<PAGE>
As filed with the Securities and
Exchange Commission on August 15, 2000
Securities Act File No. 333-[______]
Investment Company Act File No. 811-[____]
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. / /
---------------------------------------------------------------
Alliance Bond Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
(800) 221-5672
(Area Code and Telephone Number)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
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Edmund P. Bergan, Jr.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and Address of Agent for Service)
Copies of communications to:
Kathleen K. Clarke
Seward & Kissel LLP
1200 G Street, N.W.
Washington, D.C. 20005
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Approximate Date Of Proposed Public Offering:
As soon as practicable after the
effective date of this Registration Statement.
<PAGE>
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The Registrant has registered an indefinite number of
securities under the Securities Act of 1933 pursuant to Rule 24f-
2 under the Investment Company Act of 1940; accordingly, no fee
is payable herewith.
It is proposed that this filing will become effective on
September 14, 2000 pursuant to Rule 488 under the Securities Act
of 1933.
ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
ALLIANCE LIMITED MATURITY GOVERNMENT FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
[________], 2000
To the stockholders of Alliance Mortgage Securities Income Fund,
Inc. ("Mortgage Securities") and Alliance Limited Maturity
Government Fund, Inc. ("Limited Maturity"):
At the Special Meetings of Stockholders of Mortgage
Securities and Limited Maturity (together the "Acquired Funds")
to be held on November 9, 2000, stockholders of the Acquired
Funds will be asked to consider and approve the acquisition of
each such Fund's assets and liabilities by Alliance U.S.
Government Portfolio, a series of Alliance Bond Fund, Inc.
("U.S. Government" and together with the Acquired Funds, the
"Funds"). Each of the Funds is an open-end investment company
registered under the Investment Company Act of 1940, as amended,
and advised by Alliance Capital Management L.P. The proposed
acquisitions are described in more detail in the combined
Prospectus/Proxy Statement.
It is anticipated that the proposed transactions will
result in substantial benefits to the stockholders of the
Acquired Funds because the transactions will enable them to
acquire an investment in a larger fund with a similar investment
objective and a lower expense ratio. In addition, stockholders
should benefit from U. S. Government's more flexible investment
charter, which enables it to diversify its investments more
broadly within the U.S. Government and asset-backed market and to
take advantage of a wider range of maturities in selecting
investments.
The Boards of Directors of Mortgage Securities and
Limited Maturity have given careful consideration to the proposed
acquisitions and have concluded that the acquisitions are in the
2
<PAGE>
best interests of the Acquired Funds and their stockholders. If
approved by stockholders of the Acquired Funds at the Special
Meetings, the acquisitions are expected to occur shortly
thereafter. At that time, each Acquired Fund stockholder will
receive the same class of shares of U.S. Government having an
aggregate net asset value equal to the aggregate net asset value
of the stockholder's shares in the Acquired Fund. The Acquired
Fund would then cease operations.
Stockholders of the Acquired Funds will not be assessed
any sales charges or other fees in connection with the proposed
acquisitions. Please note that the closing of one acquisition is
not contingent upon the closing of the other acquisition. No
gain or loss will be recognized by stockholders of Mortgage
Securities or Limited Maturity for federal income tax purposes as
a result of the transfer of assets to U.S. Government and the
subsequent distribution of shares of U.S. Government to
stockholders in exchange for shares of the respective funds.
We welcome your attendance at the Special Meetings of
Stockholders. If you are unable to attend, please sign, date and
return the enclosed Proxy Card promptly in order to avoid
additional proxy solicitation expenses. The Board of each Fund
recommends that you vote your proxy for the proposed acquisition.
Sincerely,
John D. Carifa
President and Chairman of the
Boards of Directors
3
<PAGE>
[ALLIANCE CAPITAL LOGO(R)]
ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
ALLIANCE LIMITED MATURITY GOVERNMENT FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
________________________________________________________________
NOTICE OF SPECIAL MEETINGS OF STOCKHOLDERS
________________________________________________________________
[________], 2000
To the stockholders of Alliance Mortgage Securities Income Fund,
Inc. ("Mortgage Securities") and Alliance Limited Maturity
Government Fund, Inc. ("Limited Maturity"):
Notice is hereby given that Special Meetings of the
Stockholders of Mortgage Securities and Limited Maturity (the
"Acquired Funds") will be held at 1345 Avenue of the Americas,
33rd Floor, New York, New York 10105 on November 9, 2000 at
3:00 p.m., Eastern Time (the "Meetings"), to consider and vote on
the following, all of which are more fully described in the
accompanying Prospectus/Proxy Statement:
1. Approval of an Agreement and Plan of Acquisition
and Liquidation (the "Plan") between Alliance U.S.
Government Portfolio, a series of Alliance Bond
Fund, Inc. ("U.S. Government") and each Acquired
Fund. Under the Plan, the Acquired Fund will
transfer all of its assets and liabilities to U.S.
Government in exchange for shares of U.S.
Government. A vote in favor of this proposal also
will constitute a vote in favor of liquidation and
dissolution of the Acquired Fund and termination of
its registration under the Investment Company Act
of 1940.
2. Any other business that may properly come before
the Meetings.
The Board of Directors of each Acquired Fund has fixed
the close of business on August 25, 2000 as the record date for
determination of those stockholders entitled to notice of, and to
vote at, the Meetings or any postponements or adjournments
thereof. The enclosed proxy is being solicited on behalf of the
Boards of Directors of the Acquired Funds. Each stockholder who
4
<PAGE>
does not expect to attend in person is requested to complete,
date, sign and promptly return the enclosed Proxy Card.
The Board of Directors of each Acquired Fund recommends
approval of the Plan.
By Order of the Boards of Directors,
Edmund P. Bergan, Jr.
Secretary
New York, New York
[________], 2000
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed Proxy Card, sign and
date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. You may also be able to vote by telephone or via
the Internet as described in the accompanying Prospectus/Proxy Statement.
Your vote is very important no matter how many shares you own. In order to
save any additional costs of further proxy solicitation and to allow the
Special Meetings to be held as scheduled, please vote your proxy promptly.
(R) THIS REGISTERED SERVICE MARK USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
5
<PAGE>
PROSPECTUS/PROXY STATEMENT
ACQUISITION OF THE ASSETS AND ASSUMPTION OF THE LIABILITIES OF
ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
AND
ALLIANCE LIMITED MATURITY GOVERNMENT FUND, INC.
BY, AND IN EXCHANGE FOR SHARES OF,
ALLIANCE U.S. GOVERNMENT PORTFOLIO
OF ALLIANCE BOND FUND, INC.
[________], 2000
WHAT IS THIS DOCUMENT AND WHY DID WE SEND IT TO YOU?
On July 19-20, 2000, the Boards of Directors of Alliance
Mortgage Securities Income Fund, Inc. ("Mortgage Securities") and
Alliance Limited Maturity Government Fund, Inc. ("Limited
Maturity" and, together with Mortgage Securities, the "Acquired
Funds") approved the acquisition of the Acquired Funds by
Alliance U.S. Government Portfolio, a series of Alliance Bond
Fund, Inc. ("U.S. Government" and, together with the Acquired
Funds, the "Funds"). Stockholders of the Acquired Funds are
being asked to approve an Agreement and Plan of Acquisition and
Liquidation (a "Plan" and collectively, the "Plans") between U.S.
Government and each Acquired Fund. Each Plan provides for (i)
the transfer of all the assets of an Acquired Fund to U.S.
Government, (ii) the assumption by U.S. Government of all the
liabilities of that Acquired Fund and the subsequent liquidation
and dissolution of the Acquired Fund and (iii) the issuance to
each Acquired Fund's stockholders of shares of U.S. Government,
equal in aggregate net asset value ("NAV") to the NAV of their
former shares (an "Acquisition" and collectively, the
"Acquisitions"). This Prospectus/Proxy Statement contains the
information stockholders of the Acquired Funds should know before
voting on the proposed Acquisitions and should be retained for
future reference. You may contact a Fund at 1-800-221-5672 or
write to the Fund at 1345 Avenue of the Americas, New York, NY
10105.
HOW WILL THE ACQUISITIONS WORK?
The Acquisitions will involve three steps:
- the transfer of the assets of the Acquired Fund to
U.S. Government and the assumption by U.S.
Government of the liabilities of the Acquired Fund
in exchange for shares of U.S. Government of
6
<PAGE>
equivalent value to the assets and liabilities
transferred;
- the pro rata distribution of U.S. Government shares
to the stockholders of record of the Acquired Fund
as of the effective date of an Acquisition in
exchange for those stockholders' shares of the
Acquired Fund; and
- the liquidation and dissolution of the Acquired
Fund as soon as practicable.
As a result of an Acquisition, stockholders of an
Acquired Fund will instead hold shares of U.S. Government having
the same NAV as the shares of the Acquired Fund that they held
immediately before the Acquisition. Stockholder approval of one
Acquisition is independent of stockholder approval of the other
Acquisition and the closing of one Acquisition is not contingent
upon the closing of the other. If a majority of the shares of an
Acquired Fund does not approve an Acquisition, that Fund will not
participate in an Acquisition. In such a case, that Fund will
continue its operations and its Directors will consider what
further action, if any, is appropriate.
IS ADDITIONAL INFORMATION ABOUT THE FUNDS AVAILABLE?
Yes, additional information about the Funds is available in the:
- Prospectus of The Alliance Bond Funds dated
March 1, 2000, which includes information
concerning the Funds;
- Management's Discussion of Fund Performance,
included in the Annual Reports to Shareholders of
each of the Funds; and
- Statements of Additional Information ("SAIs") for
the Funds dated March 1, 2000.
All of this information is in documents filed with the
Securities and Exchange Commission ("SEC"). You may view or
obtain these documents from the SEC:
In person: at the SEC's Public Reference Room in
Washington, D.C.
By phone: (202) 942-8090 (For information on the
operations of the Public Reference room
only)
By mail: Public Reference Section
7
<PAGE>
Securities and Exchange Commission,
Washington, D.C. 20549-6009
(duplicating fee required)
By electronic mail: [email protected] (duplicating fee
required)
On the Internet: www.sec.gov
The information in the Prospectus relating to Mortgage
Securities, Limited Maturity and U.S. Government is incorporated
in this Prospectus/Proxy Statement by reference and is legally
deemed to be part of this document. Each Fund's Annual Report to
Stockholders, the SAI to this Prospectus/Proxy Statement and each
Fund's SAI, are also incorporated in this Prospectus/Proxy
Statement by reference and are legally deemed to be part of this
document. The Prospectus and each Fund's Annual Report to
Shareholders, which contain audited financial statements for each
Fund's fiscal year have been previously mailed to stockholders.
Additional copies of the Prospectus and Annual Report, as well as
the SAI's of each Fund, are available upon request without charge
by writing to or calling the address and telephone number listed
below.
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07096-1520
1-800-221-5672
OTHER IMPORTANT THINGS TO NOTE:
- You may lose money by investing in the Funds.
- The SEC has not approved or disapproved these
securities or passed upon the adequacy of this
Prospectus/Proxy Statement. Any representation to
the contrary is a criminal offense.
8
<PAGE>
PROPOSAL: APPROVAL OF AN AGREEMENT AND PLAN OF ACQUISITION
AND LIQUIDATION BETWEEN U.S. GOVERNMENT AND THE
ACQUIRED FUND IN WHICH YOU HOLD SHARES
On July 19-20, 2000, the Boards of Directors of each
Acquired Fund voted to approve the Acquisition applicable to it,
subject to the approval of the stockholders of that Fund. Each
Acquisition will involve the transfer by an Acquired Fund of all
of its assets to U.S. Government and the assumption by U.S.
Government of the liabilities of the Acquired Fund in exchange
for shares of U.S. Government having a value in the aggregate
equal to the net assets of the Acquired Fund. Following the
transfer of assets, shares of U.S Government will be distributed
to stockholders of the Acquired Fund in liquidation of the
Acquired Fund.
Stockholders of the Acquired Funds will recognize no
gain or loss on the exchange of the stockholder's shares of the
Acquired Fund for shares of U.S. Government. If approved by an
Acquired Fund's stockholders, the Acquisition of such Fund is
expected to occur late in the last quarter of this year or early
in the first quarter of year 2001. The expenses of the
transaction will be borne by the Funds' Adviser, Alliance Capital
Management L.P. ("Alliance").
The Board of Directors of each Acquired Fund concluded
that participation by the Acquired Fund in the proposed
Acquisitions is in the best interests of the Acquired Fund and
its stockholders. The Boards of Directors also concluded that
the proposed Acquisitions would not dilute stockholders' economic
interests. In reaching this conclusion, the Boards of Directors
considered, among other things: the similarities of the
investment objectives and strategies between U.S. Government and
the Acquired Funds; the more flexible investment charter of U.S.
Government in terms of investments in a larger class of U.S.
Government securities and permissible maturities; the improved
operating efficiencies of the combined fund; the lower expense
ratio of U.S. Government as compared to the Acquired Funds; the
effect of the Acquisitions on the advisory fees of the Funds; the
prospects for improved performance since U.S. Government has
significantly outperformed Limited Maturity over the past five
years and has recently begun to outperform Mortgage Securities;
and the tax-free nature of the Acquisitions for the Acquired
Funds. The Board of Directors of Alliance Bond Fund, Inc.
approved the Acquisition by U.S. Government on July 20, 2000
after concluding that each Acquisition is in the best interests
of U.S. Government and its stockholders, and would not dilute
such stockholders' interests.
9
<PAGE>
For a more complete discussion of the factors considered
by the Boards of Directors in approving the Acquisitions, see
page [__].
10
<PAGE>
SUMMARY
The following summary highlights differences between
U.S. Government and Mortgage Securities and Limited Maturity.
This summary is not complete and does not contain all of the
information that you should consider before voting on an
Acquisition. For more complete information, please read this
entire document and the Prospectus.
Comparison of Current Fees
The Acquisitions are expected to result in a lower
operating expense ratio for the combined Fund. As of June 30,
2000, Mortgage Securities had total assets of approximately $436
million, Limited Maturity had total assets of approximately $62
million, and U.S. Government had total assets of approximately
$745 million. As shown in the Fee Table below, U.S. Government's
expense ratios are significantly lower than those of either of
the Acquired Funds. The Fee Table below, which describes the
fees and expenses of each class of shares of the Funds as of June
30, 2000 and includes pro forma expenses for each Acquisition and
for the combined Fund assuming that the Acquisitions are approved
and consummated. Based on the pro forma operating expenses for
Class A shares, at current asset levels as of June 30, 2000 and
assuming the Acquisitions are approved, the Acquisitions would
result in projected annual expense ratio reductions of 0.12% for
Mortgage Securities, 0.74% for Limited Maturity and 0.04% for
U.S. Government.
If only one of the Acquisitions occurs, the expense
ratio benefits would be reduced. The acquisition of Mortgage
Securities would produce expense ratio benefits of 0.04%. The
acquisition of Limited Maturity alone would be expense ratio
neutral because of the small size of that Fund relative to U.S.
Government.
Fee Table
The following table describes the fees and expenses that you may
pay if you buy and hold shares of the Funds.
<TABLE>
<CAPTION>
Pro Forma
Mortgage Securities Limited Maturity U.S. Government Combined Fund
Class Class Class Class Class Class Class Class Class Class Class Class
A B C A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER FEES
11
<PAGE>
(fees paid directly
from your investment)
Maximum Sales Charge
(Load) Imposed on
Purchases (as a
percentage of the
offering price) 4.25% ... ... 4.25% ... ... 4.25% ... ... 4.25% ... ...
