanding voting
securities as defined above.  The percentage limitations set
forth below, as well as those described in the Prospectus and
elsewhere in this Statement of Additional Information, apply only
at the time an investment is made or other relevant action is
taken by the Fund.

         The Fund will not:

         1.   Invest 25% or more of its total assets (valued at
the time of investment) in securities of issuers conducting their
principal business activities in the same industry, except that
this restriction does not apply to U.S. Government Securities;

         2.   Make loans except through (i) the purchase of debt
obligations in accordance with its investment objectives and
policies; (ii) the lending of portfolio securities; or (iii) the
use of repurchase agreements;

         3.   Borrow money or issue senior securities, except
that (a) the Fund may borrow from a bank or other entity in a


                                4



<PAGE>

privately arranged transaction for (i) the repurchase and/or
tenders for its shares or to pay dividends for purposes of
complying with the Internal Revenue Code of 1986, as amended,
(the "Code"), if after such borrowing there is asset coverage of
at least 300% as defined in the 1940 Act and (ii) temporary
purposes in an amount not exceeding 5% of the value of the total
assets of the Fund; (b) the Fund may enter into reverse
repurchase agreements and dollar rolls; and (c) the Fund may
write put and call options;

         4.   Pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

         5.   Invest in companies for the purpose of exercising
control;

         6.   Make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in
amount to, the securities sold short ("short sales against the
box"), and unless not more than 10% of the Fund's net assets
(taken at market value) is held as collateral for such sales at
any one time (it being the Fund's  present intention to make such
sales only for the purpose of deferring realization of gain or
loss for federal income tax purposes); or

         7.   (i) Purchase or sell real estate, except that it
may purchase and sell securities of companies which deal in real
estate or interests therein and securities that are secured by
real estate, provided such securities are securities of the type
in which the Fund may invest; (ii) purchase or sell commodities
or commodity contracts, including futures contracts (except
forward commitment contracts or contracts for the future
acquisition or delivery of debt securities); (iii) invest in
interests in oil, gas, or other mineral exploration or
development programs; (iv) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (v) act as an underwriter of securities,
except that the Fund may acquire restricted securities under
circumstances in which, if such securities were sold, the Fund
might be deemed to be an underwriter for purposes of the
Securities Act of 1933.

         In addition, the Fund has adopted a policy which may be
changed by the action of the Fund's Board of Directors without
shareholder approval that it will not write put or call options
although it has the authority to do so.




                                5



<PAGE>

                     MANAGEMENT OF THE FUND

DIRECTORS AND OFFICERS

         The names of the directors and principal officers of the
Fund are set forth below, together with their positions and their
principal occupations during the past five years.

         The officers manage day to day operations. The officers
are directly responsible to the Board of Directors.  The
directors set broad policies and choose the officers.

                                             Principal Occupations
                                             During the Past Five Years
Name, Address And Age           Office       And Other Affiliations
---------------------           ------       -------------------------

John D. Carifa* (56)            Chairman     President, Chief Operating
1345 Avenue of the Americas                  Officer and a Director of
New York, NY  10105                          Alliance Capital Management
                                             Corporation ("ACMC"), the general
                                             partner of the Advisor with which
                                             he has been associated  since
                                             prior to 1996.

Ruth Block**+ (70)              Director     Formerly an Executive Vice
Box 4623                                     President and the Chief
Stamford, CT  06903                          Chief Insurance Officer of The
                                             Equitable Life Assurance Society
                                             of the United States
                                             ("Equitable"); Chairman and Chief
                                             Executive Officer of Evlico; a
                                             Director of Avon, Tandem
                                             Financial Group and Donaldson,
                                             Lufkin & Jenrette Securities
                                             Corporation.  She is a Director
                                             of Ecolab Incorporated (specialty
                                             chemicals) and BP Amoco
                                             Corporation (oil and gas).

David H. Dievler (71)           Director     Independent Consultant.
P.O. Box 167                                 Until December 1994 he was
Spring Lake, NJ  07762                       Senior Vice President of ACMC
                                             responsible for mutual fund
                                             administration.  Prior to joining
                                             ACMC in 1984 he was Chief
                                             Financial Officer of Eberstadt
                                             Asset Management since 1968.
                                             Prior to that he was a Senior
                                             Manager at Price Waterhouse &
                                             Co., member of  the American


                                6



<PAGE>

                                             Institute of Certified Public
                                             Accountants since 1953.

John H. Dobkin**+ (59)          Director     Consultant.  Formerly he
150 White Plains Road                        was a Senior Adviser (June
Tarrytown, NY  10591                         1999-June 2000) and President
                                             (December 1989-May 1999) of
                                             Historic Hudson Valley (historic
                                             preservation) since prior to
                                             1996.  Previously he was Director
                                             of the National Academy of
                                             Design.

William H. Foulk, Jr.**+(68)    Director     Investment Adviser and
Suite 100                                    Independent Consultant.
2 Greenwich Plaza                            He was formerly Senior
Greenwich, CT 06830                          Manager of Barrett Associates,
                                             Inc., a registered investment
                                             adviser, with which he had been
                                             associated since prior to 1996.
                                             He is a former Deputy Comptroller
                                             of the State of New York and,
                                             prior thereto, Chief Investment
                                             Officer of the New York Bank for
                                             Savings.

Dr. James M. Hester**+ (77)     Director     President of the Harry
25 Cleveland Lane                            Frank Guggenheim
Princeton, NJ 08540                          Foundation, with which he
                                             has been associated since prior
                                             to 1996.  He was   formerly
                                             President of New York University
                                             and The New York Botanical
                                             Garden, Rector of the United
                                             Nations University and Vice
                                             Chairman of the Board of the
                                             Federal Reserve Bank of New York.

Clifford L. Michel**+ (62)      Director     Member of the law firm of
St. Bernard's Road                           Cahill Gordon & Reindel,
Gladstone, NJ  07934                         with which he has been associated
                                             since prior to 1996.  He is
                                             President, Chief Executive
                                             Officer and Director of Wenonah
                                             Development Company (investments)
                                             and a Director of Placer Dome,
                                             Inc. (mining).






                                7



<PAGE>

Donald J. Robinson**+ (67)      Director     Senior Counsel of the law
98 Hell's Peak Road                          firm of Orrick, Herrington
Weston, VT  05161                            & Sutcliffe LLP since prior to
                                             1996.  He was formerly a senior
                                             partner and a member of the
                                             Executive Committee of that firm.
                                             He was also a member of the
                                             Municipal Securities Rulemaking
                                             Board and a Trustee of the Museum
                                             of the City of New York.

Wayne D. Lyski (59)             President    Executive Vice President
1345 Avenue of the Americas                  of ACMC, with which he has
New York, NY  10105                          been associated since prior to
                                             1996.

Kathleen A. Corbet (41)         Senior Vice  Executive Vice President of
1345 Avenue of the Americas     President    ACMC, with which she has
New York, NY  10105                          been associated since prior to
                                             1996.

Paul J. DeNoon (39)             Vice         Senior Vice President of
1345 Avenue of the Americas     President    ACMC, with which he has
New York, NY  10105                          been associated since prior to
                                             1996.

Gregory Dube                    Senior       Vice President of ACMC,
1345 Avenue of the Americas     Vice         with which he has been
New York, NY  10105             President    associated since prior to   .

Edmund P. Bergan, Jr. (51)      Secretary    Senior Vice President and
1345 Avenue of the Americas                  General Counsel of Alliance
New York, NY  10105                          Fund Distributors, Inc. and
                                             Alliance Global Investor Service,
                                             Inc. ("AGIS") with which he has
                                             been associated since prior to
                                             1996.

Mark D. Gersten (50)            Treasurer    Senior Vice President of
500 Plaza Drive                 and Chief    AGIS with which he has
Secaucus, NJ 07094              Financial    been associated since prior
                                Officer      to 1996.

