ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
ANNUAL REPORT
AUGUST 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
October 29, 1999
Dear Shareholder:
We are pleased to report to you on the performance, investment strategy and
outlook for the Alliance Short-Term U.S. Government Fund (the "Fund"). The
Fund's objective is to provide investors with high current income consistent
with preservation of capital by investing primarily in a portfolio of U.S.
government securities.
INVESTMENT RESULTS
The following table provides your Fund's performance during the six- and
twelve-month periods ended August 31, 1999. For comparison, we have included
the performance for the Lehman Brothers (LB) 1-3 Year Government Bond Index and
the LB 3-Month Treasury Bellwether Index. The LB 1-3 Year Government Bond Index
provides a broad-based comparison for the Alliance Short-Term U.S. Government
Fund, while the LB 3-Month Treasury Bellwether Index is a good narrow-based
benchmark given its short-term orientation.
During the six- and twelve-month periods under review, your Fund underperformed
its benchmark as a result of the Fund's exposure to non-Treasury securities, in
particular mortgage-backed securities. This relatively weak performance
reflects a marked increase in the risk premium that investors demand to own
assets other than U.S. Treasuries. The combination of considerable new supply
and Y2K concerns has created an environment where spreads on non-Treasury
securities slowly continue to widen as investors wait on the sidelines for some
sign that the environment has changed for the better.
INVESTMENT RESULTS*
Periods Ended August 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
Class A 1.34% 3.18%
Class B 0.81% 2.35%
Class C 0.82% 2.24%
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT
BOND INDEX 1.81% 3.91%
LEHMAN BROTHERS 3-MONTH TREASURY
BELLWETHER INDEX 2.41% 4.82%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF AUGUST 31, 1999. ALL FEES AND EXPENSES RELATED TO THE
OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR
SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. RETURNS FOR
THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE LEHMAN BROTHERS 1-3 YEAR GOVERNMENT BOND INDEX IS COMPOSED OF U.S.
GOVERNMENT AGENCY AND TREASURY SECURITIES WITH MATURITIES OF ONE TO THREE
YEARS. THE LEHMAN BROTHERS 3-MONTH TREASURY BELLWETHER INDEX MEASURES
PERFORMANCE OF 3-MONTH TREASURY BILLS. U.S. TREASURY SECURITIES ARE GUARANTEED
AS TO PRINCIPAL AND INTEREST IF HELD TO MATURITY WHEREAS THE VALUE OF THE
FUND'S SHARES WILL FLUCTUATE SO THAT YOUR SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. AN INVESTOR CANNOT INVEST DIRECTLY IN
THE INDICES.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
MARKET OVERVIEW
During the six-month period ended August 31, 1999, the outlook for the global
economy improved. U.S. economic growth downshifted but remained strong, while
inflation and unemployment stayed low. With economic activity remaining strong
and global liquidity concerns abating, the Federal Reserve adopted a monetary
policy tightening bias in May, and subsequently followed with 25 basis-point
increases in the Federal Funds rate in June and in August, respectively. For
the six months ended
1
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
August 31, 1999, the U.S. yield curve flattened as short- and intermediate-term
rates rose more than long-term rates. Two-year U.S. Treasury yields rose from
5.20% to 5.73%, while thirty-year U.S. Treasury yields rose from 5.67% to 6.07%.
During the six-month period ended August 31, 1999, the U.S. bond market
declined as the global economic outlook improved and the U.S. Federal Reserve
raised interest rates. Among the traditional sectors of the U.S. bond market,
asset-backed securities (ABS) recorded the strongest performance while the
corporate sector recorded the weakest performance. Rising interest rates,
uncertainty regarding future interest-rate policy and expectations of large
corporate debt issuance, as corporations prepare for Y2K, hurt corporate bond
performance during the period. The ABS sector, in particular securities backed
by home equity loans and manufactured housing, performed well over the period
as a result of strong investor demand.
INVESTMENT STRATEGY
At the beginning of the six-month period, we reduced the Fund's holdings in
short Treasury notes and selectively added in non-agency collateralized
mortgage obligations, asset-backed securities, and Government National Mortgage
Association adjustable-rate mortgages, expecting these non-Treasury securities
to outperform Treasury securities. As spreads tightened, mortgage-backed
securities were sold at attractive levels and the proceeds were reinvested in
higher-yielding commercial paper. During the summer months, most of the trading
in the portfolio was related to hedging activity to minimize the portfolio's
exposure to rising interest rates.
OUTLOOK
Current data are consistent with our view that 1999 U.S. growth will be close
to 4%. Although slightly higher Consumer Price Index inflation is likely, as
previous favorable one-off factors are unwound, accelerating productivity
should keep the "lid" on inflation. The market is still holding on to the view
that the Fed may engineer another increase in interest rates before year-end,
effectively wiping out the 75 basis points of easing after last fall's crisis.