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is lower) ... 3.00% 1.00% ... 3.00% 1.00% ... 3.00% 1.00% ...3.00% 1.00%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES (expenses
that are deducted
from fund assets) Mortgage Securities U.S. Government Pro Forma Combined
Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Class B Class C Class A Class B Class C Class A Class B Class C
Management Fees .54% .54% .54% .55% .55% .55% .54% .54% .54%
Distribution
(12b-1) Fees .30% 1.00% 1.00% .30% 1.00% 1.00% .30% 1.00% 1.00%
Interest Expense .80% .80% .80% .81% .81% .81% .81% .81% .81%
Other Expenses .37% .37% .37% .28% .28% .28% .25% .25% .25%
TOTAL FUND
OPERATING EXPENSES 2.01% 2.71% 2.71% 1.94% 2.64% 2.64% 1.90% 2.60% 2.60%
TOTAL FUND OPERATING
EXPENSES EXCLUDING
INTEREST EXPENSE 1.21% 1.91% 1.91% 1.13% 1.83% 1.83% 1.09% 1.79% 1.79%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES (expenses
that are deducted from
fund assets) Limited Maturity U.S. Government Pro Forma Combined
Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Class B Class C Class A Class B Class C Class A Class B Class C
Management Fees .65% .65% .65% .55% .55% .55% .55% .55% .55%
12
<PAGE>
Distribution
(12b-1) Fees .30% 1.00% 1.00% .30% 1.00% 1.00% .30% 1.00% 1.00%
Interest Expense .71% .71% .71% .81% .81% .81% .80% .80% .80%
Other Expenses .88% .88% .88% .28% .28% .28% .28% .28% .28%
TOTAL FUND OPERATING
EXPENSES 2.54% 3.24% 3.24% 1.94% 2.64% 2.64% 1.93% 2.63% 2.63%
TOTAL FUND OPERATING
EXPENSES EXCLUDING
INTEREST EXPENSE 1.83% 2.53% 2.53% 1.13% 1.83% 1.83% 1.13% 1.83% 1.83%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES (expenses that
are deducted from
Fund assets) Pro Forma
Mortgage Securities Limited Maturity U.S. Government Combined Fund
Class Class Class Class Class Class Class Class Class Class Class Class
A B C A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .54% .54% .54% .65% .65% .65% .55% .55% .55% .54% .54% .54%
Distribution
(12b-1) Fees .30% 1.00% 1.00% .30% 1.00% 1.00% .30% 1.00% 1.00% .30% 1.00% 1.00%
Interest Expense .80% .80% .80% .71% .71% .71% .81% .81% .81% .80% .80% .80%
Other Expenses .37% .37% .37% .88% .88% .88% .28% .28% .28% .25% .25% .25%
TOTAL FUND OPERATING
EXPENSES 2.01% 2.71% 2.71% 2.54% 3.24% 3.24% 1.94% 2.64% 2.64% 1.89% 2.59% 2.59%
TOTAL FUND OPERATING
EXPENSES EXCLUDING
INTEREST EXPENSE 1.21% 1.91% 1.91% 1.83% 2.53% 2.53% 1.13% 1.83% 1.83% 1.09% 1.79% 1.79%
</TABLE>
Examples
The Examples are to help you compare the cost of investing in the
Funds with the cost of investing in other funds. They assume
that you invest $10,000 in a Fund for the time periods indicated
and then redeem all of your shares at the end of those periods.
They also assume that your investment has a 5% return each year,
that the Funds' operating expense ratios stay the same, and that
all dividends and distributions are reinvested. Your actual
costs may be higher or lower.
Pro Forma
Mortgage Securities U.S. Government Combined Fund
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
1 year $620 $274 $274 $614 $267 $267 $610 $263 $263
13
<PAGE>
3 years $1,029 $841 $841 $1,008 $820 $820 $997 $808 $808
5 years $1,462 $1,435 $1.435 $1,427 $1,400 $1,400 $1,408 $1,380 $1,380
10 years $2,663 $2,719 $3,041 $2.593 $2,649 $2,973 $2,553 $2,609 $2,934
Pro Forma
Limited Maturity U.S. Government Combined Fund
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
1 year $671 $327 $327 $614 $267 $267 $613 $266 $266
3 years $1,182 $998 $998 $1,008 $820 $820 $1,005 $817 $817
5 years $1,718 $1,693 $1,693 $1,427 $1,400 $1,400 $1,423 $1,395 $1,395
10 years $3,178 $3,234 $3,540 $2.593 $2,649 $2,973 $2,583 $2,639 $2,964
<TABLE>
<CAPTION>
Pro Forma
Mortgage Securities Limited Maturity U.S. Government Combined Fund
Class Class Class Class Class Class Class Class Class Class Class Class
A B C A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $620 $274 $274 $671 $327 $327 $614 $267 $267 $609 $262 $262
3 years $1,029 $841 $841 $1,182 $998 $998 $1,008 $820 $820 $994 $805 $805
5 years $1,462 $1,435 $1,435 $1,718 $1,693 $1,693 $1,427 $1,400 $1,400 $1,403 $1,375 $1,375
10 years $2,663 $2,719 $3,041 $3,178 $3,234 $3,540 $2,593 $2,649 $2,973 $2,543 $2,598 $2,925
</TABLE>
Comparison of Investment Objectives and Strategies
The following is a comparison of the investment
objectives and strategies of the Funds. The investment
objectives of the Funds are substantially similar. The primary
differences in the investment strategies of the Funds are that
U.S. Government and Limited Maturity invest primarily in U.S.
Government securities, while Mortgage Securities invests
primarily in mortgage-related securities. Mortgage Securities
may invest up to 35% of its assets in U.S. Government securities
but its investment policies do not require it to invest primarily
in U.S. Government securities. In addition, the dollar-weighted
average maturities of the portfolio of debt securities of
Mortgage Securities and Limited Maturity are not more than ten
years. The dollar-weighted average maturity of U.S. Government's
investments varies between one year or less and 30 years. A more
detailed comparison of the Funds' investment objectives and
strategies can be found in Exhibit A. You can find additional
information about each of the Funds in the Prospectus and each
Fund's SAI.
14
<PAGE>
Mortgage Securities, Limited Maturity and U.S.
Government pursue similar investment objectives and hold
substantially similar securities. As a result, the proposed
Acquisitions will not cause significant portfolio turnover or
transaction expenses due to the disposal of securities that are
incompatible with the investment objective of U.S. Government.
Fund Objective Principal Investment
Strategies
Mortgage Seeks a high level The Fund invests
Securities of current income to primarily in a
the extent diversified portfolio of
consistent with mortgage-related
prudent investment securities, including
risk. collateralized mortgage
obligations. The dollar-
weighted average maturity
of the Fund's portfolio
of debt securities is
expected to vary between
two and ten years.
Limited Seeks the highest The Fund invests primarily
Maturity level of current in U.S. Government
income consistent securities, including
with low volatility mortgage-related
of net asset value. securities and repurchase
agreements relating to
U.S. Government
securities. The Fund
takes advantage of a wide
range of maturities of
debt securities and
adjusts the dollar-
weighted average maturity
of its portfolio from time
to time, depending on
Alliance's assessment of
relative yields on
securities of different
maturities and the
expected effect of changes
in interest rates on the
market value of its
portfolio. At all times,
however, each of the
Fund's securities has
either a remaining
maturity of not more than
ten years or a duration
15
<PAGE>
not exceeding that of a
ten-year Treasury note.
U.S. Seeks a high level The Fund invests
Government of current income primarily in U.S.
that is consistent Government securities,
with prudent including mortgage-
investment risk. related securities,
repurchase agreements and
forward contracts
relating to U.S.
Government securities.
The Fund also may invest
in non-U.S. Government
mortgage-related and
asset-backed securities,
and in high grade debt
securities secured by
mortgages on commercial
real estate or
residential properties.
The dollar-weighted
average maturity of the
Fund's investments varies
between one year or less
and 30 years.
Mortgage Securities and Limited Maturity intend to sell
securities and may reinvest in other securities prior to the
Acquisitions, to the extent desirable from the perspective of
U.S. Government's portfolio and practicable and consistent with
applicable legal requirements, including the Fund's investment
objectives, policies and restrictions. It is anticipated that
approximately 40% of Limited Maturity's portfolio, and
approximately 60% of Mortgage Security's portfolio would be
liquidated. Given the nature of U.S. Government's securities,
the transaction costs associated with this process are expected
to be negligible.
Common Risk Considerations
Because of the similarities in investment objectives and
strategies, Mortgage Securities, Limited Maturity and U.S.
Government are subject to substantially similar investment risks,
which will be similarly applicable to the combined Fund after the
Acquisitions. You should note, however, that the value of your
investment in a Fund will change with changes in the values of
that Fund's investments. Many factors can affect those values.
In addition, each Fund could be subject to additional principal
16
<PAGE>
risks because the types of investments made by each Fund can
change over time.
Among the principal risks of investing in the Funds are
interest rate risk, credit risk, market risk, leverage risk,
derivatives risk, liquidity risk and management risk. Each of
these risks is more fully described below. You will find
additional descriptions of specific risks of investing in a Fund
in the Prospectus.
Interest Rate Risk. This is the risk that changes in
interest rates will affect the value of a Fund's investments in
debt securities, such as bonds, notes and mortgage-related or
asset-backed securities, or other income-producing securities.
Debt securities are obligations of the issuer to make payments of
principal and/or interest on future dates. Increases in interest
rates may cause the value of a Fund's investments to decline.
Interest rate risk is generally greater for investments
in debt securities with longer maturities. This risk is also
compounded for the Funds because they invest a substantial
portion of their assets in mortgage-related or other asset-backed
securities. The value of these securities is affected more by
changes in interest rates because when interest rates rise, the
maturities of these type of securities tend to lengthen and the
value of the securities decreases more significantly. In
addition, these types of securities are subject to prepayment
when interest rates fall, which generally results in lower
returns because a Fund must reinvest their assets in debt
securities with lower interest rates. Because U.S. Government
may invest in securities with significantly longer maturities
than the Acquired Funds, it may be subject to greater interest
rate risk.
Credit Risk. This 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. The degree of risk for a particular security may be
reflected in its credit rating. Mortgage Securities may have
greater credit risk because it may invest in lower-rated
securities. These debt securities and similar unrated securities
(commonly know as "junk bonds") have speculative elements or are
predominantly speculative credit risks.
Market Risk. This is the risk that the value of a
Fund's investments will fluctuate as the bond markets fluctuate
and that prices overall will decline over shorter or longer-term
periods.
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Leveraging Risk. When a Fund borrows money or otherwise
leverages its portfolio, the value of an investment in that Fund
will be more volatile and all other risks will tend to be
compounded. Each Fund may create leverage by using reverse
repurchase agreements, inverse floating rate instruments or
derivatives, or by borrowing money.
Derivatives Risk. Each Fund may use derivatives, which
are financial contracts whose value depends on, or is derived
from, the value of an underlying asset, reference rate, or index.
The Funds will sometimes use derivatives as part of a strategy
designed to reduce other risks. Generally, however, the Funds
use derivatives as direct investments to earn income, enhance
yield and broaden Fund diversification, which entail greater risk
than if used solely for hedging purposes. In addition to other
risks such as the credit risk of the counterparty, derivatives
involve the risk of difficulties in pricing and valuation and the
risk that changes in the value of the derivative may not
correlate perfectly with relevant underlying assets, rates, or
indices.
Liquidity Risk. Liquidity risk exists when particular
investments are difficult to purchase or sell, possibly
preventing a Fund from selling out of these illiquid securities
at an advantageous price. The Funds are subject to liquidity
risk because derivatives and securities involving substantial
interest rate and credit risk tend to involve greater liquidity
risk. In addition, liquidity risk tends to increase to the
extent a Fund invests in debt securities whose sale may be
restricted by law or by contract.
Management Risk. Each Fund is subject to management
risk because it is an actively managed investment Fund. Alliance
will apply its investment techniques and risk analyses in making
investment decisions for the Funds, but there can be no guarantee
that its decisions will produce the desired results. In some
cases, derivative and other investment techniques may be
unavailable or Alliance may determine not to use them, possibly
even under market conditions where their use could benefit a
Fund.
Comparison of Stockholder Services and Distribution Arrangements
The stockholder services and distribution arrangements
of each Fund are the same and are described in the Prospectus.
Federal Income Tax Consequences
No gain or loss will be recognized by the Acquired
Funds, U.S. Government or the stockholders of the Acquired Funds
as a result of the Acquisitions. The aggregate tax basis of the
18
<PAGE>
shares of U.S. Government received by a stockholder of an
Acquired Fund (including any fractional share to which the
stockholder may be entitled) will be the same as the aggregate
tax basis of the stockholder's shares of the Acquired Fund. The
holding period of the shares of U.S. Government received by a
stockholder of the Acquired Fund (including any fractional share
to which the stockholder may be entitled) will include the
holding period of the shares of the Acquired Fund held by the
stockholder, provided that such shares are held as capital assets
by the stockholder of an Acquired Fund at the time of the
Acquisitions. The holding period and tax basis of each asset of
[6~an Acquired Fund in the hands of U.S. Government as a result
of the Acquisitions will be the same as the holding period and
tax basis of each such asset in the hands of an Acquired Fund
prior to the Acquisitions. This tax information is based on the
advice of Seward & Kissel LLP, counsel to each of the Funds. It
is a condition to the closing of each Acquisition that such
advice be confirmed in a written opinion of counsel. An opinion
of counsel is not binding on the Internal Revenue Service.
Comparison of Investment Advisory Fees
Alliance is the investment adviser for each Fund. Its
address is 1345 Avenue of the Americas, New York, New York 10105.
Alliance is a leading international investment adviser managing
client accounts with assets as of June 30, 2000 totaling more
than $388 billion (of which more than $185 billion represented
the assets of investment companies). As of June 30, 2000,
Alliance managed retirement assets for many of the largest public
and private employee benefit plans (including 29 of the nations'
FORTUNE 100 companies), for public employee retirement funds in
33 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 52
registered investment companies managed by Alliance, comprising
122 separate investment portfolios, currently have approximately
6.1 million shareholder accounts.
Alliance provides investment advisory services and order
placement facilities for the Funds. For these advisory services,
the Funds paid Alliance as a percentage of average daily net
assets:
Fee as a percentage of
Fund average daily net assets Fiscal Year Ending
___________________ _________________________ __________________
Mortgage Securities .53% December 31, 1999
Limited Maturity .65% November 30, 1999
U.S. Government .55% June 30, 2000
Comparison of Business Structures
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There are no significant differences between the Funds
in terms of their respective corporate organizational structure.
Each Fund is organized as a Maryland corporation and is governed
by its Articles of Incorporation, as amended, By-Laws and
Maryland law. For more information on the comparison of the
business structures of the Funds, see Exhibit B.
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INFORMATION ABOUT THE PROPOSED TRANSACTION
Introduction
This Prospectus/Proxy Statement is provided to you to
solicit your vote for use at the Meetings to approve the
acquisition of the assets and liabilities of each Acquired Fund
by U. S. Government. The Meetings will be held at the offices of
the Funds, 1345 Avenue of the Americas, 33rd Floor, New York, New
York 10105 at 3:00 p.m., Eastern Time, on November 9, 2000 and
any adjournments thereof. This Prospectus/Proxy Statement, the
accompanying Notice of Special Meetings of Stockholders and the
enclosed Proxy Card are being mailed to stockholders of the
Acquired Funds on or about September 13, 2000. The approval of
the stockholders of U.S. Government is not being solicited in
connection with the Acquisitions, since their approval or consent
is not necessary for the consummation of the Acquisitions.
Description of the Plans
As provided in the Plans, U. S. Government will acquire
all the assets and assume all the liabilities of each Acquired
Fund at the effective time of the Acquisitions. In return, U.S.
Government will issue, and each Acquired Fund will distribute to
its stockholders, a number of full and fractional shares of U.S.
Government, determined by dividing the net value of all the
assets of the Acquired Fund by the NAV of one share of U.S
Government. For this purpose, the Plans provide the times for
and methods of determining the net value of the assets of each
Acquired Fund. The Plans provide that each stockholder of an
Acquired Fund will be credited with shares of U. S. Government
corresponding to the aggregate NAV of the class of the Acquired
Fund's shares that the stockholder holds of record at the
effective time of the Acquisitions.
Following the distribution of U.S. Government shares,
each Acquired Fund will cancel its outstanding shares, wind up
its affairs, and dissolve as soon as is reasonably possible after
an Acquisition. If a majority of the shares of an Acquired Fund
do not approve an Acquisition, that Fund will not be acquired.
In such a case, that Fund will continue its operations and its
Directors will consider what future action, if any, is
appropriate. Alliance will pay all of the expenses of the
Acquisitions.
The Acquisitions are expected to occur late in the last
quarter of this year or early in the first quarter of 2001. The
Acquisitions are conditioned upon both stockholder approval and
each Fund satisfying the terms of the Plans. After an
Acquisition, an Acquired Fund would deregister as an investment
21
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company under the Investment Company Act of 1940, as amended
("1940 Act") and dissolve under Maryland law.
Completion of the Acquisitions is subject to certain
other conditions set forth in the Plans, some of which may be
waived by a party to a Plan. A Plan may be amended in any
mutually agreed manner, except that no amendment may be made
subsequent to the Meetings that materially alters the obligations
of either party. The parties to a Plan may terminate the Plan by
mutual consent and either party has the right to terminate the
Plan under certain circumstances. Among other circumstances,
either party may at any time terminate a Plan unilaterally upon a
determination by the party's Board of Directors that proceeding
with the Plan is not in the best interest of its stockholders.
A copy of a form of the Plans is attached as Exhibit C.