Vincent S. Noto (36)            Controller   Vice President of AGIS,
500 Plaza Drive                              with which he has been
Secaucus, NJ  07094                          associated since prior to 1996.


*   "Interested Person," as defined in the 1940 Act, of each Fund
because of an affiliation with the Fund's Adviser.
**  Member of the Audit Committee.


                                8



<PAGE>

+   Member of the Nominating Committee.

         The Board of Directors is divided into three classes,
each class having a term of three years.  Each year the term of
one class expires.  See "Description of Common Stock--Certain
Anti-Takeover Provisions of the Charter and Bylaws" in the
Prospectus.

         The Fund does not pay any fees to, or reimburse expenses
of, any Director during a time when such Director is considered
an "interested person" of the Fund, as defined in the 1940 Act.
The aggregate compensation paid by the Fund to each of its
Directors during its fiscal year ended March 31, 2001, the
aggregate compensation paid to each of the Directors during
calendar year 2000 by all of the investment companies in the
Alliance Fund Complex, and the total number of investment
companies (and separate investment portfolios within those
companies) in the Alliance Fund Complex with respect to which
each of the Directors serves as a director of trustee, as set
forth below.  Neither the Fund nor any other investment company
in the Alliance Fund Complex provides compensation in the form of
pension or retirement benefits to any of its directors or
trustees.


                                                                Total Number
                                                Total Number of of Investment
                                  Total         Investment      Portfolios
                                  Compensation  Companies in    within
                                  from the      the Alliance    Alliance
                     Aggregate    Alliance Fund Fund Complex,   Complex,
                     Compensation Complex,      including the   including the
                     from the     including     Fund, as to     Fund, as to
                     Fund during  the Fund,     which the       which the
                     its Fiscal   during        Director is a   Director is
                     Year Ended   Calendar Year Director or     a Director
Name of Director     in 2001      2000          a Trustee       or a Trustee
_________________    ____________ _____________ _____________   _____________

John D. Carifa........  $ -0-        $ -0-           35              103
Ruth Block............  $3,529       $155,737        34               80
David H. Dievler......  $3,637       $223,025        40               86
John H. Dobkin........  $3,638       $187,175        37               83
William H. Foulk, Jr..  $3,635       $220,737        41               99
Dr. James M. Hester...  $5,012       $171,137        35               81
Clifford L. Michel....  $3,638       $171,137        35               83
Donald J. Robinson....  $3,636       $160,776        37               93

         As of September 30, 2001, the Directors and officers of
the Fund as a group owned less than 1% of the outstanding shares
of Common Stock of the Fund.


                                9



<PAGE>

INVESTMENT ADVISER

         Alliance Capital Management L.P., a New York Stock
Exchange listed company with principal offices at 1345 Avenue of
the Americas, New York, New York 10105, has been retained under
an investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Board of Directors.

         The Adviser or any of its affiliates may have certain
other clients whose investment objectives and policies are
similar to those of the Fund.  The Adviser and any of its
affiliates may, from time to time, make recommendations that
result in the purchase or sale of a particular security by their
other clients simultaneously with the Fund.  If transactions on
behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or
quantity.  It is the policy of the Adviser and its affiliates to
allocate advisory recommendations and the placing of orders in a
manner that is deemed equitable by the Adviser and its affiliates
to the accounts involved, including the Fund.  When two or more
clients of the Adviser and its affiliates (including the Fund)
are purchasing or selling the same security on a given day from
the same broker-dealer, such transactions may be averaged as to
price.

ADVISORY AGREEMENT

         The Advisory Agreement between the Fund and the Adviser
provides that the Adviser will furnish investment advice and
recommendations to the Fund and will provide office space in New
York, order placement facilities and persons satisfactory to the
Fund's Board of Directors to act as officers of the Fund.  Such
officers, as well as certain Directors of the Fund, may be
employees of the Adviser or directors, officers or employees of
its affiliates.  Under the Advisory Agreement, the Fund will pay
monthly to the Adviser a fee at an annualized rate of 1.00% of
the Fund's average weekly net assets.  For purposes of the
calculation of the fee payable to the Adviser, average weekly net
assets are determined on the basis of the average net assets of
the Fund for each weekly period (ending on Friday) ending during
the month.  The net assets for each weekly period are determined
by averaging the net assets on Friday of such weekly period with
the net assets on Friday of the immediately preceding weekly
period.  When a Friday is not a Fund business day, then the
calculation will be based on the net assets of the Fund on the
Fund business day immediately preceding such Friday.  The fee is
in excess of the management fees paid by most U.S. registered
investment companies investing exclusively in securities of U.S.


                               10



<PAGE>

issuers, although the Adviser believes the fee is generally
comparable to the management fees paid by other closed-end
companies that invest in the securities of foreign issuers, and
the Adviser believes the fee is justified by the special care
that must be given to the selection and supervision of the
particular types of securities in which the Fund invests.  For
the Fund's fiscal years ended March 31, 2001, 2000 and 1999, the
Fund paid advisory fees to the Adviser that amounted to
$8,181,238, $7,259,138 and $7,553,421, respectively.

         In addition to the payments to the Adviser under the
Advisory Agreement described above, the Fund pays certain other
costs, including (i) brokerage and commission expenses; (ii)
federal, state, local (if any) and foreign taxes, including issue
and transfer taxes, incurred by or levied on the Fund; (iii)
interest charges on borrowings; (iv) the organizational and
offering expenses of the Fund; (v) fees and expenses of
registering the shares of the Fund under the appropriate federal
securities laws and of qualifying shares of the Fund under
applicable state securities laws; (vi) fees and expenses of
listing and maintaining the listing of the Fund's shares on any
securities exchange; (vii) expenses of printing and distributing
reports to shareholders; (viii) costs of proxy solicitation; (ix)
charges and expenses of the Fund's administrator, custodians and
registrar, transfer and dividend paying agent; (x) compensation
of the Fund's Directors, officers and employees who do not devote
any part of their time to the affairs of the Adviser or its
affiliates other than the Fund; (xi) legal and auditing expenses;
(xii) the cost of stock certificates representing shares of the
Fund's Common Stock; and (xiii) costs of stationery and supplies.

         Certain other clients of the Adviser and any of its
affiliates may have investment objectives and policies similar to
those of the Fund.  The Adviser and any of its affiliates may,
from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients
simultaneously with the Fund.  If transactions on behalf of more
than one client during the same period increase the demand for
securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity.  It is
the policy of the Adviser and any of its affiliates to allocate
advisory recommendations and the placing of orders in a manner
that is deemed equitable by the Adviser to the accounts involved,
including the Fund.  When two or more clients of the Adviser and
any of its affiliates (including the Fund) are purchasing or
selling the same security on a given day from the same
broker-dealer, such transactions may be averaged as to price.






                               11



<PAGE>

ADMINISTRATOR

         The Fund's administrator is Alliance Capital Management
L.P. (in such capacity, the "Administrator").  The Administrator
provides certain administrative, clerical and accounting services
to the Fund, including the provision of office facilities and
personnel to assist the officers of the Fund in the performance
of the following services: overseeing the determination and
publication of the Fund's net asset value, as described under
"Net Asset Value"; overseeing maintenance of the books and
records of the Fund required by Rule 31a-1(b)(4) under the 1940
Act; preparation of the Fund's federal, state and local tax
returns; preparation of financial information for the Fund's
proxy statements and quarterly and annual reports to shareholders
and otherwise; preparation of the Fund's periodic financial
reports to the Securities and Exchange Commission; and responding
to shareholder inquiries relating to the Fund.  As compensation
for its services, the Fund will pay the Administrator a monthly
fee at an annualized rate of .15 % of the Fund's average weekly
net assets.  For the fiscal years ended in 2001, 2000 and 1999,
the Fund paid $1,227,213, $1,088,871 and $1,133,013,
respectively.