While the direction of the dollar could have an impact on U.S. interest rates,
we expect interest rates on Treasury notes and bonds to stay below the 6.25%
level through year-end.
Over the past several months, all non-Treasury securities have underperformed
Treasury securities. We believe spreads are attractive in several sectors of
the market, most notably asset-backed securities. Nonetheless, Y2K concerns
should keep spreads from tightening significantly through the end of the year.
Thank you for your continued interest and investment in Alliance Short-Term
U.S. Government Fund. We look forward to reporting its progress to you in the
coming months.
Sincerely,
John D. Carifa
Chairman and President
Jeffrey S. Phlegar
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
Alliance Short-Term U.S. Government Fund seeks high current income consistent
with the preservation of capital and invests primarily in a diversified
portfolio of U.S. government securities.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year 3.18% -1.19%
5 Years 4.47% 3.56%
Since Inception* 4.29% 3.68%
SEC Yield** 4.87%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year 2.35% -0.58%
5 Years 3.70% 3.70%
Since Inception*(a) 3.67% 3.67%
SEC Yield** 4.37%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
1 Year 2.24% 1.27%
5 Years 3.69% 3.69%
Since Inception* 2.80% 2.80%
SEC Yield** 4.36%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(SEPTEMBER 30, 1999)
CLASS A CLASS B CLASS C
----------- ----------- -----------
1 Year -1.10% -0.39% 1.47%
5 Years 3.70% 3.86% 3.85%
Since Inception* 3.70% 3.56% 2.85%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
(a) Assumes conversion of Class B shares into Class A shares after six years.
* Inception: 5/4/92 Class A and Class B; 8/2/93 Class C.
** SEC yields are based on SEC guidelines and are calculated on 30 days ended
August 31, 1999.
3
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
GROWTH OF A $10,000 INVESTMENT
5/31/92* TO 8/31/99
$16,000
$14,000
$12,000
$10,000
$8,000
LEHMAN BROTHERS 1-3YEAR GOVERNMENT BOND INDEX: $14,918
LEHMAN BROTHERS 3-MONTH TREASURY BELLWETHER INDEX: $13,953
SHORT-TERM U.S. GOVERNMENT FUND CLASS A: $12,921
5/31/92 8/31/92 8/31/93 8/31/94 8/31/95 8/31/96 8/31/97 8/31/98
8/31/99
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Short-Term U.S. Government Fund Class A shares (from 5/31/92 to
8/31/99) as compared to the performance of appropriate broad-based indexes.
The chart reflects the deduction of the maximum 4.25% sales charge from the
initial $10,000 investment in the Fund and assumes the reinvestment of
dividends and capital gains. Performance for Class B and Class C shares will
vary from the results shown above due to differences in expenses charged to
those classes. Past performance is not indicative of future results, and is not
representative of future gain or loss in capital value or dividend income.
The unmanaged Lehman Brothers 1-3 Year Government Bond Index is composed of
U.S. government agency and Treasury securities with maturities of one to three
years.
The unmanaged Lehman Brothers 3-Month Treasury Bellwether Index measures
performance of 3-month U.S. Treasury bills. U.S. Treasury securities are
guaranteed as to principal and interest if held to maturity, whereas the value
of the Fund's shares will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost.
When comparing Alliance Short-Term U.S. Government Fund to the indices shown
above, you should note that no charges or expenses are reflected in the
performance of the indices.
Alliance Short-Term U.S. Government Fund
Lehman Brothers 1-3 Year Government Bond Index
Lehman Brothers 3-Month TreasuryBellwether Index
* Closest month-end after the Fund's Class A share inception date of 5/4/92.
4
PORTFOLIO OF INVESTMENTS
August 31, 1999 Alliance Short-Term U.S. Government Fund
================================================================================
Principal
Amount
(000) Value
- -----------------------------------------------------
MORTGAGE-RELATED
SECURITIES - 74.0%
COLLATERALIZED
MORTGAGE
OBLIGATIONS - 48.3%
FIXED RATE - 34.4%
Federal Home Loan Banks
0.00%, 8/04/17.......... $ 6,500 $ 1,519,375
4.91%, 1/28/00.......... 1,500 1,493,906
Federal Home Loan
Mortgage Corp.
