Abstract: The overall performance of water-reducible polymer dispersions, more specifically alkyd dispersions, can be substantially improved by utilizing resins derived from acidolysis reaction products of polyalkylene terephthalates and polyalkylene naphthalates. According to this invention, polymer dispersions can be produced from low acid value polymers and yet have good water dispersibility. When an aqueous coating composition is formulated using the dispersion of this invention, a final coating is formed that has good hydrolytic stability, and when blended with a latex, exhibits improved gloss and wet adhesion.