SHAREHOLDER SERVICE AGENT

         The Fund has entered into a Shareholder Inquiry Agency
Agreement with Alliance Global Investor Services, Inc. ("AGIS"),
an affiliate of the Adviser, whereby the Fund reimburses AGIS for
costs relating to servicing phone inquiries for the Fund.  During
the year ended March 31, 2001, the Fund reimbursed AGIS $7,229
relating to shareholder servicing costs.

CODE OF ETHICS

         The Fund and the Adviser have each adopted codes of
ethics pursuant to Rule 17j-1 under the 1940 Act.  These codes of
ethics permit personnel subject to the codes to invest in
securities, including securities that may be purchased or held by
the Fund.

                         NET ASSET VALUE

         The Fund calculates and makes available for weekly
publication the net asset value of its shares of Common Stock.
The net asset value per share of the Fund's Common Stock will be
determined as of the close of trading on the NYSE each Friday or,
when Friday is not a Fund business day, by adding the market
value of all securities in the Fund's portfolio and other assets,
subtracting liabilities incurred or accrued and dividing the net
amount so determined by the total number of the Fund's shares of
Common Stock then outstanding.


                               12



<PAGE>

         For purposes of this computation, portfolio securities
that are actively traded in the over-the-counter market,
including listed securities for which the primary market is
believed to be over-the-counter, are valued at the mean between
the most recently quoted bid and asked prices provided by the
principal market makers.  Any security for which the primary
market is on an exchange is valued at the last sale price on such
exchange on the day of valuation or, if there was no sale on such
day, the last bid price quoted on such day.  Options are valued
at market value or fair value if no market exists.  Futures
contracts are valued in a like manner, except that open futures
contracts sales are valued using the closing settlement price or,
in the absence of such a price, the most recent quoted asked
price.  Securities and assets for which market quotations are not
readily available are valued at fair value as determined in good
faith by or under the direction of the Board of Directors of the
Fund.  However, readily marketable fixed-income securities may be
valued on the basis of prices provided by a pricing service when
such prices are believed by the Administrator to reflect the fair
market value of such securities.  The prices provided by a
pricing service take into account institutional size trading in
similar groups of securities and any developments related to
specific securities.  U.S. Government Securities and other debt
instruments having sixty days or less remaining until maturity
are stated at amortized cost if their original maturity was 60
days or less, or by amortizing their fair value as of the 61st
day prior to maturity if their original term to maturity exceeded
60 days (unless in either case the Fund's Board of Directors
determines that this method does not represent fair value).

         For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in
foreign currencies will be converted into U.S. dollars at the
mean of the bid and asked prices of such currencies against the
U.S. dollar last quoted by a major bank which is a regular
participant in the institutional foreign exchange markets or on
the basis of a pricing service which takes into account the
quotes provided by a number of such major banks.

                     PORTFOLIO TRANSACTIONS

         Subject to the general supervision of the Board of
Directors of the Fund, the Adviser is responsible for the
investment decisions and the placing of the orders for portfolio
transactions for the Fund.  The Fund's portfolio transactions
occur primarily with issuers, underwriters and major dealers
acting as principals.  Such transactions are normally on a net
basis which do not involve payment of brokerage commissions.  The
cost of securities purchased from an underwriter usually includes
a commission paid by the issuer to the underwriter; transactions
with dealers normally reflect the spread between bid and asked


                               13



<PAGE>

prices.  Premiums are paid with respect to options purchased by
the Fund.

         The Fund has no obligation to enter into transactions in
portfolio securities with any dealer, issuer, underwriter or
other entity.  In placing orders, it is the policy of the Fund to
obtain the best execution for its transactions.  Where best
execution may be obtained from more than one dealer, the Adviser
may, in its discretion, purchase and sell securities through
dealers who provide research, statistical and other information
to the Adviser.  These services are used by the Adviser for all
of its investment advisory accounts and, accordingly, not all of
the services may be used by the Adviser in connection with the
Fund.  The supplemental information received from a dealer is in
addition to the services required to be performed by the Adviser
under the Advisory Agreement, and the expenses of the Adviser
will not necessarily be reduced as a result of the receipt of
such information.

                            TAXATION

GENERAL

         The Fund intends for each taxable year to qualify as a
"regulated investment company" under the Code.  To so qualify,
the Fund must, among other things, (i) derive at least 90% of its
gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or
other disposition of stock or securities or foreign currency, or
certain other income (including but not limited to, gains from
options, futures and forward contracts) derived with respect to
its business of investing in stock, securities or currency; and
(ii) diversify its holdings so that, at the end of each quarter
of its taxable year, the following two conditions are met: (a) at
least 50% of the value of the Fund's assets is represented by
cash, U.S. Government Securities, securities of other regulated
investment companies and other securities with respect to which
the Fund's investment is limited, in respect of any one issuer,
to an amount not greater than 5% of the Fund's total assets and
10% of the outstanding voting securities of such issuer, and (b)
not more than 25% of the value of the Fund's assets is invested
in securities of any one issuer (other than U.S. Government
Securities or securities of other regulated investment
companies).

         The Treasury Department is authorized to issue
regulations to provide that foreign currency gains that are "not
directly related" to the Fund's principal business of investing
in stock or securities may be excluded from the income which
qualifies for purposes of the 90% gross income requirement
described above with respect to the Fund's qualification as a


                               14



<PAGE>

"regulated investment company." No such regulations have yet been
issued.

         If the Fund qualifies as a regulated investment company
for any taxable year and makes timely distributions to its
stockholders of 90% or more of its net investment income for that
year (calculated without regard to its net capital gain, i.e.,
the excess of its net long-term capital gain over its net
short-term capital loss) it will not be subject to federal income
tax on the portion of its taxable income for the year (including
any net capital gain) that it distributes to stockholders.
Investors should consult their own counsel for a complete
understanding of the requirements the Fund must meet to qualify
to be taxed as a "regulated investment company."

         The information set forth in the following discussion
relates solely to the significant United States federal income
tax consequences of dividends and distributions by the Fund and
of sales or redemptions of Fund shares, and assumes that the Fund
qualifies to be taxed as a regulated investment company.
Investors should consult their own tax counsel with respect to
the specific tax consequences of their being stockholders of the
Fund, including the effect and applicability of federal, state
and local tax laws to their own particular situation and the
possible effects of changes therein.

DIVIDENDS AND DISTRIBUTIONS

         The Fund intends to make timely distributions of the
Fund's taxable income (including any net capital gain) so that
the Fund will not be subject to federal income taxes.  The Fund
also intends to declare and distribute dividends in the amounts
and at the times necessary to avoid the application of the 4%
Federal excise tax imposed on certain undistributed income of
regulated investment companies.  The Fund will be required to pay
the 4% excise tax to the extent it does not distribute to its
stockholders during any calendar year an amount equal to the sum
of (i) 98% of its ordinary taxable income for the calendar year,
(ii) 98% of its capital gain net income and foreign currency
gains for the twelve months ended October 31 of such year (or
December 31 if elected by the Fund), and (iii) any ordinary
income or capital gain net income from the preceding calendar
year that was not distributed during such year.  For this
purpose, income or gain retained by the Fund that is subject to
corporate income tax will be considered to have been distributed
by the Fund by year-end.  For federal income and excise tax
purposes, dividends declared and payable to stockholders of
record as of a date in October, November or December but actually
paid during the following January will be taxable to these
stockholders for the year declared, and not for the subsequent



                               15



<PAGE>

calendar year in which the stockholders actually receive the
dividend.

         Dividends of the Fund's net ordinary income and
distributions of any net realized short-term capital gain are
taxable to stockholders as ordinary income.  Since the Fund
expects to derive substantially all of its gross income from
sources other than dividends, it is expected that none of the
Fund's dividends or distributions will qualify for the
dividends-received deduction or corporations.