Series 1361 Cl. 1361 D
6.00%, 11/15/05......... 1,422 1,416,562
Series 1997-80 Cl. DA
6.50%, 3/18/24.......... 1,335 1,311,071
Series 2047 Cl. WA
6.80%, 8/15/26.......... 783 762,995
Series 2012 Cl. A
6.90%, 4/15/26.......... 638 628,455
Series 1445 Cl. J
7.00%, 9/15/06.......... 1,500 1,506,570
Series 1923 Cl. B
7.00%, 1/15/23.......... 174 173,763
Series 1933 Cl. C
7.00%, 3/15/25.......... 1,013 1,017,071
Series 2058 Cl. A
7.00%, 1/17/25.......... 559 548,356
Series 2072 Cl. CA
7.50%, 10/15/27......... 371 369,761
12.00%, 10/01/09-6/01/10 582 639,871
Federal National Mortgage
Association
Series 1996-68 Cl. B
6.50%, 5/18/17.......... 235 234,797
Series 1997-24 Cl. C
7.00%, 9/18/22.......... 987 988,808
Series 1997-80 Cl. DA
7.00%, 3/18/24.......... 182 182,410
ICI Funding Corp.
Series 1997-1 Cl. A2
9.00%, 3/25/28.......... 31 31,515
-----------
12,825,286
-----------
ADJUSTABLE RATE - 13.9%
Commercial Loan Funding
Trust
Series I Cl. A
5.65%, 8/15/05 (a) (b).. 88 88,004
Federal Home Loan
Mortgage Corp.
Series 1928 Cl. F
5.81%, 12/15/24 (a)..... 144 144,333
Federal National Mortgage
Association
Series 1993-639 Cl. F
5.69%, 8/25/16 (a)...... 275 275,467
Series 1992-204 Cl. FA
6.09%, 10/25/22 (a)..... 335 338,004
Federal National Mortgage
Association Remic
Series 1993-95 Cl. FA
6.09%, 6/25/08 (a)...... 1,042 1,054,349
Imperial CMB Trust
Series 1997-2 Cl. M1
5.88%, 12/25/27 (a)..... 263 261,563
Mall Asset Realty Trust
Series 1999-1A Cl. A
5.61%, 6/13/08 (a) (b).. 900 899,856
Merrill Lynch Mortgage
Investors, Inc.
Series 1998-ASP1 Cl. B
6.01%, 10/01/03 (a) (b). 900 900,000
Salomon Brothers Mortgage
Securities VII, Inc.
Series 1996-AFF1 Cl. A1
5.84%, 1/25/26 (a)...... 236 236,146
Series 1999-NCY Cl. A
5.74%, 9/25/29 (a)...... 1,000 1,000,000
-----------
5,197,722
-----------
Total Collateralized
Mortgage Obligations
(cost $18,307,835)...... 18,023,008
-----------
5
PORTFOLIO OF INVESTMENTS (continued) Alliance Short-Term U.S. Government Fund
================================================================================
Principal
Amount
(000) Value
- -----------------------------------------------------
FEDERAL NATIONAL
MORTGAGE
ASSOCIATION - 20.6%
6.65%, 5/01/27 (a)...... $ 63 $ 63,630
6.71%, 7/01/25 (a)...... 647 661,320
6.89%, 9/01/27 (a)...... 174 177,962
6.97%, 6/01/26 (a)...... 193 197,823
7.00%, 11/01/07-8/01/14. 2,331 2,309,432
7.14%, 11/01/26 (a)..... 227 232,488
8.00%, 12/01/29......... 4,000 4,052,480
-----------
Total Federal National
Mortgage Association
(cost $7,732,915)....... 7,695,135
-----------
GOVERNMENT NATIONAL
MORTGAGE
ASSOCIATION - 3.5%
6.13%, 11/20/26-12/20/26
(cost $1,304,071)....... 1,287 1,292,559
-----------
FEDERAL HOME LOAN
MORTGAGE CORP. - 1.6%
6.94%, 2/01/26 (a)...... 437 446,104
12.00%, 2/01/14......... 143 159,998
-----------
Total Federal Home Loan
Mortgage Corp.
(cost $616,058)......... 606,102
-----------
Total Mortgage-Related
Securities
(cost $27,960,879)...... 27,616,804
-----------
ASSET BACKED
SECURITIES - 28.6%
Aames Mortgage Trust
Series 1999-1 Cl. AV
5.67%, 7/15/29 (a)...... 995 994,739
Access Financial Mortgage
Loan Trust
Series 1997-3 Cl. A7
5.52%, 10/18/27 (a)..... 192 189,717
Advanta Credit Card Master
Trust
Series 1996-C Cl. A
5.27%, 11/15/03 (a)..... 350 349,657
Advanta Mortgage Loan
Trust
Series 1981-1 Cl. A7
5.55%, 3/25/28 (a)...... 481 479,533
Amresco Residential
Securities Mortgage
Loan Trust
Series 1998-3 Cl. A7
5.58%, 7/25/28 (a)...... 610 607,166
Bear Stearns Mortgage
Securities, Inc.