Board Considerations in Recommending the Acquisitions
At regular meetings of the Boards of Directors of the
Acquired Funds held on July 19-20, 2000, Alliance recommended
that the Boards of Directors approve and recommend to the
stockholders for their approval a combination of the Acquired
Funds with U.S. Government by means of tax-free acquisitions of
the assets and assumptions of the liabilities of those Funds by
U.S. Government in exchange for shares of U.S. Government, which
shares would then be distributed to the stockholders of the
Acquired Funds in liquidation of those Funds. The Funds have a
common Board of Directors. The Directors considered the factors
discussed below from the point of view of the interests of each
of the Funds and its stockholders. After careful consideration,
each Board of Directors accepted Alliance's recommendations,
concluded that the Acquisitions and Plans as applied to its Fund
would be in the best interests of that Fund and its stockholders
and recommended that the stockholders of that Fund approve the
proposed Plan and Acquisition.
Alliance made its recommendations to the Boards of
Directors in the context of a general discussion of the
substantial growth of the mutual funds advised by Alliance (the
"Alliance Mutual Funds") in recent years. Total Alliance Mutual
Fund assets, which are rapidly approaching the $200 billion
level, are invested in well over 100 operating portfolios
affording investors in all selling channels a highly diversified
range of choices among asset classes, investment disciplines and
pricing alternatives.
To a large extent, this growth has been a by-product of
the last ten years' fundamentally different investment climate,
which has precipitated correspondingly dramatic changes in
investors' preferences and needs. The long U.S. bull market,
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<PAGE>
historically low (if recently increasing) interest rates and the
sustained dominance in the marketplace of equity-oriented
investment vehicles have produced conditions that favor many
Alliance Mutual Funds, but, inevitably, disfavor some other
funds, which originated in specific response to earlier different
investment conditions. More generally, as the Alliance Mutual
Fund family proliferates, it becomes increasingly important that
Alliance and the funds' principal underwriter, Alliance Fund
Distributors, Inc. ("AFD"), remain alert to instances of
particular funds competing with each other to the point that
their consolidation would both benefit their respective
stockholders and represent a logical step from the marketing and
sales standpoints.
After considerable study and analysis, Alliance and AFD
concluded that the three Alliance Mutual Funds that focus on U.S.
Government securities--U.S. Government, Mortgage Securities and
Limited Maturity--are no longer sufficiently distinguishable and
independently attractive in the current environment to warrant
their continued operation as separate investment vehicles.
Rather, Alliance and AFD believed that the interests of each
Fund's stockholders would be served by the three Funds'
consolidation into the Fund that they believed is the most viable
of the three Funds, which would thereafter continue as the sole
U.S. Government securities fund among the retail Alliance Mutual
Funds.
Alliance advised the Boards of Directors that it
believed that, both in the current environment and over the
longer term, U.S. Government is the only truly viable among the
three and is clearly the best positioned to attract and retain
stockholders. U.S. Government has a more flexible investment
charter, in terms of sectors within the large class of U.S.
Government securities and permissible maturities, than either of
the other two Funds. Additionally, U.S. Government has always
performed better than Limited Maturity and has recently had a
performance advantage over Mortgage Securities, largely, the
Adviser believed, because of the exploitation of its broader
investment charter.
Alliance discussed with the Boards of Directors the
investment objectives and strategies of the Funds. Alliance
noted that the three Funds share similar investment themes and
have closely related fundamental investment objectives. The
Funds' investment policies differ somewhat, reflecting different
emphases within the large government securities market and, at
least as between Mortgage Securities and U.S. Government,
differing investment philosophies. Alliance advised the Boards
of Directors that it believed that an intermediate maturity
government fund such as Limited Maturity, which maintains
investments with a remaining maturity of not more than 10 years
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<PAGE>
or a duration not exceeding that of a ten-year Treasury note, has
little viability. In a market environment in which significant
volatility has become both frequent and foreseeable, the Adviser
believed that there is little investment advantage to be had from
an attempt to limit volatility by restricting maturities to the
intermediate range. The realities of the current fixed-income
market, by limiting the return that can be expected from what has
proven to be the Fund's risk profile, appear to have made a fund
such as Limited Maturity obsolete.
Alliance also discussed the investment strategies of
Mortgage Securities, which invests primarily in a diversified
portfolio of mortgage-related securities. Alliance advised the
Boards of Directors that it had concluded that a fund such as
Mortgage Securities, which is marketed as focusing on the
mortgage sector, is becoming less attractive to fixed-income
investors. Alliance noted that Mortgage Securities' limited
investment charter restricted its opportunity to add value by
attempting to time interest rate changes. This concentration in
the mortgage sector prevents Alliance from employing the
research-intensive, relative value "sector rotation" strategy
that Alliance believes is best suited to both the demands of
today's fixed income markets and the strengths of Alliance's
research process.
Alliance noted that the flexibility of U.S. Government's
investment charter enables Alliance to diversify its investments
more broadly and to add value through sector rotation within the
broad U.S. Government and asset-backed market, rather than solely
through the anticipation of interest rate movements. The ability
to invest in these sectors also allows Alliance to derive fuller
advantage, to the benefit of stockholders, from the resources and
capabilities of its large fixed-income research organization. In
addition, such increased diversification allows U.S. Government
greater opportunities for current income than either Mortgage
Securities or Limited Maturity and provides additional tools for
preserving capital during periods of market volatility.
In sum, from the perspective of investment strategies,
Alliance and AFD advised the Boards of Directors that they
believed that, in the current and foreseeable environment, the
Funds are viewed as effectively competing with each other and
that U.S. Government is better situated to fulfill the needs and
expectations of stockholders and realize the benefits of asset
growth. Therefore, Alliance and AFD have concluded that it would
be in the best interests of the stockholders of all three Funds
that U.S. Government becomes Alliance's only open-end government
securities fund.
Alliance also discussed other benefits that it expected
would result from the Acquisitions. U.S. Government's expense
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<PAGE>
ratio is significantly lower than the expense ratio of Limited
Maturity or Mortgage Securities. Alliance provided the Boards of
Directors with a summary of the pro-forma operating expenses of
the combined Fund, assuming both Acquisitions take place, that
indicates that, based on the pro forma operating expenses for
Class A shares at asset levels as of June 30, 2000, the
Acquisitions would produce expense ratio benefits to the
stockholders of approximately 0.74% for Limited Maturity, 0.12%
for Mortgage Securities and 0.04% for U.S. Government.
Alliance also noted that U.S. Government had
significantly outperformed Limited Maturity over the past five
years. While historically Mortgage Securities has had better
performance than U.S. Government, that Fund has begun this year
to outperform Mortgage Securities. (Additional information on
the historical performance of the Funds is available in the
Prospectus.) In addition, U.S. Government has recently begun to
perform well within its competitive universe. As of May 31,
2000, the total return performance of the Fund's Class A shares
ranked 19 out of 189 general U.S. Government funds traced by
Lipper Inc. for the year-to-date period. This puts the Fund in
the top decile within that competitive universe. In contrast,
Limited Maturity and Mortgage Securities are poorer performers
within their Lipper universes with the total return of each
Fund's Class A shares ranking 113 out of 131 and 22 out of 61,
respectively, for the same period.
Alliance also provided information to the Boards of
Directors about each Fund's realized and unrealized capital gains
and losses and capital loss carryforwards as of June 30, 2000.
Alliance noted that each Fund has substantial loss carryforwards
and that the ability of U.S. Government to utilize these loss
carryforwards (including its own) in future years will be subject
to restrictions imposed by the Internal Revenue Code of 1986, as
amended (the "Code"). In particular, the amount of capital loss
carryforwards of an Acquired Fund that can be utilized by U.S.
Government in a given year would be limited to an amount equal to
the total NAV of the Fund immediately prior to the Acquisition
times a specified interest rate (which is currently 5.79%).
Notwithstanding the applicable limitations, the very substantial
amount of the capital loss carryforwards that will be available
is such that Alliance believed that the limitations resulting
from the Acquisitions would have no practical effect.
The Boards of Directors also considered, among other
things: (i) the form of the relevant Plan and the terms and
conditions of the relevant Acquisition; (ii) whether the relevant
Acquisition would result in the dilution of stockholders'
interests; (iii) the investment objectives, policies and
strategies and portfolio management personnel of the parties to
the particular Acquisition; (iv) the effect of the anticipated
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<PAGE>
realignment of the investment holdings of the relevant Fund,
including the associated costs and the resulting tax consequences
in connection with the possible disposition of certain portfolio
holdings prior to the closing of the relevant Acquisition; (v)
the benefits of the relevant Acquisition to persons other than
the relevant Fund; (vi) the fact that U.S. Government will assume
all the liabilities of each Fund; (vii) the expected federal
income tax consequences of the relevant Acquisition; (viii)
historical and pro forma information, including the information
set forth above and information regarding realized and unrealized
gains and losses of the Funds; (ix) whether the Acquisitions
would be preferable to acquisitions by potential acquiries other
than U.S. Government, including funds not sponsored by Alliance;
(x) the fact that Alliance has agreed to pay all the expenses of
the Acquisitions other than portfolio realignment costs, and has
agreed to indemnify U.S. Government for a three-year period
against undisclosed liabilities of Mortgage Securities and
Limited Maturity to the extent such liabilities are known by
Alliance's senior management at the time of the Acquisitions;
(xi) the proposed treatment of unreimbursed distribution expenses
of AFD for the Acquired Funds under the U.S. Government Rule
12b-1 plan; (xii) the fact that the relevant Acquisition might or
might not be effected together with the other Acquisition; (xiii)
the respective average account sizes of the Funds; and (xiv) the
effect of the Acquisitions on the advisory fees of the Funds.
During their consideration of the relevant Acquisition,
the independent directors of each Fund (those directors who are
not "interested persons" as defined under the 1940 Act) consulted
separately with their legal counsel. Based on the factors
described above, the Boards of Directors each determined that the
relevant Acquisition would be in the best interests of each
Acquired Fund and its stockholders and would not result in
dilution of stockholders' interests, and recommended that the
stockholders of each Acquired Fund approve the proposed
Acquisition.
Existing and Pro Forma Capitalization
The following tables set forth (i) the capitalization of
the Funds and (2) the pro forma capitalization of U.S. Government
as adjusted giving effect to the proposed acquisition of assets
at net asset value:
Total Shares NAV
Fund (Class) Net Assets Outstanding Per Share
------------ ---------- ----------- ---------
Mortgage Securities (Class A) $396,426,497 48,970,216 $8.10
U.S. Government (Class A) $430,895,264 61,617,802 $6.99
Pro Forma Combined $827,321,761 118,364,404 $6.99
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<PAGE>
Mortgage Securities (Class B) $23,471,075 2,896,463 $8.10
U.S. Government (Class B) $200,282,893 28,614,921 $7.00
Pro Forma Combined $223,753,968 31,966,542 $7.00
Mortgage Securities (Class C) $16,524,457 2,037,636 $8.11
U.S. Government (Class C) $112,807,847 16,109,033 $7.00
Pro Forma Combined $129,332,304 18,469,781 $7.00
Limited Maturity (Class A) $26,180,635 2,935,453 $8.92
U.S. Government (Class A) $430,895,264 61,617,802 $6.99
Pro Forma Combined $457,075,899 65,363,759 $6.99
Limited Maturity (Class B) $16,122,011 1,807,599 $8.92
U.S. Government (Class B) $200,282,893 28,614,921 $7.00
Pro Forma Combined $216,404,904 30,918,319 $7.00
Limited Maturity (Class C) $19,678,412 2,206,887 $8.92
U.S. Government (Class C) $112,807,847 16,109,033 $7.00
Pro Forma Combined $132,486,259 18,921,239 $7.00
Mortgage Securities (Class A) $396,426,497 48,970,216 $8.10
Limited Maturity (Class A) $26,180,635 2,935,453 $8.92
U.S. Government (Class A) $430,895,264 61,617,802 $6.99
Pro Forma Combined $853,502,397 122,110,361 $6.99
Mortgage Securities (Class B) $23,471,075 2,896,463 $8.10
Limited Maturity (Class B) $16,122,011 1,807,599 $8.92
U.S. Government (Class B) $200,282,893 28,614,921 $7.00
Pro Forma Combined $239,875,978 34,269,940 $7.00
Mortgage Securities (Class C) $16,524,457 2,037,636 $8.11
Limited Maturity (Class C) $19,678,412 2,206,887 $8.92
U.S. Government (Class C) $112,807,847 16,109,033 $7.00
Pro Forma Combined $149,010,716 21,281,986 $7.00
Distribution Expenses
Each Fund has adopted a plan under SEC Rule 12b-1 ("Rule
12b-1 Plan") that allows the Fund to pay asset-based sales charge
or distribution and service fees for the distribution and sale of
its shares. The amount of these fees as a percentage of
aggregate average daily net assets is for each Fund's Class A
shares .30% and for the Class B and Class C shares 1.00%. As of
June 30, 2000, AFD had incurred distribution expenses for
Mortgage Securities and Limited Maturity in the amount of,
respectively, $60,205,458 and $8,444,665 for Class B shares and
$2,952,244 and $5,307,986 for Class C shares that had not been
reimbursed under the Rule 12b-1 Plan or recovered through
contingent deferred sales charges or otherwise. The Boards of
Directors have adopted a resolution providing that, in connection
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<PAGE>
with the Acquisitions, the amount of these unreimbursed
distribution expenses existing at the time of the closing of the
Acquisitions may be defrayed from future fees paid to AFD under
the Rule 12b-1 Plan of U.S. Government, subject to appropriate
assurances that this treatment is consistent with applicable law.
While in the past the staff of the SEC has suggested that such
payments by an acquiring fund would be inappropriate, more
recently the staff has indicated that it would not object to such
a "carryforward" if it were implemented in accordance with Rule
12b-1 requirements. Because it is unlikely that AFD will receive
reimbursement for unreimbursed distribution expenses incurred on
behalf of U.S. Government given the continued growth in U.S.
Government's assets in the foreseeable future, which would be
reimbursed before any unreimbursed distribution expenses of the
Acquired Funds, the Boards of Directors approved the assumption
of the Acquired Funds' unreimbursed expenses on the basis that
Alliance will receive adequate assurances that, in the event of
any reimbursements of these expenses, the payments are
appropriate under applicable regulatory requirements.
Federal Income Tax Consequences
Each Fund will receive an opinion of Seward & Kissel
LLP, its counsel, substantially to the following effect: (i) the
Acquisition to which the Fund is a party will constitute a
"reorganization" within the meaning of section 368(a) of the Code
and that U.S. Government and the Acquired Fund in such
Acquisition will each be "a party to a reorganization" within the
meaning of section 368(b) of the Code; (ii) each stockholder of
the Acquired Fund will recognize no gain or loss on such
stockholder's receipt of shares of U.S. Government (including any
fractional share to which the stockholder may be entitled) in
exchange for the stockholder's shares of the Acquired Fund in
connection with the Acquisition; (iii) neither the Acquired Fund
nor U.S. Government will recognize any gain or loss upon the
transfer of all of the assets of the Acquired Fund to U.S.
Government in exchange for shares of U.S. Government and the
assumption by U.S. Government of the liabilities of the Acquired
Fund pursuant to the applicable Plan or upon the distribution of
shares of U.S. Government to stockholders of the Acquired Fund in
exchange for their respective shares of the Acquired Fund; (iv)
the holding period and tax basis of the assets of the Acquired
Fund acquired by U.S. Government will be the same as the holding
period and tax basis that the Acquired Fund had in such assets
immediately prior to the Acquisition; (v) the aggregate tax basis
of shares of U.S. Government received in connection with the
Acquisition by each stockholder of the Acquired Fund (including
any fractional share to which the stockholder may be entitled)
will be the same as the aggregate tax basis of the shares of the
Acquired Fund surrendered in exchange therefor; (vi) the holding
period of shares of U.S. Government received in connection with
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the Acquisition by each stockholder of the Acquired Fund
(including any fractional share to which the stockholder may be
entitled) will include the holding period of the shares of the
Acquired Fund surrendered in exchange therefor, provided that
such Acquired Fund shares constitute capital assets in the hands
of the stockholder as of the Closing Date; and (vii) U.S.
Government will succeed to the capital loss carryovers of the
Acquired Fund, if any, under section 381 of the Code, but the use
by U.S. Government of any such capital loss carryovers (and of
capital loss carryovers of U.S. Government) may be subject to
limitation under section 383 of the Code.
Stockholders of an Acquired Fund should consult their
tax advisers regarding the effect, if any, of an Acquisition in
light of their individual circumstances. Because the foregoing
only relates to the federal income tax consequences of an
Acquisition, those stockholders also should consult their tax
advisers as to state and local tax consequences, if any, of an
Acquisition.