         The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its stockholders will be taxable to the stockholders as long-term
capital gains, irrespective of the length of time a stockholder
may have held his Fund shares at the date of distribution.  Any
dividend or distribution received by a stockholder on shares of
the Fund will have the effect of reducing the NAV of such shares
by the amount of such dividend or distribution.  Furthermore, a
dividend or distribution made shortly after the purchase of such
shares by a stockholder, although in effect a return of capital
to that particular stockholder, would be taxable to him as
described above.  Dividends are taxable in the manner discussed
regardless of whether they are paid to the stockholder in cash or
are reinvested in additional shares of the Fund.
         After the end of the taxable year, the Fund will notify
stockholders of the federal income tax state any distributions
made by the Fund to stockholders during such year.

SALES AND REDEMPTIONS

         Any gain or loss arising from a sale or redemption of
Fund shares generally will be capital gain or loss except in the
case of a dealer or a financial institution, and will be
long-term capital gain or loss if such stockholder has held such
shares for more than one year at the time of the sale or
redemption; otherwise it will be short-term capital gain or loss.
However, if a stockholder has held shares in the Fund for six
months or less and during that period has received a distribution
taxable to the stockholder as a long-term capital gain, any loss
recognized by the stockholder on the sale of those shares during
the six-month period will be treated as a long-term capital loss
to the extent of the dividend.  In determining the holding period
of such shares for this purpose, any period during which a
stockholder's risk of loss is offset by means of options, short
sales or similar transactions is not counted.

         Any loss realized by a stockholder on a sale, redemption
or exchange of shares of the Fund will be disallowed to the
extent the shares disposed of are replaced within a period of 61
days beginning 30 days before and ending 30 days after the shares


                               16



<PAGE>

are sold or exchanged.  For this purpose, acquisitions pursuant
to the Dividend Reinvestment Plan would constitute a replacement
if made within the period.  If disallowed, the loss will be
reflected in an upward adjustment to the basis of the shares
acquired.

BACKUP WITHHOLDING

         The Fund generally will be required to withhold tax on
reportable payments (which may include dividends and
distributions of net capital gains) payable to a noncorporate
stockholder unless the stockholder certifies on his subscription
application that the social security or taxpayer identification
number provided is correct and that the stockholder has not been
notified by the Internal Revenue Service that he is subject to
backup withholding.  Any such backup withholding tax would be
imposed at the rate equal to the fourth lowest rate of federal
income tax imposed on unmarried individuals other than surviving
spouses and heads of households.

UNITED STATES FEDERAL INCOME TAXATION OF THE FUND

         The following discussion relates to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year.  This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.

CURRENCY FLUCTUATIONS--"SECTION 988" GAINS OR LOSSES

         Under the Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the
Fund accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such
liabilities are treated as ordinary income or ordinary loss.
Similarly, gains or losses from the disposition of foreign
currencies, from the disposition of debt securities denominated
in a foreign currency, or from the disposition of a forward
contract denominated in a foreign currency which are attributable
to fluctuations in the value of the foreign currency between the
date of acquisition of the asset and the date of disposition also
are treated as ordinary gain or loss.  These gains or losses,
referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its stockholders as
ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain.  Because section 988 losses
reduce the amount of ordinary dividends the Fund will be allowed
to distribute for a taxable year, such section 988 losses may


                               17



<PAGE>

result in all or a portion of prior dividend distributions for
such year being recharacterized as a non-taxable return of
capital to stockholders, rather than as an ordinary dividend,
reducing each stockholder's basis in his Fund shares.  To the
extent that such distributions exceed such stockholder's basis,
each will be treated as a gain from the sale of shares.

OPTIONS, FUTURES CONTRACTS AND FORWARD FOREIGN CURRENCY CONTRACTS

         Certain listed options, regulated futures contracts, and
forward foreign currency contracts are considered "section 1256
contracts" for Federal income tax purposes.  Section 1256
contracts held by the Fund at the end of each taxable year will
be "marked to market" and treated for Federal income tax purposes
as though sold for fair market value on the last business day of
such taxable year.  Gain or loss realized by the Fund on section
1256 contracts other than forward foreign currency contracts will
be considered 60% long-term and 40% short-term capital gain or
loss.  Gain or loss realized by the Fund on forward foreign
currency contracts will be treated as section 988 gain or loss
and will therefore be characterized as ordinary income or loss
and will increase or decrease the amount of the Fund's net
investment income available to be distributed to stockholders as
ordinary income, as described above.  The Fund can elect to
exempt its section 1256 contracts which are part of a "mixed
straddle" (as described below) from the application of section
1256.

         The Treasury Department has the authority to issue
regulations that would permit or require the Fund either to
integrate a foreign currency hedging transaction with the
investment that is hedged and treat the two as a single
transaction, or otherwise to treat the hedging transaction in a
manner that is consistent with the hedged investment.  Treasury
regulations issued under this authority generally should not
apply to the type of hedging transactions in which the Fund
intends to engage.

         With respect to over-the-counter put and call options or
options traded on certain foreign exchanges, gain or loss
realized by the Fund upon the lapse or sale of such options held
by the Fund will be either long-term or short-term capital gain
or loss depending upon the Fund's holding period with respect to
such option.  However, gain or loss realized upon the lapse or
closing out of such options that are written by the Fund will be
treated as short-term capital gain or loss.  In general, if the
Fund exercises an option, or if an option that the Fund has
written is exercised, gain or loss on the option will not be
separately recognized but the premium received or paid will be
included in the calculation of gain or loss upon disposition of
the property underlying the option.


                               18



<PAGE>

         Gain or loss realized by the Fund on the lapse or sale
of put and call options on foreign currencies which are traded
over-the-counter or on certain foreign exchanges will be treated
as section 988 gain or loss and will therefore be characterized
as ordinary income or loss and will increase or decrease the
amount of the Fund's net investment income available to be
distributed to stockholders as ordinary income, as described
above.  The amount of such gain or loss shall be determined by
subtracting the amount paid, if any, for or with respect to the
option (including any amount paid by the Fund upon termination of
an option written by the Fund) from the amount received, if any,
for or with respect to the option (including any amount received
by the Fund upon termination of an option held by the Fund).  In
general, if the Fund exercises such an option on a foreign
currency, or such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option.  The foregoing rules will also
apply to other put and call options which have as their
underlying property foreign currency and which are traded
over-the-counter or on certain foreign exchanges to the extent
gain or loss with respect to such options is attributable to
fluctuations in foreign currency exchange rates.

TAX STRADDLES

         Any option, futures contract, forward foreign currency
contract, other forward contract, or other position entered into
or held by the Fund in conjunction with any other position held
by the Fund may constitute a "straddle" for federal income tax
purposes.  A straddle of which at least one, but not all, the
positions are section 1256 contracts may constitute a "mixed
straddle." In general, straddles are subject to certain rules
that may affect the character and timing of the Fund's gains and
losses with respect to straddle positions by requiring, among
other things, that (i) loss realized on disposition of one
position of a straddle not be recognized to the extent that the
Fund has unrealized gains with respect to the other position in
such straddle; (ii) the Fund's holding period in straddle
positions be suspended while the straddle exists (possibly
resulting in gain being treated as short-term capital gain rather
than long-term capital gain); (iii) losses recognized with
respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as
60% long-term and 40% short-term capital loss; (iv) losses
recognized with respect to certain straddle positions which would
otherwise constitute short-term capital losses be treated as
long-term capital losses; and (v) the deduction of interest and
carrying charges attributable to certain straddle positions may


                               19



<PAGE>

be deferred.  The Treasury Department is authorized to issue
regulations providing for the proper treatment of a mixed
straddle where at least one position is ordinary and at least one
position is capital.  No such regulations have yet been issued.
Various elections are available to the Fund which may mitigate
the effects of the straddle rules, particularly with respect to
mixed straddles.  In general, the straddle rules described above
do not apply to any straddles held by the Fund all of the
offsetting positions of which consist of section 1256 contracts.