Series 1999-1 Cl. A1
5.54%, 4/25/29 (a)...... 1,175 1,174,187
Contimortgage Home
Equity Loan Trust
Series 1998-2 Cl. A3
6.13%, 3/15/13.......... 1,000 995,630
Series 1998-2 Cl. A2A
6.15%, 3/15/13.......... 219 218,735
Countrywide Home Equity
Loan Trust
Series 1998-Cl. CTFS
5.45%, 10/15/24 (a)..... 322 320,305
IMC Home Equity Loan
Trust
Series 1998-3 Cl. A3
6.16%, 5/20/14.......... 700 696,941
ITT Federal Bank, FSB
Series 1994-P1 Cl. A1
6.81%, 6/25/24 (a) (b).. 108 107,679
Ocwen Mortgage Loan
Certificates
Series 1998-OFS3 Cl. A
5.65%, 10/25/29 (a)..... 831 830,808
6
Alliance Short-Term U.S. Government Fund
================================================================================
Principal
Amount
(000) Value
- -----------------------------------------------------
Onyx Acceptance Owner
Trust
Series 1999 -Cl. A1
5.65%, 9/15/00.......... $ 900 $ 900,000
Peco Energy Transition
Trust
Series 1999-A Cl. A5
5.26%, 3/01/09 (a)...... 800 795,376
Residential Accredit Loan,
Inc.
Series 1997-QS10 Cl. A1
7.25%, 10/25/27......... 1,196 1,198,419
Residential Funding
Mortgage Securities I
Series 1997-HS2 Cl. A
5.45%, 9/20/22 (a)...... 408 405,168
Saxon Asset Securities Trust
Series 1998-2 Cl. AV1
5.50%, 2/25/28 (a)...... 412 410,351
-----------
Total Asset Backed
Securities
(cost $10,694,293)...... 10,674,411
-----------
REPURCHASE
AGREEMENTS - 9.3%
Lehman Brothers, Inc.
5.45%, dated 8/31/99,
$1,720,260 due 9/01/99,
collateralized by
$1,709,509, FHLMC,
6.73%, 6/15/35.......... 1,720 1,720,000
State Street Bank and
Trust Co.
5.45%, dated 8/31/99,
$1,750,265 due 9/01/99,
collateralized by
$1,780,000, FNMA,
5.51%, 5/29/01.......... 1,750 1,750,000
-----------
Total Repurchase
Agreements
(cost $3,470,000)....... 3,470,000
-----------
U.S. GOVERNMENT
OBLIGATION - 5.6%
U.S. Treasury Notes
5.50%, 7/31/01 (c)
(cost $2,097,072)....... 2,100 2,090,151
-----------
TOTAL INVESTMENTS - 117.5%
(cost $44,222,244)...... 43,851,366
Other assets less
liabilities - (17.5%)... (6,531,059)
-----------
NET ASSETS - 100%.......... $37,320,307
===========
- --------------------------------------------------------------------------------
(a) Adjustable rate mortgages; stated interest rate in effect at August 31,
1999.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At August 31,
1999, these securities amounted to $1,995,539 or 5.3% of net assets.
(c) Security with an aggregate market value of $2,099,961 has been segregated
to collateralize reverse repurchase agreement.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999 Alliance Short-Term U.S. Government Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $40,752,244) .................................. $ 40,381,366
Repurchase agreements (cost $3,470,000) ................................................. 3,470,000
Cash .................................................................................... 16,391
Receivable for investment securities sold ............................................... 5,137,337
Receivable for shares of beneficial interest sold ....................................... 422,206
Interest receivable ..................................................................... 267,454
Initial margin deposit on futures contracts .. 22,500
Variation margin receivable on futures contracts ........................................ 2,109
------------
Total assets ............................................................................ 49,719,363
------------
LIABILITIES
Payable for investment securities purchased ............................................. 10,000,126
Reverse repurchase agreement ............................................................ 2,103,232
Payable for shares of beneficial interest redeemed ...................................... 117,228
Dividends payable ....................................................................... 50,984
Distribution fee payable ................................................................ 25,223
Management fee payable .................................................................. 7,950
Accrued expenses ........................................................................ 94,313
------------
Total liabilities ....................................................................... 12,399,056
------------
NET ASSETS ................................................................................. $ 37,320,307
============
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par ................................................... $ 40
Additional paid-in capital .............................................................. 38,856,102
Distributions in excess of net investment income ........................................ (68,608)
Accumulated net realized loss on investments and futures transactions ................... (1,116,030)
Net unrealized depreciation of investments, futures transactions, and other liabilities . (351,197)
------------
$ 37,320,307
============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($9,378,763 / 1,013,282 shares of beneficial interest issued and outstanding) ......... $9.26
Sales charge--4.25% of public offering price ............................................ .41
-----
Maximum offering price .................................................................. $9.67
=====
Class B Shares
Net asset value and offering price per share
($20,564,920 / 2,187,877 shares of beneficial interest issued and outstanding) ........ $9.40
=====
Class C Shares
Net asset value and offering price per share
($7,376,624 / 786,147 shares of beneficial interest issued and outstanding) ........... $9.38
=====
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
8
STATEMENT OF OPERATIONS
Year Ended August 31, 1999 Alliance Short-Term U.S. Government Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................. $ 1,988,978
EXPENSES
Advisory fee......................................................... $ 162,331
Distribution fee - Class A........................................... 21,679
Distribution fee - Class B........................................... 154,210
Distribution fee - Class C........................................... 68,676
Custodian............................................................ 107,689
Transfer agency...................................................... 57,753
Audit and legal...................................................... 45,758
Registration......................................................... 39,919