VOTING INFORMATION
Each Board of Directors has fixed the close of business
on August 25, 2000 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Meetings
and at any postponements or adjournments thereof. The
outstanding voting shares of Mortgage Securities as of that date
consisted of a total of [________] shares of common stock, each
share entitled to one vote, consisting of [________] Class A
shares, [________] Class B shares and [________] Class C shares.
The outstanding voting shares of Limited Maturity as of that date
consisted of a total of [________] shares of common stock, each
share entitled to one vote, consisting of [________] Class A
shares, [________] Class B shares and [________] Class C shares.
Those stockholders who hold shares directly and not
through a broker or nominee (that is, a stockholder of record)
may vote their shares by completing a Proxy Card and returning it
by mail in the enclosed postage-paid envelope as well as either
telephoning toll free 1-800-597-7836 or via the Internet website
at https://vote.proxy-direct.com. Shares held for a stockholder
through a broker or nominee (who is the stockholder of record for
those shares) should be voted by following the instructions
provided to the stockholder by the broker or nominee. The
telephone and Internet voting instructions to be followed by a
stockholder of record, including use of the Control Number on the
stockholder's Proxy Card, are designed to verify stockholder
identities, to allow stockholders to give voting instructions and
to confirm that stockholder instructions have been recorded
properly. Stockholders who vote by telephone or via the Internet
should not also return a Proxy Card. Stockholders who vote via
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<PAGE>
the Internet should be aware that they are responsible for any
applicable telecommunication and access charges. A stockholder
of record may revoke that stockholder's proxy at any time prior
to exercise thereof by giving written notice to the Secretary of
the Fund at 1345 Avenue of the Americas, New York, New York
10105, by voting another proxy (either by signing and mailing
another Proxy Card or, by telephone or via the Internet as
indicated above), or by personally voting at the Meetings.
Properly executed proxies may be returned with
instructions to abstain from voting or withhold authority to vote
(an "abstention") or represent a broker "non-vote" (which is a
proxy from a broker or nominee indicating that the broker or
nominee has not received instructions from the beneficial owner
or other person entitled to vote shares on a particular matter
with respect to which the broker or nominee does not have the
discretionary power to vote). Abstentions and broker non-votes
will be considered present for purposes of determining the
existence of a quorum for the transaction of business, but will
have the effect of a vote against the Proposal. Approval of the
Proposal requires the affirmative vote of a majority of the total
outstanding shares of each Acquired Fund. The approval and
closing of one Acquisition is not contingent upon the approval
and closing of the other Acquisition. If any proposal, other
than the Proposal to voted on by the stockholders of each
Acquired Fund, properly comes before a Meeting, the shares
represented by proxies will be voted on all such proposals in the
discretion of the person or persons voting the proxies. The
Acquired Funds have not received notice of, and are not otherwise
aware of, any other matter to be presented at the Meetings.
A quorum for the Meetings will consist of the presence
in person or by proxy of the holders of one-third of the shares
of each Acquired Fund entitled to vote at the Meetings. In the
event that a quorum is not represented at the Meetings or, even
if a quorum is so present, in the event that sufficient votes in
favor of the position recommended by the Boards of Directors on
the Proposal are not timely received, the persons named as
proxies may propose and vote for one or more adjournments of the
Meetings with no other notice than announcement at the Meetings,
in order to permit further solicitation of proxies. Shares
represented by proxies indicating a vote against the Proposal
will be voted against adjournment.
The Acquired Funds have engaged Shareholder
Communications Corporation, 17 State Street, New York, New York
10004, to assist the Acquired Funds in soliciting proxies for the
Meetings. Shareholder Communications Corporation will receive a
fee of $[________] from Alliance for its solicitation services,
plus reimbursement of out-of-pocket expenses.
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Share Information
Outstanding Shares. As of June 30, 2000, each class of
each Fund had the following number of shares of common stock
outstanding.
Fund (Class) Shares Outstanding
______________________________ ________________________
Mortgage Securities
Class A 48,970,216
Class B 2,896,463
Class C 2,037,636
Limited Maturity
Class A 2,935,453
Class B 1,807,599
Class C 2,206,887
U.S. Government
Class A 61,617,802
Class B 28,614,921
Class C 16,109,033
Share Ownership. As of June 30, 2000, the officers and
Directors of each Fund as a group beneficially owned less than 1%
of the outstanding shares of each class of common stock of that
Fund and, to the knowledge of the Funds, the following persons
owned either of record or beneficially, 5% or 25% or more of the
outstanding shares of the indicated class of each Fund.
Fund Percentage Ownership
_____________________________ ___________________________
Mortgage Securities:
MLPF&S Class A 9.00%
MLPF&S Class B 14.95%
MLPF&S Class C 38.79%
Limited Maturity:
MLPF&S Class A 15.17%
FleetBoston Robertson Stephens 6.46%
MLPF&S Class B 28.68%
MLPF&S Class C 48.18%
U.S. Government:
MLPF&S Class A 11.27%
MLPF&S Class B 24.01%
MLPF&S Class C 36.43%
Ho Chunk Nation 6.84%
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LEGAL MATTERS
The validity of the shares offered hereby will be passed
upon for the Funds by Seward & Kissel LLP. Seward & Kissel LLP
will rely upon the opinion of Venable, Baetjer and Howard, LLP
for matters relating to Maryland law.
EXPERTS
The audited financial information in the
Prospectus/Proxy Statement and the SAI has been included in
reliance on the report of Ernst & Young LLP, independent
auditors, 787 Seventh Avenue, New York, New York 10019, given on
its authority as experts in auditing and accounting.
THE BOARDS OF DIRECTORS OF MORTGAGE SECURITIES AND LIMITED
MATURITY RECOMMEND APPROVAL OF THE RELEVANT PLAN
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EXHIBIT A
COMPARISON OF INVESTMENT OBJECTIVES AND PRINCIPAL POLICIES
This discussion provides a more complete description of
each Fund's investment objectives and principal strategies.
Additional discussion of a Fund's investments and the risks of
investing in a Fund can be found in the Prospectus and the SAI's.
Objectives:
Mortgage Securities: -- seeks a high level of current income to
the extent consistent with prudent
investment risk.
Limited Maturity: -- seeks the highest level of current
income, consistent with low volatility
of net asset value.
U.S. Government: -- seeks a high level of current income
that is consistent with prudent
investment risk.
Investment Strategies:
Mortgage Securities: The Fund maintains at least 65% of its
total assets in mortgage-related
securities, including Collateralized
Mortgage Obligations. The average weighted
maturity of the Fund's portfolio of fixed-
income securities is expected to vary
between two and ten years.
The Fund expects that governmental,
government-related, or private entities may
create mortgage loan pools offering pass-
through investments in addition to those
described in this Prospectus. The
mortgages underlying these securities may
be instruments whose principal or interest
payments may vary or whose terms to
maturity may differ from customary long-
term fixed-rate mortgages. As new types of
mortgage-related securities are developed
and offered to investors, the Fund will
consider making investments in these new
types of securities. The Fund may invest
up to 20% of its total assets in lower-
rated mortgage-related securities.
The Fund may invest up to 35% of its total
assets in:
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-- U.S. Government securities;
-- qualifying bank deposits;
-- prime commercial paper or, if unrated,
issued by companies that have an
outstanding high quality debt issue;
and
-- high-grade asset-backed securities.
Limited Maturity: As a matter of fundamental policy, the Fund
normally invests at least 65% of its total
assets in U.S. Government securities,
including mortgage-related securities and
repurchase agreements relating to U.S.
Government securities.
In pursuing its investment objective and
policies, the Fund takes advantage of a
wide range of maturities of debt securities
and adjusts the dollar-weighted average
maturity of its portfolio from time to
time, depending on its assessment of
relative yields on securities of different
maturities and the expected effect of
future changes in interest rates on the
market value of the Fund's portfolio. At
all times, however, each security held by
the Fund has either a remaining maturity of
not more than ten years or a duration not
exceeding that of a ten-year Treasury note.
The Fund may invest up to 35% of its total
assets in:
-- high quality asset-backed securities,
including mortgage-related securities
that are not U.S. Government
securities;
-- treasury securities issued by private
corporate issuers;
-- qualifying bank deposits;
-- high quality commercial paper or, if
unrated, issued by companies that have
high quality debt issues outstanding;
and
-- high quality debt securities of
corporate issuers.
The Fund may invest up to 15% of its total
assets in high-quality debt securities
denominated in U.S. Dollars or in foreign
currencies and issued or guaranteed by
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foreign governments or issued by foreign
non-governmental issuers. The amount of
Fund investments in foreign debt securities
will vary and may include those of a number
of foreign countries or, depending upon
market conditions, those of a single
country.
U.S. Government: As a matter of fundamental policy, the Fund
pursues its objective by investing at least
65% of its total assets in U.S. Government
securities, repurchase agreements and
forward contracts relating to U.S.
Government securities. The Fund may invest
the remaining 35% of its total assets in
non-U.S. Government mortgage-related and
asset-backed securities, including high-
grade debt securities secured by mortgages
on commercial real estate or residential
rental properties.
The Fund will not invest in any security
rated below BBB or Baa. The Fund may
invest in unrated securities of equivalent
quality to the rated securities in which it
may invest, as determined by Alliance. The
Fund expects, but is not required, to
dispose of securities that are downgraded
below BBB and Baa or, if unrated, that are
determined by Alliance to have undergone
similar credit quality deterioration.
35
<PAGE>
EXHIBIT B
COMPARISON OF BUSINESS STRUCTURES
The following information provides only a summary of the
major similarities and differences between the organizational
structure and governing documents of U.S. Government, Mortgage
Securities and Limited Maturity. All three Funds are organized
as Maryland corporations. Accordingly, unless noted below, there
are no significant differences between the Funds in terms of
their respective corporate organizational structure. Copies of
the Charter and By-laws of U.S. Government, Mortgage Securities
and Limited Maturity are a part of each Fund's respective
Registration Statement filed with the SEC and may be obtained as
provided below.
General. U.S. Government, Mortgage Securities and
Limited Maturity are organized as Maryland corporations and are
governed by each of their Charters, By-Laws and Maryland law. The
Funds are not required to hold annual meetings of stockholders
and each will do so only under certain specified circumstances or
when required under Federal law. Each Fund has procedures
available to its respective stockholders for calling
stockholders' meetings for the removal of Directors.
Pursuant to Maryland law, any Director of a Fund may be
removed, either with or without cause, at any meeting of
stockholders duly called and at which a quorum is present by the
affirmative vote of the majority of the votes entitled to be
cast.
The Directors of a Fund are required to promptly call a
meeting of stockholders for the purpose of voting upon the
question of removal when requested to do so in writing by the
record holders of not less than 10% of the outstanding shares.
In addition, special meetings of stockholders for any other
purpose shall be called by a Fund's Secretary upon the written
request of holders of shares entitled to cast not less than 25%
of all the votes entitled to be cast at the meeting.
Except as otherwise required by law, the presence in
person or by proxy of the holders of one-third of the shares
entitled to be cast constitutes a quorum at any meeting of
stockholders of each Fund. Pursuant to each Charter, in instances
involving extraordinary corporate action, such as in a merger or
in making amendments to its Charter, the vote of a majority of
the aggregate number of votes entitled to be cast on a matter is
required in order to take or authorize any such action for which
approval of the stockholders is sought. With respect to other
matters, the By-Laws of each Fund provide that when a quorum is
present at any meeting, the affirmative vote of a majority of the
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<PAGE>
votes (or with respect to the election of Directors, a plurality
of votes) cast shall decide any question brought before such
meeting.
Shares. U.S. Government has authorized capital stock of
200,000,000 shares of Class A Common Stock, 200,000,000 shares of
Class B Common Stock, 200,000,000 shares of Class C Common Stock
and 200,000,000 shares of Advisor Class Common Stock, each having
a par value of $.001 per share. Limited Maturity has authorized
capital stock of 3,000,000,000 shares of Class A Common Stock,
3,00,000,000 shares of Class B Common Stock, 3,000,000,000 shares
of Class C Common Stock and 3,000,000,000 shares of Advisor Class
Common Stock, each having a par value of $.001 per share.
Mortgage Securities has authorized capital stock of 600,000,000
shares of Class A Common Stock, 600,000,000 shares of Class B
Common Stock, 600,000,000 shares of Class C Common Stock and
600,000,000 shares of Advisor Class Common Stock, each having a
par value of $.01 per share.
Liability of Directors and Officers. Each of the Funds
indemnifies its officers and Directors, as applicable, to the
full extent permitted by law. This indemnification does not
protect any such person against any liability to a Fund or any
stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
satisfaction of such person's office.
37
<PAGE>
EXHIBIT C
FORM OF AGREEMENT AND PLAN OF ACQUISITION
AND LIQUIDATION
38
<PAGE>
FORM OF
AGREEMENT AND
PLAN OF
ACQUISITION
AND LIQUIDATION
As of
[________], 2000
39
<PAGE>
This Agreement and Plan of Acquisition and Liquidation
(the "Plan") is made as of this [__] day of [________], 2000, by
and between U.S. Government Portfolio of Alliance Bond Fund,
Inc., a Maryland corporation ("U.S. Government"), and [________],
a Maryland corporation (the "Acquired Fund").
WHEREAS, U.S. Government and the Acquired Fund are open-
end management investment companies registered with the
Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the parties desire that U.S. Government acquire
the assets and assume the liabilities of the Acquired Fund in
exchange for shares of equal net asset value of U.S. Government
and the distribution of such shares of U.S. Government to the
stockholders of the Acquired Fund (the "Acquisition") and that
the Acquired Fund thereafter liquidate and dissolve; and
WHEREAS, the parties intend that the Acquisition qualify
as a "reorganization" within the meaning of section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that
with respect to the Acquisition, U.S. Government and the Acquired
Fund will each be a "party to a reorganization" within the
meaning of section 368(b) of the Code;
Now, therefore, U.S. Government and the Acquired Fund
agree as follows:
1. Definitions
In addition to the terms elsewhere defined herein,
each of the following terms shall have the meaning indicated for
that term as follows:
1933 Act Securities Act of 1933, as amended.
1934 Act Securities Exchange Act of 1934, as
amended.
Assets All assets of any kind and all interests,
rights, privileges and powers of or
attributable to the Acquired Fund or any
class of the Acquired Fund's shares, as
appropriate, whether or not determinable
at the appropriate Effective Time and
wherever located, including, without
limitation, all cash, cash equivalents,
securities, claims (whether absolute or
contingent, known or unknown, accrued or
unaccrued or conditional or unmatured),
contract rights and receivables
40
<PAGE>
(including dividend and interest
receivables) owned by the Acquired Fund
or attributable to any class of the
Acquired Fund's shares and any deferred
or prepaid expense shown as an asset on
the Acquired Fund's books.
Closing Date Such date prior to July 1, 2001 as the
parties agree to.
Effective Time 5:00 p.m. Eastern time on the Closing
Date, or such other time as the parties
may agree to in writing.
Financial Statements The audited financial statements of the
relevant Fund for its most recently
completed fiscal year and, if applicable,
the unaudited financial statements of
that Fund for its most recently completed
semi-annual period.
Fund U.S. Government and/or the Acquired Fund,
as the case may be.
Liabilities All liabilities of the Acquired Fund or
any class thereof, whether known or
unknown, accrued or unaccrued, absolute
or contingent or conditional or
unmatured.
N-14 Registration
Statement The Registration Statement of U.S.
Government on Form N-14 under the 1940
Act that will register the shares of U.S.
Government to be issued in the
Acquisition and will include the proxy
materials necessary for the stockholders
of the Acquired Fund to approve the
Acquisition.
Valuation Time The time on the Closing Date, or the
business day immediately preceding the
Closing Date if the Closing Date is not a
business day or such other date as the
parties may agree to in writing, when for
purposes of the Plan U.S. Government
determines its net asset value per share
and the Acquired Fund determines the net
value of the Assets.
2. Regulatory Filings
41
<PAGE>
U.S. Government shall promptly prepare and file the N-14
Registration Statement with the SEC, and U.S. Government and the
Acquired Fund also shall make any other required or appropriate
filings with respect to the actions contemplated hereby.
3. Stockholder Action
As soon as practicable after the effective date of the
N-14 Registration Statement, the Acquired Fund shall hold a
stockholders meeting to consider and approve the Acquisition and
this Plan, and such other matters as the Board of Directors of
the Acquired Fund may determine. Such approval by the
stockholders of the Acquired Fund shall, to the extent necessary
to permit the consummation of the transactions contemplated
herein without violating any investment objective, policy or
restriction of the Acquired Fund, be deemed to constitute
approval by the stockholders of a temporary amendment of any
investment objective, policy or restriction that would otherwise
be inconsistent with or violated upon the consummation of such
transactions solely for the purpose of consummating such
transactions.