ZERO COUPON TREASURY SECURITIES

         Under current federal tax law, the Fund will receive net
investment income in the form of interest by virtue of holding
Treasury bills, notes and bonds, and will recognize interest
attributable to it under the original issue discount rules of the
Code from holding zero coupon Treasury securities.  Current
federal tax law requires that a holder (such as the Fund) of a
zero coupon security accrue a portion of the discount at which
the security was purchased as income each year even though the
Fund receives no interest payment in cash on the security during
the year.  Accordingly, the Fund may be required to pay out as an
income distribution each year an amount which is greater than the
total amount of cash interest the Fund actually received.  Such
distributions will be made from the cash assets of the Fund or by
liquidation of portfolio securities, if necessary.  The Fund may
realize a gain or loss from such sales.  In the event the Fund
realizes net capital gains from such transactions, its
stockholders may receive a larger capital gain distribution, if
any, than they would have in the absence of such transactions.

GOVERNMENT GUARANTEED MORTGAGE PASS-THROUGH SECURITIES

         Mortgage pass-through securities such as GNMA
Certificates, FNMA Certificates, and FHLMC Certificates generally
are taxable as trusts for Federal income tax purposes, with the
certificate holders treated as the owners of the trust involved.
As a result, payments of interest, principal and prepayments made
on the underlying mortgage pool are taxed directly to certificate
holders such as the Fund.  Payments of interest, principal and
prepayments made on the underlying mortgage pool will therefore
generally maintain their character when received by the Fund.

FOREIGN TAXES

         Investment income received by the Fund from Foreign
Government Securities may be subject to foreign income taxes,
including taxes withheld at the source.  The United States has
entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of such taxes or exemption
from taxes on such income.  It is impossible to determine the


                               20



<PAGE>

effective rate of foreign tax in advance since the amount of the
Fund's assets to be invested within various countries is not
known.  To the extent that investment income of the Fund is
subject to foreign income taxes, the Fund will be entitled to
claim a deduction or credit for the amount of such taxes for
United States federal income tax purposes.  However, any such
taxes will reduce the income available for distribution to the
Fund's stockholders.  If more than 50% of the value of the Fund's
total assets at the close of its taxable year consists of stocks
or securities of foreign corporations, (which for this purpose
should include obligations issued by foreign governments), the
Fund will be eligible and intends to file an election with the
Internal Revenue Service to pass through to its shareholders the
amount of foreign taxes paid by the Fund.  However, there can be
no assurance that the Fund will be able to do so.  Pursuant to
this election, a shareholder will be required to (i) include in
gross income (in addition to taxable dividends actually received)
his pro rata share of foreign taxes paid by the Fund, (ii) treat
his pro rata share of such foreign taxes as having been paid by
him, and (iii) either deduct such pro rata share of foreign taxes
in computing his taxable income or treat such foreign taxes as a
credit against United States federal income taxes.  Shareholders
who are not liable for federal income taxes, such as retirement
plans qualified under section 401 of the Code, will not be
affected by any such pass through of taxes by the Fund.  No
deduction for foreign taxes may be claimed by an individual
shareholder who does not itemize deduction for federal income tax
purposes.  In addition, certain individual shareholders may be
subject to rules which limit or reduce their availability to
fully deduct their pro rata share of the foreign taxes paid by
the Fund.  Each shareholder will be notified within 60 days after
the close of the Fund's taxable year whether the foreign taxes
paid by the Fund will pass through for that year.

         Generally, a credit for foreign taxes may not exceed the
shareholder's United States federal income tax attributable to
the shareholder's total foreign source taxable income.
Generally, the source of the Fund's income flows through to its
shareholders.  The overall limitation on a foreign tax credit is
also applied separately to specific categories of foreign source
income, including foreign source "passive income," including
dividends, interest and capital gains.  Further, the foreign tax
credit is allowed to offset only 90% of any alternative minimum
tax to which a shareholder may be subject.  As a result of these
rules, certain shareholders may be unable to claim a credit for
the full amount of their proportionate share of the foreign taxes
paid by the Fund.  If a shareholder could not credit his full
share of the foreign tax paid, double taxation of such income
could be mitigated only by deducting the foreign tax paid, which
may be subject to limitation as described above.



                               21



<PAGE>

         The federal income tax status of each year's
distributions by the Fund will be reported to shareholders and to
the Internal Revenue Service.  The foregoing is only a general
description of the treatment of foreign taxes under the United
States federal income tax laws.  Because the availability of a
foreign tax credit or deduction will depend on the particular
circumstances of each shareholder, potential investors are
advised to consult their own tax advisers.

OTHER TAXATION

         The foregoing is a brief summary of the federal tax laws
applicable to investors in the Fund.  Investors may also be
subject to state and local taxes, although distributions of the
Fund that are derived from interest on certain obligations of the
U.S. Government and agencies thereof may be exempt from state and
local taxes in certain states.  The Fund has qualified to do
business in the Commonwealth of Pennsylvania and, accordingly,
expects to be subject to the Pennsylvania foreign franchise and
corporate net income tax in respect of its business activities in
Pennsylvania.  Accordingly, it is expected that shares of the
Fund will be exempt from Pennsylvania personal property taxes.
The Fund anticipates that it will continue such business
activities but reserves the right to suspend them at any time,
resulting in the termination of the exemption.

                          COMMON STOCK

         The Fund is authorized to issue 100,000,000 shares of
Common Stock. On October 4, 2001, the Board of Directors approved
a proposed amendment to the Fund's charter providing for an
increase in the number of authorized shares of Common Stock to
300,000,000 (the "Charter Amendment") and recommended the Charter
Amendment to stockholders for their approval.  Stockholders will
vote on this proposal at a Special Meeting to be held on November
8, 2001.  The Offer is not contingent upon the approval of the
proposed Charter Amendment by stockholders and would not be
withdrawn by reason of the failure of the Charter Amendment to
receive stockholder approval.

         The Fund has no present intention of offering additional
shares other than pursuant to the offer. Other offerings of
shares, if made, will require approval of the Board of Directors.
Any additional offering will be subject to the requirement of the
1940 Act that shares not be sold at a price below the then
current NAV (exclusive of underwriting discounts and commissions)
except in connection with an offering to existing shareholders or
with the consent of the holders of a majority of the outstanding
voting securities, as such term is defined under the 1940 Act.




                               22



<PAGE>

BENEFICIAL OWNERSHIP

         The Fund does not know of any persons who may be deemed
beneficial owners of 5% or more of the shares because they
possessed or shared voting or investment power with respect to
them.

                      FINANCIAL STATEMENTS

         The annual report for the fiscal year ended March 31,
2001, which either accompanies this statement of additional
information or has previously been provided to you, is
incorporated herein by reference with respect to all information
other than the information set forth in the letter to
shareholders included therein. The Fund will furnish, without
charge, a copy of these reports upon request to
[__________________________________________] .




































                               23



<PAGE>

                             PART C

                        OTHER INFORMATION


Item 24.  Financial Statements and Exhibits

1.   Financial Statements

Included in Part A:
     Financial Highlights for the fiscal years ended March 31,
2001, March 31, 2000, March 31, 1999, March 31, 1998, and March
31, 1997.

Included in Part B:
     Incorporated by reference to Registrant's March 31, 2001
Annual Report:
     1.  Portfolio of Investments for the year ended March 31,
         2001.
     2.  Statement of Assets and Liabilities, March 31, 2001.
     3.  Statement of Operations for the fiscal year ended March
         31, 2001.
     4.  Statement of Changes in Net Assets for the fiscal year
         ended March 31, 2001.
     5.  Notes to Financial Statements, March 31, 2001.
     6.  Financial Highlights.
     7.  Report of Ernst & Young LLP, Independent Auditors dated
         April 30, 2001.