Printing............................................................. 28,356
Trustees' fees....................................................... 15,278
Miscellaneous........................................................ 3,910
--------------
Total expenses................................... 705,559
Less: expenses waived by Adviser (See Note B)........................ (136,331)
--------------
Net expenses......................................................... 569,228
Interest expense..................................................... 45,677
--------------
Total expenses including interest expense............................ 614,905
--------------
Net investment income................................................ 1,374,073
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions......................... (345,384)
Net realized loss on futures transactions............................ (20,011)
Net change in unrealized appreciation (depreciation) of :
Investments........................................................ (346,951)
Futures transactions............................................... 29,194
Other liabilities.................................................. (2,993)
--------------
Net loss on investments.............................................. (686,145)
--------------
NET INCREASE IN NET ASSETS FROM OPERATIONS.............................. $ 687,928
==============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS Alliance Short-Term U.S. Government Fund
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, August 31,
1999 1998
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income................................................ $ 1,374,073 $ 756,194
Net realized loss on investment and futures transactions............. (365,395) (133,830)
Net change in unrealized appreciation (depreciation) of investments,
futures transactions, and other liabilities........................ (320,750) (28,689)
-------------- --------------
Net increase in net assets from operations........................... 687,928 593,675
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A............................................................ (380,166) (274,620)
Class B............................................................ (687,009) (281,947)
Class C............................................................ (306,898) (199,627)
Tax return of capital
Class A............................................................ (16,138) (18,747)
Class B............................................................ (29,164) (19,247)
Class C............................................................ (13,028) (13,628)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase......................................................... 16,628,915 6,278,281
-------------- --------------
Total increase....................................................... 15,884,440 6,064,140
NET ASSETS
Beginning of year.................................................... 21,435,867 15,371,727
-------------- --------------
End of year.......................................................... $ 37,320,307 $ 21,435,867
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
August 31, 1999 Alliance Short-Term U.S. Government Fund
================================================================================
NOTE A: Significant Accounting Policies
Alliance Short-Term U.S. Government Fund (the "Fund"), a series of The Alliance
Portfolios (the "Trust"), organized as a Massachusetts Business Trust on March
29, 1987, is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Fund offers Class A,
Class B and Class C shares. Class A shares are sold with a front-end sales
charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to
purchases of $1,000,000 or more, Class A shares redeemed within one year of
purchase may be subject to a contingent deferred sales charge of 1%. Class B
shares are currently sold with a contingent deferred sales charge which declines
from 3% to zero depending on the period of time the shares are held. Class B
shares will automatically convert to Class A shares six years after the end of
the calendar month of purchase. Class C shares are subject to a contingent
deferred sales charge of 1% on redemptions made within the first year after
purchase. All three classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the mean of the bid and asked prices on that day's closing.
Securities traded on the over-the-counter market are valued at the mean of the
current bid and asked prices reported by NASDAQ, the National Quotation Bureau
or other comparable sources deemed appropriate to reflect the fair market value
thereof. 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 the Trustees. 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 Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. The Fund accretes discount as an
adjustment 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 Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the shares of such class, except that the Fund's Class B
and Class C shares bear higher distribution fees and, in the case of Class B
shares, higher transfer agent fees than Class A shares. Expenses of the Trust
are charged to each Fund in proportion to settled shares.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal
11
NOTES TO FINANCIAL STATEMENTS (cont.) Alliance Short-Term U.S. Government Fund
================================================================================
tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to a tax return of capital resulted in a net decrease in
distributions in excess of net investment income and a corresponding decrease in
additional paid-in capital. This reclassification had no effect on net assets.
6. Repurchase Agreement
The Fund's custodian takes possession of collateral pledged for investments in
repurchase agreements, the market value of which is required to be at least
equal to the resale amount at the time of purchase. The value of the
collateral is marked-to-market on a daily basis and additional collateral is
requested from the counterparty, as necessary, to ensure that its value is at
least equal at all times to the total amount of the repurchase obligation,
including interest. If the seller defaults and the value of the collateral
declines or if bankruptcy proceedings commence with the respect to the seller
of the security, realization of the collateral by the Fund may be delayed or
limited.