4. Transfer of the Acquired Fund's Assets. U.S. Government
and the Acquired Fund shall take the following steps with respect
to the Acquisition, as applicable:
(a) On or prior to the Closing Date, the Acquired Fund
shall pay or provide for the payment of all of the Liabilities,
expenses, costs and charges of or attributable to the Acquired
Fund that are known to the Acquired Fund and that are due and
payable prior to or as of the Closing Date.
(b) Prior to the Effective Time, the Acquired Fund
shall declare and pay to its stockholders on its normal monthly
schedule a dividend and/or other distribution in an amount such
that it will have distributed substantially all of its
theretofore undistributed investment company taxable income, if
any (as defined in Code section 852), and net capital gain, if
any (as defined in Code section 1222).
(c) At the Effective Time, pursuant to Articles of
Transfer accepted for record by the State Department of
Assessments and Taxation of Maryland (the "SDAT"), the Acquired
Fund shall assign, transfer, deliver and convey the Assets to U.
S. Government, subject to the Liabilities. U.S. Government shall
then accept the Assets and assume the Liabilities such that at
and after the Effective Time (i) the Assets at or after the
Effective Time shall become and be assets of U. S. Government,
and (ii) the Liabilities at the Effective Time shall attach to U.
S. Government, enforceable against U. S. Government to the same
extent as if initially incurred by U. S. Government.
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<PAGE>
(d) Within a reasonable time prior to the Closing Date,
the Acquired Fund shall provide, if requested, a list of the
Assets to U.S. Government. The Acquired Fund may sell any Asset
on such list prior to the Effective Time. After the Acquired
Fund provides such list, the Acquired Fund will not acquire any
additional securities or permit to exist any encumbrances,
rights, restrictions or claims not reflected on such list,
without the approval of U.S. Government. Within a reasonable
time after receipt of the list and prior to the Closing Date,
U.S. Government will advise the Acquired Fund in writing of any
investments shown on the list that U.S. Government has determined
to be inconsistent with its investment objective, policies and
restrictions. The Acquired Fund will dispose of any such
securities prior to the Closing Date to the extent practicable
and consistent with applicable legal requirements, including the
Acquired Fund's investment objectives, policies and restrictions.
In addition, if U.S. Government determines that, as a result of
the Acquisition, U.S. Government would own an aggregate amount of
an investment that would exceed a percentage limitation
applicable to U. S. Government, U.S. Government will advise the
Acquired Fund in writing of any such limitation and the Acquired
Fund shall dispose of a sufficient amount of such investment as
may be necessary to avoid the limitation as of the Effective
Time, to the extent practicable and consistent with applicable
legal requirements, including the Acquired Fund's investment
objectives, policies and restrictions.
(e) The Acquired Fund shall assign, transfer, deliver
and convey the Assets to U. S. Government at the Effective Time
on the following basis:
(1) U.S. Government shall simultaneously issue and
deliver to the Acquired Fund that number of full and fractional
shares of common stock of each class of U. S. Government, rounded
to the third decimal place or such other decimal place as the
parties may agree to in writing, determined by dividing the value
of the Assets less the Liabilities attributable to a class of the
Acquired Fund by the net asset value per share of the
corresponding class of U. S. Government.
(2) The net asset value of the shares of U. S.
Government to be delivered to the Acquired Fund shall be
determined as of the Valuation Time in accordance with U.S.
Government's then applicable valuation procedures, and for this
purpose, the net value of the Assets to be conveyed to U.S.
Government shall be determined as of the Valuation Time in
accordance with the then applicable valuation procedures of the
Acquired Fund.
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<PAGE>
(3) The Acquired Fund shall deliver the Assets
with good and marketable title to the custodian for the account
of U. S. Government. All cash shall be transferred in the form
of immediately available funds payable to the order of U.S.
Government's custodian.
(f) Promptly after the Closing Date, the Acquired Fund
will deliver to U.S. Government a Statement of Assets and
Liabilities of the Acquired Fund as of the Closing Date.
5. Liquidation and Dissolution of the Acquired Fund,
Registration of Shares of U.S. Government and Access to Records.
The Acquired Fund and U.S. Government also shall take the
following steps, as applicable:
(a) At or as soon as reasonably practical after the
Effective Time, the Acquired Fund shall liquidate and dissolve by
transferring to stockholders of record of each class of the
Acquired Fund full and fractional shares of common stock of the
corresponding class of U. S. Government equal in value to the
shares of the class of the Acquired Fund held by the stockholder.
Each stockholder also shall have the right to receive any unpaid
dividends or other distributions that the Acquired Fund declared
with respect to the class of the Acquired Fund's shares held by
the stockholder before the Effective Time. U.S. Government shall
record on its books the ownership by the Acquired Fund's
stockholders of U.S. Government shares so transferred to such
stockholders and the Acquired Fund shall simultaneously redeem
and cancel on its books all of the issued and outstanding shares
of each class of the Acquired Fund. U.S. Government shall issue
certificates representing U.S. Government shares in accordance
with the then current U.S. Government prospectus; provided,
however, that U.S. Government shall not issue certificates
representing U.S. Government shares to replace certificates
representing Acquired Fund shares unless the Acquired Fund share
certificates are first surrendered to U.S. Government. Following
distribution by the Acquired Fund to its stockholders of all of
the shares of U.S. Government delivered to the Acquired Fund, the
Acquired Fund shall wind up its affairs and shall take all steps
as are necessary and proper to dissolve as soon as is reasonably
possible after the Effective Time, including filing Articles of
Dissolution with the SDAT.
(b) At and after the Closing Date, the Acquired Fund
shall provide U.S. Government and its transfer agent with
immediate access to: (i) all records containing the names,
addresses and taxpayer identification numbers of all of the
Acquired Fund's stockholders and the number and percentage
ownership of the outstanding shares of each class of the Acquired
Fund owned by stockholders as of the Effective Time, and (ii) all
original documentation (including all applicable Internal Revenue
44
<PAGE>
Service forms, certificates, certifications and correspondence)
relating to the Acquired Fund stockholders' taxpayer
identification numbers and their liability for or exemption from
back-up withholding. The Acquired Fund shall preserve and
maintain, or shall direct its service providers to preserve and
maintain, records with respect to the Acquired Fund as required
by Section 31 of, and Rules 31a-1 and 31a-2 under, the 1940 Act.
6. Certain Representations and Warranties of the Acquired
Fund. The Acquired Fund represents and warrants to U.S.
Government as follows:
(a) The Acquired Fund is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Maryland. The Board of Directors of the
Acquired Fund duly established and designated each class of the
Acquired Fund as a class of the Acquired Fund. The Acquired Fund
is registered with the SEC as an open-end management investment
company under the 1940 Act, and such registration will be in full
force and effect as of the Effective Time.
(b) The Acquired Fund has the power and all necessary
federal, state and local qualifications and authorizations to own
all the Assets, to carry on its business, to enter into this Plan
and to consummate the transactions contemplated herein.
(c) The Board of Directors of the Acquired Fund has
duly authorized the execution and delivery of this Plan and the
transactions contemplated herein. Duly authorized officers of
the Acquired Fund have executed and delivered the Plan. The Plan
represents a valid and binding contract, enforceable in
accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, arrangement, moratorium,
and other similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
The execution and delivery of this Plan does not, and, subject to
the approval of its stockholders referred to in Section 3 hereof,
the consummation of the transactions contemplated by this Plan
will not, violate the Acquired Fund's Charter, its By-Laws or any
material agreement to which the Acquired Fund is subject. Except
for the approval of its stockholders, the Acquired Fund does not
need to take any other action to authorize its officers to
effectuate this Plan and the transactions contemplated herein.
(d) The Acquired Fund has qualified as a regulated
investment company under Part I of Subchapter M of Subtitle A,
Chapter 1, of the Code, in respect of each taxable year since the
commencement of its operations and intends to continue to qualify
as a regulated investment company for its taxable year ending
upon its liquidation.
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<PAGE>
(e) The information pertaining to the Acquired Fund
included within the N-14 Registration Statement when filed with
the SEC, when Part A of the N-14 Registration Statement is
distributed to stockholders, at the time of the stockholders
meeting of the Acquired Fund for approval of the Acquisition and
at the Effective Time shall (i) comply in all material respects
with the applicable provisions of the 1933 Act, the 1934 Act and
the 1940 Act, and the rules and regulations thereunder and
applicable state securities laws, and (ii) not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein not misleading.
(f) The Acquired Fund has duly authorized and validly
issued all of its issued and outstanding shares of common stock,
and all such shares are fully paid and non-assessable and were
offered for sale and sold in conformity with the registration
requirements of all applicable federal and state securities laws.
There are no outstanding options, warrants or other rights to
subscribe for or purchase any of the shares of the Acquired Fund,
nor are there any securities convertible into shares of the
Acquired Fund.
(g) The Acquired Fund shall operate its business in the
ordinary course between the date hereof and the Effective Time.
Such ordinary course of business will include the declaration and
payment of customary dividends and distributions and any other
dividends and distributions referred to in Section 4(b) hereof.
(h) At the Effective Time, the Acquired Fund will have
good and marketable title to the Assets and full right, power and
authority to assign, transfer, deliver and convey the Assets.
(i) The Financial Statements of the Acquired Fund, a
copy of which has been previously delivered to U.S. Government,
fairly present the financial position of the Acquired Fund as of
the Acquired Fund's most recent fiscal year-end and the results
of the Acquired Fund's operations and changes in the Acquired
Fund's net assets for the periods indicated.
(j) To the knowledge of the Acquired Fund, the Acquired
Fund has no liabilities, whether or not determined or
determinable, other than the Liabilities disclosed or provided
for in its Financial Statements or Liabilities incurred in the
ordinary course of business subsequent to the date of the most
recent Financial Statement referencing Liabilities.
(k) The Acquired Fund does not know of any claims,
actions, suits, investigations or proceedings of any type pending
or threatened against the Acquired Fund. There are no facts that
the Acquired Fund has reason to believe are likely to form the
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<PAGE>
basis for the institution of any such claim, action, suit,
investigation or proceeding against the Acquired Fund. The
Acquired Fund is not a party to or subject to the provisions of
any order, decree or judgment of any court or governmental body
that adversely affects, or is reasonably likely to adversely
affect, its financial condition, results of operations, or the
Assets or its ability to consummate the transactions contemplated
by the Plan.
(l) Except for agreements entered into or granted in
the ordinary course of its business, in each case under which no
material default exists, the Acquired Fund is not a party to or
subject to any material contract, debt instrument, employee
benefit plan, lease, franchise, license or permit of any kind or
nature whatsoever.
(m) The Acquired Fund has filed its federal income tax
returns, copies of which have been previously made available to
U.S. Government, for all taxable years for which such returns are
due and has paid all taxes payable pursuant to such returns. No
such return is currently under audit and no unpaid assessment has
been asserted with respect to such returns. The Acquired Fund
will timely file its federal income tax return for each
subsequent taxable year including its current taxable year.
(n) Since the date of the Financial Statements of the
Acquired Fund, there has been no material adverse change in its
financial condition, results of operations, business or Assets.
For this purpose, negative investment performance shall not be
considered a material adverse change.
7. Certain Representations and Warranties of U.S.
Government. Alliance Bond Fund, Inc. ("Bond Fund"), on behalf of
U.S. Government, represents and warrants to the Acquired Fund as
follows:
(a) Bond Fund is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Maryland. The Board of Directors of Bond Fund duly established
and designated U.S. Government as a series of Bond Fund and each
class of shares of U.S. Government as a class of U.S. Government.
Bond Fund is registered with the SEC as an open-end management
investment company under the 1940 Act, and such registration will
be in full force and effect as of the Effective Time.
(b) On behalf of U.S. Government, Bond Fund has the
power and all necessary federal, state and local qualifications
and authorizations to own all of its assets, to carry on its
business, to enter into this Plan and to consummate the
transactions contemplated herein.
47
<PAGE>
(c) On behalf of U.S. Government, the Board of
Directors of Bond Fund has duly authorized execution and delivery
of this Plan and the transactions contemplated herein. Duly
authorized officers of Bond Fund have executed and delivered the
Plan. The Plan represents a valid and binding contract,
enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles. The execution and delivery of this
Plan does not, and the consummation of the transactions
contemplated by this Plan will not, violate the Charter of Bond
Fund, its By-Laws or any material agreement to which U.S.
Government is subject. Bond Fund does not need to take any other
action to authorize its officers to effectuate the Plan and the
transactions contemplated herein.
(d) U.S. Government has qualified as a regulated
investment company under Part I of Subchapter M of Subtitle A,
Chapter 1, of the Code in respect of each taxable year since the
commencement of its operations and qualifies and intends to
continue to qualify as a regulated investment company for its
current taxable year.
(e) The N-14 Registration Statement, when filed with
the SEC, when Part A of the N-14 Registration Statement is
distributed to stockholders, at the time of the stockholder
meeting of the Acquired Fund for the approval of the Acquisition
and at the Effective Time, insofar as it relates to U.S.
Government shall (i) comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act and the 1940
Act, and the rules and regulations thereunder and applicable
state securities laws, and (ii) not contain any untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made
therein not misleading.
(f) On behalf of U.S. Government, Bond Fund has duly
authorized and validly issued all of the issued and outstanding
shares of common stock of U.S. Government, and all such shares
are fully paid and non-assessable and were offered for sale and
sold in conformity with the registration requirements of all
applicable federal and state securities laws. Bond Fund has duly
authorized shares of U.S. Government to be issued and delivered
to the Acquired Fund as of the Effective Time. When issued and
delivered, such shares of U.S. Government shall be validly
issued, fully paid and non-assessable, and no stockholder of U.S.
Government shall have any preemptive right of subscription or
purchase in respect of any such share. There are no outstanding
options, warrants or other rights to subscribe for or purchase
48
<PAGE>
any shares of U.S. Government, nor are there any securities
convertible into shares of U.S. Government.
(g) U.S. Government does not know of any claims,
actions, suits, investigations or proceedings of any type pending
or threatened against U.S. Government. There are no facts that
U.S. Government currently has reason to believe are likely to
form the basis for the institution of any such claim, action,
suit, investigation or proceeding against U.S. Government. U.S.
Government is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that
adversely affects, or is reasonably likely to adversely affect,
its financial condition, results of operations, its assets or its
ability to consummate the transactions contemplated by the Plan.
(h) Except for agreements entered into or granted in
the ordinary course of its business, in each case under which no
material default exists, U.S. Government is not a party to or
subject to any material contract, debt instrument, employee
benefit plan, lease, franchise, license or permit of any kind or
nature whatsoever.
(i) Bond Fund has filed its federal income tax returns,
copies of which have been previously made available to the
Acquired Fund, for all taxable years for which such returns are
due and has paid all taxes payable pursuant to such returns. No
such return is currently under audit and no unpaid assessment has
been asserted with respect to such returns. Bond Fund will
timely file its federal income tax return for each subsequent
taxable year including its current taxable year.
(j) Since the date of the Financial Statements of U.S.
Government, there has been no material adverse change in its
financial condition, results of operations, business or assets.
Negative investment performance shall not be considered a
material adverse change.
8. Conditions to the Obligations of U.S. Government and the
Acquired Fund. The obligations of U.S. Government and the
Acquired Fund with respect to the Acquisition shall be subject to
the following conditions precedent:
(a) The stockholders of the Acquired Fund shall have
approved the Acquisition in the manner required by the Charter of
the Acquired Fund, its By-Laws and applicable law. If
stockholders of the Acquired Fund fail to approve the
Acquisition, that failure shall release the Funds of their
obligations under this Plan.
(b) U.S. Government and the Acquired Fund shall have
delivered to the other party a certificate dated as of the
49
<PAGE>
Closing Date and executed in its name by its Secretary or an
Assistant Secretary, in a form reasonably satisfactory to the
receiving party, stating that the representations and warranties
of U.S. Government or the Acquired Fund, as applicable, in this
Plan that apply to the Acquisition are true and correct in all
material respects at and as of the Valuation Time.
(c) Bond Fund, on behalf of U.S. Government, and the
Acquired Fund shall have performed and complied in all material
respects with each of its representations and warranties required
by this Plan to be performed or complied with by it prior to or
at the Valuation Time and the Effective Time.
(d) There has been no material adverse change in the
financial condition, results of operations, business, properties
or assets of the Acquired Fund or U.S. Government since [December
1999]. Negative investment performance shall not be considered a
material adverse change.