2.   Exhibits

(a)(1)   Articles of Incorporation of the Company filed with the
         Maryland State Department of Assessments and Taxation on
         May 20, 1993

(a)(2)   Articles of Amendment to the Articles of Incorporation
         of the Company filed with the Maryland State Department
         of Assessments and Taxation on June 11, 1993

(b)      By-Laws

(c)      Not Applicable

(d)(1)   Form of Subscription Certificate (To be filed by
         subsequent amendment.)
(d)(2)   Form of Notice of Guaranteed Delivery (To be filed by
         subsequent amendment.)

(e)      Dividend Reinvestment Plan

(f)      Not Applicable


                               C-1



<PAGE>

(g)      Advisory Agreement between the Company and the Adviser
         dated July 27, 1993

(h)(1)   Dealer Manager Agreement  (To be filed by subsequent
         amendment.)
(h)(2)   Master Dealer Manager/Dealer Agreement  (To be filed by
         subsequent amendment.)

(i)      Not Applicable

(j)      Custody Agreement between the Company and The Bank of
         New York (To be filed by subsequent amendment.)

(k)(1)   Administration Agreement between the Company and the
         Adviser dated July 27, 1993
(k)(2)   Registrar, Transfer Agency and Service Agreement between
         the Company and State Street Bank and Trust Company
         dated August 3, 1993 (To be filed by subsequent
         amendment.)

(l)(1)   Opinion and Consent of Seward & Kissel LLP  (To be filed
         by subsequent amendment.)
(l)(2)   Opinion and Counsel of Ballard Spahr Andrews &
         Ingersoll, LLP, special Maryland counsel for the Company
         (To be filed by subsequent amendment.)

(m)      Not Applicable

(n)      Consent of Ernst & Young, Independent Auditors

(o)      Not Applicable

(p)      Investment Representation Letter from Alliance Capital
         Management L.P (the "Adviser") dated July 20, 1993

(q)      Not Applicable

(r)(1)   Code of Ethics for the Fund (1)
(r)(2)   Code of Ethics for Alliance Capital Management L.P. (2)

(s)      Other Exhibits: Powers of Attorney.

1.  Incorporated by reference to Exhibit (p)(1) to Post-Effective
    Amendment No. 74 of the Registration Statement on Form N-1A
    of Alliance Bond Fund, Inc. (File Nos. 2-48227 and 811-2383),
    filed with the Securities and Exchange Commission on October
    6, 2000, which is substantially identical in all material
    respects except as to the party, which is the Registrant.

2.  Incorporated by reference to Exhibit (p)(2) to Post-Effective
    Amendment No. 74 of the Registration Statement on Form N-1A


                               C-2



<PAGE>

    of Alliance Bond Fund, Inc. (File Nos. 2-48227 and 811-2383),
    filed with the Securities and Exchange Commission on October
    6, 2000, which is substantially identical in all material
    respects.

Item 25.  Marketing Arrangements

    See Dealer Management Agreement to be filed as Exhibit
    (h)(1).

Item 26.  Other Expenses of Issuance and Distribution
(To be filed by subsequent amendment.)

Registration fees                                       $[__]
National Association of Securities Dealers, Inc. fees   $[__]
Printing                                                $[__]
Fees and expenses of qualifications under state
securities laws (including fees of counsel)             $[__]
Securities laws (including fees of counsel)             $[__]
Legal fees and expenses                                 $[__]
Dealer Manager expenses                                 $[__]
Auditing fees and expenses                              $[__]
New York Stock Exchange                                 $[__]
Subscription Agent fees and expenses                    $[__]
Information Agent fees and expenses                     $[__]
Miscellaneous                                           $[__]

Item 27.  Persons Controlled by or Under Common Control

     Not applicable

Item 28.  Number of Holders of Securities (as of October 3, 2001)

             Title of Class        Number of Record Holders

       Common Stock ($0.01 par
       value per share)                      3,323

Item 29.  Indemnification

       It is the Registrant's policy to indemnify its directors
and officers, employees and other agents to the maximum extent
permitted by Section 2-418 of the Corporations and Associations
Law of the State of Maryland and as set forth in Article EIGHTH
of Registrant's Articles of Incorporation to be filed as Exhibit
(a)(1), Article 9 of the Registrant's Bylaws to be filed as
Exhibit (b) and, all as set forth below.  The liability of the
Registrant's directors and officers is dealt with in Article
EIGHTH of Registrant's Articles of Incorporation, and Article 9,
Sections 1 through Section 5 of Registrant's Bylaws, as set forth
below.  The Adviser's liability for any loss suffered by the


                               C-3



<PAGE>

Registrant or its stockholders is set forth in Section 4 of the
Advisory Agreement to be filed as Exhibit (g) to this
Registration Statement, as set forth below.  The Administrator's
liability for any loss suffered by the Registrant or its
shareholders is set forth in Section 6 of the Administration
Agreement to be filed as Exhibit (k)(1) to this Registration
Statement, as set forth below.

Section 2-418 of the Maryland Corporations and Associations Law
reads as follows:

       Section 2-418.  Indemnification of directors, officers,
employees, and agents.

         (a)  Definitions. -- In this section the following words
         have the meanings indicated.
              (1)  "Director" means any person who is or was a
              director of a corporation and any person who, while
              a director of a corporation, is or was serving at
              the request of the corporation as a director,
              officer, partner, trustee, employee, or agent of
              another foreign or domestic corporation,
              partnership, joint venture, trust, other
              enterprise, or employee benefit plan.

              (2)  "Corporation" includes any domestic or foreign
              predecessor entity of a corporation in a merger,
              consolidation, or other transaction in which the
              predecessor's existence ceased upon consummation of
              the transaction.

              (3)  "Expenses" include attorney's fees.

              (4)  "Official capacity" means the following:

                   (i)    When used with respect to a director,
                   the office of director in the corporation; and

                   (ii)   When used with respect to a person
                   other than a director as contemplated in
                   subsection (j), the elective or appointive
                   office in the corporation held by the officer,
                   or the employment or agency relationship
                   undertaken by the employee or agent in behalf
                   of the corporation.

                   (iii)  "Official capacity" does not include
                   service for any other foreign or domestic
                   corporation or any partnership, joint venture,
                   trust, other enterprise, or employee benefit
                   plan.


                               C-4



<PAGE>

              (5)  "Party" includes a person who was, is, or is
              threatened to be made a named defendant or
              respondent in a proceeding.

              (6)  "Proceeding" means any threatened, pending or
              completed action, suit or proceeding, whether
              civil, criminal, administrative, or investigative.

         (b)  Permitted indemnification of director. -- (1)  A
         corporation may indemnify any director made a party to
         any proceeding by reason of service in that capacity
         unless it is established that:

                   (i)  The act or omission of the director was
                   material to the matter giving rise to the
                   proceeding; and

                          1.     Was committed in bad faith; or

                          2.     Was the result of active and
                                 deliberate dishonesty; or

                   (ii)  The director actually received an
                   improper personal benefit in money, property,
                   or services; or

                   (iii)  In the case of any criminal proceeding,
                   the director had reasonable cause to believe
                   that the act or omission was unlawful.

         (2)  (i)  Indemnification may be against judgments,
              penalties, fines, settlements, and reasonable
              expenses actually incurred by the director in
              connection with the proceeding.

              (ii)  However, if the proceeding was one by or in
              the right of the corporation, indemnification may
              not be made in respect of any proceeding in which
              the director shall have been adjudged to be liable
              to the corporation.

         (3)  (i)  The termination of any proceeding by judgment,
              order, or settlement does not create a presumption
              that the director did not meet the requisite
              standard of conduct set forth in this subsection.

              (ii)  The termination of any proceeding by
              conviction, or a plea of nolo contendere or its
              equivalent, or an entry of an order of probation
              prior to judgment, creates a rebuttable presumption



                               C-5



<PAGE>

              that the director did not meet that standard of
              conduct.