- --------------------------------------------------------------------------------
NOTE B: Advisory Fee and Other Transactions With Affiliates
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at an annual rate of
.55 of 1% of the Fund's average daily net assets. Such fee is accrued daily and
paid monthly. The Adviser has agreed to waive its fees and bear certain expenses
to the extent necessary to limit total operating expenses on an annual basis to
1.40%, 2.10% and 2.10% of the daily average net assets for the Class A, Class B
and Class C shares, respectively. For the year ended August 31, 1999, such
waiver amounted to $136,331.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $31,637 for the year ended August 31, 1999.
For the year ended August 31, 1999, the Fund's expenses were reduced by $2,042
under an expense offset arrangement with Alliance Fund Services.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Fund's shares. The Distributor
has advised the Fund that it has received $64,527, and $13,757 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class B and
Class C shares, respectively, for the year ended August 31, 1999.
Accrued expenses includes $17,624 owed to a Trustee under the Trust's deferred
compensation plan.
- --------------------------------------------------------------------------------
NOTE C: Distribution Plans
The Trust has adopted a plan of distribution for each class of shares of the
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940 (each a
"Plan" and collectively the "Plans"). Under the Plans, the Fund pays a
distribution fee to the Distributor at an annual rate of up to .50 of 1% of the
Fund'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
Trustees currently limit payments under the Class A plan to .30 of 1% of the
Fund's aggregate average daily net assets attributable to Class A shares. The
Plan provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities.
The Fund is not obligated under the Plans to pay any distribution services fee
in excess of the amounts set forth above. The purpose of the payments to the
Distributor under the Plans is to compensate the Distributor for its
distribution services with respect to the sale of the Fund's shares. Since the
Distributor's compensation is not directly tied to its expenses, the amount of
compensation received by it under the Plan during any year may be more or less
than its actual expenses. For this reason, the Plans are characterized by the
staff of the Securities
12
Alliance Short-Term U.S. Government Fund
================================================================================
and Exchange Commission as being of the "compensation" variety.
In the event that a Plan is terminated or not continued, no distribution
services fees (other than current amounts accrued but not yet paid) would be
owed by the Fund to the Distributor with respect to the relevant class.
The Plans also provide that the Adviser may use its own resources to finance the
distribution of the Fund's shares.
- --------------------------------------------------------------------------------
NOTE D: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $26,107,737 and $12,025,009,
respectively, for the year ended August 31, 1999. There were purchases of
$75,195,373 and sales of $51,867,019 of U.S. government and government agency
obligations for the year ended August 31, 1999.
At August 31, 1999, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $14,597 and gross unrealized
depreciation of investments was $385,475 resulting in net unrealized
depreciation of $370,878.
At August 31, 1999, the Fund had net capital loss carryforward of $741,247 of
which $44,111 expires in the fiscal year ending 2001, $36,136 expires in the
fiscal year ending 2002, $522,417 expires in the fiscal year ending 2003,
$14,141 expires in the fiscal year ending 2004, $14,331 expires in the fiscal
year ending 2006 and $110,111 expires in the fiscal year ending 2007. To the
extent that this loss carryforward is used to offset future capital gains, it is
probable that the gains so offset will not be distributed to shareholders to the
extent provided by the regulations.
Capital losses incurred after October 31, within the Fund's fiscal year are
deemed to arise on the first business day of the following fiscal year. The Fund
incurred and elected to defer post October losses of $345,589 for the year ended
August 31, 1999.
Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse affects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the time it was closed. At August 31, 1999, the Fund had outstanding futures
contracts, as follows:
<TABLE>
<CAPTION>
Number of Expiration Original Value at Unrealized
Type Contracts Position Month Value August 31, 1999 Appreciation
- --------------- -------------- -------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury
Note 2 Yr Future 45 Short December 1999 $9,344,194 $9,315,000 $29,194
</TABLE>
13
NOTES TO FINANCIAL STATEMENTS (cont.) Alliance Short-Term U.S. Government Fund
================================================================================
NOTE E: Shares of Beneficial Interest
There are an unlimited number of $0.00001 par value shares of beneficial
interest authorized, divided into three classes, designated Class A, Class B and
Class C shares. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
----------------------------------- ----------------------------------
SHARES AMOUNT
----------------------------------- ----------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold....................... 3,659,787 2,479,220 $ 34,303,722 $ 23,780,868
Shares issued in reinvestment of
dividends and distributions.... 32,432 19,158 304,354 183,032
Shares converted from Class B..... 33,384 28,866 313,617 275,890
Shares redeemed................... (3,296,064) (2,348,787) (30,889,860) (22,525,423)
-------------- -------------- -------------- --------------
Net increase...................... 429,539 178,457 $ 4,031,833 $ 1,714,367
============== ============== ============== ==============
Class B
Shares sold....................... 3,739,933 1,141,000 $ 35,665,911 $ 11,027,623
Shares issued in reinvestment of
dividends and distributions.... 56,923 22,555 542,390 218,460
Shares converted to Class A....... (32,876) (28,483) (313,617) (275,890)
Shares redeemed................... (2,701,167) (673,074) (25,765,478) (6,524,245)
-------------- -------------- -------------- --------------
Net increase...................... 1,062,813 461,998 $ 10,129,206 $ 4,445,948
============== ============== ============== ==============
Class C
Shares sold....................... 1,506,231 408,212 $ 14,351,027 $ 3,945,097
Shares issued in reinvestment of
dividends and distributions.... 26,480 19,127 252,113 185,026
Shares redeemed................... (1,274,620) (414,401) (12,135,264) (4,012,157)
-------------- -------------- -------------- --------------
Net increase...................... 258,091 12,938 $ 2,467,876 $ 117,966
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
NOTE F: Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing cash, cash equivalents or liquid
high-grade debt securities having a value at least equal to the repurchase
price.
As of August 31, 1999, the Fund had entered into the following reverse
repurchase agreements:
<TABLE>
<CAPTION>
Date Entered Amount Broker Interest Rate Maturity
- -------------------- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
August 30, 1999 $2,102,625 Paine Webber, Inc. 5.20% September 7, 1999
</TABLE>
For the year ended August 31, 1999, the maximum amount of reverse repurchase
agreements was $5,055,000, the average amount outstanding was approximately
$930,360, and the daily weighted average interest rate was 4.842%.
14
Alliance Short-Term U.S. Government Fund
================================================================================
NOTE G: Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
the miscellaneous expenses in the statement of operations. The Fund did not
utilize the Facility during the year ended August 31, 1999.
15
FINANCIAL HIGHLIGHTS Alliance Short-Term U.S. Government Fund
================================================================================
Selected Data For A Share of Beneficial Interest Outstanding Throughout Each
Year
<TABLE>
<CAPTION>
---------------------------------------------------------
CLASS A
---------------------------------------------------------
Year Ended August 31,
---------------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 9.48 $ 9.63 $ 9.66 $ 9.70 $ 9.67
------ ------ ------ ------ ------
Income From Investment Operations
Net investment income (a) ........................... .49(b) .49(b) .47(b) .47 .42
Net realized and unrealized gain (loss) on investment
transactions ..................................... (.19) (.11) .03 (.02) .05
------ ------ ------ ------ ------
Net increase in net asset value from operations ..... .30 .38 .50 .45 .47
------ ------ ------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income ................ (.50) (.50) (.46) (.49) (.41)
Dividends in excess of net investment income ........ -0- -0- -0- -0- (.03)
Tax return of capital ............................... (.02) (.03) (.07) -0- -0-
------ ------ ------ ------ ------
Total dividends and distributions ................... (.52) (.53) (.53) (.49) (.44)
------ ------ ------ ------ ------
Net asset value, end of year ........................ $ 9.26 $ 9.48 $ 9.63 $ 9.66 $ 9.70
====== ====== ====== ====== ======
Total Return
Total investment return based on net asset value (c) 3.18% 4.04% 5.29% 4.71% 5.14%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $9,379 $5,535 $3,901 $3,455 $2,997
Ratios to average net assets of:
Expenses, net of waivers/reimbursements .......... 1.40% 1.41%(d) 1.40% 1.40% 1.40%
Interest expense on reverse repurchase
agreements .................................... .15% .42% .01% .13% -0-
Expenses, before waivers/reimbursements .......... 2.00% 2.81% 2.42% 3.04% 3.71%
Net investment income ............................ 5.27% 5.00% 4.90% 4.85% 4.56%
Portfolio turnover rate ............................. 209% 206% 65% 110% 15%
</TABLE>
- --------------------------------------------------------------------------------
See footnotes on page 18.