(e) U.S. Government and the Acquired Fund shall have
received an opinion of Seward & Kissel LLP, in form and substance
reasonably satisfactory to each of them, based upon
representations made in certificates provided by the Funds, their
affiliates and/or principal stockholders and dated as of the
Closing Date, substantially to the effect that, based on facts
and assumptions stated therein, for federal income tax purposes:
(1) the Acquisition will constitute a
"reorganization" within the meaning of section
368(a) of the Code and that U.S. Government
and the Acquired Fund will each be "a party to
a reorganization" within the meaning of
section 368(b) of the Code;
(2) each stockholder of the Acquired Fund will
recognize no gain or loss on such
stockholder's receipt of shares of U.S.
Government (including any fractional share to
which the stockholder may be entitled) in
exchange for the stockholder's shares of the
Acquired Fund in connection with the
Acquisition;
(3) neither the Acquired Fund nor U.S. Government
will recognize any gain or loss upon the
transfer of all of the Assets to U.S.
Government in exchange for shares of U.S.
Government and the assumption by U.S.
Government of the Liabilities pursuant to this
Plan or upon the distribution of shares of
U.S. Government to stockholders of the
50
<PAGE>
Acquired Fund in exchange for their respective
shares of Acquired Fund;
(4) the holding period and tax basis of the Assets
acquired by U.S. Government will be the same
as the holding period and tax basis that the
Acquired Fund had in such Assets immediately
prior to the Acquisition;
(5) the aggregate tax basis of U.S. Government
shares received in connection with the
Acquisition by each stockholder of the
Acquired Fund (including any fractional share
to which the stockholder may be entitled) will
be the same as the aggregate tax basis of the
shares of the Acquired Fund surrendered in
exchange therefor;
(6) the holding period of U.S. Government shares
received in connection with the Acquisition by
each stockholder of the Acquired Fund
(including any fractional share to which the
stockholder may be entitled) will include the
holding period of the shares of the Acquired
Fund surrendered in exchange therefor,
provided that such Acquired Fund shares
constitute capital assets in the hands of the
stockholder as of the Closing Date; and
(7) U.S. Government will succeed to the capital
loss carryovers of the Acquired Fund, if any,
under Section 381 of the Code, but the use by
U.S. Government of any such capital loss
carryovers (and of capital loss carryovers of
U.S. Government) may be subject to limitation
under section 383 of the Code.
(f) The N-14 Registration Statement shall have become
effective under the 1933 Act as to the shares of U.S. Government,
and the SEC shall not have instituted and to the knowledge of
U.S. Government is not contemplating instituting, any stop order
suspending the effectiveness of the N-14 Registration Statement.
(g) No action, suit or other proceeding shall be
threatened or pending before any court or governmental agency in
which it is sought to restrain or prohibit, or obtain damages or
other relief in connection with, the Acquisition.
(h) The SEC shall not have issued any unfavorable
advisory report under Section 25(b) of the 1940 Act nor
51
<PAGE>
instituted any proceeding seeking to enjoin consummation of the
Acquisition under Section 25(c) of the 1940 Act.
(i) Neither party shall have terminated this Plan with
respect to the Acquisition pursuant to Section 12 of this Plan.
9. Conditions to the Obligations of the Acquired Fund. The
obligations of the Acquired Fund with respect to the Acquisition
shall be subject to the following conditions precedent:
(a) The Acquired Fund shall have received an opinion of
Seward & Kissel LLP, as counsel to U.S. Government, in form and
substance reasonably satisfactory to the Acquired Fund and dated
as of the Closing Date, substantially to the effect that:
(1) Bond Fund is a corporation duly incorporated,
validly existing and in good standing under
the laws of the State of Maryland and is an
open-end, management investment company
registered under the 1940 Act;
(2) This Plan has been duly authorized, executed
and delivered by U.S. Government and, assuming
due authorization, execution and delivery of
this Plan by the Acquired Fund, represents a
legal, valid and binding contract, enforceable
in accordance with its terms, subject to the
effect of bankruptcy, insolvency, moratorium,
fraudulent conveyance and transfer and similar
laws relating to or affecting creditors'
rights generally and court decisions with
respect thereto, and further subject to the
application of equitable principles in any
proceeding, whether at law or in equity or
with respect to the enforcement of provisions
of the Plan and the effect of judicial
decisions which have held that certain
provisions are unenforceable when their
enforcement would violate an implied covenant
of good faith and fair dealing or would be
commercially unreasonable or when default
under the Plan is not material;
(3) The shares of U.S. Government to be delivered
as provided for by this Plan are duly
authorized and upon delivery will be validly
issued, fully paid and non-assessable by U.S.
Government;
(4) The execution and delivery of this Plan did
not, and the consummation of the Acquisition
52
<PAGE>
will not, violate the Charter of Bond Fund,
its By-Laws or any agreement of U.S.
Government known to such counsel, after
reasonable inquiry; and
(5) To the knowledge of such counsel, no consent,
approval, authorization or order of any
federal or state court or administrative or
regulatory agency, other than the acceptance
of record of Articles of Transfer by the SDAT,
is required for U.S. Government to enter into
this Plan or carry out its terms, except those
that have been obtained under the 1933 Act,
the 1940 Act and the rules and regulations
under those Acts or that may be required under
state securities laws, or subsequent to the
Effective Time or when the failure to obtain
the consent, approval, authorization or order
would not have a material adverse effect on
the operation of U.S. Government.
In rendering such opinion, Seward & Kissel LLP may (i) rely on
the opinion of other counsel to the extent set forth in such
opinion, (ii) make assumptions regarding the authenticity,
genuineness and/or conformity of documents and copies thereof
without independent verification thereof, (iii) limit such
opinion to applicable federal and state law, (iv) define the word
"knowledge" and related terms to mean the knowledge of attorneys
then with such firm who have devoted substantive attention to
matters directly related to this Plan and (v) rely on
certificates of officers or directors of Bond Fund as to factual
matters.
10. Conditions to the Obligations of U.S. Government.
The obligations of U.S. Government with respect to the
Acquisition shall be subject to the following conditions
precedent:
(a) U.S. Government shall have received an opinion of
Seward & Kissel LLP, as counsel to the Acquired Fund, in form and
substance reasonably satisfactory to U.S. Government and dated as
of the Closing Date, substantially to the effect that:
(1) The Acquired Fund is a corporation duly
incorporated, validly existing and in good
standing under the laws of the State of
Maryland and is an open-end, management
investment company registered under the 1940
Act;
53
<PAGE>
(2) This Plan has been duly authorized, executed
and delivered by the Acquired Fund and,
assuming due authorization, execution and
delivery of this Plan by Bond Fund, represents
a legal, valid and binding contract,
enforceable in accordance with its terms,
subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance
and transfer and similar laws relating to or
affecting creditors' rights generally and
court decisions with respect thereto, and
further subject to the application of
equitable principles in any proceeding,
whether at law or in equity or with respect to
the enforcement of provisions of the Plan and
the effect of judicial decisions which have
held that certain provisions are unenforceable
when their enforcement would violate an
implied covenant of good faith and fair
dealing or would be commercially unreasonable
or when default under the Plan is not
material;
(3) The execution and delivery of this Plan did
not, and the consummation of the Acquisition
will not, violate the Charter of the Acquired
Fund, its By-Laws or any agreement of the
Acquired Fund, known to such counsel, after
reasonable inquiry; and
(4) To the knowledge of such counsel, no consent,
approval, authorization or order of any
federal or state court or administrative or
regulatory agency, other than the acceptance
of record of Articles of Transfer by the SDAT,
is required for the Acquired Fund to enter
into the Plan or carry out its terms, except
those that have been obtained under the 1933
Act, the 1940 Act and the rules and
regulations under those Acts or that may be
required under state securities laws or
subsequent to the Effective Time or when the
failure to obtain the consent, approval,
authorization or order would not have a
material adverse effect on the operation of
the Acquired Fund.
In rendering such opinion, Seward & Kissel LLP may (i) rely on
the opinion of other counsel to the extent set forth in such
opinion, (ii) make assumptions regarding the authenticity,
genuineness and/or conformity of documents and copies thereof
54
<PAGE>
without independent verification thereof, (iii) limit such
opinion to applicable federal and state law, (iv) define the word
"knowledge" and related terms to mean the knowledge of attorneys
then with such firm who have devoted substantive attention to
matters directly related to this Plan and (v) rely on
certificates of officers or directors of the Acquired Fund as to
factual matters.
(b) Except to the extent prohibited by Rule 19b-1 under
the 1940 Act, the Acquired Fund shall have declared a dividend or
dividends that, together with all previous such dividends, shall
have the effect of distributing to the stockholders of the
Acquired Fund substantially all of its investment company taxable
income, if any (as defined in Code section 852), and all of its
net capital gain, if any, (as defined in Code section 1222).
11. Survival of Representations and Warranties. No
representations, warranties or covenants in or pursuant to this
Plan (including certificates of officers) hereto shall survive
the completion of the transactions contemplated herein.
12. Termination of Plan. A majority of either Fund's Board
of Directors may terminate this Plan with respect to that Fund at
any time before the applicable Effective Time if: (i) the Fund's
conditions precedent set forth in Sections 8, 9 or 10 as
appropriate, are not satisfied; or (ii) the Board of Directors
determines that the consummation of the Acquisition is not in the
best interests of the Fund or its stockholders and gives notice
of such termination to the other party.
13. Governing Law. This Plan and the transactions
contemplated hereby shall be governed, construed and enforced in
accordance with the laws of the State of New York, except to the
extent preempted by federal law, without regard to conflicts of
law principles.
14. Brokerage Fees. Each party represents and warrants that
there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for in the Plan.
15. Amendments. The parties may, by agreement in writing
authorized by their respective Board of Directors, amend this
Plan at any time before or after the stockholders of the Acquired
Fund approve the Acquisition. However, after stockholders of the
Acquired Fund approve the Acquisition, the parties may not amend
this Plan in a manner that materially alters the obligations of
either party. This Section shall not preclude the parties from
changing the Closing Date or the Effective Time by mutual
agreement.
55
<PAGE>
16. Waivers. At any time prior to the Closing Date, either
party may by written instrument signed by it (i) waive the effect
of any inaccuracies in the representations and warranties made to
it contained herein and (ii) waive compliance with any of the
agreements, covenants or conditions made for its benefit
contained herein. Any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any
other or future inaccuracy or lack of compliance.
17. Indemnification of Directors. On behalf of U.S.
Government, Bond Fund will assume all obligations of the Acquired
Fund to exculpate and indemnify its current and former directors
and officers, acting in their capacities as such.
18. Cooperation and Further Assurances. Each party will
cooperate with the other in fulfilling its obligations under this
Plan and will provide such information and documentation as is
reasonably requested by the other in carrying out the Plan's
terms. Each party will provide such further assurances
concerning the performance of its obligations hereunder and
execute all documents for or in connection with the consummation
of the Acquisition as, with respect to such assurances or
documents, the other shall deem necessary or appropriate.
19. Updating of N-14 Registration Statement. If at any time
prior to the Effective Time, a party becomes aware of any untrue
statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements
made not misleading in the N-14 Registration Statement, the party
discovering the item shall notify the other party and the parties
shall cooperate in promptly preparing, filing and clearing with
the SEC and, if appropriate, distributing to stockholders
appropriate disclosure with respect to the item.
20. Limitation on Liabilities. The obligations of the
Acquired Fund and U.S. Government shall not bind any of the
directors, stockholders, nominees, officers, employees or agents
of the Acquired Fund or Bond Fund personally, but shall bind only
the Acquired Fund or U.S. Government, as appropriate. The
execution and delivery of this Plan by an officer of either party
shall not be deemed to have been made by the officer individually
or to impose any liability on the officer personally, but shall
bind only the Acquired Fund or Bond Fund, on behalf of U.S.
Government, as appropriate.
21. Termination of the Acquired Fund. If the parties
complete the Acquisition, the Acquired Fund shall terminate its
registration under the 1940 Act and liquidate and dissolve.
22. Notices. Any notice, report, statement, certificate or
demand required or permitted by any provision of the Plan shall
56
<PAGE>
be in writing and shall be given in person or by telecopy,
certified mail or overnight express courier to:
For the Acquired Fund:
[Acquired Fund]
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
For U.S. Government:
U.S. Government Portfolio of Alliance Bond Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
23. Expenses. Alliance Capital Management L.P., the
investment adviser to each party hereto, will bear all expenses
incurred in connection with this Agreement and Plan of
Acquisition and Liquidation, and all transactions contemplated
hereby, whether or not the Acquisition is consummated.
24. General. This Plan supersedes all prior agreements
between the parties with respect to the subject matter hereof and
may be amended only in writing signed by both parties. The
headings contained in this Plan are for reference only and shall
not affect in any way the meaning or interpretation of this Plan.
Whenever the context so requires, the use in the Plan of the
singular will be deemed to include the plural and vice versa.
Nothing in this Plan, expressed or implied, confers upon any
other person any rights or remedies under or by reason of this
Plan. Neither party may assign or transfer any right or
obligation under this Plan without the written consent of the
other party.
57
<PAGE>
In Witness Whereof, the parties hereto have executed
this Plan as of the day and year first above written.
[Acquired Fund]
Attest:
___________________________ By:_________________________
Name: Name:
Title: Title:
U.S. Government Portfolio of
Alliance Bond Fund, Inc.
Attest:
___________________________ By:_________________________
Name: Name:
Title: Title:
Accepted and agreed with respect
to Section 23 only:
Alliance Capital Management L.P.
By: Alliance Capital Management
Corporation, its General Partner
By: _____________________________
Name: _______________________
Title: _____________________
58
00250236.AL1
<PAGE>
TABLE OF CONTENTS PAGE
ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
ALLIANCE LIMITED MATURITY GOVERNMENT FUND, INC.
ALLIANCE CAPITAL LOGO(R)
Alliance Capital Management L.P.
NOTICE OF SPECIAL MEETINGS
OF STOCKHOLDERS AND
PROSPECTUS/PROXY STATEMENT
[________], 2000
59
00250236.AL1
<PAGE>
PROXY PROXY
ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
ALLIANCE LIMITED MATURITY GOVERNMENT FUND, INC.
Instructions to the stockholders of Alliance Mortgage Securities
Income Fund, Inc. and Alliance Limited Maturity Government Fund,
Inc. (the "Funds") in connection with the Special Meeting of
Stockholders to be held on November 9, 2000.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE FUND
The undersigned hereby appoints Reid Conway and Carol H. Rappa,
or either of them, as proxies, each with the power to appoint
his/her substitute, to attend the Special Meetings of
Stockholders of the Funds to be held at 3:00 p.m., Eastern Time,
on November 9, 2000 at the offices of the Funds, 1345 Avenue of
the Americas, 33rd Floor, New York, New York, 10105, and at all
adjournments or postponements thereof to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast at
such meeting and otherwise to represent the undersigned at the
meeting with all powers possessed by the undersigned if
personally present at the meeting. The undersigned hereby
revokes any proxy heretofore given and acknowledges receipt of
the Notice of Special Meeting and accompanying Prospectus/Proxy
Statement and hereby instructs said proxies to vote said shares
as indicated hereon.
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS
INSTRUCTED BELOW. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION
IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL
BE CAST "FOR" PROPOSAL 1 AND IN THE DISCRETION OF THE PROXY
HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
Please sign this proxy exactly as your name appears on the books
of the Fund. Joint owners should each sign personally. Trustees
and other fiduciaries should indicate the capacity in which they
sign, and where more than one name appears, a majority must sign.
If a corporation, this signature should be that of an authorized
officer who should state his or her title.
60
00250236.AL1
<PAGE>
This proxy, if properly executed, will be voted in the manner
directed by the undersigned. If no direction is made, this proxy
will be voted "FOR" the proposal.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK. Example: /X/
FOR AGAINST ABSTAIN
1. To approve an Agreement / / / / / /
and Plan of Acquisition
and Liquidation providing
for the transfer of all of
the assets and liabilities
of the Fund to Alliance
Bond Fund, Inc./U.S.
Government Portfolio in
exchange for Class, A,
Class B and Class C shares
of Alliance Bond Fund,
Inc./U.S. Government
Portfolio the distribution
of such Class A, Class B
and Class C shares to
stockholders of the Fund
in liquidation of the Fund
and the subsequent
dissolution of the Fund.
2. To vote and otherwise
represent the undersigned
on any other matter that
may properly come before
the meeting or any
adjournment or
postponement thereof in
the discretion of the
proxy holder.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
____________________________
Signature
____________________________
Signature (if held jointly)
[__________], 2000
Date
61
00250236.AL1
<PAGE>
Part B
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information or SAI relating to
the proposed acquisitions of the assets and assumption of the
liabilities of Alliance Mortgage Securities Income Fund Inc.