         (4)  A corporation may not indemnify a director or
         advance expenses under this section for a proceeding
         brought by that director against the corporation,
         except:

              (i)  For a proceeding brought to enforce
              indemnification under this section; or

              (ii)  If the charter or bylaws of the corporation,
              a resolution of the board of directors of the
              corporation, or an agreement approved by the board
              of directors of the corporation to which the
              corporation is a party expressly provide otherwise.

         (c)  No indemnification of director liable for improper
         personal benefit. -- A director may not be indemnified
         under subsection (b) of this section in respect of any
         proceeding charging improper personal benefit to the
         director, whether or not involving action in the
         director's official capacity, in which the director was
         adjudged to be liable on the basis that personal benefit
         was improperly received.

         (d)  Unless limited by the charter:

              (1)  A director who has been successful, on the
              merits or otherwise, in the defense of any
              proceeding referred to in subsection (b) of this
              section shall be indemnified against reasonable
              expenses incurred by the director in connection
              with the proceeding.

              (2)  A court of appropriate jurisdiction, upon
              application of a director and such notice as the
              court shall require, may order indemnification in
              the following circumstances:

                   (i)  If it determines a director is entitled
                   to reimbursement under paragraph (1) of this
                   subsection, the court shall order
                   indemnification, in which case the director
                   shall be entitled to recover the expenses of
                   securing such reimbursement; or

                   (ii)  If it determines that the director is
                   fairly and reasonably entitled to
                   indemnification in view of all the relevant
                   circumstances, whether or not the director has


                               C-6



<PAGE>

                   met the standards of conduct set forth in
                   subsection (b) of this section or has been
                   adjudged liable under the circumstances
                   described in subsection (c) of this section,
                   the court may order such indemnification as
                   the court shall deem proper. However,
                   indemnification with respect to any proceeding
                   by or in the right of the corporation or in
                   which liability shall have been adjudged in
                   the circumstances described in subsection (c)
                   shall be limited to expenses.

              (3)  A court of appropriate jurisdiction may be the
                   same court in which the proceeding involving
                   the director's liability took place.

         (e)  Determination that indemnification is proper. --
         (1)  Indemnification under subsection (b) of this
              section may not be made by the corporation unless
              authorized for a specific proceeding after a
              determination has been made that indemnification of
              the director is permissible in the circumstances
              because the director has met the standard of
              conduct set forth in subsection (b) of this
              section.

              (2)  Such determination shall be made:

                   (i)  By the board of directors by a majority
                   vote of a quorum consisting of directors not,
                   at the time, parties to the proceeding, or, if
                   such a quorum cannot be obtained, then by a
                   majority vote of a committee of the board
                   consisting solely of two or more directors
                   not, at the time, parties to such proceeding
                   and who were duly designated to act in the
                   matter by a majority vote of the full board in
                   which the designated directors who are parties
                   may participate;

                   (ii)  By special legal counsel selected by the
                   board of directors or a committee of the board
                   by vote as set forth in subparagraph (i) of
                   this paragraph, or, if the requisite quorum of
                   the full board cannot be obtained therefor and
                   the committee cannot be established, by a
                   majority vote of the full board in which
                   directors who are parties may participate; or

                   (iii)  By the stockholders.



                               C-7



<PAGE>

              (3)  Authorization of indemnification and
              determination as to reasonableness of expenses
              shall be made in the same manner as the
              determination that indemnification is permissible.
              However, if the determination that indemnification
              is permissible is made by special legal counsel,
              authorization of indemnification and determination
              as to reasonableness of expenses shall be made in
              the manner specified in subparagraph (ii) of
              paragraph (2) of this subsection for selection of
              such counsel.

              (4)  Shares held by directors who are parties to
              the proceeding may not be voted on the subject
              matter under this subsection.

         (f) Payment of expenses in advance of final disposition
         of action. --
              (1)   Reasonable expenses incurred by a director
              who is a party to a proceeding may be paid or
              reimbursed by the corporation in advance of the
              final disposition of the proceeding upon receipt by
              the corporation of:

                   (i)  A written affirmation by the director of
                   the director's good faith belief that the
                   standard of conduct necessary for
                   indemnification by the corporation as
                   authorized in this section has been met; and

                   (ii)  A written undertaking by or on behalf of
                   the director to repay the amount if it shall
                   ultimately be determined that the standard of
                   conduct has not been met.

              (2)  The undertaking required by subparagraph (ii)
                   of paragraph (1) of this subsection shall be
                   an unlimited general obligation of the
                   director but need not be secured and may be
                   accepted without reference to financial
                   ability to make the repayment.

              (3)  Payments under this subsection shall be made
                   as provided by the charter, bylaws, or
                   contract or as specified in subsection (e) of
                   this section.

         (g) Validity of indemnification provision. -- The
         indemnification and advancement of expenses provided or
         authorized by this section may not be deemed exclusive
         of any other rights, by indemnification or otherwise, to


                               C-8



<PAGE>

         which a director may be entitled under the charter, the
         bylaws, a resolution of stockholders or directors, an
         agreement or otherwise, both as to action in an official
         capacity and as to action in another capacity while
         holding such office.

         (h) Reimbursement of director's expenses incurred while
         appearing as witness. -- This section does not limit the
         corporation's power to pay or reimburse expenses
         incurred by a director in connection with an appearance
         as a witness in a proceeding at a time when the director
         has not been made a named defendant or respondent in the
         proceeding.

         (i) Director's service to employee benefit plan. -- For
         purposes of this section:

              (1)  The corporation shall be deemed to have
              requested a director to serve an employee benefit
              plan where the performance of the director's duties
              to the corporation also imposes duties on, or
              otherwise involves services by, the director to the
              plan or participants or beneficiaries of the plan;

              (2)  Excise taxes assessed on a director with
              respect to an employee benefit plan pursuant to
              applicable law shall be deemed fines; and

              (3)  Action taken or omitted by the director with
              respect to an employee benefit plan in the
              performance of the director's duties for a purpose
              reasonably believed by the director to be in the
              interest of the participants and beneficiaries of
              the plan shall be deemed to be for a purpose which
              is not opposed to the best interests of the
              corporation.

         (j) Officer, employee or agent. -- Unless limited by the
         charter:

              (1)  An officer of the corporation shall be
              indemnified as and to the extent provided in
              subsection (d) of this section for a director and
              shall be entitled, to the same extent as a
              director, to seek indemnification pursuant to the
              provisions of subsection (d);

              (2)  A corporation may indemnify and advance
              expenses to an officer, employee, or agent of the
              corporation to the same extent that it may
              indemnify directors under this section; and


                               C-9



<PAGE>

              (3)  A corporation, in addition, may indemnify and
              advance expenses to an officer, employee, or agent
              who is not a director to such further extent,
              consistent with law, as may be provided by its
              charter, bylaws, general or specific action of its
              board of directors, or contract.

         (k) Insurance or similar protection. --
              (1)  A corporation may purchase and maintain
              insurance on behalf of any person who is or was a
              director, officer, employee, or agent of the
              corporation, or who, while a director, officer,
              employee, or agent of the corporation, is or was
              serving at the request of the corporation as a
              director, officer, partner, trustee, employee, or
              agent of another foreign or domestic corporation,
              partnership, joint venture, trust, other
              enterprise, or employee benefit plan against any
              liability asserted against and incurred by such
              person in any such capacity or arising out of such
              person's position, whether or not the corporation
              would have the power to indemnify against liability
              under the provisions of this section.

              (2)  A corporation may provide similar protection,
              including a trust fund, letter of credit, or surety
              bond, not inconsistent with this section.

              (3)  The insurance or similar protection may be
              provided by a subsidiary or an affiliate of the
              corporation.

         (l) Report of indemnification to stockholders. -- Any
         indemnification of, or advance of expenses to, a
         director in accordance with this section, if arising out
         of a proceeding by or in the right of the corporation,
         shall be reported in writing to the stockholders with
         the notice of the next stockholders' meeting or prior to
         the meeting.