16
Alliance Short-Term U.S. Government Fund
================================================================================
Selected Data For A Share of Beneficial Interest Outstanding Throughout Each
Year
<TABLE>
<CAPTION>
--------------------------------------------------------------
CLASS B
--------------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 9.62 $ 9.74 $ 9.77 $ 9.81 $ 9.78
------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a) ........................... .43(b) .42(b) .41(b) .41 .36
Net realized and unrealized gain (loss) on investment
transactions ..................................... (.21) (.08) .02 (.03) .04
------- ------- ------- ------- -------
Net increase in net asset value from operations ..... .22 .34 .43 .38 .40
------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ................ (.42) (.43) (.39) (.42) (.34)
Dividends in excess of net investment income ........ -0- -0- -0- -0- (.03)
Tax return of capital ............................... (.02) (.03) (.07) -0- -0-
------- ------- ------- ------- -------
Total dividends and distributions ................... (.44) (.46) (.46) (.42) (.37)
------- ------- ------- ------- -------
Net asset value, end of year ........................ $ 9.40 $ 9.62 $ 9.74 $ 9.77 $ 9.81
======= ======= ======= ======= =======
Total Return
Total investment return based on net asset value (c) 2.35% 3.52% 4.45% 3.89% 4.32%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $20,565 $10,827 $ 6,458 $ 6,781 $ 6,380
Ratios to average net assets of:
Expenses, net of waivers/reimbursements .......... 2.10% 2.11%(d) 2.10% 2.10% 2.10%
Interest expense on reverse repurchase
agreements .................................... .15% .45% .01% .13% -0-
Expenses, before waivers/reimbursements .......... 2.73% 3.63% 3.10% 3.74% 4.33%
Net investment income ............................ 4.47% 4.49% 4.13% 4.11% 3.82%
Portfolio turnover rate ............................. 209% 206% 65% 110% 15%
</TABLE>
- --------------------------------------------------------------------------------
See footnotes on page 18.
17
FINANCIAL HIGHLIGHTS (continued) Alliance Short-Term U.S. Government Fund
================================================================================
Selected Data For A Share of Beneficial Interest Outstanding Throughout Each
Year
<TABLE>
<CAPTION>
---------------------------------------------------------
CLASS C
---------------------------------------------------------
Year Ended August 31,
---------------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 9.61 $ 9.73 $ 9.76 $ 9.80 $ 9.77
------ ------ ------ ------ ------
Income From Investment Operations
Net investment income (a) ........................... .43(b) .42(b) .41(b) .40 .34
Net realized and unrealized gain (loss) on investment
transactions ..................................... (.22) (.08) .02 (.02) .06
------ ------ ------ ------ ------
Net increase in net asset value from operations ..... .21 .34 .43 .38 .40
------ ------ ------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income ................ (.42) (.43) (.39) (.42) (.34)
Dividends in excess of net investment income ........ -0- -0- -0- -0- (.03)
Tax return of capital ............................... (.02) (.03) (.07) -0- -0-
------ ------ ------ ------ ------
Total dividends and distributions ................... (.44) (.46) (.46) (.42) (.37)
------ ------ ------ ------ ------
Net asset value, end of year ........................ $ 9.38 $ 9.61 $ 9.73 $ 9.76 $ 9.80
====== ====== ====== ====== ======
Total Return
Total investment return based on net asset value (c) 2.24% 3.53% 4.45% 3.90% 4.33%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $7,377 $5,074 $5,012 $4,850 $5,180
Ratios to average net assets of:
Expenses, net of waivers/reimbursements .......... 2.10% 2.11%(d) 2.10% 2.10% 2.10%
Interest expense on reverse repurchase
agreements .................................... .16% .45% .01% .12% -0-
Expenses, before waivers/reimbursements .......... 2.71% 3.58% 3.09% 3.72% 4.23%
Net investment income ............................ 4.43% 4.48% 4.15% 4.11% 3.80%
Portfolio turnover rate ............................. 209% 206% 65% 110% 15%
</TABLE>
- --------------------------------------------------------------------------------
(a) Net of fees waived and expenses reimbursed by Adviser.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return.
(d) Ratio reflects expenses grossed up for expense offset arrangement with the
transfer agent. For the year ended August 31, 1998, the ratio of expenses
net of waivers and reimbursements would have been 1.40%, 2.10%, and 2.10%
for Class A, Class B and Class C shares, respectively.
18
REPORT OF INDEPENDENT ACCOUNTANTS Alliance Short-Term U.S. Government Fund
================================================================================
To the Trustees and Shareholders of
Alliance Short-Term U.S. Government Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance Short-Term U.S. Government
Fund (one of the portfolios of The Alliance Portfolios, hereafter referred to as
the "Fund") at August 31, 1999, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
October 22, 1999
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
_______________________________________________________________________________
BOARD OF TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
BRENTON W. HARRIES (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
BRUCE W. CALVERT, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
JEFFREY S. PHLEGAR, VICE PRESIDENT
EDMUND P. BERGAN, JR., CLERK
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER & CHIEF ACCOUNTING OFFICER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
ROPES & GRAY
One International Place
Boston, MA 02110-2624
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free (800) 221-5672
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, NY 10036-2798
(1) Member of the Audit Committee.
20
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Quality Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Health Care Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
General Municipal Portfolio
Government Portfolio
21
ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
STMUSGAR899