("Mortgage Securities") and Alliance Limited Maturity Government
Fund, Inc. ("Limited Maturity") by Alliance U.S. Government
Portfolio, a series of the Alliance Bond Fund, Inc. ("U.S.
Government") in exchange for shares of U.S. Government consists
of this cover page and the following described documents, each of
which is attached hereto or incorporated herein by reference:
(1) The SAI of Mortgage Securities dated March 1, 2000.
(2) Semi-Annual Report to Shareholders of Mortgage
Securities dated June 30, 2000.
(3) The SAI of Limited Maturity dated March 1, 2000.
(4) Semi-Annual Report to Shareholders of Limited Maturity
dated May 31, 2000.
(5) The SAI of U.S. Government dated November 1, 1999.
(6) Annual Report to Shareholders of U.S. Government dated
June 30, 2000.
(7) Unaudited pro forma combined financial information as of
June 30, 2000. The pro forma financial statements give effect to
the acquisitions as if they had occurred for the periods
presented.
This SAI is not a prospectus and should be read in
conjunction with the Prospectus/Proxy Statement, dated [August
[__], 2000]. The Prospectus/Proxy Statement and SAI may be
obtained without charge by calling 1-800-221-5672 or writing to
Alliance U.S. Government Portfolio, 1345 Avenue of the Americas,
New York, NY 10105.
This SAI is dated [August [__], 2000].
<PAGE>
----------------------------------------------------------------
FINANCIAL STATEMENTS
----------------------------------------------------------------
<PAGE>
PRO-FORMA COMBINED
------------------------
FINANCIAL STATEMENTS
------------------------
ALLIANCE LIMITED MATURITY GOVERNMENT FUND
ALLIANCE MORTGAGE SECURITIES INCOME FUND
ALLIANCE BOND FUND U.S. GOVERNMENT PORTFOLIO
JUNE 30, 2000
(unaudited)
PORTFOLIO OF INVESTMENTS
PRO-FORMA COMBINED
June 30, 2000 (unaudited)
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
-------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS-98.4%
FEDERAL NATIONAL MORTGAGE ASSOCIATION-37.7%
zero coupon, 2/15/08 $22,130 $ 13,034,858
6.00%, 1/01/29-12/31/99 39,184 35,851,647
6.50%, 12/01/99 15,000 14,142,150
6.50%, 4/01/11-6/01/29 (a) 34,902 33,479,159
7.00%, 9/01/14-12/31/99 (a) 74,797 72,984,293
7.00%, 12/01/14-2/01/15 4,179 4,099,301
7.50%, 2/01/15-12/31/99 (a) 54,571 54,239,178
7.50%, 4/01/15-12/31/99 80,750 80,343,305
7.50%, TBA 8,782 8,752,504
8.00%, 8/01/28-6/01/30 24,652 24,752,247
8.00%, 6/01/30-12/31/99 50,335 50,547,322
8.00%, TBA 5,000 5,021,100
8.50%, 8/01/11 (a) 15,009 15,266,583
8.50%, TBA 2,000 2,037,180
9.00%, 8/01/21 2,896 2,982,745
10.00%, 10/01/14 33,235 35,665,616
10.00%, 10/01/14 (a) 8,973 9,629,397
11.00%, 7/15/16 2,401 2,571,601
11.25%, 2/01/16 754 819,896
11.50%, 9/15/20 1,486 1,597,777
------------
467,817,859
U.S. TREASURY SECURITIES-36.1%
U.S. TREASURY BONDS-32.0%
6.375%, 8/15/27 10,000 10,298,400
6.875%, 8/15/25 20,000 21,796,800
8.125%, 5/15/21 29,100 35,506,656
8.875%, 8/15/17 24,000 30,592,560
10.75%, 2/15/03 80,000 88,024,800
12.50%, 8/15/14 65,150 92,339,701
14.00%, 11/15/11 85,900 119,293,625
------------
397,852,542
U.S. TREASURY NOTES-3.9%
5.875%, 11/15/04 2,975 2,931,773
6.00%, 8/15/09 7,065 7,008,692
6.50%, 2/15/10 30,500 31,543,710
6.625%, 5/31/02 1,100 1,104,125
6.75%, 5/15/05 6,125 6,267,590
------------
48,855,890
U.S. TREASURY BILLS-0.2%
Zero coupon, 7/06/00 2,640 2,637,922
5.47%, 7/06/00 50 49,962
5.65%, 7/06/00 20 19,984
------------
2,707,868
------------
449,416,300
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-14.2%
Single Family Homes
6.50%, 12/15/27-2/15/30 45,993 43,650,477
7.00%, 1/15/23-8/15/28 50,744 49,342,239
7.50%, 12/15/21-5/15/30 2,880 2,860,871
8.00%, 12/31/99 41,705 42,148,324
8.00%, 3/15/12 28,038 28,458,312
8.15%, 9/15/20 5,133 5,235,594
8.50%, 8/15/27-6/15/30 2,875 2,943,281
9.00%, 12/15/19 2 1,929
9.00%, 7/20/24-9/20/24 2,058 2,114,304
------------
176,755,331
FEDERAL HOME LOAN MORTGAGE CORP.-6.2%
5.75%, 6/15/01 3,310 3,276,900
6.50%, 2/01/26-12/01/28 12,071 11,392,422
7.50%, 9/01/29-4/01/30 40,768 40,158,063
8.00%, 9/01/09 (b) 3,568 3,597,575
9.50%, 9/01/20 2,425 2,522,147
11.00%, 1/01/11-9/01/20 702 761,624
11.50%, 10/01/10-6/01/20 1,394 1,531,881
12.00%, 8/01/15-7/01/20 10,021 10,936,214
12.25%, 8/01/13 16 17,199
12.50%, 6/01/19 1,616 1,811,784
13.00%, 5/01/14-12/01/18 511 578,784
------------
76,584,593
COLLATERALIZED MORTGAGE OBLIGATIONS-4.2%
Federal Home Loan Mortgage Corp.
Series 1955 Cl.K
7.50%, 2/20/24 5,000 5,000,000
Series 1748 Cl.B
8.00%, 6/15/23 13,400 13,534,000
1
PORTFOLIO OF INVESTMENTS
PRO-FORMA COMBINED
(continued)
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
-------------------------------------------------------------------------------
Federal National Mortgage Association
Series 1997-44 Cl.PE
7.00%, 6/18/21 $23,884 $ 23,757,176
Government National Mortgage Association
Series 1997-8 Cl.PI
7.00%, 9/16/21 9,392 9,346,449
------------
51,637,625
Total U.S. Government & Agency Obligations
(cost $1,252,143,559) 1,222,211,708
COLLATERALIZED MORTGAGE OBLIGATIONS-11.1%
BA Mortgage Securities, Inc.
Series 1997-1 Cl.A8
7.10%, 7/25/26 3,845 3,813,539
Chase Mortgage Finance Corp.
Series 1993-3 Cl.B8
7.40%, 10/30/24 3,108 3,046,122
Series 1993-3 Cl.B9
7.40%, 10/30/24 2,954 2,895,265
Series 1993-3 Cl.B10
7.40%, 10/30/24 2,646 2,593,552
Citicorp Mortgage Securities, Inc.
Series 1987-3 Cl.A1
9.00%, 5/01/17 5,685 5,706,456
Collateralized Mortgage Obligation Trust
Series 63 Cl.Z
9.00%, 10/20/20 13,958 14,350,021
Delta Funding Home Equity Loan Trust
Series 1999-2 Cl. A1F
6.14%, 3/15/18 1,984 1,959,387
Deutsche Mortgage & Asset Receiving Corp.
Series 1998-C1 Cl.A2
6.538%, 2/15/08 9,425 8,849,227
First Union National Bank Commercial Mortgage
Series 2000-C1 Cl. IO
0.776%, 9/15/29 6,208 248,334
Series 2000-C1 Cl. A2
7.841%, 3/15/10 2,000 2,034,380
Honda Auto Lease Trust
Series 1999-A Cl. A4
6.45%, 9/16/02 3,000 2,970,780
MLCC Mortgage Investors, Inc.
Series 1995-B Cl.B
6.94%, 11/15/20 (a) 4,544 3,879,817
Series 1996-B Cl.B
6.94%, 7/15/21 (b) 9,274 8,021,730
Prudential Home Mortgage Securities
Series 1994-29 Cl.A7
7.00%, 10/25/24 10,000 9,178,100
Series 1992-33 Cl.B1
7.50%, 11/25/22 12,284 11,949,801
Sears Mortgage Securities Corp.
Series 1992-18A Cl. A1
8.086%, 9/25/22 1,101 1,100,782
Securitized Asset Sales, Inc.
Series 1993-J Cl.1B 1
6.8076%, 11/28/23 5,263 4,892,647
Starwood Asset Receivables Trust
Series 2000-1 Cl.E
9.401%, 1/25/05 25,000 25,000,000
WMC Mortgage Loan
Pass-Through Certificate
Series 2000-A Cl. A
6.991%, 5/15/30 1,591 1,590,062
Total Collateralized Mortgage Obligations
(cost $115,914,553) 114,080,002
STRIPPED MORTGAGE BACKED SECURITIES-7.8%
Bear Stearns
Series 1997 Cl.2-X I/O
1.520%, 8/25/36 (b)(c) 69,167 2,918,163
First Union National Bank Commercial Mortgage
Series 2000-C1 Cl.I/0
0.776%, 9/15/29 99,333 3,973,336
Series 2000-C1 Cl.A2
7.841%, 3/15/10 13,000 13,223,470
2
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) VALUE
-------------------------------------------------------------------------------
LB Commercial Conduit Mortgage Trust
Series 1998-C4 Cl.X I/O
0.561%, 9/15/23 (c) $201,564 $ 6,865,281
Series 1999-C1 Cl.X
0.007%, 12/31/30 256,974 10,278,957
Series 1999-C2 Cl.X
0.665%, 10/15/32 117,259 4,800,551
Mortgage Capital Funding, Inc.
Series 1996-MC2 Cl.X I/O
1.973%, 12/21/26 (c) 134,029 9,088,507
Series 1996-MC2 Cl. X
2.095%, 12/21/26 17,679 1,198,813
Prudential Securities Secured Financing Corp.
Series 1999-NRF1 Cl.AEC
0.986%, 10/15/18 364,678 17,435,244
Salomon Brothers Mortgage Securities VII
Series 2000-FL1 Cl.A
6.1583%, 4/05/01 (b) 15,951 15,951,137
Salomon Brothers Mortgage Securities Inc.
Series 1999-5
3.128%, 6/25/28 72,496 4,236,661
Series 1999-5
10.34%, 6/25/28 112,541 6,576,912
Total Stripped Mortgage Backed Securities
(cost $100,265,462) 96,547,032
COMMERCIAL MORTGAGE BACKED SECURITIES-7.0%
Allied Capital Commercial Mortgage Trust
Series 1998-1-A Cl.A
6.31%, 9/25/03 (b) 6,065 5,983,168
BTC Mortgage Investors Trust
Series 1997-S1 Cl.D
6.95%, 12/31/09 (b) 944 943,854
BTR 2 Trust
Series 1999-S1A Cl.C
7.611%, 2/28/04 (b) 5,000 5,006,250
Credit Suisse First Boston Mortgage
Series 1998-FL1A Cl.F
7.491%, 1/10/01 (b) 21,350 21,329,931
Series 1998-Fl2 Cl.1AC
7.79875%, 8/15/01 1,600 1,602,000
Series 1998-Fl2A Cl.D
8.048%, 10/15/01 (b) 15,000 14,925,000
First Chicago/Lennar Trust
Series 1997-CHL1 Cl.A
8.076%, 4/29/05 15,361 15,034,131
Forum Finance Corp.
Series 1 Cl.A1
7.125%, 5/15/04 (b) 11,875 11,904,094
Merrill Lynch Mortgage Investors, Inc.
Series 1998-ASP1 Cl.B
7.508%, 10/01/03 (b) 5,000 5,037,500
Nationslink Funding Corp.
Series 1999-SL Cl.A1
5.805%, 2/10/01 5,460 5,405,573
Total Commercial Mortgage Backed Securities
(cost $87,312,478) 87,171,501
CORPORATE OBLIGATION-3.0%
Beverly Finance
8.36%, 7/15/04 (b) 37,200 37,631,892
Total Corporate Obligation
(cost $39,010,146) 37,631,892
ASSET BACKED SECURITIES-0.7%
Green Tree Home Improvement Loan Trust
Series 1998-D Cl. HEA4
6.25%, 8/15/29 23,000 22,317,130
Series 1997-A Cl.HEA5
7.21%, 3/15/28 1,699 1,698,950
Option One Mortgage Securities Corp.
Series 1999-B Cl.CTFS
9.66%, 6/25/29 (b) 1,537 1,503,942
Series 1999-2
9.66%, 6/25/29 (b) 1,537 1,503,942
Series 2000-1 CL.CTFS
9.85%, 5/25/30 (b) 5,012 5,012,288
Total Asset Backed Securities
(cost $32,780,300) 32,036,252
3
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
-------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-0.9%
Lehman Brothers, Inc.
6.50%, dated 6/30/00,
due 7/03/00 in the amount of
$10,754,822 (cost $10,749,000;
collateralized by $11,264,791
FNMA, 6.75%, 3/25/21,
value $10,964,021) $10,749 $10,749,000
State Street Bank and Trust Co.
6.25%, dated 6/30/00, due
7/03/00 in the amount of
$586,305 (cost $586,000;
collateralized by $600,000
FNMA, 6.30%, 11/21/01,
value $599,250) 586 586,000
Total Repurchase Agreements
(amortized cost $11,335,000) 11,335,000
TOTAL INVESTMENTS-128.9%
(cost $1,638,761,498) $ 1,601,013,387
Other assets less liabilities-(28.9%) (358,624,296)
NET ASSETS-100% $ 1,242,389,091
(a) 15 year mortgage.
(b) Securities exempt from Registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 2000,
these securities amounted to $129,651,161 of 10.4% of net assets.
(c) Interest rate represents yield to maturity and principal amount represents
amortized cost.
See notes to financial statements.
4
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (unaudited)
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
<TABLE>
<CAPTION>
Alliance Alliance Alliance
Limited Mortgage Bond Fund
Maturity Securities U.S.
Government Income Government Pro-Forma
Fund Fund Portfolio Adjustment(s) Combined
----------- ------------ -------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $1,638,761,498) $78,811,494 $557,616,300 $ 964,585,593 $ -0- $1,601,013,387
Cash 46,541 139,741 2,700,271 -0- 2,886,553
Receivable for investment securities sold 5,006,840 7,296,958 50,068,403 -0- 62,372,201
Interest receivable 581,401 4,713,120 13,438,179 -0- 18,732,700
Receivable for capital stock sold 6,653 2,819 4,641,151 -0- 4,650,623
Total assets 84,452,929 569,768,938 1,035,433,597 -0- 1,689,655,464
LIABILITIES
Payable for investment securities purchased 17,751,404 78,616,380 183,623,325 -0- 279,991,109
Reverse repurchase agreement 4,183,048 -0- 98,292,335 -0- 102,475,383
Payable for capital stock redeemed 196,907 372,830 6,319,681 -0- 6,889,418
Dividends payable 81,718 725,434 1,380,656 -0- 2,187,808
Distribution fee payable 36,384 130,884 365,567 -0- 532,835
Advisory fee payable 33,223 625,618 1,050,158 -0- 1,708,999
Variation margin payable on futures contracts 14,983 -0- -0- -0- 14,983
Deposit for securities loaned -0- 52,315,344 -0- -0- 52,315,344
Accrued expenses and other liabilities 174,204 560,419 415,871 -0- 1,150,494
Total liabilities 22,471,871 133,346,909 291,447,593 -0- 447,266,373
NET ASSETS $61,981,058 $436,422,029 $ 743,986,004 $ -0- $1,242,389,091
Class A Shares
Net assets $26,180,635 $396,426,497 $ 430,895,264 $ 853,502,396
Shares of capital stock outstanding 2,935,453 48,970,216 61,617,802 8,586,890 122,110,361
Net asset value and redemption price
per share $8.92 $8.10 $6.99 $6.99
Sales charge--4.25% of public offering price .40 .36 .31 .31
$9.32 $8.46 $7.30 $7.30
Class B Shares
Net assets $16,122,011 $ 23,471,075 $ 200,282,893 $ 239,875,979
Shares of capital stock outstanding 1,807,599 2,896,463 28,614,921 950,957 34,269,940
Net asset value and redemption price
per share $8.92 $8.10 $7.00 $7.00
Class C Shares
Net assets $19,678,412 $ 16,524,457 $ 112,807,847 $ 149,010,716
Shares of capital stock outstanding 2,206,887 2,037,636 16,109,034 928,429 21,281,986
Net asset value and redemption price
per share $8.92 $8.11 $7.00 $7.00
</TABLE>
See notes to financial statements.