Article EIGHTH of the Registrant's Articles of Incorporation
reads as follows:
    EIGHTH:   (1) To the Fullest extent that limitations on the
    liability of directors and officers are permitted by the
    Maryland Corporations and Associations Law, no director or
    officer of the Corporation shall have any liability to the
    Corporation or its shareholders for damages.  This limitation
    on liability applies to events occurring at the time a person
    serves as a director or officer of the Corporation whether or
    not such person is a director or officer at the time of any
    proceeding in which liability is asserted.


                              C-10



<PAGE>

    (2)  The Corporation shall indemnify and advance expenses to
    its currently acting and its former directors to the fullest
    extent that indemnification of directors is permitted by the
    Maryland Corporations and Associations Law.  The Corporation
    shall indemnify and advance expenses to its officers to the
    same extent as its directors and to such further extent as is
    consistent with law.  The Board of Directors may by Bylaw,
    resolution or agreement make further provisions for
    indemnification of directors, officers, employees and agents
    to the fullest extent permitted by the Maryland Corporations
    and Associations Law.

    (3)  No provision of this Article EIGHTH shall be effective
    to protect or purport to protect any director or officer of
    the Corporation against any liability to the Corporation or
    its security holders to which he would otherwise be subject
    by reason of willful misfeasance, bad faith, gross negligence
    or reckless disregard of the duties involved in the conduct
    to his office.

    (4)  References to the Maryland Corporations and Associations
    Law in this Article EIGHTH are to that law as from time to
    time amended.  No amendment to these Articles of
    incorporation of the Corporation shall affect any right of
    any person under this Article EIGHTH based on any event,
    omission or proceeding prior to the amendment.

Section 4 of the Advisory Agreement reads as follows:
    4.   [Alliance World Dollar Government Fund II, Inc. (the
"Fund")] shall expect of [Alliance Capital Management L.P. (the
"Adviser")], and [the Adviser] will give the [Fund] the benefit
of, [its] best judgment and efforts in rendering these services
to [the Fund], and [the Fund] agree[s] as an inducement to [the
Adviser] undertaking these services that [it] shall not be liable
hereunder for any mistake of judgment or in any event whatsoever,
except for lack of good faith, provided that nothing herein shall
be deemed to protect, or purport to protect, [the Adviser]
against any liability to [the Fund] or to [its] security holders
to which [the Adviser] would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of [the Adviser's] duties hereunder, or by reason of
[the Adviser's] reckless disregard of [the Adviser's] obligations
and duties hereunder.

Section 6 of the Administration Agreement reads as follows:

    6.   Limitation of Liability of the Administrator.  The Fund
shall expect of the Administrator, and the Administrator will
give the Fund the benefit of, the Administrator's best judgment
and efforts in rendering these services to the Fund, and the Fund
agrees as an inducement to the Administrator's undertaking these


                              C-11



<PAGE>

services that the Administrator shall not be liable under this
Agreement for any mistake of judgment or in any event whatsoever,
except for lack of good faith, provided that nothing herein shall
be deemed to protect, or purport to protect, the Administrator
against any liability to the Fund or to the Fund's security
holders to which the Administrator would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of the Administrator's reckless disregard of the
Administrator's obligations and duties under this Agreement.

Article VIII, Section 7 of Registrant's Bylaws reads as follows:

    Section 7.  Insurance Against Certain Liabilities.  The
Corporation shall not bear the cost of insurance that protects or
purports to protect directors and officers of the Corporation
against any liabilities to the Corporation or its security
holders to which any such director or officer would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office.

Article IX, Section 1 through Section 5 of the Registrant's
Bylaws reads as follows:

    Section 5.  Other Rights.  The Board of Directors may make
further provision consistent with law for indemnification in
advance of expenses to directors, officers, employees and agents
by resolution, agreement or otherwise.  The indemnification
provided by this Article shall not be deemed exclusive of any
other right, with respect to indemnification or otherwise, to
which those seeking indemnification may be entitled under any
insurance or other agreement or resolution of stockholders or
disinterested directors or otherwise.  The rights provided to any
person by this Article shall be enforceable against the
Corporation by such person who shall be presumed to have relied
upon it in serving or continuing to serve as a director, officer,
employee, or agent as provided above.

Certain provisions of the Dealer Management Agreement to be
provided by pre-effective amendment

Item 30.  Business and Other Connections of Alliance

    The description of Alliance Capital Management L.P. under the
caption "Management of the Fund - Investment Adviser" in the
Prospectus is incorporated by reference herein.

    The information as to the directors and executive officers of
Alliance Capital Management Corporation, the general partner of
Alliance, set forth in Alliance Capital Management L.P.'s current
Form ADV, filed with the Securities and Exchange Commission


                              C-12



<PAGE>

electronically (IARD/CRD #108477), is incorporated by reference
herein.

Item 31.  Location of Accounts and Records

    The accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder are maintained as follows: journals,
ledgers, securities records and other original records are
maintained principally at the offices of Alliance Capital
Management L.P., 500 Plaza Drive, Secaucus, New Jersey 07094, and
at the offices of The Bank of New York, the Registrant's
Custodian, Transfer Agent, Dividend-Disbursing Agent and
Registrar, 101 Barclay Street, Boston, New York, New York 10286.
All other records so required to be maintained are maintained at
the offices of Alliance Capital Management L.P., 1345 Avenue of
the Americas, New York, New York 10105.

Item 32.  Management Services

Not Applicable

Item 33.  Undertakings

1.  Registrant undertakes to suspend offering of the shares
    covered hereby until it amends its Prospectus contained
    herein if, subsequent to the effective date of this
    Registration Statement, its net asset value per share
    declines more than 10 percent from its net asset value per
    share as of the effective date of this Registration Statement

2.  Not Applicable

3.  Not Applicable

4.  Not Applicable

5.  Not Applicable

6.  Registrant undertakes to send by first class mail or other
    means designed to ensure equally prompt delivery, within two
    business days of receipt of a written or oral request, any
    Statement of Additional Information.










                              C-13



<PAGE>

                           SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in Washington, District of Columbia, on the 5th day
of October, 2001.

                   Alliance World Dollar Government Fund II, Inc.

                   By   /s/  John D. Carifa
                        -----------------------------
                        John D. Carifa
                        Chairman

    Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed below by
the following persons in the capacities and on the date
indicated.

Signature                    Title              Date
---------                    -----              ----

(1)  Principal Executive
Officer:

/s/  John D. Carifa
-------------------------
     John D. Carifa          Chairman           October 5, 2001

(2)  Principal Financial and
     Accounting Officer:

/s/  Mark D. Gersten
-------------------------    Treasurer and Chief
     Mark.D. Gersten         Financial Officer  October 5, 2001
















                              C-14



<PAGE>

(3)  All of the Directors:
     John D. Carifa*
     Ruth Block*
     David H Dievler*
     John H. Dobkin*
     William H. Foulk, Jr.*
     Dr. James M. Hester*
     Clifford L. Michel*
     Donald J. Robinson*

*By: /s/  Edmund P. Bergan, Jr.
     --------------------------
     Edmund P. Bergan, Jr.
     Attorney-in-fact                           October 5, 2001







































                              C-15



<PAGE>

                          EXHIBIT INDEX

Exhibit                    Description of Exhibit

     (a)(1)                 Articles of Incorporation
     (a)(2)                 Articles of Amendment to the Articles
                            of Incorporation
     (b)                    Bylaws
     (e)                    Dividend Reinvestment Plan
     (g)                    Advisory Agreement
     (k)(1)                 Administration Agreement
     (n)                    Consent of Ernst & Young
     (p)                    Investment Representation Letter
     (s)                    Powers of Attorney







































                               16
00250261.AA3

</TEXT>
</DOCUMENT>