5
STATEMENT OF OPERATIONS
Twelve Months Ended June 30, 2000 (unaudited)
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
<TABLE>
<CAPTION>
Alliance Alliance Alliance
Limited Mortgage Bond Fund
Maturity Securities U.S.
Government Income Government Pro-Forma
Fund Fund Portfolio Adjustment(s) Combined*
----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 5,629,863 $ 45,633,563 $ 75,347,516 $ -0- $126,610,942
EXPENSES
Advisory fee 487,252 2,678,227 4,512,662 (966,196) 6,711,945(a)
Distribution fee - Class A 84,298 1,290,439 1,279,649 (63,599) 2,590,787(b)
Distribution fee - Class B 237,457 484,757 2,642,382 (965,836) 2,398,760(c)
Distribution fee - Class C 231,166 189,997 1,287,011 (218,067) 1,490,107(c)
Transfer agency 146,425 1,041,940 1,349,201 (437,566) 2,100,000(d)
Administrative 127,580 147,852 114,349 (269,781) 120,000(d)
Audit and legal 119,250 146,318 113,585 (264,153) 115,000(d)
Custodian 103,908 290,922 266,418 (357,248) 304,000(e)
Printing 47,795 183,282 250,622 (166,699) 315,000(d)
Registration 46,129 50,660 105,931 (102,720) 100,000(d)
Directors' fees 22,895 26,796 11,814 (49,505) 12,000(d)
Miscellaneous 17,059 20,481 61,666 (34,206) 65,000(d)
Total expenses before interest 1,671,214 6,551,671 11,995,290 (3,895,576) 16,322,599
Interest expense 432,147 5,387,800 8,163,954 -0- 13,983,901
Total expenses 2,103,361 11,939,471 20,159,244 (3,895,576) 30,306,500
Net investment income 3,526,502 33,694,092 55,188,272 3,895,576 96,304,442
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investment
transactions (3,787,820) (21,570,094) (23,827,379) -0- (49,185,293)
Net realized loss on options transactions (2,755) (995) (6,310) -0- (10,060)
Net realized gain (loss) on futures
transactions 32,586 (502,224) 1,130,988 -0- 661,350
Net change in unrealized
appreciation / depreciation of:
Investments 1,732,154 10,982,768 (2,400,040) -0- 10,314,882
Futures transactions (87,137) -0- -0- -0- (87,137)
Net loss on investments (2,112,972) (11,090,545) (25,102,741) -0- (38,306,258)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,413,530 $ 22,603,547 $ 30,085,531 $ 3,895,576 $ 57,998,184
</TABLE>
* Based on combined net assets as of 6/30/00.
(a) Advisory fee based on an annual rate of .55% of the total combined average
net assets for the twelve months ended June 30, 2000.
(b) Distribution fee based on an annual rate of .30% of the total combined
average net assets for the twelve months ended June 30, 2000.
(c) Distribution fee based on an annual rate of 1.00% of the total combined
average net assets for the twelve months ended June 30, 2000.
(d) Expenses are based on one fund.
(e) Custodian fees are based on monthly fixed fees and on average net assets.
See notes to financial statements.
6
NOTES TO PRO-FORMA COMBINED
FINANCIAL STATEMENTS
June 30, 2000 (unaudited)
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
NOTE A: General
The Pro-Forma Financial Statements give effect to the proposed acquisition of
the assets of Alliance Limited Maturity Government Fund and Alliance Mortgage
Securities Income Fund by Alliance Bond Fund U.S. Government Portfolio (the
"Portfolio") pursuant to agreements and plans of acquisition and liquidation.
The acquisitions would be accomplished by a tax-free exchange of the assets of
Alliance Limited Maturity Government Fund and Alliance Mortgage Securities
Income Fund for shares of the Portfolio.
The unaudited Pro-Forma Statements of Investments, of Assets and Liabilities
and of Operations have been prepared as though the acquisitions had been
effective June 30, 2000 and should be read in conjunction with the historical
financial statements and schedules of investments of the Portfolio, included in
the Statement of Additional Information. The Pro-Forma Statement of Operations
has been prepared under the assumption that certain expenses would be lower for
the combined entity as a result of the acquisitions. The expense of the
acquisitions, including the cost of proxy solicitation, will be borne by
Alliance Capital Management L.P.
NOTE B: Significant Accounting Policies
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States which require management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
1. Security Valuation
Portfolio securities traded on a national securities exchange are valued at the
last reported 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. If no bid
prices are quoted, then the security is valued at the mean of the bid and asked
prices as obtained on that day from one or more dealers regularly making a
market in that security. Securities traded on the over-the-counter market are
valued at the mean of the closing bid and asked prices provided by two or more
dealers regularly making a market in such securities. U.S. government
securities and other debt securities which mature in 60 days or less are valued
at amortized cost unless this method does not represent fair value. Securities
for which market quotations are not readily available are valued at fair value
as determined in good faith by, or in accordance with procedures approved by,
the Board of Directors. Fixed income securities may be valued on the basis of
prices provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. Mortgage backed and asset backed
securities may be valued at prices obtained from a bond pricing service or at a
price obtained from one or more of the major broker/dealers in such securities.
In cases where broker/dealer quotes are obtained, the Adviser may establish
procedures whereby changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted bid price on a security.
2. Taxes
It is the Portfolio's policy to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. The Portfolio amortizes premiums and
accretes discounts as adjustments to interest income. Investment gains and
losses are determined on the identified cost basis.
4. Income and Expenses
All income earned and expenses incurred by the Portfolio are borne on a
pro-rata basis by each settled class of shares, based on the proportionate
interest in the Portfolio represented by the net assets of such class, except
that the Portfolio's Class B and Class C shares bear higher distribution and
transfer agent fees than Class A shares.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital
7
NOTES TO PRO-FORMA COMBINED
FINANCIAL STATEMENTS
(continued)
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Bond Fund U.S. Government Portfolio
_______________________________________________________________________________
gains distributions are determined in accordance with federal tax regulations
and may differ from those determined in accordance with accounting principles
generally accepted in the United States. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require such
reclassification.
NOTE C: Advisory Fee
Under the terms of an investment advisory agreement, the Portfolio pays
Alliance Capital Management L.P. (the "Adviser") an advisory fee at a quarterly
rate of .15 of 1% (approximately .60 of 1% on an annual basis) of the first
$500 million of the Portfolio's net assets and .125 of 1% (approximately .50 of
1% on an annual basis) of its net assets over $500 million, valued on the last
business day of the previous quarter.
NOTE D: Distribution Services Agreement
The Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Portfolio pays a distribution fee to the Distributor at an
annual rate of up to .30 of 1% of the Portfolio's average daily net assets
attributable to Class A shares and 1% of the average daily net assets
attributable to both Class B and Class C shares. The fees are accrued daily and
paid monthly. The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and promotional
activities.
8
<PAGE>
PART C
OTHER INFORMATION
62
<PAGE>
Item 15. Indemnification.
__________________________
Incorporated by reference to Item 25 of Post Effective
Amendment No. 73 to Registrant's Registration Statement on Form
N-1A (File Nos. 2-48227 and 811-2383), filed June 28, 2000.
Item 16. Exhibits.
___________________
(1)(a) Articles of Incorporated by reference to
Incorporation of Exhibit 1(a) to Post-Effective
the Registrant Amendment No. 65 of the
Registrant's Registration
Statement on Form N-1A, (File
Nos. 2-48227 and 811-2383),
filed with the Securities and
Exchange Commission on
October 31, 1997.
(1)(b) Articles of Amendment Incorporated by reference to
of the Articles of Exhibit 1(b) to Post-Effective
Incorporation of the Amendment No. 66 of the
Registrant dated Registrant's Registration
December 15, 1989 and Statement on Form N-1A (File
filed December 19, Nos. 2-48227 and 811-2383),
1989 filed with the Securities and
Exchange Commission on October
30, 1998.
(1)(c) Articles Supplementary Incorporated by reference to
to the Articles of Exhibit 1(b) to Post-Effective
Incorporation of the Amendment No. 65 of the
Registrant dated Registrant's Registration
and filed August 28, Statement on Form N-1A (File
1991 Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
63
<PAGE>
(1)(d) Articles Supplementary Incorporated by reference to
to the Articles of Exhibit 1(d) to Post-Effective
Incorporation of the Amendment No. 65 of the
Registrant dated Registrant's Registration
March 25, 1992 and Statement on Form N-1A (File
filed March 26, 1992 Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(1)(e) Articles of Amendment Incorporated by reference to
to the Articles of Exhibit 1(e) to Post-Effective
Incorporation of the Amendment No. 66 of the
Registrant dated Registrant's Registration
October 27, 1992 and Statement on Form N-1A (File
filed November 2, 1992 Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 30, 1998.
(1)(f) Articles Supplementary Incorporated by reference to
to the Articles of Exhibit 1(f) to Post-Effective
Incorporation of the Amendment No. 66 of the
Registrant dated Registrant's Registration
December 30, 1992 and Statement on Form N-1A (File
filed December 31, Nos. 2-48227 and 811-2383) filed
1992 with the Securities and Exchange
Commission on October 30, 1998.
(1)(g) Articles of Amendment Incorporated by reference to
to the Articles of Exhibit 1(e) to Post-Effective
Incorporation of the Amendment No. 65 of the
Registrant dated Registrant's Registration
January 7, 1993 and Statement on Form N-1A (File
filed January 8, 1993 Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(1)(h) Articles Supplementary Incorporated by reference to
to the Articles of Exhibit 1(h) to Post-Effective
Incorporation of the Amendment No. 66 of the
Registrant dated Registrant's Registration
April 29, 1993 and Statement on Form N-1A (File
filed April 30, 1993 Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 30, 1998.
64
<PAGE>
(1)(i) Articles Supplementary Incorporated by reference to
to the Articles of Exhibit 1(e) to Post-Effective
Incorporation of the Amendment No. 64 of the
Registrant dated Registrant's Registration
September 30, 1996 Statement on Form N-1A (File
and filed October 2, Nos. 2-48227 and 811-2383) filed
1996 with the Securities and Exchange
Commission on October 31, 1996.
(1)(j) Articles Supplementary Incorporated by reference to
to the Articles of Exhibit (a) to Post-Effective
Incorporation of the Amendment No. 69 of the
Registrant dated Registrant's Registration
March 31, 1998 and Statement on Form N-1A (File
filed April 6, 1998 Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on April 9, 1999.
(1)(k) Articles Supplementary Incorporated by reference to
to the Articles of Exhibit a(11) to Post-Effective
Incorporation of the Amendment No. 72 of the
Registrant dated Registrant's Registration
June 29, 1999 and Statement on Form N-1A (File
filed July 1, 1999 Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 29, 1999.
(2) By-Laws of the Incorporated by reference to
Registrant Exhibit 2 to Post-Effective
Amendment No. 65 of the
Registrant's Registration
Statement on Form N-1A (File
Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(3) Not applicable
(4) Plan of Filed herewith as Exhibit C to
Acquisition and Part A.
Liquidation relating
to Alliance Mortgage
Securities Income
Fund, Inc.
65
<PAGE>
(6)(a) Investment Advisory Incorporated by reference to
Contract between the Exhibit 5 to Post-Effective
Registrant and Amendment No. 65 of the
Alliance Capital Registrant's Registration
Management L.P. Statement on Form N-1A (File
Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(6)(b) Amendment to the Incorporated by reference to
Investment Advisory Exhibit (d)(2) to Post-Effective
Contract between the Amendment No. 72 of the
Registrant and Registrant's Registration
Alliance Capital Statement on Form N-1A (File
Management L.P. Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 29, 1999.
(7)(a) Distribution Services Incorporated by reference to
Agreement between the Exhibit 6(a) to Post-Effective
Registrant and Amendment No. 65 of the
Alliance Fund Registrant's Registration
Distributors, Inc. Statement on Form N-1A (File
("AFD") Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(7)(b) Amendment to the Incorporated by reference to
Distribution Services Exhibit 6(e) to Post-Effective
Agreement between the Amendment No. 64 of the
Registrant and Registrant's Registration
AFD Statement on Form N-1A (File
Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1996.
(7)(c) Selected Dealer Incorporated by reference to
Agreement between Exhibit 6(c) to Post-Effective
AFD and selected Amendment No. 65 of the
dealers offering Registrant's Registration
shares of Registrant Statement on Form N-1A (File
Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
66
<PAGE>
(7)(d) Selected Agent Incorporated by reference to
Agreement between Exhibit 6(d) to Post-Effective
AFD and selected Amendment No. 65 of the
agents making Registrant's Registration
available shares of Statement on Form N-1A (File
Registrant Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(8) Not applicable
(9)(a) Custodian Contract Incorporated by reference to
between the Exhibit 8(a) to Post-Effective
Registrant and Amendment No. 65 of the
State Street Bank Registrant's Registration
and Trust Company Statement on Form N-1A (File
Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(9)(b) Amendment to the Incorporated by reference to
Custodian Contract Exhibit 8(a) to Post-Effective
between the Amendment No. 64 of the
Registrant and Registrant's Registration
State Street Bank Statement on Form N-1A (File
and Trust Company Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1996.
(10)(a) Rule 12b-1 Plan See 7(a) above.
(10)(b) Amended Rule 12b-1 See 7(b) above.
Plan
(10)(c) Amended and Restated Incorporated by reference to
Rule 18f-3 Plan Exhibit 18(a) to Post-Effective
Amendment No. 64 of the
Registrant's Registration
Statement on Form N-1A (File
Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1996.
(11)(a) Opinion of Seward & Filed herewith.
Kissel LLP as to the
legality of the
securities being
registered
67
<PAGE>
(11)(b) Opinion of Venable, Filed herewith.
Baetjer and Howard,
LLP as to the
legality of the
securities being
registered
(12) Opinions of Seward & To be filed by means of a
Kissel LLP as to tax Post-Effective Amendment
consequences hereto.
(13) Transfer Agency Incorporated by reference to
Agreement between Exhibit 9 to Post-Effective
the Registrant and Amendment No. 65 to the
Alliance Fund Registrant's Registration
Services, Inc. Statement on Form N-1A (File
Nos. 2-48227 and 811-2383) filed
with the Securities and Exchange
Commission on October 31, 1997.
(14) Consent of Ernst & Filed herewith.
Young LLP,
independent auditors
for U.S. Government,
Mortgage Securities
and Limited Maturity
(15) Not applicable
(16) Powers of Attorney Filed herewith.
68
<PAGE>
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through
the use of a prospectus which is a part of this
Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of
Rule 145(c) under the Securities Act of 1933 (17
CFR 230.145c), the reoffering prospectus will contain
the information called for by the applicable
registration form for reofferings by persons who may be
deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed
as a part of an amendment to the Registration Statement
and will not be used until the amendment is effective,
and that, in determining any liability under the 1933
Act, each post-effective amendment shall be deemed to
be a new registration statement for the securities
offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned Registrant agrees to file a copy of
each tax opinion required to be filed as an exhibit to
the Registration Statement by Item 16(12) of Form N-14
under the Securities Act of 1933, as amended, by means
of a post-effective amendment to the Registration
Statement.
69
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this
Registration Statement has been signed on behalf of the
Registrant in the City and State of New York, on the [____] day
of August, 2000
U.S. GOVERNMENT PORTFOLIO OF
ALLIANCE BOND FUND, INC.
By: /s/ John D. Carifa
______________________
John D. Carifa
Chairman and President
As required by the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
Signature Title Date
_________ _____ ____
1) Principal
Executive Officer
Chairman August [__], 2000
/s/ John D. Carifa and President
____________________
John D. Carifa
2) Principal Financial
and Accounting Officer
/s/ Mark D. Gersten Treasurer August [__], 2000
____________________
Mark D. Gersten
3) Directors
Ruth Block
John D. Carifa
David H. Dievler
John H. Dobkin
William H. Foulk, Jr.
James M. Hester
Clifford L. Michel
Donald J. Robinson
70
<PAGE>
/s/ Edmund P. Bergan, Jr. August [__], 2000
_________________________
By: Edmund P. Bergan, Jr.
(Attorney-in-fact)
71
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
(4)(b) Plan of Acquisition and
Liquidation relating to
Alliance Limited Maturity
Government Fund, Inc.
(11)(a) Opinion of Seward & Kissel LLP
(11)(b) Opinion of Venable, Baetjer and
Howard LLP
(14) Consent of Ernst & Young LLP
(16) Powers of Attorney
72
00250236.AK9
